by Zoran Stanisljevic -

PAPER WRAP-UP: Will the Bottom of the Pyramid Hit Bottom? The Effects of the Global Credit Crisis on the Microfinance Sector, by the United States Agency for International Development (USAID)

By Barbara Magnoni and Olga Jennifer Powers of EA Consultants, published by the United States Agency for International Development (USAID), March 2009, microReport number 150, 54 pages, available at: 

http://collab2.cgap.org//gm/document-1.9.34169/11Will%20the%20Bottom%20of%20the%20Pyramid%20Hit%20Bottom_The%20Effects%20of%20the%20Global%20Credit%20Crisis%20on%20the%20Microfinance%20Sector.pdf

The produced report by USAID provides an assessment on the impact of the financial crisis on the microfinance sector.  The paper provides a framework for assessing the impact of the crisis on the microfinance sector by analyzing the effects on both the liabilities side (access to finance, cost of funding, financial risk) and the asset side (portfolio growth, portfolio risk, portfolio quality) of an MFI’s (Microfinance Institutions) balance sheet in order to determine the extent that MFIs may have been impacted.

by the MicroCapital Team -

CGAP Microfinance Dealbook: April 2009 Transactions

The CGAP Microfinance Dealbook publicizes microfinance capital market transactions in an effort to bring greater transparency to the industry. This information is made freely available as a public service. Parties to microfinance transactions are encouraged to submit their deals to this effort. The following deals were collected for April 2009:

by Sally Levy -

MICROCAPITAL STORY: International Finance Corporation (IFC) Worldwide Microfinance Investment Deals March and April 2009 of $51m and EURO 7m

The International Finance Corporation (IFC), a member of the World Bank Group, provides investments and advisory services to build the private sector in developing countries.  It made the following microfinance investment deals in March and April 2009 of USD 51m and EURO 7m.

by Laura Anderson -

MICROCAPITAL STORY: Government of Sudan Issues Directives Requiring Banks to Allocate 12 Percent of Portfolio to Microfinance

According to the Sudan Vision Daily, The Central Bank of Sudan(CBOS) has issued a circular note detailing directives regarding microfinance to Sudanese Banks.  A copy of the circular was not available for this report.  As part of its 2009 Central Bank Policy the CBOS has encouraged the development of microfinance aimed at social needs such as housing and agriculture, as well as the deepening of Islamic banking.

by Jaclyn Berfond -

MICROFINANCE PAPER WRAP-UP: MIX and Intellecap Present the Asia Microfinance Analysis and Benchmarking Report 2008

Produced by Microfinance Information Exchange, Inc. (MIX) and Intellecap, March 2009, 20 pages, available at: http://www.themix.org/sites/default/files/2008%20Asia%20Microfinance%20Analysis%20and%20Benchmarking%20Report.pdf

The “Asia Microfinance Analysis and Benchmarking Report 2008” analyzes the evolution of the microfinance industry in South Asia and East Asia and the Pacific (EAP), with a focus on outreach and scale, funding sources, and financial performance in fiscal year (FY) 2007.

by Laura Anderson -

MICROCAPITAL STORY: Muhammad Yunus Warns of the Dangers of Foreign Currency at Sa-Dahn Microfinance Conference

Muhammad Yunus, the Nobel Laureate who made microfinance a success in Bangladesh, has warned of the pitfalls for microfinance institutions relying on foreign money.  The comments, reported by The Hindu Business Line, came at the recent Sa-Dahn National Microfinance Conference 2009 in New Delhi, India.

by Ryan Hogarth -

MICROCAPITAL STORY: Scalable and Sustainable Micro Health Insurance Just Around the Corner?

“Is there a business in micro health insurance?” This was the central question posed by a recent article published in INSEAD Knowledge, a newsletter of international business school INSEAD (Institut Européen D’Administration des Affaires). The World Health Organization (WHO) has stated that beyond inadequate healthcare delivery systems, inadequate healthcare financing mechanisms is one of the biggest obstacles to improving health outcomes of the poor. However, although sustainable micro life insurance products have experienced recent growth in certain parts of the world (see this MicroCapital article on the success of Allianz Life Indonesia), a sustainable and scalable micro health insurance model remains elusive.

by Laura Anderson -

MICROCAPITAL STORY: Malam Ahmad Dogara Advocates Islamic Microfinance Banking in Nigeria to Eradicate Poverty

In a presentation at the Micro-Finance Investors Forum in Kano, Nigeria, Malam Ahmad Dogara of the Association of Oasis Associates, indicated that Islamic microfinance could be an excellent substitute for conventional microfinance already being used in the country. According to a report in the Daily Triumph, the economist lamented that despite prior success of conventional microfinance, these services were still not reaching all the poor and some of the money went to activities unrelated to helping entrepreneurs. Mr. Dogara pointed out that in some Muslim communities conventional microfinance has been rejected principally for its non-compliance with Islamic law, particularly with regard to interest. He explained “Islamic microfinance could arguably help the current short comings, since it focuses on achieving social justice, disallows exploitation and battles poverty as well.”

by Andrea Chu -

MICROCAPITAL STORY: International Finance Corporation (IFC) Acquires 16.5% Stake in Peruvian MicroInsurer Protecta

International Finance Corporation (IFC) acquired a 16.5% stake in Peruvian life insurer Protecta, a microinsurance company. In February 2009, Protecta sold 3.17 million new shares to IFC at one sol each for a total of PEN 3.17 million (USD $1million). IFC stated in its official press release that the deal was made in order to help expand Protecta’s capital base and extend its insurance services to lower-income households and smaller businesses.

