“Migrant Remittances: A Development Challenge”, Published by the African Development Bank Group, 2009. Available at: http://collab2.cgap.org//gm/document-1.9.34957/Migrant%20Remittances,%20a%20Development%20Challenge.pdf

This 85 page report presents the results of the African Development Bank (AfDB)’s 2007 extensive study on migrant remittances. The study involved a survey of emigrants from Morocco, Senegal, Mali, and the Comoros as well as beneficiaries in the countries. The African countries, while very different from one another, all have a French colonial background while the emigrants surveyed lived in France, Italy, and Spain. The study examines the use of remittances and preferences for various transfer mechanisms to ultimately present various challenges in dealing with remittances as well as a number of suggestions for how to improve the method and use of remittances. Among the suggestions is the recommendation that microfinance institutions (MFIs) expand or mobile banking services be offered, so that beneficiaries of remittances might readily access the transferred money through a formal mechanism. Remittances constitute a great volume of cash inflow to the countries surveyed, totaling between 9 percent of GDP in Morocco and 24 percent in the Comoros, or between 80 and 750 percent of the countries’ official development assistance (ODA). Continue Reading »

The Uganda Cooperative Alliance (UCA) has entered a dispute with members who claim that only collectives of individual cooperatives can join the UCA. The disgruntled member collective societies claim that the UCA is accepting and favoring newer individual cooperatives rather than manage the existing collectives. The collective societies have submitted a business plan to the government to claim the USD 16 million allotted to the UCA for building the infrastructure of cooperative societies. A representative of the collectives and chairman of the Uganda National and District Unions Association, Erisa Ngereza, comments, “We want this money as a loan, while Uganda Cooperative Alliance wants it as a grant.” The UCA has criticized the ineffectiveness and corruption of the older collectives, seemingly preferring to move forward with fresher projects. The State Minister for Micro Finance, Caleb Akandwanaho, advised both parties, “If you do not end the wrangles, no financier nor government would give you money. We need to see willingness in organizing yourselves more than when you are presenting proposals and demands.” The UCA, founded in 1961, works with many types of cooperatives in areas of agriculture, manufacturing, and microfinance through Savings and Credit Cooperative Societies (SACCOs). Continue Reading »

Peace Microfinance Bank of Nigeria is still seeking licensing from the Central Bank of Nigeria (CBN) to become a state microfinance bank. In preparation, Peace raised USD 6.75 million (Naira 1 billion) in share capital by December 2008. According to the Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, this is the minimum paid-up capital necessary for a state microfinance bank. Furthermore, a state bank must operate in two-thirds of the local government areas in the state of operations. These requirements are part of 2005 reforms in Nigeria’s microfinance sector, further discussed in this MicroCapital story. Currently, Peace operates primarily in the Federal Capital Territory (FCT) of Nigeria, a small area in the center of the country that includes the capital city of Abuja. Presumably, this is the area in which Peace intends to operate as a state bank. Continue Reading »

Citibank, N.A. Bangladesh is arranging and fundraising for a loan of USD 21.74 million for the microfinance institution (MFI) BURO Bangladesh. The loan, meant exclusively for agricultural microloans, will be distributed amongst the sectors of crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation. BURO will also distribute the loan through other non-governmental organizations in the country. In April 2009, a MicroCapital story discussed BURO’s intention to raise USD 14.5 million for its agricultural loans through Citibank. BURO, a Bangladeshi non-profit founded in 1990 and operating 393 branches in 48 districts, has won the CGAP/The World Bank Financial Transparency Award in 2005, the Institute of Chartered Accountants of Bangladesh National Award for Best Published Reports and Accounts annually from 2004 to 2006 as well as the South Asian Federation of Accountants Award for Best Published Reports and Accounts in 2005. Continue Reading »

“The Miracle of Microfinance? Evidence From a Randomized Evaluation”, by Abhijit Banerjee, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan, Published by CGAP, May 2009. Available at: http://collab2.cgap.org//gm/document-1.9.34827/The%20miracle%20of%20micro%C2%85nance.pdf

This study, claimed by the authors to be the first randomized evaluation on the effects of microfinance, comes to the pessimistic conclusion that microfinance has only a small effect on the fortunes and almost no effect on the lifestyles of poor people after the opening of a microfinance institution (MFI) in their neighborhood. In this case, the term randomized refers to the random selection of 52 of 104 similar poor areas as locations for new branches of the MFI Spandana in the Indian city of Hyderabad. Dubbing the randomly selected areas with microfinance the “treatment” group and the areas without microfinance the “comparison” group, the authors distributed a survey amongst an average of 65 households in each area fifteen to eighteen months after the openings of the branches. The authors ultimately find that there is some difference, albeit not a major difference, in business profit and consumption patterns between households in treatment and comparison areas. Continue Reading »

A new private Credit Reference Bureau (CRB) has been established by the African credit information company Compuscan in Rwanda. Compuscan will compile and share credit information about borrowers between banks and non-bank financial institution. The National Bank of Rwanda (BNR) has approved a three year contract with Compuscan to provide credit information to financial institutions within the country. Michael Malan, managing director of Compuscan, comments, “The principle of data reciprocity will apply. Users of data will be required to share data in order to view data ensuring fairness for all.” In 2009, the World Bank “Doing Business” Survey gave Rwanda’s credit information system a “2″ out of a possible high score of “5″. Continue Reading »

