SMERA is a ratings agency that focuses primarily on Micro, Small & Medium Enterprises (MSMEs) in order to facilitate flows of credit from the banking sector. Given their experience assessing MSMEs, the growth in the number and relevance of MFIs in the local economy, and the heightened interest of international funds in the microfinance sector, SMERA has launched a new MFI Rating service.

SMERA-MFI Rating is an independent agency that will provide assessments of the risk involved in the underlying portfolio of an MFI, as well as its social impact. SMERA will evaluate the creditworthiness, trustworthiness, operational excellence, quality of loans, internal governance, strategic positioning, and social profile of participating MFIs. The rating process includes submission of data by the applicant, followed by a site visit and interaction with management. The final rating – on a scale from MF1 to MF8 – is undertaken by a Rating Committee.

SMERA is supported by the Small Industries Development Bank of India (SIDBI), which was established in 1990 to promote and finance the development of small-scale industries in India. In 1999, the SIDBI Foundation for Micro Credit (SFMC) was launched as a wholesaler for microfinance in India, providing a range of financial and non-financial services such as loan funds, grants, equity and institution building support to MFIs in order to facilitate their development into financially sustainable entities. SFMC also plays a significant role in advocating appropriate policies and regulations and to act as a platform for exchange of information across the sector. The SFMC has supported previous initiatives to rate MFIs, such as the Capacity Assessment Rating [CAR] to judge risk perception in the microfinance sector, and commissioned ratings of MFIs to Micro-Credit Ratings International Limited (MCRIL) and Credit Rating and Information Services of India Limited (CRISIL).

Dun & Bradstreet (D&B), established in 1841, is a provider of business information for risk management, sales & marketing, and supply management decisions worldwide. D&B’s commercial database contains more than 140 million business records, covering over 190 countries. SMERA-rated MFIs will be allotted a D&B D-U-N-S Number and will be featured in D&B’s Global Database. Such profiling of SMERA’s MFI Ratings is expected to enhance credibility of MFIs within the banking sector, social investing and other similar institutions.

SMERA-MFI Rating is being sold as an important tool for banks, financial institutions and other market participants to undertake investment or funding decisions, validating data submitted to investors and lenders. The rating will also help MFIs to enhance management and internal operations, and achieve better resource and asset allocation. On both sides, the ratings will allow for industry-wide benchmarking.

By Jaclyn Berfond, Research Assistant

Additional Resources:

India PR Wire: SME Rating Agency of India launches Microfinance Institutions Ratings

SMERA: MFI Rating Product Info Sheet

SIDBI: Homepage

D&B: Homepage

The Microfinance Banana Skins 2009 survey explores the risks, or “Banana Skins,” facing the microfinance industry at a time when the global financial crisis has raised new and unfamiliar challenges. The report, the second in the series, describes the risks seen by an international sample of practitioners, investors, regulators and observers of the sector. The survey was conducted in April and May 2009 and is based on 430 responses from 82 countries and multinational institutions.

The key finding of the survey is that the economic crisis has completely transformed perceptions of the microfinance risk landscape. MFIs, their investors, and regulators are now focusing on credit risk, liquidity, and global economic trends, in contrast to the top three concerns from 2008 – management quality, corporate governance, and inappropriate regulation.

Of the 25 risks ranked, the top five Banana Skins identified this year include:

1. Credit Risk. Rising from the number 10 spot in the 2008 survey, the emergence of credit risk – the risk of loss when loans are not repaid – as the top Banana Skin is representative of the new challenges facing the industry in the wake of the financial crisis. In the past, the microfinance industry was known for its excellent repayment record, but a combination of stressful economic conditions – economic slowdown, rising unemployment, and volatile commodity prices – and structural change within the industry – where competition among MFIs has led to an erosion of standards, including a shift from group lending to riskier individual lending – has greatly increased concern about default and loan loss. Credit risk was in the top five risks identified by all respondent categories, and dominated geographical responses – excepting Africa and Asia.
2. Liquidity. Having enough cash available to make loans and meet deposit withdrawals is today seen as one of the most significant risks to the sector, rising from number 20 in last year’s survey. With banks already cutting lines because of the credit crunch, and the fear that depositors could lose confidence and pull out, liquidity risk could affect MFIs’ business prospects and financial strength. The risk was geographically widespread, and ranked high among all respondent categories.
3. Macro-economic Trends. Many respondents said that MFIs could no longer claim to be insulated from shocks in the “real economy,” a sharp change in attitude from the last survey when macro-economic trends were ranked number 23. Respondents saw microfinance being hit by rising unemployment, worsening bad debts, falling remittances, and declining investor and depositor confidence. Respondents from all regions – except Asia – put this risk in their top five, with practitioners and investors most concerned.
4. Management Quality. Concern about management quality fell from the number 1 position in the 2008 survey, both because it was overtaken by more urgent risks and because there was the perception of progress due to an influx of talent and a drive to raise quality. Of note, respondents in Africa still ranked management quality as the number 1 risk.
5. Refinancing. One of the top concerns for investors, refinancing risk addresses the danger that MFIs may not be able to renew their base funding from investors or donors because of changes in their circumstances or the stresses of the economic crisis. Investor nervousness is a direct consequence of mounting financial pressures on MFIs: the growth of loan delinquency and operating losses, the slowdown in new business, and worries about liquidity. If funding dries up, MFIs’ prospects could get even worse, and there is a real concern that these risks could exacerbate one other.

Other top risks identified include too little funding (6), corporate governance (7), foreign currency (8), competition (9), and political interference (10). Depositor confidence (21), back office operations (22), ownership (23), product development (24), and too much funding (25) were seen as the least important risks facing the industry.

The final part of the survey asked how prepared MFIs were to handle these risks. Only 5 percent of respondents thought they were well prepared, and 13 percent thought they were poorly prepared. This is a more negative result than the 2008 survey when 27 percent said “well” and only 5 percent said “poorly”.  While many respondents thought that MFIs had been lulled by good times into thinking that the global economic crisis would not affect them, some respondents stressed the traditional resilience of the microfinance in facing these challenges. This sentiment was echoed by CGAP’s CEO Elizabeth Littlefield who said; “This year’s Banana Skins survey highlights cracks and fissures in microfinance that have surfaced with the global economic crisis. But, the sector is basically healthy, with strong fundamentals and a solid, reliable, and growing client base. Tackling immediate concerns about credit risk and liquidity is important, but remaining focused on longer term issues of strong management, governance, and asset and liability management capacity remains crucial for the future.”

The authors of the Microfinance Banana Skins 2009 survey, however, summed up the tone of the report as “ominous.”

By Jaclyn Berfond, Research Assistant

The Inter-American Development Bank (IDB), established in 1959 by the Organization of American States, lends money, provides grants and research, and offers technical assistance and advice to small businesses, central governments and city authorities in 26 countries throughout Latin America and the Caribbean (LAC). Since 1959, the IDB has approved USD 168 billion for projects, mobilizing more than USD 375 billion in investments. The IDB has 48 member countries, with the LAC countries holding 50.02 percent of the voting power. The single largest shareholder is the United States, with 30.01 percent.  The IDB finances both public and private sector projects in the region.

The investment in CIDRE was made through the IDB’s Multilateral Investment Fund (MIF), which was established in 1993 to promote economic growth through private sector development, particularly microenterprises and small businesses. The MIF currently has 38 donating member countries from LAC, North America, Europe and Asia. MIF projects typically fund private financial institutions, such as banks, cooperatives, MFIs or NGOs, who can then on-lend the resources to the benefit of micro and small businesses. Since its inception, the MIF has approved more than 1,000 projects, primarily grants, with over 800 civil society, private sector, and government partners, putting USD 2.2 billion to work in all 26 developing countries of the IDB.

Read more about a recent initiative by the IDB and MIF to fund credit risk ratings and performance assessments for small MFIs in LAC in this MicroCapital story. For a review of the MIF’s investments in LAC in March and April 2009, see this MicroCapital article.

CIDRE is a Bolivian MFI, established in 1981, which works in the regions of Cochabamba, North Potosi, Oruro, Santa Cruz, Valles Alto, Bajo and Tarija. According to the MIX Market, the microfinance information clearing house, CIDRE had 4,198 active borrowers, a gross loan portfolio of USD 10.2 million, total assets of USD 13.4 million, a debt-to-equity ratio of 2.35, an ROA of 2 percent, and an ROE of 5.8 percent as of December 2008.

