According to SMEEIS guidelines, SMEEIS was approved in December 1999 and officially launched in 2001 by the Central Bank of Nigeria’s (CBN) Banker’s Committee. SMEEIS’ role was aimed to promote economic development, employment and poverty alleviation.

Its mandate dictated that all banks in Nigeria commit 10 percent (reduced to five percent after the first five years) of their annual profits after tax to SMEEIS’ initiatives. Yet, the investments would be made by the banks via equity in SMEEIS’ affiliated small and medium-sized enterprises (SMEs). This funding would be complimented by voluntary training and partial management by the bank. Equity investments, instead of loans, were chosen with the aim “to reduce the burden of interest” on the SME. A bank could gain up to 40 percent in equity in any single institution.

SMEEIS was established by the CBN’s Banker’s Committee as a response to the governments’ concerns about the promotion of SMEs in Nigeria. Administrative costs were facilitated by debiting any banks that had neglected to invest in SMEEIS over the year. In late 2007, SMEEIS was made optional to banks. In December of 2007, according to CBN’s Annual Report (28), SMEEIS had the equivalent of USD 213 million invested by banks in 327 Nigerian projects. Yet, SMEEIS had total sums of the equivalent of USD 362.3 million at its disposal. The report also notes that though Nigeria has 36 states, the equivalent of USD 89 million or 49 percent of the investments were made only in Lagos state. 12 states were completely untouched by the initiative.

The lack of geographic coverage of the SMEEIS program was one of the main reasons the program was cut according to the CBN’s governor Chukwuma Soludo. SMEEIS was also being criticized for having only disbursed 30 percent of its funding during its seven year lifetime. In a 2007 MicroCapital article, the CEO of Nigerian Seedvest Microfinance Bank Limited criticized SMEEIS as unutilized.

The government claims that this underutilization was due to the lack of demand and lack of interest on the part of both the SMEs and banks. Soludo claims the banks had no interest in managing multiple projects for the small amount of equity investment. This indicates that the banks did not find the initiative profitable, grew wary of this obligation and had little incentive to either commit resources or fully participate in SMEEIS.

Banks blame the SMEs for being neither efficient nor well managed, making it difficult for banks to work with them through equity participation and voluntary training. Banks noted the unwillingness of SMEs to work with additional partners in managing their enterprises.

On this point, SMEs seem to agree, pointing out that as entrepreneurs, they were not interested in being owned by outside investors. SMEs also point out a lack of access to SMEEIS funds as banks were requiring collateral. SMEs complained of the cost of documentation to access the funds (up to the equivalent of USD 4,311), which seems to indicate an expensive and cumbersome application process.

Now, as SMEEIS has been halted, the government has chosen to approach the need for funding by initiating CBN’s USD 426 million Micro Credit Development Fund. MicroCapital reported on its launch in February 2008 here. The fund absorbed the extra SMEEIS capital that had not been invested in projects at its close. The fund will also follow a similar funding structure to SMEEIS as banks will have to contribute five percent of their profits after tax to the fund. In addition, state governments will have to provide matching funds.

The aim for the microcredit fund is to disperse loans via microfinance institutions that lend to the public, thereby eliminating the problem of equity participation. The Nigerian government has also mandated that non-governmental MFIs must transform into Nigerian microfinance banks (MFBs) if they have total assets of the equivalent of USD 171,858 or above. The hope is that it will be easier to disperse money directly to MFBs than it was to finance enterprises through commercial banks. Geographic coverage is hoped to expand as MFBs can be set up throughout the country.

The government has not addressed the distinction between the clients served by SMEEIS and the Micro Credit Development Fund. While the fund seems to be targeting micro-enterprises specifically, it is not clear whether or not what was initially designated as an SME (small and medium-sized enterprise) can be re-designated as “micro” in order to be able to access the new funding source.

By Sarah Knapp, Research Assistant

Additional Resources:

Bank of Nigeria: 2007 Annual Report, FAQ

Media: All Africa, Business Day, News Watch Nigeria, Nigeria Business, Sun News, Tribune

MicroCapital.org: Nigerian Government Creates 426m Microcredit Development Fund, Seedvest Microfinance Bank Comes on Board

Small and Medium Enterprises Equity Investment Scheme (SMEEIS)

According to the Central Bank of Nigeria, Olive has not registered any other branches. Olive Microfinance Bank’s website is in the process of being completed. Though specific information is currently unavailable, the website seems to indicate that Olive hopes to offer savings accounts, loans and leases to customers nationwide. In initiating its microfinance endeavors the bank stated its social motivations and indicated a campaign to offer “convenience and accessibility”. There is no current financial information on Olive Microfinance Bank.