by Yanni Hao -

MICROCAPITAL STORY: RIZAL Commercial Banking Corporation (RCBC) Announces Tentative Plan to Acquire JP Laurel Rural Bank for $8m to Establish Its Microfinance Business

RIZAL Commercial Banking Corporation (RCBC), one of the Philippines’ 10 biggest banks, announced that it will acquire Batangas based JP Laurel Rural Bank for 8 million USD to establish its microfinance business. According to a report from the Manila Times, RCBC said its board of directors approved the establishment of an 8 million USD shareholder advance facility which will be infused over a three year period from 2009 to 2011 in order to acquire JP Laurel Rural Bank. The acquisition will extend RCBC’s penetration into the Batangas, Laguna, and Mindoro Oriental areas where JP Laurel Rural Bank’s branches are located. The rural bank’s particular geographic coverage represents a prime market for achieving RCBC’s strategic goals, which include microfinance. The acquisition decision is still subject to approval by the Bangko Sentral ng Pilipinas (BSP), the central bank of the Republic of the Philippines.

by Ryan Hogarth -

MICROFINANCE PAPER WRAP-UP: Beyond Economic Benefits: The Contribution of Microfinance to Post-Conflict Recovery in Asia and the Pacific, by Pascal Marino

“Beyond Economic Benefits: The Contribution of Microfinance to Post-Conflict Recovery in Asia and the Pacific” was written by Pascal Marino, published in 2005 by The Foundation for Development Corporation in Brisbane, Australia, and presented at the University of Melbourne conference “Aid and Development in Conflict Environments: What are the lessons?” The full text of this report is 14 pages and available here. The paper is a literature review and synthesis of research on the impact of microfinance in nine different post-conflict countries in Asia and the Pacific, with a focus on Afghanistan, Indonesia (Maluku), Papua New Guinea (Boaguainville), Sri Lanka, and Timor Leste. It focuses on the difficulties in operating microfinance institutions (MFIs) in post-conflict zones and on the intangible benefits of microfinance through social capital enhancement: social mobilization, empowerment, democracy building, conflict resolution, refugee reintegration, and organization building.

by Bharathi Ram -

MICROCAPITAL STORY: US Secretary of State Designate Hilary Clinton Refers to Obama’s Mother, Ann Dunham; Implies Microfinance Would be an Important Part of her Agenda

At a confirmation hearing before the United States Senate Foreign Relations Committee, US Secretary of State designate Hilary Clinton, while speaking briefly about President-elect Barack Obama’s mother, Stanley Ann Dunham, implied that microfinance would be an important part of the Obama administration’s agenda. Senator Clinton noted that Ann Dunham had worked on microfinance in Indonesia and that she had been scheduled to attend a microfinance forum at a United Nations conference in Beijing in 1995, which Ms. Clinton attended. Ms. Dunham, however, could not make it to the conference as she was diagnosed with cancer that eventually claimed her life few months after the conference. MicroCapital recently reported on Ann Dunham’s work as a researcher and practitioner of microfinance in Indonesia and her philosophy on the empowerment of women as a means to address poverty. Hilary Clinton also expressed similar sentiments at the hearing where she stated how, through her work on microfinance around the world, she had ‘seen firsthand how small loans given to poor women to start small businesses can raise standards of living and transform local economies’.

by Lori Curtis -

MICROCAPITAL STORY: Mercy Corps Recognized by Fast Company for its Innovative Microfinance Program “The Bank of Banks”

Fast Company Magazine named Mercy Corps as one of its 2009 Social Enterprises of the Year, recognizing the work it has done this past year as one of the “bold and timely ideas that wow us”. Mercy Corps is praised as “the bank of banks” for buying a struggling Balinese bank and reopening it as an organization that would “cut the costs and inefficiencies” of microfinance institutions (MFIs) and provide them capital, financial tools and tech platforms. Mercy Corps had also previously been recognized as one of the 45 Social Entrepreneurs Who Are Changing the World as a part of Fast Company’s 2008 Social Capitalist Awards. ACCION International, another organization involved in microfinance, was honoured with this recognition for the fifth year in a row. The other organizations that were honoured as 2009 Social Enterprises of the Year include Do Something, The Academy for Urban School Leadership, DataDyne, Civic Ventures, The Institute for OneWorld Health, The Acumen Fund, Husk Power Systems, and Hopelab.

by Lori Curtis -

MICROCAPITAL STORY: Are Microfinance Operations Boosting Asian Banks Against Financial Shocks?

The CEO and Managing Director of Sri Lanka’s Hatton National Bank, Rajendra Theagarajah, stated that large populations and microfinance in Asia have provided a “buffer” against the global financial crisis. An article in Sri Lanka’s Daily News reported on a speech Theagarajah gave at the Lanka Business Report-Lanka Business Online CEO Forum, stating that Asia has been able to withstand shocks to the global financial crisis due to a strong banking sector, the market available as a result of large populations, and investing in microfinance instead of focusing on subsidies. Theagarajah highlighted countries such as Cambodia, Indonesia and Bangladesh as having banks which have previously invested in microfinance and as a result have had extremely high profit margins. The banks to which he was referring were not identified, nor the role played by microfinance in any profit increases. He also stated that banks in Asia have adopted measures since the 1997 Asian Financial Crisis that are further protecting them from feeling strong negative impacts of the current crisis.