The global economic and financial crisis is severely affecting low-income households across the world. New World Bank estimates suggest that 53 million will stay trapped in poverty who would otherwise have escaped its effects.

How are microfinance clients doing? Are they more resilient to the crisis? How are MFIs coping? Are they experiencing liquidity constraints? If so, how is the liquidity shortage distributed by region?

CGAP is conducting a global survey to answer these questions and inform the microfinance industry on the impact of the financial and economic crisis on MFIs and their clients. The survey takes only 5 minutes, and closes on March 23, 2009.

Take the survey.

MUMBAI, India, March 11, 2009 – As the recession spreads to developing countries around the world, and the effects of the crisis set in, Microfinance Insights explores how the microfinance sector is coping with the global recession. In the March/April 2009 issue, Global Crisis & Microfinance, sector stakeholders, from institutional investors to microfinance institutions and their clients, reveal how they have been affected by the liquidity crisis and speculate on when it will end.

Microfinance clients, many of whom are below the poverty line, have felt the squeeze with rising food and energy prices, decreases in remittances and less availability of loans. Many microfinance institutions (MFIs), particularly those not permitted to mobilize deposits, have struggled to maintain the liquidity to continue loan cycles without interruption. As the situation worsens, equity investors continue to show interest in investing in large microfinance institutions, confident that many established MFIs will weather the crisis.

Microfinance Insights, the international print magazine, brings a diversity of new perspectives to the forefront in this issue, shedding light on the road ahead for the sector. In this issue, the magazine publishes a new survey on microfinance and the global economic crisis, gathering views from 120 MFIs and 40 investors from around the world on a range of issues from strategic organizational changes to risk assessment. The survey reveals that over 25 percent of non-deposit taking MFIs have decreased their lending in the last 12 months and 20 percent have reduced their staff size. Forty-one percent of MFIs have had to face higher interest rates from lenders, and 37 percent have modified their growth plan downwards. Nevertheless, more than 4/5 of investors have not reduced their portfolio allocation towards MFIs. More survey statistics can be found in the latest issue of Microfinance Insights.

Features of Vol. 11 Microfinance Insights, Global Crisis & Microfinance include:
• How Microfinance can make it through the Global Recession by Yana Watson of Dalberg Global Development Advisors
• Commentary on the Dangers of Leverage by Vinay Nair, Executive Director, JP Morgan
• Alok Prasad, Country Director, Citi Microfinance Group, Citi India, on lending to MFIs during the downturn
• Roshanah Zafar, Founder Kashf, on Political Interference in Pakistani microfinance
• Milford Bateman, Visiting Professor of Economics at the University of Juraj Dobria in Croatia, critiques the microfinance sector
• Bhakti Mirchandani, Associate Vice President at Unitus Capital, on the need for a publicly traded MFI index
• Perspectives from borrowers in Mexico and Nigeria, and Triodos, KIVA and Aga Khan Foundation
• And much more…

Microfinance Insights is a dynamic, fast growing magazine with over 10,000 readers around the world. The magazine is published from India by Intellecap, the social investment advisory firm, and is international in content and distribution, bringing in articles, interviews and commentary from India as well as microfinance markets around the world including Mexico, the Philippines, Nepal, Ecuador, Kazakhstan and Pakistan.

Microfinance Insights publishes on a bimonthly schedule, producing 6 issues a year. The magazine also has networks on Twitter, Facebook and LinkedIn, as well as a blog on the website www.microfinanceinsights.com.

Upcoming issues of the magazine include a focus on Social Impact in May/June and a look at Private Equity investment in the sector in July/August 2009.

Past issues of the magazine have highlighted opinions and analyses from leading industry voices from the CGAP, the IFC, Morgan Stanley, Blue Orchard, Women’s World Banking, MIX Market, MicroCapital Monitor, the Micro Insurance Center, Sanabel, SKS and many others.

