Posts Tagged ‘development’

Posted on November 25, 2009 - by boris

Does microfinance always lead to development?…

Microfinance can be successfully used in supporting people to engage in enterprise that allows them to generate an income and, in many cases, begin to build wealth to end poverty.

But microfinance is not always as successful in Asia as its advocates suggest and there is a need to consider when it is most effective and when it fails to deliver effective poverty alleviation.

Aid practitioners often view microfinance institutions (MFIs) as any effective means of improving the position of the poor. Despite this widely held view, detailed research studies have been more guarded about the impact of microfinance. In particular, several studies have raised doubts about the effectiveness of MFIs in reaching the world’s most poor who often do not have access to even those most basic resources to enable them to be entrepreneurial.

Read more

Source: http://csr-asia.com/weekly_detail.php?id=11880

Posted on June 24, 2009 - by Gavin

MICROCAPITAL STORY: New Professional Body for the Microfinance Sector Launches in the United Kingdom

Microcapital

The Microfinance Association, a global professional body that
will cater to the needs of practitioners in the microfinance
sector, has been established in the United Kingdom. Membership in
the association is open to all practitioners working in the
microfinance sector worldwide, not just to those in the UK.

The association plans to offer its members an information center,
a career advice center, and a knowledge management center. The
information center will provide information such as links and
resources to rating agencies, market information, microfinance
news, information on government agencies, forums and conferences,
training and research, and networking opportunities.

The career advice center will provide resources such as tips on
structuring a CV, successful interviewing strategies, sample
interview questions, and a job search function. The knowledge
management center will provide research, newsletters and
publications from leaders in the industry such as CGAP,
Microfinance Insights, and the Journal of Microfinance. At the
time of this story most of these services were not yet available.

(more…)

Posted on June 22, 2009 - by Gavin

MFIs in Africa face collapse as financial crisis bites…

Microfinance institutions in Africa have very little chance of
surviving the current financial crisis as loan repayment default
soars. Most of their low-income debtors will be too busy
concentrating on personal survival to think of repaying their
loans. This is despite a show of resilience by the global
microfinance sector in a new survey conducted by CGAP, an
independent policy and research centre dedicated to advancing
financial access for the world’s poor. “There have been few
failures among microfinance institutions since the onset of the
current financial crisis. However, the more than 400 respondents to
the March survey reported significantly tougher market conditions,”
reads the report, released recently. In East Africa, microfinance
institutions have been pivotal in spurring growth and development
for the majority of rural dwellers. They also support a thriving
small and medium scale enterprise sector that today account for
about 30 per cent of the gross domestic product of countries like
Kenya. However, the full impact of the financial crisis is likely
to be felt in the second half of this year. Accordingly, many MFIs
are taking steps to cope, such as taking a more conservative
lending approach and in some cases, even cutting staff. “Many poor
households are struggling with the many consequences of the global
food, financial and employment crises,” said Elizabeth Littlefield,
CGAP’s chief executive. She added, “Their income sources like
revenue from small businesses or from money sent from families
working abroad, have become more erratic. At the same time, many
expenses like food, are still far higher than before. Savings are
thus being withdrawn and loan repayment rates to MFIs are
worsening.” According to the survey, as opposed to their
counterparts in emerging economies, leading MFIs in the West are
well positioned to adjust their operations to weather the financial
storm. Many are investing more in client communications and
tightening credit and collection policies. Source:
http://www.theeastafrican.co.ke/business/-/2560/613414/-/5jyrrxz/-/

Posted on June 22, 2009 - by Gavin

Aid has not, does not, and will never, help Africa…

Daily Nation

RECENTLY, AID TO AFRICA has come under attack from the most
unlikely quarters — the Africans themselves. The most recent of
these has come from Dambisa Moyo, a Zambian economist, whose
recently-published book, Dead Aid, makes a convincing argument
against foreign aid to Africa. Moyo argues that Africans have for
too long lived in “a culture of aid” that has failed to reduce
poverty or promote economic growth on the continent. She calls
for the eventual phasing out of aid altogether and for making
African markets more efficient. Despite billions of aid money
being poured into government coffers every year, Africa continues
to remain largely poor because aid fosters corruption and hinders
the development of home-grown industries and solutions. Moreover,
aid doesn’t come for free. Most of it has to be paid back, which
means future generations of Africans are burdened with debt
before they are even born. Even when things, such as mosquito
nets, are given for free, they end up stunting or killing local
industries that produce those things, which leads to more
poverty.

