by the MicroCapital Team -

SPECIAL REPORT: Inclusivity in Capital Markets Demands Sustainability Reporting

Sustainability reporting entails assessing, dis­closing and managing an organization’s environmental, social and governance (ESG) impacts. This prac­tice communi­cates to investors, custo­mers, employ­ees and regulators that the organization is com­mit­ted to sustainability. The dis­closure element, in particular, con­veys values, strategies, risks, oppor­tunities, account­ability and trans­par­ency.

The significance of sustain­ability re­port­ing within capital markets is increasing steadily, as more investors

by the MicroCapital Team -

SPECIAL REPORT: e-MFP Launches the Green Map, a Pioneering Resource to Address an Information Gap in Green Inclusive Finance

e-MFP logoAs the inclusive finance sector increasingly understands the crucial role it can have in supporting the most vulnerable populations – who are dis­pro­portionately affected by the consequences of climate change – the Euro­pean Microfinance Platform (e-MFP) is delighted to announce the launch of the Green Map, a project implemented by the e-MFP Green Inclusive and Climate Smart Finance Action Group (GICSF-AG) and supported by the Government of the Grand-Duchy of Luxembourg. The Green Map was officially launched on Thursday, September 28 at an in-person and live-streamed event entitled “Addressing Climate Change via an Open Resource for Green Inclusive Finance Projects & Practices.”

What’s this all for? The Green Map project aims to

by the MicroCapital Team -

SPECIAL REPORT: Fortune Credit of Kenya, Fundación Génesis Empresarial of Guatemala, Yikri of Burkina Faso Are Finalists for European Microfinance Award 2023 on Inclusive Finance for Food Security & Nutrition

e-MFP logoFrom the European Microfinance Platform (e-MFP): On September 19 and September 20, 2023, the Selection Committee for the European Microfinance Award (EMA) 2023 on “Inclusive Finance for Food Security & Nutrition” selected the three finalists that will go on to compete for the prize of EUR 100,000 (USD 105,000): Fortune Credit Limited from Kenya, Fundación Génesis Empresarial from Guatemala and Yikri from Burkina Faso.

The choice of topic for the EMA2023 comes at a

by James Stevenson -

MICROCAPITAL BRIEF: Non-performing Loan (NPL) Ratios Up Among Microfinance Providers in Bangladesh

Bangladesh Bank, the country’s central bank, recently reported that the volume of non-performing loans (NPLs) in the domestic microcredit industry rose from BDT 45 billion (USD 412 million) in the fiscal year ending March 2021 (FY21) to

by Rohit Dayanand -

MICROFINANCE PAPER WRAP-UP: “Climate Risk and Financial Inclusion: A Regulatory Perspective on Risks and Opportunities;” by Peter Knaack, Peter Zetterli

This paper analyzes how climate change may impact the stability of financial systems and – particularly – access to financial services for groups that often have difficulty with such access, including micro- and small enterprises (MSEs) as well as low-income households and those in rural areas. The authors emphasize three challenges:

by the MicroCapital Team -

SPECIAL REPORT: An Interview with Christoph Pausch of e-MFP on European Microfinance Week, Luxembourg & Online, November 2023

e-MFP logoMicroCapital: What can we expect from EMW2023, happening in-person November 15-17 in Luxembourg and online?
Christoph Pausch: EMW2022, back in-person after two years, showed us that there is no substitute for getting the opinion leaders and decision-makers in the inclusive finance sector together in-person, ensuring they have the time and space to debate, make new connections, and of course give presentations and discuss the various challenges and innovations under­way around the world.

After the success of the hy­brid EMW2022, which gathered 570 attend­ees (including over 200 who joined us online) from 48 countries, we are delighted to return to the beautiful Abbaye de Neumunster in Luxem­bourg for another hybrid event, which will once again offer an excep­tion­al networking and knowledge-sharing experi­ence with the top ex­perts in the financial inclusion sector. And the programme is designed to be as conducive as possible to those joining us online from different time zones. Plus, sessions will be re­corded for “catch-up” after.

