Posts Tagged ‘microcredit’
Posted on July 20, 2010 - by M. Bennett
Nigeria: The Sins of Microfinance Banks…
Jerry Uwah
19 July 2010
These are not the best of times for the nation’s embattled financial system. The capital market is yet to emerge from the abyss that unrestrained insider dealings and calamitous share price manipulations plunged it into.
Commercial banks are still waddling in the financial tsunami triggered by the infamous margin facility in the capital market and the fallout of fraudulent and inept risk management. Microfinance banks (banks of the poor) are struggling with a catastrophic misalignment of priorities.
Posted on April 14, 2010 - by James
NY Times: Big Banks Draw Big Profits from Microloans to Poor
In recent years, the idea of giving small loans to poor people became the darling of the development world, hailed as the long elusive formula to propel even the most destitute into better lives. But the phenomenon has grown so popular that some of its biggest proponents are now wringing their hands over the direction it has taken. Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks and financial institutions now dominate the field, with some charging interest rates of 100% or more.
“We created microcredit to fight the loan sharks; we did not create microcredit to encourage new loan sharks,” Yunus recently said at a gathering of financial officials at the United Nations. The fracas over preserving the field’s saintly aura centers on the question of how much interest and profit is acceptable, and what constitutes exploitation. The noisy interest rate fight has even attracted Congressional scrutiny, with the House Financial Services Committee holding hearings this year focused in part on whether some microcredit institutions are scamming the poor.
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 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 June 30, 2009 - by Gavin
Microfinance: The Next Bubble?…
Wealth of Nations
Our Rio de Janeiro correspondent, Mac Margolis, delves into a new microfinance study, and wonders whether the much-lauded sector is about as efficacious as a subprime CDO and as bubbly as a Pets.com equity option.
BWS The international financial crisis has destroyed many certainties, but one of the touted survivors
is the old saw that small is beautiful. Sure, no one is flogging mansions to paupers anymore. But microfinance is still flourishing, and even expanding. Ever since Bangladeshi economist Muhammad Yunus started handing out small loans to the poor in 1974,the idea that a little credit can help peasants and simple villagers climb out of poverty has swept the map. Civic groups, the World Bank, even commercial lenders have gotten into the act,capturing millions of barefoot clients across the developing world.
Today microfinance is a global growth industry. It reaped Yunus the Nobel prize. Even the developed world is catching on. Grameen Bank, the Bangladesh-based microlender Yunus founded, opened a branch in Queens, New York, last year and plans to unveil another in Omaha, Nebraska. Take that, Citicorp. But hold that confetti.
(more…)
Posted on June 23, 2009 - by Gavin
Micro Credit in USDA’s Election Plan…
The Irrawaddy News
organization backed by the Burmese military junta, has expanded
its micro credit projects across the country ahead of the 2010
elections.
increased funding for micro loans for farmer in rural areas of
Rangoon Division and other parts of the country.
loaned Kyat 50,000 (about US $ 50) per acre to farmers. The
project started at the beginning of this monsoon season,” a
source said. He added the loan project is a part of the plan by
the military backed political party to win people’s hearts and
minds in the coming elections.
the first time this season, the USDA has been making loans in
other parts of Burma for at least two years.
given to farmers for two years. The farmers got Kyat 50,000 for
per acre of rice field in the first year, but got more the second
year,” said a USDA member in the township.
the junta-backed USDA. The pro-junta organization has had a bad
name since their participation in the 2003 Depayin Massacre,
which brutally ambushed pro-democracy leader Aung San Suu Kyi’s
motorcade, and the September 2007 crackdown on demonstrators.
rural social development projects ahead of the elections
scheduled for 2010. Such projects include road building roads,
plant propagation, provision of educational and medical
facilities upcountry, performing relief work in the Irrawaddy
delta after Cyclone Nargis, as well as providing micro credit.
leaders often meet with foreign delegations on a party to party
basis.
North Korean film event in Rangoon, which marked the 45th
anniversary of the North Korean leader Kim Jong Il’s seat on the
central committee of the ruling Worker’s Party of Korea.
officially, the leaders of the USDA have been campaigning across
the country.
reported on Monday that an executive leader of the USDA, Burmese
Information Minister Brig-Gen Kyaw Hsan, met more than 23,000
people in Saw Township, Magway Division in central Burma last
week—observers believe this kind of trip is a part of the
election campaign.
“http://www.irrawaddy.org/article.php?art_id=16147″>http://www.irrawaddy.org/article.php?art_id=16147
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.
Posted on June 18, 2009 - by Gavin
MICROCAPITAL STORY: Microloans In China – Recent Experiences In The Ningxia Province…
Microcapital
In a Bloomberg report date dated 16 June 2009, reporter Dune Lawrence highlights the impact of microloans in rural China. By way of illustration, Wang Shulian started a business producing mineral powder that is used for plastering by obtaining microloans equivalent to USD 146 from an organization that supports rural women in the Ningxia province. Her monthly income has grown from nothing to about USD 1460 in just over 8 years.
