CGAP has partnered with the UK Department for International Development (DFID) and the GSM Association, a global trade association representing over 700 mobile phone operators from 218 countries, to conduct diagnostic reviews of the regulatory environment for branchless banking approaches in Pakistan, Kenya, South Africa, the Philippines, India, Russia and Brazil. The report on India, summarized here, was released this month. MicroCapital covered the release of the Kenya report in a story dated November 26. 2007, and the Pakistan report can be downloaded from CGAP.
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PAPER WRAP-UP: Foreign Exchange Rate Risk in Microfinance: What Is It And How Can It Be Managed?, A Focus Note by the Consultative Group to Assist the Poor (CGAP)
Published by CGAP, January 2006, 16 pages, available for viewing here.
Because most microfinance institutions operate in developing countries where risk of currency depreciation is high and debt restructuring occurs periodically, they are particularly vulnerable to foreign exchange rate risk. A recent CGAP survey not only revealed that 50 percent of MFIs have no protection mechanisms in place, but also indicated a general lack of understanding of both foreign exchange risk and the extent to which MFIs are exposed. This paper seeks to raise awareness of the issue of foreign exchange rate risk within the microfinance sector first, by providing a brief overview of the different components of risk, second, by looking at current techniques employed by microfinance institutions (MFIs) and investors to manage these risks, and finally, by making recommendations on mitigating or avoiding exposure to exchange risk.
MICROCAPITAL STORY: Study by Consultative Group to Assist the Poor (CGAP) and Innovations for Poverty Action (IPA) Reveals that Marketing Affects Savings Among Poor in Peru
CGAP’s (Consultative Group to Assist the Poor) most recent issue of its Portfolio Newsletter outlined a recent study conducted by Innovations for Poverty Action (IPA) and funded by CGAP that focused on specific marketing techniques to encourage long-term savings among poor Peruvians.
MICROCAPITAL STORY: CGAP-Supported Global Microfinance Consumer Protection Campaign Launched in Ghana by GHAMFIN and SPEED Ghana
The Ghana Microfinance Institutions Network (GHAMFIN) and SPEED Ghana have teamed up to launch a consumer education and protection (CEP) campaign that specifically targets customers of the country’s microfinance sector. The campaign, a global initiative promoted by the Consultative Group to Assist the Poor (CGAP) and the Small Enterprise and Education Promotion Network (SEEP), seeks to ensure that clients are treated fairly and with respect by financial institutions.
MICROCAPITAL STORY: CGAP Report on Branchless Banking in Kenya Cautiously Optimistic on Continued Innovations in Microfinance
The Consultative Group to Assist the Poor (CGAP) calls Kenya a world leader in fostering mobile phone banking and other ‘branchless’ banking services. The Government of Kenya and the Central Bank have shown a strong interest in branchless banking and have expressed their commitment to institute legal and regulatory changes that will support new technology-based products and services and enable increased outreach. Read more in “Notes on Regulation of Branchless Banking in Kenya“.
PRESS RELEASE: Winners of the CGAP Microfinance Photography Contest Announced
Source: Consultative Group to Assist the Poor (CGAP).
PAPER WRAP-UP: Microfinance Investment Vehicles (CGAP Brief), by Xavier Reille and Ousa Sananikone
By Xavier Reille and Ousa Sananikone, published by Consultative Group to Assist the Poor (CGAP), April 2007, 2 pages, available on the Microfinance Gateway at http://www.microfinancegateway.org/content/article/detail/40677
The paper, a Consultative Group to Assist the Poor (CGAP) brief, by Xavier Reille and Ousa Sananikone, highlights the growth of foreign capital investment in microfinance, specifically the proliferation and impact of private investment funds. The authors begin by describing two primary players in microfinance investment, international financial institutions (IFIs), which provide seed capital to start-up microfinance institutions (MFIs), and private investment funds know as microfinance investment vehicles (MIVs). IFIs are investment arms of public development agencies. For example, the International Finance Corporation (IFC), a member of the World Bank Group, is considered an IFI. The Netherlands Development Finance company (FMO) is also an IFI. MIVs, on the other hand, draw funds from the private sector. BlueOrchard, an MIV, manages funds that deliver capital from private investors directly to MFIs through loans and other structures. MIVs are, in essence, financial intermediaries that act as distribution channels of private monies.
