“Multiple borrowing was endemic,” in Bangladesh as of 2008, says Shameran Abed, the director of microfinance at Bangladesh-based Brac International, “but we didn’t know if this was bad, although we knew it was a risk.” Mr Abed was speaking this morning at the opening plenary of the last day of European Microfinance Week, which is organized by the Luxembourgish NGO European Microfinance Platform (e-MFP). In the past, he explained, the members of borrowing groups were good at letting Brac staff know who was a good credit risk. As the market was getting saturated, “Groups became less cohesive, so we couldn’t totally rely on them to tell us if individuals were becoming overindebted.”
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SPECIAL REPORT: Over-indebtedness, Microfinance and Environment Award, Conflict Zones at e-MFP’s European Microfinance Week
MicroCapital: Please describe one of the key issues to be covered this year at European Microfinance Week.
Christoph Pausch: The question of over-indebtedness is still the major risk for the sector, as identified in the most recent Banana Skins survey. We had a very successful plenary last year exploring the issue from a research perspective. This year, we’re taking a very different approach by bringing CEOs of leading microfinance institutions (MFIs) from three countries – Bangladesh, Morocco, and Mexico – to discuss how they’ve been dealing with the issue. Each of these countries has had a different experience, with Bangladesh having successfully averted a potential crisis by slowing market growth (as described in an excellent paper by Stuart Rutherford and Greg Chen). Morocco was one of the original “microfinance crisis” countries during 2008 and 2009, and the MFIs there have had an interesting experience in resolving the problems from that period. Finally, Mexico is a major market with serious concerns regarding over-indebtedness, and MFIs there are working to avert a potential crisis.
MICROCAPITAL BRIEF: Morgan Stanley Offers Balanced, Equity “Investing with Impact” Portfolios
Morgan Stanley, a US-based international financial services corporation, recently created two “Investing with Impact” portfolios as part of its goal to draw USD 10 billion in client assets towards “sustainable” investing products.
MICROCAPITAL BRIEF: Absolute Portfolio Management’s Vision Microfinance Funds Loan $14m to Microfinance Institutions (MFIs) in Armenia, China, India, Peru, Tajikistan
Absolute Portfolio Management (APM), an arm of Austria-based asset group C-Quadrat, recently informed MicroCapital that it has distributed credits in several currencies that total approximately the equivalent of USD 13.5 million to unspecified microfinance institutions (MFIs) in Armenia, China, India, Peru and Tajikistan through its Dual Return Fund-Vision Microfinance and Dual Return Fund-Vision Microfinance Local Currency.
MICROCAPITAL BRIEF: Absolute Portfolio Management’s Vision Microfinance Funds Loan $9.4m to Microfinance Institutions (MFIs) in Armenia, India, Kazakhstan, Kyrgyzstan, Mongolia, Peru, Sri Lanka, Tanzania
Absolute Portfolio Management (APM), an arm of Austria-based asset group C-Quadrat, recently informed MicroCapital that it has distributed credits worth approximately USD 9.4 million through its two Vision Microfinance funds to unspecified microfinance institutions (MFIs) in Armenia, India, Kazakhstan, Kyrgyzstan, Mongolia, Peru, Sri Lanka and Tanzania.
MICROCAPITAL BRIEF: Absolute Portfolio Management’s Vision Microfinance Funds Loan $5m to Microfinance Institutions (MFIs) in Azerbaijan, El Salvador, Tajikistan
Two funds controlled by Absolute Portfolio Management (APM), an arm of Austria-based asset group C-Quadrat, have distributed credits worth approximately USD 5 million to unspecified microfinance institutions (MFIs) in Azerbaijan, El Salvador and Tajikistan.
MICROFINANCE PUBLICATION ROUND-UP: Over-indebtedness in Mexico; Achieving Customer Centricity; Managing Over-indebtedness
“Over-Indebtedness in Mexico: Its Effect on Borrowers;” published by Microfinance CEO Working Group; May 2014; 32 pages; available at http://microfinanceceoworkinggroup.org/wp-content/uploads/2014/05/Over-Indebtedness-in-Mexico-Its-Effect-on-Borrowers-552014.pdf
This report cautions lending institutions in Mexico about rising levels of over-indebtedness – meaning more borrowers cannot reasonably repay their debts – which can threaten the financial system as well as the economic outlook of low-income individuals.
MICROCAPITAL BRIEF: Goldman Sachs, International Finance Corporation (IFC) Announce $600m Fund for Women-owned Small, Medium-Sized Enterprises (SMEs)
The International Finance Corporation (IFC), the private-investment arm of the US-based World Bank Group, and US-based investment bank Goldman Sachs Group (GS) recently announced the establishment of the “Women Entrepreneurs Opportunity Facility,” a USD 600 million credit fund aimed at supporting women-owned small and medium-sized enterprises (SMEs) in emerging economies.
