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.
Search Results for: microfinance financial crisis
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 STORY: Blue Financial Services in South Africa to Continue Microfinance Growth in Africa But Lessens Pace
Blue Financial Services, the South Africa based microfinance institution (MFI) will remain focused on expansion in Africa and will begin operations in more African countries this year, according to a press release on AllAfrica.com. In this regard, the release quotes Blue’s CEO Dave van Niekerk as saying that Blue’s plans in Africa come despite a slowdown in the ‘pace of its expansion due to the global financial crisis.’ [1]. Per information currently available, Blue’s immediate plans also include the setting up of a branch in Ghana over the next 2 months [2]. (AllAfrica.com is a news and information portal owned by AllAfrica Global Media, a multi-media content service provider, systems technology developer and distributor of African news and information worldwide.)
MICROCAPITAL.ORG PAPER WRAP-UP: Microfinance: Where Do We Stand Today? By Ajit Jain and Caroline Norton
By Ajit Jain and Caroline Norton, Deutsche Bank, published by the MixMarket Microbanking Bulletin, Issue 18, Spring 2009, pages 17-20, available at:
http://www.themix.org/sites/default/files/MBB%2018%20Spring%202009.pdf
According to Spring 2009 MixMarket Microbanking Bulletin, many microfinance institutions (MFIs) face challenges as slowing growth and funding opportunities forces them to refine risk, actively manage liquidity and rising delinquencies. While the co-authors view the current global economic situation as an opportunity for best run MFIs to distinguish themselves, this was originally complicated by the increasing appetite of MFIs for a greater levered capital structure (as seen by the increase of structured funds offering private and institutional investors new opportunities to acquire notes collateralized by loans to MFIs in the past few years). Note: Data for these findings have been drawn from portfolios managed by the Global Social Investments Group at Deutsche Bank.
MICROCAPITAL STORY: International Fund for Agricultural Development (IFAD) Grants $23.9m to Afghanistan for Rural Microfinance and Livestock Support
The International Fund for Agricultural Development (IFAD), a United Nations agency, has announced a grant of USD 23.9 million to create the Rural Microfinance and Livestock Support Program in Afghanistan. This is the first IFAD program in Afghanistan and will be implemented in the northern region. The microfinance portion of the program will tailor microfinance services to the rural population, especially farmers who lack access to microcredit. It will be implemented in partnership with the Microfinance Investment Support Facility for Afghanistan (MISFA).The Ministry of Agriculture, Irrigation and Livestock (MAIL) will be the lead agency for the livestock part of the program which will focus on women headed households and pilot various private-public partnership models. It is not clear how the funding will be split between the two sections of this program.
MICROFINANCE PAPER WRAP-UP: Microfinance Banana Skins 2009: Confronting Crisis and Change by David Lascelles and Sam Mendelson
Written by David Lascelles and Sam Mendelson, released in June 2009 as publication number 85 of the Centre for the Study of Financial Innovation (CSFI), sponsored by Citi Foundation and the Consultative Group to Assist the Poor (CGAP), 52 pages, available at: http://www.cgap.org/gm/document-1.9.35203/Microfinance%20Banana%20Skins%202009.pdf
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
MICROCAPITAL STORY: Client Protection In Microfinance – Observations by ACCION and Prizma Mikro From A Hanson Wade Conference On Microfinance Investments
At a recent conference on ‘Investments In Microfinance’ which was held in London and organized by Hanson Wade, a panel discussion was dedicated to the issue of client protection. The panel was led by Ms. Elisabeth Rhyne, Managing Director at the ACCION Centre for Financial Inclusion and Mr. Kenan Crnkic, General Director of Prizma Mikro, an MFI headquartered in Sarajevo. According to its profile on the MIX Market portal, a database which collects financial and other information about MFIs across the globe, Prizma is a non-bank financial institution and was established in 1997. Its total assets as at 31 December 2008 is USD 52,445,597 and it has a Debt To Equity ratio of 297.89 percent. Its Return On Equity is 8.17 percent and its Return On Assets is 2.28 percent. Prizma has 55,820 active borrowers as at 31 December 2008.
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: Reducing Foreign Currency Risk In Microfinance Transactions – Observations by MFX Solutions At A Hanson Wade Conference On Microfinance Investments
The importance of hedging against fluctuations in foreign currencies was highlighted on more than one occasion during the recent ‘Investments In Microfinance’ conference that was held in London and attended by a variety of participants in the microfinance sector, including MFIs, investors, bankers, lawyers and researchers. Mr. Brian Cox, Executive Director at MFX Solutions, mentioned that currency risk and mismatches are factors that hinder growth in the microfinance sector. He added that volatility in emerging market currencies, which has become increasingly evident in the current crisis, can be better managed by MFIs. MFX Solutions is a new company that is dedicated to managing global currency risk in the microfinance industry. As highlighted in a previous Microcapital Story, the company aims to make hedging instruments accessible to microfinance lenders in developing markets.