(more…)

Posted on June 18, 2009 - by Gavin

Micro-finance companies’ bank financing ratio won’t rise…

China Daily

The 50-percent limit on micro-finance companies’ bank financing ratio won’t be eased in the short run, according to Zang Jingfan, head of the cooperative finance supervision department of the China Banking Regulatory Commission.

“It is not good timing to increase micro-finance companies’ current ratio since they may pass their risks over to banks,” Zang said in an interview with 21st Century Business Herald after the Tsinghua China rural financial development forum last week. His comments came amid recent calls for raising the ratio.

Micro-finance companies have two ways to raise funds, the first is from shareholders and donations, which are both hard to increase, the other is financing from at most two banks.

Current rules, however, impose a 50-percent limit on the companies’ balance of bank financing against their net capital, restricting their plans to expand amid constrained funding sources.

Commenting on the calls, Zang said micro-finance companies can still ease the difficulty of financing by increasing their capital funds or granting short term loans for more efficient use of the funds, rather than simply depending on borrowing money from the banks. (more…)

Posted on June 18, 2009 - by Gavin

SAP wants to help microcredit groups manage loans…

CIO

SAP hopes to help lower the cost of managing loan portfolios for organizations offering microcredits as part of a partnership announced Wednesday with French nonprofit group PlaNet Finance.

Microcredits, or very small loans, were pioneered by Grameen Bank founder Muhammad Yunus in Bangladesh as a way of helping the rural poor to start up economic activities with which to earn their way out of poverty.

PlaNet Finance supports a number of microfinance institutions around the world, providing them with consulting services and loan portfolio management software to help them run more efficiently.

SAP will contribute software, expertise and a little bit of cash to PlaNet Finance’s work, SAP CEO Léo Apotheker said at a news conference in Paris on Wednesday.

That expertise will first be applied to a field project in Ghana. In the north of the country, a major source of income is the cultivation of shea nuts, which can be transformed into shea butter for use in cosmetics and food.

The growers, predominantly women, see little of the profit from their work because they have little bargaining power and insufficient information about the value of their produce, said PlaNet Finance President Jacques Attali.

(more…)

Posted on June 17, 2009 - by Gavin

LeapFrog Raises $44 Million for World’s First Microinsurance Fund…

PR Newswire

LUXEMBOURG, – In a breakthrough for microfinance and alternative investment, the LeapFrog Financial Inclusion Fund announced today that it has raised US$44 million. It is the world’s first investment fund focused on microinsurance. The fund aims to invest in businesses that will bring insurance and financial services to 25 million low-income people in Africa and Asia.

The capital was raised from a diverse set of public and private investors around the world, including the European Investment Bank (EIB), FMO, Omidyar Network, Triodos-Doen, Hivos-Triodos Fund, ACCION International, Calvert Large Cap Growth Fund, wealth manager Felipe Medina, and the LeapFrog team. The team consists of former CEOs and pioneers in insurance and investment in emerging markets.

“The world desperately needs market-based solutions to poverty that draw in major financial investors by offering fair but competitive returns,” said Dr. Andrew Kuper, President and Founder of LeapFrog. “The best part about microinsurance is that we can reach millions of people, swiftly. Microinsurance is both profitable and scalable. We can think big. We don’t have to choose between money and meaning.” (more…)

Posted on June 17, 2009 - by Gavin

Microfinance helping poor become entrepreneurs…

Deseret News

WASHINGTON — Two years ago, the life of Manuel Mendez del Rio, general director and head of global risk management at the Spanish bank BBVA, took an unexpected turn. His fellow directors decided to entrust him with the responsibility of launching a BBVA Microfinance Foundation that would bring credit to the poor in Latin America. The conditions were simple: He would have 200 million euros (about $277 million) at his disposal, but he would have to run a profitable enterprise, because the foundation would not get one more penny from the bank.