]]> http://www.microcapital.org/news-wire-over-80-percent-of-investors-have-not-reduced-their-microfinance-investment-portfolio-due-to-the-global-recession/feed/ 1 http://www.microcapital.org/news-wire-how-technology-built-the-microfinance-industry/?utm_source=rss&utm_medium=rss&utm_campaign=news-wire-how-technology-built-the-microfinance-industry http://www.microcapital.org/news-wire-how-technology-built-the-microfinance-industry/#comments Fri, 13 Mar 2009 05:01:32 +0000 Diana Yang http://www.microcapital.org/?p=3078 Source: Computer World .

Original news wire here.

March 9 – Bhalchander Vishwanath plans to operate in the global financial markets, and for a mere USD 5,000 cash investment, he has a pretty good shot.

Vishwanath is the founder and CEO of United Prosperity, which plans to raise money from individuals to guarantee the microcredit loans banks make to impoverished entrepreneurs. Contributors will make pledges, and they’ll get their money back when entrepreneurs repay their loans.

As one can imagine, there’s not a lot of funding available for a start-up nonprofit that’s helping to serve the poor. So Vishwanath and executives at similar organizations have to make every penny count. They do that by using technology to minimize costs while maximizing reach.

Not long ago, this business model would have been impossible. Now, though, it’s clear that technology has built a new sector within the world of microfinance — and it’s proving that small budgets can yield big gains with the help of high technology.

“We consider technology as an integral part of our future, for our visibility and for our donors to have a great experience,” says Kristin Houk, president of NamasteDirect in San Francisco.

NamasteDirect raises money to make microcredit loans to poor women in Guatemala. The organization collects donations through various avenues, and it has found that online fundraising costs a fraction of what traditional methods cost, Houk says. Other IT initiatives have also enabled the organization to achieve high-level goals on shoestring budgets. For example, NamasteDirect used volunteers to build an e-card system that costs nothing to run and generates “a ton of traffic to our Web site,” Houk says.

Researchers expect interest and investments in microfinancing to grow significantly in coming years. A December 2007 report by Deutsche Bank Research predicts that U.S. institutional and individual investments in microfinancing will jump from UAS 2 billion in 2006 to UAS 20 billion in 2015.

“To raise that, you need a really scalable solution,” says Ashwini Narayanan, general manager of MicroPlace Inc., a for-profit enterprise owned by eBay Inc.

Narayanan says when MicroPlace started three years ago, its IT group decided to build out from scratch using Ruby on Rails and an agile development method to enable a quick launch at a lower cost than what would have been possible with other technologies and development methods.

IT is also driving cost-effective innovations on the back end, says George Conard, executive director of the Seattle-based Mifos Initiative.

Part of the Grameen Foundation, a microfinancing institution headquartered in Washington, D.C., Mifos builds open-source financial software for MFIs. That helps ensure that they have the flexible, supportable platforms they need to scale up, says Conard, noting that many MFIs are still using pen and paper to manage tens of thousands of loans.

Conard sees more tech-driven innovations on the horizon. For example, he says, some MFIs want to deploy customized handhelds that use biometrics to identify borrowers who don’t have any ID.

And as in any business, the IT investments of microfinance organizations show significant returns, Conard says. “When you automate, your transaction costs can go down, but more important, you gain insight into the business — what products work and what don’t — so you can better target resources,” he says. “And then they can look at social impact. We can see financial performance but, more crucially, how it’s impacting client lives. Those are some of the transformative changes that technology can provide.”

Somenath Mukhopadhyay, a teacher in a government-run school in West Bengal, India, is the winner of the 2008 CGAP Microfinance Photography Contest. The judges unanimously chose this image of a young girl preparing radishes to take to market in Tarapur village, Birbhum, for the top prize. Amateur photographer Mukhopadhyay won out over more than 700 entries from professional and nonprofessional photographers in 40 countries all over the world.

Second prize goes to a photo of traditional spinning taken by Kushal Gangopadhyay. And third prize goes to accountant Ellen de Leon of the Philippines for a dramatic photo of a Muslim woman drying corn. The blocks of color in this image reminded judge Bob Annibale, global director of Citi Microfinance, of an abstract painting by American artist Mark Rothko.

