The European Investment Bank (EIB), the long-term lending institution of the EU, recently loaned USD 100 million to Corporación Financiera de Desarrollo (COFIDE), a development bank owned by the Peruvian government, to provide support to small businesses and projects to reduce the climate impacts of energy usage. This includes investments
Search Results for: COVID
MICROCAPITAL BRIEF: Jive, IFC Launch $320m Investment Vehicle to Buy Distressed Assets in Brazil; Freeing Cash for SMEs, Lenders
An entity of Jive Investments, a Brazil-based investment management firm, recently partnered with the International Finance Corporation (IFC), a member of the World Bank Group, to purchase “non-productive assets” in Brazil, increasing liquidity in markets that have been bogged down during the COVID-19 pandemic. Jive Distressed Fund III and IFC will invest USD 240 million and USD 80 million, respectively, in a
MICROFINANCE PAPER WRAP-UP: “Protecting Low-income Communities Through Climate Insurance,” by Will Bugler et al, Published by InsuResilience Investment Fund
Launched in 2015 and focused on developing countries, the InsuResilience Investment Fund (IIF) is dedicated to increasing access for low-income households as well as micro-, small and medium-sized enterprises to financial services that increase their resilience to climate change. The report focuses on IIF’s “achievements in facilitating adaptation of climate insurance to improve productivity and resilience of
MICROCAPITAL BRIEF: FMO Loans $25m to Aklease to Support Renewable Energy in Turkey
The Netherlands Development Finance Company, a public-private partnership also known by its Dutch acronym FMO, recently loaned USD 25 million to Aklease, a leasing subsidiary of Turkish bank Akbank, to be used for solar energy projects. Through this loan, Aklease aims to increase the “green” portion
MICROCAPITAL BRIEF: EBRD Loans $6m to OTP Bank Albania to On-lend to SMEs, EU Offers Premiums for Hitting Goals
Országos Takarék Pénztár (OTP) Bank Albania, a member of the Hungary-based OTP Bank Group, recently borrowed EUR 5 million (USD 6.1 million) from the UK-based European Bank for Reconstruction and Development (EBRD) to support small and medium-sized enterprises (SMEs) in Albania in responding to the COVID-19 pandemic by upgrading
MICROCAPITAL BRIEF: IDB Loans $50m to BRDE to Support MSMEs in Southern Brazil in Retaining Employees During Pandemic
The Inter-American Development Bank (IDB), which is owned by 48 member nations, recently issued a loan of USD 50 million, with a term of 15 years and a 5.5-year grace period, to Banco Regional de Desenvolvimento do Extremo Sul (BRDE), which is owned by three states in southern Brazil. BRDE will on-lend the funds through its Recupera Sul credit line product in an effort to support micro-, small and medium-sized enterprises (MSMEs) in adjusting to the COVID-19 pandemic. The primary goal is to help these firms to preserve employment in order to hasten economic recovery after the pandemic, decreasing the burden on social programs.
MICROFINANCE PAPER WRAP-UP: “Digital Cash Transfers for Stranded Migrants,” by Anit Mukherjee, Published by Center for Global Development
In light of efforts by government entities to assist internal migrants within India whose lives have been disrupted by the COVID-19 pandemic, Mr Mukherjee argues that “unlike countries such as Brazil or Pakistan, India does not have a unified beneficiary database or social registry that could be used to identify, target, register and pay those in need of assistance.” The bureaucracy of India’s social assistance programs, which are fragmented among
SPECIAL REPORT: European Microfinance Week Closes, Looking to Future of Financial Inclusion: Wooing Regulators, Women Leveraging Loans by Factor of 5, Investor Collaboration, New Customers for MFIs
Claudio 
Gonzalez-Vega, a board member of Spain’s BBVA Microfinance Foundation, spoke of the huge impact of the COVID-19 pandemic at the closing plenary of European Microfinance Week, with life expectancy falling and an estimated 115 million people being pushed into extreme poverty. Despite the difficulties for microfinance institutions (MFIs), he said they may soon find a larger, very appropriate market for their services, given that many of these newly poor people have business experience. Dr Gonzalez-Vega argued that the “pandemic will make microfinance more important,” as – given MFIs’ “intimate knowledge of clients – the role of microfinance will be appreciated in a new light.”
