Despite challenging economic times, Banco Compartamos SA, a microfinance bank located in Mexico City, has reported strong results for third quarter of 2009. Compartamos reported a total loan portfolio of 7,071 million pesos or 548 million USD, or an increase of 40.2 percent from the previous year.[1, 2] The number of new clients reached 1.4 million active clients resulting from an increase of 36.1 percent of new clients over the past year.[1,2] Compartamos states that global macroeconomic environment has not negatively affected client demand.[2, pg.4] The average outstanding loan balance per client increased slightly by 3.1 percent to 4,968 pesos or 385 USD in third quarter of 2009.[2, pg.4] Compartamos’ core product called “Credito Mujer” (group loans) represents 74.2 percent of the total loan portfolio in third quarter of 2009.[2, pg.4] The Bank states that it “restructured the loan origination process in higher risk profile products, establishing stricter policies to avoid over indebting customers.”[2, pg. 4]
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MEET THE BOSS: Discussions on Successful Due Diligence When Evaluating Microfinance Investment Vehicles’ (MIV’s) Financial Viability: Interview with Christina Leijonhufvud, Managing Director, Social Sector Finance Group (SSF)/Investment Bank (IB) at JP Morgan (Part II of a Three Part Series)
Ms. Leijonhufvud is Managing Director of the Global Social Sector Finance Group at JPMorgan. The SSF unit leverages JP Morgan’s products and skills to help bring financial services to microfinance and social enterprises around the world. The scope includes capital markets, structured products and principal investments. The unit seeks to achieve a double bottom line of social benefit and financial returns. According to JP Morgan, potential demand for sustainable financial services is immense, at an estimated USD 300 billion. JPMorgan utilizes its global IB platform to raise capital to support poverty alleviation initiatives in developing economies.
Ms. Leijonhufvud has led J.P. Morgan’s Social Sector Finance unit since its inception in late 2007. A double bottom line initiative that brings financial services and financing to microfinance institutions and other enterprises serving the base of the economic pyramid, Social Sector Finance also focuses on engaging the firm’s employees in these sectors. Outside J.P. Morgan, Ms. Leijonhufvud serves on the Advisory Board for the Center for Financial Inclusion, has been a consultant to Ashoka-Innovators for the Public in their social financial services venture, and has lectured widely on financial globalization and emerging markets risks. Ms. Leijonhufvud has held various risk management positions at J.P. Morgan, including as head of Country Risk Management & Advisory, Credit Portfolio Market Risk Management, Emerging Markets Market Risk Management, and Industry Concentrations. Prior to joining J.P. Morgan in 1996, Ms. Leijonhufvud worked at the World Bank as Country Officer, helping develop reform programs and borrowing strategies for the former Soviet Republics of Central Asia. In 1991, she served on the Economic Reform Committee for the Government of Kazakhstan. Ms. Leijonhufvud earned a M.Sc. degree in Economics from the London School of Economics, a M.A. degree in International Affairs from George Washington University, and a B.A. in Sociology from UCLA.
MICROFINANCE PAPER WRAP-UP: Regulation and Supervision of Microfinance in Egypt by Magdy Moussa
Written by Magdy Moussa, Senior Microfinance Advisor at PlaNet Finance for the Middle East and North African Region; published in January 2007 by the Consultative Group to Assist the Poor’s (CGAP) Microfinance Regulation and Supervision Resource Center; number 21 of The Essays on Regulation and Supervision series, 17 pages, available at:
http://www.microfinancegateway.org/gm/document1.9.27739/37060_file_Egypt_Moussa_Final_.pdf
MICROCAPITAL.ORG STORY: Daily Monitor of Uganda Reports on Progress of Equity Bank Uganda, Bank Formed After Acquisition by Equity Bank of Kenya
The Daily Monitor Online of Uganda has reported on the progress of Equity Bank Uganda, a microfinance bank that was formed when Equity Bank, a major bank in Kenya, acquired 100 percent of Uganda Microfinance Limited [1,2]. The acquisition, valued at 1.66 billion Kenyan shillings, the equivalent at the time of over USD 26.9 million, was reported by Microcapital in April of 2008 [3].