The mission fit Mendez del Rio’s own philosophy well. He believed in enterprise rather than charity and was convinced that the big financial institutions were missing the chance to serve potentially 500 million poor people in the world by placing most of their focus on their clients’ collateral and guarantees, as opposed to the merits of their business proposals. And, it could revolutionize economic development.

To be sure, a few other microfinance institutions lend money to the poor without asking for collateral. The best known is Bangladesh’s Grameen Bank, which won the Nobel Prize a few years ago. But it is funded by selling bonds guaranteed by the Bangladeshi government and operates on the principle of peer pressure — each borrower has to be part of a group that makes sure he or she manages the loan responsibly and pays it back. Mendez del Rio manages risk the old-fashioned way — by gauging the sustainability of the proposals put forth by borrowers. And he has no government backing. (more…)

Posted on June 15, 2009 - by Gavin

Belgian stake in Assam firm…

The Telegraph

Assam’s fledgling microfinance sector has receive a boost, with a foreign company picking up a stake in Asomi Finance Private Ltd — an institution which undertakes microfinance, income generation and development activities in the state.

Incofin, a Belgium microfinance company, which operates in 23 countries across the globe, has picked up a 34 per cent stake (Rs 8 crore) recently in Asomi Finance Private Ltd.

The Assam company got its non-banking financial company (NBFC) licence from the Reserve Bank of India on October 30 last year.

This is the first time that the Belgium-based company has invested in the country.

Microfinance is required, as many small entrepreneurs, farmers or artisans in Assam often do not have sufficient collateral or a regular income to qualify for conventional bank loans.

With a small loan, these individuals can start or develop their own business and secure their livelihood.

They thus become more independent and contribute to building a local economy, which, in turn, creates jobs and brings stability.

(more…)

Posted on June 10, 2009 - by Gavin

Ghana to Host the Applied Microfinance Institute training programme…

Ghana Web

Ghana -based Blackwealth Consulting and MicroSave Consulting based in Kenya will host this year’s Applied Microfinance Institute (AMI) -Africa, in Ghana, at the Golden Tulip Hotel, Kumasi. This will be the second time that the event will be held in Ghana.

Last year’s event was held for the first time in Ghana at the Elmina Beach Resort, Elmina, in the Central Region. About 90 microfinance practitioners, including consultants and academics attended.

Following significant interest in MicroSave tools and approaches in previous years from West Africa, MicroSave is now very active in West Africa with market-led solutions for the microfinance sector. Previously, many West Africans attended MicroSave’s courses at the School of Applied Microfinance in Mombasa, Kenya. (more…)

Posted on June 9, 2009 - by Gavin

Gates Foundation giving $20M to World Bank…

Business Journal

(more…)

Posted on June 9, 2009 - by Gavin

World Bank rural finance scheme to help Indian farmers…

Sakaal Times

WASHINGTON: With a $20 million Bill & Melinda Gates Foundation contribution, the World Bank will establish an Agriculture Finance Support Facility to support the expansion of rural finance in the developing world including India.

In a time of tight credit, the Facility will support grants to bank and non-bank institutions for activities to increase access to financial services, such as savings, credit, payments and insurance, in rural areas in developing countries as profitable business lines, the bank announced on Monday.

“In India, a country with relatively high rural banking outreach, 45 percent of smallholder farmers did not have a savings account, and 69 percent did not have a credit account with formal financial institutions,” it noted announcing the new venture in recognition of the financial crisis hitting the poorest the hardest.

“There is a great need among smallholder farmers, who make up the bulk of the world’s poor, for ways to save and manage their money,” said Carlos Cuevas, Deputy Director of Financial Services for the Poor for the Bill & Melinda Gates Foundation.