Dina Pons of Belgium’s Incofin Investment Management agreed that microfinance clients have gotten
SPECIAL REPORT: Financial Inclusion for Forcibly Displaced Persons (FDPs) – Part 2: Regulatory Barriers, Segmenting Needs
(This is the companion feature to an earlier piece on a European Microfinance Week conversation on serving refugees.)
Swati Mehta Dhawan of Germany’s Catholic University of Eichstätt-Ingolstadt argued for building up legal frameworks to allow forcibly displaced persons (FDPs) to escape “infinite limbo” by accessing documentation for identification purposes, working legally and integrating with host populations. She offered the example of a person displaced to Kenya, who has been there for 15 years without being allowed to work. Hans-Martin Zademach, also of Catholic University, noted many are “stuck in survival mode,” more in need of a reliable income source than methods for managing money.
However, Ms Dhawan explained that FDPs’ needs for financial services often increase as years go by. A common trajectory is
SPECIAL REPORT: Strong Motivation to Save, “Extreme Resilience During Times of Crisis” Despite Microfinance Institutions’ “Smothering” Loan Offers Pre-pandemic
During the plenary titled “Creating an Environment for Effective and Inclusive Savings” on day two of European Microfinance Week, Stuart Rutherford of the Hrishipara Daily Diaries Project suggested thinking of savings as two separate services – collection and storage. While storage is primary for a person with regular paychecks deposited into a bank electronically, collection is critical for cash earners. This is why the service of a susu worker, who collects deposits frequently door-to-door and then returns “withdrawals” periodically, is so valuable that people are willing to pay fees for it.
Luis Treviño Garza of the Alliance for Financial Inclusion noted that savings is an “important factor for resilience, especially for vulnerable groups.” He added that “from the regulator’s perspective savings is really crucial… above credit.”
Mr Rutherford said that “all the diaries I’ve [collected in Bangladesh] show that poor people have a strong propensity to
SPECIAL REPORT: Digitizing Microfinance – Silver Lining of the Pandemic?
Ciprian Panturu of Belgium-based cooperative PHB Development opened a European Microfinance Week session on financial services providers (FSPs) moving toward digital services with a joke: “Who got the FSP to ‘go digital,’ the CEO, the CFO?” The answer, of course, is “COVID!”. Unlike before the pandemic, when FSPs were looking into digital services and clients were often unconvinced, Mr Panturu said, “Now there is a clear pull from the customer side.”
Jessica Schicks of the Belgian Investment Company for Developing Countries (BIO) agreed, “Client uptake has been a challenge in past. COVID is helping overcome digital literacy and trust issues.” However, she warned,
SPECIAL REPORT: Lessons, Tools for the Pandemic from Prior Microfinance Crises
Deborah Drake of Accion’s CFI opened a European Microfinance Week session on crises in microfinance by noting that the effect of COVID-19 on the financial inclusion industry “is a different crisis because it is global.” In past crises, which were centered on a single economy, microfinance investors had sufficient capacity to inject into stronger institutions to help them survive. The global nature of the current downturn, however, may exceed the capacity of investors to sustain “worthy” financial services providers (FSPs) in certain markets. “There is inevitable
SPECIAL REPORT: During Pandemic, VSLAs Support Members Struggling with Barriers to Income, Education, Gender-based Violence, Lack of PPE
During a European Microfinance Week session on village savings and loan associations (VSLAs), speakers from several affiliates of Switzerland-based CARE International described their organizations’ responses to the COVID-19 pandemic. As the pandemic set in, they surveyed members of VSLAs, which commonly include 30 women, in various formats to learn how they were adjusting to the pandemic and what support they need.
