According to a 2005 World Bank study, entitled “Microfinance in Russia Broadening Access to Finance for Micro and Small Entrepreneurs”, a need exists for more microlending in Russia. It stated “small-scale entrepreneurship has emerged in response to the collapse of state-ownership and unemployment in the early 1990s. Small businesses typically lack adequate collateral and credit history, making them “unbankable” by the mainstream financial sector.“[1]

As of 2009, approximately 24.5 million out of the 142 million people [2] in Russia live below the poverty line. The poverty line is defined as those who make less than RUB 5,497 (USD 185) per month. [3]

In 2008, the Microfinance Information Exchange (MIX), and the RMC published a paper that analyzed the microfinance industry in Russia. The paper stated that the number of microfinance institutions (MFIs) had increased to approximately 2,000, serving nearly 700,000 customers (borrowers and savers). According to the RMC estimates, the aggregate offer of loans by non-bank MFIs totaled USD 625 million. Microfinance banks, such as KMB and Forus, in addition to programs from commercial banks supported by the European Bank for Reconstruction and Development (EBRD) had an aggregate portfolio estimated of USD 2 billion. [4]

As of 2007, the RMC had served approximately 400 banks and non-bank microfinance providers. It works with international organizations such as CGAP, SEEP, USAID, Citigroup, DAI Int., the World Bank, EBRD, the European Union, Barrick Gold Mining, the European Microfinance Network (EMN) and the Microfinance Center for central and Eastern Europe (MFC). The RMC Supervisory Board currently includes representatives of 22 major Russian microfinance institutions with a combined total loan portfolio of USD 170 million and about 120 thousand active customers. [5]

CGAP’s 2008 report “Eastern Europe and Central Asia Microfinance Analysis and Benchmarking Report” showed that in 2008, Russia received the smallest amount of donated funds in the region. Investors provided ninety-nine percent of the USD 3.5 billion while donors provided only one percent. [6]

The RMC’s mission is to support the microfinance sector in the Russian Federation while facilitating access to financial resources. It assists the microfinance sector’s interaction with government, the public, and investors. Additionally, it acts as a legal advocate for microfinance. The RMC also provides training and professional consulting services to microfinance institutions, while developing national microfinance standards.

The RMC’s 5 main goals are to 1) improve the legal and regulatory environment, taking into account the needs of all established forms of microlending; 2) develop industry support infrastructure to facilitate training and education of effective methodologies, within microfinance institutions; 3) develop national microfinance standards while improving transparency and investment interest in the industry; 4) facilitate information exchange to create a shared information infrastructure for microfinance in Russia; and 5) improve social and economic development through supporting microfinance programs across Russia.

RMC’s President, Mikhail V. Mamuta has worked in financial and lending services for Russian small businesses and microfinance since 1997. From 1997 to 2000, Mr. Mamuta worked for the Investments Committee of the Voronezh Regional Administration where he became director of business development. Since 2001, he has served as an industry expert for several Russian and international microfinance programs. He is the author of over 20 publications on physics, economics as well as microfinance and crisis management. He is also a President of the National Partnership of Microfinance Market Stakeholders (NAMMS) and a member of the Government Commission on SME Development and the Coordination Council at the RF Ministry of Finance on the legislation development for the microfinance and credit cooperation. He is involved in developing an all-inclusive financial system in Russia as well as drafting laws aimed at improving small business access to financial services. After completing university, he obtained a master’s degree in physics and a second degree in Finance, Lending, and Banking and has specialized training in crisis management.

The board of trustees consists of 11 members. Andrey Yemelin, Vice President of the Association of Russian Banks; Viktor Sedov, Executive Director of the US Russia Entrepreneur Center; Aleksander Lopukhin, Vice President of the Association of Regional Banks of Russia; Grzegorz Galusek, Executive Director of the Microfinace Center for Central and Eastern Europe and the New Independent States; Kendrick D.White, Managing Principal of Marchmont Capital Partners; Roman Simonov, Managing Director of Delta Private Equity Partners; Mark Robinson, President of Citibank, Russia; Yevgeniy Gorkov, Vice President of Russia Partners; Alexis Rodzyanko, Managing Director of Credit Suisse Private Banking; Kim Iskyan of Uralsib Financial Corporation, and Viktor Yermakov, General Director of the Russian Agency for Small and Medium Business Support.