MICROCAPITAL BRIEF: Microfinance CEO Working Group Hires Anne Hastings as Manager
The Microfinance CEO Working Group, which was launched by eight microfinance organizations with goals including the improvement of client outcomes, has hired Anne Hastings as the group’s manager [1].
MICROFINANCE PUBLICATON ROUND-UP: Rural Finance in Laos, Micro-Health Insurance in Rural India, Distribution Models in Mobile Financial Services
“Rural Finance in Loas: GIZ Experience in Remote Rural Areas;” by Klaus Prochaska, Dennis Fischer, Philipp Hauger, Tony Deary; published by Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ); December 2012; 40 pages; available at: http://www.microfinancegateway.org/gm/document-1.9.61072/Rural_Finance_in%20Laos_Paper_GIZ_2012.pdf
This report presents an analysis of the “Microfinance in Rural Areas – Access to Finance for the Poor” project, which is operated by Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), an agency of the German Government, in partnership with the Bank of Lao, the central bank of Laos.
MICROCAPITAL BRIEF: Indian Government Commits $183m Each to Women-Only Bank, Nirbhaya Fund for Women’s Empowerment
The government of India reportedly has plans to create a bank that will exclusively serve women, lending mostly to women-run businesses as well as self-help groups of a dozen or a few dozen women.
MICROCAPITAL BRIEF: Austria’s Vision Microfinance Funds Loan $5m to MFIs in Colombia, Mexico, Paraguay
Austria-based asset management company Absolute Portfolio Management (APM) recently announced that it has disbursed the equivalent of USD 5 million to microfinance institutions (MFIs) in Latin America through its two Dual Return-Vision Microfinance funds in early 2013.
MICROCAPITAL BRIEF: Global Partnerships Agrees to Loan Up to $500k to Friendship Bridge for Microcredit for Rural Guatemalan Women
Global Partnerships (GP), a nonprofit investor based in the US city of Seattle, Washington, has launched a partnership with Friendship Bridge, a US-based nonprofit microfinance institution that provides rural Guatemalan women with microcredit loans as well as business and preventive health education.
MICROCAPITAL BRIEF: Incofin Lends $1m to Fundación para el Desarrollo Socioeconómico Rural (FUNDESER) of Nicaragua
Belgian microfinance fund manager Incofin Investment Management (Incofin IM) recently loaned USD 1 million to Fundación para el Desarrollo Socioeconómico Rural (FUNDESER), a Nicaraguan nongovernmental organization (NGO), through a fund it manages, the Rural Impulse Fund II.
SPECIAL REPORT: Responsible Microfinance Implementation Action Group Looks to Boost Usage of Existing Tools, Distributes Template of Covenants for Investors to Attach to Loans to Microbanks
At the European Microfinance Week conference today in Luxembourg, representatives of the European Microfinance Platform (e-MFP) Action Group on the Implementation of Responsible Microfinance led a discussion on its work. The group presented graphics compiling existing social performance tools such as social audits and the publication of pricing data via the US-based nonprofit Microfinance Transparency. One of the suggested steps for microbanks embarking on the process of evaluating its social performance is to make a public commitment through an effort such as the Smart Campaign, which is backed by US-based nonprofit Accion, or the Global Appeal for Responsible Microfinance, which is promoted by a set of institutions led by Oxus Group, an initiative of French NGO Agency for Technical Cooperation and Development (ACTED).
MICROCAPITAL BRIEF: 8th Annual Clinton Global Initiative: Commitments to Financial Access, Global Citizen Awards Presented
The eighth annual Clinton Global Initiative (CGI), which concluded on Wednesday, September 26, focused on the theme “Designing for Impact,” which was intended to promote the use of creativity and innovation to drive change, particularly through social investment and the empowerment of women. Approximately 150 new commitments to various projects were announced, as were progress reports for commitments made in previous years. The new commitments include:
MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Approves $10m Loan to Nicaragua’s Banco de Finanzas for Rent-to-Own Housing
The Inter-American Development Bank (IDB), a US-based multilateral financial institution, has approved a USD 10 million, ten-year loan to Banco de Finanzas (BDF), a commercial bank in Nicaragua, to fund a pilot housing project in Nicaragua.
MICROCAPITAL BRIEF: Microfinance CEO Working Group Issues Road Map for Microfinance Industry Promoting Smart Campaign, Microfinance Transparency, Social Performance Task Force
A group of eight CEOs of nonprofit microfinance organizations has issued a “Road Map for the Microfinance Industry: Focusing on Responsible and Client-Centered Microfinance.”