Evolution and growth of the Russian Microfinance Center

November 9, 2011

This blog post provides background information on the Russian Microfinance Center. The President, Mikhail Mamuta, presented at the recent After Hours Seminar, "Overview of Microfinance Markets and Investment Opportunities in Russia and China."

The Russian Microfinance Center (RMC) was created in 2002 as a national resource center for the promotion of financial inclusion. RMC received initial support from USAID and Development Alternatives International (DAI).

When RMC was created in 2002, it was estimated that there were 4.5 million potential microfinance clients in Russia. In 2002 there were only 300 MFIs (both credit cooperatives and microfinance organizations) that satisfied 1 percent of the market demand. Since 2002 the microfinance sector in Russia has grown rapidly. In his presentation on October 4, 2011, Mikhail Mamuta, President of the Russian Microfinance Center, mentioned that by the end of 2011 there will be 700 registered MFOs and about 1200 credit cooperatives in Russia. In addition, according to data provided by the Russian Microfinance Center, overall demand for microfinance services in Russia amounts to 233 billion rubles (US$7.7 billion) and the current supply meets only about 15 percent of the demand (which is still low but an increase of 14 times since 2002). The average portfolio at risk is well below 6 percent and the operational self-sustainability is averaging at 127 percent. Nearly 50 percent of all MFIs have delinquency rates less than 2.7 percent.

In 2005 RMC and the Association of Russian Banks created Centurion Capital (APEX financial institution) to help MFIs in Russia with liquidity constraints by providing qualified MFIs with loans for expansion and short-term liquidity. Centurion Capital also sought to attract domestic and international commercial funding into the microfinance sector in Russia. In December 2006, the average outstanding loan of Centurion’s final borrowers—the saving and credit cooperatives’ 22,481 active borrowers and 48,276 members—was US$1,532 (based on the report by Vision Microfinance).

In 2006 RMC further expanded its operations and outreach by creating the National Partnership of the Microfinance Market Stakeholders (NAMMS). NAMMS combines associations of MFIs, banks, credit unions, foundations for SME support, and the SME development union “OPORA Rossii.” Such representation allows NAMMS to promote the interests of the microfinance industry in Russia on a more macroeconomic level.

Both NAMMS and Centurion Capital remain independent organizations that work closely with RMC. To learn more about the creation and objectives of RMC, NAMMS and Centurion, please listen to the interview that Mamuta gave to SEEP in 2009.