MC: What choices of sessions can attendees expect?
CP: As always, EMW sessions have been put forward largely by our members – so they address the sector’s current “hot topics” – and we organise them across several thematic streams. We received an enor­mous response to our call for proposals that went out early in the sum­mer, giving us great scope for a fascinating, diverse program across different streams. In addition to our usual annual topic areas – digiti­sation, social performance, funding/investment – this year there also will be streams on refugee finance, agri-finance, a particular emphasis on

by James Stevenson -

MICROFINANCE PAPER WRAP-UP: “Land Titling and Microcredit in Cambodia: Examining the Reality of Hernando de Soto’s ‘Three Steps to Heaven,’” by Milford Bateman

In this paper, Dr Bateman examines the Cambodian microcredit industry and argues against prior claims that increases in land titling lead to access to credit that enables poor landowners to increase their incomes. The results are based on

by the MicroCapital Team -

SPECIAL REPORT: Let’s Channel Climate Finance to Those on the Climate Front

Climate finance is hot, and right­fully so. The threat is real, and the needs are towering. The good news is that there are investible solutions out there. As with any new field, the development of climate finance has been accompanied by a range of standards, taxon­omies and met­rics. For climate mitigation, a clear consensus seems to be emerging on emissions reductions as the preferred metric to be tracked by investors, however the jury is still out on the ideal standards for tracking the impact of climate adaptation, and it is only starting to deliberate on resilience projects.

This difference in the pace of development of climate mitigation and adaptation standards has led to an unintended consequence: that the story of climate finance today is the story of climate mitigation. Less than 10 percent of all climate finance today goes to adaptation and resilience. This happens not because mitigation is more important than adaptation, but because the impact of mitigation projects is easier to track than that of adaptation projects. Simply put: what gets measured, gets managed.

The problem with too narrow of a focus on climate mitigation is that it does not take into account the fact that climate change is a challenge of livelihoods and social justice as much as it is an environmental chal­lenge, especially for low-income populations and other vulnerable com­muni­ties in the global South. Because climate change is not gender neu­tral, applying a gender (or JEDI for Justice, Equity, Diversity) approach to investments can

by Rohit Dayanand -

MICROFINANCE PAPER WRAP-UP: “Driving Digital Financial Services in Africa Through Merchant Acceptance of Digital Payments,” published by Alliance for Financial Inclusion (AFI)

This paper examines the growth and challenges of digital payment adoption by retailers in Africa, including “contactless payment (QR codes, tap to pay) [and] buy-now-pay-later” services. The authors note four main prerequisites for merchant adoption:

by Rohit Dayanand -

MICROFINANCE PAPER WRAP-UP: “Establishing a Financial Services Ombudsman in Mongolia: Experiences and Lessons from Armenia, Australia and Singapore,” by Massimiliano Gangi et al

This paper explores the potential of introducing an independent ombudsman system to address complaints by consumers against financial services providers (FSPs) in Mongolia by exploring existing dispute resolution systems in Armenia, Australia and Singapore.

Among the similarities of these three systems are:

by Renata Samadova -

MICROFINANCE EVENT: Global SME Finance Forum; September 12-14, 2023; Mumbai, India

The ninth iteration of this event will explore financial services providers’ delivery of digital services to small and medium-sized enterprises (SMEs), leveraging samples from India and abroad. The forum will cover topics – particularly “ecosystems” – relating to digital finance, international

by Rohit Dayanand -

MICROFINANCE PAPER WRAP-UP: “Worth Your Weight: Experimental Evidence on the Benefits of Obesity in Low-income Countries,” by Elise Macchi

This paper examines how the perception of obesity as a symbol of wealth can yield financial benefits to overweight people in southern Uganda. The author applied computer software to photos of 34 test subjects to create

by Vaughn Rajah -

MICROFINANCE PAPER WRAP-UP: “Predictors of Microfinance Sustainability: Empirical Evidence from Bangladesh,” by Maeenuddin et al

This article examines the financial sustainability of microfinance institutions (MFIs) in Bangladesh. Using data from the MIX Market database, the authors develop a

by the MicroCapital Team -

SPECIAL REPORT: Small Is Beautiful – Sustainable Agriculture Finance

What financial institutions can do to help poor smallholder farmers secure their livelihoods and make their communities more climate-resilient

Big in numbers, small in size
When German-born British economist E F Schumacher published his book Small Is Beautiful in 1973, he proposed an alternative to the main­stream economic principle of “bigger is better.” Mr Schumacher was an early proponent of sustainable development, demanding that people and planet should matter more than mere profits.

