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Microfinance in Africa, in its myriad of shapes and forms, continues to meet the needs of an increasing number of un-banked farmers, traders and micro-entrepreneurs. Across the region microfinance institutions greatly value both credit and deposit services provided by microfinance institutions. Overall, savings form an integral part of the local microfinance industry's financial services, and while growth has been slow with regard to credit outreach, deposit mobilization has expanded significantly over the past years.

African microfinance institutions are continuing their path towards serving some of the most vulnerable populations in the world. The industry has grown due to improved access to equity, commercial funds and deposits from clients. Increasing competition will push institutions to set deposit and lending rates at lower levels, still allowing for profit-making, while technology innovations will help to expand product diversity and drive the industry to increased levels of efficiency and productivity.

MIX research shows that African microfinance institutions which engage in full intermediation grow faster and fare better in outreach and financial terms than those specializing in lending only, by keeping costs low and expanding their resource base through deposit collection. Credit-only institutions suffer most from the prohibitive operating environments and from limited access to commercial funding. Overall, the African microfinance industry faces significant challenges in pursuing its activities, including high operating costs, unfavorable macroeconomic factors, increasing competition and little access to commercial funds.

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