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: Philippines Government and Microfinance Institutions (MFIs) Initiate Loans Totaling $3.3b Since July 2004
In 2004 the Philippines Government and private microfinance institutions (MFIs) agreed to increase microfinance lending across the country. At the 11th anniversary of the Filipino National Anti Poverty Commission (NAPC), data was released indicating that loans totaling PHP 161 billion (USD 3.3 billion) have been made to 5.8 million microfinance clients from July 2004 to April 2009. The NAPC, a government body, estimated that 2.7 million jobs have also been created through this investment. In 2007 PHP 25.9 billion (USD 537 million) in loans were made and this grew to PHP 64.8 billion (USD 1.3 billion) in 2008. From January to April 2009 PHP 9.7 billion (USD 201.1 million) microfinance loans have been created. It was not clear how this data was collected or the methodology behind it.
MICROFINANCE EVENT: 2009 SEEP Annual Network Conference in Washington, DC on November 2-6, 2009, Organized by SEEP
Event Name: 2009 SEEP Annual Network Conference
Date: November 2-6, 2009
Location: Sheraton National Hotel, Arlington, VA (Washington, DC metro area)
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) provides EUR 5m Microfinance Loan to ProCredit Bank Albania
ProCredit Bank Albania has received a EUR 5 million loan from the European Fund for Southeast Europe (EFSE), a Luxembourg based microfinance fund. The loan is split into two components with EUR 2 million for Energy Efficiency Housing Loans and EUR 3 million for Rural Loans. ProCredit Bank will be the first bank in Albania to offer these specialized energy loans which are aimed at helping families and businesses reduce their energy costs by financing energy-saving technologies. The bank also hopes to extend its outreach to small and medium enterprises (SMEs) in rural areas as the Rural Loans will be targeted towards small-scale agricultural clients.
MICROFINANCE STORY: The Unaddressed Need for Microfinance Oversight and Customer Protection in Haiti
After the 2002 crisis that wiped out USD 200 million in savings in Haiti, the Haitian government passed legislation to address and increase oversight of savings and loans cooperatives. However, as discussed by the Center for Financial Inclusion’s (CFI) Summary of Client Protection in Haiti, there are no regulations that address the microfinance sector. There has been pending legislation in Parliament for the past two years that would increase oversight for the microfinance sector, the details of which are not available. The Association Nationale de Institutions de Microfinance d’Haiti (ANIMH), founded in 2002, was formed by a group of non-cooperative microfinance institutions (MFIs) to deal with the threat of a similar financial crisis in the microfinance sector. It has a loan portfolio from its member institutions of USD 47.4 million as of 2007. According to the CFI, to regulate and increase consumer protection in the microfinance sector in Haiti, legislation should be passed to address the microfinance sector specifically.
MICROCAPITAL PAPER WRAP-UP: Asset and Liability Management for Deposit-Taking Microfinance Institutions, Kara Bloom
Asset and Liability Management for Deposit-Taking Microfinance Institutions, by Kara Bloom, Published by CGAP, June 2009, Available at: http://www.cgap.org/gm/document-1.9.34818/FN55.pdf
The author acknowledges that financial risk can yield high profits, but urges microfinance institutions (MFIs) to maintain proper asset and liability management (ALM) to find a level of risk the institution can bear. As the financial activity of MFIs grows more complex and funding increasingly comes from commercial sources, the careful examination of the balance sheet can help MFIs measure and evaluate risk. Risk, in this case, is defined as a mismatch between assets and liabilities. In this paper, the author examines three types of risk: liquidity, interest rate, and foreign exchange. Although each type of risk is distinct, ALM strategies for all types include gap analysis to match assets and liabilities over time and volatility analysis to determine the typical fluctuations in the discrepancy between assets and liabilities. The multifaceted approach to ALM proposed by the author includes an official risk-management strategy written by the MFI based on the institution’s own priorities, matching tables for assets and liabilities, and the institution a special committee for ALM. The author provides several matching tables as examples of how to compare assets and liabilities.
MICROFINANCE STORY: The European Bank for Reconstruction and Development (EBRD) Lends $10M from Its Microfinance Program to Minsk Transit Bank (MTB) of Belarus
The European Bank for Reconstruction and Development (EBRD), a multilateral development institution that fosters private sector investment in 30 countries in Central Europe and Central Asia, is lending USD 10 million to Minsk Transit Bank (MTB), a commercial bank established in 1994 and based in Minks, Belarus. According to Moody’s, MTB reported total assets of USD 150 million in 2007. MTB is one of six EBRD partner banks in Belarus. The five-year loan to MTB will be used to lend to privately-owned micro, small, and medium-sized businesses (MSMEs). As stated by the EBRD, the funding is to help small businesses in the country weather the crisis.
MICROFINANCE EVENT: Encuentro Centroamericano de Microfinanzas Conference in El Salvador on September 9 -11, 2009, Organized by ACCION International and Citi Foundation
Event Name: Encuentro Centroamericano de Microfinanzas
Date: September 9 -11, 2009
Location: Real InterContinental Hotel, San Salvador, El Salvador
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events