In addition to the 20 other finalists, the judges awarded two special prizes for images that stood out for their representation of microfinance. Sandipan Majumdar captured this image of a camel owner making use of mobile technology at the Great Pushkar Fair, known as the Cattle Fair, which takes place every winter in Rajasthan. And the “towering sky, angular composition, and tonal quality” of this dramatic black-and-white photograph of fishermen hauling nets on Digha Beach taken in early monsoon season by Saikat Mukherjee, also warranted special mention, said judge Gary Cameron of Reuters.

The judges liked the image of solidarity captured by 2006 winner Srinivasa Rao Allamsetty in a photograph taken in early morning light during a group meeting in Orissa.

They commented on the feeling of gritty reality in Subhrajit Basu’s black-and-white image of a woman returning home after a day of selling milk in the Calcutta market. Photojournalist Jez Coulson called it “a proper piece of reportage.” Gary Cameron agreed, saying that the image is very successful at drawing you into the woman’s story, even though her face doesn’t appear.

And the judges were delighted by Samuel de Leon’s image from a strawberry farm in La Trinidad, Philippines, and the story it tells of a farmer tending her strawberries with loving care.

National Geographic Senior Picture Editor Gail Fischer says Bobby Eleazar’s Night Fish Vendor was unusually successful for an image taken using available light. What made it stand out is the expression on the fish vendor’s face: “He’s really working, there’s nothing engineered about this image,” she said.

The judges liked the abstract quality of Mohammad Rakibul Hasan’s image of stones being transported in Bangladesh—an industry that offers employment for many microfinance clients collecting and transporting stone from the mountains by river—and the way the eye can wander around the image. And of the many images of fishing entered in the Contest, they picked one by Anindya Majumdar of the moment at which fishermen fling their nets together in the Shilabati River. As two groups of fishermen spread out on each side of the river, they trap the fish in between, sweeping them up in their nets.

National Geographic’s Gail Fischer commended the graphic qualities in this black-and-white image of basket weaving by Saikat Mukherjee. Women And Microfinance founder Deb Burand added: “There are so many images of basket weaving in microfinance that it’s easy for them to become stereotyped, but this image stood out for the judges. It’s very strong, quite unique.”

The 2009 CGAP Microfinance Photography Contest will open for entries in May 2009.

Click to see a slideshow of the 25 winning photographs and for details of the winners.

Baku, 23 February 2009 – AccessBank continues to set new records in its business lending. Today the business loan portfolio crossed the USD 200 million and 50,000 client thresholds. Almost simultaneously the Micro loan portfolio exceeded USD 100 million demonstrating the bank’s commitment to its corporate mission of providing access to financial services for micro and small entrepreneurs. It is notable that the Micro loan which pushed the portfolio over this new threshold was disbursed by the Khachmaz branch as AccessBank attaches special improtance to increasing access to financial services specifically in the regions of Azerbaijan. AccesssBank is experiencing increased demand for its services and only during the first three week of this month the Bank has disbursed over 4,500 micro business loans for over USD 13 million. These are record figures for the bank for a three-week period. Loans for micro and small enterprises are a specialization of AccessBank. The Bank disburses loans to its customers depending on their needs starting from 100 up to one-million USD / AZN / EUR.

Dr. Andrew Pospielovsky, General Manager of AccessBank welcoming the new records said: “In the current economic climate, we are seeing only increasing demand for our services. Every day more and more businesses as well as ordinary families are turning to AccessBank in search of a reliable banking partner – a partner that can be depended upon to provide financing when needed and a partner that can be entrusted with hard-earned savings”.

AccessBank has been recognised as the most reliable private bank in Azerbaijan by Fitch Ratings (BB+) and is 100% foreign owned by six shareholders, including the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), the Black Sea Trade and Development Bank, KfW – the Development Bank of the German Government (20 percent share each), AccessHolding – a strategic investor in microfinance (16.5 percent), and LFS Financial Systems GmbH – a German consulting company (3.5 percent).

Original news wire here.

Cambridge, Massachusetts February 11, 2009 — The S.E.VEN Fund is pleased to announce that it has awarded MicroRate, Inc. a grant for its “Improving Flows of Foreign Capital to the Microfinance Industry” to support their proposed year-long Microfinance Investor Information Service (MIIS) – Pilot Project.

