Global Micro Lending Market Overview
The key driver impacting the micro-lending market is the rapidly growing favorable government initiative across developing nations for promoting the growth of small-scale industries, MSME businesses, people below the poverty line, and women. for instance, the Indian government had launched the Micro Finance Program with SIDBI to provide quick and affordable loans to NGOs and MFIs. SIDBI proposes micro-credit services to MSMEs who are involved in industrial activities. These credit facilities are offered through Micro Finance Institutions (MFIs) or Non-Governmental Organization (NGOs). also, growing demand by women from rural areas seeks small loans at affordable rates to earn their livelihood by doing small business. As per the International Finance Corporation (IFC), lending to microfinance borrowers, typically women in rural areas, has augmented by 900 percent in the last six years, from $2 billion in 2012 to $20 billion in 2018 worldwide. Moreover, the growing expansion of microfinance services in an innovative way owing to high technological advancements such as mobile banking, ATMs, POS, and others is estimated to be a significant factor that positively impacts market growth.
According to Value Market Research, the global micro-lending market size was valued at around USD 135 million in 2020 and is estimated to grow at a CAGR of about 12.5% during the forecast period of 2021 to 2027.
The rapid development of the small and medium enterprises (SMEs) and lower-income group and their unmet need for finance are estimated to augment micro-lending demand in the forecast period. For instance, according to the World Bank report, Globally, SMEs represent 90% of businesses and more than 50% of employment globally. formal SMEs is responsible for 40% of national income (GDP) in emerging nations. these numbers could be much higher when informal SMEs are added. The world bank estimated that there are over 600 million jobs will be needed by 2030 to take in the rising global workforce, which makes SME development a high concern for many governments globally. The International Finance Corporation (IFC) estimations, around 65 million firms, or 40% of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing want of $5.2 trillion each year, which is equal to 1.4 times the present level of the worldwide MSME lending. however, the nominal records of very small enterprises (VSEs) may hamper the global micro-lending market in the long run. the high operational cost of microfinance loans negatively impacts industry growth. the current industry trends, such as the adoption of advanced technology in microfinancing and high demand for general purpose loans, are expected to provide market players with several market opportunities.
The micro-lending market is vast, with many local and global players. the key leaders follow different strategies to improve their market position, such as contracts, mergers, contracts, extending product portfolio, acquisitions, expansions, and product innovations to augment their market share globally. The known players included in the report are 51Give, Annapurna Finance Ltd, Al Amana Microfinance, Al-Barakah Microfinance Bank, Banco do Nordeste do Brasil S.A, Asirvad Microfinance Pvt. Ltd., Bandhan Financial Services Pvt. Ltd., BRAC, BSS Microfinance Ltd., Bank Rakyat Indonesia, BSS Microfinance Ltd., Grameen Foundation, Jamii Bora Bank, and Kiva.
In this research report, the micro-lending market is segmented by service providers, end-user, and regions.
Analysis by Service Providers:
By service providers, the report is categorized into banks, microfinance institutes (MFI), NBFC (non-banking financial institutions), and others. Bank and MFI dominate the type segment with over 60% share in 2020. It is due to the growing adoption of micro-lending services among various banks and fintech industries. Moreover, the rise in microloans' needs among individuals contributes to the high demand for micro-lending in the forecast period.
Analysis by End-User:
By end-user, the report is categorized as solo entrepreneurs & individual, micro-enterprises, and small enterprises. The small enterprise segment dominates the application segment with over 35% share in 2020. It is due to the increase in the number of small businesses across the developing nations of LAEMA and Asia-Pacific. The Solo Entrepreneurs & Individual is estimated to grow at a significant rate due to the rising adoption of microlending among individuals to maintain financial stability is the significant factor responsible for the high demand from individuals in the forecast period.
Analysis by Region:
In the regional outlook of the global micro-lending market, the Asia Pacific region dominates with a 30% market share in 2020. The presence of key players and the surge in favorable government policies for micro-funding are critical factors driving regional growth. Moreover, the considerable population falls under the BPL (Below Poverty Line) category, and the growing need for women from rural areas who seek small loans at affordable rates to earn their livelihood contribute to the development of the micro-lending market across the Asia Pacific.
Market Segmentation covered in the Report:
By Service Providers
- Banks
- Micro Finance Institute (MFI)
- NBFC (Non-Banking Financial Institutions)
- Others
By End User
- Solo Entrepreneurs & Individual
- Micro Enterprises
- Small Enterprises
By Region
- North America
- Europe
- The Asia Pacific
- Latin America
- The Middle East and Africa
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