Archive for the ‘Archives’ Category
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 December 30, 2009 - by James
Microfinance investments make 2009 a watershed year…
Dec. 30, 2009: The year 2009 may go down as the watershed year for the Indian microfinance industry. Marked by strong growth and pioneering deals the industry is riding high, growing at a rapid pace of 100%-200% year-on-year. Attracting attention from mainstream investors, the sector accounted for 40 percent of all Private Equity deals in the past 18 months. There were 11 PE deals worth $178 million during the financial year 2009, compared to three deals worth $52 million in 2008, according to Venture Intelligence.
A plethora of reasons like huge untapped rural market, lower delinquency rates, high resilience, Union Budget emphasis on rural development and a volatile world economy have made investors flock to this segment. MFIs have reported growth in outstanding portfolio at a CAGR (Cumulative Annual Growth Rate) of 80 per cent and ROE (Return on Equity) of 30 per cent between 2003 and 2008. According to the 2008 microfinance industry report by Intellecap, the current Indian MFI market is around $1.5 billion with a penetration of around 10 per cent while the overall market size is estimated to be as high as $50 billion. Even the MFIs seem to be well prepared to exploit the new opportunities and take their business through uncharted ways like experimenting with various financial instruments like non-convertible debentures (NCDs), commercial papers, IPOs mutual funds etc.
Posted on December 22, 2009 - by James
India: SKS Microfinance ties up with State Bank of India…
SKS Microfinance has tied up with State Bank of India and two of its group banks for integration of 600 of its branch accounts with them.
“This is an innovation on the liability side we are offering to our customers. It will facilitate last mile cash-dealing,” Mr Dilli Raj, Chief Financial Officer, SKS Microfinance, told Business Line here.
As a part of the agreement, the Hyderabad-based microfinance institution would integrate its accounts in 390 branches with State Bank of India, 150 with State Bank of Hyderabad and 60 with State Bank of Mysore.
SKS had earlier tied up with Axis Bank, HDFC Bank (NYSE:HDB) and ICICI Bank (NYSE:IBN) for a similar facility.
“In addition, State Bank of India is also giving us Rs 100 crore funds as a mix of term loan and cash credit. This is significant because it shows the willingness of public sector banks to be associated with MFIs which was not happening earlier,” he said.
SKS, which has an outstanding portfolio of Rs 3,628 crore as on November 30, 2009, now had 36 per cent of its credit sources coming from 17 public sector banks.
CAPITAL
On the need for further capital, Mr Raj said evaluation of all possible options in debt and equity (including IPO) was being examined.
SKS has been aggressive on securitization of its agri/weaker section portfolio with banks. “Before March 31, 2010, we will be doing Rs 1200 crore through this route as the funds would be cheaper by 200 to 250 basis points than the term loans (at about 8.25 per cent), he said.
So far, it had tied up with ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra, Punjab National Bank and Yes Bank (OOTC:YESBF) in this regard.
The benefit in the cost of funds would eventually be passed on to the 5.7 million customers SKS currently had, the CFO said.
“In fact, we have reduced our lending rates in Orissa, Karnataka and Andhra from 15 per cent (flat) to 12.5 per cent recently,” Mr Raj said.
SKS, which had ‘pioneered’ securitization of portfolio in MFI sector, had also tied up with Religare for commercial papers worth Rs 25 crore.
“This is the first standalone debt paper from a Mutual Fund to MFI,” Mr Raj said.
SKS, which has over 19,000 employees on its rolls, is now currently adding 1000 new employees every month to its field force for expanding its reach, he added.
Source: http://www.istockanalyst.com/article/viewiStockNews/articleid/3730342
Posted on December 22, 2009 - by James
India: Microfinance lenders to stop multiple loans…
Among key decisions taken at a meeting in Mumbai on 7 December were not to offer above Rs50,000 to any single borrower and not more than three lenders lending money to one individual.