MicroRate’s MIIS – Pilot Project seeks to promote long-term growth in microfinance by facilitating informed investment through improved transparency. While objective, reliable investment information is taken for granted in today’s investment fund industry, there is currently no independent source of information for microfinance funds, putting investors at risk and endangering sustainable, long-term growth in the sector. The MIIS – Pilot Project will leverage MicroRate’s vast microfinance experience to develop a framework for evaluating and disseminating information about microfinance funds, known in the industry as microfinance investment vehicles (MIVs). “By collecting data on MIVs and making them available to the public, investors will be able to compare microfinance funds, just as they do other capital market investments,” says MicroRate’s founder and CEO, Damian von Stauffenberg.

Improving Flows of Foreign Capital to the Microfinance IndustryBy collecting data on MIVs and making them available to the public, investors will be able to compare microfinance funds, just as they do other capital market investmentsS.E.VEN is pleased to have partnered with MicroRate to support this effortMicroRate is uniquely positioned to help address this critical issue for the microfinance sector as it further integrates into global markets. MicroRate’s proposal, selected through a competitive peer review process that included leading business executives and development authorities, was chosen for its use of rigorous and innovative research approaches to address this important question within enterprise solutions to poverty.

MicroRate is the premier international microfinance rating agency, dedicated to evaluating microfinance institutions (MFIs). Since its inception, MicroRate has done over 450 ratings in Latin America, Africa and Eastern Europe. As the first organization of its kind, MicroRate was founded to promote effectiveness and growth in microfinance by providing independent evaluations to create transparency and facilitate the flow of funds from capital markets to this sector.

“S.E.VEN is pleased to have partnered with MicroRate to support this effort,” says Fund co-Director Andreas Widmer. “MicroRate is uniquely positioned to help address this critical issue for the microfinance sector as it further integrates into global markets.”

This competition was initially supported through a generous grant from the John Templeton Foundation.

Standard Chartered conducted a one and half day workshop on “Managing Human Capital in a High Growth industry”, during Feb 6-7, 2009 at Taj Deccan, Hyderabad. Over thirty Managing Directors, CEOs and HR Heads of the country’s leading Microfinance Institutions (MFIs) and service providers gathered in Hyderabad last week for deliberations on HR strategy and growth. The event, a workshop held by Standard Chartered Bank, is the third in Standard Chartered’s ‘Managing Growth in Microfinance’ series. This workshop brought together the cream of the HR and financial services industry to work with participants in integrating HR with broader issues of business strategy.

“There is a need to transform the HR function in growing organizations”, adds Madhavi Lall, Regional Head of HR at Standard Chartered Bank. “In a sector as vibrant and as fast growing as microfinance, it is critical for HR to link in with other aspects of organizational strategy. A failure to do so could be a huge risk to growth”.

The workshop brought together senior management from Tier 1 and Tier 2 MFIs, sector specialists and the HR Heads of MFIs for a one and a half day set of sessions at the Taj Deccan, Hyderabad. Workshop content spanned the full range of issues ranging from Recruitment and Training, Retention and Reward to Brand strategy as a magnet for human capital.

Faculty included: Dr. T.V. Rao, the Chairman of T.V. Rao Learning Systems, Ms. Madhavi Lall, Regional Head of HR at Standard Chartered Bank, Mr. Ashwani Singla, CEO of Genesis Burson Marsteller, Mr.Edward Rogers, Asst. Professor of Strategic Management and Entrepreneurship at the Indian School of Business, Hyderabad and Mr. Manoj K Sharma, Deputy Director of Microsave India.

‘Managing Growth in Microfinance’ is Standard Chartered’s flagship training series for the microfinance sector. The first workshop training focused on ‘The Role of Corporate Governance in Managing Growth’. Held in November 2007 at Mumbai, it aimed to build a muti-stakeholder perspective of governance in the microfinance sector. As a follow up to this the Bank also co hosted, ‘Investment Readiness for MFIs’ in April 2008 in New Delhi, India and in Novermber 2008 in Lagos, Nigeria.

