by Uyen Tran -

MICROCAPITAL STORY: European Union (EU) Proposes to Provide €100m in “Micro-credit” for Domestic Small Businesses to Counter Credit Crunch and Unemployment

The European Commission (EC), the executive branch of the European Union (EU), plans to allot EUR 100 million from the EU budget to provide “micro-credit” for people hoping to start a small business. A total of EUR 500 million will be available for microcredits when supplemented by the European Investment Bank (EIB), the “policy-driven lending institution” for the EU. EU leaders will further discuss this plan later in June.

by Zoran Stanisljevic -

MICROCAPITAL STORY: Habitat for Humanity International Plans to Establish a USD 70 million Microfinance Fund to Assist Low-income Families and Improve Housing Globally

Habitat for Humanity International (HFHI), a non-profit organization founded in 1976, has received a USD 100 million gift from J. Ronald Terwilliger of Atlanta, a former chief executive of housing developer Trammell Crow Residential Co. and a longtime member of Habitat’s board of directors.  According to HFHI’s chief executive, Jonathan Reckford, the gift is the largest individual contribution in its history.  Habitat for Humanity International estimates that this single donation will help 60,000 families with access to improved housing conditions.

by Goda Thangada -

MICROCAPITAL STORY: Bhartiya Samruddhi Finance Ltd, a Unit of BASIX Group, Raises USD 9.87m in Capital

A recent press release from Intellectual Capital Advisory Services (Intellecap) reports that Bhartiya Samruddhi Finance Ltd (BSFL), a microfinance institution (MFI) based in Hyderabad, India, has received USD 9.87 million in Series-B funding from several investors including Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company and Small Industries Development Bank of India (SIDBI). Intellecap, a finance consultancy firm, was BSFL’s advisor on the deal. BSFL’s old investors, including IFC, Shorecap International Ltd, and ICICI Bank, commenced their exit by making a secondary sale of USD 4 million to the new investors. According to Aavishkaar Goodwell, USD 500 million in private equity over the next five years is necessary to facilitate the growth of MFIs in India. BSFL was set up in 1997 by Bhartiya Samruddhi Investments and Consulting Services (BASICS), the holding company of the BASIX group. BASICS currently owns 49.5 percent of BSFL, with investors holding the remaining amount. According to Mr. Vijay Mahajan, the Chairman and CEO of BSFL, “This is a big milestone for us as investors have reposed faith in the BASIX integrated livelihood promotion model over cookie-cutter micro-credit. We are all set to now address our goal of reaching 10 million poor households by 2014.” Donald Peck, the co-founder of Lok Capital, remarked, “We are delighted to be able to support the further growth of BSFL as it embarks on the next stage of roll-out of its unique agriculture and skills focused business models.”

by Laura Anderson -

MICROCAPITAL STORY: European Investment Bank (EIB), Gates Foundation, and Dutch Development Agency to Provide Technical Assistance Grants to AfriCap Microfinance Fund and FinTech Africa

The European Investment Bank (EIB) announced it is providing a EUR 2 million (USD 2.6 million) grant to support the AfriCap Microfinance Fund through FinTech Africa, to fund capacity building for early-stage and greenfield microfinance institutions across Africa.  In addition to the EIB grant, the Bill & Melinda Gates Foundation will contribute a USD 5 million grant to FinTech Africa, the non-profit organization that manages AfriCap’s technical services facility, and the Dutch development agency, FMO, will provide a USD 0.75 million grant.

by Jaclyn Berfond -

MICROCAPITAL STORY: Michael Chu Promotes Commercial Microfinance in Forbes Article

In a recent Forbes article, Michael Chu, senior lecturer at Harvard Business School and former CEO of ACCION International, writes that microfinance is a scalable, sustainable model that can provide real hope of winning the war against global poverty, even in the midst of the global economic crisis.

by Ryan Hogarth -

MICROCAPITAL STORY: ACCION’s “Lend to end Poverty” Petition Surpasses 20k Signatures Calling on World Economic Forum to Focus on Microfinance

