by Yanni Hao -

MICROFINANCE PAPER WRAP-UP: Microfinance: Ready For its Big Leap? By John Engen

The cover story of the February, 2009 issue of US Banker was entitled, “Microfinance: Ready for its Big Leap?” In it, author John Engen lays out his expectations that a hybrid funding approach will arrive in microfinance sector – one that meshes government, non-profit, and business ethos in pursuit of a “double bottom line” that measures success both with respect to social benefits and financial returns. However, Mr. Engen argues that to attract more funding from private investors, MFIs need further adjustments in both their business practices and ideologies. While such adjustments may be controversial and draw criticism at present, in the long term the changes should induce competition in the sector, and so the theory goes, be beneficial. The real question then is: are MFIs ready for such a big leap? The full text is available at:  

http://www.americanbanker.com/usb_article.html?id=20090126JLCSNV6Y&pagenum=1&numpages=3

by Lori Curtis -

MICROCAPITAL PAPER WRAP-UP: The State of the Microcredit Summit Campaign Report 2009, by Sam Daley-Harris

The State of the Microcredit Summit Campaign Report 2009 was written by Sam Daley-Harris and is a 70 page report that discusses the human face of global poverty, reviews microfinance breakthroughs in helping slum dwellers move out of the slums and highlights innovations that have brought renewable energy to poor communities. The report is a summary of the achievements and innovations of the Microcredit Summit Campaign for the year 2008 as wells as notable achievements in the microfinance community in general and consists of contributions from a variety of experts in the microfinance industry. The original report is available here.

by Bharathi Ram -

MICROCAPITAL STORY: Lagos State Government Provides Microloans worth USD 48k to Small and Medium Enterprises (SMEs) in the City of Ikorodu in Nigeria

The Lagos State Government has provided loans worth NGN 7 million (approximately equivalent to USD 48k) in an effort to provide access to financial services to Small and Medium Enterprises (SMEs) in the city of Ikorodu. According to a press release on the Nigerian daily, punchng.com the loan was facilitated by Ms. Abike Dabiri-Erewa, a member of the House of Representatives. punchng.com is owned and operated by the Nigerian newspaper, The Punch. Speaking during the presentation of checks to the beneficiaries of the scheme, Ms. Dabiri-Erewa described poverty as ‘multi-dimensional’ and called for effective implementation of microfinance schemes as a means to address poverty in Nigeria. The release quoted her as saying that microfinance was a vital instrument for self-empowerment, enabling the poor to become agents of economic ‘change’. This loan by the Lagos State Government is among a series of efforts by other local and state governments in Nigeria to address poverty through microfinance.

by Bharathi Ram -

PAPER WRAP-UP: Outreach and Efficiency of Microfinance Institutions (MFIs) by Niels Hermes, Robert Lensink and Aljar Meesters

Written by Niels Hermes, Associate Professor of International Finance at the University of Groningen, Robert Lensink, Professor of Finance and Financial Markets at the University of Groningen and Aljar Meesters, Faculty at the University of Groningen, this report is based on a study of MFIs over a 11 year period to examine the trade-off (if any) between outreach to the poor and efficiency of microfinance institutions (MFIs). The 29 page document was published by the University of Groningen in June 2008 and the full text of the report is available here.

by Bharathi Ram -

MICROCAPITAL STORY: Central Bank of Liberia (CBL) Grants Formal Banking License to Liberia’s First Commercial Microfinance Institution, Access Bank Liberia (ABL); ABL Starts Issuing Loans to the Public

Access Bank Liberia (ABL), the first commercial microfinance institution of Liberia, has become operational and started issuing loans to the public, according to an announcement by the International Finance Corporation (IFC), a member of the World Bank group. ABL, which received a preliminary banking license in July 2008, started operations after it was granted a formal banking license by the Central Bank of Liberia (CBL) on January 21, 2009. According to the announcement by IFC, since receiving the preliminary license, ABL had hired and trained loan officers, tailored all its savings and credit products to cater to the demands of the Liberian market and ensured compliance of all its banking systems with the Liberian law. ABL will focus on microfinance lending in Liberia in addition to providing short and medium-term lending to small and medium enterprises (SMEs) in Liberia. So far, no information on the interest rates to be charged is available yet.

