February 2024
14 Jul 2023
The global micro lending market size was evaluated at USD 186.79 billion in 2022 and is projected to attain around USD 379.44 billion by 2030, growing at a CAGR of 9.26% during the forecast period from 2022 to 2030.
The growing demand for microlending among end users, such as micro enterprises and small businesses, is reportedly being driven by shifting market trends, which are anticipated to boost both industry growth and market growth throughout the projection period.
Over the projected period, the worldwide microlending market is anticipated to develop due to the decreased market risk associated with microlending. Microlending enables aspiring entrepreneurs to launch a new firm with little cash and grow it. The ongoing use of cutting-edge technology in microfinance systems is anticipated to create fruitful chances for the market's expansion. However, some of the factors that are anticipated to hinder the market's growth throughout the projected period include the lower loan amounts associated with micro lending and the quicker payback terms offered by micro lenders.
In the aftermath of the COVID-19 epidemic, microlending start-ups are concentrating on financing. For instance, Five Star secured USD 234 million in a capital round in March 2021 from a group of local and international investors. The investment round included contributions from new investors such TVS Capital Funds (P) Limited and Kohlberg Kravis Roberts & Co. L.P. The fundraising round proved that investors' faith in the microfinance ecosystem is growing.
More companies have entered the microlending market as technology advances. The list below does not include all available microloan choices, but it should give both borrowers and lenders a solid understanding of the key players in the market and how they may contrast with one another.
The supposed potential of microfinance to empower women is a key selling factor. According to research, microcredit improves women's mobility, social and political awareness, negotiating power in the household, and importance in the community. Additionally, it raises their sense of value and self-esteem. Microcredit, however, cannot dismantle deeply rooted patriarchal structures of power. Despite having access to credit, some female microcredit clients have little influence over the loans they take out or the money their micro businesses make. Microcredit does empower women overall, but only non-economically.
Regional Snapshots:
Asia-Pacific is expected to increase at a CAGR of 32% over the projected period and provide the most revenue overall. The rise of the region's microlending sector has been mostly fueled by China, India, and Japan. New government regulations addressing microlending platforms and expanding small and medium-sized enterprises in the area are to blame for this. New microlending services have also been developed by small and medium-sized commercial banks and non-bank financial organisations to promote the growth of diverse small enterprises. This is a fantastic opportunity to encourage the growth of the microlending sector in this area.
The second-largest region, LAMEA, is anticipated to increase at a CAGR of 12.4% to reach USD 200 billion by 2030. The growth of the banking and capital markets in the UAE, Brazil, and Mexico, as well as a surge in consumer demand for microcredit programmes, all contribute to the region's market expansion. Small businesses may now more easily receive credit services because to the regions growing number of commercial microfinance banks, which is boosting the sector. The market for microloans has grown as a result of the rising financial demands of micro entrepreneurs as well as improvements in the quality of financial services.
The third-largest market share is held by Europe. End-users can benefit from the microlending approach in a number of ways, including by encouraging self-employment, preventing social and financial exclusion, and supporting micro businesses. The escalating financial problems affecting various banking sectors and the rise in profit inequality in various European nations are driving the expansion of the microlending business in this area. The market is expanding as a result of rising demand for micro businesses in France, Germany, and the United Kingdom.
Micro Lending Market Report Scope:
| Report Coverage | Details |
| Market Revenue in 2023 | USD 204.1 Billion |
| Projected Forecast Revenue in 2032 | USD 379.44 Billion |
| Growth Rate from 2022 to 2030 | CAGR of 9.26% |
| Largest Market | Asia Pacific |
| Base Year | 2022 |
| Forecast Period | 2022 To 2030 |
| Regions Covered | North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa |
Market Dynamics:
Drivers:
By providing them with financial assistance, microlending or microfinance is altering the way of life for many individuals in poor countries in Asia-Pacifc and LAMEA. The expansion of the microlending business is also fueled by an increase in government programmes for microlending in many nations. Additionally, a surge in microlenders aids numerous emerging nations in eliminating poverty and raising the standard of living for the underprivileged. For instance, a research study carried out in Bangladesh found that microfinance was responsible for a 40% decrease in poverty across the nation. Additionally, many farmers in African nations are using microlending to purchase crops, which are fueling the expansion of the microlending sector. Additionally, rural residents are borrowing money from microlenders to start their own businesses and improve their standard of life, which stimulates the market's expansion.
The microlending business is growing as a result of the increased adoption of digital technology by the micro financial sector, which opens up new channels for consumers and increases their income opportunities. Additionally, the industry is anticipated to benefit greatly from improved connectivity in developing countries and technical advancements in several African and Middle Eastern nations. Additionally, emerging countries' extensive use of advanced technology in the microfinance industry, including mobile banking, ATMs, point-of-sale systems, and others, is creating future market opportunities. For instance, the Aadhar Payment Bridge System is used by the Indian government to offer microloans and other services to citizens all around the nation. In addition, the market's leading players are bringing new technologies to increase their market shares and give consumers a better experience, which is anticipated to create opportunities for the market in the future.
A thriving small firm that relies heavily on the efforts of the owner and his or her family might benefit from microlending. Where such micro businesses currently exist and have the potential to grow, funding is provided. As a result, using microlending must be completely voluntary. At any point, release from microlending programmes must be assured. The long-term jobless should not be actively encouraged to utilise microlending since self-employment and the wise use of credit lay more demands on an individual than does reliance on the job market.
Restraints:
Opportunities:
The microfinance industry's rapid use of digital technology to open up new channels for consumers and boost income
The widespread use of cutting-edge technology in the microfinance business, including mobile banking, ATMs, point-of-sale systems, and others, in developing countries
Challenges:
Borrowers who are above the poverty line benefit more from microloans than those who are below it. This is due to the fact that clients with higher income levels are more ready to take risks, such investing in new technology, which will almost certainly result in higher income flows. Contrarily, low-income borrowers frequently take out cautious loans to cover their basic needs and seldom make investments in new technology, fixed assets, or the employment of personnel.
According to Vijay Mahajan, the CEO of Basix, an Indian rural finance organisation, microloans can occasionally even lower the cash flow to the lowest of the poor. Microcredit "seems to cause more damage than benefit to the poorest," he says.
Report highlights:
Recent developments
In Sep 2022, British International Investment, along with current investors Incofin Investment Management, Nordic Microfinance Initiative (NMI), and Dutch impact investor Triple Jump will be investing about $25 million, or 196 crore, in Ahmedabad-based Light Microfinance, which has made progress over the past few years, in one of the largest microfinance investments in recent memory.
Major Key Players:
Market Segmentation:
By Provider
By End users
By Geography
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