by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: Vietnamese Government Sets Up Working Committee On Microfinance

It was recently reported on the Vietnamese Business News online portal [1]  that the Vietnamese Government has decided to set up a Working Committee on Micro-Finance. The Working Committee will be chaired by the Governor of the State Bank of Vietnam (SBV) [2], Mr Nguyen Van Giau. The Working Committee is responsible for studying and making recommendations to the Vietnamese Prime Minister on the directives and measures necessary to develop microfinance operations in the country. It will also assist the Prime Minister in guiding and coordinating the relevant ministries, ministerial agencies and government agencies.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: CGAP Blog Explains High Collection Rates And Clarifies Key Microfinance Concepts Including Loan-Loss Rates and Outstanding Loan Portfolio

In a recent blog entry entitled ‘Is 95% a good collection rate?’ [1] CGAP Senior Advisor Mr Richard Rosenberg discusses the misconceptions about collection rates in the microfinance world. His blog has attracted significant comment and queries, some of which are referred to below. According to Mr Rosenberg, MFIs that report collection rates of over 90 percent or 95 percent in some cases are typically viewed positively by the press and by other market participants. He cautions that the situation may not be as promising or straightforward as it sounds and that ‘for most MFIs a collection rate of 95 percent would be unsustainable’. One should not equate a 95 percent collection rate with ‘losing just 5 percent of [our] portfolio a year to loan default’ as the reality is often more complicated. In an extreme scenario, he adds that ‘if an MFI makes 3-month loans repayable weekly, and collects 95 cents of every dollar it lends, it will lose almost 40 percent of its loan portfolio in a year’. This is a scenario he explains in some detail in his blog and is summarised below.

by Christopher Maggio -

MICROCAPITAL.ORG PAPER WRAP-UP: Do Interest Rates Matter? Credit Demand in the Dhaka Slums, by Rajeev Dehejia, Heather Montgomery & Jonathan Morduch

Written by Rajeev Dehejia, Heather Montgomery & Jonathan Morduch, published in May 2009 in a cooperative effort by the Financial Access Initiative and NYU Wagner School, 41 pages, available at:
http://financialaccess.org/sites/default/files/Do%20Interest%20Rates%20M…

This study attempts to show how sensitive borrowers are to rises in interest rates. It measures the change in overall demand for loans after an increase in the interest rate. The study was done at SafeSave, a credit cooperative in Dhaka, Bangladesh. SafeSave has the convenience of a credit cooperative as the loan officers visit borrower’s homes, but also the flexibility of a bank in terms of repayment schedule within a given month. However, outstanding interest must be paid on a monthly basis. For the study, interest rates were unexpectedly raised from 2 percent per month to 3 percent per month in two branches of SafeSave but not a third branch, which was the control group. The data is from 1999 to 2001, was collected monthly, and 5,147 customers, not all of whom participated throughout the study. Average loan size ranged from USD 48 in the branches that underwent interest rate change, to USD 37 in the branch that did not.

by Diya Chopra -

MICROFINANCE EVENT: MicroFinance Transparency (MFTransparency) & the Azerbaijani Microfinance Association (AMFA) to Hold Workshop & Kick off Transparent Pricing Initiative in Baku, Azerbaijan October 8th, 2009

Event Name: Transparent Pricing Initiative Training Workshop

Event Date: October 8, 2009

Event Location: Hotel Respublika, Baku, Azerbaijan

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

Cost: Not yet disclosed

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: Exclusive Interview On The Current State Of Microfinance In Malaysia And Challenges Facing The Sector: Observations From The Assistant Governor Of Bank Negara Malaysia

In a recent Microcapital.Org exclusive written interview with the Malaysian central bank, Bank Negara Malaysia [1], the Assistant Governor Mr Muhammad bin Ibrahim provided the following responses to a series of questions about the current state of microfinance in Malaysia and challenges facing the sector. Previous Microcapital.Org stories on microfinance in Malaysia have been set out in the Bibliography section below [2] – [5].

by Radhika Chandrasekhar -

MICROFINANCE EVENT: Third International Conference on Micro Finance, January 22-24 2010, Pondicherry University, Pondicherry, India

Event Name: Third International Conference on Micro Finance

Location: Pondicherry University, Kalapet, Pondicherry – 605 014 India

Event Description: This event is a conference that aims to collaborate with National and International Research centers, and involve economists, socialists, administrators, policy makers, and NGOs, to discuss strategies and policies to eradicate poverty in India and the world through microfinance. Participants may submit contributions of original research work, which has not been published or submitted for publication elsewhere to be published, reviewed, and discussed in the conference. [1]

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

by Zoran Stanisljevic -

MICROCAPITAL.ORG STORY: Venture Capital and Private Equity Firms Invest Millions in India, but is there Risk in Microfinance Funding?