Olive has also indicated a future partnership with Grameen Bank of Bangladesh that aims to facilitate the integration of two Grameen employees in Olive’s corporate offices, as well as organize technical assistance for the new Nigerian microfinance bank from Grameen.

The launch of Olive as a microfinance bank comes strategically as the Nigerian government has recently changed its official focus from small and medium enterprise to microfinance as reported by MicroCapital here.

By Sarah Knapp, Research Assistant

Additional Resources:

Guardian News: Olive Bank Opens Shop in Lagos

MicroCapital.org:

Olive Microfinance Bank: Central Bank of Nigeria, Jobs

Anne Hastings joined Fonkoze in 1996; two years after its inception by founder Joseph Philippe. Ms. Hastings was waiting for an assignment from the Peace Corps when she was connected to Philipe and became part of Fonkoze as the executive director. When she joined Fonkoze the MFI was being run by two volunteers. It now has 400 full-time employees. In 2004, Ms. Hastings helped to establish Sèvis Finansye Fonkoze, S.A (Fonkoze Financial Services, Inc), Fonkoze’s sister company for its commercial microfinance operations. Ms. Hastings also heads the Fonkoze Foundation which provides social services for Fonkoze clients, such as education, and helps in the development of new Fonkoze products.

Though Ms. Hastings is a microfinance professional she admits that microfinance alone is not enough but that “helping the poorest to make their way out of poverty requires the integration of microfinance, education and health care services.” Therefore, in conjunction with the educational services of the Fonkoze Foundation, Ms. Hastings recently launched a program called Chemen Lavi Miyò (CLM) and established a health care partnership. The health care partnership was launched in 2004 with Zanmi Lasante, the Haitian project of Dr. Paul Farmer’s international non-governmental organization Partners in Health (PIH) to provide rural healthcare services to Fonkoze clients.

The CLM program was launched as a result of Ms. Hastings’ belief that in Haiti the poorest of the poor, who have no productive assets at all, can not at their initial level of poverty benefit from microcredit. CLM (the Pathway to a Better Life) recently began with 150 pilot families. Ms. Hastings’ program includes 18 months of training, health care, and “income generating assets”. Examples of these assets would be goats or seeds that could help the recipient begin a microenterprise. Fonkoze will provide the equivalent of USD 920 per family to facilitate the program. Ms. Hastings recently spoke on the program at an event in entitled “Accompanying The Poorest Out Of Poverty: The Effect Of The Global Food Crisis” as reported by MicroCapital here.

In 2005, she received the Grameen Foundation USA’s Pioneer in Microfinance Award and, in 2006, she was honored in the First Annual Chiapas Project Recognition Dinner. In May 2008 she received the Women Together Award at United Nations as reported by MicroCapital here.

Ms. Hastings received her PhD from the University of Virginia and in 2007 was awarded an Honorary Doctorate in Business Leadership from Duquesne University. From 1982-1985 she worked at Advanced Technology in Virginia as a senior Analyst and from 1985-1996 she was a Senior Partner and Managing Director of management consulting firm Scanlon and Hastings.

She can be contacted at director@fonkoze.org.

By Sarah Knapp, Research Assistant

Fondasyon Kole Zepol (Fonkoze): Chemen Lavi Miyò, MIX Market Profile, Newsletter Fall 2004

Global Giving Matters: Microlending and healthcare in Haiti offer opportunities for social investment

Grameen Foundation GF Celebrates Women on the Front Lines of Microfinance

MicroCapital.org: Anne Hastings of Fonkoze to Appear at Joint Microfinance Club of New York and Women Advancing Microfinance Event, Anne Hastings of Haitian Microfinance Institution Fonkoze Receives Women Together Award at United Nations, Central Bank of Enid Oklahoma Partners with Haitian Microfinance Institution Fonkoze to Provide Low Cost Remittances

Zanmi Lasante: Partners in Health, Partnership

DELINQUENCY MANAGEMENT (AUG. 4 – AUG. 6 IN VIGAN, ILOCOS SUR)

