by Radhika Chandrasekhar -

MICROCAPITAL BRIEF: Critics Claim that Bosnian Microfinance Institutions Simply Issuing “Commercial Loans Masquerading as Microfinance”

A recent article from Al Jazeera English, an English-language news source based in Qatar, cited critics blaming the decline in the Bosnian microfinance sector on the profit-driven orientation of the country’s microfinance institutions (MFIs).

by Radhika Chandrasekhar -

MICROCAPITAL BRIEF: Nigeria Deposit Insurance Corporation (NDIC) Blames Microfinance Institutions (MFIs) for Lending Failures, MFIs Fault “Bad” Nigerian Borrowers

Amidst the turmoil in Nigeria’s microfinance sector, industry players seem to be holding each other responsible for the industry’s failures.

by the MicroCapital Team -

MICROCAPITAL BRIEF: LuxFLAG-labeled Microfinance Investment Vehicles Maintain Performance Through Economic Downturn

Luxembourg Fund Labelling Agency (LuxFLAG), an organization that certifies whether microfinance investment vehicles (MIVs) actually invest in microfinance, recently carried out a study of the MIVs it has labeled (as investing in microfinance) to determine how they have been impacted by the recent financial downturn.

by Hio Kyeng Lee -

MICROCAPITAL BRIEF: World Bank and Central Bank of Azerbaijan (CBA) Present Consumer Protection Plan for Microfinance and Traditional Financial Service Consumers

The World Bank and the Central Bank of Azerbaijan (CBA) recently presented a plan titled, “The Protection of Rights and Financial Literacy of Financial Service Consumers in Azerbaijan.”  According to the Azerbaijan Microfinance Association (AMFA), which is a trade association representing Azerbaijani non-bank credit organizations, approximately 1,200 consumers provided feedback towards the development of the consumer protection plan.  Mr. Alim Guliyev, CBA First Deputy CEO, states that the plan is based on two developments in the financial services sector, i.e., the introduction of financial sector legislation and regulation as well as the rise in the financial literacy of the population.  CBA will be the coordinating body between different areas of the financial services sector, including banking, insurance and investment services. In connection with these developments, CBA will create a special unit and hotline dedicated to responding to consumer complaints regarding business practices. Mr. Guliyev comments that the “[P]rotection of the consumers’ rights is especially important in the conditions of financial crisis.”

by Christopher Maggio -

MICROCAPITAL BRIEF: The International Finance Corporation (IFC) to Provide $3m to AB Microfinance Bank Nigeria Limited

The International Finance Corporation (IFC), the investment arm of the World Bank, has announced that it will provide a loan worth NGN 450 million, the equivalent of over USD 3 million, to AB Microfinance Bank Nigeria Limited, a Nigerian microfinance institution (MFI) [1,2,3]. In turn, AB Microfinance Bank will provide loans to “microenterprises and low-income entrepreneurs in Nigeria” [1]. The tenor of the loan is five years, and is denominated in Nigerian Naira [1]. This will eliminate foreign exchange risk for AB Microfinance Bank, thus allowing the MFI “to offer long term Naira products to its customers” [1]. In October of 2008, the IFC provided AB Microfinance Bank with a NGN 150 million loan, the equivalent of over USD 998,000, which was used to help the MFI begin operations [1].  AB Microfinance Bank Nigeria Limited was created in 2008 by Access Microfinance Holding AG, an investor in MFIs, and Impulse Microfinance Investment Fund, a fund managed by Incofin Invesment Management [3,4,5].

by the MicroCapital Team -

MICROCAPITAL BRIEF: International Finance Corporation (IFC) Takes $1.1m Equity Stake in Belstar, Microfinance Division of Hand in Hand of India

