by Christopher Maggio -

MICROCAPITAL.ORG STORY: Mexican Business Tycoon Carlos Slim Helú’s Carlos Slim Foundation and Grameen Trust Launch “Grameen-Carso”, Mexican Micro-Lending Program With USD 5 Million Donation and USD 40 Million Guaranteed as Credit Line

Mexican entrepreneur Carlos Slim Helú (Carlos Slim), through his charitable Carlos Slim Foundation, has teamed with Grameen Trust, an organization charged with supporting and promoting poverty-alleviating activities, to begin “Grameen-Carso” a micro-lending program in Mexico started with a Carlos Slim Foundation donation of USD 5 million for initial assets, and a guaranteed USD 40 million from the Carlos Slim Foundation as a credit line [3]. The terms and conditions of this credit line have not been disclosed. Grameen Trust will assume a management role for the program, bringing in experienced employees in the field of microfinance from Grameen Bank, the microfinance institution (MFI) whose model Grameen Trust attempts to promote in its ventures [1,3]. The managers will then, in the long term, “capacitate local managers in order to be in charge of procedures in Mexico” [3].

by Christopher Maggio -

MICROCAPITAL.ORG STORY: Citi Microfinance Executive, Robert Annibale, Says Financial Crisis Will Spur Microfinance to Move Toward a Banking Model

The Wall Street Journal Online has reported on the comments of Robert Annibale, global director of Citi Microfinance, the arm of the financial services company dedicated to fostering microfinance through funding and support [1,2]. Mr. Annibale believes that more microfinance institutions (MIFs) will begin to “seek banking licenses to broaden their sources of funding” [1]. He sees the lack of liquidity caused by the financial crisis as creating a situation in which MFIs need “diversified funding” and that deposits are one source that MFIs should draw from. In Mr. Annibale’s opinion, deposits have more stable sources of funding in the financial crisis than “selling debt on the capital markets or loans from public and private sector banks” [1]. As debt and credit markets have slowed down during the financial crisis, these sources of funding have been more difficult to obtain, which Mr. Annibale says has not been the case with deposits [1]. He cites the trajectories of MFIs such as Peru’s MiBanco and Mexico’s Banco Compartamos SA, “which started as non-government organizations and later became banks in order to offer a wider range of products” as being indicative of a greater trend to come in microfinance [1,3,4,5,6].

by Christopher Maggio -

MICROFINANCE EVENT: Central Bank of Brazil’s I Forum on Financial Inclusion

MICROFINANCE EVENT: The Central Bank of Brazil’s Financial System Organization Department Hosts The I Central Bank Forum on Financial Inclusion as Part of the Department’s Financial Inclusion Project; November 16-18, 2009 in Salvador, Brazil

Event Name: The I Central Bank Forum on Financial Inclusion

Event Description: Microfinance seminars centered around forging “joint partnerships” with the goal of a “sustainable and inclusive financial system”

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

Summary of Event: The 16th-17th will consist of workshops and lectures by experts on technical microfinance aspects. The 18th will provide opportunities for players in the microfinance sector to hold meetings with the intention of creating “partnerships and projects”

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: The Economist Continues Debate About A ‘Microfinance Bubble’ And Sets Out Observations By SKS Microfinance, ACCION International And Co-Author Of ‘Portfolios Of The Poor’

In an article in the Economist magazine entitled ‘Froth at the bottom of the pyramid: Is microfinance going the same way as subprime mortgages’ [1], the Economist continues the controversial debate on the ‘microfinance bubble’ that was initiated by a series of provocative articles on the Wall Street Journal and a subsequent blog on the Reuter’s website. These articles have been discussed in previous Microcapital.Org publications [2], [3], [4]. The Economist draws our attention to a view put forward recently by Mr Vikram Akula, founder of India’s SKS Microfinance [5], who expressed disappointment at the recent ‘unbalanced and misleading’ views on microfinance investments and ‘absurd’ sweeping generalisations drawn from anecdotal evidence in one neighbourhood. The Economist reminds us that SKS is about to go public in a ‘doubtless lucrative’ IPO but the views of Mr Akula resonate with the views of other participants in the microfinance sector. Mr Alvaro Rodriguez, former chairman of ACCION International [6] and now chairman of Compartamos Banco [7], finds it hard to see how there can be a ‘bubble’ when, according to estimates, ‘there are currently 100 million microfinance clients out of one billion poor people who want access to financial services’. He added that competition among investors may generate a ‘gold rush’ and lead to ‘frothy lending’ in some instances but stated that competition is a good way to introduce innovation, greater efficiency, better products and pricing into any industry, a development he added that will ultimately benefit the microfinance customers.

by Goda Thangada -

MICROCAPITAL STORY: ACCION International’s CEO Maria Otero To Be United States Under Secretary of Democracy and Global Affairs