MARKET-BASED FINANCIAL PRODUCT DESIGN AND DEVELOPMENT (SEP. 1 – SEP 3. IN CEBU)

FINANCIAL ANALYSIS (OCT. 6 – OCT. 8 IN ILOILO)

STRATEGIC PLANNING FOR MICROFINANCE INSTITUTIONS (NOV. 6 – NOV. 8 MANILA)

RISK MANAGEMENT, INTERNAL CONTROLS AND AUDIT (NOV. 10 – NOV. 12 IN CAGAYAN DE ORO)

FINANCIAL ANALYSIS (DEC. 1 – DEC. 3 IN DAVAO)

The courses are held by Social Enterprise Development Partnerships, Inc. (SEDPI) an institution dedicated to microfinance capacity building through training, technical assistance and strategic planning. SEDPI was established in 2004 as a private organization and is labeled by MIX Market as a “market facilitator” as it has provided its management services to 502 organizations in Africa, Asia, Latin America and Europe as of November 2007. SEDPI works closely with Ateneo de Manila University. SEDPI employees run the University’s Microfinance Capacity Building Program, which helps to facilitate SEDPIs courses. The University’s partnership with Bank of the Philippine Islands has helped SEDPI to expand its operational reach. In 2007, SEDPI attracted a total of 1,357 participants through 70 training events. Further financial data on SEDPI is unavailable.

SEDPI’s upcoming courses cover a wide range of microfinance topics such as basic methodology, forms of assessment, product design and current trends. Additionally, many cover various financial tools and their specific adaptation to the microfinance industry. Examples will be presented from SEDPI market research and Filipino case studies. The cost is the equivalent of USD 77 for Filipino participants and USD 150 for international participants.

Registration is available online. There are no specific deadlines. More information is available by emailing: info@sedpi.com or calling their Manila office at + 632-4266001.

By Sarah Knapp, Research Assistant

Additional Resources:

Ateneo de Manila University

Social Enterprise Development Partnerships, Inc. (SEDPI): MIX Market Profile, Registration, Trainings

This paper aims to investigate “peer mentoring”, or “learning by association” through traditional microfinance borrowing groups whereby a lump sum is delegated to a whole group instead of individuals. The authors examine this lending structure in the microfinance process and the relationship between peer mentoring and client repayments. The authors hypothesize that stronger support through “peer mentoring” groups will enable weaker members of the group to advance and succeed. They consider that poor people do not just lack financial access, but also skills and discipline to be able to manage their money. Peer mentoring is desired to provide support and a level of transparency.

The study uses data from ALSol a non-governmental organization established in 1999 in Mexico. They explain AlSol’s methodology, loan structure and formation of groups. The authors present AlSol’s client’s economic activities and commit the bulk of the paper to creating various equations to measure how well repayments were made (325). While the paper hypothesizes that group mentoring will be successful, the authors do concede that the group model could encourage members to drop out if they see a fellow member default and do not want to carry the extra burden of this person.

Yet, the results show a positive relationship between repayment rates and peer mentoring, which supports that when there is both a strong member and weak member in a group, the weak group member performs more favorably under the influence of a peer mentor. Therefore, the author’s conclude, based on the AlSol model, peer mentoring can be an encouraging factor in client repayment.

By Sarah Knapp, Research Assistant

• be subject to supervision by a national regulator
• have a microfinance portfolio corresponding to at least 50 percent of total assets
• have at least 25 percent of its microfinance portfolio invested in MFIs rated by a microfinance rating agency recognized by LuxFLAG

LuxFLAG has granted its label to five other funds as reported by MicroCapital here. As of June 30^th 2008, the labeled MIV’s held assets under management totaling USD 1.3 billion.

LuxFLAG was launched in 2006 by its Charter Members: Luxembourg Stock Exchange, European Investment Fund (EIF), Association of the Luxembourg Fund Industry (ALFI), Luxembourg Bankers’ Association (ABBL), Financial Technology Transfer Agency (ATTF), Appui au Développement Autonome (ADA), Luxembourg’s Ministry of Finance and Ministry of Foreign Affairs.

The LuxFLAG label is listed on the Consultation Portal of the Centrale de Communications Luxembourg (CCLux), a subsidiary of the Luxembourg Stock Exchange. Further financial information on LuxFLAG is not available.

