MICROFINANCE PUBLICATION ROUND-UP: Disclosure Regimes for Responsible Financial Inclusion; The Thailand Village and Urban Revolving Fund; “Microsavings Works Much Better”

“Designing Disclosure Regimes for Responsible Financial Inclusion,” by Jennifer Chien; published by CGAP (Consultative Group to Assist the Poor); March 2012; 23 pages; available at:
http://www.cgap.org/gm/document-1.9.57109/FN_78.pdf

This publication discusses the importance of client comprehension of products as part of efforts to increase financial inclusion and transparency. The author recommends seeking improvement in “disclosure regime,” or the guidelines, regulation, supervision and enforcement of transparency initiatives. She argues that disclosure regimes can increase transparency, client comprehension and market competition. Three dimensions are proposed for inclusion in the establishment of these regimes to increase their effectiveness: content of disclosure at the consumer level, methods of disclosure at the consumer level and disclosure to the public. She also examines disclosure regimes in eight regions to assess their implementation and relative success.

“Appraising the Thailand Village Fund,” by Jirawan Boonperm, et al; published by the World Bank; March 2012; 51 pages; available at:
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/03/14/000158349_20120314093820/Rendered/PDF/WPS5998.pdf

This document reviews the Thailand Village and Urban Revolving Fund (VF), which aims to support locally run rotating credit associations in Thailand. The World Bank Group, a US-based institution that aims to improve living conditions for people in developing countries, surveyed 3,000 VF committees and found that the scheme has not kept up with the growth of the Thai economy. However, from its inception in 2001 to 2005, committees lent THB 258 billion (USD 8.4 billion), and today VF reportedly reaches 30 percent of all Thai households. The World Bank concludes that the fund model is best described as altruistic and that its benefits exceed costs incurred.

“Forget Microcredit: Microsavings Work Much Better,” by Duncan Green; published by Oxfam International; April 2012; available at:
http://www.oxfamblogs.org/fp2p/?p=9489

The author of this blog entry recommends the promotion of microsavings over microcredit to help alleviate poverty in rural areas, supporting this argument via an interview with Jeff Ashe, manager of Savings for Change, an initiative of nonprofit Oxfam America that helps groups of women combine their savings to create a loan pool. According to the interview, Savings for Change differs from typical rotating savings and credit associations (ROSCAs) because it allows members to take out loans when they need them, rather than obligating women to follow a predetermined order. Users can also choose the amount of money they wish to take out of the savings pool and may also have to pay interest.

By Charlotte Newman, Research Associate

About Consultative Group to Assist the Poor (CGAP)
CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to providing financial access to poor people worldwide. CGAP is supported by approximately 30 development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors. CGAP reports taking in USD 20.9 million in total revenue for fiscal year 2010.

About World Bank Group
The World Bank Group consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Established in 1944, the World Bank was initially comprised of two development institutions, IBRD and IDA, which provide leveraged loans to developing countries for capital programs. IBRD makes loans and grants and provides analytical and advisory services to middle-income countries and poorer countries that are deemed creditworthy, with the aim of promoting sustainable development to reduce poverty. IDA offers interest-free credits and grants to the world’s 81 poorest countries, where a majority of the people lives on less than USD 2 per day. IDA resources and technical assistance support country-led poverty reduction strategies in the following policy areas: increased productivity, better governance and accountability, an improved private investment climate and access to education and healthcare. Established in 1956, IFC was created to support financial private sector development, mobilize private capital and provide advisory and risk mitigation services to businesses and services in emerging markets. Unlike the World Bank, which finances projects with sovereign guarantees, the IFC finances projects without sovereign guarantees, which means that the IFC is primarily active in private sector projects. Established in 1988, MIGA’s mission is to promote foreign direct investment (FDI) in developing countries to help support economic growth, reduce poverty and improve people’s lives. It does this by providing political risk insurance (guarantees) to the private sector. Established in 1966, ICSID facilitates the settlement of investment disputes between governments and private foreign investors through conciliation and arbitration. Its aim is to foster an atmosphere of mutual confidence between states and investors in order to promote increased flows of international investment. ICSID is an autonomous international organization. However, ICSID’s Administrative Council is chaired by the World Bank Group’s President. Also housed in the World Bank is the Consultative Group to Assist the Poor (CGAP), an independent policy and research center guided by the aim to promote financial access for the world’s poor. The World Bank was one of the founding donors of CGAP in 1995.

About Oxfam International
Oxfam International was established in 1995 as a confederation of 15 organizations working to reduce poverty. Oxfam’s name is derived from its founding member, the Oxford Committee for Famine Relief, which began operating in Britain in 1942 by advocating for food supplies to be sent to women and children in Greece during the Second World War. Oxfam International since has grown into a network of member organizations serving 99 countries with disaster relief, advocacy and policy research with the aim of providing long-term solutions for poverty eradication. As of March 2011, Oxfam International reports GBP 2.8 million (USD 4.4 million) in assets.

Sources and Additional Resources:

“Designing Disclosure Regimes for Responsible Financial Inclusion,” http://www.cgap.org/gm/document-1.9.57109/FN_78.pdf

“Thailand’s Grand Experiment In Microcredit is Paying Off,” http://www.businessinsider.com/thailands-grand-experiment-in-microcredit-is-paying-off-2012-4

“Appraising the Thailand Village Fund,” http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/03/14/000158349_20120314093820/Rendered/PDF/WPS5998.pdf

MicroCapital.org story, April 10, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Microinsurance and Child Labor; Benin Poverty Scorecard; Effect of Recession on Microcredit Sector,” https://www.microcapital.org/microfinance-publication-round-up-microinsurance-and-child-labor-benin-poverty-scorecard-effect-of-recession-on-microcredit-sector/

MicroCapital Universe Profile: Consultative Group to Assist the Poor (CGAP)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

MicroCapital Universe Profile: World Bank Group
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group

MicroCapital Universe Profile: Oxfam International
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Oxfam+International

Browse the MicroCapital Universe Profile and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/