Posts Tagged ‘crisis’
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 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 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 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 November 6, 2009 - by boris
Nicaraguan Microfinance in Crisis…
The microfinance industry in Nicaragua is under siege by a politically motivated group of borrowers who call themselves the No Payment Movement (Moviemiento No Pago).
The Movimiento No Pago includes from 3,000 to 5,000 producers, merchants and microentrepreneurs who are led by the former mayor of Jalapa Omar Vílchez. The movement commenced in Jalapa in the summer of 2008, with the takeover of an MFI and a riot incited by a protest speech.
Recently, the leaders of the movement have demanded that the Congress approve a Moratorium Law to give debtors a 10 year amortization period with interest rates that do not exceed 8 percent APR as a condition to stop harassment of the microfinance industry. The leaders of the Movimiento No Pago from the North and Caribbean regions of Nicaragua have threatened to burn the buildings of MFIs, take hostage MFI personnel and escalate their violence if their demands for a moratorium law are not met.
Source: http://www.syminvest.com/market/news/microfinance/nicaraguan-microfinance-in-crisis/2009/11/5/2135
Posted on June 2, 2009 - by Gavin
Agenda of global financial reform needs broadening…
Daily Monitor
Our world is at a tipping point. If we do not act together, if we do not act responsibly, if we do not act now, we risk slipping into a cycle of poverty, degradation, and despair.
Twenty-two years ago, the United Nations advanced the idea of sustainable development as a way of escaping from this cycle. This idea of an integrated and comprehensive approach to development remains as valid today as ever. It shows how to address the climate crisis, the food crisis and the energy crisis. It contains durable solutions to the financial crisis and global recession.
We must follow the wisdom of the Brundtland Report. We must pursue “development that meets the needs of the present generation without compromising the ability of future generations to meet their needs.” To do that, we must deal with climate change. As you know, this is the year of climate change.
We look to the December climate negotiations in Copenhagen to seal a deal that will enable us to pursue climate action on all fronts. A deal that covers adapta-tion, mitigation and the deployment of clean technologies. A deal that will reverse deforestation. A deal that will build capacity, and mobilize financial resources for developing countries. (more…)
Posted on May 26, 2009 - by Gavin
PAPER WRAP-UP: Microfinance Funds Continue to Grow Despite the Crisis, by the Consultative Group to Assist the Poor (CGAP)…
Microcapital
According to recent CGAP research report, microfinance funds have not been severely impacted by the global financial crisis.The report acknowledges that while emerging market funds have experienced a 20 percent sell-off, microfinance investment funds (MIVs) experienced positive returns in 2008.In fact, assets in the top 10 microfinance investment funds grew by 32 percent in 2008.The report is based on UBS Investment Research regarding economic comment on the state of the emerging markets, CGAP and Symbiotic’s (a microfinance investment advisor) research on the top 10 microfinance investment vehicles (MIVs), and the historical performance of euro-denominated funds as obtained from the Symbiotics Microfinance Index EUR.
As of December 2008, there were 104 active microfinance funds with total assets under management of USD 6.5 billion.CGAP notes that the industry is very concentrated (private equity funds, holding of microfinance banks, fixed income funds, structure finance vehicles and a broad range of institutions) with the top 10 funds holding about 60 percent of the asset base.
The International Finance Corporation (IFC), a member of the World Bank Group, as well as other Development investors are presently active in the microfinance community and have been strengthening their portfolios in response to the credit crisis.Retail investors have also contributed to the growth of microfinance funds in 2008.For example, a retail-oriented fund, the responsAbility Global Microfinance Fund has increased by 17 percent since September 2008 and 96 percent for the year.
Posted on April 21, 2009 - by Gavin
Fresh forecasts, crisis plans up at World Bank-IMF meet…
Business World Online
THE COUNTRY’S economic prospects as well as ways to address the impact of the global downturn top the agenda of Philippine officials attending this week’s World Bank-International Monetary Fund (IMF) Spring Meetings in Washington.
The April 25-26 event, to be held as the world grapples with the effects of the global crisis, is expected to tackle how countries are faring and what programs are being undertaking to spur economic growth.
