An article by Mr. Sunanda Creagh in the Khaleej Times has highlighted important tensions in the microinsurance sector. As noted by senior World Bank insurance specialist, Mr. Craig Thorburn, interest in microinsurance has grown dramatically in recent years. As reported in a previous Microcapital Story, the LeapFrog Financial Inclusion Fund recently raised USD 44 million for what was billed as the world’s first microinsurance fund. Commercial firms have recognized the profit potential of the microinsurance industry. The article observed that the Ugandan arm of global insurance provider AIG earns about 17 percent of its profits through microinsurance premiums from clients in Uganda.
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MICROCAPITAL STORY: Grama Vidiyal Micro Finance Limited (GVMFL) Raises USD 4.25 million from MicroVest, Unitus Equity Fund, and Amar Foundation
In its second round of fundraising, Grama Vidiyal Micro Finance Limited, a microfinance institution (MFI) based in Tamil Nadu, India, raised USD 4.25 million from MicroVest, Unitus Equity Fund, and the Amar Foundation.
MICROCAPITAL STORY: International Finance Corporation (IFC) Invests USD 75 million in MTN Dubai subsidiary MTN Afghanistan to Expand Mobile Communications Access in Afghanistan
The International Finance Corporation (IFC), a unit of the World Bank Group, is providing a USD 65 million loan and USD 10 million in equity capital to MTN Afghanistan, a subsidiary of MTN Dubai and part of the South Africa-based MTN Group Ltd. The investment is meant to support the expansion of MTN’s mobile telephone network to meet growing mobile phone service demand in Afghanistan. The expansion is focused on low-income populations. Details of the loan and equity investment were not available for this story, however James Ramadan, MTN Group’s Regional Vice President for Middle East and North Africa stated that the IFC was providing “long-term funding.” The IFC hopes its investment will encourage other investors into the sector in Afghanistan.
MICROCAPITAL STORY: The Role Of Rural Microfinance In Improving Food Security – Experiences of the Agricultural Credit Corporation in Jordan
In Omar Omeidat’s report in the Jordan Times on a regional conference in Amman on agricultural banks and rural microfinance, HRH Princess Basma was reported to have highlighted the importance of funding for rural projects, particularly in view of the global economic crisis, which she said has had a negative impact on food security programmes. The Princess indicated that due to local and global economic circumstances and a shortage of water resources, the agricultural sector in Jordan faces several challenges, which have led to a drop in the sector’s contribution to the gross domestic product (GDP) and work force. Jordan’s water crisis was the focus of a recent article on the AlertNet-Reuters network, which disseminates information about humanitarian disasters and emergencies across the globe. The IRIN portal, which provides information on humanitarian affairs under the auspices of the United Nations Office for the Coordination of Humanitarian Affairs, recently reported that whilst the water and related food crisis in Jordan is not yet critical, a range of measures and projects need to be implemented as soon as possible to contain the problem.
MICROCAPITAL PAPER WRAP-UP: The Miracle of Microfinance? Evidence From a Randomized Evaluation, by Abhijit Banerjee, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan
“The Miracle of Microfinance? Evidence From a Randomized Evaluation”, by Abhijit Banerjee, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan, Published by CGAP, May 2009. Available at: http://collab2.cgap.org//gm/document-1.9.34827/The%20miracle%20of%20micro%C2%85nance.pdf
This study, claimed by the authors to be the first randomized evaluation on the effects of microfinance, comes to the pessimistic conclusion that microfinance has only a small effect on the fortunes and almost no effect on the lifestyles of poor people after the opening of a microfinance institution (MFI) in their neighborhood. In this case, the term randomized refers to the random selection of 52 of 104 similar poor areas as locations for new branches of the MFI Spandana in the Indian city of Hyderabad. Dubbing the randomly selected areas with microfinance the “treatment” group and the areas without microfinance the “comparison” group, the authors distributed a survey amongst an average of 65 households in each area fifteen to eighteen months after the openings of the branches. The authors ultimately find that there is some difference, albeit not a major difference, in business profit and consumption patterns between households in treatment and comparison areas.
WHO’S WHO IN MICROFINANCE: Catherine Quense, ACCION International’s Interim President and CEO
Catherine Quense, ACCION International’s Chief Administrative Officer and Chief Deputy, will take over as interim president and CEO, replacing Maria Otero, who has left to join the Obama Administration as Under Secretary of Global Affairs in the US State Department. Ms. Quense will direct ACCION in line with its 2008-2011 strategic plan and the key initiatives launched under Ms. Otero’s direction, “ACCION’s Model for Social Change” from its 2007 annual report. The four issues the plan addresses are “low income, poor quality of life, vulnerability and lack of dignified solutions,” through which the provision of financial services to low-income households will address. ACCION will broaden and reach beyond its target audience from informal-sector microentrepreneurs in urban Latin America for a greater global reach. The new areas include Inner Mongolia, China and Nigeria.
MICROCAPITAL STORY: Spandana Sphoorty Financial Ltd. Issues INR 800 million (USD 17 million) One-year 10 Percent Bonds in Deal Arranged by Standard Chartered Bank
Spandana Sphoorty Financial, an Indian microfinance institution (MFI), has raised INR 800 million (USD 17 million) in one-year 10 percent bonds that have been listed on the Bombay Stock Exchange (BSE). Standard Chartered was the sole book runner and arranger. Mrs. Padmaja Reddy, Managing Director of Spandana, indicated the funds would help the MFI to expand to seven new states this year, and that listing on the BSE would help improve Spandana’s corporate governance.
