By Pascaline Dupas and Jonathan Robinson, published by the National Bureau of Economic Research (NBER), March 23, 2009, 48 pages, available at: http://ideas.repec.org/p/nbr/nberwo/14693.html

Ms Dupas and Mr Robinson conduct a field experiment to examine whether savings constraints prevent the self-employed from increasing the size of their businesses. In order to test their hypotheses, the authors opened interest-free savings accounts for a random selection of low-income earners in rural Kenya. Although the bank charged substantial withdrawal fees, take-up and usage was high among women. Furthermore, the savings accounts had substantial, positive impacts on their productive investment levels and expenditures. The results suggest that a significant proportion of daily income earners face important savings constraints and have a demand for formal saving devices. Continue Reading »

European Fund for Southeast Europe (EFSE), an organization based in Germany that attempts to foster economic development in Southeast Europe through the provision of microcredit, pledged EUR 900 million (USD 1 billion) to various financial institutions to support small businesses in the Southeast region of Europe at a press conference held in Skopje, FYR Macedonia. The conference was held in order to prepare for the Fund’s Annual Meeting, which is to be held from June 8-10, 2010 in Ohrid, FYR Macedonia. The money is specifically meant to finance long-term loans to small business, in particular to micro- and small enterprises (MSEs), as well as housing improvement loans to low-income households. Continue Reading »

The National Microfinance Bank (NMB), one of Tanzania’s largest banks, has issued loans worth TSH 92 billion (USD 63 million) to about 45,000 small and medium enterprises (SMEs) countrywide [1]. Although NMB was largely privatized in 2005, with 49 percent of its shares in the hands of a consortium of banks and firms primarily in the Netherlands, the government of Tanzania continues to be the majority shareholder. According to Robert Pascal, the head of SMEs at NMB, the loans were issued in an effort to contribute to national social and economic development. Continue Reading »

Grameen America, a non-profit microfinance organization founded by Dr. Muhammad Yunus, recently held the grand opening of a new Manhattan, New York, branch [1]. This grand opening brings the total number of branches of Grameen America to four, with branches in Queens and Brooklyn, New York, and a third in Omaha, Nebraska. The ceremony took place at City College of New York and was hosted by the Colin Powell Center for Policy Studies. The event featured previous Grameen America borrowers who had used their loans develop retail and culinary businesses [2]. Continue Reading »

Lockheed Martin, a global security company based in the US state of Maryland, has given a USD 30,000 grant to support the microfinance efforts of the Foundation for International Community Assistance (FINCA) [1]. Established in 1984, FINCA is a global microfinance network, which serves approximately 700,000 people through its subsidiaries in 21 countries [2]. The funding from Lockheed Martin will help provide loan capital for FINCA’s clients in Afghanistan and El Salvador and will support FINCA Haiti’s relief fund efforts following the January 12th earthquake. Continue Reading »

Ecuador’s central bank, Banco Central del Ecuador (BCE), recently further reduced the cap on annual interest rates to 30.5 percent from 33.9 percent for retail microlenders, and to 27.5 percent from 33.3 percent for all others lenders [1]. Since 2007, when the national government enacted banking reforms allowing the central bank to set a maximum interest rate for all banking institutions, the cap for microlenders has been dropping. According to Javier Vaca, the executive director of Red Financiera Rural (RFR), an Ecuadorian network of organizations that is focused on facilitating and promoting access to financial services, this forces microlenders to increase the average amount of their loans. Some are left with no choice but to sell their portfolios to larger institutions with lower fixed costs [2]. Continue Reading »

Event Name: Convergences 2015

Event Date: May 25 to May 26, 2010

Event Location: City Hall, Paris, France

Event Website: http://www.convergences2015.org/ Continue Reading »

A new law to regulate the microfinance sector in Uganda is expected before the reading of the 2010/2011 budget in June [1]. The plan was announced by Ruth Nankabirwa, the microfinance state minister at the third Financial Inclusion Advisors Conference recently hosted in the capital, Kampala. According to Ms. Nankabirwa, membership in the microfinance sector has grown from 644,318 in 2008 to 1,154,715 in 2009. A large proportion of funds within the sector are unregulated – there are over 1,340 microfinance institutions (MFIs) in Uganda that are not regulated. Ms. Nankabirwa argues that regulating the microfinance sector will increase consumer confidence and encourage more people to use its services. Continue Reading »

