In an article on Pakistan’s ‘The Nation’ online news portal, reporter Saadia Qamar makes a number of important observations on microfinance based on a publication by the State Bank of Pakistan (SBP) entitled ‘Towards Achieving Social and Financial Sustainability – A study on the performance of microfinance in Pakistan’. The publication is not currently available in the public domain. According to the report in The Nation, results of the SBP study reinforces a point that has been made on many prior occasions in both informal and scientific contexts; namely that the provision of microcredit alone is not always sufficient to alleviate the socio-economic problems of poor households. Continue Reading »

An article by Mr. Sunanda Creagh in the Khaleej Times has highlighted important tensions in the microinsurance sector. As noted by senior World Bank insurance specialist, Mr. Craig Thorburn, interest in microinsurance has grown dramatically in recent years. As reported in a previous Microcapital Story, the LeapFrog Financial Inclusion Fund recently raised USD 44 million for what was billed as the world’s first microinsurance fund. Commercial firms have recognized the profit potential of the microinsurance industry. The article observed that the Ugandan arm of global insurance provider AIG earns about 17 percent of its profits through microinsurance premiums from clients in Uganda. Continue Reading »

A recent report by Kate Murphy in the New York Times highlighted the importance of financial and business education alongside the provision of microcredit. The report notes that interest in training programmes targeting microfinance clients has grown in recent years. The reason for this appears to stem from results of studies which suggest that start-up micro-businesses are more likely to survive if the owners have basic operational skills. Mr. Bobbi L. Gray of the non-profit international development organisation, Freedom From Hunger, was quoted as saying that loan recipients are more likely to succeed if they receive business education. Freedom From Hunger was established in 1946 and currently provides financial education in developing countries under its Credit With Education programme.  Continue Reading »

In a recent entry posted by Mr. Siddharta Chowdri, ACCION International Country Manager for India, on David Roodman’s Microfinance Open Book Blog, it was pointed out that borrower delinquency has become a problem faced by all MFIs in the Indian state of Karnataka. According to the Mr. Chowdri, microfinance clients in the state are borrowing from as many as 6 MFIs and many local money lenders. Many existing MFI’s in the area do not have the systems to track and monitor how much debt their clients are incurring as a result of loans from other MFIs. A good number of clients borrow excessively and exceed their capacity to repay their multiple loans on a timely basis. As a consequence, some of these clients turn to local leaders with complaints about MFIs and their inability to repay their debts. To add to the problem, a number of local leaders have instructed certain MFIs to cease operations and have informed borrowers via the local media and through word of mouth that they are being exploited. There is some suggestion that the actions of some local leaders in this regard may be politically motivated. Continue Reading »

It was recently reported by Ruchika Sharma in VC Circle, a specialist South Asian journal on venture capital, that a South India based MFI, ESAF Microfinance and Investments (EMFIL) has raised Rupees 12 crore (approximately USD 2.5 million). According to the MIX Market portal, a database which provides financial and other information on MFIs across the globe, EMFIL was established in 1992 and is a regulated non-bank financial institution which is modeled along the lines of Grameen Bank. It is stated in EMFIL’s profile on the MIX Market that the MFI’s total assets as at 31 March 2008 is USD 21, 838,532 and it has active 145,712 borrowers. EMFIL’s total equity is reported to be USD 1,169,903 and it has a profit margin of 3.03%. Its return on assets is said to be 0.71 percent and return on equity is 16.74 percent. The services offered by EMFIL include microcredit, microinsurance, funds transfers and micro-energy loans. Kerala-based EMFIL raised the amount by selling 20 percent of its stake to Dia Vikas Capital Private Limited, a 100% subsidiary of Opportunity International Australia. No further information about the transaction is currently available in the public domain. Continue Reading »

In Omar Omeidat’s report in the Jordan Times on a regional conference in Amman on agricultural banks and rural microfinance, HRH Princess Basma was reported to have highlighted the importance of funding for rural projects, particularly in view of the global economic crisis, which she said has had a negative impact on food security programmes. The Princess indicated that due to local and global economic circumstances and a shortage of water resources, the agricultural sector in Jordan faces several challenges, which have led to a drop in the sector’s contribution to the gross domestic product (GDP) and work force. Jordan’s water crisis was the focus of a recent article on the AlertNet-Reuters network, which disseminates information about humanitarian disasters and emergencies across the globe. The IRIN portal, which provides information on humanitarian affairs under the auspices of the United Nations Office for the Coordination of Humanitarian Affairs, recently reported that whilst the water and related food crisis in Jordan is not yet critical, a range of measures and projects need to be implemented as soon as possible to contain the problem. Continue Reading »

