In a report by the Hindu Business Line entitled ‘Microfinance sector losing sheen due to high valuations’ [1], reporter Mr Sagar Bhadra observes that the microfinance sector, which he stated accounted for 40 percent of all private equity transactions in India in the last 18 months, ‘seems to have lost its charm’. Valuations in the sector have ‘skyrocketed’ with the consequence that ‘investors now fear a bubble and are approaching the sector cautiously’. Some market participants feel that investments in the sector is likely to decrease as investors become more selective, particularly when funding start-up MFI, according to Mr Anurag Agrawal, Senior Vice-President of Intellecap [2], a social investment advisory firm. Mr Agrawal added that the secondary market for MFI investments will start to pick up as existing investors start looking for exits.
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MICROCAPITAL.ORG STORY: Guarantors of Microloans In The Balkans Struggle To Meet Demands By Microfinance Lenders As A Result Of Financial Crisis
In a report on the Reuters website entitled ‘Balkan loan guarantors struggle to pay others’ debt’ by reporter Daria Sito-Sucic [1], it was stated that guarantors in the Balkan states are increasingly being pursued by lenders to pay up on loans to defaulting borrowers. The article notes that it was common for borrowers to secure guarantees from family and friends in order to rebuild their lives in the immediate aftermath of the war from 1992 to 1995. Mr Sito-Sucic notes that people readily guaranteed loans for friends and relatives after the collapse of Yugoslavia ‘unaware that their backing was no longer a mere formality as during socialist times’. In the past, jobs were more or less secure until the age of retirement and the local currency did not suffer frequent redenomination as it has in post-war times. Now, the impact of the global economic crisis is affecting small businesses and the financial sector in the Balkan region.
MICROCAPITAL.ORG STORY: Microfinance Organisations In The Kashmir Valley Should Increase Their Focus On The Urban Poor – Observations From Jammu And Kashmir
In a recent report available the Microfinance Focus portal [1] entitled ‘Rising urban poverty in Jammu and Kashmir calls for focus on microfinance’ [2] by the journalist Bilal Hussain [3] in Srinagar, Mr Hussain calls for microfinance participants to increase their focus on the urban poor in the Kashmir Valley. Whilst a good number of MFIs and related organisations focus on alleviating poverty in rural areas of the Kashmir valley, Mr Hussain is of the view that there are significant numbers of urban poor who would benefit greatly from access to microcredit.
MICROCAPITAL.ORG PAPER WRAP-UP: Before the Crisis: A Look at MFI Trends in 2005-2007 by Blaine Stephens
By Blaine Stephens, COO and Director of Analysis, MIX, published by the MixMarket Microbanking Bulletin, Issue 18, Spring 2009, pages 20-26, available at:
http://www.themix.org/sites/default/files/MBB%2018%20Spring%202009.pdf
According to the report in the Spring 2009 MixMarket Microbanking Bulletin, the analysis highlights several key trends that MFIs underwent in the 2005-2007 period. The publication of MIX’s Trend Lines 2005-2007 MFI Benchmarks provide a quantitative perspective on MFI operational and financial performance for that period. The overview of benchmark data for this report covers 487 MFS (representing microfinance in 78 countries, 82 percent of outstanding loans and 75 percent of borrowers at the end of 2007). The analysis also draws new data set of funding liabilities for MFIs as of 2007 and provides a framework of the evolutions in MFIs leading up to the financial crisis.
MICROCAPITAL.ORG STORY: The Use Of Microfinance To Facilitate Access To Water – Lessons From Water.Org and Its Water Credit Initiatives
A recent report on the news portal Microfinance Focus [1] discusses the ‘Water Credit’ [2] initiative introduced by Water.Org [3] in order to promote sustainable access to water. Water.Org is a non-profit organization that was co-founded by Mr Matt Damon and Mr Gary White in 1990. Among other things, the organization works with stakeholders in the water sector to derive financing solutions and create partnerships with a view to improving access to clean water in the developing world.