(more…)

Posted on June 9, 2009 - by Gavin

MICROCAPITAL STORY: Unitus Announces Ganesh Rengaswamy as India Country Director and Newest Member of Global Senior Management Team…

Microcapital

Ganesh Rengaswamy has been named India Country Director for Unitus, Inc., an international non-profit organization that partners with early-stage microfinance institutions (MFIs).  Mr. Rengaswamy will head the organization’s India microfinance initiatives including managing the team of consultants, advising Unitus microfinance partners, and serving on the global senior management team.

Mr. Rengaswamy holds a Bachelor’s degree in engineering from IT-BHU/IIT-BHU (India), a Master in Business Administration from Harvard Business School, and a graduate degree in finance and systems strategy from IIM-Calcutta.  Before joining Unitus, Rengaswamy was co-founder of Travelguru.com, a travel website for hotels and vacations in India and South Asia, and launched India investments for Greylock Partners.  Prior to Greylock he worked for Infosys Technologies, managing mission-critical engagements for Fortune 500 clients and leading USD 100 million customer acquisition programs. Before Infosys, he managed a private investment fund.

Established in 2000 and based in Seattle, Washington (US), Unitus Inc. connects partner MFIs with business expertise, capital investments, and innovative tools and services.  According to its website, Unitus works with 24 microfinance partners in India, Southeast Asia, East Africa, South America, and Mexico, and has served more than 8 million families in the last seven years. According the company’s most recent annual report, as of December 2007 Unitus’ total assets were USD 15.1 million. (more…)

Posted on June 8, 2009 - by Gavin

Dead aid or sustainable development?…

Austrian Times

Kenya is famous for producing Europe’s Roses. Some 36 per cent of the roses sold in Europe come from Kenya’s Rift Valley, flown here from Nairobi via Amsterdam and Frankfurt. This article is about another Rose.

Austrian Times correspondent and CEO of the Austria for Africa Association John Morris has been to the Rift valley and filed this report about Rose the orphan.

Rose is from the Luo tribe, the same as Barrack Obama’s father, and she now lives with her Aunty and Uncle and attends Morop Girls School just north of Nakuru, Kenya some 10 km south of the Equator and she is benefiting from secondary education and she is playing soccer for a girl’s team, but like many of her team mates, she is dependant on good will around her to help her through to adulthood. She is being sponsored by an Austrian based family. This Rose has a chance to bloom.

There are thousands of human “Roses” in Kenya, orphaned and without hope, in need of guidance and support.

Kenya’s Rift Valley is a magnificent volcanic landscape made famous by the Hollywood Movie “Out of Africa” starring Meryl Streep and Robert Redford, but it hides a reality: Rose’s parents like so many others in Kenya’s Rift Valley have died from HIV which has reached endemic proportions. The death rate caused by HIV is so extreme that about 10 percent of the children are now without natural parents and their future looks uncertain. Only around 60 percent of Kenya’s children get secondary education and provision of higher education is very low. (more…)

Posted on June 8, 2009 - by Gavin

How AGFUND spurs social development…

Arab News

JEDDAH: Gulf speakers at the Social Development Forum yesterday shed light on how social development can work when government and private organizations cooperate.

Nasir Al-Qahtani from the Arab Gulf Program for the United Nations Development Organizations (AGFUND) delivered a presentation on how his organization has used strategies such as microfinance to help people. “The Kingdom has signed the Millennium Agreements with the United Nations and became part of it in terms of tackling social issues strategically,” he said.

AGFUND is a nonprofit regional development institution established in 1980 under the initiative of Prince Talal bin Abdul Aziz and with the support of the leaders of Arab Gulf states. The organization is concerned with supporting sustainable human development efforts targeting needy people in developing countries.

Al-Qahtani explained that in the Kingdom, AGFUND targets women and children, and issues relating to health, education and poverty. “They are priorities,” he said. “What was mentioned in the Millennium Agreem-ents is a map of certain plans to follow and implement. We have to draw our own map and implement it with Saudi hands,” he said. (more…)

Posted on June 8, 2009 - by Gavin

FINANCE/BANKING: MICROFINANCE THE WAY TO GO…

Island Business

There are 6.5 million South Pacific islanders representing 80 percent of low income earners in the region craving to access financial services.

