According to the Indo Asian New Service and the India Daily, Bangladeshi Nobel Laureate Mohammed Yunus of the Grameen Foundation announced that he would join the political process in Bangladesh. Quoting from the article in the Daily India, Mohammed Yunus said, “If people of Bangladesh think that my entry in politics will improve things I am ready to risk a chance.” Mr. Yunus also indicated that his official entrance will not be an easy decision because his family and close friends do not want to see his name tarnished as is sometimes the case in the democratic process. He does, however, wish to use the opportunities provided to him through his reception of the Nobel Peace Prize last year to continue making positive changes in the region. Mr. Yunus mentioned an election in the near future, suggesting entrance into the Parliamentary elections that have been postponed indefinitely since their scheduled date of 21 January 2007 and their rescheduled date of 22 January 2007.
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Bellwether Microfinance Fund receives USD 2.4 mm from FMO, a Dutch financial institution
Bellwether Microfinance Fund (BW) recently received an investment amounting USD 2.4 mm from Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden NV (Netherlands Development Finance Company) (‘FMO‘). Bellwether, founded in 2005, is committed to investing in the equity of Microfinance institutions (MFIs) in India. In addition, as of June 2006, Bellwether had total assets of USD 6 mm. Bellewether does report to the MIX Market, the microfinance information clearinghouse, but no other information is publicly available about its financial performance. Founded in 1970, FMO was set up especially to provide financial services to developing countries. Likewise, FMO does report to the MIX, but no financial information about the institutions’ performance is currently available. The partnership between Bellwether and FMO hopes to increase the availability of much needed Equity financing to microfinance institutions throughout India.
Microfinance Milestone: Swayam Krishi Sangam reaches 500,000 clients
Swayam Krishi Sangam (SKS) Microfinance, founded in 1997 by Dr. Vikram Akula, has accomplished a landmark that many microfinance institutions long for. As of January 31, SKS has reached 500,000 clients throughout India. Only a few microbanks anywhere in the world can claim a half million accounts. They include Grameen Bank, Association for Social Advancement (ASA), Bangladesh Rural Advancement Committee (BRAC), Bank Rakyat Indonesia (BRI), PROSHIKA (Bangladesh) , SHARE Microfin Ltd. (SHARE) (India), Spandana (India), and Caja Popular Mexicana according to the Mix Market clientele data. As of March 2006, SKS had a gross loan portfolio of USD 20,596,150 total assets of 26,814,820, a return on assets of 2.80% and a debt to equity ratio of 636.06%. Micro-Credit Ratings International Limited (M-Cril), a rating agency of microfinance, has given SKS, a rating of alpha for 2005.
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Unitus Partners with Credex to Expand Access to Microfinance in Mexico
Unitus, a nonprofit organization committed to fighting global poverty through microfinance, will partner with Credex, a MFI in Mexico. Unitus was founded in 2000, by Bob Gay, Mike Murray, Joseph Grenny and Todd Manwaring, and is dedicated to providing capital investments and consulting services to financially sustainable MFIs worldwide. As of 2006, Unitus had 10 MFI partners worldwide serving more than 820,000 poor clients and as of December 2006, the Unitus portfolio of partners provided loans to 1.2 million micro-entrepreneurs and their families in India, Kenya, Mexico, Argentina, the Philippines and Indonesia. The details of the partnership between Credex and Unitus have not been announced. Credex, founded in 2002, targets the working poor in southwestern and central Mexico and has plans to expand across the nation. Since its establishment Credex has disbursed over 30,000 loans and currently serves close to 12,000 active borrowers with a $5 million loan portfolio. Credex does not report to the MIX Market, the microfinance information clearinghouse and no other information is publicly available about its performance. The partnership hopes to bring life-changing financial services to more than 82,000 customers by 2009, an increase from 12,000 today. Credex is Unitus’s second microfinance partner in Mexico, along with Pro Mujer Mexico.
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Who’s Who in Microfinance: Unitus
Unitus, a US nonprofit organization supporting microfinance internationally, was founded in 2000 by Bob Gay, Mike Murray, Joseph Grenny and Todd Manwaring with the goal of fighting global poverty through increasing access to microfinance. Unitus provides capital investments and consulting services to financially sustainable MFIs worldwide. As of May 2006, Unitus has ten MFI partners in Mexico (Pro Mujer), Argentina (FIS) and India (ASA-GV, Bandhan, BSS, Grameen Koota, SKS, Swadhaar, Ujjivan) that, as of March 31, 2006, combined to have a total gross portfolio of USD 49.6 mn.
