Micro Lending Market size was over USD 150.1 billion in 2023 and is predicted to exceed USD 581.4 billion by the end of 2036, growing at over 10.1% CAGR during the forecast period i.e., between 2024-2036. In 2024, the industry size of micro lending is estimated at USD 183.3 billion.
Over the past two decades, the global microfinance industry has expanded quickly, taking the international financial sector by storm. There is a growing adoption of micro financing as many self-employed individuals and microenterprises in developing regions seek financial services that include microloans, microcredit, microinsurance, and money transfers. For instance, BRAC is one of the founding partners of the inaugural 60 Decibels Microfinance Index. The index report of BRAC Liberia Microfinance Company Ltd (BLMCL) published in 2022 showed the comparative social performance of 72 microfinance institutions (MFIs), based exclusively on the voices of nearly 18,000 clients. Collectively, these MFIs are serving more than 25 million clients in 41 countries, which is equivalent to more than 15% of all microfinance clients globally. Additionally, technological advancements, such as mobile banking and digital lending platforms, have also played a significant role by making financial services more accessible and efficient.
Growth Drivers
Challenges
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Base Year |
2023 |
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Forecast Year |
2024-2036 |
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CAGR |
10.1% |
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Base Year Market Size (2023) |
USD 150.1 billion |
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Forecast Year Market Size (2036) |
USD 581.4 billion |
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Regional Scope |
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Provider (Banks, Micro Finance Institutes (MFIs), NBFCs (Non-banking Financial Institutions))
Banks segment is likely to dominate over 55.1% micro lending market share by 2036, on account of the expansion in banking services, along with increasing collaborations of banks with other micro lending service providers. For instance, in 2022, the Asian Development Bank (ADB) and HSBC India (HSBC) agreed to develop a USD 100 million partial guarantee program to serve over 400,000 micro-borrowers and largely women-owned microenterprises across India. Moreover, expanded banks can utilize their extensive data and sophisticated risk management systems to better assess and mitigate the risks associated with micro lending. This improves the overall sustainability and reliability of micro lending programs.
In addition, the global demand for peer-to-peer lending a type of crowdsourcing where loans are raised and repaid with interest is anticipated to fuel the microfinance institutes (MFIs) segment's expansion. P2P lending is seeing a rise in demand from small and medium-sized enterprises as well as in a variety of industries, including real estate and student loans.
End-users (Solo Entrepreneurs & Individuals, Micro, Small and Medium Enterprises)
The micro, small, and medium enterprises segment in micro lending market is projected to generate significant revenue in the coming years. This segment expansion is dominated by the growing number of SMEs that have extremely restricted access to credit facilities, deposits, and other forms of financial assistance. Particularly, in 2021, there were projected to be more than 330 million SMEs globally. Small and medium-sized enterprises (SMEs) are gaining more attention as a viable alternative to microcredit investment in the fight against poverty. These firms frequently require easier access to capital, hence micro lending plays a significant part in their funding to help these businesses get established, grow, and flourish. In developing and transitional nations, microfinance is seen as an essential instrument for expanding small businesses since it promotes the creation of new business models and assists in building economic infrastructure. For instance, small sums of money, usually between USD 4,000 and USD 48,000, are lent by microloan lenders to business owners who are unable to obtain operating capital from credit cards or other traditional financial institutions.
However, the share for solo entrepreneurs & individuals will also experience considerable development during the forecast period. Micro lending might assist solopreneurs with profitable opportunities and aid in launching new projects.
Our in-depth analysis of the global market includes the following segments:
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Provider |
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End-users |
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APAC Market Statistics
Asia Pacific micro lending market is set to hold revenue share of over 47.1% by the end of 2036. The region has a substantial market for micro lending due to its large population, significant number of small businesses, and varying economic conditions. According to United Nations Population Fund, Asia Pacific is home to 60% of the world’s population, and includes the world’s most populous countries China and India.
In India various government initiatives and schemes, such as the Pradhan Mantri MUDRA Yojana (PMMY) and the Ajeevika Microfinance Yojana (AMY), support financial framework for expanding micro lending activities. For instance, in 2023, according to the Ministry of Finance, loans amounting to USD 3.2 billion have been disbursed under the Pradhan Mantri MUDRA Yojana (PMMY) till date, and over 470 million small and new entrepreneurs have benefitted from the scheme.
Moreover, there is significant potential for micro lending focused on rural and agricultural sectors, providing loans for farming activities and rural development projects in the country.
The micro lending market in China is regulated by multiple government bodies, including the China Banking and Insurance Regulatory Commission (CBIRC) and the People’s Bank of China (PBOC). Regulations have been evolving to address risks and ensure financial stability.
Latin America Market Analysis
Latin America will register tremendous growth for the micro lending market owing to the increasing number of fintech companies characterized by a notable rise in alternative finance, banking, and digital payments. For instance, in 2022, more than 1,200 fintech businesses were registered in Latin America, a remarkable 46% increase from the year before. Financial technology solutions have proliferated in the region, which is expected to help in several ways to meet the needs of the rural market, including financial inclusion and easy access to loans. Financial technology, or FinTech, has revolutionized the conventional lending process, making loans more accessible and giving micro lending clients better access to capital.
Brazil has a significant need for micro loans due to its large number of small businesses, low-income individuals, and underserved population. Many local banks offer micro lending products, often through specialized departments or partnerships with MFIs. Banks like Banco do Brasil and Banco Itaú Unibanco S.A have micro lending programs targeting small businesses and low income borrowers.
In addition to encouraging economic growth, self-employment, and financial empowerment, the microfinance industry in Mexico has seen tremendous transformation and evolution. It has also helped women take on more decision-making roles and has significantly increased women's ability to escape poverty and maintain their way of life.
Numerous important companies in the micro lending market are starting several tactical projects to increase their market share and strengthen their positions in the industry. It is predicted that the top five companies will control the majority of the market share by taking calculated risks, expanding, forming agreements, and participating in joint ventures.
Author Credits: Abhishek Verma
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