MICROCAPITAL STORY: Microfinance Investors Back The Leapfrog Financial Inclusion Fund To Raise USD 44 Million For Microinsurance
The LeapFrog Financial Inclusion Fund recently announced that it has raised USD 44 million. This was reported on several news portals including Bloomberg, the Corporate Social Responsibility Newswire, the Press Portal website and CNBC. The fund has been billed as the world’s first investment fund that is focused on microinsurance. The fund aims to invest in or partner with businesses that offer insurance products and financial services to low-income communities throughout Africa and Asia, including India, Pakistan, South Africa and Uganda.
MICROCAPITAL STORY: SKS Microfinance Plans to Raise USD 104 Million in Rated Debt
SKS Microfinance, a Hyderbad-based microfinance institution (MFI), announced it plans to raise Rs. 500 Crore (USD 104 million) in rated debt products in order to satisfy customer loan demands. According to Dili Raj, Chief Financial Officer, the new debt will include bonds, commercial paper (CP), and securitization of receivables. Included in the total amount is the recent one-year, 10 percent USD 16 million bond issue reported in a recent MicroCapital story. Those bonds were listed on the Bombay Stock Exchange and fully subscribed by Standard Chartered Bank. In fiscal year 2009, SKS raised a total of Rs. 3,700 Crore (USD 767 million) in debt, of which Rs. 150 Crore (USD 31 million) was in bonds, CP, or securitizations. This fiscal year SKS plans to issue an incremental Rs. 5,000 Crore (USD 1 billion) in debt.
CGAP Microfinance Dealbook: May 2009 Transactions
The CGAP Microfinance Dealbook publicizes microfinance capital market transactions in an effort to bring greater transparency to the industry. This information is made freely available as a public service. Parties to microfinance transactions are encouraged to submit their deals to this effort. The following deals were collected for May 2009:
MICROCAPITAL STORY: Tori Hogan’s Ninth Episode (Entitled “Micro-lending”) of the Ten-Part Film Series “Beyond Good Intentions” Takes a Critical Look at the Realities of Micro-Lending by Questioning the Impact of the Kiva Model
Director Tori Hogan’s Ninth Episode (entitled “Micro-lending”) of a ten-part film series “Beyond Good Intentions” takes a critical look at the realities of micro-lending by questioning the impact of one of the world’s respected and favorite microfinance organization: Kiva.org (Kiva). Ms. Hogan openly debates that while she has total respect and admiration for the numerous successful work performed by the Kiva organization and the team, her experiences and research in the microfinance field, specifically in both Cambodia and Mozambique, left much to be desired. Outside of the interviews and assessments, Ms. Hogan does not reference the vast amount of material currently available to the public that is critical of microfinance.
MICROCAPITAL STORY: CGAP, Dell Foundation, Ford Foundation and MIX Market Announce New Social Performance Reporting Award Winners AMK, FINCA Peru, Prisma Peru and Asasah
The winners of a new Social Performance Reporting Award were announced at the Annual Social Performance Task Force Meeting in Madrid, Spain. AMK in Cambodia, FINCA Peru, and Prisma Peru received the Gold Award, and Asasah from Pakistan received the Silver Award.
MICROFINANCE EVENT: Achieving Scale and Sustainability in Enterprise Development Initiatives, Multiday Online Conference, June 15-26, 2009
Event Name: Achieving Scale and Sustainability in Enterprise Development Initiatives
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
Summary of Event: This online conference will discuss the sustainability of enterprise development programs around the world. A key component is the review of case studies.
MICROCAPITAL STORY: Bill & Melinda Gates Foundation Gives USD 20m to World Bank to Establish Agriculture Finance Support Facility
The World Bank Group has announced the establishment of an Agriculture Finance Support Facility to support the expansion of rural finance in developing countries. The Facility is made possible by a USD 20 million grant from the Bill & Melinda Gates Foundation, through their Financial Services for the Poor program.
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.
NEWS WIRE: France: Most Microcredit Loans Not Used to Grow Businesses
Source: Financial Times.
MICROCAPITAL STORY: Incofin Invests USD 4.4m in Microfinance Institutions Seilanithih Limited, Apoyo Integral, and Mibanco
Incofin is a Belgium-based private social investment company that invests in microfinance institutions (MFIs) through loans, equity investments, and guarantees. In addition to its own portfolio, Incofin manages four microfinance funds – the Impulse Microfinance Investment Fund, the Rural Impulse Fund, VDK MFI Fund, and Volksvermogen. As of April 30, 2009, Incofin had invested EUR 127.8 million (USD 178.5 million) in 65 MFIs across 26 countries. In May, Incofin reported to the CGAP Microfinance Dealbook that it had offered debt products totaling USD 4.375 million to three MFIs – Seilanithih in Cambodia, Apoyo Integral in El Salvador, and Mibanco in Peru.
MICROFINANCE EVENT: Advanced Reflective Education and Training (ART) on Community based Development Finance training offered by Tata-Dhan Academy
Advanced Reflective Education and Training (ART) on Community based Development Finance, December 1-12, 2009, at Tamilnadu, India, presented by the Social Tata-Dhan Academy and sponsored by the DHAN Foundation.
December 1-12, 2009, at Tamilnadu, India
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events