This six day seminar will focus on measuring MFI performance, identifying the appropriate risk management systems, gaining access to additional funding sources, and preparing MFIs for future challenges.  The target audience consists of managers working for commercial banks engaged in microfinance, transformed MFIs, investment funds or other commercial organisations active in microfinance.
 
The facilitators for the seminar will be:
 
Joachim Bald – Mr. Bald  is a highly accomplished consultant and trainer and serves on a large portfolio of short-term assignments for the International Advisory Services at Frankfurt School.  Liquidity, interest rate risk, and foreign exchange rate risk are his key areas of expertise. Working with MFIs in Uganda, South Africa and Kazakhstan, Joachim has had great success in applying bank treasury concepts to the microfinance environment. Joachim also has extensive experience with microfinance funds and apex structures from his role as the Chief Technical Advisor to the Rural Housing Loan Fund in South Africa, his involvement with the JAIDA fund in Morocco and as a financial modeling advisor to the European Fund for Southeast Europe (EFSE).  His professional history also includes international banking with Commerzbank AG in Frankfurt, Oregon State University in Corvallis where he served as international faculty, Deutsche Börse systems, the IT subsidiary of the German Stock Exchange and Eurex, the international derivatives market.   He has also served Vice President and Managing Director of the US subsidiary of the exchange in Chicago; being responsible for operating the electronic futures and options trading platform for the Chicago Board of Trade. Today, he continues as an occasional management consultant for the German Stock Exchange in Chicago and Frankfurt.  Mr. Bald holds a German MBA, a doctorate in Economics and is also a US Certified Management Accountant.  His publications include a dissertation and articles on the Russian economic transformation process, Treasury Management and Liquidity Management manuals developed for the Frankfurt School as well as a forthcoming study on core deposit supply behavior in low-income banking for CGAP.

Christian Rühmer – Mr. Rühmer has been a part of the Micro Banking Summer Academy faculty since its 2000 inception.  He is currently a Managing Director at WestLB, a European commercial bank. He is the head of the Investment Management Unit/Credit Investments -New York which oversees an Investment Portfolio of EUR 20 billion. Before joining WestLB, Mr. Rühmer worked for 14 years at Deutsche Bank in various locations, ending as a Director of the Loan Exposure Management Group in New York. He is a Chartered Financial Analyst (CFA) and a Financial Risk Manager (FRM). He has been involved in microfinance since 2000 and has his own consulting company, Perfect Point Partners srl.(PPP) in Bolivia.  His areas of specialty are Efficiency Management and Risk Management. 

The cost of the session is EUR 3000.  Fees include all training materials, full board accommodation, social program, and transportation to and from the airport.  The number of participants is limited to 30 and applicants will be selected in an effort to create a class of participants with complementary experiences and backgrounds.  April 24, 2009 is the last day to register online.  For additional information about the Commercial Micro Banking seminar, contact Maria Johansson at m.johansson@frankfurt-school.de.

This six day seminar will focus on management practices for smaller MFIs.  The target audience consists of managers of non-bank MFIs and central bankers and staff members of apex institutions who want to gain insights in successful MFI management.  The seminar uses real life case studies to facilitate the various discussions. 

The following topics will be covered:

• Change Management and Human Resources – How do MFI managers respond to the resistance to change within the organization?  Important aspects of human resources will be addressed, including staff recruitment, training and coaching, staff assessment and incentives.
• Operational Management – Tools for product development and marketing will be presented.  Strategies for managing credit and operations risks, including how traditional commercial banking practices can be applied in microfinance, will be covered.
• Financial Management – Two days will be dedicated to this crucially important topic.  The facilitator will focus on gaining access to additional capital and liquidity.  Another important part of the sessions will focus on profitability management, achieving adequate levels of return, and measuring and improving MFI performance.
• Transformation – The advantages and disadvantages of transforming MFIs into banks. 

The facilitators for the seminar will be:
 
Helmut Grossman – Mr. Grossman is a senior microfinance expert and trainer with a focus on rural and agricultural lending.  He studied International Agriculture Development at the University of Kassel.  He has served as an instructor at the Institute for Technical and Further Education, Cairns, Australia, and he has also worked for German Technical Cooperation as an advisor for the People’s Bank of Sri Lanka.  He has been with Frankfurt School of Finance & Management since 2004.  During that time he has had short term assignments in many countries: Georgia, Moldova, Turkey, Cameroon, Namibia, Cambodia, Bangladesh, Nepal, and India.
 
Ganhuyag Ch. Hutagt – Mr. Hutagt is currently serving as the CEO of XacBank and XAC-GE Group, the parent company of XacBank.  He also serves as the Chairman of X.A.C. Foundation and Chairman of the Board of Directors of th enewly founded MIC – Mongolian Mortgage Corporation.  XacBank is the product of a merger between Goviin Ekhlel LLC and X.A.C. At the time of the merger, Hutagt was serving as the Executive Director of XAC.  Prior to that, Mr. Hutagt served as the Operations Manager of UNDP’s MicroStart Pilot Project, a member of Mongolia’s Central Bank’s Supervision Division, and a floor supervisor at the Mongolian Stock Exchange.  He is a 1997 graduate of the Budapest University of Economic Sciences.  Since 2005, he has been in the Business Advisory Council to the President of Mongolia.
 
Maria Ekström Johansson – Ms. Johansson joined Frankfurt School of Finance & Management in 2004.  In addition to her involvement with the Summer Academy, she functions as trainer and project manager for Frankfurt School. Her recent assignments include training for Savings and Credit Associations in Moldova, microfinance training for commercial banks in Sudan, and training for a commercial bank active in microfinance in Macedonia.
 
Olga Tomilova - Ms. Tamilova currently works as a CGAP Consultant for Europe and Central Asia.  She has over 12 years of experience in microfinance management, finance, consulting and research.  Prior to joining CGAP, she spent two years managing the Central Asia Microfinance Center, a joint project of the Microfinance Centre for CEE and the NIS (MFC) and CGAP in Kazakhstan.  She worked at the MFC for 4 years as manager of the training and consulting department. Prior to that she worked as a researcher for a microfinance project of Harvard University in Russia, and in two microfinance institutions in Russia – as executive director for Russian Women’s Microfinance Network in Moscow and accountant and assistant to finance manager for Opportunity International in Nizhny Novgorod, Russia. She has a degree in history, social sciences, and applied sociology from Nizhny Novgorod State University in Russia and holds a certificate of the professional accountant. She speaks English and Russian.

The cost of the session is EUR 3000.  Fees include all training materials, full board accommodation, social program, and transportation to and from the airport.  The number of participants is limited to 30 and applicants will be selected in an effort to create a class of participants with complementary experiences and backgrounds.  April 24, 2009 is the last day to register online.  For additional information about the MFI Management seminar, contact Maria Johansson at m.johansson@frankfurt-school.de.

Microfinance Credit Guarantee Facility (MCGF)
 
This facility will provide incentives to banks and development financial institutions (DFIs) to provide funds to microfinance institutions which will then be used to provide credit to the MFI’s borrowers.  Lenders will lend to the MFIs at the State Bank of Pakistan policy discount rate plus 2 percent.  The incentives include a guarantee on repayment of 40% of the funds provided by banks and DFIs to MFIs.  In addition to the guarantee, banks and DFIs may deduct the funds loaned to MFIs from their demand and time liabilities when calculating their statutory liquidity and the cash reserve requirements for regulatory purposes.  GBP 10 million in grant funds from the UK Government Financial Inclusion Program will be used to help make up the guarantee fund.  SBP plans to leverage the guarantee fund several times, thereby increasing the amount of funds that can be brought in from the formal banks under the guarantee program.
 
Institutional Strengthening Fund (ISF)
 
Again using GBP 10 million from the UK Government Financial Inclusion Program, the objective of the Institutional Strengthening Fund is to increase the capacity of MFIs by providing grants for them to make advances in their human resources, management, governance, internal controls, business development, cost reduction mechanisms, product innovation, and technology implementation. 
 