Agriculture plays a key role in global and local sustainable development. It is not an exaggeration to say: Farming is everyone’s business! Just think about the following mind-blowing facts:

  • The world population will reach 10 billion by the year 2050, and global food demand will increase by some 50 percent by then.
  • 30 percent of global food production is wasted after harvest.
  • Every year, we lose almost 1 percent of global farmland due to environmental degradation.
  • 26 percent of global greenhouse gas emissions, which cause climate change, come from the food sector.
  • Up to 2,000 species of wild animals and plants are estimated to become extinct each year, and agriculture is a main driver of this biodiversity loss.
  • There are an estimated 570 million farms worldwide, 84 percent of which are smallholdings with less than 2 hectares of land (equivalent to a plot of 200 meters by 100 meters).
  • Smallholder farms comprise only 12 percent of all agricultural land on our planet, but still produce roughly one third of the world’s food.

Distribution of the world’s farms and farmland area by land size class.
Source: CGAP.

e-MFP logo

Why do smallholder farmers matter?
To consider sustainability in all its

by Renata Samadova -

MICROFINANCE EVENT: Responsible Finance Forum; July 5-7, 3023; Bengaluru, India

Themed “Shaping a Responsible Digital Finance Ecosystem,” the upcoming edition of this event – the first in-person since 2019 – will focus on client protection to help “low-income and vulnerable” people reduce risks as they use financial tools. Although the detailed agenda has not yet been finalized, it is expected to include topics such as: (1) Balancing Responsible Finance Between

by Renata Samadova -

MICROFINANCE EVENT: Global Impact Investing Network (GIIN) Impact Forum; October 4-5, 2023; Copenhagen, Denmark

This event will address sustainable development via impact investing. The agenda offers sessions including: (1) Impact Analytics, Predictive and Optimization tools: What Does “Good” Impact Look Like?; (2) Designing the Future of

by the MicroCapital Team -

SPECIAL REPORT: Christoph Pausch on the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition

e-MFP logoMicroCapital: Why was “Inclusive Finance for Food Security & Nutrition” chosen as the topic of this, the 14th edition of the European Microfinance Award?

Christoph Pausch: For a long time, it looked like progress in this field would be positive and continuous. But a combination of factors – among them climate change, the COVID-19 pandemic and the global infla­tion­ary context – means that progress in food security and nutrition may have stalled, or in fact reversed. According to the World Food Pro­gramme, “Conflict, economic shocks, climate extremes and soaring fertiliser prices are combining to create a food crisis of unprecedented proportions.” And the Food and Agriculture Organization reports that the number of people affected by hunger has grown by 150 million since the onset of the pandemic. But the problem is not only one of hunger – lack of access to sufficient food – it’s also one of insufficient quality, meaning poor nu­tri­tion, and lack of access to the micronutrients necessary for good health, all compounded by the stress of uncertain supply. There may be 2 billion people worldwide in this category.

There are many sectors that have to play roles in addressing food secur­ity and nutrition. And because the people most vulnerable to food in­security and malnutrition are largely those who are low-income, living in low-income countries and financially excluded, there is a vital role for the financial inclusion

by the MicroCapital Team -

MICROFINANCE EVENT: Navigating the Future of Impact Investing in Asia; May 9, 2023; Hong Kong, China

Attendees at this conference will debate investing “with the intention to generate social and environmental impact alongside a financial return” in Asia and worldwide. The topics to be covered include: 1) the current status of the sector; 2) methods for