PRESS RELEASE: Microfinance Investor Oikocredit Announces Results of Social Audit
Source: Oikocredit.
PRESS RELEASE: Women’s World Banking, MasterCard Foundation Create Center for Microfinance Leadership
Source: Women’s World Banking.
PRESS RELEASE: Oikocredit’s Partner Microfinance Institutions Affected by Natural Disasters
Source: Oikocredit.
MICROCAPITAL.ORG STORY: P500 Billion (USD 10.7 Billion) Bank Loans Exposed to Defaults in Philippines After Tropical Storms
The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has estimated that P-500-Billion (USD 10.7 Billion) worth of loans are at risk of default due to financial hardships that have come as a result of the typhoons “Ondoy” and “Pepeng” that hit the Philippines in late September [1,2]. This is 24 percent of the total loan portfolio of the banking sector in the Philippines [1]. Because those most vulnerable are individual and retail borrowers, the microfinance industry has been particularly effected by the storms [2]. The typhoons mainly damaged parts of Luzon and the capital, Manila, which accounts for about 30 percent of the country’s gross domestic product (GDP) [2].
MICROCAPITAL STORY: Gates Foundation Gives USD 35m to Alliance of 64 Countries to Train Central Bankers, Funds Managed by German Aid Agency GTZ
The global Alliance for Financial Inclusion (AFI), a coalition of developing countries committed to financial inclusion, was launched in Nairobi, Kenya, with a USD 35 million grant from the Bill & Melinda Gates Foundation’s .[2] The AFI is based in Bangkok and managed on behalf of its members by the German government development organization Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ), the recipient of the Gates grant. [1]
MICROFINANCE PAPER WRAP-UP: Who is Reaching Whom? Depth of Outreach of Rural Micro Finance Institutions in Ghana, by Kofi Awusabo-Asare, Samuel K. Annim, Albert M. Abane and Daniel Asare-Minta
Written by Kofi Awusabo-Asare, Samuel K. Annim, Albert M. Abane and Daniel Asare-Minta, published in the International NGO Journal Vol. 4 (4), pp. 132-141, April 2009, 10 pages, available at: http://www.academicjournals.org/ingoj/PDF/Pdf2009/Apr/Asare%20et%20al.pdf
This paper aims to study the socioeconomic status of clients being reached by different “types” microfinance institutions (MFIs) in Ghana. Using a poverty index, the study shows which type of MFIs reach relatively poorer or richer clients. The study also attempts to explain these results through reasons relating to the “source of funds, strategies for outreach and mission of the institution.” Lastly, MFI policy recommendations are made.
MICROCAPITAL.ORG STORY: CGAP Microfinance Blog Comments On Case Studies On The Liquidation Of Microfinance Institutions And Highlights Challenges Associated With Retaining Borrower Repayment Incentives In The Midst Of A Deteriorating Loan Portfolio
In a blog on the CGAP Microfinance Blog portal entitled ‘When MFIs fail, is their loan portfolio worth anything?’ [1], Senior Advisor to Research and Market Intelligence Team at CGAP, Mr Richard Rosenberg refers to Mr Daniel Rozas’s publication entitled ‘Throwing in the Towel: Lessons from MFI Liquidations’ [2]and makes some observations about the steps an MFI should take to maximise collections on a deteriorating loan portfolio. Mr Rosenberg notes that Mr Rozas’ article offers a ‘useful, timely, concise, and readable study of a half-dozen MFI failures, focusing on efforts by creditors and others to collect the loan portfolio of the defunct institutions’ but cautions that some of Mr Rozas’ recommendations may be difficult to implement in practice.
MICROCAPITAL.ORG STORY: Founder And Officer Of India-Based SKS Microfinance Comment On Prospects For Microfinance In China In A Wall Street Journal Report
A recent article entitled ‘Microfinancing China’ in the Wall Street Journal [1] by Mr Vikram Akula and Mr Tarun Khanna discuss the scope for microfinance in China and explores why the concept of microcredit has a ‘notably minimal footprint’ in a mammoth economy such as China. Mr. Akula is founder and chairperson of India-based MFI, SKS Microfinance [2]. Mr. Khanna, the author of the book ‘Billions of Entrepreneurs’ [3] is Jorge Paulo Lemann Professor at Harvard Business School and serves on SKS Microfinance’s board of directors. The view taken by Mr Akula and Mr Khanna is that ‘it will take hard work and reform to grow microfinance in China’ but that millions of poor people in the world’s third largest economy could derive benefits from microloans.