Whether it is the canteen lady or the small business grog seller who sells packets of yaqona from the large wholesaler, the money from these businesses do not go to the banks.

Where the banks have failed to support people like canteen and small business owners, microfinance organisations have taken up the challenge for the poor section of the community who still hope to help themselves.

The Foundation for Development Corporation Pacific (FDCP) representative Luse Kinivuwai believes that microfinance has proven its effectiveness as an instrument to overcome poverty.

The Microfinance Pasifika Network, an initiative of FDCP, is an alliance of institutions committed to supporting disadvantaged people in the Pacific to improve their quality of life, through the provision of inclusive and sustainable financial services such as savings, credit, remittances and payment services and insurance, she said.

A recent report commissioned by UNDP and UNCDF estimated that only 20 percent of the populations in Vanuatu, Solomon Islands, Tuvalu and Kiribati have access to financial services. (more…)

Posted on June 5, 2009 - by Gavin

Co-op unveils new global development fund…

International Supermarket News

The Co-operative Bank today (5 June) unveiled an innovative new global co-operative development fund aimed at helping to alleviate poverty in some
of the world’s poorest communities. The initiative is very much in line with the ethics that form the central identity of the firm.

The Global Co-operative Development Fund (GCDF) has been created withlong-term partner Deutsche Bank and is the first specialised international development fund to specifically target credit unions and agricultural co-operatives that serve some of the world’s poorest communities.

It is being initiated at a particularly opportune time with some regions seeing cutbacks in development finance, such as funding for microfinance, following the global downturn.

Participation in this fund supports the Bank’s aim to be one of the UK’s leading providers of development finance. Since 2005, the UK only bank has been steadily increasing its commitment to international development and poverty alleviation.

Richard Wilcox Head of Structured and Asset Finance at The Co-operative Bank said: “The co-operative business model of operating for the benefit of its members looks set to emerge stronger from the wreck of the global downturn. (more…)

Posted on June 4, 2009 - by Gavin

SACCOs can promote devt of the rural poor…

The New Vision

Building a more inclusive and equitable economic order helps in shaping a financial system that is responsive to the needs and aspirations of the people. Every country should strive to have such a financial system. But this requires political will as well as good leadership at all levels.

An inclusive economic order involves creating room for more people to participate in the mainstream economy and to partake the opportunities of an expanded market economy.

I am glad the Government has shown commitment towards ensuring inclusive and equitable growth by setting up the Rural Finances Service Programme.

According to the World Council of Credit Unions, 43,000 credit unions provide financial services to over 136 million members in 91 countries. Many well-managed Savings and Credit Cooperative Societies (SACCOs) have empowered many people, especially the rural poor women, whose roles and responsibilities are critical to the sustenance of households and the future generation.

When these people join SACCOs, they access credit which helps them participate in the economic order. (more…)

Posted on June 3, 2009 - by Gavin

ACCION and enConfianza Microfinanciera Partner to Serve More Microentrepreneurs in Mexico…

International News

ACCION Signs Technical Assistance Contract to Increase Impact in Major Microfinance Market

BOSTON, /PRNewswire/ — ACCION International, a pioneer and leader in microfinance, and enConfianza Microfinanciera, a microfinance company based in Mexico City, have announced a new partnership aimed at providing innovative and client-oriented financial services to more microentrepreneurs in Mexico.

Throughout the long-term technical assistance contract, ACCION’s microfinance experts will advise enConfianza on best practices in the areas of credit methodology, risk management, project and process management, and human resources and organizational development.

Founded in 2007, enConfianza is an institution that, despite its short lifespan, has designed and implemented a series of new developments to benefit entrepreneurs at the base of the economic pyramid in Mexico. enConfianza offers a variety of working capital products to its clients, who reside and run their microenterprises in Mexico City, Mexico State, Morelos, Queretaro, Hidalgo and Guerrero.

ACCION International is an innovator in financial access, pioneering many of the best practices and emerging standards in the industry. Over the past four decades, ACCION has helped to build and strengthen some of the most successful microfinance institutions (MFIs) in the world. (more…)

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…)