by Bharathi Ram -

MICROCAPITAL STORY: Government of Cape Verde to Create Microcredit Bank; Portuguese Bank Banco Português de Gestão (BPG) to Hold a 10 Percent Stake in the Bank

The Government of Cape Verde will open a microcredit bank in the island republic of Cape Verde in the first half of 2009. This announcement was made by the Finance Minister of Cape Verde, Ms Cristina Duarte in the capital city of Praia. According to a press release found on the Macau based news service macauhub.com, the bank would focus on the needs of poor families and small and medium enterprises in Cape Verde. Micro-enterprises account for nearly 50 percent (p 2) of Cape Verde’s employment, according to the report ‘Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde‘ published by the University of Evora. As per the press release on Macauhub, the new bank would have an initial equity of 300 million Cape Verde Escudos, approximately equivalent to USD 3.4 million. The release also stated that the Portuguese Bank, Banco Português de Gestão would hold a 10 percent stake in the bank, following approval from the Central Bank of Cape Verde, Banco de Cabo Verde.

by Lori Curtis -

MICROCAPITAL STORY: Central Bank of Nigeria (CBN) Celebrates New Microfinance Licenses and Challenges Governments at 3rd Annual Microfinance and Microfinance Entrepreneurship Awards

The Central Bank of Nigeria (CBN) announced at the 3rd Annual Microfinance and Microfinance Entrepreneurship Awards Ceremony that it has licensed a total of 840 microfinance institutions throughout the country in, 25 of which have been licensed since September 2008. CBN Governor Chukwuma Soludo stated that despite this increase in MFIs, as well as an increase in branches of universal banks by two thousand since 2003, access to formal finance in Nigeria remains at 35 percent. Local and state governments were challenged to establish and mainstream microfinance programmes while praising particular microfinance initiatives such as the Agricultural Credit Guarantee Scheme (ACGSF), the insurance deposits for microfinance by the Nigeria Deposit Insurance Corporation (NDIC) as well the development of a credit bureau, the Credit Reference Company.

by Bharathi Ram -

MICROCAPITAL STORY: Federal Government of Nigeria Disburses Microloans Worth Naira 81 million (approximately $543k) to Small and Medium Enterprises (SMEs) in Nigeria

The Federal Government of Nigeria disbursed loans worth Naira 81 million (approximately USD 543k) to encourage employment generation in the country. According to a press release on AllAfrica.com, these loans were disbursed in the capital city of Ajuba and chaired by the Secretary to the Government of the Federation (SGF), Alhaji Yayale Ahmed. The loan drawn was from the Enterprises Creation Fund which was launched by The National Directorate of Employment (NDE) in partnership with the Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB). According to the release, the partnership between NDE and NACRDB was established in 2004. The loans were provided as soft loans to 370 beneficiaries to help them establish small business enterprises in keeping with the Directorate’s efforts to create and promote small businesses. Soft loans are loans that have extended grace periods and below-market rates of interest. No information on the interest rate charged for these loans is available.

by Lori Curtis -

MICROCAPITAL PAPER WRAP-UP: 2008 MIX Global 100 Composite: Rankings of Microfinance Institutions

Published by Microfinance Information Exchange (MIX), 13 pages, available for viewing here.
The Microfinance Information Exchange, Inc. (MIX) has released its 2008 MIX Global 100 Composite: Rankings of Microfinance Institutions. The business results of 971 MFIs for the 2007 financial year were surveyed, from which 652 profitable MFIs were sampled to present the 100 leading MFIs. The ranking measures the balance achieved by an individual MFI of three key attributes: outreach, efficiency and transparency. Outreach is determined by the number of borrowers, the growth in borrowers, market penetration, deposit to loan portfolio ratio and the depositors to borrowers ratio. Efficiency is measured by the cost per borrower to GNI per capita ratio, profit to loan portfolio, the portfolio at risk greater than 30 days and the write off ratio. Transparency is measured by the annual reporting on MIX Market and audits on MIX Market.

by Bharathi Ram -

MICROCAPITAL STORY: Kazakhstan Prime Minister Calls for Schemes to Improve the Functioning of MicroCredit Organizations in Rural Areas; Appoints Deputy Prime Minister to Coordinate the Efforts

