Archive for February, 2010
Posted on February 25, 2010 - by James
BBC News: “Saving holds key to women’s empowerment”
Once upon a time, Sumitra used to roam the streets of the Indian city of Ahmedabad, collecting discarded caps which could be recycled and sold back to manufacturers such as Coca-Cola.
She would spend the whole day sifting through the rubbish collecting the caps in return for a few hundred rupees – about $2. Then in 2006, Sumitra was introduced to a microfinance initiative which provided her with a small loan to start her own business. Four years on, she employs five women, and is the proud owner of six bottle-cap straightening machines which process 50kg of caps a day.
Posted on February 25, 2010 - by James
WSJ: Mexico’s Compartamos Eyes 20% Profit Growth, Deals In 2010
MEXICO CITY (Dow Jones)–Mexican microfinance bank Banco Compartamos SA (COMPART.MX) plans to grow its profit 20% this year and is looking for acquisitions in other Latin American countries, top executives said Tuesday.
“In Mexico, we think the best way to grow is organically, but outside of Mexico we are open to and looking for opportunities to acquire a well-managed institution with a focus similar to our own,” said Fernando Alvarez Toca, Compartamos’ chief executive, in an interview.
Alvarez Toca said the company has an internal team looking for acquisitions.
“Colombia, Peru and Brazil are countries that we think have the best environment for an operation like ours, but we aren’t ruling any [country] out,” he said.
Last week, Mexican consumer finance company Financiera Independencia SAB (FINDEP.MX) closed the acquisition of Financiera Finsol in a deal that boosted its domestic microfinance business and gave it a foothold in Brazil.
Posted on February 21, 2010 - by James
WSJ: Microfinance has The Makings of An Industry…
Opportunities at the bottom of the pyramid are driving the buzz today. One of the most significant areas in this category in India is Microfinance – both in what it has been able to achieve over the past couple of decades, as well as in its unrealized potential. Besides the scale of business that is possible in microfinance, what is even more exciting is the scale of impact that is possible through microfinance, in enabling other businesses in that segment.
One of the most significant aspects of microfinance over the past 5 years has been the talent and capital it has been able to attract. From socially-focused entrepreneurs and grants, the industry has moved to attracting the best consumer finance professionals (with an equally compassionate outlook) and large scale institutional financing. This, coupled with the experience that early Microfinance Institutions provided, has led to emergence of this opportunity at an unprecedented scale.
Posted on February 21, 2010 - by James
Economist Intelligence Unit: Philippines has the “best” MF environment
MANILA, Philippines – The Economist Intelligence Unit (EIU), the business information arm of The Economist Group, has declared the Philippines as the best in the world in terms of its microfinance environment.
The study conducted by the EIU looked at 55 countries and measured each country’s state of regulatory framework, investment climate and institutional development.
“In 2009, the First Annual Global Microfinance Index and Study declared the Philippines as the best in the world in terms of its microfinance regulatory framework,” the study added.
In all, the Philippines ranked third overall worldwide in terms of microfinance business environment.
Posted on February 17, 2010 - by James
Reserve Bank of India Asks MFIs to Improve Governance Standards
HYDERABAD: India’s booming microfinance segment is under the scanner, with the Reserve Bank of India (RBI) issuing a veiled warning that it could be taken off the priority sector lending list of banks if the industry fails to improve its governance standards.
This was spelt out at a meeting in late January between senior RBI officials, representatives of Sa-Dhan—the association of Indian microfinance institutions (MFIs)—and some senior MFI managers from Karnataka, West Bengal and Andhra Pradesh.
The RBI officials reportedly told MFI executives that the central bank was aware of the extent of benami loans being given by MFIs, the practice of writing off bad loans and sloppy corporate governance in some of the entities, all of which could have their impact years down the line.
Posted on February 10, 2010 - by James
Big Crisis, Small Help: Microcredit’s role in crisis relief…
Hollywood couldn’t have done it better. Late in the afternoon on Jan. 22, an armored car packed with $2 million in cash rolled out of J.P. Morgan Chase headquarters in downtown Miami, headed to the Homestead Air Force Base. Thirty-four bricks of bank notes packed into ordinary office supply boxes were loaded onto a C-17 transport plane redeployed from Langley, Va., and dispatched to Haiti, lighting up switchboards at the United Nations, the U.S. State Department, the Federal Reserve, and military rescue bases in Port-au-Prince.