The USD 2 million loan from the MIF will allow CIDRE to expand and strengthen its loan portfolio. The USD 150,000 grant for technical assistance will go toward CIDRE’s transition into a regulated MFI under the supervision of the Bolivian Financial Superintendency (SBEF). The SBEF, created under the Bolivian General Law on Banking and Financial Institutions of 1993, issues periodic regulatory updates, including one on the “Regulation and Supervision of Microfinance Institutions in Bolivia.”  This update outlined requirements for MFIs operating in Bolivia such as a specific credit rating scheme, mandated reporting to credit bureaus, and transparency on conditions of loans, interest rates, charges and fees. The SBEF monitors MFIs through financial records/indicators, as well as on-site inspections of the MFI with regard to quality of information, governance, risk assessment and loan portfolio.

By Jaclyn Berfond, Research Assistant

Additional Resources:

IDB Project: Rural Productive Credit and Microsavings in Bolivia

MIF: Homepage

MIX Market: Homepage

Center For Financial Inclusion: Summary of Client Protection in Bolivia

MicroCapital Story: Inter-American Development Bank’s Multilateral Investment Fund (MIF) and Corporation Andina de Fomento (CAF) Back Ratings For Microfinance Institutions

MicroCapital Story: The Multilateral Investment Fund (MIF) invests USD 10.1m, including USD 1.6m in Microfinance, in Latin America and the Caribbean during March and April 2009

The microfinance sector in Tajikistan has been growing at an unprecedented rate, with the number of active borrowers nearly tripling in the last two years (read more in this MicroCapital Story). Yet, as a result of the financial crisis and liquidity constraints, many Tajik banks have been unable to provide new loans to customers. The EBRD estimates that there are over 500,000 micro and small enterprises (MSEs) currently operating in Tajikistan, which are particularly affected by the lack of access to credit. Upon its launch in late 2009, AccessBank Tajikistan will provide much needed lending to these MSEs. The bank will offer both business micro-loans and agribusiness loans, and they plan to later expand to offer products including micro-leasing, microinsurance, and credit cards. To facilitate access to finance for entrepreneurs in rural areas, AccessBank will develop a strong regional presence in Tajikistan and plans to open 17 branches outside of the capital.

Access Microfinance Holding AG (AccessHolding) is a commercial microfinance holding company that invests in microfinance institutions (MFIs) through equity finance and holding services.  AccessHolding also provides management services through their technical partner LFS Financial Systems GmbH (LFS). Since its inception in August 2006, AccessHolding has invested in four microfinance banks – AccessBanque Madagascar, AccessBank Azerbaijan, AccessBank Tanzania, and AB Microfinance Bank Nigeria Ltd. The establishment of AccessBank Tajikistan is representative of AccessHolding’s investment philosophy; with a 50.5 percent stake in the new bank, AccessHolding is a strategic investor that “shapes and controls investee companies.” Currently a Joint Stock Company under German law, AccessHolding aims to become a parent company of a global network of microfinance banks with a common brand identity.

The EBRD, founded in 1991 and headquartered in London, is an international financial institution that supports private sector development in central Europe and central Asia. The EBRD promotes microfinance through its Micro, Small and Medium Business Program, and since it was established has provided more than EUR 14.8 billion (USD 20.8 billion) to support micro, small and medium-sized enterprises. In the past two years alone, the EBRD has dedicated over USD 1 billion to microfinance programs; read more in this MicroCapital story. The EBRD has invested USD 2 million in AccessBank Tajikistan, for an 18 percent stake in the new company. This brings EBRD’s total investment in the Tajik financial sector to EUR 54 million (USD 76 million).

The IFC, a member of the World Bank Group, provides investments and advisory services to build the private sector in developing countries. The IFC has taken an 18 percent stake in AccessBank Tajikistan, with an investment of USD 2 million. Alongside the start-up capital, IFC will also provide advisory services to support the capacity building phase of the project. The IFC has participated as a founding shareholder in over 20 microfinance banks; read more about IFC investments in microfinance in this MicroCapital story.

KfW is a development bank that finances investments on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). KfW has invested USD 1.5 million in AccessBank Tajikistan, for a 13.5 percent stake. KfW supports microfinance through its Financial Sector program activities, promoting over 100 microfinance projects in 60 developing or transition countries. Read more about KfW’s investments in the sector in this MicroCapital story.