International Finance Corporation (IFC), a member of the World Bank Group, has agreed to provide equity of USD 1.15 million to Hand in Hand’s microfinance arm, Belstar Investment and Finance Limited. Hand in Hand is an NGO that is involved in efforts such as reducing child labor and malnutrition and improving solid waste management. The financing is intended to enable Belstar to obtain support from other investors and IFC Advisory Services will help Belstar improve risk management, staff training and product range.

by Christopher Maggio -

MICROCAPITAL BRIEF: Eighteen South Korean Banks Donate $221m to the Microfinance Foundation, a South Korean Government Program

Eighteen banks in South Korea have donated a total of 255.5 billion won, the equivalent of over USD 221.4 million, to the Microfinance Foundation, a program led by the South Korean Government to provide unsecured micro loans [1]. These banks will also, over the next 10 years, invest 700 billion won, the equivalent of over USD 603.9 million, in the Microfinance Foundation [1]. The funds for this investment will come from “‘dormant deposits’ – small accounts that have been idle for years at the contributing banks” [1]. Some of these banks are Korean banks including the state-run Korea Development Bank and the commercial bank, Hana Bank [1,2,3]. Other banks, such as Citi from the United States, are foreign commercial banks operating in South Korea [1,4]. The Microfinance Foundation intends to “open 20 to 30 regional units [to service the microloans] by May 2010 and raise that to 200 to 300 [units] in the next two or three years” [1].

by Hio Kyeng Lee -

MICROCAPITAL.ORG BRIEF: Nigerian Microfinance Banks Pledge to Form Single Organization in Response to Supervision Crisis

Two Nigerian microfinance trade associations, the National Association of Microfinance Banks (NAMFBIN) and Association of Microfinance Bank in Nigeria (AMBN), have pledged to form the single organization titled, the National Association of Microfinance Banks (NAMB).  Under the supervision of the Central Bank of Nigeria (CBN), NAMB would become the only authorized organization to represent microfinance institutions.  Currently, Nigerian regulators have been overwelmed by the large number of microfinance institutions operating in the country and the microfinance banking industry has been in turmoil. By forming a single microfinance trade association, the hope is to promote greater adherence by members to a common set of business practices and to lessen the regulatory burden on the state thereby restoring confidence in the industry as a whole.

by Christopher Maggio -

MICROFINANCE PAPER WRAP-UP: IFC Reports on Its Activities: Access to Finance (A2F) Highlights Report 2009

Published by IFC, 40 pages, available at: http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/A2F-HighlightsReport2009/$FILE/A2F-HighlightsReport2009.pdf

The International Financial Corporation, the investment arm of the World Bank, has published its annual Access to Finance Highlights Report for 2009. The report covers the efforts of the IFC to expand and improve financial access. Some of the main highlights include:

by Diya Chopra -

MICROCAPITAL.ORG STORY: SKS Microfinance Planning to Expand Network into Punjab, India

SKS Microfinance, an Indian non-banking microfinance institution (MFI), recently announced plans to expand its network into Punjab, India. Mr. Rao, COO of SKS Microfinance said “Punjab has approximately 2 [million] people living Below Poverty Line, with a credit demand of Rs 1,168 crore [USD 2.5 million]” [1]. According to a previous statement released by SKS, its expansion into Punjab will take place primarily in urban areas [2].

by the MicroCapital Team -

KNOW A FUND: Microfinance Enhancement Facility, An Interview with Mark Berryman of the International Finance Corporation (IFC)

The Microfinance Enhancement Facility (MEF) is a microfinance investment vehicle that was established this year in response to the global credit crisis to refinance loans to well-established microfinance institutions (MFIs). MEF was founded by the International Finance Corporation (IFC) and KfW Entwicklungsbank. IFC, a member of the World Bank Group, made new investments totaling USD 16.2 billion in fiscal 2008. IFC’s microfinance investment activities reached nearly USD 1.3 billion in 2009 through over 160 projects in over 60 countries. Mark Berryman, of IFC’s Global Financial Markets Microfinance Group, recently spoke with MicroCapital: