Source: CGAP.
Search Results for: microfinance financial crisis
NEWS WIRE: India: Microfinance Sector Activity Hushed
Source: Financial Times.
NEWS WIRE: Microfinance Institutions Scrutinized as Potential “Subprime” Borrowers
Source: The Economist.
MICROCAPITAL STORY: Credit Crunch Hits Cambodian Microfinance Institutions
Nguon Sovan and George Mcleod, writers for Cambodian newspaper The Phnom Penh Post, reported in March 2009 that although the microfinance institutions (MFIs) have so far avoided the worst of the current economic recession, they are expecting slower growth rates and higher interest rates as the global credit crunch hits foreign lenders who have been a key source of funding in the past. This is a new perspective on the Cambodian microfinance market, as in February 2009, The Phnom Penh Post published a far more optimistic article stating that although the growth of the microfinance sector this year would be at a slower pace than previous years, the industry is still stable and expected to grow at double-digit rates. For more on The Phnom Penh Post’s February 2009 article, please read this MicroCapital article.
MICROCAPITAL STORY: Microfinance Continues to Play a Key Role in Developing Economies as Remittances to Latin America and the Caribbean Decline 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.
MICROCAPITAL STORY: Microfinance Insights Reports Over 80% of Investors Haven’t Reduced Microfinance Investment Portfolio Due to Global Recession
In its latest issue Microfinance Insights explores how industry stakeholders have been affected by the global liquidity crisis. While microloan clients have been squeezed by the crisis and MFIs have struggled to work with less liquidity, equity investors continue to show interest in investing in large microfinance institutions, confident they will weather the crisis. In this issue the magazine surveys 120 MFIs and 40 investors from around the world.
PAPER WRAP-UP: 2008 Microscope on the Microfinance Business Environment in Latin America and the Caribbean (LAC), (Part II of II), by The Economist Intelligence Unit
Published by the Economist Intelligence Unit, October 2008, available at:
The Economist Intelligence Unit released a 62 page report that provides a framework of the microfinance business environment in Latin America and the Caribbean. The report was commissioned by the Inter-American Development Bank and the Corporacion Andina de Fomento and also looked at three major individual features that provide greater insight to the microfinance arena. The three categories are as follows: regulatory framework, investment climate and institutional development. The indicator scores are aggregated to produce an overall score ranging from 0 to 100 (note, 100 being the best score). While these scores are provided, the report utilizes these figures in a “strengths” and “challenges” framework.
NEWS WIRE: Cambodia’s Microfinance Association Forecasts Vast Employment Slowdowns
Source: The Phnom Penh Post.
MICROCAPITAL STORY: International Finance Corporation (IFC) Provides Loan worth EUR 7 million to Microcredit Foundation EKI (MCF EKI) to Expand Financial Services in Bosnia and Herzegovina
The International Finance Corporation (IFC), the private sector lending arm of the World Bank, is providing a loan worth EUR 7 million to the Microcredit Foundation EKI (MCF EKI), a microfinance institution (MFI) based in Bosnia and Herzegovina (BiH). According to a press release on the IFC website, this loan is issued to enable MCF EKI to expand its outreach to micro-entrepreneurs in the rural areas of the BiH region and will be used in part to finance micro-entrepreneurs and the rest to finance home-improvement projects in several of the region’s war ravaged areas. In this regard, EKI’s micro-lending program, which targets micro and small enterprises in the region, aims to utilize IFC’s support to disburse 4,200 new loans to microentrepreuners by the end of 2011. Under its Housing Refurbishment Loan Program, EKI will use up to EUR 1 million of IFC’s loan to provide loans for repair and improvement of several houses in the BiH region that were badly damaged by the Bosnian Civil War that took place between 1992 and 1995.
MICROCAPITAL STORY: Omidyar-Tufts $100m Microfinance Fund Earns 12 Percent Return and $6.6m for Tufts University in 2008
In 2005, MicroCapital reported enthusiastically that Pierre Omidyar, founder of eBay, and his wife donated USD 100 million to their former school Tufts University, to be managed as a for-profit fund exclusively for investments into microfinance initiatives. At the time, the Omidyar-Tufts Microfinance Fund was the largest single for-profit microfinance fund in the world.
MICROCAPITAL EVENT: Financial Research Associates, LLC to host Microfinance West 2.0: The Social and Commercial Investor’s Summit on July 13-14, 2009 in Washington, D.C
Microfinance West 2.0: The Social and Commercial Investor’s Summit
July 13-14, 2009, Washington, D.C.
Financial Research Associates (FRA), LLC the research firm in California providing focused business information to executives and managers, will host Microfinance West 2.0: The Investment Opportunity Summit in Washington D.C. on the 13th and 14th of July, 2009. The two day event will be geared specifically towards social and commercial investors and will focus on an array of topics including the role of intermediaries in a microfinance deal, the value of ratings in today’s economy, new opportunities for microfinance professionals and new investment strategies for pensions, foundations and endowments. The event is open to current and prospective microfinance investors, public pension funds, private pension funds, foundations, endowments, other institutional investors, investment consultants, social entrepreneurs, microfinance managers, high net worth individuals, family offices, microfinance funds, attorneys, investment and commercial banks. The event details have been posted on the FRA website
MICROCAPITAL STORY: Huge Global Pensions Back Break-Out Private Equity Fund: TIAA-CREF, APG, DWM and SNS REAAL Contribute $82 million to Developing World Markets Microfinance Equity Fund I
Developing World Markets (DWM) has closed its DWM Microfinance Equity Fund I with a commitment of USD 82 million from four large institutional investors. The fund provides equity capital to microfinance institutions (MFIs) around the world. The Fund Manager, DWM Asset Management Limited Liability Company (LLC), now controls a total of USD 200 million in microfinance-related assets: a pool, which it states, is the largest in the world dedicated solely to MFI equity investment. Acting as Advisor to the Fund Manager is major microfinance investor SNS Asset Management. After the closing, Theo Brouwers, Director of SNS Asset Management said, “The success of the fundraising at a time of global economic turmoil demonstrates the confidence of international investors in microfinance as a stable asset class and that institutional investors continue to search for good investment opportunities that contribute to social development.” MicroCapital has previously quoted Theo Brouwers in his argument that despite the controversy over for-profit microfinance, the key to microfinance succeeding in poverty alleviation is to funnel institutional capital to developing countries lacking funds. DWM’s new USD 82 million fund is a step in that direction.
PAPER WRAP-UP: Bosnia and Herzegovina Microfinance Analysis and Benchmarking Report, 2008, by the Association of Microfinance Institutions in Bosnia and Herzegovina (AMFI), and Microfinance Information Exchange (MIX)
Published by the Association of Microfinance Institutions in Bosnia and Herzegovina (AMFI), and Microfinance Information Exchange (MIX), January 2009, available at:
http://www.microfinancegateway.org/files/55357_file_08.pdf
“Bosnia and Herzegovina (BiH) Microfinance Analysis and Benchmarking Report, 2008,” analyzes the development of the microfinance industry in BiH with a focus on key growth trends for the last four years (2004 to 2007), legislative changes of 2007, funding flows and structure, and performance of microfinance institutions (MFIs) as of 2007. The 14 page report is based on data submitted from 12 large Bosnian MFIs that are members of (AMFI). The report states that the 12 large Bosnian MFIs comprise 98 percent of the microfinance portfolio in the country. The report does not cite a source for the estimate of total market size. It is important to note that five microcredit organizations from BiH have been awarded the CGAP Financial Transparency Award in 2006. Only 20 MFI institutions worldwide have received this honor in 2006. (p1).
MICROFINANCE PAPER WRAP-UP: Shedding Light on Microfinance Equity Valuation, by Nicholas P. O’Donohoe, Frederic Rozeira de Mariz, Elizabeth Littlefield, Xavier Reille, and Christoph Kneiding, Part II of II
The Consultative Group to Assist the Poor (CGAP), a policy and research center housed at the World Bank dedicated to advancing financial access to the world’s underprivileged, released a path breaking 40-page report in February 2009 entitled, “Shedding Light on Microfinance Equity Valuation – Past and Present,” produced with limited analytical support from banking firm JPMorgan Chase & Co. The white paper is notable in providing an empirically grounded analysis of how financial valuation methods are actually applied by external actors to MFIs and other lending institutions with poverty alleviation goals. This is made possible by CGAP’s collection of information on 144 private equity transactions, the largest such dataset gathered to date, as well as information on 10 MFIs and other low income focused lenders that have raised funds through the issuance of securities. The original report is available at: http://www2.cgap.org/gm/document-1.9.9021/OP14v3.pdf.
MICROFINANCE PAPER WRAP-UP: “Setting Standards and Sticking to Them: When Microfinance Network NGOs Decide to Exit,” edited by Elissa McCarter and Andree Simon
Published by the Small Enterprise Education and Promotion (SEEP) Network, “Setting Standards and Sticking to Them: When Microfinance Network NGOs Decide to Exit,” is a collection of four case studies, each written by a different author, that focus on the central theme of exit strategies for microfinance network NGOs. Broadly speaking, microfinance network NGOs are large-scale apex organizations that start-up and/or support microfinance operations in different countries with financial investments and grants, capacity building, and monitoring. The first three case studies discuss the processes underwent by the Cooperative Housing Foundation (CHF), Adventist Development and Relief Agency (ADRA), and the Foundation for International Community Assistance (FINCA) to divest from their respective microfinance operations in a particular country. The fourth outlines the general process in which Women’s World Banking (WWB) disaffiliates from a microfinance subsidiary. Full text of the article is 31 pages, and is available here. What follows is a brief summary of each case study.
MICROCAPITAL STORY: Customer Savings and Deposits Ensure Stability of Cambodia’s Microfinance Sector Despite the Economic Crisis; Country’s Microfinance Industry Expected to Grow at Double-digit Rates in 2009
Microfinance, one of the fastest growing sectors in the Kingdom of Cambodia, is all set to weather the current economic crisis with strong growth, according to industry experts. According to a press release on The Phnom Penh Post, although the growth of the microfinance sector this year would be at a slower pace than previous years, the industry is still stable and expected to grow at double-digit rates. Commenting on the slight slowdown but stable situation of Cambodia’s microfinance sector this year, Paul Luchtenburg, the Chief Executive Officer of the Cambodian microfinance institution (MFI) AMK microfinance said that although the decrease in financing and foreign capital have made Cambodian MFIs more conservative in their lending practices this year, the sector overall was still heading towards positive, albeit slightly slower growth.
PRESS RELEASE: Crisis Hitting Poor Hard in Developing World, World Bank says
Source: The World Bank.
MICROCAPITAL PAPER WRAP-UP: From Revolution to Evolution: Charting the Main Features of Microfinance 2.0 by Ronald U. Mendoza and Brandon C. Vick
Written by Ronald U. Mendoza of the Office of Development Studies, United Nations Development Program (UNDP) and Brandon Vick of Frodham University, this paper speculates on the future of microfinance and elaborates on the role to be played by private innovations and public policies in this regard. The 43 page document was published by Fordham University, Department of Economics in its Fordham Economics Discussion Paper Series in February, 2008 and the full text is available here.