The ISF is capped at $1 million per year per recipient, and is subject to at least a 25 percent matching grant from the recipient.  With good performance and resubmission of their proposal, MFIs may be recipients of grants several years in a row.  The fund will primarily focus on institutions that are already regulated, or are in the process of seeking a license, or have solid plans for restructuring in the near future.   
 
Improving Access to Financial Services (IAFS)
 
This fund also is designed to enhance the capacity of MFIs with the additional goal of promoting financial literacy.  The fund was established with a USD 20 million endowment from the Asian Development Bank (ADB) supported Improving Access to Financial Services Program.  In addition to promoting an increase in capacity in many of the same ways as the ISF, the IAFS places some added focus on increasing capacity in remittances and Islamic financial services.  It will also train government and regulatory authorities on supporting the development of an inclusive financial system.  It will also enable financial services providers to provide financial and basic literacy programs to their clients and prospects.

The State Bank of Pakistan was inaugurated by Quaid-i-Azam Muhammad Ali Jinnah in 1946 as the central bank of Pakistan and was nationalized in 1974. The scope of the bank’s operations increased from its original mandate “to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage” to its expanded mandate in 1956, to “regulate the monetary and credit system of Pakistan and to foster its growth in the best national interest with a view to securing monetary stability and fuller utilisation of the country’s productive resources”. Total assets in 2008 stood at Rs 1.05 trillion (USD 13.3 billion).  The SBP and the Government of Pakistan have set a goal increasing the number of microfinance borrowers to three million by the end of 2010, and to ten million by 2015, as documented in the national Microfinance Strategy adopted in 2007.

Microcapital reported on the Financial Inclusion Programme when it was established in September 2008.  The program is a joint scheme between the State Bank of Pakistan and the UK Department for International Development (DFID).  The program allows banks to provide wholesale credit to microfinance institutions for onward disbursement to microcredit borrowers in rural areas against the larger credit enhancement of the SBP.  The DFID is the department responsible for Britain’s poverty-reduction efforts worldwide and is participating in the FIP as part of its aim to achieve the Millennium Development Goals set by the United Nations in Pakistan. The program will focus on financing for micro and small enterprises during the first year, then gradually focus on low-income housing and rural finance. 
 
Headquartered in Manila, Philippines, the Asian Development Bank (ADB) is an international development finance institution whose mission is to help its developing member countries reduce poverty and improve the quality of life of their people.  Pakistan has received about $18.59 billion in loans since joining ADB in 1966.  The lending program in 2007 was a record that included almost $2.0 billion in loans and $20.2 million for technical assistance grants.  ADB is working with the Pakistani government and the private sector to improve the country’s infrastructure, energy security, and basic public services.  Aligned with national development objectives, ADB’s partnership priorities aim to attract investment, create champion industries and jobs, and improve the quality of life of citizens.

By Iyanna Holmes, Research Assistant
 
Additional Resources:
 
Asian Development Bank:  Asian Development Bank and Pakistan, 2008 Fact Sheet
 
CIA World Factbook:  Pakistan/Economy
 
Government of Pakistan Finance Division: Poverty Reduction Strategy Paper (PRSP) – II
 
MicroCapital Story: January 26, 2009, Revamping Pakistan’s Microfinance Sector: Government Reveals Aggressive Goals in Second Poverty Reduction Strategy Policy Paper; September 15, 2008, State Bank of Pakistan (SBP) Partners with DFID in Diversifying Agrocredit and Extending Access to Microfinance in Rural Regions

The MicroFinance Gateway:  New Credit Guarantee Facility for Pakistani MFIs Launched
 
State Bank of Pakistan:  Home, Maintenance of Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR)
 
Symbiotics: The State Bank of Pakistan Launches Three Microfinance Development Funds

FEBRUARY 4, 2009, 4: 30PM

LECRAW AUDITORIUM, GEORGIA TECH COLLEGE OF MANAGEMENT, 800 WEST PEACHTREE STREET NW, ATLANTA, GA, 30308

The Georgia Tech Institute for Leadership and Entrepreneurship presents Deborah Burand of the University of Michigan Law School.  This event is free and open to the public.  Immediately following the presentation, join Women Advancing Microfinance (WAM) Atlanta for a reception from 5:30pm – 6:30pm to meet the speaker and network with WAM members.