MICROCAPITAL STORY: What Are the Total Global Assets in Microfinance? Leading Sources Weigh In: MIX, Microcredit Summit, MicroBanking Bulletin (MBB), ACCIÓN, Microfinance Gateway, BlueOrchard, UNCDF, Unitus, CGAP
Numerous challenges hinder the spread of accurate information on microfinance. Due to the lack of transparency of many microfinance providers, much information is never publicly disclosed. Much of the information that is reported is obsolete and outdated—often two or more years old. As there is limited and inconsistent regulation of microfinance providers, third party confirmation of data is often not required, and providers have little incentive to verify their own figures. Essentially, there is no standardized system to which all microfinance providers report and from which accurate information can be retrieved. Thus, the task of determining a basic statistic—such as the total amount of assets invested in microfinance worldwide—can prove nearly impossible. Calculating this figure requires a worldwide census of microfinance institutions (MFIs), coops, government banks, credit unions, self-help groups, etc. Needless to say, no such census exists.
CGAP Releases List of Recent Microfinance Publications
The Consultative Group to Assist the Poor (CGAP) today issued this list of publications recently posted on its website:
MFI Capital Structure Decision Making: A Call for Greater Awareness
CGAP
Microfinance: An Emerging Asset Class for Equity and Debt Investors
MicroCapital
MICROCAPITAL STORY: Consultative Group to Assist the Poor (CGAP) Working Group on Microinsurance, Munich Re Foundation, and India’s Insurance Regulatory and Development Authority (IRDA) Host Microfina
MICROINSURANCE CONFERENCE 2007
NOVEMBER 13-15, 2007, HYATT REGENCY IN MUMBAI, INDIA
The Consultative Group to Assist the Poor (CGAP) Working Group on Microinsurance, international research organization Munich Re Foundation, and Indian government-run Insurance Regulatory and Development Authority (IRDA) have scheduled the third annual Microinsurance Conference. The cost to attend is USD 490; representatives of non-profits from developing countries, however, are eligible for the USD 100 discount price.
Please Report to the Microfinance Capital Markets (MCM) Update newsletter: (cgap.org/mcm) by CGAP, MIX, and Microfinancegateway.org
We here at microcapital.org constantly receive requests from readers that we provide more technical information on microfinance investment deals. Until there is a market for information in microfinance åö until you start paying for it åö there will be no budget to birddog this information.
MICROCAPITAL STORY: CGAP Publishes Focus Note on Compartamos Controversial IPO åö Discussed by Microfinance Practice Group
The biggest news in microfinance last month was the sale of equity of Compartamos, a Mexican microfinance institution (MFI), on stockmarkets in both the US and Mexico (see previous article on microcapital). The move stirred up much debate and drawing on this, the Consultative Group to Assist the Poor (CGAP) has recently published a focus note addressing the issues brought up by this development.
At the time of the deal, and ongoing since then, there has been much discussion over this issue, particularly in the Yahoo online ‘microfinance practice group’ (see previous article on microcapital) which is monitored by Mr. Chuck Waterfield who has more than 20 years of experience in the microfinance industry. Below we quote in full a recent comment posted to the group by Mr. Waterfield regarding the CGAP focus note. Microcapital will also be posting our own paper review of the focus note over the coming days.
MICROCAPITAL STORY: Update on CGAP’s Phone Banking Project
As an update on one of the many technological initiatives CGAP (Consultative Group to Assist the Poor) has taken up, the launch of their phone banking project has officially taken off
CGAP, an extension of the World Bank, was given a USD 26 million grant to work with, provided by the Bill and Melinda Gates Foundation, in order to figure out the best methods in utilizing technology to overcome the barriers associated with poverty. One such method identified is the mobile banking service concept created by the Rural Bankers Association of the Philippines, and is one the nine projects included in the iniital round of selection. (For an outline of all projects, refer to a previous microcapital article on the subject). The final decision about which projects will be funded will be announced later this summer according to Jim Rosenberg, Communications Officer at the CGAP Technology Program.