By Jaclyn Berfond, Research Assistant

Additional Resources:

EBRD Press Release: EBRD boosts microfinancing in Tajikistan

IFC Summary of Proposed Investment: AccessBank Tajikistan JSC

Access Microfinance Holding AG: Homepage

MicroCapital Story: European Development Finance Institutions Part 1: European Bank for Reconstruction and Development (EBRD) Invests Over USD 1 Billion in Microfinance Initiatives Since 2007

MicroCapital Story: International Finance Corporation (IFC) Invests over $514m in Micro Small and Medium Enterprise (MSME) Initiatives During 2008

MicroCapital Story: European Development Finance Institutions Part 2: KfW Entwicklungsbank Remains One of the Largest Global Investors in Microfinance

The CGI was established in 2005 by U.S. President Bill Clinton to convene global leaders from all sectors to devise and implement innovative solutions to some of the world’s most pressing challenges. Since 2005, CGI Annual Meetings have brought together more than 100 current and former heads of state, 14 Nobel Peace Prize laureates, hundreds of leading CEOs, heads of foundations, major philanthropists, directors of nongovernmental organizations (NGOs), and members of the media. CGI members have made more than 1,400 commitments valued at USD 46 billion in the areas of education, energy & climate, global health and poverty alleviation. The CGI community also includes CGI University, a forum to engage college students in global citizenship, CGI Asia, and MyCommitment.org, an online portal where individuals can make their own Commitments to Action.

For the Fifth Annual Meeting, CGI is introducing four new Action Areas – points of collaboration and intervention – that will guide CGI’s program. These Action Areas allow CGI members to make concrete Commitments to Action – to plan and launch specific projects to address the global economic, environmental, and social challenges discussed. The 2009 Action Areas include Harnessing Innovation for Development, Strengthening Infrastructure, Developing Human Capital, and Financing a Sustainable Future.

The Financing a Sustainable Future program explores “impact investing” – investment opportunities which aim to generate financial returns in addition to social and/or environmental value.  The sessions will not only look at microfinance as an attractive investment, but will also look at finance opportunities in health, clean energy, housing, small and medium-sized enterprise, and microinsurance.

The Clinton Global Initiative has included microfinance in its Annual Meeting program for several years. At the 2008 Annual Meeting, participants discussed the need for a diversity of financial instruments beyond credit, such as savings and insurance (including crop, life, and health insurance), as well as innovations in the delivery mechanisms for financial services, including ATMs, mobile phones, and online terminals. Speakers included: Christopher Crane, President and CEO of Opportunity International;?Elizabeth Littlefield, Chief Executive of CGAP; Maria Otero, President and CEO of ACCION International; Fazle Abed, Founder and Chairperson of BRAC; Sylvia Matthews Burwell, President of the Global Development Program at the Bill & Melinda Gates Foundation; Julio Frenk, Senior Fellow at the Bill & Melinda Gates Foundation; James Mwangi, Managing Director and CEO of Equity Bank Limited; and?Robert E. Rubin, Director and Senior Counselor of Citigroup Inc. and Former U.S. Secretary of the Treasury.

Commitments to Action that came out of the 2008 Annual Meeting included a USD 25 million commitment by Habitat for Humanity to mobilize capital for housing finance, a commitment by Root Capital to triple its lending to microenterprises from USD 41 million to USD 121 million in the next five years, a USD 15 million commitment by ACCION International to unite the microfinance industry around core principles of consumer protection, a commitment by Oxfam America and Swiss Reinsurance Company to launch a pilot for weather index insurance in Ethiopia for USD 335,000, and a USD 1.5 million commitment by 51Give – an online microfinance lending platform – to establish a financing mechanism for student loans. While progress updates are available for many of the commitments made, CGI does not track the total investments made in microfinance.

In his closing remarks for the 2008 CGI Annual Meeting, Bill Clinton praised microfinance as a viable investment alternative amid turbulent markets; read more in this MicroCapital story.

By Jaclyn Berfond, Research Assistant

Additional Resources:

Clinton Global Initiative: Homepage

MicroCapital Story: Bill Clinton Extols Microfinance Amid Global Credit Crisis at 2008 Clinton Global Initiative Summit

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

Cost: (Registration after June 19, 2009)

Standard Price:
£1695 for Three Days
£1295 for Two Days

African Delegate:
£847.50 for Three Days
£647.50 for Two Days

The conference fee includes 3 course lunch, refreshments and full conference documentation. The fee does not include travel expenses or hotel accommodation.