“We will discuss with the World Bank their outlook and how they are assisting in mitigating the impact of the global economic crisis,” said Rosalia V. de Leon, officer in charge of the Finance department’s International Finance Group.
The Philippine contingent, she said, will be headed by Finance Secretary Margarito B. Teves.
Specific details of the Philippine agenda remained unavailable but Finance Undersecretary Gil S. Beltran said they usually present measures being undertaken to reduce poverty and to boost economic activity. (more…)
Posted on April 2, 2009 - by Gavin
‘China no more a threat to us’…
DNA India
Mumbai: Many Indian manufacturers that were giving China competition in the international market have been hit hard by the current crisis. Still, Mohammed Saqib, founder and secretary-general of the India-China Economic and Cultural Council, says Indian businessmen have no reason to fear the dragon.
Who is worst affected by the global economic recession — India or China?
It is China. More than 50% of their economy is dependent on exports and China exports all types of goods across the world. Due to the recession, China is going through a bad phase. In the past a few months, more than 50 lakh people have lost jobs and more than 10 lakh have shut down their business. In the case of India, our exports are just 14% of our economy and the slowdown is psychological. Looking at all these factors, now, China is no more a threat to India.
Compared to China, where is India lacking?
I have been to China several times over the past few decades. There is neither license raj nor inspector raj in China, which is our biggest drawback. If our government stops interfering once the licenses are issued, even our companies will be able to produce good quality products. As regards the Chinese, they are tech-savvy and they are good in productivity. But they lack in marketing skills. (more…)
Posted on March 26, 2009 - by Gavin
Investing in Women’s Earning Power in Times of Crisis…
Web News Wire
Government policy responses to the global financial meltdown must focus on the role of women as economic agents in order to address the all-too-familiar trend of women and girls suffering disproportionately during times of economic crisis, speakers told the Commission on the Status of Women this afternoon as it held an expert panel discussion on the gender perspectives of the crisis.
Mayra Buvinic, Senior Spokesperson on Gender Equality and Development of the World Bank, said ignoring the crisis’ gender-specific impacts ‑‑ such as the expected drop in women’s income and girls’ school enrolment and the rise in mortality rates among infant girls ‑‑ would increase poverty and imperil future development. Evidence showed that the loss of women’s income more adversely affected children and caused generations of families to remain in the poverty trap than the loss of men’s earnings. As banking institutions cut microfinance lending, millions of women-run enterprises, the main beneficiaries of microcredit, would lose their livelihoods, and as the demand for exports dropped, women in export-oriented industries around the world would lose their jobs. (more…)
Posted on January 19, 2009 - by James
Which way for African Microfinance?…
Nairobi, Kenya, January 2009 – In its bid to develop microfinance within the broader context of continental economic growth and poverty alleviation efforts, the African Union commissioned a workshop in Dakar, Senegal in 2008. The meeting was attended by 27 experts in the field of microfinance, regulatory agencies and staff of the AU Commission.
The workshop hosted by the African Institute for Economic Development and Planning (IDEP) defined Microfinance as “ the provision of a broad range of financial products and services to people with low incomes who, by virtue of their social and economic status, are excluded from conventional financial institutions. Such provision must be sustainable both for the microfinance institutions and for the borrowers.” The workshop further observed that “Microfinance is a key component of financial systems and aims at changing and improving the lives of people with low incomes, creating jobs and contributing to the development of both the local and the national economy.”
The Consultant, Mr. Henry Oloo Oketch, presented a report on the study on the elaboration of a roadmap/action plan for the development of microfinance in Africa. On the state of microfinance in Africa, he observed the following… [click here to read the rest of this article...]
