Enabling Growth: An Analysis of Compartamos’ Expansion

Publication Date: Mar 2005
Published by: MicroBanking Bulletin
Document Type: Case Study (PDF)

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Growth trajectory of Compartamos, a Latin American MFI

This case study examines the evolution of Compartamos, analyzes its performance and describes how the MFI navigated market and industry trends to reach its flagship position in Latin American microfinance. The paper states that:

• Compartamos found poor people could pay higher interest rates and would repay loans reliably;
• This insight, combined with the a large, underdeveloped market, helped it grow;
• In 1999, Compartamos’ loan portfolio was almost completely funded through equity;
• The management believed that Compartamos could achieve massive outreach, and fulfill its mission, by becoming profitable;
• Compartamos used its new legal charter to leverage equity with commercial debt;
• Capital-funded growth enabled Compartamos to transform into a regulated non-bank financial institution in 2001;
• From 1995 to 2003, its assets grew from USD 1 million to USD 86.6 million;
• Currently, the MFI is among the most profitable larger MFIs in Latin America.