This is the first ever study of the microfinance sector in Russia in terms of demand and supply.
Restricted access of small enterprises to sources of external finance accounts for much of the decrease in small business activity in Russia. That access was narrowed even further in the wake of the recent financial crisis, jeopardizing two major categories of small entrepreneurship: individual entrepreneurs and microenterprises. As experience in other countries shows, microfinance is an effective tool for securing needed resources for these groups.
Despite the fact that the Russian government recognizes that promotion of microfinance is a prerequisite for small business creation, operation, and development, most of microfinance programs in Russia are funded mainly by non-governmental organizations (NGOs)—primarily credit unions and consumer cooperatives—and MFIs established under programs sponsored by the international community.
The survey assesses the size and structure of demand for microfinance in Russia; how many potential customers of MFIs currently exist in Russia and who are they? The number of microenterprises and individual entrepreneurs is estimated to be 610 thousand and 2.5 million respectively. According to the survey, about 70 percent of the combined group considers the microfinance shortage to be their chief business constraint. Thus, at least 2.2 million Russian entrepreneurs have a demand for microloans of $50 to $5,000, thereby representing the client base of MFIs. If we add to that group the category of unemployed with entrepreneurial potential (at least 830 thousand people), the total number of potential MFI clients exceeds 3 million people.
The numbers highlight the significant deficiency of microfinance services in the Russian financial market and
demonstrate the vital role of microfinance for Russian small entrepreneurship.