Posted on December 4, 2008 - by James
Microfinance Still Hums, Despite Global Financial Crisis
When the rich suffer, so do the poor. Or so goes the trickle-down theory. It turns out, though, that the spreading of global financial pain is far from simple. The microfinance industry, for instance, may be resistant to some of the volatility now plaguing financial markets. That’s because those who borrow in small amounts from micro lenders often work on projects unaffected by large-scale global banking travails. Recent studies have confirmed the robust reliability of borrowers at the bottom end of the global income scale. The world’s poorest are affected, though, by commodity price volatility and fluctuating food and fuel costs. Mary Ellen Iskenderian, CEO of Women’s World Banking, a global network of 54 microfinance institutions and banks in 30 countries, spoke to Time’s Jeremy Caplan recently about how the financial crisis has affected those on the lower rungs of the world’s economic ladder… [click here to read the rest of this article...]
Posted on November 18, 2008 - by James
Reuters: Global Credit Crisis Hurts MiFi in South Asia…
MUMBAI (Reuters) – A global credit crisis that has felled large investment banks and prompted multi-billion dollar bailout packages is also hurting unlikely victims half a world away: small south Asian businesses dependent on microfinance.
Microfinance has helped poor women and farmers in Bangladesh and India set up businesses and grow crops since the 1970s.
But as credit tightens and largesse from corporations and socially-minded investors dries up, microfinance will be hit, impacting poor people who have no other access to finance… [click here to read the rest of this article...]
Posted on November 4, 2008 - by James
MFIs face challenge of global meltdown
HYDERABAD: Financing FOR the poor is getting more frugal now with microfinance institutions facing the heat of the global financial meltdown. There has been a virtual halt in fresh disbursements to MFIs by banks and financial institutions coupled with over 200 basis points hike in interest rate. It does not end at credit squeeze alone. Banks are also asking for personal guarantees of directors of MFIs… [click here to read the rest of this article...]
Posted on October 29, 2008 - by lincolnw
Global Economy Tests African Microcredit Channels
Amid growing signs that the global economy is worsening, the White House yesterday extended an invitation to developing countries to attend a summit next month in Washington with leaders of the world’s wealthy economies.Faced with rising food and fuel prices, some of Africa’s poorest nations are struggling to lower earlier projections of economic growth by focusing on how to satisfy the basic day-to-day needs of their citizens. One avenue for attracting investment needed to keep capital flowing in to local African businesses and public works is the practice of microfinance, or supplying credit to the poor at agreed-to, flexible rates which they can afford to pay back in an acceptable time frame.But the director of the Microcredit Summit Campaign Sam Daley-Harris says that tightening pressures are being felt even in low-end borrowing circles and that such small but essential programs that can make a difference for Africans facing dire poverty are also feeling the effects of the global financial pinch…{click this link to read the rest of the article}
Posted on October 21, 2008 - by James
Muhammad Yunus on the Financial Crisis…
A Nobel Prize-winning academic turned micro-finance banker for the poor has important advice for Washington. Muhammad Yunus believes that the government bailout of the banking system is but the first step in redesigning the global credit system. In the end, Yunus believes that a new self-correcting market system will have to be created.
In 1983, Muhammad Yunus set up the Grameen Bank in Bangladesh and ushered in the era of micro-finance andsocial entrepreneurship. By offering tiny amounts of credit to poor people, mostly women, to finance small businesses, he contradicted the established banking norms of the day. As a consequence, he received an unrelenting barrage of criticism from bankers and economists… [click here to read the rest of this article...]
Posted on October 1, 2008 - by James
Global credit crunch affects microfinancing…
The global credit crunch has led to a significant drop in fund flow to the microfinance sector.
Banks, which are required to provide 32-40 per cent of their loans to the priority sector (which includes rural credit), are the largest providers of funds to MFIs.
They lend to microfinanciers, who then on lend to the poor at a higher rate.
But with banks’ lending rates rising more than 200 basis points over the last quarter, microfinanciers are finding it tough to get enough funds to sustain business.
“We raised money a couple of months ago so we are safe. But for entities that didn’t, it’s going to be very difficult,” said K. Vinod Kumar, Assistant Vice-President, member services at SKS Microfinance.
Microfinanciers don’t want to raise lending rates themselves —- they already hover around 20 per cent plus —- as it would mean a reduction in business and would hamper expansion… [click here to read the rest of this article...]
The MiFi Report
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