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 Chinq Yee Chong -

MICROCAPITAL STORY – Highlights From A Hanson Wade Conference On Microfinance Investments And Observations By Key Panelists From MFX Solutions, ACCION, OPIC, Deutsche Bank, Microfinance Transparency And Others

The recent conference on ‘Investments In Microfinance’ which was held in London was attended by a variety of participants in the microfinance sector, including MFIs, investors, bankers, lawyers and researchers. Panelists and speakers at the event discussed topical issues affecting the microfinance sector which included the following: (i) Hedging foreign currency risk in microfinance transactions; (ii) The problem of over-indebtedness; (iii) Client protection issues and (iv) Small and Medium Enterprise (SME) Finance. As shown in the conference agenda, panelists and speakers also discussed the future of microfinance and the impact of the current crisis on sources of funding for the microfinance industry. The conference concluded with a discussion on microfinance securitization and the key legal issues in such transactions. Below is a short summary of some of the points raised at the conference.

by Ryan Hogarth -

MICROCAPITAL STORY: Pro Mujer Registers as a Charity in the UK to Attract Philanthropic Funds

Pro Mujer International, an international non-profit affiliated with a network of five microfinance institutions (MFIs) in Latin America, released a press release announcing that it registered as a charity in England and Wales.  Maria Richter, Board Chair of Pro Mujer UK, explained that the new office was launched in effort to attract more philanthropic funding: “We expect many opportunities to garner support in the UK because there is a growing awareness of microfinance and the power it has to transform lives.”  The press release said that donations made to Pro Mujer UK would support the provision of credit, healthcare, and business training to poor women in Latin America.  Information was not provided how exactly the donations will be utilized.

by Yrenilsa Lopez -

MICROCAPITAL STORY: Overseas Private Investment Corporation (OPIC) approves USD 350 million in financing for Latin American sectors, including Microfinance

The Overseas Private Investment Corporation (OPIC), a United States federal agency, has announced a USD 350 million financing plan towards private equity investments in Latin America. The plan was approved by OPIC’s Board of Directors to finance three approved new funds in order to provide capital across several economic sectors, including microfinance. The private equity funds are the Greylock Latin America Opportunity Fund, the Latin Power and Infrastructure IV Fund, and the Altra Private Equity IV Fund (APEF). The investment will allow these funds to achieve a combined capitalization of USD 1.45 billion.

by Ryan Benson -

MICROCAPITAL STORY: Microfinance Program Co-Sponsored by MFI Small Enterprise Foundation, London School of Hygiene and Tropical Medicine, and University of Witwatersrand Reduces HIV Risk in Women, Study Shows

Findings from a recent public health study suggest that the provision of microfinance and business training services to impoverished women were associated with a significant reduction in risk behaviors for HIV contraction. The study monitored the effects of IMAGE (Intervention with Microfinance for AIDS and Gender Equity), a research-oriented microfinance program that is co-administered by nonprofit MFI Small Enterprise Foundation and the university-sponsored RADAR research initiative. Essentially, the study’s findings suggest that the economic empowerment women derive from a microenterprise is capable of severing a financial dependence on their husband, a circumstance which frequently prevents women from negotiating safer methods of sexual intercourse. Unprotected sex amongst married couples is particularly risky in some societies, because extra-marital affairs are socially-acceptable and a common occurrence among married men.

by the MicroCapital Team -

PRESS RELEASE: Overseas Private Investment Corporation (OPIC), World Bank Member International Finance Corporation (IFC), Palestine Investment Fund, Bank of Palestine Partner on Housing Finance for the Poor in West Bank and Gaza

Source: International Finance Corporation (IFC).

by Anthony Busch -

MICROFINANCE EVENT: Overseas Private Investment Corporation’s (OPIC) Middle East Conference to Include Microfinance

ACCESS TO OPPORTUNITY IN THE MIDDLE EAST

MAY 5-7, 2008, KEMPINSKI HOTEL ISHTAR, DEAD SEA, JORDAN

The Overseas Private Investment Corporation (OPIC), a self-funded US government agency with 2006 total assets of USD 6.3 million promoting economic development and US investment in overseas markets since 1971, will hold a conference “to highlight investment opportunities in the [Middle East], encourage the formation of joint ventures and partnerships between US and local businesses, and facilitate support for new investments,” according to the conference web site. The first day of the two-day conference will include a session entitled “Access to Capital: Microfinancing to SMEs,” which will consist of presentations from managers of Middle Eastern microfinance institutions (MFIs). In attendance will be investment experts, US firms investing in the Middle East, US government officials, and financial institutions operating in the region. Countries to be featured in the conference include Afghanistan, Bahrain, Egypt, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, the West Bank and Gaza, and Yemen.

by Sophie Kim -

MICROCAPITAL STORY: InterContinental Hotels Group Collaborates with Tropical Agricultural Research and Higher Education Center To Initiate a Loan Program in Costa Rica

The Americas region of InterContinental Hotels Group (IHG), a UK-based international hotel company, partnered with Tropical Agricultural Research and Higher Education Center (CATIE) by funding a microcredit program for small farmers of Costa Rica. In the first phase of the program, the initial donation of USD 10k from IHG to CATIE became available for small farmers of rural Costa Rica to borrow for uses such as enhancement of operations. IHG has previously funded two other microcredit programs of village banks in Mexico that provide business loans for women. It also has made a commitment for another microcredit initiative in 2008.

by the MicroCapital Team -

Mr. Omidyar’s Philanthropic Vision: a Work in Progress, Part 1

You may have heard the hype about the eBay fortune being on its way to revolutionizing philanthropy through for-profit investing, but the numbers tell a different story.