Swedish company Investment AB Kinnevik has committed to investing USD 10 million in MicroVest II , an equity fund focusing on microfinance and part of the microfinance investment group MicroVest Capital Funds. Additionally, Kinnevik announced the acquisition of 30 percent of shares worth USD 4 million in an Ukrainian farming company. Henrik Persson, Head of New Investments at Kinnevik, comments, “”Micro financing and farming are focus sectors for new investments in Kinnevik and we are pleased to have identified investments within these growth areas.” In October 2007, MicroCapital reported that Kinnevik invested USD 14 million in the African microfinance institution (MFI) Bayport Financial Services. Continue Reading »

The EBRD has granted a EUR 25 million (USD 34.9 million) loan to each of two leasing subsidaries of Poland´s third largest bank and fourth largest leasing company, Bank Zachodni WBK. The subsidiaries, BZ WBK Leasing and BZ WBK Finance & Leasing, , provide medium- and long term lease financing to Polish small and medium enterprises (SMEs). Lucyna Stanczak, EBRD Director for Poland, commented“The loans will play an important role in keeping up leasing financing to SMEs outside the large cities at a time when funds are needed more than ever.” MicroCapital has also reported on EBRD´s February 2009 loan of USD 3.8 million to Inicjatywa Mikro, a microfinance institutuion (MFI) in Poland. The loan was directed towards micro and small Enterprise (MSE) development. According to the EBRD, only 3 percent of registered micro and small enterprises are financed by mainstream financial institutions. Microleasing, a new area of exploration for the EBRD, can allow business owners to use equipment without investing in its purchase. A list of past EBRD microleasing projects can be found here. Continue Reading »

Event Name: Achieving Scale and Sustainability in Enterprise Development Initiatives

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events

Summary of Event: This online conference will discuss the sustainability of enterprise development programs around the world. A key component is the review of case studies. Continue Reading »

In May 2009, Bellwether Microfinance Fund, a private equity fund based in Hyderabad, India, reported a USD 479,600 equity investment in Equitas Micro Finance India, a Chennai based microfinance institution (MFI), to the CGAP Microfinance Dealbook, the monthly report on microfinance market transactions. The deal was denominated in local currency. MicroCapital has reported on a May 2009 USD 3.7 million investment by MicroVentures in Equitas as well as a securitization worth USD 3.0 million in March 2009. Continue Reading »

The Global Partnerships Microfinance Fund 2008 (GP MFF 2008), a member of the Global Partnerships family of funds, reported three investments in April 2009 to the CGAP Microfinance Dealbook, the monthly report on microfinance market transactions. Equadorian microfinance institutions (MFIs) FODEMI and Fundacion D-MIRO each received USD 500,000 in debt while Peruvian MFI Asociacion Benefica PRISMA received USD 750,000 in debt. MicroCapital previously reported on the launch of the GP MFF 2008 in November 2008. Continue Reading »

Zurich Bolivia, a unit of Zurich Financial Services, and the microfinance bank BancoSol of Bolivia have partnered to offer insurance to Bolivian emigrants in Spain. The insurance comes in four different plans. The first plan, requiring a premium of USD 57, covers 10,000 dollars in case of death due to any cause and the return of the body to Bolivia. The second plan, requiring an annual premium of USD 86, offers the same benefits, as well as home expenses for the family for one calendar year. The third plan, requiring a premium of USD 100, covers the return of the body to Bolivia and the cost of education for two children up to USD 300 per year per child. The fourth plan, requiring a premium of USD 129, includes all of the above benefits. Continue Reading »

Indian companies Tata Housing Development Company Ltd., a subsidiary of the massive Tata Group, and the Micro Housing Finance Corporation (MHFC) have partnered to offer low cost housing. While Tata Housing will facilitate construction of the residential complex Shubh Griha, MHFC will provide long term micro mortgages to approved applicants. The cost of the homes ranges from USD 8,300 to USD 14,200. According to India´s Ministry of Housing and Urban Poverty Alleviation, there is a housing shortage of about 24.7 million units in the country, with 99 percent of this shortage pertaining to low income households. Continue Reading »

PlaNet Finance United Arab Emirates (PlaNet Finance UAE), a unit of the France-based microfinance support organization the PlaNet Finance Group, plans to launch a microfinance institution (MFI) in the Sultanate of Oman. The MFI, a joint stock company, is also supported by the Oman-based Ajit Khimji Group, MB Holding Company, and the private philanthropist Mr. Samir Fancy. The Omani Ministry of Social Development is also supporting the project. The as-yet-unnamed MFI is currently referred to by PlaNet Finance as the “Greenfield MFI”, “Greenfield” being the generic term for new business ventures. Information on the ownership of the MFI is not yet available. PlaNet Finance UAE is currently working on the legal structure of the MFI. The MFI needs an initial investment fof USD 3.4 million and a USD 15 million concessionary and commercial loan for three to five years to finance portfolio growh. There are donors who have approved the business plan of the new MFI, but amount of current investment and the amount committed by each donor is not publicized. Once established, the MFI will offer one-year loans between USD 800 and USD 4,000. Continue Reading »

A conference on the challenges of microfinance in Lebanon was recently held at Beirut’s Haigazian University, The general manager of microfinance institution (MFI) Ameen, Ziad Halabi remarked, “….only 28.4 percent of the market has been served, so we still have a gap of 71.6 percent in the market.” According to a 2008 study published by the International Finance Corporation (IFC) and Grameen Jameel Pan Arab Microfinance Ltd., microfinance in Lebanon has a potential customer base of 190,000 clients. Mr. Halabi added that Ameen grew 40 percent in 2008, adding 35 staff members and that 1,000 more staff is necessary to reach the potential clients. Continue Reading »