Summary of Event: The Mobile Banking & Financial Services Africa conference includes a variety of workshops, case studies and interactive discussion sessions to examine how mobile operators, banks, microfinance institutions (MFIs), payment specialists and solutions vendors are developing and launching products and services for a variety of market environments and customer segments. Addressing pan-African concerns, the program will examine the business models, technical infrastructure, security and regulatory issues associated with supporting mobile banking, mobile money transfers (remittances), mobile and contactless payments, and microfinance (including micro-lending, disbursements, and insurance).

Background on Organizers:
The Mobile Banking & Financial Service Conference was organized by IRR, a knowledge and skills transfer company that specializes in conferences and trainings. IRR Telecoms & Technology London provides strategic telecommunications conferences.

Associate Sponsors of the event include Belgacom ICS and Clickatell. Belgacom International Carrier Services (Belgacom ICS) is a global carrier of voice, data and value added services to over 500 wireless, wireline and service providers. Belgacom has sales offices in Brussels, Bern, Dubai, Singapore and New York, and was awarded Best Wholesale Carrier at the World Communications Award 2009. Clickatell offers mobile messaging services to businesses, governments and communities, specializing in bulk messaging services and SMS gateway connectivity.

The conference is endorsed by Smart X central intelligence, a professional association of private and public sector end-users, solutions providers and consultants in the smart card, RFID, and related emerging technologies industry. World membership exceeds 500 companies in the UK, Africa and the Asia Pacific regions. The aim of Smart X is to make its members aware of the developments taking place in the industry both in South Africa and internationally.

Media Partners for the event include Africa & Middle East Telecom Week, African Banker, Balancing Act, BuddeCom, CardWorld, Developing Telecoms, Global Platform, IAMTN, IT Edge, MBendi, MicroCapital, Microfinance Insights, Mobile-Financial, Mobile World, ReConnect Africa, Southern Africa Wireless Communications, and Telecompaper.

Event Themes and Discussion Topics:
Pre-Conference Workshops:

• Understanding the Impact of the Growth of Mobile Internet on Mobile Payments in Africa
• Examining Developments in Contactless Payments and Ticketing in South Africa
• Developing and Launching a Profitable Mobile Remittance Service

Conference Sessions:

• Examining How a Traditional Retail Bank Designed and Delivered a Mobile Banking Business Model: An FNB Cellphone Banking Case Study
• Developing a Mobile Banking Business Model to Successfully Meet the Demands of the Banked, Under-banked and Unbanked
• Designing and Implementing a Low-Cost, Mobile-Based Community Banking Service in South Africa – A Standard Bank Case Study
• Understanding the Implications of the New E-Money Position Paper – A Regulator’s Perspective on E-money and Related Emerging Payment Technologies in South Africa
• Examining the Impact of the Regulatory Environment on Mobile Banking and Payments Innovation in Africa
• Enabling Mobile Money Transfer Across Borders – Taking Advantage of the Opportunities
• Examining Opportunities for Intra-Regional, Borderless Networks: Supporting Interoperable Mobile Money and Airtime Transfers
• Examining the Expansion of the M-PESA Model to Tanzania
• Examining New Forms of Mobile Payment Mechanisms – Leveraging Existing Payment Infrastructure to Support New Services
• Understanding the Impact of the Convergence of the Telecoms and Financial Services Industries on Prepaid Mobile Services
• Developing a Viable Mobile Micro Finance Business Model – Examining Opportunities for the Mobile and Microfinance Industries
• Developing a Solid Business Case for Enhancing Your Value Added Services (VAS) Portfolio With a Mobile Payment Offering
• Utilising the Mobile Channel to Help Tackle Debit and Credit Card Fraud in South Africa – Understanding How the Mobile Can Be Used as Part of a Two-Factor Authentication Process
• Managing Perception and Reality to Assure the Security of Mobile Banking Services

Presenters:

• Richard Ketley, Director, Banking Strategy Practice, Genesis Analytics
• Johan van Wyk, Managing Director, TripSWITCH
• Len Pienaar, CEO Mobile and Transact Solutions, First National Bank
• Adrian Vermooten, Head of Mobile, Digital Channels, ABSA Bank
• Brett Cronje, Director, Community Banking, Standard Bank
• Dave Mitchell, Head, National Payment System Department, Reserve Bank of South Africa
• Frederic Schepens, EVP Strategic Business Development, Belgacom ICS
• Craig Kilfoil, Senior Specialist Consultant, ExactConsult
• Jacques Voogt, Head of Department, Financial Services, Vodacom Tanzania
• Dave Parratt, Business Development Executive, MTN MobileMoney
• Aristide Ngalani, Mobile Money Marketing Manager Tr., MTN Cameroon
• Nick Essame, Head of Innovative Payments – Sub Saharan Africa, Visa
• Tom Wills, Senior Analyst, Security, Fraud & Compliance, Javelin Strategy & Research

Online Registration Address: http://www.iir-events.com/IIR-conf/Telecoms/EventReg.aspx?EventID=2134

Call: +44 (0) 20 7017 7483
Email: registrations@iir-telecoms.com

Submit Your Event: http://microfinanceassociation.ning.com/events

For additional information, please contact:
Customer Services
Tel: +44 (0) 20 7017 7483

For Group Discounts, contact:
Anthony Streeter
Tel: +44 (0) 20 7017 7145
Email:astreeter@iir-conferences.com

For Speaker Opportunities, contact:
Mindy Emsley
Tel: +44 (0) 1273 330 097
Email:memsley@iir-conferences.com

For Sponsorship and Exhibition, contact:
Damon Thompson
Tel: +44 (20) 7017 5002
Email:dthompson@iir-conferences.com

Event Type: Conference
Event Starts: July 20, 2009
Event Ends: July 22, 2009
Location: Southern Sun Grayston Hotel, Johannesburg
Website: http://www.iir-events.com/IIR-conf/Telecoms/EventView.aspx?EventID=2134
Phone: +44 (0) 20 7017 7483
Organized By: IIR

Grama Vidiyal (GV) was founded in 1992 by Activists for Social Alternatives (ASA), a non-profit organization working with marginalized communities in Tamil Nadu.  In 1997, GV became an independent organization, offering microfinance services based on the Grameen model – providing collateral free credit to poor women organized in small groups at the village level. Grama Vidiyal Microfinance Ltd. (GVMFL), a private limited liability company, was formed to allow GV to transform from a Public Charitable Trust to a Non-Banking Financial Company (NBFC). A part of the funds raised will be used to meet the enhanced capital adequacy requirements set by the Reserve Bank of India (RBI) to obtain an NBFC license.

According to the MIX Market, the microfinance information clearinghouse, GV had 224,000 active borrowers, a gross loan portfolio of USD 28.7 million, total assets of USD 30.8 million, a debt-to-equity ratio of 5.45, an ROA of 1.63 percent, and an ROE of 15.3 percent as of March 2008. In the past year, they have expanded to reach 400,000 women with a loan portfolio of over USD 40 million. GV plans to use the increased capital to expand beyond its work in six districts to operate in all districts of Tamil Nadu. Read more in this MicroCapital story.

MicroVest Capital is a private microfinance investment firm – founded by CARE, MEDA, and the Seed Capital Development Fund – that provides financial capital to MFIs. MicroVest’s first fund, MicroVest I LP, had placed more than USD 80 million in debt and equity investments with 37 MFIs in 16 countries through February 2009.  The investment in GV came from MicroVest II, MicroVest’s newly launched equity fund, which invests in Tier 1 MFIs. No information was provided on the exact amount contributed by each investor, nor the valuation of the equity holdings.

The Unitus Equity Fund (UEF) is a private equity fund established in 2006 by Unitus, Inc., an international non-profit organization, in order to encourage the development of a commercial equity market. Unitus Inc. and the UEF, which is managed by Elevar Equity LLC, are separate legal entities. Established with USD 23.6 million, the UEF offers commercial debt and equity to MFIs. Unitus Capital was established in 2008 by Unitus, Inc. to provide financial advisory services for MFIs and other social enterprises. Unitus Capital was the advisor for the GV equity raise.

The AMAR Foundation is a non-profit private foundation founded in 1987 by Vinod and Neeru Khosla. The foundation provides support to a variety of organizations that focus on education and microfinance. Vinod Khosla is a venture capitalist who was one of the co-founders of Sun Microsystems and a general partner at venture capital firm Kleiner, Perkins, Caufield & Buyers.  Vinod Khosla and Unitus both contributed capital – totaling USD 3.7 million – during GV’s first round of fundraising in May 2008. Read more in this MicroCapital story.