‘Managing Human Capital in a High Growth Industry’ emerged from the bank’s own stakeholder discussions with key experts both within and outside the microfinance sector. Managing human capital through the growth process was articulated as a key challenge, and an increasingly complex risk. With this objective in mind this workshop was organized to meet the needs of the sector.

Original news wire here.

Bahrain, Feburary 13 – Riyadh: Bahrain has become the first GCC state to launch a bank for extending micro-credit facilities for the poor.

The Ibda’a (Creativity) Bank was launched jointly by Shaikha Sabeeka Bint Ebrahim Al Khalifa, King Hamad’s wife and chairwoman of Bahrain’s Supreme Council for Women, and Prince Talal Bin Abdul Aziz, president of the Arab Gulf Programme for United Nations Development Organisation in Manama on Wednesday evening.

The bank, a joint venture of Agfund, will support low income Bahrainis with small loans to start their own businesses.

Speaking on the occasion, Prince Talal congratulated Bahrain on becoming the first country in the Gulf to set up such a bank.

“This step reflects the firm determination of the leadership of Bahrain in addressing hard realities existing in the society with a visionary approach. I am confident that the bank will contribute in creating a rise in employment and improve the social and economic empowerment of Bahraini women,” he said.

According to a press release issued by the office of Prince Talal in Riyadh yesterday, the bank, with a capital investment of USD 5 million (Dh18.35 million), aims at helping 1,000 Bahrainis in its first year and 5,000 by the end of the second year of operation.

The bank’s capital is raised by the Agfund, the Housing Bank and Bahrain’s private sector. Prince Talal commended Bahrain for its positive response in implementing Agfund-financed development projects in the Kingdom.

“Launching of the bank for extending micro-credit to the low income people in the society was the real manifestation of Bahrain’s opening up to address its development problems.

This is not to be considered as sheer local problem in the wake of the global financial crisis that erupted for the first time in the US and started spilling over to other parts of the world,” the prince said in the statement.

Prince Talal noted that Agfund has embarked on the initiative of launching banks for extending micro credit to the poor with a strategic partnership with Bangladeshi Nobel laureate Professor Mohammad Younus, father of the Grameen Bank movement.

The European Bank for Reconstruction and Development (EBRD) is providing the micro finance institution Inicjatywa Mikro SP Z.O.O with a Euro 3 million-equivalent loan in z?oty to support the development of micro and small enterprises in Poland. The loan is supported by technical assistance funded by the European Commission.

Inicjatywa Mikro performs an important role in the micro enterprise sector in southern Poland, a region still suffering from the decline of the large state-owned mining and steel sector. For many former employees in these industries, starting up their own business is the only way forward, but access to finance has become even more difficult in the current global financial crisis.

A recent EU-sponsored study has found out that there remains a large demand for micro finance in Poland with only 3 percent of registered micro and small enterprises financed by the formal financial sector. Inicjatywa Mikro is focussing on this vital sector of the economy to help bridge this gap.

Lucyna Stanczak, EBRD Country Director for Poland, said. “The loan to Inicjatywa Mikro will lead to increased availability of finance to a crucial sector of the economy. The difficult market environment makes this more important and timely than ever. We are confident that the loans will help Poland’s entrepreneurial spirit blossom.”

Ian Townsend, CEO of Inicjatywa Mikro, added, “This loan will enable us to reach out to the micro finance sector from our seven offices in the south of Poland. The funds will ensure that finance is available to assist small businesses develop especially in the current financial climate. All of us at Inicjatywa Mikro are pleased to be working with the EBRD and the EU to develop the economy of cities, towns and rural areas in which we operate.”

Inicjatywa Mikro is member of Opportunity International, a network of micro finance institutions active in the EBRD region in Macedonia, Montenegro, Poland, Romania, Russia and Serbia. Operations in Poland started in 1996.

The financing comes under the EU/EBRD Preparatory Action Framework which supports micro and small enterprises in the new EU member states and aims to provide medium and long-term financing from the EBRD combined with technical assistance funded by the European Commission.

WASHINGTON , February 12, 2009 — The spreading global economic crisis is trapping up to 53 million more people in poverty in developing countries and, with child mortality rates set to soar, poses a serious threat to achieving internationally agreed targets to overcome poverty, the The World Bank Group said.

