Posts Tagged ‘financial crisis’

Posted on July 24, 2009 - by boris

MICROFINANCE group Blue Financial Services focus still on growth in Africa…

BusinessDay posted:

MICROFINANCE group Blue Financial Services had slowed the pace of its expansion due to the global financial crisis, but the rest of Africa remained its focus and it would enter more countries this year, said CEO Dave van Niekerk yesterday.

There were plans, for instance, to open in Ghana this year. Blue already operates in 14 countries, including Mauritius, which serves as a treasury for its African operations and provides certain tax benefits.

Reasons for the slower expansion included the lesser availability and higher cost of finance and the devaluation of many African currencies.
(more…)

Posted on July 6, 2009 - by boris

MFBs hopeful on positive signs for profits in second half year…

BUSINESSDAY

Microfinance   bank operators have admitted that the effect of global financial crises in the first half year was an eye opener to them assuring that they were now ready to take the bull by the horn in terms of mobilising more funds as strategy to economic recovery in the next half year.

To this effect, not a few of them say they are optimistic that the next six months would be much better when compared to the last half year. They insist that now that the economy has started to improve slightly, especially as evidenced in the price of oil hitting about $70 as against the $45 early this year, even as there is also noticeable improvement in the capital market.

Speaking on his plans and strategies for the next half year, Victor Mfon, director, Business Development Manager, Olive Microfinance Bank Limited disclosed that his bank will seek additional funding to be able to penetrate additional markets.
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Posted on May 18, 2009 - by Gavin

Microfinance NPL rate rises again as lenders suffer high-risk status…

The Phnom Penh Post

Cambodia’s high-risk rating means that international lenders have increased interest rates to the Kingdom’s MFIs, which are in turn being passed on to the borrower, fuelling bad loans.

THE rate of microfinance nonperforming loans (NPLs) has increased to 2.5 percent in the first four months of 2009, compared with less than 1 percent for the same period last year, Huot Ieng Thong, president of the Cambodia Microfinance Institution, told the Post Sunday.

The sector said that the NPL rate went above 1 percent in the first quarter, but that level of bad loans has since increased.

“Things are still in good shape … it is a yellow light as a sign of serious risk,” said Huot Ieng Thong, referring to the possibility that things could worsen.

“We won’t give up until markets are in place and interest rates are lowered.”
He added that since the financial crisis, MFIs had charged farmers interest rates of 2 to 3 percent per month, an increase since the liquidity crisis hit global markets. (more…)

Posted on May 15, 2009 - by Gavin

Microfinance Institutions Face Growing Pressures…

CGAP

Washington, DC—Despite the severity of the current global financial crisis, microfinance institutions (MFIs) have shown greater resilience than many traditional banks, according to a new survey conducted by CGAP, in collaboration with the MIX, the Microcredit Summit, ACCION, Grameen, FINCA, Freedom From Hunger, MicroFinance Network, Opportunity International, Women’s World Banking, and Sanabel.

There have been few failures among MFIs since the onset of the current financial crisis. However, the more than 400 respondents to the March survey reported significantly tougher market conditions.

The full impact of the financial crisis is likely to be felt in the second half of 2009. 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 officer. “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.” (more…)

Posted on May 13, 2009 - by Gavin

Foreign aid survives Budget axe…

ABC News

Despite producing a 2009-10 Budget marked by disappearing revenues and a slide into the red, some Government pledges have survived – among them, the aid budget.

There is little new in the list of aid programs.

But aid spending in the new financial year will rise from $3.7 billion to $3.8 billion, keeping faith with the commitment to grow the overseas development budget over time to 0.5 per cent of Gross National Income.

Indonesia and Papua New Guinea receive the largest slices of that budget, the former commanding more than $452 million, the latter – for years the single biggest Australian aid recipient – to receive $414 million.

A highlight of the program for Indonesia is the cancellation over six years of $75 million in debt owed by Indonesia to Australia in exchange for increased Indonesian government investment in programs fighting tuberculosis.

A focus on democracy, justice and good governance marks Australia’s approach to its large, mostly Muslim neighbour as it continues to build on its striking democratic transformation. (more…)

Posted on May 11, 2009 - by Gavin

Poverty level still high despite 840 MFBs…

The Business Day

There is an indication that poverty level is still very high in Nigeria despite the establishment of over 840 microfinance institutions in the country. This is according to the September 2008 World Bank’s report that Nigeria had nearly 70 percent of its population living in poverty, with more than 54 percent living below the poverty line (less than one US dollar a day). Also, the 2008 Human Development survey of the United Nations ranked Nigeria among the 25 poorest countries, measured on the basis of standard of living, life expectancy, and literacy.