According to Arun Natarajan, CEO of Venture Intelligence (a provider of analysis and information on private equity (PE), Venture Capital (VC) and Mergers and Acquisition deals (M&A) in India), Venture Capital firms invested USD 117 million in over 27 deals in India during the six months ending June 2009 [1]. Microfinance Institutions (MFIs) raised roughly USD 68 million in India from venture capital (VC) and private equity (PE) firms in May through July 2009 [2]. While this increase in capital bodes well for MFIs, it brings forth a necessity for greater level of due diligence. According to Deepti Chauhary of Livemint, (an Indian provider of global, financial and economic headline news), such high cash inflows may bring new risk to MFIs such as over-indebtedness and malpractices in pre-loan disbursal [2].  Does this pose a barrier for MFIs to obtain future funding from outside investors?

by Diya Chopra -

MICROCAPITAL.ORG STORY: Peruvian Commercial Bank, Banco de Credito, to Acquire Microfinance Group, Financiera Edyficar from CARE, International Finance Corporation (IFC), and MicroVest (MV)

Banco de Crédito del Perú (BCP) recently announced its deal with nongovernmental organization CARE, to purchase a 77.2% stake in the Peru-based microfinance company, Financiera Edyficar. BCP is a Peruvian publicly-traded commercial bank founded in 1889 and owned by Credicorp Ltd, a financial holding company in Peru. BCP offers services and products to businesses and individuals, as well as small and medium-sized enterprises [1]. In March 2008, BCP reported total assets of USD 17.3 billion, a debt-equity ratio of 1,422.10%, and a return on average assets of 2.13%. It has a BBB- credit rating from both Standard & Poor’s and Fitch Ratings. As of June 2009, BCP claimed 32% of loans and 36% of deposits in the Peruvian banking system. Approximately 97% of BCP is owned by Credicorp [2].

by Christopher Maggio -

MICROFINANCE EVENT: Azerbaijan Microfinance Association Investors Fair in Baku, Azerbaijan, October 7, 2009

Microfinance Event: Azerbaijan Microfinance Association Investors Fair in Baku, Azerbaijan, October 7, 2009

Event Name: Azerbaijan Microfinance Association Investors Fair

Location: Baku, Azerbaijan

Date: October 7, 2009

Event Description: The conference will focus on MFI governance strategy, financial risk management, client protection, opportunities to learn about innovative products, and a chance to access capital investors [1].

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

Cost: AMFA Members: AZN 200 (USD 248)
non-AMFA Members: AZN 250 (USD 310)
International: USD 200

Summary of Event: The day will start with remarks from members of the Azerbaijan Microfinance Association, the Azerbaijani government, and business representatives. There will then be three panels on governance, risk, and client protection, respectively. Lastly, the Investors Fair will be a roundtable to discuss critical microfinance issues [2].

by Diya Chopra -

MICROCAPITAL.ORG STORY: U.S. Senators Introduce Microfinance Growth Fund (MGF) in Latin America and Caribbean, Backed by Overseas Private Investment Corporation (OPIC), Multilateral Investment Fund (MIF), and Inter-American Investment Corporation (IIC)

United States Senator Bob Menendez of the state of New Jersey, U.S. recently announced plans to invest in the Latin American and Caribbean (LAC) microfinance sector. The U.S. administration will launch a Microfinance Growth Fund (MGF) with the following organizations: the Overseas Private Investment Corporation (OPIC), an independent U.S. government agency which assists with investments in developing countries; the Multilateral Investment Fund (MIF), an autonomous fund administered by the Inter-American Development Bank (IDB); and the Inter-American Investment Corporation (IIC), an affiliate of the IDB which supports private sector and capital market development in LAC countries.

by Diya Chopra -

MICROCAPITAL.ORG STORY: Unitus and Michael & Susan Dell Foundation Collaborate to Increase Use of Social Performance Management Among Microfinance Institutions

A recent press release announced a new program to be implemented by the Michael and Susan Dell Foundation in association with Unitus, an international non-profit organization specializing in microfinance. The Social Performance Management Implementation Project (SPM IP) will be launched in India to measure the impact of microfinance institutions (MFIs) on the borrowers who work with them. Social performance management is a program used to assess an organizations goals, its progress towards these goals, and the need for improving process to strengthen future performance.

by Christopher Maggio -

MICROCAPITAL.ORG PAPER WRAP-UP: Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila, Dean Karlan and Jonathan Zinman

Written by Dean Karlan and Jonathan Zinman published July 2009 as a cooperative effort by Financial Access Initiative and Innovations for Poverty Action, 33 pages, available at:
http://financialaccess.org/sites/default/files/Expanding%20Credit%20Access%20Manila.pdf
and
http://poverty-action.org/sites/default/files/expandingaccess_manila_jul09.pdf

This paper examines the effect of the extension of micro credit in Manila, Phillipines. The people who received loans, or the treatment group, were selected randomly from a group of first-time applicants deemed “marginally creditworthy” based on personal financial data. Those not randomly selected, the control group, did not receive loans. Loans ranged from 5,000 to 25,000 Philippines Pesos (PHP), the equivalent of over USD 100 to over USD 500, and were of individual-liability. The survey took place at the end of one year, and referenced the month just prior.