About the Speaker

Deborah Burand recently joined the faculty of the University of Michigan Law School to direct the launch of the International Transactions Clinic, a training ground for highly qualified lawyers who gain experience in representing their clients in an increasingly globalized world.  Ms. Burand’s history in microfinance includes serving as the Executive Vice President, Strategic Services, of Grameen Foundation and co-founding Women Advancing Microfinance (WAM) International, an organization that supports the advancement of women in microfinance through education and training.  She also sits on the investment committee of a $75 million microfinance investment fund managed by Deutsche Bank, and on the Advisory Council of MicroVest, a specialized fund investing in microfinance.

Prior to entering the microfinance industry, Burand worked in both the public and the private sectors.  She spent five years at the Federal Reserve Board where she was a senior attorney in the international banking section of the legal division, and three years with the U.S. Treasury Department as the senior attorney for international monetary matters.  In the private sector, Ms. Burand practiced with Shearman & Sterling, a New York law firm, during which time she provided pro bono support to Conservation International and represented bank advisory committees in restructuring the sovereign debt of Brazil, Peru and Vietnam, among others.

Ms. Burand earned her B.A., cum laude, from Depauw University and a joint graduate degree, JD/MSFS with honors, from Georgetown University.  In 1993-1994 she was an International Affairs Fellow of the Council on Foreign Relations.  During her fellowship she was seconded to the International Monetary Fund and the European Bank for Reconstruction and Development. She now is a member of the Council on Foreign Relations.  She also is a member of the bars of New York and the District of Columbia.

Funding and Refinancing Risks
 
The report outlines the main sources of wholesale funding for the MFI sector as: 1) wholesale funding from development finance institutions (DFIs), socially-motivated funders, and to a lesser extent customer deposits and 2) commercially orientated public and private sector funding.  While the first category of funding is usually counter-cyclical, MFIs access to commercial funding has been reduced and become more expensive when it is available.  This has led to increased levels of refinancing risk, although, the level of financing constraints varies by region.  For example, Fitch notes that eastern Europe, central Asia, and the Balkans are experiencing tighter funding constraints than central and Latin America.  Fitch raises the concern that from an operational standpoint, some MFIs may not be prepared to deal with these challenges.
 
Changing Growth Dynamics
 
The short-term nature of microcredit and the cash flow that is generated by repayment is a positive in this environment.  However, as MFIs begin to use their cash flow in order to meet debt obligations, Fitch feels that lower growth scenarios for 2009 are very likely.  High double-digit growth rates which were commonplace in past years, are expected to fall to single-digits or low double-digit growth rates.  Fitch feels that key to the MFIs success is its ability to manage this lower growth, for example, explaining to new or existing customers that new loans are not available due to funding constraints.  This prospect raises yet another risk: one key incentive to the microcredit borrower of repaying a loan is the promise of a larger loan, for better terms, in the future.  If the borrower perceives that this incentive no longer exists, MFIs could incur higher loan defaults.  A higher percentage of non-performing loans in the portfolio would no longer be able to be distorted by rapid loan growth.  A rapidly growing loan portfolio has the ability to distort the ratio of non-performing loans to total loans as the denominator grows from period to period and diminishes the relative significance of the numerator.  Fitch also notes the increased potential for currency-induced credit risk in countries where sharp local currency devaluations could also negatively affect asset quality if loan have been granted in hard currency.
 
Financial Performance
 
Fitch expects that lower lending volumes, higher funding costs, deteriorating asset quality, currency risk, and hedging losses will all negatively affect the financial performance of MFIs.
 
The report speculates that MFIs will use this time of lower growth to tighten lending and liquidity management procedures as well as build capacity.  Additionally, MFIs may choose to refocus on their core lending activities and abandon attempts to diversify into other products such as consumer loans.  Despite all of this, the Fitch report cites one case study, the Bolivian financial crisis of 2000-2002, which indicates that while asset quality and financial performance may initially deteriorate in line with the broader financial system, MFI borrowers tend to bounce back more quickly than borrowers of traditional commercial banks.  This is primarily because microentreprenurs are able to adapt their economic activity more quickly than the traditional commercial bank borrower.  Also, as unemployment levels in the formal economy grow, so does the demand for the non-traditional financial services that MFIs provide.

