While volume remains relatively low in Africa with almost 11% of the microfinance portfolio of all microfinance investment vehicles (MIVs), investment in Africa has grown by 211% over the past five years, according to the latest survey by Symbiotics.

The 9th Annual Microfinance Investment Vehicles survey revealed that Africa is the fastest growing continent followed by Asia (+92% since 2010).

Africa has also recorded the fastest growth measured on an annual basis (21%).

The Survey, which aims to provide comprehensive market trends and peer group analysis on microfinance off-shore investments, is based on December 2014 financial and social performance indicators reported by a large number of MIVs.

Symbiotics has identified 110 MIVs in the world, with 84 of them being included in the latest survey, representing 96% of the total market share, which is estimated at $10.4bn AUM.

Marina Parashkevova Holmegaard, Market Research Analyst at Symbiotics, said that there are seven regional MIVs that are focused exclusively on Africa, and many other global focused funds that have Africa allocations.

In 2014 there were two new funds launched, both with a specific country focus – one on Rwanda and another one on the Democratic Republic Congo: the Microfinance Challenge Fund Rwanda, managed by the Frankfurt School of Finance & Management, and the FPM SA (Fonds pour l’inclusion financière en République Démocratique Congo), managed by Incofin.

Holmegaard said that the majority of the regional funds invest in debt instruments and there are also a number of hybrid and equity funds.

Vincent Lehner, Head of Financial Institutions at Symbiotics, added that there are also many MIVs that are trying to diversify their strategies by turning to Africa because of its potential and due to the slower growth of the market in other regions.

“We are also seeing that many microfinance institutions (MFIs) have grown and are evolving to Tier-2 and Tier-1 size, which is also opening up more investment opportunities. Additionally, up until now we haven’t noticed any major defaults of institutions in this market as we have in the other regions. This tends to reassure new investors of the quality of the African MFIs despite their often lower returns compared to some other markets,” he said.

In terms of MIV country allocation, Kenya and Nigeria are the countries in which MIVs invested the most last year, whereas Zimbabwe is in the top-10 list of preferred investment destinations for equity funds.

The survey reveals that the African region will slow down next year.

“If you look at the global picture in terms of forecasted growth, MIVs are expected to grow at 6% next year – the lowest forecasted growth in several years.African growth will certainly be lower than in 2014, but we still expect it to be higher than in other regions," said Lehner.

Moreover, markets are evolving very fast with important growth and regulation changes, according to Lehner, who said that as a consequence the monitoring of the market and of each MFIs remains important.

“Issues such as overindebtedness and regulation of risk management as well as opportunities like mobile banking, housing and energy loans are modifying the market very quickly and need to be monitored closely," he said.

Incorporated in 2004 in Geneva, Symbiotics is an investment company specialized in emerging, sustainable and inclusive finance which offers market research, investment advisory and asset management services.

Symbiotics is managing Regmifa, the largest regional debt microfinance investment fund for Sub-Saharan Africa, dedicated to fostering economic development through the support of micro, small and mid-sized enterprises.

Since inception, Symbiotics has invested over $2.4bn in more than 275 microfinance institutions in 50 emerging countries, working with more than 28 investment funds and many institutional investors.