The Prime Minister of Kazakhstan, Karim Massimov, has called for schemes to coordinate the functioning of microlending systems in the rural areas of the country. According to a press release found on the state-run news agency, Kazakh National Information Agency (Kazinform), the Prime Minister appointed Umirzak Shukeyev, the Deputy Prime Minister of Kazakhstan, to coordinate the efforts. The PM has commissioned the Deputy PM to coordinate specifically the activities of the Ministry of Agriculture and the Kazakhstan based public entrepreneurship development fund, Damu. The release quoted the PM as saying that because several past decisions taken by the Government, with regard to microlending in the rural areas, had not yet translated to action, such measures for coordination were necessary.

by Bharathi Ram -

MICROCAPITAL STORY: Depositors in Rwanda Approach the Ombudsman’s Office for Help to Recover their Deposits From Corrupt Microfinance Institutions

Nearly two years after the crackdown on corrupt Microfinance Institutions (MFIs) in Rwanda by the Central Bank of Rwanda (BNR), depositors are still struggling to retrieve their deposits caught up with the fraudulent MFIs. According to a press release found on AllAfrica.com, in an effort to collect their money, depositors have decided to file their concerns with Rwanda’s Ombudsman’s office.

by Bharathi Ram -

MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Provides EUR 5m Loan to Macedonian Commercial Bank, TTK Banka A.D. Skopje (TTK); Fund will be Used to Provide Microloans to Micro and Small Enterprises (MSEs) in Macedonia

The European Fund for Southeast Europe (EFSE), a Luxembourg based microfinance fund has agreed to lend EUR 5 million to TTK Banka A.D. Skopje (TTK), a commercial bank based in Skopje, Macedonia as part of a loan agreement to help TTK further expand its outreach to micro and small entrepreneurs in the Republic of Macedonia. In a news release found on the Frankfurt School of Finance and Management website, Nikolche Petkoski, a member of the Board of Directors at TTK said that the loan, which would help TTK to support and increase access to finance for micro and small businesses in Macedonia, was particularly important during the present ‘times of economic uncertainty’.

by Lori Curtis -

MICROCAPITAL STORY: Bill and Melinda Gates Provide US$700,000 to Microcredit Summit Campaign’s “Movement Above US$1 Per Day Threshold” Project

The Bill and Melinda Gates Foundation has donated USD 700 thousand in the form of a grant to the Microcredit Summit Campaign‘s (MSC) project entitled “Movement Above the US One Dollar Per Day Threshold“. The funds will be used to form expert panels who will develop credible methodologies for determining the number of microfinance clients who have crossed the USD 1 a day threshold between 1990 and the current year. The funds will also be used to research and produce studies based on the recommendations of these panels. A Bangladesh Expert Panel has already convened, an India Expert Panel is currently being formed, and an Ethiopia Expert Panel is being planned for 2009. While this is the first time the Bill and Melinda Gates Foundation has provided funding to the Microcredit Summit Campaign, it has previously provided funding to the RESULTS Educational Fund, MSC’s founding organization.

by Bharathi Ram -

MICROCAPITAL STORY: Corrupt Microfinance Institutions in Benin Accept Bribes from Poor Borrowers; Government of Benin Calls for Reform

Local Non-Government Organizations (NGOs) and Microfinance Institutions (MFIs) in Benin which were subcontracted by the Government-run ‘Microloans to the Poorest’ program have been accused of taking bribes from their borrowers, according to a press release found on IRIN News. The Government-run program, which operates through five partner banks, provides loans up to a maximum of 60 US dollars to borrowers in Benin. No information on the partner banks involved in this program is available. These partner banks disburse loans to borrowers through local MFIs and NGOs which interface with the borrowers and serve as loan intermediaries. Loan payments from borrowers are also collected by these intermediaries and remitted back to the partner banks which lend them. The press release quoted Mr. Aboubacar Aboudou, the first director of the Government-run program, as saying that a lack of oversight coupled with the rapid growth of the program led to hiring of several ‘unscrupulous intermediaries’ to process loans. Mr. Aboudou stated that these intermediary organizations squandered funds and ‘made the poor even poorer’. The program’s current director, Komi Koutche has called for step to eliminate these intermediaries. No information is available on which local MFIs were involved in these fraudulent activities.