Muhammad Yunus, the microfinance pioneer and winner of the Nobel Prize for founding the Grameen Bank, spoke out against the growing trend of commercial microfinance. In an interview with CNNMoney.Com, Yunus chastised those involved with for-profit microfinance by saying that “poor people should not be considered an opportunity to make yourself rich.” These remarks come at the start of the Asia-Pacific Regional Microcredit Summit 2008 in Bali Indonesia.
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PAPER WRAP-UP: Transforming NGO MFIs: Critical Ownership Issues to Consider, by Kate Lauer
Written by Kate Lauer, lawyer and a policy advisory consultant to Consultative Group to Assist the Poor (CGAP), published in June 2008 as Number 13 of Occasional Papers, a publication of CGAP, 28 pages, available at http://www.cgap.org/gm/document-1.9.4213/OccasionalPaper_13.pdf
NEWS WIRE: India: Microfinance Raises Fresh Sub-prime Fears
Source: Times Online.
NEWS WIRE: United States: Let the Market Determine How Much Profit Microfinance Institutions Should Earn Says O’Grady in The Wall Street Journal
Source: Wall Street Journal.
MICROCAPITAL STORY: ACE INA Foundation, Based in Philadelphia, Makes Three-Year USD 720,000 Grant to Freedom From Hunger’s Credit with Education program in Mexico
ACE INA Foundation, the philanthropic arm of Bermuda-based casual insurance company ACE Limited, announced that it will be making a three-year USD 720,000 grant to US based international development organization Freedom from Hunger (FFH). Established in 1946, FFH works in developing countries to provide self-help programs against hunger and poverty. The organization’s work is specifically targeted to those who live on USD 1 per day or less. FFH will use the ACE grant to bring microfinance and financial education to nearly 3 million Mexican women, through its Credit with Education program.
NEWS WIRE: United Kingdom: The Economist Comments on Profiting from Microfinance
Source: The Economist.
NEWS WIRE: India: Private Equity in Microfinance Will Have Pros and Cons
Source: Sify.
NEWS WIRE: United Kingdom: Financial Times Reports on Investors Boosting the ‘Missing Middle’
Source: Financial Times.
NEWS WIRE: United Kingdom: Lars Thunell of IFC Tells Financial Times “Poor Farmers Need Level Field” When Accessing Microfinance
Source: Financial Times.
MICROCAPITAL STORY: Indian SKS Microfinance Plans to Raise $30m in Equity; Possible Future IPO
To finance its ambitious expansion plans, for-profit microlender SKS Microfinance has announced it plans to raise RUP 1.3 billion (USD 30.3 million) in equity capital through private investors, hoping to increase its equity base from roughly USD 50 to 80 million. SKS’ management plans to use the new funds to double its current customer base of 500,000 over the next two years. To meet its equity target, SKS added that it may induct a new investor onto its balance sheet.
NEWS WIRE: United States: Lee Hudson Teslik Revisits Crossroads Metaphor for Microfinance at Council on Foreign Relations
Source: Council on Foreign Relations.
PAPER WRAP-UP: Transitions To Private Capital – Case Studies From The Liability Side Of The Balance Sheet, by Marc de Sousa-Shields & Caroline Esther Averch
Produced for review by the United States Agency for International Development (USAID), released July 2007, written by Marc de Sousa-Shields of Enterprising Solutions and Caroline Esther Averch of Chemonics International, 26 pages, available at: http://www.microfinancegateway.org/content/article/detail/49344
Once it became evident that microfinance could be a financially sustainable enterprise, many microfinance institutions (MFIs) operating as non-governmental organizations (NGOs) sought to change their legal status to a commercial MFI. As private entities, these MFIs would not only be able to turn a profit, they would also gain access to private investors offering the debt-capital necessary to expand operations.
“Transitions To Private Capital” reviews the funding strategies employed by three Latin American MFIs following their establishment as for-profit MFIs. Below is a summary of each case, highlighting the key changes in funding, and an accompanying rationale behind each funding decision.
MICROCAPITAL STORY: TIME Magazine: Commercial Banks Could Create Trouble for Microfinance
In its June 5 issue, TIME magazine wonders whether the recent rush of big-name financial institutions to microfinance creates new pressures that unavoidably conflict with the mission of alleviating poverty.
The entry of banks such as Citigroup or Spanish giant BBVA into the microfinance arena has undoubtedly wrought some positive changes. Competition has spurred more industry development, driven down interest rates, and expanded the offerings of microfinance institutions (MFIs) to include new products, such as savings accounts, mortgages, and insurance.
MICROCAPITAL STORY: Citibank Bangladesh Provides Microfinance Institution ASA of Bangladesh with $10m in Financing
Citibank Bangladesh (Citi Bangladesh), the Bangladeshi banking arm of Citigroup (Citi), a global financial services firm, has signed a credit facility agreement with ASA, a Bangladeshi microfinance institution (MFI), which provides ASA with USD 10 million. This financing will allow ASA to expand its microfinance portfolio and to disburse its funds to a larger number of micro-entrepreneurs. Citi Bangladesh has agreed to provide the USD 10 million in the local currency, Taka (BDT).
MICROCAPITAL STORY: ACCION International President, Maria Otero, Awarded Ellis Island Medal of Honor for Pioneering Work in Microfinance
ACCION International President and CEO, Maria Otero, was awarded the Ellis Island Medal of Honor by the The National Ethnic Coalition of Organizations (NECO) in recognition of her contribution to sustainable development in the global microfinance sector.
MICROCAPITAL STORY: PlaNet Finance United Arab Emirates (PlaNet Finance UAE) Holds Golf Tournament Promoting Awareness about Microfinance amongst International Financial Firms
PlaNet Finance United Arab Emirates (PlaNet Finance UAE), a branch of the global non-governmental organization (NGO) which provides technical assistance and consulting to microfinance institutions (MFIs) in close to 60 countries, held a golf tournament entitled “Tee Off Against Poverty” on April 23rd at the Wadi by Faldo course of the Emirates Golf Club (EGC) in Dubai in an effort to increase awareness about microfinance amongst international financial firms and other global corporations, according to a press release on ArabianBusiness.com.
NEWS WIRE: United States: Wharton’s “Microfinance Grows Up: Success Brings New Challenges for Investors, Practitioners in Emerging Economies”
Source: Knowledge@Wharton.
MICROFINANCE PAPER WRAP-UP: Stemming the Tide of Mission Drift: Microfinance and the Double Bottom Line, by Christina Frank
Written by Christina Frank of Women’s World Banking (WWB), a U.S. non-profit focused on microfinance for women entrepreneurs, released April 2008 by Women’s World Banking, 23 pages, available at: http://swwb.org/files/pub_lang_WWBworkingpaper.pdf
Microfinance institutions (MFIs) are less likely to lend to women and more likely to make larger loans once they are “transformed” – that is, morphed from being non-profit lenders to regulated financial institutions – according to the findings described in this paper.