There is no doubt, however, that the persistent global financial crisis, which has not only affected Nigeria but also individuals, has intensified poverty rate. The end result of the crisis is evident in global job losses, companies declaring bankruptcy, while others completely closed down; employers cutting down salaries, etc., all contribute to high rate of poverty.

Meanwhile, in order to assist majority of the populace and encourage private businesses to thrive, the Central Bank of Nigeria (CBN) set up the microfinance scheme as an instrument to access financial services when succour was not coming from the conventional financial institutions in the country. (more…)

Posted on May 7, 2009 - by Gavin

Banks may need to hike capital reserves…

Business Standard

Banks worldwide may be asked to raise minimum capital reserves by several percentage points to help them weather the next financial crisis, according to Nout Wellink, Chairman of the Basel Committee on Banking Supervision.

Current requirements are “still not enough”, Wellink said today in Kuala Lumpur, where he was attending a forum on microfinance. The Basel proposal, still under discussion, may be completed in the first half of next year, he said.

The US Federal Reserve is due to publish tomorrow the results of stress tests on banks that may determine how much more capital they need to raise. Worldwide, lenders should focus on the quality of capital, rather than just the size of reserves, Wellink said, adding that the current crisis is far from over. “It will make the world a lot safer, but I’m not sure it’s going to be enough to zero the risks,” said Joseph Tan, Singapore-based chief Asian economist at Credit Suisse Group. “This is one small piece in a greater puzzle, and derivatives markets may need separate attention,” Tan said. (more…)

Posted on May 7, 2009 - by Gavin

Britain Will Remain a Global Financial Leader…

The Wall Street Journal

For centuries, Britain has been a leader in finance and banking. Today we are setting out how we can remain world leaders. Not at the expense of others, but in partnership with them. And not by returning to business as usual, but by reforming, renewing and championing our financial sector so that it is ready and able to seize future opportunities.

Over the past ten months, the treasury’s “Group on Financial Services Competitiveness” has been looking at the global trends that will determine the future prospects for the sector, and its recommendations are published today. Across the world, we are seeing the most disruptive financial crisis in generations, which has completely shaken up the global financial services industry. Our goal is to maintain a competitive and vibrant sector in Britain.

At the core of our analysis is the realization that maintaining Britain’s position as a world center for financial services must not come at the expense of other countries — but by working with them. Partnership may not be one of the key words associated with competitiveness, especially in the financial services industry. But global partnership is precisely the approach that the U.K. needs in order to keep its competitive edge in this dynamic sector. (more…)

Posted on May 5, 2009 - by Gavin

Rural poor worldwide to benefit from over $200 million in UN funding…

eGov Monitor

Poverty eradication efforts in developing countries are set to receive a cash injection of over $200 million from the United Nations rural development arm this week to help off-set the impact of the global financial crisis.

The new set of grants and loans from the International Fund for Agricultural Development (IFAD) will finance rural micro-finance projects, livestock support initiatives and natural resource management schemes among others.

Some 60 per cent of IFAD’s ongoing programmes already promote rural financial services and institutions that help give the rural poor access to global markets and help them cope with shocks such as unexpected severe weather patterns and commodity price volatility.

“Protecting and increasing the access of poor rural people to financial services is all the more important as the global financial crisis bites and as remittances shrink,” said IFAD President Kanayo F. Nwanze.

The IFAD executive board has approved more than $131 million in loans and $63 million in grants along with around $9 million in grants to international research centres and intergovernmental organizations. (more…)

Posted on April 23, 2009 - by Gavin

Nigeria: Labour Ministry Tackles Unemployment…

All Africa.com

Once during an interview with Labour Vanguard, Labour Minister, Prince Adetokunbo Kayode vowed that the National Employment Summit which had been locked up in the files in the Ministry of Labour would be held soon.

He was determined that the ministry under his leadership would not be known for mediating in strike disputes alone, but would make a more positive impact by developing strategies for job creation.The minister said this had become necessary because of the global meltdown which had resulted in loss of jobs. He has kept his words.