New estimates for 2009 suggest that lower economic growth rates will trap 46 million more people on less than USD 1.25 a day than was expected prior to the crisis. An extra 53 million will stay trapped on less than USD 2 a day. This is on top of the 130-155 million people pushed into poverty in 2008 because of soaring food and fuel prices.

These new forecasts highlight the serious threat to the achievement of the U.N.’s Millennium Development Goals (MDGs), which set specific targets by 2015 to overcome poverty. The new research shows that the sharply lower economic growth rates will significantly retard progress in reducing infant mortality. Preliminary estimates for 2009 to 2015 forecast that an average 200,000 to 400,000 more children a year, a total of 1.4 to 2.8 million, may die if the crisis persists.

“The global economic crisis threatens to become a human crisis in many developing countries unless they can take targeted measures to protect vulnerable people in their communities,” said World Bank Group President Robert B. Zoellick, who will be attending the meetings on Saturday. “While much of the world is focused on bank rescues and stimulus packages, we should not forget that poor people in developing countries are far more exposed if their economies falter. This is a global crisis requiring a global solution. The needs of poor people in developing countries must be on the table.”

In a policy note issued in the run up to the Group of Seven finance ministers meeting on Saturday, the World Bank said almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis and the remainder was moderately exposed, with less than 10 percent facing little risk.

The policy note, entitled “The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens”, said it was critical for exposed countries to finance job creation, the delivery of essential services and infrastructure, and safety net programs for the vulnerable. Yet three quarters of these countries cannot raise funds domestically or internationally to finance programs to curb the effects of the downturn. One quarter of the exposed countries also lacked the institutional capacity to expand spending to protect vulnerable groups. The note urges financial support in the form of grants and low or zero interest loans for these countries.

Zoellick has recently called for the establishment of a “Vulnerability Fund” in which each developed country devoted 0.7 percent of its stimulus package to the fund. Three priority areas for the Vulnerability Fund are: safety net programs, infrastructure investments, and, support for small and medium-sized enterprises and microfinance institutions.

Background on Recent World Bank Group Initiatives:
The World Bank Group has been stretching to offer expanded, innovative products and services to assist developing countries:

• Substantially increasing lending by the International Bank for Reconstruction and Development (IBRD): IBRD could make new commitments of up to USD 100 billion over the next three years. This year, lending could almost triple to USD 35 billion.
• Fast-tracking funds from the International Development Association (IDA): facility now in place to speed USD 2 billion to help poorest countries deal with the crisis. Money to be used for safety nets, infrastructure, education and health which is part of the USD 42 billion IDA15 fund for the poorest people.
• Food crisis response: Nearly USD 900 million is approved or in the pipeline to help developing countries cope with the impact of high food prices through a USD 1.2 billion food facility.

The IFC, an affiliate within the World Bank Group that focuses on the private sector, has launched new facilities to provide around $30 billion over the next 3 years and:

• Ensure trade flows. IFC plans to double its existing Global Trade Finance Program to USD 3 billion over a three year period and mobilize funds from other sources.
• Bolster distressed banking systems. IFC is putting in place a global equity fund to recapitalize distressed banks. IFC expects to invest USD 1 billion over three years, and Japan plans to invest USD 2 billion. The USD 3 billion fund, managed by the IFC, is a global equity and subordinated debt fund which aims to help recapitalize banks in smaller emerging markets.
• Keep infrastructure projects on track. IFC expects to invest at least USD 300 million over three years and mobilize at least USD 1.5 billion to provide rollover financing and recapitalize viable private infrastructure projects in financial distress. Germany has earmarked 100 million Euros for the facility. With additional funds from KfW Bank, the amount could grow to half a billion Euros.
• Support microfinance. IFC and Germany have launched a USD 500 million facility that will support microfinance institutions facing difficulties refinancing as a result of the global financial crisis. It will ensure that low-income borrowers in developing countries continue to have access to finance.
• Shift advisory support to help companies weather the crisis. IFC is refocusing advisory services programs to help clients cope with the crisis. It estimates a financing need of at least USD 40 million over three years.

To download the policy note, please click here