RMC’s Partners:

ACDI/VOCA

Association of Credit Unions of Central Region

Association of Regional Banks of Russia (Association “Russia”)

Association of Russian Banks

Higher School of Economics

Development Alternatives Inc.(DAI)

European Microfinance Network (EMN)

Centurion Capital

Consultative Group to Assist the Poor (CGAP)

League of Credit Unions

Microfinance Information eXchange (MIX)

National Institute for System Studies of Entrepreneurship

National Union of Organizations of Financial Mutual Support

The Rural Finance Learning Centre

The Small Enterprise Education and Promotion (SEEP)

OPORA RUSSIA

Portal “OPORA-CREDIT”

PRISTAV Debt Collection Agency

Russian SME Resource Center

Russian Agency for SME Support

Rural Credit Cooperation Foundation

The Microfinance Centre for Central and Eastern Europe and the New Independent States (MFC)

Chita Oblast Fund for Small Enterprise Support

Irkutsk Oblast Fund for Small Enterprise Support

Voronezh Oblast State Fund for SME Support

Bibliography

[1] World Bank “Microfinance in Russia: Broadening Access to Finance for Micro and Small Entrepreneurs”

[2] http://en.wikipedia.org/wiki/Demographics_of_Russia

[3] http://www.guardian.co.uk/world/2009/aug/31/russia-economy-poverty-incre…

[4] http://www.themix.org/publications/2008-russia-microfinance-analysis-and…

[5] http://www.rmcenter.ru/en/

[6] http://www.cgap.org/gm/document-1.9.36440/2008%20Eastern%20Europe%20Cent…

Mongolia’s XacBank was cited as an example of an MFI that emphasizes savings as crucial to alleviating poverty and assisting in economic development. With only 30 percent of Mongolia’s 2.9 million people living outside of Ulanbataar [1], the nations urban capital, few have access to banking.

One of XacBank’s programs, “Future Millionaires” encourages families to open up savings accounts for their children at birth. The accounts pay high interest rates, however no withdrawals can be taken until the child reaches the age of 18. A minimum deposit of MNT 3,000 (USD 2.10) is required to open up the account. Deposits can be made at any time.

Another initiative by XacBank is a savings program backed by Women’s World Banking (WWB) and the Nike Foundation. [2] Started in 2008, the program encourages young girls to open savings accounts. XacBank works directly with the young girls to teach them personal finance at a young age. The program provides savings products, financial literacy and knowledge sharing to promote the economic empowerment of adolescent girls. [3]

Founded in 1998, XacBank provides small loans to yak herders, embroiderers, shoe shiners and others interested in starting a business. In 2008, XacBank assets grew 45 percent and its loan portfolio grew 48.5 percent to USD 106 million with a total of 63,000 loans. XacBanks portfolio at risk (PAR) was at 1.2 percent. The bank holds the highest rating from the Central Bank of Mongolia, and in 2008, Fitch assigned XacBank with a B+ rating. It has 76 branches and extensive mobile banking services. [4] For more information on XacBanks’ mobile banking initiatives please see MICROCAPITAL.ORG’s article [5].

Mercy Corps was founded in 1979. Since that time, they have given over USD 1.7 billion in relief and assistance in 107 countries. Over the last 5 years 89% of their resources have been directly allocated to programs. In 2008, they reported USD 1 billion in net assets and USD 244 million in revenue. [6]

WWB is a global network of 54 microfinance providers and banks, working in 30 countries to bring financial products and services to low-income entrepreneurs, especially women. The network serves 11 million microentrepreneurs directly, and another 14 million indirectly through its bank partners and other regional networks. In 2008, WWB held assets of USD 25 million and produced USD 8 million in revenues. [7]

The Nike Foundation is a U.S. non-profit organization supported by NIKE, Inc., that is dedicated to investing in adolescent girls for change in the developing world. In 2008, the Nike Foundation reported USD 22 million in assets. [8]

[1] http://en.wikipedia.org/wiki/Mongolia#Demographics

[2] http://www.swwb.org/node/522

[3] http://www.mercycorps.org/inthenews/16738

[4] XacBank 2008 Annual Report http://www.mixmarket.org/sites/default/files/medialibrary/20501.38/XacBa…

[5] http://www.microcapital.org/microcapitalorg-story-mongolia’s-xacbank-and-horus-noomadic-solutions-announce-launch-of-mobile-banking-services-for-microfinance/#more-3591

[6] Mercy Corps 2008 annual Report

http://www.mercycorps.org/sites/default/files/MercyCorps_AnnualReport2008.pdf

[7]http://www.swwb.org/files/SWWB_Financial_Statements_2007_08.pdf

[8] http://watchdog.net/ein/931159948/nike-foundation

According to the Renewable Energy & Energy Efficiency Partnership (REEEP), there are 76 million homes without electricity in India while 65 million rely on kerosene.