The White House has nominated the president and CEO of ACCION International, Ms. Maria Otero, to assume the position of Under Secretary of Democracy and Global Affairs in the US Department of State. Although the Senate Foreign Relations Committee has yet to approve the nomination, Ms. Otero has indicated that she will accept the position should her nomination be successful. Ms. Otero has been profiled in MicroCapital’s Who’s Who in Microfinance series in May 2007. Her position at ACCION International will be filled temporarily by Ms. Catherine Quense, Chief Administrative Officer and Chief Deputy, while a committee searches for Ms. Oteros successor. Ms. Diana Taylor, Vice Chair of the ACCION Board, comments, “Her nomination as Under Secretary comes as no surprise to those of us who know her and her deep commitment to social and economic justice, and we know that she now has an even more effective platform from which to help build better lives for the world’s citizens.” Ms. Otero was born and raised until the age of 12 in La Paz, Bolivia, whereupon she and her family moved to Washington DC. She holds a BA in Literature from the University of Maryland and an MA in International Relations from Johns Hopkins. She has been with ACCION since 1986 and became CEO in 2000. ACCION International is a microfinance organization founded in 1961 and consisting of 27 partner microfinance institutions (MFIs) in 20 countries. The position of Under Secretary of Democracy and Global Affairs was established under Section 161(b) of the Foreign Relations Authorization Act for Fiscal Years 1994 and 1995. In total, there are five Under Secretaries of State in the Department of State, headed by Secretary Hillary Rodham Clinton.

by Zoran Stanisljevic -

MICROFINANCE EVENT: Will the Bottom of the Pyramid Hit Bottom? The Effect of the Financial Crisis on the Microfinance Sector, May 18, 2009, New York City, presented by Women Advancing Microfinance International and sponsored by USAID

Monday, May 18, 2009, New York City, New York.

See Our Comprehensive Event Calendar Here:
http://microfinanceassociation.ning.com/events

by Jaclyn Berfond -

MICROCAPITAL STORY: Michael Chu Promotes Commercial Microfinance in Forbes Article

In a recent Forbes article, Michael Chu, senior lecturer at Harvard Business School and former CEO of ACCION International, writes that microfinance is a scalable, sustainable model that can provide real hope of winning the war against global poverty, even in the midst of the global economic crisis.

by Zoran Stanisljevic -

PAPER WRAP-UP: The New Money Lenders: Are the Poor Being Exploited by High Microcredit Interest Rates, by Richard Rosenberg, Adrian Gonzalez, and Sushma Narain

Richard Rosenberg, Adrian Gonzalez, and Sushma Narain, CGAP’s co-authors, provide an in-depth look to address the question of whether microcredit borrowers are being exploited by unreasonably high interest rates.  CGAP is an independent policy and research center that provides market intelligence and is dedicated to advancing financial access for the world’s poor.  The organization is housed at the World Bank and is supported by over 30 development agencies and private foundations.  This paper explores the components of microcredit interest rates in order to provide a framework for borrowers and other microfinance practitioners to determine whether “excessive” MFI lending rates are more than occasional exceptions.

by Bharathi Ram -

MICROCAPITAL STORY: Center for Financial Inclusion at ACCION International Holds First Meeting of the Steering Committee for the Campaign for Client Protection in Microfinance; International Leaders Endorse the Six Principles of Client Protection in the Meeting

In the face of client protection failures in the mainstream financial sector, the first meeting of the Steering Committee for the Campaign for Client Protection in Microfinance was hosted by the Center for Financial Inclusion at ACCION International. The meeting was attended by members of the committee which comprises of twenty-three leaders from various microfinance organizations representing a diversity of regions, types of institutions and expertise. The purpose of the meeting was aimed at ensuring microfinance providers worldwide remain committed to serving their clients’ best interests. According to a press release on PRNewsire, the leaders attending the meeting officially endorsed the six principles of client protection in microfinance launched by the campaign at the Clinton Global Initiative in September, 2008. MicroCapital had previously reported on the official launch of the campaign; more information on the story can be found here. The press release states the meeting has a ‘sense of importance and timing’ given the current financial crisis sweeping the world and the increasing focus on interest rates and transparency.

by Zoran Stanisljevic -

MICROCAPITAL STORY: Mexico’s Fifth-Biggest Bank Grupo Financiero Banorte SAB is Closing its Microfinance Division Creditos Pronegocio after Experiencing Losses of USD 8.4 Million for 2008

The Wall Street Journal (WSJ)/(Dow Jones) reported that Grupo Financiero Banorte SAB (Mexico’s fifth-biggest bank) is closing its microfinance division Creditos Pronegocio.  The bank suffered losses of USD 8.4 million for 2008.  Alejandro Valenzuela, Grupo Financiero Banorte, chief executive stated to the WSJ that the bank has been in liquidation mode since 2008 and that they “feel that right now it is a major distractions from the big challenges we face.”

by Ryan Hogarth -

MICROCAPITAL STORY: Huge Global Pensions Back Break-Out Private Equity Fund: TIAA-CREF, APG, DWM and SNS REAAL Contribute $82 million to Developing World Markets Microfinance Equity Fund I

Developing World Markets (DWM) has closed its DWM Microfinance Equity Fund I with a commitment of USD 82 million from four large institutional investors. The fund provides equity capital to microfinance institutions (MFIs) around the world. The Fund Manager, DWM Asset Management Limited Liability Company (LLC), now controls a total of USD 200 million in microfinance-related assets: a pool, which it states, is the largest in the world dedicated solely to MFI equity investment. Acting as Advisor to the Fund Manager is major microfinance investor SNS Asset Management. After the closing, Theo Brouwers, Director of SNS Asset Management said, “The success of the fundraising at a time of global economic turmoil demonstrates the confidence of international investors in microfinance as a stable asset class and that institutional investors continue to search for good investment opportunities that contribute to social development.” MicroCapital has previously quoted Theo Brouwers in his argument that despite the controversy over for-profit microfinance, the key to microfinance succeeding in poverty alleviation is to funnel institutional capital to developing countries lacking funds. DWM’s new USD 82 million fund is a step in that direction.