by the MicroCapital Team -

SPECIAL REPORT: “Capital in the Age of COVID” at European Microfinance Week

European Microfinance PlatformAt this presentation on the effects of the COVID-19 pandemic on financial inclusion, which was subtitled “Navigating the Uncharted Sea of Insolvency,” Lucia Spaggiari of MFR (formerly known as Microfinanza Rating) predicted that the solvency challenges brought on – or simply exacerbated – by the pandemic may haunt institutions for the next 10 years. Although she described the solvency challenges of 2020 as “not drastic,” 22 percent of financial services providers (FSPs) in her dataset still significant solvency risk. Ms Spaggiari believes this may increase to as high as 34 percent over the next two years.

As for the potential effects on clients, there are clusters of greater risk among: FSPs in sub-Saharan Africa, where 17 percent of institutions are in danger; smaller FSPs, those with assets under USD 10 million; FSPs with

by Zach Deluca -

MICROCAPITAL BRIEF: HDFC Bank to Lend $100m to Micro-, Small, Medium-sized Enterprises (MSMEs) in India – Half Led by Women – with Support from DFC, Mastercard, USAID

HDFC Bank, an affiliate of India’s Housing Development Finance Corporation, recently agreed to lend USD 100 million to micro-, small and medium-sized enterprises (MSMEs) in India to support their usage of digital payments, including to adjust to the COVID-19 pandemic. Half of the credit facility is

by Teo Lin-Bianco -

MICROCAPITAL BRIEF: Tanzania Mortgage Refinance Company (TMRC) Sells $3.8m in Bonds to Boost Access to Home Ownership

The Tanzania Mortgage Refinance Company (TMRC), an institution that refinances the portfolios of housing lenders, recently completed an issue of corporate bonds on the Dar es Salaam Stock Exchange. The bond listing had a target of

by Bradley Shulman -

MICROCAPITAL BRIEF: Ascent Rift Valley Fund II Raises $100m from Public, Private Investors for SMEs in East Africa

Kenya-based private equity firm Ascent Capital Africa recently secured USD 100 million at the first rolling close of its Ascent Rift Valley Fund II (ARVF II), surpassing the firm’s initial goal of USD 80 million. The funds will be invested in small and medium-sized enterprises (SMEs) in East Africa, targeting

by Sophie Fiala -

MICROCAPITAL BRIEF: Georgia Seeks to Ease MSMEs’ Adjustment to COVID-19 with World Bank Funding for Fintech, Loan Guarantees, Grants

The World Bank recently approved EUR 85 million (USD 103 million) for a project called “Relief and Recovery for Micro-, Small and Medium Enterprises (MSMEs),” which will support businesses in Georgia that have been affected negatively by the COVID-19 pandemic. The project includes funding to expand Georgia’s financial infrastructure, such as to support online banking, know-your-customer (KYC) protocols and

by Aakansha Shenoy -

MICROFINANCE PAPER WRAP-UP: “Deploying Blended Finance to Mobilize Investment at Scale in Food and Agriculture;” by Bettina Prato et al; Published by SAFIN, Convergence

The authors of this paper discuss the “financing landscape” of the food and agriculture sector and argue in favor of increasing the deployment of blended finance, “the use of catalytic capital from public or philanthropic sources to increase private sector investment.” A report from the 2019 UN Conference on Trade and Development estimates that the private sector could fund

by Tejas Gumudavelly -

MICROCAPITAL BRIEF: Joint Impact Indicators (JIIs) Bridge HIPSO, IRIS+ to Streamline Investors’, Investees’ Measurement of Gender Equality, Job Creation, Climate Impacts

A group of investors recently launched the Joint Impact Indicators (JIIs), a framework for increasing “harmonization in the way that impact investors measure and report on the effects of their investments.” The indicators, which were developed by The Global Impact Investing Network, a US-based nonprofit, and the World Bank Group’s International Finance Corporation, focus on three areas:

by Tejas Gumudavelly -

MICROCAPITAL BRIEF: Central Bank of Sri Lanka Launches National Finance Inclusion Strategy

The Central Bank of Sri Lanka (CBSL), with assistance from the World Bank Group’s International Finance Corporation (IFC), recently launched a National Finance Inclusion Strategy (NFIS). The strategy has four primary goals: “increase access to digital finance and payments, boost access to finance for MSMEs [micro-, small and medium-sized enterprises], protect financial consumers, and

by Bradley Shulman -

MICROFINANCE PAPER WRAP-UP: “ESG and Accountability to Communities;” Published by Publish What You Fund

This report examines 20 development finance institutions (DFIs) to learn how these organizations: (1) are transparent in terms of their policies on environmental, social and governance (ESG) issues; (2) disclose ESG risks and plans to manage those risks; and (3) implement independent accountability mechanisms (IAMs) to ensure policies are being followed. Among the benefits of ESG transparency

by Eha Joshi -

MICROCAPITAL BRIEF: Equity Bank Kenya Secures $50m Nasira Loan Guarantee from FMO for COVID-19 Support to Agricultural MSMEs Led by Youth, Women

Equity Bank Kenya, a Kenya-based bank focused on micro-, small and medium-sized enterprise (MSME), recently signed an agreement with Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), a Dutch development bank, whereby FMO’s Nasira Risk Sharing Facility will guarantee USD 50 million in lending by Equity Bank Kenya. This lending is meant to help agricultural MSMEs run by female and young entrepreneurs

by the MicroCapital Team -

SPECIAL REPORT: Local Market Data, Resilience During Pandemic, Securitization, Land Title Systems Enable Housing Microfinance, Micro-mortgages

During European Microfinance PlatformEuropean Microfinance Week 2020, Maria Claudia Rojas of the Netherlands’ Triple Jump described her firm’s experience managing the MicroBuild Fund it created with US-based Habitat for Humanity in 2012. Compared with Triple Jump’s portfolio as a whole, MicroBuild has maintained higher asset quality, and that margin of superiority has doubled during the COVID-19 pandemic.