By Jaclyn Berfond, Research Assistant

Additional Resources:

VC Circle: A Tamil Nadu MFI Gets $4.25M From MicroVest, UEF, Vinod Khosla

Unitus Capital: Grama Vidiyal Equity Raise (Jun ’09)

MicroCapital Story: Microfinance Institution Grama Vidiyal Plans to Raise USD 9.7 Million in Private Equity

MicroCapital Story: Indian Microfinance Institution Grama Vidiyal Microfinance (GV) Plans Expansion and Receives USD 3.5 Million from Unitus Equity Fund and Vinod Khosla

Formed in 1984 as the Wisconsin Coordinating Council on Nicaragua, WCCN originally focused on political activism and aid to Nicaragua. In the 1990s, WCCN redirected its mission toward social and economic development issues and partnered with the Nicaraguan Council of Protestant Churches (CEPAD) to fund a microfinance institution. Today, WCCN provides financing to 15 MFIs in Nicaragua, and is expanding lending to Guatemala, El Salvador, and Honduras. To complement its microfinance activities, WCCN also pursues initiatives on women’s empowerment, housing, and fair trade.

WCCN’s main project is the Nicaraguan Credit Alternatives Fund (NICA Fund), which channels funds from socially responsible investors to partner microfinance agencies. Currently, the NICA Fund has USD 9.2 million in loans outstanding to its partner MFIs, reaching over 16,000 low-income Nicaraguan borrowers. NICA Fund Notes were recently made available on MicroPlace.com, as described in this MicroCapital story.

Through the NICA fund, WCCN has offered a loan of USD 355,000 to the Cooperativa de Servicios Multiples 20 de Abril R.L. (The April 20th Cooperative), an MFI operating in the remote rural area of Quilalí, Nicaragua. The April 20th Cooperative offers both financial and non-financial services including storage and marketing assistance, savings, life insurance policies, as well as loans for housing, agricultural production, and small businesses. According to the MIX Market, the microfinance information clearinghouse, the April 20th Cooperative has a gross loan portfolio of USD 12.5 million, serving 10,270 clients.

WCCN has also offered a USD 175,000 loan to Cooperativa San Antonio (CSA), an MFI working in the remote areas of eastern Nicaragua. CSA offers financial services, as well as technological training and assistance to 821 borrowers, with a total loan portfolio of USD 1.6 million (as of December 2006). CSA does not report to the MIX Market. Both two-year loans were offered at 10 percent interest.

By Jaclyn Berfond, Research Assistant

Additional Resources:

CGAP Microfinance Dealbook

Working Capital for Community Needs: Homepage

MicroCapital Story: MicroPlace Offers Online Microfinance Investment in Nicaraguan Credit Alternatives Fund issued by Working Capital for Community Needs with Interest Rates up to 6 percent

The new license comes under the Kenyan Microfinance Act that came into effect in May 2008. The Microfinance Act allows the Central Bank to license, regulate and supervise “deposit-taking microfinance businesses” – defined as institutions that provide loans or other facilities to micro or small enterprises and low income households, and that receive money by way of deposits or interest on deposits. Previously, MFIs could issue loans but were not allowed to take money from the public. Faulu was one of ten MFIs to submit a formal application to become a deposit-taking institution. CBK Governor Ndung’u has said that the other applications are in various stages of the approval process, to be completed by year-end. Read more about Kenya’s Microfinance Act in this MicroCapital story.

Faulu Kenya was founded as a pilot micro-enterprise lending program of Food for the Hungry International (FHI), a relief and development organization based in Geneva, Switzerland. The Faulu Loan Scheme began in Nairobi in 1992, and Faulu Kenya became a limited liability company – a 70 percent owned subsidiary of FHI – in 1999. FHI also operates microfinance programs through its affiliates Faulu Uganda Limited and Faulu Tanzania.

Today, Faulu Kenya has 87 branches serving over 220,000 clients with a gross loan portfolio of Ksh 3.4 billion (USD 437 million).* Faulu Chairman Ken Wathome has announced that the new deposit-taking services will allow Faulu to expand.  They hope to reach 1 million customers by 2011, offering both credit and savings products.

The new licenses are part of a push on the part of the Kenyan government and the CBK to expand access to financial services, as well as promote a culture of saving in Kenya. Read about proposed amendments to Kenya’s Banking Act to enhance the regulatory framework for MFIs and mobile banking technology in this MicroCapital story.