Currently, the size of a micro loan is capped at Rs25,000, but borrowers often take three or four times this from multiple lenders, putting pressure on themselves. While delinquency is low in large microfinance firms, there is apprehension they may be hit by loan losses.
Between 2005 and 2009, the microfinance industry grew 13-fold, from Rs900 crore to Rs11,700 crore. In 2009 alone, some 230 microfinance institutions added 8.5 million borrowers, taking the total to 22.6 million. Loan assets rose 97%, from Rs5,950 crore to Rs11,734 crore, amid the credit crunch.
Microfinance firms lend to subprime borrowers and these tiny loans are not backed by any collateral. Once a borrower’s overall debt to such institutions is capped, the risk of default will come down.
Posted on December 14, 2009 - by James
Pakistan State Bank: Microfinance role ‘vital’…
KARACHI – Governor, State Bank of Pakistan, Salim Raza on Saturday said that microfinance banks/institutions have a key role to play in creating economic opportunities for the poorest sections of the society by broadening their outreach.
Delivering a keynote address on “ Economic Empowerment for the Base of the Pyramid “ at the Acumen Community Gathering here, Mr. Raza said that the regulatory role develops infrastructure of service delivery, cross fertilizes from researching and encouraging use of successful global practices , and guides the provision of rules and oversight that would enable Microfinance Institutions (MFIs) build sources of public funding and deposits, said SBP release.
Posted on December 11, 2009 - by James
Nigerian MFBs Face Crisis Due to Increased Yuletide Withdrawals
Nigerian microfinance banks (MFBs) are facing difficult times as they manage their liquidity positions and also endeavor to cope with the increased yuletide withdrawals by their customers. The season of Christmas is a period of increased expenditure for many households. The case of individuals who have held their savings at some of the microfinance banks mired in crisis adds to the worries that some Nigerians may have in this forthcoming yuletide season.
One MFB staff member, who pleaded anonymity, disclosed that withdrawal has intensified since the Sala celebration, saying “Customers are withdrawing their money and the banks closed their door against us. It is a big challenge. We do not know what to do.”
But Uche Ubani, managing director, Peniel Microfinance Bank Lagos, believes that banking is a continuous process: as some customers are withdrawing their money, others are depositing. He explains that, “As long as the process continues, I do not see any challenge”. He sees the development as being more challenging to those who are already having problems.
Posted on December 9, 2009 - by James
Nigeria: ‘Failed banks’ staff have infiltrated microfinance institutions’
The inability of microfinance banks in the country to meet their obligations to customers has been blamed on the infiltration of their management and boards by some former staff of most of the failed banks that have closed business.
The acting Managing Director, the National Deposit Insurance Corporation (NDIC), Umaru Ibrahim, said in Abuja that most managers of the 930 licensed microfinance banks currently operating across the country pay scant attention to issues of corporate governance, particularly strict adherence to stipulated guidelines and regulations on risk management.
Posted on December 8, 2009 - by James
The Poor In Debt: Oikocredit’s Concern In Microfinance…
MANILA, Dec. 8 /PRNewswire-Asia/ — The threat of poor entrepreneurs taking on too much loan debt is a growing reality, and a genuine threat to the rapidly expanding microfinance sector. At Oikocredit’s annual staff and board meetings, regional managers who operate in almost 70 different countries, raised concerns over the rate of over-indebtedness in some countries. Those working in the field have witnessed that cases of over-indebtedness are becoming more common. Oikocredit board and staff agreed urgent action is needed and defined an action plan.
Microfinance has grown at a tremendous pace. This development has been applauded because microfinance allows poor people and small entrepreneurs to receive financial services they could otherwise not access. While some regions continue to struggle with inactive MFIs and an unmet demand for financing, others are experiencing the reverse.
