The Microfinance Banana Skins Index provides a picture of changing “anxiety levels” in the microfinance business. The top line shows the average score given to the top risk over the five surveys since 2008, and the bottom line the average of all the risks. After rising strongly up to 2011, both lines showed a small downturn in 2012. But they resumed their upward trend this year, largely because of the high risk attached to over-indebtedness which is seen by many of the respondents to this survey as a growing problem. The breakdown of responses by geography also showed a strong focus on over-indebtedness. Of the seven regions covered by the survey (Africa, East Asia Pacific, Eastern Europe and Central Asia, Middle East and North Africa, North America, South Asia and Western Europe) all but two placed it No. 1. The exceptions were Africa, where it came No. 3 after credit risk and governance, and South Asia where it came No. 2 after political interference. In general, responses from investor countries (i.e. North America and Western Europe) focused on institutional risks (governance, management) while practitioner regions focused on the operating environment.

Contrary to assertions by a number of industry commentators, the problem of over-indebtedness remains a dominant concern for the industry, and may even be growing. It is true that this survey measures perceptions rather than numbers. Still, perceptions on this scale are hard to dismiss since they influence vital aspects of the business such as management, clients, products, regulation and reputation. t what is widely seen as a critical juncture in the evolution of the microfinance industry, insufficient thought is being given to its strategic development. Strategic risk ranks high in this survey because people see the industry paying too little attention to its future. Key long-term development issues such as technology, new products and client management are seen as low order, particularly by the industry itself.