Mark Headley of Matthews International Capital Management Mentions Indonesian MFI as Investment Opportunity
In a recent article in the International Herald Tribune, Mark Headley, president of Matthews International Capital Management in San Francisco pointed to the Indonesian microfinance institution Bank Rakyat Indonesia (BRI) as a potentially wise investment. The comment was made in reference to finding alternative emerging market investments outside of China and India.
PRESS RELEASE: Deutsche Bank Examines the Attractiveness of Microfinance for Private Sector Investors
Source: Deutsche Bank.
Original press release available here.
MixMarket Releases it 2005 Microfinance Benchmarking Reports on Asia
A report from the Microfinance Information Exchange Inc, November 2006, 12 pages Download here: http://www.mixmarket.org/medialibrary/mixmarket/MIX_Benchmarking_Asian_Microfinance_2005.pdf
The definitive word in micro-bank performance is out, published annually. The Asia microfinance market is the largest in the world, offering in 2005, over USD 4bn in loans to 22.5 million borrowers. The most significant aspect of the development of microfinance in Asia has been the scaling up of MFIs. Bangladesh, the mother country of microfinance, has always had Microfinance Institutions(MFIs) with the highest customer base in the world in ASA, Grameen and BRAC. The fourth largest MFI is the Indonesian BRI(Bank Rakyat Indonesia). Amongst the MFIs surveyed, the current average customer outreach is 330,000. India is quickly catching up as well, with average outreach crossing 100,000 at a 100% growth rate. The lowest outreach was observed in Philippines with an average outreach of 10,000 borrowers per MFI. While, significant progress in outreach has been made, Asian MFIs, in general, do not offer a diversified range of services. Thus, non-diversified services coupled with extensive microfinance activity in some regions is causing client overlap and that should be taken into account while examining the large client outreach numbers.
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Paper Wrap Up: Microfinance: "Harnessing Enterprise to Fight Poverty"
Edited by Tom Clougherty, published by the Globalisation Institute, Nov 2006, 25 pages, download here: http://www.globalisationinstitute.org/publications/microfinance.pdf
The Globalisation Institute, which published “Harnessing Enterprise to Fight Poverty”, is a British think-tank focusing on how globalization can alleviate poverty. It was founded in 2005 and headed up by Director-General Alex Singleton. The paper summarizes the successes of microfinance and urges the British Department for International Development (DFID) to focus on microfinance as a development tool. It starts with a foreword by former British High Commissioner to Uganda, Mike Cook CMG. He bemoans the fact that the DFID’s fund distribution does not directly involve the poor and contrasts the institution’s projects with the success of microfinance. The report then emphasizes these achievements, arguing that microfinance is a key to establishing better governance and property rights in the developing world, and provides several case studies, including stories from Jamii Bora Trust in Kenya, SKS in India, and ACORD Ethiopia. They note that there is plenty of donor money available to microfinance institutions (MFIs), but ultimately, they must find commercial funding to meet global demand. Finally, the report argues that the DFID has not done enough to support microfinance. It says that development agencies should focus their funds at “contributing to the start-up costs and fostering the establishment of truly self-sustaining microfinance institutions.” However, they warn policymakers to be wary of “throwing money” at microfinance or believing that one variety of microfinance can work globally. Specifically, the Globalisation Institute argues that the DFID should have a team focusing on microfinance, with a head that reports monthly to the Secretary of State. Additionally, they suggest that the government host an “annual summit on microfinance, drawing together the leading figures in the world of microfinance and the major international banks, to encourage greater private funding of microfinance and to promote the exchange of expertise and best practice.” (pg 24) Ultimately, the report laments the fact that the DFID prefers to “support ‘big name’ development charities instead.” Now that microfinance is one of the “big names” we shall see how state development organizations, such as the DFID, react.
Unitus Releases the Details of Its Efficiency-Enhancing Initiative Funded for $1.46m by the Gates Foundation
Unitus, a global non-profit organization which assists microfinance institutions (MFIs) with accessing market capital, officially announced a USD 1.46 million grant from the Bill and Melinda Gates Foundation. The grant money will fund a new project geared toward enhancing efficiency within the microfinance industry. Unitus will analyze the business practices four of its “partner MFIs,” and recommend steps to improving their overall business efficiency. The ultimate goal is to create a report at the end of the three-year project which will provide insight into efficiency-enhancing measures that can be utilized by MFIs across the globe. According to Unitus’ overview of the project, the four MFIs which most likely will be researched are Grameen Koota (from India), Bandhan (also Indian), Pro Mujer Mexico, and Fondo Inversion Social (Argentina).
Uganda Microfinance Limited Recipient of $240,000 Credit Line from Incofin
Another deal coming to us this month courtesy of the CGAP-MIX Capital Markets MCM Newsletter, Uganda Microfinance Limited (UML) recently received a $240,000 line of credit from Incofin. UML was established in 1997 as a commercial microfinance institution by a local Ugandan and an American citizen. According to year end 2005 data from Microfinance Information eXchange (MIX), it has 31,145 clients who have taken out loans totaling $11.3 million. In addition, it has total assets worth $16.5 million, return on assets of 4%, and a debt to equity ratio of 295%.
