Archive for the ‘Featured’ Category
Posted on March 10, 2010 - by James
India: SKS to file for IPO in 3-4 weeks…
MUMBAI, March 8 (Reuters) – SKS Microfinance, an Indian firm that makes small loans to poor borrowers, plans to file application papers for an IPO in 3-4 weeks, three sources with knowledge of the deal said. The exact size and structure of the fundraising was not yet determined, with one source putting the figure at roughly $200 million, some of which might be raised through a pre-IPO placement. Another source said the company could raise $250-$350 million.
The sources did not wish to be named as they were not authorised to speak with the media. SKS founder Vikram Akula declined to comment. The for-profit company is India’s largest microfinance institution and is backed by private-equity firms such as Sequoia Capital, Kismet Capital and Sandstone Capital.
Posted on March 2, 2010 - by James
WSJ: Microfinance’s Midlife Crisis…
From humble beginnings, microfinance—a system of providing tiny loans and savings accounts to the poor—has grown into a global industry attracting the interest of large multinational banks.
But the commercialization of the industry has sparked a fierce debate. Profit advocates highlight improved access to foreign capital and expertise; traditionalists say microfinance companies are in danger of becoming little better than predatory moneylenders.
There is little doubt that microfinance is now big money. In 2008 it attracted $14.8 billion in foreign capital, up 24% from the previous year. For the first time, the majority of the money came from private investors—including pension schemes and private-equity funds—rather than governments, according to the World Bank. (more…)
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 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.\
Posted on January 25, 2010 - by James
ACCION gets green light in Brazil…
BOSTON, Jan. 25 — ACCION® International, a pioneer and leader in global microfinance, announced today that Brazilian President Luiz Inacio Lula da Silva has approved its application to establish ACCION Microfinancas, a new microfinance organization in the state of Amazonas in Brazil’s remote northern region. It was in Recife, Brazil that ACCION first pioneered the concept of microlending, in 1973.
Joining ACCION as an equity partner in the new venture is the Multilateral Investment Fund (MIF) of the Inter-American Development bank (IDB), which will assume an 18.1 percent stake. Private investor Luiz Felipe D’Avila and other private investors will assume a total of 8.5 percent. ACCION will hold 73.4 percent of the organization.
ACCION Microfinancas will begin operations in Manaus, the largest city in Amazonas, with plans to extend services to cities throughout Brazil’s northern region. The northern region, comprising seven states with a total population of about 14.7 million, is home to an estimated 1.9 million microentrepreneurs, only 8 to 10 percent of whom have received any kind of loan from a bank or microfinance organization.
Posted on January 25, 2010 - by James
Dean of Wharton on Microfinance, M. Yunus…
Each generation of business students has a prototypical hero. Past generations have revered masters of possibility: the self-made millionaire, the architect of the corporate takeover, the Silicon Valley entrepreneur.
Throughout my career, I have come to admire many different kinds of leaders, but perhaps none more than the father of microcredit, Muhammad Yunus. As founder and managing director of Bangladesh’s Grameen Bank, Prof Yunus has been lending to the poor for more than three decades, and in 2006 won the Nobel Peace Prize, which made him a global icon. In my view, no one has done more to expand our sense of what business can and should do to contribute to economic and social welfare, especially among the world’s poor.
Having long admired Prof Yunus’s work, I was eager to host him as Wharton’s MBA graduation speaker last spring. What I did not anticipate was our community’s overwhelming response to his visit. He could hardly take two steps without students rushing over to shake his hand. They were enthralled by him.
Posted on January 20, 2010 - by James
Grameen Foundation Releases New Version of Mifos
Latest Release of Open Source Software for Microfinance Includes Support for Spanish and Firefox 3.0 Browser and Interface for Banking Systems
SEATTLE, Jan. 20 /PRNewswire-USNewswire/ — Grameen Foundation announced today the latest release of Mifos, its award-winning open source software platform for microfinance. Mifos 1.4 is the first version available in Spanish and also provides support for Firefox 3.0 and integration with banking and other systems. This marks a significant step forward in extending an open platform that gives the entire microfinance industry cost-effective access to technology.
Engineers at Grameen Foundation’s Technology Center in Seattle worked closely with its global community including corporate volunteers from SunGard Technology Services, as well as individual technology contributors from the United States, Europe and Australia to build the new features and additional product scalability. (more…)
Posted on January 20, 2010 - by James
Microfinance Could Be Hazardous For Teens…
Microfinance is on the rise and not only reaching women, but a growing number of female teens. One industry participant warns that lenders must step carefully with this age group to avoid causing unintended harm.
UNITED NATIONS, New York (WOMENSENEWS)– Microfinance might be a panacea for women’s poverty, as many claim, but concern is growing in the nongovernmental community about such loans to teens. Several in the field warn that microfinance loans to teen girls could actually increase their vulnerability.
Since the 1980s, microfinance has grown and spread to become a major tool in fighting poverty across the globe. Grameen Bank, a community development bank established by microfinance godfather and Nobel Prize winner Mohammed Yunus in 1983, has loaned money to over 7 million women in Bangladesh.
Posted on January 13, 2010 - by James
India: Investors happy as microfinance lenders discipline growth…
Microfinance institutions (MFIs)—firms that offer tiny loans to low-income groups—are moderating their pace of growth, but private equity (PE) and venture capital (VC) funds that have invested in them aren’t complaining.
