The United Nations’ International Fund for Agricultural Development will provide USD $27 million in debt capital to support the expansion of microlending activity in Nigeria, with the goal of creating a sustainable rural financial system in the West African nation. Co-financed with nonprofit Ford Foundation, the financing aims to build ties between Nigerian MFIs and formal financial institutions in twelve Nigerian provinces. While Nigerian MFIs currently provide services to a variety of demographics, IFAD hopes that the capital infusion will particularly improve access to financial services to women, young people, and other marginalized groups. It is unclear whether IFAD’s financial assistance will be allocated to a Nigerian government agency such as central bank, or if it will be allocated directly to MFIs operating in-country. Continue Reading »

Mexican microfinance giant Banco Compartamos recently announced that it has officially reached the milestone of providing microlending services to one million active clients. Continue Reading »

Originally reported by Bangladesh’s The Financial Express, it appears that an increasing number of MFI clients in Bangladesh are not utilizing disbursed microloans to support planned microenterprises, instead using loans to cover the rising cost of food. A product of the 2008 world food shortage, in many countries rapid increases in food prices have not been accompanied by a comparable increase in wages, causing MFI clients to fill their budgetary gaps with microloan funds. Continue Reading »

Sa-Dhan, India’s largest association of microfinance institutions recently announced it would host a policy forum bringing together key stakeholders of Indian microfinance to conceptualize an expansion plan for microfinance in India’s eastern provinces. The two-day policy forum, titled “Breaking the vicious cycle of poverty: synergy between micro-finance and livelihood,” will examine the current state of microfinance in eastern India, particularly the states of Orissa and West Bengal, and identify the key challenges that impede regional growth there. Continue Reading »

Findings from a recent public health study suggest that the provision of microfinance and business training services to impoverished women were associated with a significant reduction in risk behaviors for HIV contraction. The study monitored the effects of IMAGE (Intervention with Microfinance for AIDS and Gender Equity), a research-oriented microfinance program that is co-administered by nonprofit MFI Small Enterprise Foundation and the university-sponsored RADAR research initiative. Essentially, the study’s findings suggest that the economic empowerment women derive from a microenterprise is capable of severing a financial dependence on their husband, a circumstance which frequently prevents women from negotiating safer methods of sexual intercourse. Unprotected sex amongst married couples is particularly risky in some societies, because extra-marital affairs are socially-acceptable and a common occurrence among married men. Continue Reading »

Indian microlender Equitas Microfinance recently announced it successfully raised RUP 500 million (USD 12.5 million) in additional capital from existing investors Bellwether Microfinance Fund, MVA Ventures (a holding of MicroVentures SPA) and Indian Financial Fund.

Continue Reading »

MICROFINANCE PAPER WRAP-UP: “The Microfinance Sector: Its Success Could be its Biggest Risk”, Fitch Ratings

Produced by Fitch Ratings, June 2008, 20 pages, available at: http://microfinancegateway.org/files/49914_file_Microfinance_Success_Could_Be_its_Biggest_Risk1206.pdf

This paper presents what Fitch Ratings believes to be the key risk factors of commercial microfinance. While the title of the report suggests that the paper presents risk factors directly associated with the sector’s rapid growth, the report actually includes a wide array of perceived risks that may not necessarily be a result from the sector’s success. Below are summaries of the risk factors that Fitch seems most concerned with in its report. For the complete report containing all risk factors, please click here. Continue Reading »

Advans SA, a Luxembourgian venture capital firm that specializes in microfinance ventures, recently announced it raised EUR 7 million (USD 10.5 million) in equity capital from CDC Group, a private equity fund of funds sponsored by the British government. CDC’s investment aims to support Advans’ expansion of investments in Asian and African microfinance institutions (MFIs). The deal will consist of two financing rounds: CDC has committed to an initial round of EUR 3 million (USD 4.5 million) in equity, and plans to invest EUR 4 million (USD 6.5 million) of equity during a subsequent round of Advans-planned fundraising in early 2009. Continue Reading »

The government of Bahrain plans to seek technical assistance from India’s microfinance sector in establishing future government-sponsored microfinance programs. Minster of Social Development Fatima Al Balooshi will lead a delegation to India next week to discuss technical assistance prospects with officials at various government and private institutions involved in India’s microfinance development. Institutions on the delegation’s itinerary include India’s NABARD (National Bank of Agricultural and Rural Development), an unnamed microfinance research institution, as well as various NGOs associated with microenterprise development. Continue Reading »