Chief Jethro Akun, the Vice President of the National Association of Microfinance Banks (NAMB) in Nigeria, has announced plans to partner with the National University Commission (NUC), a parastatal under the Federal Ministry of Education established in 1962, to facilitate the offering of courses in microfinance banking at the university level. According to Mr. Akun, the partnership is necessary as the microfinance sector needs more “manpower” to achieve growth in the sector. He also believes that courses in microfinance banking will help to allay many of the fears of the general public over the viability of microfinance banks [1]. Continue Reading »

Through a webinar last week, the Grameen Foundation, a non-profit organization based in Washington, DC, that aims to help microfinance institutions (MFIs) replicate the model of the Grameen Bank, introduced its newest campaign, the Pioneer Fund, and examined how the organization assists MFIs so that they might reach poor people in underserved areas with microloans. The webinar was the organization’s largest online event ever held with over 600 subscribers [2]. Continue Reading »

Radio Netherlands Worldwide recently reported that microfinance in Rwanda is “booming” and the Netherlands is contributing to this “success” [1]. One of the potential effects of the rise of microfinance in Rwanda is social reconciliation. Faustin Zihiga, the Chief Operating Officer of Urwego Opportunity Bank (UOB) of Rwanda, the largest microfinance bank in Rwanda among those reporting to the Microfinance Information Exchange (MIX Market), suggests that in group-lending programs, survivors of the genocide mix in the same groups as perpetrators of the genocide. They begin to associate themselves by their group, not by their ethnic background. According to Zihiga, the social change is often even more visible than the economic change that microfinance brings about [3]. Continue Reading »

Citigroup, a major American financial services company based in New York City, has pledged USD 1 million in grants to help rebuild Haiti’s microfinance industry [1]. The money will be distributed via three microfinance providers: SOGESOL, Fonkoze and FINCA-Haiti. The grants are to be used by microentrepreneurs whose businesses were damaged by the earthquake in mid-January. This adds to the large grants already given to microfinance institutions in Haiti. Fonkoze has already received a USD 4.5 million grant from the MasterCard Foundation, based in Canada [2]. Continue Reading »

On April 29, 2010, the Global Resources and Opportunities for Women to Thrive (GROWTH) Act was introduced in the US House of Representatives. The bill, which was originally introduced into the US Senate on July 9, 2009, would provide a range of economic tools intended to help women in developing countries improve their financial situations. The bill includes microfinance and small business development and training as well as measures to enhance women’s land and property rights, to improve wages and working conditions, to improve access to global trade and to strengthen local women’s organizations. Continue Reading »

A group of microfinance institutions (MFIs) across Nigeria, including microfinance banks, co-operative societies and NGOs, has joined together to form the Association for the Survival/Sustenance of Microfinance Institutions. The primary goal of the association is to facilitate funding from international financial institutions such as the International Monetary Fund (IMF) and the International Finance Corporation (IFC). Continue Reading »

On April 26 and April 27, the Presidential Summit on Entrepreneurship was hosted at the Ronald Reagan Building in Washington, DC. The summit, which was co-hosted by the US Departments of State and Commerce, brought together more than 275 participants from over 50 countries around the world [1]. The goal of the summit was to deepen ties between business leaders, foundations and entrepreneurs in the US and Muslim communities around the world. With attendance by the US President, various Cabinet Secretaries and other senior US government officials, the summit was meant to highlight the importance of entrepreneurship for fostering economic opportunity and community development. Although microfinance was not addressed in detail at the summit, it was generally acknowledged by the presenters during the summit that microfinance would play a vital role in the promotion and development of entrepreneurship [2]. Continue Reading »

Esther Duflo, a contributor to the field of microfinance research, has been awarded the John Bates Clark Medal [1]. The award, which is generally considered to be one of the most prestigious prizes in the field, is given to an economist in the US under the age of forty who is judged to have made the most significant contribution to economic thought and knowledge. Continue Reading »

Event Name: The Making of a Tiny Loan

Event Date: Friday, May 7, 2010 – 12:00 PM EDT

Event Location: Webinar

Event Website: To learn more about the campaign and register, you may go to http://grameenfoundation.org/pioneer Continue Reading »