From April 21 to April 23, the Ministry of Labour in collaboration workers organizations, private sector employers, the informal sector, representatives of state governments, local governments etc will fashion out strategies for creating jobs in the various sectors of the economy.

The International Labour Organisation (ILO) is supportive of the Summit and will provide technical assistance. The theme of the Summit is “Meeting the Employment Challenges of the Global Economic and Financial Crisis.” (more…)

Posted on April 21, 2009 - by Gavin

Financial crisis may hit microfinance industry…

Daily News

Although the micro- finance industry has shown impressive growth and a degree of resilience in the recent past, the pause in global growth momentum under the current financial crisis might have a negative impact in the near future, said Director, Centre for Banking Studies, Udeni Alawattage.

He was speaking at the inauguration of the four-day International Seminar on “Microfinance for inclusive Development and Sustainable Growth” at the Centre for Banking Studies Rajagiriya yesterday.

Under the current global financial turmoil, market signals on funding for microfinance are clearly indicating a tightening as money will become more scarce, more conservative and more costly and based on the recent experiences some clients may understandably worry about the safety of their life savings and decide that the mattress is safer, he said.

However, this phenomenon, both positive and negative, provides an opportunity for micro finance professionals, practitioners and regulators to catch a breath, re-evaluate and challenge their current status-quo and assumptions to chart a new path forward, he said. (more…)

Posted on April 7, 2009 - by Gavin

Microfinace to the rescue…

Westender.com

Nobel Laureate from Bangladesh and founder of the Grameen Bank, Muhammad Yunus called for strengthening the micro-finance movement particularly in developing countries as one of the options to counter the fallout of the recent global financial crisis. He said that appropriate regulations should be put in place to facilitate the growth of this ’social business’.

Saying that micro-finance movement needed to take deeper roots in India, Yunus said, “India should set up an appropriate regulatory authority for micro-finance institutions (MFIs). Regulations for banks and MFIs should be different as MFIs cater to the poor and should be regarded as a social business as distinguished from the purely commercial banking operation.” (more…)

Posted on March 26, 2009 - by Gavin

“Financial Crisis and the Role of Microfinance”…

All Africa.com

French economist and micro-finance specialist, Jacques Attali, will on Monday, March 30, 2009, in Tunis make a presentation on the “Financial Crisis and the Role of Microfinance”.

According to Mr. Attali, who is President of PlaNet Finance, micro-credit plays a key role in development efforts targeting the poorest segments of the population, and micro-finance sources need to be preserved at a time when the global financial crisis is severely hitting Africa. The continent has made steady progress over the last decade, building the foundations for higher growth rates and poverty reduction.

These achievements are now being undermined by factors beyond Africa’s control. While the initial effects of the global financial crisis were slow to manifest themselves on the continent, the impact is now becoming clear. It is sweeping away firms, mines, jobs, revenues, and livelihoods. (more…)

Posted on March 24, 2009 - by Gavin

Mexico’s Microfinance Industry Undergoes Shake-Up On Crisis…

Wall Street Journal

Of DOW JONES NEWSWIRES

MEXICO CITY (Dow Jones)–Mexico’s microfinance industry is undergoing a major shake-up as the global financial crisis spurs banks that had dabbled in the sector in recent years to pull out altogether, at the same time making funding scarce for specialized lenders.

Mexico’s fifth-biggest bank Grupo Financiero Banorte SAB (GFNORTE.MX) is shutting its microfinance arm Creditos Pronegocio, which it launched in 2005, after its losses widened to 120 million pesos ($8.4 million) last year from MXN30 million in 2007.

“Pronegocio has been in liquidation since last year,” said Alejandro Valenzuela, the bank’s chief executive, in an interview. “We feel that right now it is a major distraction from the big challenges we face.”

HSBC Holdings PLC (HBC), which owns Mexico’s fourth-largest bank, sold its 18.7% stake in consumer loan and microfinance institution Financiera Independencia SAB (FINDEP.MX) to the company’s controlling shareholders for about $145 million last November, in order to focus on its banking business. (more…)

Posted on March 24, 2009 - by Gavin

Weighing in on Microfinance and the Financial Crisis…

New American Foundation

Signs point to toughening times for the microfinance industry. A recent article from the Economist has echoed my concerns that selling microcredit (as a concept or a product) will grow increasingly difficult as the global economy stumbles (or crashes and burns) on the heels of a debt-led recession in the United States.  Not only in the concept politically less appetizing than it was back when Muhammad Yunus won the Nobel Peace Prize in 2006, the capital fueling the industry is drying up.  The similarities and differences between subprime lending that fueled the US recession and the “sub, sub, subprime” lending happening in developing countries through microfinance institutions have been debated and analyzed for over a year now. But only recently has the engine of seemingly-endless capital to MFIs around the world starting slowing, sputtering to slow chug in some instances.