“Providing electricity is a government responsibility, but it’s a gigantic task and the government alone cannot do it,” said Shirish Garud, coordinator of REEEP in south Asia. [2]

The United Nations Environment Program’s (UNEP) study entitled “Global Trends in Sustainable Energy Investment 2009” showed that renewable energy investment in India grew by 12 percent (USD 3.7 billion) in 2008. The Indian government plans to grow the sector to USD 19 billion by 2012. Data on the amount contributed by MFI’s was not available. [3]

In 2006, Self Employed Women’s Association (SEWA) [4], partnered with India’s Solar Electric Light Company (SELCO) to create Project Urja in order to provide alternative power to the poor. The project was the result of a study commissioned by the United Nations Office for Project Services to SEWA and Mahila Housing SEWA Trust (MHT). The mission was to develop a microfinance strategy for consumer lending in the energy sector.

The study determined that, on average, households spent 3 to 4 hours per day and USD 8 either collecting or buying firewood. It concluded that the time and money spent on unreliable energy sources would be better spent on income generating activities. And as large numbers of women work from their homes, reliable power is essential to their livelihood. [5]

The loans allow women to purchase solar lanterns and smokeless gas stoves for cooking. Additionally, they are used to light up vegetable stands and tea stalls. [6] SEWA has already provided more than 6 million rupees (USD 124,000) in loans for solar appliances to approximately 10 percent of their 300,000 members.

SEWA was founded in 1972 as an organization of poor, self employed women. SEWA also launched a bank that lends to women and provides financial management. As of March 2008, the SEWA Bank had 300,000 savers, 22,000 borrowers and USD 25 million in total assets. Eighty percent of SEWA’s account holders reside in urban areas, while 20 percent reside in rural areas. For more information on SEWA, please see MICROCAPITAL.ORG’s Who’s Who in Microfinance article [7].

The Aryavart Gramin Bank has also expanded into renewable energy. It has already approved loans for 8,000 solar home systems in Uttar Pradesh, India’s most populated region and a key farming region.

Established in 2006, The Aryavart Gramin Bank, has 305 branches, six regional offices and a head office. The Bank operates in 6 districts namely Lucknow, Barabanki, Farrukhabad, Hardoi, Kannauj and Unnao in the state of Uttar Pradesh. As of 2008, it held USD 469 million in customer deposits.

And SKS Microfinance, India’s largest MFI, offers solar lamps to its 5 million customers. [8] Founded in 2006, SKS has loaned over USD 170,000 to approximately 600,000 women in India. It currently has 1200 branches in 15 states throughout India.

Traditionally, MFI’s have focused mainly on financial services. However, as Elizabeth Israel, a manager at Green Microfinance, a US for profit LLC that assists environmental and microfinance sectors, stated, “in the last few years, we have seen a tremendous influx of interest.” [9]

Bibliography

[1] http://www.indiamicrofinance.com/micro-finance/renewable-microfinancing

[2] http://tvnz.co.nz/technology-news/solar-power-lighting-rural-india-30957…

[3] http://switchboard.nrdc.org/blogs/sreddy/india_12_growth_in_renewable_e….

[4] http://www.microcapital.org/who’s-who-in-microfinance-ela-ramesh-bhatt/

[5] http://www.sewabank.com/energy-services-portfolio.htm

[6] http://ipsnews.net/news.asp?idnews=42725

[7] http://www.microcapital.org/who’s-who-in-microfinance-ela-ramesh-bhatt/

[8]http://www.khaleejtimes.com/DisplayarticleNew.asp?section=todaysfeatures&xfile=data/todaysfeatures/2009/October/todaysfeatures_October66.xml

[9] http://www.indiamicrofinance.com/microfinance/india-microfinance/renewab…