By Jaclyn Berfond, Research Assistant

*Note: Faulu Kenya does report to the MIX Market, the microfinance information clearinghouse, however the information was outdated.  More recent financial information was available on Faulu’s website here.

Additional Resources:

Bloomberg: Kenya to License Nine Deposit-Taking Micro Lenders by December by Eric Ombok

Daily Nation: Faulu licensed to take deposits by Mwaniki Wahomep

Kenya Broadcasting Corporation: CBK licences Faulu Kenya to receive deposits

Central Bank of Kenya: Microfinance Act

Faulu Kenya: Homepage

MicroCapital Story: Kenya’s Microfinance Act to Come into Effect

MicroCapital Story: M-Banking 2009 Conference in Nairobi Showcases Promise to Enhance Kenya’s Banking Regulations Towards Microfinance Institutions and Mobile Banking Technology

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

Cost:
Online Registration:
USD 45 – MBITA members
USD 60 – Non-members

At the Door:
USD 55  – MBITA members
USD 70 – Non-members

Summary of Event: This conference will explore recent trends in Socially Responsible Investing (SRI) and microfinance. Leaders in the microfinance field will present on new investment vehicles that realize returns while promoting economic development.

Background on Organizers:
The Monterey Bay International Trade Association (MBITA) is a non-profit organization that promotes international business and trade in the greater Monterey Bay region.

Trade Port is an information resource for businesses conducting international trade to and from California. It is owned by the Bay Area Council Economic Institute and the Los Angeles Area Chamber of Commerce, and managed by MBITA.

Global California is an online portal that connects the trade-related services provided by public and private organizations in California. It is managed by MBITA and the San Fernando Valley International Trade Association (VITA).

The Monterey Institute of International Studies is a graduate institute and research center that focuses on international policy, translation and interpretation, teaching languages, and international business. It is affiliated with Middlebury College.

Event Themes and Discussion Topics:

• The Basic Components of a Socially Responsible Company
• Microfinance & Socially Responsible Investing (SRI): How Do the Two Intersect?
• Micro Enterprise Development: A Potent Tool for Stimulating Local Economies
• SRI-Building a Global Standard with the United Nations Global Compact and Principles for Responsible Investment
• Integrating Social-Responsibility into For Profit Economic Development
• Emerging or Just Merging: Is Social Investing a Brave New World or More of the Scary Old World?
• Women and Global Poverty: How Microlending Can Enhance and Sustain their Livelihood
• Social Investing, Then and Now
• Addressing Global Warming Through Innovative Energy Policy and Business Participation
• The New Socially Responsible Asset Class: Peer-to-Peer Lending in America

About the Presenters:

• Almaz Negash, Managing Partner & Founder, Entwine Global
• Charles V. Fishel, Chairman & Chief Executive Officer, Abundant Biofuels Corporation
• Chris Larsen, Chief Executive Officer & Co-Founder, Prosper Marketplace
• Claudia Viek, Chief Executive Officer, California Association for Micro Enterprise Opportunity (CAMEO)
• Conrad MacKerron, Director, Corporate Social Responsibility Program, As You Sow Foundation
• Lloyd Kurtz, Senior Portfolio Manager, Nelson Capital Management, Wells Fargo Bank
• Mehul M. Thakker, Investment Advisor, Progressive Asset Management-FWG
• Rupert Ayton, Chairman & Co-Founder, Center for the Development of Social Finance (CDSF)
• Sanjay Sinha, Deputy Chief Financial Officer, Micro Credit Enterprises (MCE)
• Scott Secrest, Financial Advisor, Natural Investment, LLC

Important Dates: Register online by June 24, 2009.

Online Registration Address: http://www.suretomeet.com/exec/gt/event_pb.h,event=ab3bedbb691a

For additional information, please call the MBITA office at 831-335-4780 or email cristina@mbita.org

Submit Your Event: http://microfinanceassociation.ning.com/events

Event Type: Conference
Event Date: June 26, 2009
Location:  Irvine Auditorium, Monterey Institute of International Studies (MIIS)
499 Pierce Street
Monterey, CA 93940
Website: http://www.mbita.org/events/socialinvesting.html
Phone: 831-335-4780
Organized By: Monterey Bay International Trade Association