In Zhang Jiawei’s recent report on the China Daily entitled ‘Micro-finance companies’ bank financing ratio won’t rise’, the head of the cooperative supervision department at the China Banking Regulatory Commission (CBRC), Zang Jinfang, was quoted as saying at a recent forum on rural financial development in Tsinghua that the ’50 percent limit on microfinance companies’ bank financing ratio will not be eased in the short run’. Currently, information (in the English language) verifying and clarifying Zang’s quotation above is not available in the public domain. It was reported that Zang recently came under pressure to raise the current ratio applicable to microfinance companies in China. However, Zang was quoted as saying that it is not the right time to ease the ratio as it may lead microfinance companies to pass their risks on to their lenders. Continue Reading »

The LeapFrog Financial Inclusion Fund recently announced that it has raised USD 44 million. This was reported on several news portals including Bloomberg, the Corporate Social Responsibility Newswire, the Press Portal website and CNBC. The fund has been billed as the world’s first investment fund that is focused on microinsurance. The fund aims to invest in or partner with businesses that offer insurance products and financial services to low-income communities throughout Africa and Asia, including India, Pakistan, South Africa and Uganda. Continue Reading »

In a Bloomberg report date dated 16 June 2009, reporter Dune Lawrence highlights the impact of microloans in rural China. By way of illustration, Wang Shulian started a business producing mineral powder that is used for plastering by obtaining microloans equivalent to USD 146 from an organization that supports rural women in the Ningxia province. Her monthly income has grown from nothing to about USD 1460 in just over 8 years. Continue Reading »

In a recent speech before the senate, Lamido Sanusi who is the governor of the Nigerian Central Bank (CBN) governor, emphasized that it is important to ensure that banks do not claim to offer Islamic banking products when they are in fact running a conventional banking business. Continue Reading »

In a recent report by Paolo Luis G. Montecillo in the Business World in the Philippines, it was observed that microfinance institutions in the Philippines have started to approach international rating firms with the hope that independent ratings will attract foreign investments and improve institutional operations. The president and chairman of Rural Green Bank of Caraga, Joseph Omar O. Andaya, noted that the bank was able to obtain a million-peso loan after securing a rating from Milan-based Microfinanza Rating. In addition, the assessment by Microfinanza Rating allowed Mr. Andaya to learn about institutional strengths and weaknesses of his institution, the latter of which included high operating costs and inefficient operations. Rural Green Bank is now in discussions with Blue Orchard Microfinance Investment Managers, a Switzerland-based fund, in relation to a loan for an amount almost equivalent to a quarter of its 1.6-billion peso loan portfolio. The Green Bank was established in 1975 and has a 4-diamond rating on the MIX Market portal. It does not appear to have submitted updated information for 2008. However, latest figures on the MIX Market portal show that Green Bank has a gross loan portfolio of USD 30,524,872 and 72,742 active borrowers as at 31 December 2007. Green Bank’s key sources of funding are loans, savings and shareholder capital. Continue Reading »

According to the Yemen Times, the Yemeni government admitted that its strategy to reduce unemployment to 12 percent by 2010 was failing in a recent official report by the Yemeni Ministry of Planning and International Cooperation. The percentage of unemployment in Yemen varies from source to source because of a divergence in the methods of calculation used and the lack of accuracy of basic figures such as population, percentage of Yemenis who are of working age and so forth. Official statistics put the figure at no less than 16 percent whilst according to Taher Mujahid Al-Salehi, an economist from the Yemeni Research and Studies Center, an unemployment figure of at least 35 percent is more realistic. The official report attributed the lack of progress in reducing unemployment to the Yemeni economy’s inability to provide new jobs for youth. In addition, the low level of qualification among the national labor force remains a significant obstacle to unemployment reduction in the country. The report suggested a number of ways to improve employment figures including conducting qualitative training programs for the country’s labor force and providing employment offices with the means to more effectively advertise job vacancies. Continue Reading »