Microfinance institutions (MFIs) must expand to become financially sustainable. As such, they aim for scale and strive to reach out to more and more clients. In some cases, especially with the entrance of profit driven actors, this leads to an increase in competition and results in institutions reaching out to the same clients in the same (often urban) areas. Oikocredit Regional Directors reported stories of clients with loans by more than two, three or even five different microfinance institutions. The over-indebtedness of clients, and sometimes abusive collection practices, can often be a consequence of this multiple lending.
Posted on December 8, 2009 - by James
Microfinance without the finance: self-liquidating currency…
Dec. 08, 2009 : In my earlier article (Microfinance FocusAugust 2009 – Download ) I wrote about the potential of using community currencies, or scrip, as a basis of a local microfinance project. As I pointed out there, one problem with using a community currency is the redemption of the scrip: if everyone changes their community currency back into legal tender as soon as they receive it, there will be no benefit from using scrip. On the other hand, setting limits on the redemption of the scrip reduces its attractiveness. In addition, the ability to redeem the scrip requires that there is some monetary asset to back it (in the form of legal tender bank deposits or even cash). This article examines an alternative mechanism.
A form of community currency that was used in certain American towns during the Great Depression provided a novel method of providing credit within a community – a form known variously as stamp money (or scrip); self-liquidating stamp money; or as Gesellian money, after Silvio Gesell, who appears to have originated the idea.
Among the abundance of substitutes for money that appeared in the United States during the Great Depression, stamp scrip is arguably the most exotic. Unlike bank-issued Clearing House certificates, it did not rely on the backing of bank deposits for its value. Nor, unlike tax anticipation bonds, did it rely on the tax-raising powers of local governments. Instead stamp scrip is a form of community-generated credit, whereby a payment levied on the use of the scrip builds up a fund to redeem the scrip. In practice, stamp scrip took the form of certificates to which a special stamp had to be affixed each time the scrip was used (transactions-based scrip, championed by Charles Zylstra), or every week or month (time-based scrip, as advocated for by Silvio Gesell[i] and later by Irving Fisher[ii]). Some issuers of stamp scrip opted for a hybrid scheme, whereby the stamp needed to be affixed every time the certificate changed hands, or on each stamping date if it had not already been used.
Posted on December 8, 2009 - by James
Nigeria: Central Bank Set to Reform Microfinance Banks, Guidelines…
Against the backdrop of incessant complaints against the operations and operators of the microfinance banks (MFBs) in the country, the Central Bank of Nigeria (CBN) is set to review its policy guidelines, with a view to making it alive to its responsibilities.
According to the Deputy Director, Other Financial Institutions Department (OFID) of the apex bank, Mrs Adetutu Ogunnaike, who stood in for Mr Tunde Lemo, the deputy governor in charge of operations, during a sensitization workshop on the Micro-credit fund for managing directors of Deposit Money Banks in Lagos, the policy review has become imperative, going by the perceived weaknesses in the operations of the MFBs.
She explained that CBN has decided to take another look at their policy framework as a result of the incessant complaints and petitions from the public, stating that the apex bank is specifically targeting the microfinance strategy for review.
The current microfinance strategy focuses on licensing, regulation and the establishment of microfinance banks, promotion and establishment of institutions that support the development and growth of microfinance services provider, mobilization of domestic savings and promotion of banking culture among low income groups, strengthening of the capital base of microfinance institutions as well as the skills of regulators, operators and beneficiaries of microfinance initiatives.
Posted on December 3, 2009 - by James
The Finance Gap in Tanzania: Growing…
Despite the numerous microfinance institutions in Tanzania there is still a considerable unmet demand because only a few large providers extend individual loans to micro, small and medium scale enterprises.
The resident representative of the African Development Bank (AfDB) in Tanzania, Dr Sipho Moyo, made this observation in Dar es Salaam yesterday.
He said it was due to that financing gap that the AfDB has stepped in and dished about $660,000 as a grant to the AccesBank Tanzania (ABT). This would cater for its micro, small and medium scale enterprises (MSMSE), he said.
The grant is part of the Fund for African Private Sector Assistance (FAPA), a $1 billion initiative of the government of Japan and AfDB to promote private sector development in Africa.