Microloans for farmers and entrepreneurs like Wang may be a more sustainable path to rural consumption and growth although such initiatives do not grab the headlines much like China’s recent 4 trillion yuan (USD 585 billion) stimulus plan to build housing and infrastructure. Many commentators agree that getting funds through to the lowest levels of the economy is critical for the long-term development of China. As many as 30 million migrant workers from China’s cities have moved back to rural areas in search of jobs since the global slowdown began. Whilst jobs may be found, rural incomes on average work out to be less than a third of urban income levels. Accordingly, the government believes that the provision of credit to fuel growth in rural China is a key priority.
Some of Wang’s neighbors also obtained equivalent loans to raise sheep, thereby expanding their village economy beyond subsistence farming. More families now make at least several thousand yuan a year. Wang’s lender is Ningxia Huimin Microfinance Co. (Ningxia) which does not currently supply data to the MIX Market portal, an online network which provides financial and other information on over 600 MFIs around the world. Accordingly, updated financial data about Ningxia is not currently available. (more…)
Posted on June 5, 2009 - by Gavin
Recession-proof banking?…
World Mag
Finance: Grameen Bank and microfinance guru Muhammad Yunus came to America just a year ago with ideas—an success stories—on how the poor can survive a credit crunch | Emily Belz
NEW YORK—There he was—silver-haired and in a Bengali tunic—arguably the most popular banker of the year in New York City. As soon as he stepped out on the street in Queens, vendors at an outdoor market abandoned their wares—necklaces, a cart of Italian ice, rice pudding, and yards and yards of saris—to get a picture with him and shake his hand. Muhammad Yunus, the 2006 Nobel Peace Prize winner for his development of a microfinance model that has spread around the world, is as famous as a rock star among Asians just about anywhere. He offered high fives and hugs in return.
Yunus, who turns 69 this month, brought his revolutionary model to New York just over a year ago. Grameen America, a microfinance bank that provides loans to low-income entrepreneurs, is “banking for the unbanked” as its slogan goes.
“And ka-ching I take your money . . .” boomed a stereo system out over the crowd playing “Paper Planes” by Sri Lankan rapper M.I.A.
This is not a good year to be in the credit industry—unless you are Yunus. His U.S. bank has distributed $1.5 million in loans to small business owners in its first year while enjoying a 99.5 percent repayment rate. Yunus has said “you need a dollar to earn a dollar,” and Grameen offers the first dollar—tiny loans that the poor can repay and build their own businesses, one week at a time. (more…)
Posted on June 4, 2009 - by Gavin
Microcredit loans ‘used to buy food’…
Financial Times
Fewer than half of microcredit borrowers invest the money in the grassroots businesses that such loans are intended to foster, new research into poverty alleviation has discovered.
But the claim is disputed by some microlenders, including ASA of Bangladesh, winner of the Banking at the Bottom of the Pyramid category in last year’s FT Sustainable Banking Awards.
Microcredit was devised in the 1970s in Bangladesh by Muhammad Yunus, who founded the Grameen Bank to lend small sums to rural women to buy livestock or invest in arming activities or small businesses. Mr Yunus won a Nobel prize three years ago for his work in tackling poverty.
Researchers say microlenders have realised that many extremely poor borrowers are using their loans for other purposes, such as buying food reserves.
This shows that the benefits of this fast-growing system to people outside the traditional banking net are not as have been portrayed by microlenders, say the researchers, although they say it does not undermine the value of the system.
Posted on June 2, 2009 - by Gavin
Pushing pedals to give credit to world’s poor…
York Region.com
BY L.H. TIFFANY HSIEH
Jenika Wong doesn’t classify herself as an avid cyclist. Once she tried to bike on Hwy. 7 and was flagged down by the police and told never to do that again.
“I was pretty turned off from cycling in Markham after that, because of safety,” said the 22-year-old Unionville resident, who is currently studying international development and philosophy at the University of Toronto Scarborough campus.
But on Saturday, Ms Wong was leading the second annual Break the Cycle pledge ride in Toronto to raise funds for a microcredit initiative spearheaded by Global Agents for Change (Global AFC), a youth-led charitable organization that supports sustainable solutions to global poverty.
And in July and August, the Global AFC ride leader will cycle 4,000 km between Amsterdam and Istanbul with 24 other young riders, mostly from the Toronto and Vancouver areas, to raise $100,000 for microcredit collectively.