Why so much attention to Pierre Omidyar? High stakes: he is estimated to be worth $10 billion, only 1% of which he plans to retain. The rest will be given away or invested with a social purpose. In June, he demonstrated his commitment to microfinance with a $4 million grant to the nonprofit Grameen Foundation USA (GFUSA).

(Omidyar.net extends the commitment to microfinance with an online discussion board with a microfinance focus.)

The Omidyar Foundation undertook a facelift when it was transformed into the newly christened Omidyar Network in 2003, now housing both a foundation and an arm that makes investments.

The news that the Network would revolutionize philanthropy by no longer purely donating to nonprofits "shocked the philanthropic community," as reported in Business Week and Newsweek. However, despite his belief that "for-profit companies can have a big impact on society," most of Mr. Omidyar’s activity is grant-making. In the second half of 2004, less than $5 million was invested in social-mission for-profits, while a prorated $91 million was granted to nonprofits. From these numbers, we have to wonder what’s stopping Mr. Omidyar from giving this revolutionary idea a chance to get off the ground.

That said, the Network reporting on its site is not clear. So, we are using some guess work here.Omidyar Network uses the terminology “non-profit investment” and “pro-profit investment” as its two super-categories when reporting on its website. What does this mean? For instance, the donation to the Grameen Foundation was a “non-profit investment.” How is this different than a grant? After our inquiries to Omidyar Network, we have guessed that there is no difference.

In the Omidyar Network’s defense, the language has indeed gotten quite muddy around the new field of ‘social enterprise,’ where organizations with a social mission can either be non-profit or for-profit.May we suggest a clear distinction: is a return on capital expected? If yes, then it is an investment. If no, it is a grant.

In other words, our critique may be misplaced if Mr. Omidyar’s group is making ‘program-related investments’ (PRIs) to non-profits instead of grants. A PRI is the legal term describing when a foundation expects a return on its grant-making capital from a nonprofit.

So, let’s hope we are wrong about Mr. Omidyar’s group. Let’s hope he really is expecting a return on his philanthropic dollars to in turn create more philanthropic dollars. But current giving patterns and opaque reporting make us doubt they are actually pursuing the sophisticated philanthropic strategy their press proclaims. Too bad. We could use some visionary leadership in microfinance to model market discipline for all the other players on the investment side.

More on PRIs in the next entry  

Additional Resources

1) Omidyar Network: "On Microfinance" discussion forum
2) Omidyar Investments
3) "Grameen Foundation Receives $9 Million to Finance Micro-Loans."
4) Press Release: "eBay Founder to Create Organization to Fund Social Change."
5) Omidyar Network record of news coverage

by Rohan Kumar Agarwal -

MICROCAPITAL BRIEF: 3k Displaced Persons, Returnees, Hosts Access Loans, Guarantees, Business Training in Iraq

The UN’s International Labour Organization (ILO) and the Central Bank of Iraq have partnered with the Iraqi Company for Bank Guarantees and three commercial banks over the past two years to provide a range of services to forcibly displaced people, returning refugees and host communities in the Dohuk and Ninewa regions of Iraq. These services include

by Aarya Dhru -

MICROFINANCE EVENT: 19th Annual Global Microfinance Forum; March 14-15, 2024; Amsterdam, Netherlands

This forum will bring stakeholders together to discuss topics such as: (1) Climate-smart Financing for Smallholder Farmers; (2) Women’s Economic Empowerment by MFIs [Microfinance Institutions]; and (3) Green & Sustainable Finance; Genuine Change from MFIs.

by the MicroCapital Team -

SPECIAL REPORT: Financial Inclusion of Forcibly Displaced Persons (FDPs), Host Communities Results in Competitive PAR Ratios #EMW2023

e-MFP logoThe Grameen Credit Agricole Foundation recently carried out a pilot project in Uganda engaging financial services providers (FSPs) in serving refugees and their host communities. The goal is to support FSPs in adapting their products to the needs of forcibly displaced persons (FDPs) – “adapting” because new products are not generally needed – and rolling them out to prove the business case for serving these populations. Despite early reluctance from FSPs, their portfolio-at-risk ratios turned out to be under 5 percent – sometimes better than their overall portfolios. As a result, two of the foundation’s FSP partners have

by Aarya Dhru -

MICROFINANCE EVENT: Consumers International Global Congress; December 6-8, 2023; Nairobi, Kenya

Every four years, this event gathers stakeholders aiming to create a resilient future for the mass market. The agenda covers topics such as: (1) Transforming Consumer Journeys in Mobile Money; (2) The Influence of ChatGPT on Consumer Experiences; (3) Channels of