MICROFINANCE PRINCIPLES
 
JULY 3-5, 2009

DB TRAINING CENTER, BAD HOMBURG, GERMANY

The weekend seminar will discuss the key success factors of microfinance institutions as well as how to assess the performance of an MFI.  The seminar utilizes real MFI case studies to facilitate the discussions.  Participants will walk away with an understanding of good practices in modern microfinance and latest trends in the industry.  The first day will cover the needs of microfinance clients, suitable financial products, different lending technologies, and the credit cycle management.  The second day will be dedicated to learning how to analyze the financial statements of MFIs and calculate key ratios for performance assessment.
 
The facilitators for the seminar will be:
 
Helmut Grossman – Mr. Grossman is a senior microfinance expert and trainer with a focus on rural and agricultural lending.  He studied International Agriculture Development at the University of Kassel.  He has served as an instructor at the Institute for Technical and Further Education, Cairns, Australia, and he has also worked for German Technical Cooperation as an advisor for the People’s Bank of Sri Lanka.  He has been with Frankfurt School of Finance & Management since 2004.  During that time he has had short term assignments in many countries: Georgia, Moldova, Turkey, Cameroon, Namibia, Cambodia, Bangladesh, Nepal, and India.
 
Ms. Maria Ekström Johansson – Ms. Johansson joined Frankfurt School of Finance & Management in 2004.  In addition to her involvement with the Summer Academy, she functions as trainer and project manager for Frankfurt School. Her recent assignments include training for Savings and Credit Associations in Moldova, microfinance training for commercial banks in Sudan, and training for a commercial bank active in microfinance in Macedonia.
 
The cost of the session is EUR 800.  Fees include all training materials, full board accommodation, social program, and transportation to and from the airport.  April 24, 2009 is the last day to register online.  For additional information about the Microfinance Principles seminar, contact Maria Johansson at m.johansson@frankfurt-school.de.

MARCH 26-28, 2009

TUFTS UNIVERSITY, THE FLETCHER SCHOOL, A GRADUATE SCHOOL OF INTERNATIONAL AFFAIRS

MEDFORD, MASSACHUSETTS

Savings-led microfinance has arisen as a surprising alternative to credit-led microfinance. Despite the growth of the sector, savings-led microfinance still lacks common principles, consensus on methods of sustaining and scaling groups and evidence of impact. In response to these unanswered questions, The Fletcher School is hosting a two day event, followed by an optional third day, to discuss topics such as the following:

• The evidence of the impact of savings groups on the lives of households living in difficult geographic areas
• The links between savings groups and the formal financial system – successes and failures in connecting groups to banking and insurance services
• Methods used by non-governmental organizations and banks to increase the number of groups and ensure performance quality
• The integration of savings groups into their development sectors such as water, health, agriculture, environmental protection, land tenure initiatives, and education.

The conference is being sponsored by the Bill and Melinda Gates Foundation and Oxfam America. The full schedule of events can be found here and while there is no cost to attend the event, registration is required. Registration may be completed online. For additional information, please contact Stacy Neal at stacy.neal@tufts.edu.

Samhita Community Development Services (SCDS) will be the first group to benefit from the new product.  SCDS is an organization that primarly serves poor, rural women in the Madhya Pradesh district.  Under the terms of the agreement, 13,356 SCDS members will be covered for a cumulative amount of over Rs 7 crore, approximately USD 205,000.  The policy covers the lives of the group members as well as protection from loan liabilities in the event of the death of the primary bread-winner
 
Launched in March 2008, IDBI Fortis Life Insurance Co. Ltd., is a joint venture between IDBI, an Indian development and commercial bank, Federal Bank, an Indian private sector bank, and Fortis, a European financial services provider.  IDBI owns 40% of the equity of the joint venture and Federal Bank and Fortis own 26% each.  Products are distributed through the IDBI and Federal Reserve Bank branches as well as through IDBI Fortis’ network of insurance advisors.
 