Before dawn the next day, the stash was on a helicopter bound for 34 branches of microlender Fonkoze. While Port-au-Prince’s nine commercial banks were in a shambles and Western Union was paralyzed, half of Fonkoze’s 42 agencies were up and running in four days, and all but two of the rest within a week. The amounts were trifling: no more than a few dollars per client. But for tens of thousands of desperate Haitians, the nimble infusion of cash amid the chaos and ruin literally meant survival. For the legions of aid bureaucrats, charities, civic groups, and emergency organizations struggling to get a grip on the Western hemisphere’s worst natural disaster in memory, Fonkoze’s nationwide client base of 200,000 depositors (50,000 of whom are also borrowers) was a ready-made lifeline. Could microcredit be the new Red Cross?
Posted on February 9, 2010 - by James
CGAP: Haiti’s Path to Recovery…
CGAP: On January 12, 2010, a catastrophic 7.0 magnitude earthquake struck Haiti, causing immense destruction in the densely populated capital of Port-au-Prince and nearby areas. This natural disaster killed over 200,000 people and uprooted the lives of millions, bringing unspeakable personal losses to the population of an already poor country.
Three weeks after the earthquake, some of Haiti’s largest MFIs including Fonkoze, Sogesol and ACME had accounted for staff, but were still searching for many of their clients. MFI staff lost relatives and friends, taking a heavy emotional toll. Large and small microfinance operations faced serious physical destruction. Fonkoze’s headquarters and six of its branches were damaged beyond repair. One hundred and forty-five Fonkoze employees lost their homes, and another 121 have homes in need of repairs. Though the task ahead is daunting, MFIs are committed to staying the course and helping clients rebuild their lives. International microfinance organizations have begun fundraising campaigns to support their Haitian partners.
Posted on February 2, 2010 - by James
State Of Global Microfinance
TESTIMONY January 27, 2010 DAMIAN VON STAUFFENBERG; CHAIRMAN AND FOUNDER MICRORATE HOUSE FINANCIAL SERVICES
Mr Chairman, Members of the Subcommittee,
MicroRate is the first rating agency dedicated to measuring the performance of microfinance institutions (”MFIs”). MicroRate’s rating teams visit MFIs and “kick their tires”. We have been doing this since 1996 and we have by now rated many hundreds of MFIs. When you see so many of these institutions, certain patterns begin to emerge. I will describe some of these patterns, which are relevant to the question you are considering: what are the appropriate roles of public and private funding of microfinance? Before I started MicroRate, I worked for 25 years in the World Bank and (mostly) in its private sector affiliate, the International Finance Corporation.
Let me just mention that MicroRate is financially independent. We receive no donor money. I therefore feel free – with your permission – to speak openly not just about what works in microfinance, but also – and especially – about what doesn’t work. Yes, microfinance is a development success story. It really is! That is remarkable in itself, and it is all the more remarkable, because development is not noted for its successes. But let me immediately inject an element of caution. Your invitation for this hearing refers to microfinance as “one of the great success stories of US foreign aid”. That, Mr. Chairman, is overstating things. Microfinance is a success, but whether US aid for microfinance has been equally successful is not so obvious. Our experience tells us that there are some notable successes, but there are also a great many failures. I would trace many of those failures back to two factors…
Posted on February 2, 2010 - by James
Kenya: Still reeling from the effects of post-election violence, drought
Microfinance institutions (MFIs) are emerging from one of their lowest business ebb in the last two years due to the 2008 post-election violence, a severe drought and dried fund taps from donors as a result of the global financial crisis.
According to the industry players, the last two years have been the toughest for their businesses.
“The last two years have been the toughest as we experienced a triple blow in the form of the post-election violence in 2008 a severe drought last year and dwindling funds from donors with most of our members the worse affected thereby resulting in the portfolio risk edging up”, said Lydiah Koros the chairperson of the Association of Microfinance Institutions (AMFI), the umbrella body for MFIs.\
The MiFi Report
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