The microfinance market size has experienced rapid growth in recent years, projected to rise from $193.85 billion in 2023 to $215.51 billion in 2024 at a compound annual growth rate (CAGR) of 11.2%. The historic growth can be attributed to increased usage of digital technology, commercialization and sustainability, an increased focus on responsive lending, improved access to loan facilities, and the rise in the adoption of online lending platforms. In the forecast period, the microfinance market size is expected to reach $330.98 billion in 2028, growing at a CAGR of 11.3%. This growth is driven by evolving regulatory frameworks, a focus on environmental sustainability, rising interest in socially responsible investing, growing demand for microfinance loans, and increasing financial inclusion. Key trends during this forecast period include the integration of cloud computing, biometrics and digital identity, microinsurance and parametric insurance, embedded payments and insurance, and the standardization of digital operations.
Major Driver In The Microfinance Market
The rising number of small and medium-sized enterprises (SMEs) is expected to significantly propel the growth of the microfinance market in the coming years. SMEs are businesses characterized by their relatively modest scale in terms of revenue, assets, and employee count. The increase in SMEs can be linked to a surge in entrepreneurial spirit, advancements in technology that lower entry barriers, supportive government policies, and improved global market access. Microfinance plays a critical role in supporting SMEs by providing access to small loans and financial services, which aid in capital acquisition, cash flow management, and risk mitigation. For example, a report published by Startups.co.uk in February 2024 highlighted that new SME businesses surged by 19.5% in 2023, totaling 39,966 establishments, which reflects a 6.5% increase from 2022, while overall incorporations grew by 2% to 778,219 in 2022. The microfinance market is projected to expand from $2 billion in 2023 to $2.5 billion in 2024, with expectations of reaching $3 billion by 2028. Consequently, the increasing number of SMEs is driving the growth of the microfinance market.
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Microfinance Market Competitive Landscape
Major companies operating in the microfinance market are Bank Rakyat Indonesia (BRI), Oliver Wyman Group, Bandhan Bank Limited, LendingClub Corporation, ASA International Group PLC, Accion International, Annapurna Finance Private Limited, PRASAC Microfinance Institution Ltd., Prosper Marketplace Inc, Madura Microfinance Ltd. , Compartamos Banco, Pro Mujer International, Oikocredit International, Ujjivan Financial Services , Fundación Génesis Empresarial (FGE), Kiva Microfunds, Gojo & Company Inc., FINCA International, Fonkoze Financial Services S.A., Cashpor Micro Credit, Opportunity International, BSS Microfinance Limited, Asirvad Microfinance Limited
Key Microfinance Market Trend
Major companies in the microfinance market are concentrating on creating innovative solutions with technological advancements, such as digital microfinance platforms, to improve accessibility, streamline operations, and enhance financial inclusion for underserved populations. A digital microfinance platform is an online or mobile-based system that offers financial services like microloans, savings accounts, and insurance to underserved individuals and small businesses. For instance, in April 2021, Eamar Microfinance, a Nigeria-based microfinance firm, launched the pilot phase of Yemen's first digital microfinance platform to assist clients and communities by offering blended financial and non-financial digital services. This platform enables clients to access both financial and non-financial services digitally, providing convenience and support to underserved communities. It includes advisory support and training to facilitate access to e-money and transfers anytime and anywhere, representing an effort to promote financial inclusion and aid economic recovery during the ongoing humanitarian crisis in the country.
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Global Microfinance Market Segmentation
The microfinance market covered in this report is segmented –
1) By Service Type: Group And Individual Micro Credit, Leasing, Micro Investment Funds, Insurance, Savings And Checking Accounts, Other Service Types
2) By Providers: Banks, Micro Finance Institutions (MFI), NBFC (Non-Banking Financial Institutions), Other Provider
3) By Purpose: Agriculture, Manufacturing Or Production, Trade And Services, Household, Other Purposes
4) By End-Users: Small Enterprises, Micro Enterprises, Solo Entrepreneurs Or Self-Employed
By Geography:The regions covered in the microfinance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.
Asia-Pacific was the largest region in the microfinance market in 2023, and is expected to be the fastest-growing region in the forecast period.
The Microfinance Global Market Report 2024 furnishes information about the global microfinance market, encompassing details like market size, projections for growth, segmentation across various sectors and regions, and an overview of competitors, including their revenues, profiles, and market shares. Furthermore, the report pinpoints potential opportunities and strategic directions derived from market trends and the strategies adopted by key competitors. The report also offers an assessment of how the COVID-19 pandemic, the Russia-Ukraine conflict, and increasing inflation have affected both global and regional markets, furnishing valuable strategic insights for businesses.