“If successful, it will be the largest youth-run microcredit fund in the world,” said Ms Wong, whose personal goal is to raise $4,000. (more…)
Posted on May 22, 2009 - by Gavin
World poor have little access to microcredit: experts…
AFP
MADRID (AFP) — The vast majority of the world’s poor still have no access to microloans that have been hailed as a good way to eradicate poverty, experts said Thursday at an international conference in Madrid.
“More than 95 percent of the world’s poor population remain far removed from any sort of financing,” the chairman of the microfinance foundation of Spain’s second-largest bank BBVA, Manuel Mendez del Rio Piovich, told the conference.
“In the world there are four billion people who are excluded from financing,” he said, adding there was a huge gap between the potential demand for microcredits and the number of institutions that provide them.
Campaigners say microloans, which average 100 dollars (73 euros) and require no collateral, can help poor people expand a basic food or handicraft business and enable them to lift themselves out of poverty.
The benefits of microfinance for the poor were highlighted when microloan pioneer Muhammad Yunus of Bangladesh won the Nobel peace prize in 2006.
Eight million people in Latin America and the Caribbean received 8.6 billion dollars in microcredits in 2007, the Inter-American Development Bank said. (more…)
Posted on May 19, 2009 - by Gavin
Microsavings, a step up the ladder for the poor
Daily Mirror
In a developing country such as Sri Lanka, where the percentage of rural poor is high with nine out of ten people living in rural areas, microfinancing and microcrediting can play a vital part. Branchless banking,a concept still not fully introduced to Sri Lanka, has the potential to grow leaps and bounds and aid the poor to overcome problems associated with banking and related other areas.
Access to financial services by poor people is seen as an influential tool to curb poverty, and microfinancing is a vital way forward. Daily Mirror FT met up with Thilakshana Kodithuwakku, Brand Manager ITC to talk about branchless banking and its importance to Sri Lanka today.
“It makes an enormous difference when underprivileged populations have access to basic financial services, whereby they can invest in income-producing activities, meet their crucial needs, such as health, education and nutrition,” says Mr. Kodithuwakku, “and branchless banking is one of the easiest ways to assist the poor by getting them involved in financial matters such as banking.” (more…)
Posted on May 19, 2009 - by Gavin
Accessing financial services ‘difficult for Europe’s poor’…
EurActive.com
More should be done by the EU and member states to increase the quality and accessibility of financial services for Europe’s poor, a group of activists and people experiencing poverty said on Friday (15 May).
Currency issues
The need to urgently improve access to finance was highlighted at the conference’s opening session by Eva Szarvak of the Hungarian branch European Anti-Poverty Network (EAPN), who noted that the economic crisis had created great “uncertainty and insecurity” for citizens in new member states, who are facing soaring costs of servicing foreign currency loans as the value of their own money falls.
“It shows social policy is not the only important tool in fighting poverty, but our approach must also involve financial policy,” said Jérôme Vignon, a director at the European Commission responsible for social protection and integration.
The Commission is already addressing the issue of the cost of falling currencies via the European Recovery Plan, which ”aims at convergence in macroeconomic policy,” said Vignon. (more…)
Posted on May 15, 2009 - by Gavin
MICROFINANCE EVENT: Latin America – Caribbean Regional Microcredit Summit, June 8-10, 2009…
Microcapital
Latin America – Caribbean Regional Microcredit Summit, June 8-10, 2009, Cartagena, Colombia.
Summary of Event: This is the 13th Microcredit Summit since the first summit held in Washington DC in 1997. The summit will offer the opportunity for microcredit practitioners, advocates, investors, donors, non-government organizations, financial institutions and those committed to the summits’ goals to assess progress, address challenges and discuss strategies for achieving the 2015 goals. Delegates will also come together to share microfinance best practices and network. The conference will be in Spanish and English depending upon the workshop session.
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
Cost: Registrants from Latin America and the Caribbean USD 250; all other registrants USD 300. This excludes 16 percent tax and must be paid in USD. This includes all sessions (seating may be limited), closing dinner and all lunches. This does not include field visits and day-long courses post summit. (more…)
Posted on May 14, 2009 - by Gavin
Microcredit one bright spot in recession…
The Daily Star
Nobel laureate Prof Muhammad Yunus said yesterday microcredit could safeguard many retrenched employees from the effects of deepening recession through self-employment.
“It’s (microcredit) an important tool to create self-employment. It bears more significance in times of recession, as it shows laid-off employees a way to stand up again on their own,” said Yunus at the launch of Bangladesh Microfinance Statistics for 2007 at the LGED auditorium.
Regarded as the banker to the poor, Yunus said microfinance has so far been immune to the global economic crisis at a time when big banks sought bailout packages to survive, although they had extended loans to borrowers against collateral.
“The banks are failing to retrieve loans although there are collateral, documents and lawyers to get the money back. Now the documents have proved fake,” he said.
