Georgia’s Microfinance Sector – Growth Trends and Key Financial Indicators

In 2024, Georgia’s microfinance organizations (MFIs) demonstrated significant financial growth. The sector’s net profit reached 133.6 million GEL, marking an 8.3 million GEL increase compared to 2023. This indicates that the microfinance market in Georgia remains active and continues to play a crucial economic role.

Financial Performance and Sector Stability

According to the National Bank of Georgia’s consolidated financial report:

• Total assets of MFIs amounted to 2.27 billion GEL.
• Total capital stood at 778.6 million GEL.

This growth in financial indicators highlights the sector’s stability and increasing capital base, allowing MFIs to expand their lending services further.

Revenue Structure and Loan Distribution

The primary source of income for the microfinance sector remains loans issued to individuals.

• In 2024, interest income totaled 463.2 million GEL, of which:
  • 408.9 million GEL came from loans issued to individuals.
  • Only 4 million GEL came from loans to legal entities (businesses).

This structure confirms that the microfinance sector primarily targets individual borrowers, rather than businesses.

Non-Interest Income Contribution

Beyond interest revenues, MFIs generated 80.2 million GEL in non-interest income in 2024. This includes:

• Commission fees
• Other financial services
• Additional income sources

These non-interest revenues enhance the financial resilience of microfinance institutions, allowing them to maintain a more flexible and sustainable structure.

Market Competition and Regulatory Challenges

• As of 2024, 31 microfinance organizations were operating in Georgia.
• This number indicates a highly competitive yet stable market.
• However, stricter regulations are affecting future strategies for these institutions.

The Role of Microfinance in Georgia’s Economy

The steady growth of the microfinance sector reflects two key factors:

1. The resilience of Georgia’s economy.
2. The continued demand for accessible financial services, particularly among low- and middle-income consumers.

However, as the sector expands, so does the need for improved financial literacy among borrowers. Increased consumer education on loan management and financial decision-making will be crucial in ensuring sustainable financial growth for both individuals and microfinance institutions.