MICROCAPITAL.ORG STORY: Former Founding Member Of Amanah Ihktiar Malaysia And Current Professor At Universiti Sains Malaysia Professor Sukor Kasim Appointed As Government Adviser To Northern Malaysian State Of Perak to Help Address Problems Related To Poverty And Income Disparity
It was recently reported in Malaysia’s Bernama press portal [1] that Professor Sukor Kasim of Universiti Sains Malaysia’s (USM) [2], a tertiary educational institution in Malaysia, will be appointed adviser and consultant to the Perak state government in its bid to narrow income disparities in the state. Perak is a state in the northern half of Western Peninsula Malaysia. Professor Kasim was co-founder of Malaysia’s earliest microfinance NGO, Amanah Ihktiar Malaysia (AIM) [3] in 1986. AIM’s operations were modelled after Grameen Bank [4].
NEWS WIRE: United States: China Needs Microfinance, Say Vikram Akula of SKS and Tarun Khanna of Harvard Business School in Wall Street Journal
Source: The Wall Street Journal.
MICROCAPITAL.ORG PAPER WRAP-UP: Acute Poverty Alleviation Through Women’s Targeting by Micro nance Programs, by Alexandra Dobra
Written by Alexandra Dobra, published in March 2009 by the Munich Personal RePEc Archive, 8 pages, available at: http://mpra.ub.uni-muenchen.de/16874/1/MPRA_paper_16874.pdf
This paper, by Alexandra Dobra of the University of York Department of Politics, is a literature review that attempts to address the merits of female-targeted microfinance [1]. In addition to microfinance, Ms. Dobra has also done research on immigration in developed countries [1,2]. The paper is published by the Munich Personal RePEc Archive, an archive that houses economics papers for authors who want their work to be freely available [3].
MICROCAPITAL.ORG PAPER WRAP-UP: Microfinance Mission Drift?, by Roy Mersland and R. Øystein Strøm
Written by Roy Mersland and R. Øystein Strøm, published in July 2009 by Elsevier Ltd., 9 pages, available at: http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VC6-4WRD6C7-1&_user=142623&_rdoc=1&_fmt=&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1032771517&_rerunOrigin=scholar.google&_acct=C000000333&_version=1&_urlVersion=0&_userid=142623&md5=93709e08c2d88cfca1ce951dff7c457d
This paper studies the tendency of microfinance institutions (MFIs), as they grow, to cater to groups that are different from those in the “mission” of microfinance. Basically, this mission includes serving low-income people who have less access to credit, namely poor, rural women. To do this, loan size, the main market, lending methodology, and gender bias were studied in 379 MFIs in 74 counties. The MFIs reported 4-6 years of data each.
MICROCAPITAL.ORG STORY: International Banking Systems Online Journal Publishes Supplement On The Role of Technology In Microfinance And Highlights Importance Of Risk Management Systems
The International Banking Systems publication (IBS), an online journal that provides information on banking systems and operations, have produced a detailed supplement on the role of technological systems in microfinance [1]. An article within the supplement entitled ‘Technology for Microfinance – Trends driving the technology’ [2], the authors discuss the growing importance of risk management systems in MFIs. These systems are significant as they allow MFIs to address critical issues such as over-indebtedness, a problem which has become acute for some MFIs in the current financial turmoil, and report to their investors promptly.
MICROCAPITAL.ORG STORY: Social Capital Markets 2009 (SoCap09) and Global Impact Investing Network (GIIN) Support “Social Financing”
A recent story from The Economist titled, “Financial innovation and the poor: A place in society,” states that despite the recent financial crisis, bankers, investors, and philanthropists have not shied away from capital markets. [2]