“The ABT project is in line with the bank group’s strategy for Tanzania which focuses on two reinforcing pillars of the National Strategy for Growth and Reduction of Poverty (Mkukuta). These are growth and reduction of income poverty as well as improvement of social well-being, Dr Moyo said.
Posted on December 3, 2009 - by James
Micronesia: How to raise funds for microfinance? Raffle a pig…
POHNPEI, MICRONESIA – Banks are facing tough times all over, including on the West Pacific island of Pohnpei in the Federated States of Micronesia. With credit getting tighter and Pohnpeians learning firsthand the harsh results of defaulting on loan repayments, communities here are combining resources at raffle parties to raise interest-free capital for families in need.
“This is a new trend that’s really become popular in just the last year,” says Adelino Lorens, Pohnpei chief of agriculture with the office of economic affairs. “Now many people are not approaching the banks applying for small loans.”
Island-wide, fundraisers have become a focal point of social life, as families gather to buy raffle tickets on goods donated by friends and family. With the prizes ranging from a few yams to large pigs worth several thousand dollars, some events yield significant sums in one night.
“Fundraisers are easier than going to banks nowadays,” says Wetsin Beleb, while emceeing a recent fundraiser in Madolenihmw, Pohnpei’s largest municipality.
Posted on December 3, 2009 - by James
Microsoft: software for microfinance institutions…
By DWIGHT SARGA
Software giant Microsoft Corp. (Microsoft) is giving $1 million worth of software grants to non-government microfinance institutions (MFI) to help them modernize and expand their financial services to more poor households in the Philippines.
Microsoft program manager of community affairs Lindsay Bealko said that every eligible NGO-MFO could avail of the software grant by submitting an application to Microsoft.
With the grant, MFIs would be able to use computer technology and software in doing business with their customers in an easier, faster and cheaper way. This would also make MFIs expand their services in a wider reach given through the internet.
Bealko said that this would aid MFIs to have access to technology and other resources, by providing them the “know-how” on how to use technology more effectively in their business.
Posted on December 3, 2009 - by James
Grameen Foundation and Microsoft Announce Initiative to Expand Value and Use of Technology for Microfinance
Inaugural Microfinance Leadership Summit focuses on helping microfinance institutions reach more of the world’s poor through technology
Grameen Foundation and Microsoft Corp. today announced a joint initiative to help accelerate microfinance’s impact on poverty alleviation through the strategic use of technology. This initiative will kick-off today at the inaugural Microfinance Leadership Summit in Manila, the Philippines, where Microsoft will also donate software worth up to US$1 million to eligible microfinance institutions (MFIs) attending the event. Titled, “Fueling Growth: Strategic Technology for Microfinance,” the summit is cosponsored by Grameen Foundation and Microsoft, in partnership with the Microfinance Council of the Philippines.
The summit will bring together executive management teams from 50 leading Filipino MFIs to provide them with a new framework for strategically adopting and using technology to expand their financial services to more poor households. It is the first in a series of education and mentorship forums for microfinance that Microsoft and Grameen Foundation plan to conduct in other countries in the coming year. The Philippines was chosen as the launch market because of its demonstrated leadership in the microfinance industry and advanced technology infrastructure, as well as the availability of resources on the ground to assist MFIs in adopting technology.
During the summit, attendees will receive practical advice on how to effectively use technology to enhance their work and prove the business and social impact of their technology investments. Equally important, it will provide MFIs with the opportunity to forge new relationships with industry partners, service providers and funders they need to maximize their success. With this summit as the first step, Microsoft and Grameen Foundation will work together to deliver new learning models and solutions to ensure technology enables microfinance to reach greater numbers of the world’s poor.