Continue reading “Uganda Microfinance Limited Recipient of $240,000 Credit Line from Incofin”Philippines’ Mindanao State Holds Microfinance Forum, Possibility of Capital Market Saturation Mentioned
The Mindanao Microfinance Council (MMC) recently held a forum in which several proposals were made to expand and enhance microfinance in the Philippine state. The forum convened as a reaction to the spread of “Bombay” lenders, Indian nationals who move to the area and act as “informal money lenders,” providing loans to locals at high rates. One proposal to fix the problem came from Assistant Secretary of the Department of Trade and Industry (DTI), Merly Cruz. Her plan involves the government-owned Land Bank of the Philippines’ National Livelihood Support Fund (NLSF), the country’s largest development institution. Cruz proposed that the fund loan directly to cooperatives and “market vendors associations” which would in turn supply loans to members. She mentioned that this would create more competition in the credit market and lower the market interest rate. Currently, there are no laws, aside from standard business permits, which regulate the “Bombay lenders” but Cruz argued that competition from NLSF funds could limit their spread.
The Grameen Foundation Receives $1.5 Million Grant from the Gates Foundation for Strategic Plan
The Gates Foundation has made an unrestricted grant to the Grameen Foundation as a show of support for the latter’s strategic plan. On June 1, 2006, MicroCapital reported on the Gates Foundation $1.46 million donation to nonprofit microfinance network Unitus. Earlier in March, it also reported on Bill Gates’ focus on microfinance investing. And in January, ACCION International received a $5.8 million grant from the Gates Foundation to develop partnerships with microfinance institutions in West Africa and India. The Gates Foundation gave $8.7 million in microfinance grants in 2005 (see MicroCapital Blog’s December 14, 2005 and December 1, 2005 articles). The recipients of these grants were Opportunity International, FINCA International, and California-based Freedom From Hunger.
Bellwether Microfinance Fund purchases $1.5 million in Shares from MAS Financial Services in Microfinance Investment
MAS Financial Services Limited of India sold $1.5 million in Common and Preferred Shares to the Bellwether Microfinance Fund. MAS, a non-banking finance company, is downscaling operations to focus on microfinance. Bellwether’s investment is aimed to assist MAS in enlarging its microcredit portfolio, which it hopes to increase to 75% of its total portfolio over the next five years. MAS Financial does not currently report to the MIX Market, and no further financial information is currently available.
Another Day to Remember: The New York Times Recognizes the Challenges of For-Profit Microfinance
Tyler Cowen, in his August 10 article for The New York Times, examined the success of microfinance in helping the poor through the MIT-supported Poverty Action Lab’s research on Spandana, an Indian microfinance institution. Mr. Cowen concluded that “microfinance is working, but it is often more corporate, more commercial and under more attack than I had expected.” Excerpts from “Microloans May Work, but There Is Dispute in India Over Who Will Make Them” are below:
Another Micro Venture Capital Fund Seeks to Fill the Gap between Microfinance and Venture Capital: Agora Partnerships Funds Entrepreneurs in Nicaragua
MicroCapital recently reported on Aavishkaar India Micro Venture Capital Fund’s support of businesses which need start-up capital greater than those provided by microfinance institutions (MFIs) but smaller than those provided by venture capitalists. Agora Partnerships carries this mission beyond India with its operations in Nicaragua. It seeks to fill this gap between $25,000 and $200,000, making it a vanguard in the micro venture field.
Bellwether Microfinance Fund Sells US$2.4 million in Shares to the Netherlands Development Finance Company
The Bellwether Microfinance Fund is an Equity Fund founded in 1995 in Hyderabad, India. It reported $5 million in assets to MIX Market as of 7/15/05 and currently has investments in six Microfinance Institutions in India. These include MAS Financial, Sonata, Ujjivan, SWAWS, Satin Credit and Arohan.
The Gates Foundation Donates $1.46 million to Seattle Area Based Microfinance Network Unitus for Further Investment in Microcredit Initiatives
The Bill and Melinda Gates Foundation donated $1.46 million to Seattle area based Unitus, a non-profit microfinance network investing in small and medium-sized MFIs, thereby subsidizing microfinance investment in Unitus partners. The Gates Foundation donation will be funding research on how to increase operational efficiency in four of Unitus’ nine microfinance institution partners in Latin America and India, with the aim to achieve a 10% gain in efficiency within three years. Information on which Unitus partners will benefit from this donation is not currently available.