MFIs are going slow on opening branches and acquiring loan customers. In an attempt to improve quality control, the industry has prepared a code of conduct, following which MFIs will try to avoid heavy concentration in some regions and stop chasing the same set of customers.
High growth means high returns for PE and VC funds. Yet investors are pleased the Rs11,750 crore microfinance industry is starting to rein in lending to address concerns that unbridled growth may cause bad assets to pile up.
Posted on January 12, 2010 - by James
From Mobile Healthcare to Payments to Microfinance, SMS Remains ‘Tip of the Spear’…
In less than a decade, mobility has gone from a mere convenience to an absolute must-have, both in the US and globally. In the US, mobility is most commonly used for social connections, and is gaining momentum for high value transactions and mobile services such as banking, healthcare, government, and more, albeit on a slower scale, especially when compared to other, developing regions around the world.
In Afghanistan, small business owners absolutely depend on mobility to bank; in South Africa, people use their mobile phone to purchase insurance; in India, farmers are using SMS to track crop prices; in Iraq people are “listening” in to President Obama’s historic speeches. These are just a few examples, and testimony to the wide selection of life-changing and awe-inspiring necessities using the simplicity and mass ubiquity of mobile text messaging, especially when looking at underdeveloped and developing regions.
Posted on January 7, 2010 - by James
Indian Microfinance Sector Demand Exceeds Current Fundraising…
With more than Rs. 1,000 crore capital inflow into the microfinance sector in 2009, new avenues to raise funds have come under scrutiny of microfinance institutions to meet the demand for rapid expansion that the sector is witnessing in the last two years despite the global financial meltdown in the mainstream banking sector.
Led by SKS microfinance and Spandana Sphoorthy which have successfully raised funds via the non-convertible debentures (NCD) route, many MFIs will follow the suit. The NCDs, which can be issued to both retail and institutional investors, will be in the form of a loan to a company that cannot be converted into equity.
The country’s first ever listed MFI’s non- convertible debentures issue was by Hyderabad-based SKS Microfinance that had raised Rs 75 crore by one year NCD at a coupon rate of 10 per cent in May 2009. The NCDs are listed on the Bombay Stock Exchange (BSE) and have been placed with the Standard Chartered Bank’s Foreign Institutional Investments (FII). The company chose to raise funds through NCDs (debt) so that it could match its debt with the equity it raised a year before.
Posted on January 4, 2010 - by James
Microfinance meltdown in Bosnia…
A market-led lending scheme some hoped would be the driving force behind economic revival in Bosnia after the civil war ended in 1995 is facing meltdown. Its harshest critics say the scheme is not only in crisis, but that it has done more economic harm than good. Microfinance, where modest loans are distributed to tiny start-ups, is seen by its supporters as a way to foster profitable economic activity from the grass-roots level. This idea has steadily won favour among policy-makers and socially-minded investors around the world since it was first pioneered in Bangladesh in the 1980s. All was seemingly going to plan in Bosnia until recently.
Microfinance loan portfolios grew at 80 per cent plus a year for the five years leading up to 2008 and fewer than 2 per cent of loans were more than a month in arrears. By the end of 2008 there were 390,000 loans on the books, together totalling over BAM 1 billion ($770m).
Posted on December 30, 2009 - by James
New York Times: The Role of Microfinance
Does the aid world exaggerate the benefits of microloans? How much do they help? Here’s a thoughtful, evidence-based analysis by three economics professors: Abhijit Vinayak Banerjee and Esther Duflo of M.I.T, and Dean Karlan of Yale. Their work is sometimes cited in critiques of microlending, so here’s their take:
Microcredit is undoubtedly the most visible innovation in anti-poverty policy in the last half century. In the three decades since Mohammed Yunus gave his first loan to a group of Bangladeshi women, the number of microcredit borrowers has crossed 150 millions. The majority had no access to credit from banks before microcredit came to them. When they needed to borrow, and most people do at some point or the other–to pay for an illness or a wedding, to grow a business or to fix their roof—they would go to money lenders and pay rates that have, justly or otherwise, accounted for the universal unpopularity of moneylenders (they can be over 20% per month). Now they borrow from MFIs at significantly lower (though often high by US standards) rates. At the same time MFIs have managed to find ways to be financially sustainable and to keep growing fast.
Posted on December 22, 2009 - by James
MIX Market Partners with The MasterCard Foundation for Re-Launch…
Next generation mixmarket.org features expanded data set
WASHINGTON, Dec. 21 — The Microfinance Information Exchange, Inc. (MIX) announced the re-launch of MIX Market (www.mixmarket.org), the global platform for microfinance data, analytics and business information. The website was redesigned and the underlying database rebuilt to allow for the rapidly expanding network of microfinance institutions and their broader array of products, services and metrics. The new platform also provides increased functionality and tools for all users. Importantly, MIX Market now includes the availability of all content in English, Spanish, French and Russian, with Arabic content coming online in early 2010.
“Thanks to our partnership with The MasterCard Foundation, we were able to invest in a flexible and strong technology platform that will allow MIX Market to evolve along with the microfinance industry. Now our users have access to three times more microfinance data than was previously available, with many new features that allow for improved analysis and customized reporting,” stated Marten Leijon, executive director of MIX.
The MiFi Report
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