“Every nonprofit is faced with the challenge of doing more with less. Technology can help, but NGOs must advance their technological capabilities, and technology providers must ensure that today’s innovations are affordable and accessible,” commented Akhtar Badshah, Senior Director, Global Community Affairs, Microsoft. “Microsoft meets this challenge in two key ways. First by donating software to more than 30,000 nonprofits each year, helping them establish stable and secure IT platforms. Second by working very closely with key partners that can provide domain or technical expertise to the nonprofit community to make that technology as effective as possible. By working closely with Grameen Foundation, we can bring the benefits of technology to microfinance institutions around the world, translating into greater support for people in need. Partnership is at the center of bringing the benefits of technology to our society.”
“Technology is just one of the many challenges facing microfinance executives today. Microsoft and Grameen Foundation, as catalysts for change, can help microfinance executives make the right business and technology decisions to achieve sustainability and long-term growth,” said George Conard, executive director of Grameen Foundation’s Technology for Microfinance initiative. “By hosting this summit in one of the most vibrant microfinance markets, we will be able to demonstrate how microfinance institutions can cost-effectively integrate technology into their business strategy in a way that greatly enhances their ability to serve more of the world’s poor.”
The foundation’s Seattle-based Technology Center has been a leader in spearheading innovative technology solutions for the microfinance industry. As part of its Technology for Microfinance initiative, it has developed Mifos (www.mifos.org), an award-winning open source information management platform for microfinance.
For more information please visithttp://www.microfinanceleadershipsummit.org.
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people access financial services and technology solutions by providing financing, technology support and management strategies to the local organizations that serve them. It also spearheads technology initiatives that create new microbusiness opportunities for the poor, provide telecommunications access for the world’s rural poor, and improve their access to health and agriculture information and other services. Founded in 1997, Grameen Foundation has offices in Washington, D.C., Seattle, Washington, Hong Kong, Ghana and the Philippines. Dr. Muhammad Yunus, the founder of Grameen Bank and the 2006 Nobel Peace Prize Laureate, is a founding member of its board of directors, and now serves as director emeritus. For more information, please visit www.grameenfoundation.org.
Posted on December 2, 2009 - by James
Uganda: Banks Told to Develop Products for the Poor…
Kampala — Banks should develop new products that would enable the poor people to access funds that are risk free. “Specially designed schemes such as crop insurance and the group based bank lending supported by low cost central bank refinance line can mitigate the risks for the poor people,” says Dr Atiur Rahman, the governor of the central bank of Bangladesh.
He said like in his country, banks don’t want to lend to poor people due to lack of collateral security.
Dr Rahman, a researcher, banker and leader in pro-poor, was on November 20, delivering a paper: “Financial Inclusion as a tool for combating poverty” during the 17th Joseph Mubiru Memorial Lecture held at Speke Resort Munyonyo, South of Kampala.
The Joseph Mubiru Memorial Lecture was instituted by Bank of Uganda in 1988 to honour its first governor, the late Joseph Mary Mubiru who led the bank from 1966 to 1971.
“Banks should develop many products that will result into expanding and deepening financial inclusion, with appropriate adaptations suitable to local circumstances,” he said.
Posted on December 2, 2009 - by James
Nicaragua’s Banex microfinance bank chairman Gabriel Solórzano quits…
Microfinance Focus, Dec. 2, 2009: Gabriel Solorzano, chairman of Banex, a leading Nicaraguan microfinance bank formerly known as Findesa, has resigned paving the way for a new chairman to be selected by the board.
The announcement came close on the heels of Banex Shareholders Meeting held on Tuesday that had approved a capitalization of $10 million to strengthen the bank which has recently come under pressure, thus affecting the microfinance industry in Nicaragua.
The funds have been raised with the support of all shareholders, international banks and microfinance funds, said a note sent to Microfinance Focus. Investors In Banex, which began its formal banking operations since October 15, 2009, include Latin American Challenge Investment Fund (LA-CIF), MIF Formin and BlueOrchard.
Solorzano has served the bank as founding member since it was created as an NGO in 1996, as Chairman of the Board of FINDESA since 2002 and of Banco del Exito since 2008. Banex has grown from a single small office in Managua to over 30 branches nationwide and one in Honduras, consolidating as the leader and largest MFI in Nicaragua, said the note.