Lucie Astier Such of the French government’s AFD explained her agency’s role in providing technical assistance, loans and data to support housing finance in developing countries. Part of this effort involves connecting households and microfinance institutions (MFIs) with reputable builders and suppliers of construction materials. One tool for this purpose is

by the MicroCapital Team -

SPECIAL REPORT: Danone, Incofin, Water.org: WASH Sector is Already Investible

During European Microfinance Platformone of the Friday sessions of European Microfinance Week 2020, Dina Pons of Belgium-based Incofin Investment Management explained a partnership with France-based food company Danone through which the organizations are building a 10-year equity fund to invest in expanding access to clean water in developing countries. Since 2007, the Danone Communities arm of Danone – mostly funded by its employees – has invested in access to drinking water on a proof-of-concept basis. Now Danone believes the sector has matured from the incubation stage to the investible stage. The company selected Incofin to help it invest in proven models, with a technical assistance component and monitoring of factors such as affordability, limiting plastic usage and

by the MicroCapital Team -

SPECIAL REPORT: Resilience Among Microfinance Institutions? “Region of Crisis” Relatively Stable; “Moratorium Veil” Yet to Lift

As European Microfinance Platformpart of the opening day of European Microfinance Week, Mohammed Khaled of the World Bank Group’s International Finance Corporation stated that the effects of the COVID-19 pandemic on the microfinance sector in the Middle East and North Africa (MENA) so far have not been as bad as was feared earlier in 2020. Most of the large microfinance institutions (MFIs) in the region have maintained 30-day portfolio-at-risk (PAR) ratios below 4 percent. Mr Khaled said, “Among leading MFIs, PAR did not rise as high as expected. We thought [it might rise to] 10 percent to 20 percent, but many MFIs have kept things under control.” Part of the reason for this, he believes is that “this is

by Kate Finster -

MICROCAPITAL BRIEF: Tonga Development Bank Launches ‘Ave Pa’anga Pau Digital Remittance Product via Regional Australia Bank

The International Finance Corporation (IFC), a member of the World Bank Group; the Tonga Development Bank (TDB), which is subsidized by the government of New Zealand; and the member-owned Regional Australia Bank recently released ‘Ave Pa’anga Pau, a product allowing Tongans residing in Australia to send remittances to individuals in their home country using their mobile phones. Recipients may direct their funds to a TDB bank account

by Romil Pandey -

MICROCAPITAL BRIEF: Ghana’s Ministry of Finance to Launch Development Bank of Ghana with $250m from World Bank’s IDA to Promote MSME Lending, Including to 2k Enterprises Led by Women

The International Development Association (IDA), a unit of the World Bank, recently agreed to provide USD 250 million for Ghana’s Ministry of Finance to create the Development Bank of Ghana (DBG). DBG is slated to provide “long-term wholesale financing, credit guarantees, and other services” benefitting 10,000 micro-, small and medium-sized enterprises (MSMEs) – including 2,000 that are led by women – that are active in agribusiness, manufacturing and unspecified “high-value services.” DBG also is to create

by Romil Pandey -

MICROCAPITAL BRIEF: India-UN Development Partnership Fund to Provide $850k for Climate-disaster Index Insurance in Fiji

The government of India and the UN Office for South-South Cooperation (UNOSSC), through the India-UN Development Partnership Fund that they co-manage, recently agreed to contribute FJD 1.8 million (USD 850,000) to implement the Developing Climate Disaster Risk Financing Framework and Parametric Insurance program in Fiji. The funding is intended to mitigate

by Nathan Kiplagat -

MICROCAPITAL BRIEF: Code for Responsible Lending Assessment Tool to Incorporate Comprehensive Credit Reporting, Microfinance Institutions to Increase Frequency of Reports to Credit Bureaux

The Code for Responsible Lending (CRL), an initiative serving microlenders in India, recently began developing a new credit assessment tool for evaluating loan applications from low-income households. The tool is intended to help lenders “go beyond multiple/over lending limits and more systematically evaluate the low-income customer

by Kate Finster -

MICROCAPITAL BRIEF: Maha Agriculture Borrows $6m from FMO for Digital Microfinance in Myanmar

The Netherlands Development Finance Company, which also is known by its Dutch acronym FMO, recently disbursed a loan of USD 6 million to Myanmar-based microfinance institution (MFI) Maha Agriculture Public Company Limited to be on-lent as microloans in rural Myanmar. The goal of the loan is to support small-scale farmers