As nearly 2500 world business leaders gathered in Davos, Switzerland for the World Economic Forum (WEF) Annual Meeting 2009, ACCION announced that its “Lend to End Poverty” petition surpassed the 20 thousand signature mark. The online petition began earlier in January, and calls on the co-chairs to promote and prioritize microfinance as a subject at the conference. ACCION estimates microfinance could benefit 500 million poor entrepreneurs over the next 10 years, and is only reaching 10 to 20 percent of its potential today.

by Bharathi Ram -

MICROCAPITAL STORY: ACCION Invests $4.2m in Two Microfinance Companies: Mauritius Based Leapfrog Investments Ltd and Swiss Based Paralife, Invests in Initiatives Aimed at Moving Microfinance ‘Beyond Credit’

ACCION International, a microfinance organization founded in 1961, has invested a total of USD 4.2 million in ParaLife, a Swiss microinsurance holding company and LeapFrog Investments, a USD 100 million microinsurance investment fund headquartered in Mauritius. In a press release found on Microfinance Gateway, Ms. Monica Baron, the principal director of ACCION’s Gateway Microfinance Innovation Fund, said that the investment by ACCION was aimed at moving microfinance ‘beyond credit’. The press release quoted Ms. Baron as saying the future of financial inclusion lay in offering the working poor a basic suite of all financial tools instead of providing only credit. In this regard, Ms. Baron mentioned that ACCION believed both ParaLife and LeapFrog Investments would be leaders for the industry, developing flexible, responsive insurance products that would meet the needs of a broad range of low income clients.

by Jeffrey Erfe -

MICROCAPITAL STORY: DataX Credit Reporting Agency Provides Short-Term Lender CashNetUSA with Non-Traditional Credit Data on Clients Seeking MicroLoans

On November 20, CashNetUSA, a Chicago-based short-term online lender, announced that it will begin receiving its non-traditional credit data from the DataX Credit Reporting Agency (DataX), a Las Vegas-based data collection agency for the financial sector. DataX will collect and provide credit information to CashNetUSA on clients seeking micro-loans and other financial services. Although Microcapital typically covers only those newsworthy developments with an international scope, this new relationship between two American firms has been reported because of its potential spillover effects for international microfinance.

by Lori Curtis -

MICROCAPITAL STORY: Mercy Corps Recognized by Fast Company for its Innovative Microfinance Program “The Bank of Banks”

Fast Company Magazine named Mercy Corps as one of its 2009 Social Enterprises of the Year, recognizing the work it has done this past year as one of the “bold and timely ideas that wow us”. Mercy Corps is praised as “the bank of banks” for buying a struggling Balinese bank and reopening it as an organization that would “cut the costs and inefficiencies” of microfinance institutions (MFIs) and provide them capital, financial tools and tech platforms. Mercy Corps had also previously been recognized as one of the 45 Social Entrepreneurs Who Are Changing the World as a part of Fast Company’s 2008 Social Capitalist Awards. ACCION International, another organization involved in microfinance, was honoured with this recognition for the fifth year in a row. The other organizations that were honoured as 2009 Social Enterprises of the Year include Do Something, The Academy for Urban School Leadership, DataDyne, Civic Ventures, The Institute for OneWorld Health, The Acumen Fund, Husk Power Systems, and Hopelab.

by Lori Curtis -

MICROCAPITAL STORY: New Insights Into The Impact of The Global Credit Crisis Envisage A Slow in Growth for Microfinance According to Reuters, World Bank, ACCION and YES Bank

Two stories on how the global financial crisis will impact microfinance were released this week, by Reuters and the World Bank. These reports are only the latest in a slew of reports and analyses on how microfinance will be impacted by the credit crisis, ranging from extremely cautious pessimism to undaunted optimism. While these new reports remain mostly speculative, with little documented evidence of actual changes, they offer fresh insights by experts in the microfinance industry into whether any impacts have been experienced a few months into the credit crisis. As there have been a myriad of articles on the topic, this article highlights the unique or new information addressed in the two reports, with a list of past articles on the topic listed in the Additional Reading section below for further information.