Samhita Community Development Services is an incubator for specialized development initiatives, exclusively targeting disadvantaged and dispersed populations. Based in Rewa district of Madhya Pradesh, the network’s mission is to deliver economic and primary health services on a fast-track basis and at scale, supported by its common appropriate technology platform. Samhita’s economic service offerings to poor households address 3 levels – through microfinance, micro-enterprises and web-enabled common markets.  SCDS does not report to MIX Market, the information clearinghouse for microfinance institutions.
 
By Iyanna Holmes, Research Assistant
 
Additional Resources:
 
IDBIFortis.com
 
MoneyControl.com:  December 16, 2008, IDBI Fortis Life Insurance Launches Group Microinsurance Plan

MicroCapital reported on Incofin’s launch of the Rural Impulse Fund in August 2007.  At December 31, 2008, the fund had USD 31.5 million in invested assets.  The fund aims to increase the supply of rural microfinance by extending commercial funding and strengthening the financial structure of MFIs that have successfully provided financial services to the rural poor and proved themselves to be financially sustainable.  MFIs are selected on the basis of a methodology that measures the presence of the MFIs’ points of sales in rural areas.  As of December 31, 2008, the largest geographic concentrations in the fund were in Bosnia and Herzegovina, Kyrgyzstan, Georgia, and Bolivia.  The fund is made up of 81 percent debt, 11 percent equity, and eight percent quasi equity investments.  Its primary investors include the Belgian Investment Company for Developing Countries (BIO), the European Investment Bank (EIB), the Netherlands Development Finance Company (FMO), the International Finance Corporation (IFC), and a group of private investors (KBC Private Equity, Incofin, MRBB, Volksvermogen, CERA, and BRS). 

Established in 2001, Asomi fits the Rural Impulse Fund’s profile.  Asomi has grown from less than 4,000 borrowers in 2005 to over 30,000 reached through 40 branches today.  When Asomi reported to MIX Market in March 2008, the company had generated a 3.97 percent return on assets and a 109.4 percent return on equity. 

Incofin was founded in 1992 and is currently a co-operative company (with limited liability) with social objectives.  Currently Incofin supports 64 MFIs in 27 countries and manages USD 160.7 million across all of its funds. 

By Iyanna Holmes, Research Assistant

MICROCAPITAL STORY: August 15, 2007, Incofin Announces Creation of Rural Impulse Fund, an Investment Fund to Target Rural Microfinance; BIO, EIB, IFC, FMO Invest

MIX Market Profile: Asomi; Incofin; Rural Impulse Fund

Symbiotics: Incofin Has Realized its First Equity Participation in India in Asomi, the Leading MFI in the State of Assam (North-Eastern India)

In addition to increasing funding and the number of MFIs that receive funding, SIDBI is also planning to open specialized branches that will focus on MFIs in seven locations of the country.  Speaking at the Orissa State Policy Conclave Kirpal Singh, general manager of SIDBI  supported the need for the expansion by saying that, “MFIs in the country are largely concentrated in the southern states with the eastern region showing trends of growth.  The northern and western states as well as the North-Eastern region are underserved as far as MFIs are concerned.”

SIDBI is a state bank that was established in 1990 under the Small Industries Development Bank of India Act of 1989.  SIDBI serves as the principal financial institution for the promotion, financing, and development of small scale industry.  MicroCapital has covered its partnership with Industrial Credit and Investment Corporation of India (ICICI) as well its investments in SKS Microfinance.  At September 30, 2008, total assets stood at Rs 219 billion, approximately USD 4.3 billion.  In 1999, SIDBI launched the SIDBI Foundation for Micro Credit (SFMC) in order to channel funds to the poor. 

By Iyanna Holmes, Research Assistant

Additional Resources:
 
Business Standard:  SIDBI to Give Rs300cr to MFIs
 
MicroCapital Story: Small Industries Development Bank of India (SIDBI) Makes over $220,000 Microfinance Equity Investment in SKS Microfinance

SIDBI.com