The Economist article argues that the microfinance industry is more insulated from the crisis than many of my colleagues working in the sector would currently state. Just because the Grameen Bank has not faltered in this financial crisis doesn’t equate to an entirely healthy sector. Moreover, the decrease in capital, and the resulting liquidity constraints and challenges institutions will face, does not represent the variety of challenges that MFIs, or the microfinance sector, could and will likely face as a result of this crisis. While I commend the Economist for putting on spotlight on this particular problem, the article fails to provide readers with the bigger picture. (more…)

Posted on March 19, 2009 - by Gavin

Counsels for World Bank, IMF, Citibank seek coordinated response to financial crisis…

Harvard Law Record

The expansion of international trade and integration of the global financial system have stimulated phenomenal growth around the world, but now that banks and corporations in developed nations are de-leveraging to deal with the crisis at home, export-driven national economies are coming against their greatest challenge in decades.

The International Law Journal recently convened a symposium to examine the problems facing the developing world and the solutions needed to address them, and one of the highlights was a panel featuring the General Counsels of the International Monetary Fund and the World Bank along with an expert corporate practitioner, each of whom offered his view of the global financial crisis and its implications for developing nations and multinational financial institutions.

Development in Distress

The experts agreed that the outlook for less developed economies is bleak and that immediate action is needed to avoid the further intensification of the global financial crisis and its cost in human suffering. Sean Hagan, General Counsel for the IMF, warned that the current turmoil is unlike any other crisis because of its simultaneous impact on the economies and financial systems of all the worlds largest economies. (more…)

Posted on February 25, 2009 - by Gavin

MICROCAPITAL STORY: Russian Delegation Visits Grameen Bank of Bangladesh in Efforts to Scale-Up Microfinance Industry and Mitigate Financial Crisis…

Microcapital.org

Bangladeshi news source The Daily Star reported that a high-profile Russian delegation visited the Grameen Bank in Bangladesh to examine how the country regulates its relatively saturated microfinance industry. The delegation observed the operations and legal structure of Grameen Bank in hopes to replicate the structure in Russia. The four-day visit came as Russia explores ways to scale-up its microcredit program to fill a void left by the global financial meltdown. “The global financial crisis has affected many small businesses in Russia while the conventional banks are not willing to finance them for risk involvement in such financing,” said delegation leader and Russian Deputy Minister for Economic Development, Anna Popova, at a joint press conference with Muhammad Yunus in Dhaka City.

MicroCapital has frequently reported on the resilience of the microfinance industry to financial crises and its utility in post-financial crisis recovery. Three particularly relevant MicroCapital articles include two paper wrap-ups, “Fitch Ratings Report: Microfinance – Testing its Resilience to the Global Financial Crisis” and “Microfinance Still Hums, Despite Global Financial Crisis,” and the story “World Bank Sees Microfinance as Strong Asset Class in Midst of Financial Crisis.”

The Russian delegation, comprised of 10 individuals, included senior representatives from the Ministry of Finance and the Ministry of Economic Development, President of National Association of Microfinance Market Stakeholders, senior representatives from the Moscow government and Association of Regional Banks. Beyond meeting high-level bank managers, the Russians took part in a Grameen training program, visiting bank branches and holding discussions with borrowers. A variety of international training programs are offered to the general public via the Grameen Bank website. (more…)

Posted on November 3, 2008 - by lincolnw

Indian MFIs face challenge of global meltdown

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.

A few banks have hiked the security margins from 10% to 25% over the loan amount sanctioned to banks. As a result, MFIs are unable to use even sanctioned funds. According to sector trackers, MFI sector may have trouble raising loans till January as banks will try to complete their priority sector lending targets more aggressively only in the last quarter of the fiscal…{click this link to read the rest of the article}

Posted on October 31, 2008 - by lincolnw

Microfinance draws interest

With a huge base of borrowers and emphasis on timely repayments, microfinance is relatively insulated from defaults…