MICROCAPITAL.ORG STORY: Grameen Foundation CEO Alex Counts Discusses The Issue Of Multiple Borrowing In The Microfinance Sector And Suggests Ways To Minimize Borrower Over-Indebtedness
For a discussion of this topic, click here: http://microfinanceassociation.ning.com/forum/topics/trends-and-innovation-the
In a recent report on the Microfinance Focus news portal [1], the CEO of Grameen Foundation [2], Mr Alex Counts commented that a flexible approach in microfinance will help the sector tide over many new challenges. He added that the related issues of multiple borrowing and borrower over-indebtedness are becoming increasingly common in the microfinance industry. One way to address the problem of multiple borrowing is by ensuring that loan officers are dissuaded from underestimating risks in order to meet required targets.
MICROCAPITAL.ORG PAPER WRAP-UP: Elevated Food Prices – Impact on Microfinance Clients by Zaved Ahmed and Camilla Nestor
By Zaved Ahmed and Camilla Nestor, Grameen Foundation, published by the MixMarket Microbanking Bulletin, Issue 18, Spring 2009, pages 14-16, available at:
http://www.themix.org/sites/default/files/MBB%2018%20Spring%202009.pdf
According to the report in the Spring 2009 MixMarket Microbanking Bulletin, food prices in developing countries remain elevated (above international market prices) and continue to negatively impact microfinance clients. Amazingly enough, approximately 1 billion people (nearly one-sixth of the world’s population) subsist on less than USD 1 per day. Both Ahmed and Nestor of the Grameen Foundation note that increasing food prices have the greatest effect on the poor populations that spend between 70 and 80 percent of their household income on food.
MICROCAPITAL EVENT: Middle East and North Africa (MENA) Microfinance Conference 2009 in Amman, Jordan on October 26-27, 2009, Organized by UniGlobal Research in Association with Sanabel
Event Name: MENA Microfinance Conference 2009
Date: October 26-27, 2009
Location: Amman, Jordan
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
MICROCAPITAL STORY: The Economist Magazine Reviews Studies Of The Impact Of Microfinance By The Poverty Action Lab
A recent report in The Economist magazine reviews two papers which focus on the social impact of microfinance. The papers are “The Miracle of Microfinance? Evidence from a Randomised Evaluation” by Abhijit Banerjee, Esther Duflo, Rachel Glennerster and Cynthia Kinnan and published by CGAP (which has been covered in a previous Microcapital Paper Wrap-Up), and “Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila” by Dean Karlan and Jonathan Zinman and published by the Poverty Action Lab, a centre within the Economics Department of the Massachusetts Institute of Technology whose aim is to reduce poverty by ensuring that policy is based on scientific evidence.
MICROCAPITAL STORY: Sri Lanka Government Backs Microfinance, Seeking to Rebuild Economy of War Affected Regions
In an effort to resettle the 300000 Tamil people relocated due to ethnic conflict in the Northern part of the country, the Sri Lankan government has launched a USD 26 million microfinance loan program to spur local agriculture and business in the region. According to a press release on the Reuters portal, the efforts to rebuild the war-torn Northern region of Sri Lanka – which has been dubbed ‘Northern Awakening’- will support ‘the resumption of economic activities in agriculture, livestock, fisheries, micro and small enterprises’. A related release on the Sri Lankan newspaper Daily Mirror states that the launch of the scheme was announced by the Sri Lankan President Mahinda Rajapaksa following a meeting with heads of banking institutions to discuss the role of the banking sector in the development of the Northern Province. As per available information, the Central Bank of Sri Lanka (CBSL) will initially disburse the earmarked sum of USD 26.12 million under the loan scheme at a concessionary rate of interest among eligible Micro, Small and Medium scale Enterprises (MSMEs) through certain Participating Financial Institutions (PFIs). These PFIs which have already been identified by the CBSL include the Bank of Ceylon, People’s Bank, Hatton National Bank, Commercial Bank, Seylan Bank and SANASA Development Bank.
MEET THE MICROBANKER: Interview with Scott Budde, Managing Director of the Global Social and Community Investment Group (GSCIG) and founder of the Global Microfinance Investment Program (GMIP) at TIAA-CREF
TIAA-CREF is a national financial services organization with more than USD 398 billion in combined assets under management (9/30/08) and a provider of retirement services in the academic, research, medical and cultural fields. In 2006 the company had formed a new Social and Community Investing Department within its Asset Management area. The Global Microfinance Investment Program is part of TIAA-CREF’s Social and Community Investing Department, which develops new socially oriented products, oversees the screening methodology of social screened funds, formulates policies around key social issues and manages community investment programs. Notable accomplishments for the firm have been the creation of a USD 100 million Global Microfinance Investment Program (GMIP) to invest in selected Microfinance Institutions (MFI’s) worldwide. Concurrently, TIAA-CREF also announced GMIP’s first investment – a USD 43 million private equity stake in ProCredit Holding AG, a microfinance company.