Continue reading “MICROCAPITAL STORY: Update on CGAP’s Phone Banking Project”
CEO’s from Consultative Group to Assist the Poor (CGAP) and SKS Microfinance to be Keynote Speakers at Chicago Microfinance Conference, May 25th 2007
This year’s third annual Chicago Microfinance Conference (CMFC), ‘The Road Ahead, Innovation, Integration, Impact,’ will feature keynote addresses by Elizabeth Littlefield, CEO Consultative Group to Assist the Poor (CGAP), a consortium of 33 public and private development agencies based in Washington DC, and Vikram Akula, CEO, SKS Microfinance, and Indian microfinance institution (MFI). Established by the University of Chicago, Kellogg School of Management, and Harris School of Public Policy Studies, the conference, to be held on May 25th 2007, aims to “advance strategic debate of the future of microfinance” and brings together practitioners, academics and industry leaders.
ProMujer Nicaragua and ACODEP of Nicaragua are Latin American Winners of the Consultative Group to Assist the Poor (CGAP) Financial Transparency Award 2006
Programas para la Mujer (ProMujer) Nicaragua was recently among the winners of the Consultative Group to Assist the Poor (CGAP) Financial Transparency Awards 2006. ProMujer Nicaragua is part of the ProMujer Microfinance Network which provides loans, training and education to women, and was established in 1996. It was the first ProMujer organisation to be replicated outside of Bolivia where the network was first founded in 1990. According to the Mix Market, the microfinance information clearing house, at the end of 2005 ProMujer Nicaragua had a gross loan portfolio equal to USD 2,542,609 and a debt to equity ratio of 56.92%. Its return on assets was 12.97% while its return on equity was 18.28%. According to the ProMujer website, as of March 2006 they had 11,182 active borrowers.
Good News is Good News. CGAP Announces Bi-monthly Newsletter
CGAP, the leading policy research shop in microfinance, announces its bi-monthly e-newsletter called CGAP Portfolio. In this publication, and the broader website that supports it, CGAP plays to its strengths to good effect, namely, policy advice for its members (and the public), hands-on support for local and international officials, and technology. Please take the Reader Survey: “What is the most important role for policy-makers interested in increasing the availability of financial services for the poor in their country?”
Continue reading “Good News is Good News. CGAP Announces Bi-monthly Newsletter”
CGAP Announces Its 9 Technology Picks
CGAP, the World Bank associated microfinance agency, announced its nine technology partners. Quoting the CGAP press release, the chosen nine are as follows:
Project Ideas Selected from Concept Notes Received:
1. Colombia: Credibanco VISA provides credit and debit card transaction acquiring to banks in Colombia through 53,000 points of sale and a telecommunications network that connects in real time to 17 principal cities of the country and 385 municipalities.
CGAP is planning a project with Credibanco to test whether a third party provider can use its merchant network to provide financial services on behalf of banks. Credibanco also plans to extend its existing merchant network to reach 250 additional municipalities that are currently unserved by bank branches. Banking agents in these municipalities will offer a full set of financial services on behalf of VISA member banks using POS and card-based technologies.
Gates Foundation Grants USD 24mn Over 5 Years to Consultative Group to Assist the Poor (CGAP) to Promote Microfinance Technology
The Consultative Group to Assist the Poor (CGAP), a World Bank associated agency for international microfinance, announced its partnership with the Bill and Melinda Gates Foundation, including a USD 24 mn grant spread over five years to pilot technologies for increasing access to financial services for the global majority.
CGAP technology expert Gautam Ivatury hopes that technology breakthroughs will provide incentive for more commercial banks to serve the rural poor. CGAP capitalizes on the now prevalent mobile phones throughout the impoverished areas to reach those who are “unbanked” due to barriers such as weak institutions, ineffective aid, and inappropriate policies and regulations.