“I want to thank Microfinance Focus, all my colleagues, board members, shareholders and especially the Banex team for their unconditional effort and support while facing very significant challenges, and always coming out ahead of the pack with excellence and social sensitivity,” said Solorzano in his note.
Posted on December 1, 2009 - by boris
Microfinance sector development concept introduced in Belarus…
The concept of microfinance sector development in the Republic of Belarus for 2010-2015 has been drafted, BelTA learnt from Yury Malafei, the manager of the National Bank of Belarus and the UNDP joint project “Assisting the development of the microfinance sector in the Republic of Belarus”.
The Council on Microfinance Sector Development in Belarus, which has been set up within the framework of the joint project of the National Bank of Belarus and the UNDP, has approved the final version of the microfinance sector development concept. “We have considered and approved the final version of the concept. We have recommended the National Bank of Belarus to send the document for the government’s consideration in the nearest future”, said Yury Malafei.
The member of the Supervisory Board of the Russian Microfinance Center, one of the chief developers of the concept of microfinance development in Belarus, Marat Ovchiyan, said that the document generalizes the situation in this sector in Belarus.
Source: http://www.belta.by/en/news/econom?id=454699
Posted on December 1, 2009 - by boris
European Investment Bank to finance projects under China Climate Change Framework Loan…
Drawing from the China Climate Change Framework Loan (CCCFL), signed with China in November 2007, the European Investment Bank (EIB) is providing a total of EUR 134 million in four operations that will contribute to the mitigation of climate change.
EIB estimates that up to 830,000 tons of CO2 emissions will be avoided every year when the four projects will be fully operational.
The projects are as follows: The transformation of the district heat system of the city of Jinan (capital of Shandong Province), which will move from steam supply to hot water supply, improving the whole automation of the system. The project will increase energy efficiency and will lead to a better use of resources, reducing both greenhouse gas emissions and water consumption.
Source: http://www.finchannel.com/news_flash/Banks/52915_EUR_134_million_from_EIB_to_finance_four_projects_under_China_Climate_Change_Framework_Loan/
Posted on December 1, 2009 - by boris
European Bank for Reconstruction and Development (EBRD) boosts financing for businesses in Poland…
The EBRD is increasing the availability of financing in Poland with a €100 million medium term credit line to Bank Millennium for on lending to small and medium enterprises (SMEs).
Although Poland has been less affected by the financial crisis compared with other countries in the region, access to finance by enterprises, in particular SMEs, has been severely reduced. “Responding to the new market conditions, Bank Millennium, majority-owned by Banco Comercial Português, aims to increase its business in the SME segment in Poland,” EBRD says.
The EBRD funds will support Bank Millennium’s strategy to rebalance its loan portfolio by strengthening the corporate lending side of its business. In addition, the EBRD loan will support Bank Millennium’s efforts to raise medium term funding.
Source: http://www.finchannel.com/news_flash/Banks/52929_EBRD_boosts_financing_for_businesses_in_Poland_/
Posted on December 1, 2009 - by boris
International Financial Institutions Help improve Corporate Governance Standards in Eurasia…
IFC, a member of the World Bank Group, the IFC Global Corporate Forum, and the European Bank for Reconstruction and Development are helping develop corporate governance codes in Eurasian countries, enabling local banks and companies to improve transparency, accountability and enhance their competitiveness.
A two-day workshop on Corporate Governance in Tbilisi this week that will be attended by over 40 participants from 13 countries, will address issues including qualification of board members, disclosure of beneficial ownership, internal and external audits, and transparency disclosure.
The workshop will also provide guidance on implementing corporate governance codes to help companies and banks improve their corporate governance practices and boost their confidence, competitiveness, and investor appeal.
Source: http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=EAC9B87980FBFF0C8525767E00552922
The MiFi Report
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