Maryam Garba Usman of CARE Nigeria described her organization’s survey of 100 VSLAs, largely via an interactive voice response telephone system. The team also used a mobile app to distribute information on COVID-19 and a range of gender-related issues. Most groups continued to meet in person, incorporating social distancing. In addition to accessing financial services, VSLA members addressed problems such as gender-based violence, child marriage, interruptions to children’s education and
MICROCAPITAL BRIEF: The Currency Exchange Fund (TCX) Raises $200m in Equity from EU, IFC, KfW, PROPARCO to Manage FX Risk for Microfinance, Other Impact Investments
The Currency Exchange Fund (TCX) recently raised a total of USD 200 million in equity financing that it will use to lower the foreign-exchange risk of third-party impact investments in developing nations. TCX hedges emerging-market currencies to support investments
SPECIAL REPORT: Protecting Consumers, Tracking Business Cash Flows, Cutting Costs for Digital Microfinance
During a session entitled “Digital Credit Beyond Consumer Finance” at European Microfinance Week 2020, Michael Rothe, the co-founder of UK-based Flow, argued that there are both good and bad players in digital lending. He said that “most development finance institutions think digital credit is dangerous” and that “because providers are not being differentiated, Flow is being lumped in with” consumer finance. In fact, Flow is a fintech that lends to businesses only. During the COVID-19 pandemic, some Flow customers – many of whom operate shops that offer mobile-money services as a sideline – had to close down due to government restrictions on travel and trade. However, those that remained open saw an uptick in transactions. This is partially because governments encouraged the use of mobile money in an effort to minimize virus transmission. While other lenders stopped operating during the early days of the pandemic, Flow continued to lend, resulting in brand loyalty that Mr Rothe describes as very high. The ratio of the firm’s portfolio at risk peaked at
SPECIAL REPORT: Local Market Data, Resilience During Pandemic, Securitization, Land Title Systems Enable Housing Microfinance, Micro-mortgages
During European Microfinance Week 2020, Maria Claudia Rojas of the Netherlands’ Triple Jump described her firm’s experience managing the MicroBuild Fund it created with US-based Habitat for Humanity in 2012. Compared with Triple Jump’s portfolio as a whole, MicroBuild has maintained higher asset quality, and that margin of superiority has doubled during the COVID-19 pandemic.
Lucie Astier Such of the French government’s AFD explained her agency’s role in providing technical assistance, loans and data to support housing finance in developing countries. Part of this effort involves connecting households and microfinance institutions (MFIs) with reputable builders and suppliers of construction materials. One tool for this purpose is
SPECIAL REPORT: Danone, Incofin, Water.org: WASH Sector is Already Investible
During one of the Friday sessions of European Microfinance Week 2020, Dina Pons of Belgium-based Incofin Investment Management explained a partnership with France-based food company Danone through which the organizations are building a 10-year equity fund to invest in expanding access to clean water in developing countries. Since 2007, the Danone Communities arm of Danone – mostly funded by its employees – has invested in access to drinking water on a proof-of-concept basis. Now Danone believes the sector has matured from the incubation stage to the investible stage. The company selected Incofin to help it invest in proven models, with a technical assistance component and monitoring of factors such as affordability, limiting plastic usage and
SPECIAL REPORT: Resilience Among Microfinance Institutions? “Region of Crisis” Relatively Stable; “Moratorium Veil” Yet to Lift
As part of the opening day of European Microfinance Week, Mohammed Khaled of the World Bank Group’s International Finance Corporation stated that the effects of the COVID-19 pandemic on the microfinance sector in the Middle East and North Africa (MENA) so far have not been as bad as was feared earlier in 2020. Most of the large microfinance institutions (MFIs) in the region have maintained 30-day portfolio-at-risk (PAR) ratios below 4 percent. Mr Khaled said, “Among leading MFIs, PAR did not rise as high as expected. We thought [it might rise to] 10 percent to 20 percent, but many MFIs have kept things under control.” Part of the reason for this, he believes is that “this is