Scott Budde, Managing Director of the Global Social and Community Investment Group (GSCIG), and founder of the Global Microfinance Investment Program (GMIP) at TIAA-CREF
MICROFINANCE EVENT: Microfinance for Institutional Investors Conference, September 21-23, 2009 in Washington, DC, Organized by Hanson Wade
Event Name: Microfinance for Institutional Investors Conference
Date: September 21-23, 2009
Location: Tyson’s Corner Marriott, Vienna, VA (Washington, DC metro area)
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
MICROCAPITAL STORY – Highlights From A Hanson Wade Conference On Microfinance Investments And Observations By Key Panelists From MFX Solutions, ACCION, OPIC, Deutsche Bank, Microfinance Transparency And Others
The recent conference on ‘Investments In Microfinance’ which was held in London was attended by a variety of participants in the microfinance sector, including MFIs, investors, bankers, lawyers and researchers. Panelists and speakers at the event discussed topical issues affecting the microfinance sector which included the following: (i) Hedging foreign currency risk in microfinance transactions; (ii) The problem of over-indebtedness; (iii) Client protection issues and (iv) Small and Medium Enterprise (SME) Finance. As shown in the conference agenda, panelists and speakers also discussed the future of microfinance and the impact of the current crisis on sources of funding for the microfinance industry. The conference concluded with a discussion on microfinance securitization and the key legal issues in such transactions. Below is a short summary of some of the points raised at the conference.
MICROCAPITAL STORY: Mobile Money Service Provider Mi-Pay Forms Partnership with Small World Financial Services to Create and Expand their Mobile Money Distribution Network
Mi-Pay, a mobile money company based in the United Kingdom, has recently announced that it has partnered with Small World Financial Services (a global money transfer business based in Europe) to globally expand mobile money payment solutions. The partnership will focus on providing operators with solutions for international prepay phone top-up and global money transfer functionality to over 30 countries. No additional information regarding how the network will function or its scope is provided.
According to Business Intelligence Middle East, a business information company based in Dubai, the partnership with Small World and Mi-Pay would provide a mix of operational, regulatory consultation, business and technical processes, and market knowledge to facilitate mobile money payment solutions globally. Mobile phone top-up is a recharge service that allows customers in one country to buy airtime for people in different countries via the Internet or on a foreign mobile network for prepaid mobile phones. Mi-Pay’s global top-up service hub will also provide Small World the ability to offer international prepay phone airtime to its customers. In turn Mi-Pay will be able to extend its services into new countries and regions while leveraging the distribution network to work earlier with clients in the regulatory, compliance and payment process.
MICROFINANCE EVENT: Mobile Money Transfer, Conference and Expo, October 26-27, 2009, Dubai, United Arab Emirates
Mobile Money Transfer, Conference and Expo, October 26-27 2009, Dubai
October 26-27 2009, Dubai, United Arab Emirates
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
NEWS WIRE: Microfinancing Money and Talent
Source: NY Times
NEWS WIRE: Indonesia: Microinsurance Companies See Potential Profits from the Poor
Source: Reuters
MICROCAPITAL STORY: The Impact Of Microfinance On Child Labour And The Need To Improve Outreach – Lessons From Pakistan
In an article on Pakistan’s ‘The Nation’ online news portal, reporter Saadia Qamar makes a number of important observations on microfinance based on a publication by the State Bank of Pakistan (SBP) entitled ‘Towards Achieving Social and Financial Sustainability – A study on the performance of microfinance in Pakistan’. The publication is not currently available in the public domain. According to the report in The Nation, results of the SBP study reinforces a point that has been made on many prior occasions in both informal and scientific contexts; namely that the provision of microcredit alone is not always sufficient to alleviate the socio-economic problems of poor households.