MIMOSA estimating market saturation

Interview by B. De Bruyne with E. Javoy (Planet Rating) and D. Rozas. Full disclosure: in addition to being co-author of MIMOSA, Daniel Rozas is the editor of the e-MFP blog.

QUESTION: Can you explain in a few words what the new Planet Rating index MIMOSA measures? ANSWER: MIMOSA estimates how much retail credit a given country can absorb, and compares that to the actual amount of credit reported. If the amount of reported credit is significantly greater than what MIMOSA estimates as optimal amount, the market is scored as being at risk of over-capacity (e.g. scores 4 & 5, or orange & red). If it's the reverse, the market is evaluated as being under-served (scores 1 & 2, or green and light green).

QUESTION: How do you think MIMOSA can change the microfinance industry? ANSWER: MIMOSA is easy to understand and simple to use. Some investors have already incorporated it into their decision-making process. However, MIMOSA is also a prototype model. We're currently seeking to launch the next stage of the project, MIMOSA 2.0, which will fill many of the gaps, including providing a tool to evaluate a country at the regional, or even city level. We believe it can become the de-facto standard instrument for evaluating market capacity, and also a key component in investment decision-making, and orientation of grant funding and technical assistance to where they're most needed (e.g. emphasis on overindebtedness prevention in some markets, and institutional development in others).

QUESTION: What role do you foresee for e-MFP in the future of MIMOSA? ANSWER: I think the key value is both to communicate MIMOSA and help members learn from each other (investors, DFIs, bilateral donors, and others) on how to adopt the tool in their everyday processes.

For more information on MIMOSA, Microfinance Index of Market Outreach and Saturation, visit Planet Rating.

author: e-MFP