Microfinance Event: XII FOROMIC 2009: Inter-American Forum on Microenterprise
FOROMIC 2009: Inter-American Forum on Microenterprise, September 30 – October 2, 2009, Arequipa, Peru, Sponsored by the Multilateral Investment Fund, Organized by the Inter-American Development Bank
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Source: Inter Press Service
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), established by the government of India and the Small Industries Development Bank of India (SIDBI) intends to provide credit guarantee support to 57,500 MSEs in 2009. In 2008, CGTMSE approved about 53,700 MSEs for guarantee support, but ultimately, only 43,555 were covered. This year, CGTMSE has raised USD 451.5 million for guarantee payment to MSEs. In 2008, CGTMSE had raised USD 441.3 million, but was only able to guarantee loans worth USD 343.8 million for undisclosed reasons. CGTMSE is a fund that gives guarantee payments to lending institutions so that microentrepreneurs may obtain collateral-free loans. If a borrower defaults on a loan, CGTMSE compensates the lender up to 75, 80, or 85 percent of the loan depending on the loan amount and the profile of the borrower. The CEO of CGTMSE, OS Vinod, has stated in an interview, “What we are trying to tell the banks is — you don’t appraise the collateral but the project. If the project is good, then the second issue of collateral comes in and we will step in. So, banks have to move from collateral-based lending to project-based lending, which was not happening.” CGTMSE does not directly interact with borrowers and lenders must approve loans before seeking a guarantee from CGTMSE. The Indian government’s Ministry of Micro, Small & Medium Enterprises (MSME) created the Credit Guarantee Scheme (CGS) to improve credit access for MSEs. Together with SIDBI, the government instituted CGTMSE to implement this scheme.
Source: Jordan Times
Source: Huffington Post
The Multilateral Investment Fund (MIF), administered by the Inter-American Development Bank (IDB) is one of the largest public sector Development Finance Institutions (DFI) in the Americas. DFIs are government owned bilateral or multilateral development agencies whose investments include microfinance deals. DFIs make either direct or indirect investments. Direct investments are in microfinance institutions (MFIs) and indirect investments are in microfinance investment vehicles such as private investment funds. The majority of investments are direct and in hard currency (USD).
ACCION International has been awarded the Juscelino Kubitschek Award by the Inter-American Development Bank (IDB) along with two other institutions for their contribution to development in Latin America and the Caribbean. ACCION won the prize in the field of economics and finance which drew nominations from 30 institutions. The criteria used to select the winner for the field of economics and finance was based on the magnitude of its social impact. The award recognizes contributions in two areas: economics and finance, and in the cultural, social and scientific fields. Fe y Alegría and Associacao Vaga Lume will share the award for the social, cultural and scientific category, which received 115 nominations.
A recent press release from Intellectual Capital Advisory Services (Intellecap) reports that Bhartiya Samruddhi Finance Ltd (BSFL), a microfinance institution (MFI) based in Hyderabad, India, has received USD 9.87 million in Series-B funding from several investors including Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company and Small Industries Development Bank of India (SIDBI). Intellecap, a finance consultancy firm, was BSFL’s advisor on the deal. BSFL’s old investors, including IFC, Shorecap International Ltd, and ICICI Bank, commenced their exit by making a secondary sale of USD 4 million to the new investors. According to Aavishkaar Goodwell, USD 500 million in private equity over the next five years is necessary to facilitate the growth of MFIs in India. BSFL was set up in 1997 by Bhartiya Samruddhi Investments and Consulting Services (BASICS), the holding company of the BASIX group. BASICS currently owns 49.5 percent of BSFL, with investors holding the remaining amount. According to Mr. Vijay Mahajan, the Chairman and CEO of BSFL, “This is a big milestone for us as investors have reposed faith in the BASIX integrated livelihood promotion model over cookie-cutter micro-credit. We are all set to now address our goal of reaching 10 million poor households by 2014.” Donald Peck, the co-founder of Lok Capital, remarked, “We are delighted to be able to support the further growth of BSFL as it embarks on the next stage of roll-out of its unique agriculture and skills focused business models.”
In a recent Forbes article, Michael Chu, senior lecturer at Harvard Business School and former CEO of ACCION International, writes that microfinance is a scalable, sustainable model that can provide real hope of winning the war against global poverty, even in the midst of the global economic crisis.
Source: Forbes
Gateways to Global Poverty Reduction and Financial Inclusion: Linking Savings and Conditional Cash Transfers (CCTs)
April 29, 2009, 9:30am-11:00am EST, New American Foundation Head Office, 1899 L Street NW, Washington DC, 4th Floor
US President Barack Obama opened the fifth Summit of the Americas in Trinidad and Tobago with a speech outlining his administration’s policy toward the Western Hemisphere. As part of his response to the global economic crisis, the President announced a newly-formed Microfinance Growth Fund to jump start lending to small businesses in the region.
Dave Valle, a former Major League Baseball player for the Seattle Mariners, is the founder of microcredit agency Esperanza, whose mission is to help the poor in the Dominican Republic and Haiti start their own businesses. In addition to making loans, Esperanza has become active in community development: creating a school, computer training centers, a member-funded health care plan, a water treatment system, and a home improvement initiative. The organization has also spearheaded the construction of five baseball fields.
According to a report in The Times of India, three Indian MFIs will begin offering home loan products to the rural poor. SKS Microfinance, Madura Micro Finance and Grama Vidiyal all plan to start rolling out home loans and home improvement loans to borrowers with good repayment records. According to Tara Thiagarajan, Chairman of Madura Micro Finance, the low cost construction model used by the rural poor has prompted the MFIs to offer the loans. Most people in Indian villages own plots and construct their own homes using indigenous materials.
According to a report in the Phnom Penh Post, Cambodian microfinance institutions predict that as the economic crisis spreads, their level of non-performing loans (NPLs) will grow. “Our major concern now is that nonperforming loans will go up,” said Bun Mony, a member of the board of the Cambodian Microfinance Association (CMA) and chairman of Sathapana Limited, a Cambodian MFI with 37,000 clients. “We forecast that NPLs will increase to 1 percent or higher this year due to the economic downturn that is affecting our clients’ incomes.” According to Bun Mony, the NPL rate at his institution was only 0.16 percent at the same time last year. Even as the global economy slows, Bun Mony still expects his overall loan portfolio to grow. Sathapana lent USD 37.5 million last year and expects that to rise to USD 44.5 million in 2009.
The Inter-American Development Bank (IBD) predicts 2009 with be the first year that remittances will decline in Latin America and the Caribbean after a decade of growth. The IBD has been tracking these flows since 2000. Remittances are transfers of money by foreign workers to their home countries. With the already shaken international banking system, following the collapse of Lehman Brothers in September 2008, Immigrants are feeling the credit squeeze as they reduce money sent to family in their home countries.
Source: Inter-American Development Bank.
International Finance Corporation (IFC), a member of the World Bank Group, has joined forces with Bharatiya Yuva Shakti Trust (BYST), an organization that focuses on “mentoring” as a technique to help young entrepreneurs in India, and venture capital firm VenturEast Micro Equity Managers Private Limited (VMEM) to set up a fund that will provide financing to young Indian business persons with growth potential but limited resources. It will target in particular India’s disadvantaged entrepreneurs between 18-35 years, who are considered too high risk for debt financing and thus require equity injections.