Nonprofit AKAM (Aga Khan Agency for Microfinance), a unit of AKDN (Aga Khan Development Network), continues its rapid expansion of microfinance operations with the recent establishment Syria’s first microfinance institution. Suitably named “First Microfinance Institution” (FMFI), the microlender is scheduled to begin operations in the coming weeks, providing financial services to individuals currently bypassed by mainstream banking, a market that constitutes 90 percent of the country’s population. FMFI’s financial services will include both microloans and deposit facilities, and will serve Syrians in six of the country’s fourteen provinces. Continue Reading »

African commercial microlender Blue Financial Services (BFS) has announced plans to purchase the entire issued share capital of South African microlender Credit U Holdings for the price of RND 278 million (USD 36 million). The purchase will consist of a 50 percent cash and 50 percent share offer to all Credit U shareholders, at a ratio of one BFS share for every 2.25 Credit U shares. Both companies’ shares are traded on the Johannesburg Securities Exchange. Continue Reading »

The European Fund for Southeast Europe (EFSE), an investment firm that seeks returns from a portfolio of social enterprises, has made a USD 15 million loan to Bosnian-Herzegovinian nonprofit microlender Partner Microcredit Foundation. The loan will be used by Partner to expand its on-lending activities to small and micro enterprises. The loan’s term and rate were not disclosed. Continue Reading »

Bank Negara, the Malaysian government’s central bank, has announced it will offer assistance in developing microcredit schemes for African governments that seek outside advisory services. The Malaysian financial institution extended the offer as part of its support for Africa’s Financial Inclusion Advisers program (FIA), a poverty reduction initiative that consists of African countries sharing information on microfinance programs and strategies. Continue Reading »

The state government of Nigerian province Jigawa has released NGN 100 million (about USD 850 thousand) for the recapitalization of nine community banks in the region, aiming to save them from imminent liquidation. By providing funds, the provincial government sought to preserve the banks’ liquidity while the institutions prepare for a legal and structural transformation into microfinance institutions, in response to a mandate (p.13) from the Central Bank of Nigeria. It remains unclear what terms, if any, the Jigawan government has attached to the capital infusion. At this point, the available information suggests that the funds are a giveaway. Continue Reading »

Njala University College in Sierra Leone plans to incorporate a microfinance course into its current course offerings. Jointly developed by Njala University and NaCSA (National Commission for Social Action), the course will form part of the university’s Social Science Curriculum, leading to the award of a Bachelor of Science Degree. Course concepts will be intended for those who wish to become practitioners of microfinance. Subject matter will include principles of finance, lending methodology, and methods of controlling loan delinquency. Continue Reading »

Nigeria-based Global Trust Bank has recently acquired Ugandan microlender CMF (Commercial Micro Finance Ltd) for an undisclosed price. Global Trust will assume control of CMF’s eight branches and six agencies as part of the deal, and CMF will change its name to Global Trust Bank Uganda. Global trust plans to continue CMF’s microlending operations. Continue Reading »

India’s NABARD (National Bank of Rural Development) plans to take a group of 20 individuals that represent India’s largest financial institutions to Sri Lanka to observe microfinance methods employed by the country’s financial institutions. The trip will be hosted by NABARD’s Regional Training College, with the purpose of acquainting Indian bankers with the microfinance concept. Individuals were chosen from a wide range of India’s financial institutions, including commercial banks, regional rural banks, cooperative banks and NABARD itself. Names of specific financial institutions represented were not available. In addition to NABARD’s support, the trip was facilitated by Sri Lankan microfinance institution Sanasa Development Bank. Continue Reading »

Unitus, Inc., an international nonprofit that seeks to advance market-based solutions to poverty, recently launched Unitus Capital, a for-profit financial advisory firm that aims to connect capital market investors with social enterprises focused on creating both social and financial returns. Operating as a legally independent, for-profit institution, Unitus Capital represents the transformation of nonprofit Unitus’ capital markets business unit. It will remain a strategic affiliate of Unitus. The nascent institution has received USD 5.5 million in seed funding from private investors including WEGA Support GmbH, Robert Gay, co-founder and CEO of H&G Capital Partners, and William S. Price III, Founding Partner of Texas Pacific Group. Unitus Capital did not disclose its number of employees; nonprofit Unitus currently employs 21-100 individuals, according to nonprofit research firm GuideStar. The firm’s Managing Directors include Kylie Charlton and Eric Savage, both founding members of Unitus Capital. Both Charlton and Savage were most recently employees of nonprofit Unitus’ capital markets unit. Before Unitus, both worked for Citigroup in separate investment banking units. For a complete profile on Unitus Capital’s management team, please click here. Continue Reading »