The microcredit system is a driver of employment, savings and women’s empowerment, he said. (more…)
Posted on May 13, 2009 - by Gavin
Summit fuels microcredit interest…
The Falcon
SPU hosted the first ever Pacific Northwest Microfinance conference last weekend in Upper Gwinn Commons, an event that attracted over 400 students, business people and community members. Headlining speakers included Skip Li, founder of Agros International, and Matt Flannery, CEO of Kiva. Li and Flannery urged participants to connect to those suffering from poverty in new, innovative ways, such as microcredit.
“Microcredit is a way to make loans and repayments, so it’s more sustainable (than traditional charity),” said Kenman Wong, professor of business and economics, who helped plan the event. “I would even argue that it’s more dignified, because people are actually participating, hopefully creating small businesses to help them earn their way out of poverty.”
Though the concept is relatively new, interest in microfinance is growing. The conference, which began as an offhand suggestion, attracted participants from as far away as New Hampshire, Florida, Ohio, Oklahoma and North Carolina. The event sold out and nearly 100 people were on the waiting list, Wong said. (more…)
Posted on May 13, 2009 - by Gavin
A life to save: direct action on poverty…
Australia News
People with more than enough have an immediate and personal obligation to help those living in extreme poverty, says Peter Singer.
Imagine you come across a small child who has fallen into a pond and is in danger of drowning. You know that you can easily and safely rescue him, but you are wearing an expensive pair of shoes that will be ruined if you do. We all think it would be seriously wrong to walk on past the pond, leaving the child to drown, because you don’t want to have to buy a new pair of shoes – in fact, most people think that would be monstrous. You can’t compare a child’s life with a pair of shoes!
Yet while we all say that it would be wrong to walk past the child – and probably nearly all of us really would save the child in the pond – there are other children whose lives we could save just as easily, and yet we are letting them die. The United Nations Children’s Fund (Unicef) estimates that nearly 10 million children under 5 years old die each year from causes related to poverty.
That’s 27,000 a day – a sports-stadium full of young children; and the number is exceeded by thousands of older children and adults who die from poverty every day as well. Some children die because they don’t have enough to eat or clean water to drink. More die from measles, malaria, diarrhoea and pneumonia – diseases that don’t exist in developed nations, or if they do, are easily cured and rarely fatal. (more…)
Posted on May 12, 2009 - by Gavin
MICROCAPITAL STORY: Venezuelan Government Bank BANDES To Open Branch in Angola…
Microcapital
Jesus Alberto Garcia, Venezuelan ambassador to Angola, stated in an interview with Radio Nacional de Angola that Banco de Desarrollo Económico y Social de Venezuela (BANDES), the state development bank of Venezuela, will open a branch in Angola. He added, “This is one of the main things President Chavez wants to do with Africa.” Branches of BANDES outside of Latin America and the Caribbean include Syria and the Republic of Mali. Mr. Garcia expects that the Angola branch may be open by next year. In 2005, BANDES became an independently managed institution under the supervision of the government’s Ministry of the People’s Empowerment in Economics and Finance and is currently 75 percent government owned. BANDES provides microcredit and funds development projects in Venezuela as well as abroad.
The MIX, the internet microfinance database, lists two microfinance institutions (MFIs) in Angola, NovoBanco and KixiCredito, Angola’s first commercial microfinance organization. As of 2007, these MFIs cumulatively serve 11,056 borrowers and maintain a cumulative gross loan portfolio of USD 11.7 million. The CIA World Factbook reports Angola’s Gross Domestic Product (GDP) as USD 110.3 billion in 2008. The real GDP growth rate was 13.2 percent and the GDP per capita, about USD 8,800. The commercial bank prime lending rate was 17.7 percent at the end of 2007. Oil production accounts for 85 percent of Angola’s GDP.
The Angolan government has used a USD 9 billion line of credit from China to build public infrastructure and has also been extended lines of credit from Brazil and the EU. Half of the country’s food is imported although 85 percent of the labor force works in agriculture. MicroCapital has reported on a USD 32 million allocation by the United Nations Development Fund (UNDF) to various Angolan economic development organizations in April 2008. (more…)
Posted on May 11, 2009 - by Gavin
Microfinance must reach poor: expert…
The International News
KARACHI: Economic and social dimensions should go hand in hand to help microfinance reduce poverty in the country, said Sohailuddin Alavi, an expert on microfinance.
He was speaking at a discussion on ‘Microcredit’ held by Rotary Club of Karachi Defence here on Thursday evening.
According to Alavi, “microcredit is no longer known as microcredit, it is referred to as microfinance, which means providing better access for finance to poor people and help them grow economically while expanding their income.”
Explaining the need of microfinance to help the poor, he stressed the need for more institutions and organisations coming forward to provide microfinance. “Microfinance can help achieve a sustainable growth in rural areas and provide economic opportunities for people including women.” (more…)
The MiFi Report
-