The Rural Impulse Fund SA SICAV-FIS (RIF) was initiated in 2007 by Incofin, a Belgian microfinance investment company as reported by MicroCapital here. According to the 2007 Luxembourg laws on Specialised Investment Funds, “SICAV” denotes a variable capital investment company and “FIS” a specialized investment fund. RIF is a microfinance investment fund that acts as a MIV by making debt and equity investments in MFIs in rural areas of developing countries. RIF uses an extensive list of criteria to choose rural MFIs.

The fund is advised by Incofin and operates under the administration of Kredietrust Luxembourg (KTL), the asset management subsidiary of European bank Kredietbank Luxembourg (KBL). Its main corporate investors are the European Investment Bank, Dutch Nederlandse Financierings Maatschappij voor Ontwikkelingslanden (FMO), the International Finance Corporation (IFC), and Belgian Investment Company for Developing Countries (BIO) as well as private Belgian companies Volksvermogen, MRRB and CERA. According to a MicroCapital article of December 2007, RIF’s investor base is 50 percent public and 50 percent private. According to a presentation by Incofin’s Managing Director Loïc De Cannière, in March 2008, the fund totaled USD 38 million. MicroCapital reported on RIF’s 2007 investment in Latin American microfinance here.

By Sarah Knapp, Research Assistant

Additional Resources:

Incofin: 2008 Presentation, RIF criteria,

International Finance Corporation (IFC)

Kredietrust Luxembourg

LuxFLAG: Charter Members, Listing Procedure, Press Release

MicroCapital: Incofin Announces Creation of Rural Impulse Fund, Launching of Luxembourg Fund Labelling Agency, LuxFLAG Awards Label to Five MIVs, Rural Impulse Fund Lends to Latin American Microfinance Institution Espoir

Nederlandse Financierings Maatschappij voor Ontwikkelingslanden

OCTOBER 1-2 2008 AT THE INTERNATIONAL LABOUR ORGANIZATION (ILO) IN GENEVA SWITZERLAND

Building Fair Financial Markets for All: Profitable Investment Opportunities in Micro
and Small Businesses Symposium is hosted by the World Microfinance Forum Geneva, a public-private partnership of nonprofit and for profit institutions that promotes inclusive financial markets by hosting events and conducting research. The 2008 Symposium is geared towards investors, “financial intermediaries”, microfinance professionals and public actors. The event will feature research on microfinance investment, the relationship between microfinance and the private sector and “new products, new technology, new markets”. There will be a special focus on China and its market for microfinance.

Nobel Peace laureate Professor Muhammad Yunus is scheduled to speak and members of Council of Microfinance Equity Funds will be in attendance. The event is supported by the Swiss Agency for Development and Cooperation (SDC), Geneva Financial Center, private bank Pictet and the International Labour Organization. The cost for the event is the equivalent of USD 728 for both days, with specialized rates for single-day passes, non-governmental and nonprofit organizations.

Registration is currently open online or by post. There is no specified deadline. For more information contact the World Microfinance Forum Geneva: info@microfinanceforum.org or +41 22 770 00 83.

By Sarah Knapp, Research Assistant

Additional Resources

Council of Microfinance Equity Funds

Geneva Financial Center

International Labour Organization (ILO)

Pictet

Swiss Agency for Development and Cooperation (SDC)

World Microfinance Forum Geneva: Building Fair Financial Markets for All: Profitable Investment Opportunities in Micro and Small Businesses Symposium, Members, Registration

Geared towards informing governments, the private sector and civil society organizations, the report focuses on strategies for doing business with the poor in order to expand markets. Specifically the report used UNDP’s Growing Inclusive Markets Initiative’s “strategy matrix” a tool that shows the frequency and viability of strategies used in various countries and case studies. In the report, the matrix highlighted possible solutions to current constraints. Additionally, “heat maps” are included that color code geographical areas depending on level of access to water, credit, electricity or telephone service. The heat maps were made with the aim to identify opportunities, supply structure and current access. Already countries such as Zambia and the Ukraine have responded to the report, looking to use the report to facilitate national achievement of the UN’s Millennium Development Goals.

The report was initiated by the UNDP’s Growing Inclusive Markets Initiative, launched in 2006. With an advisory board of private sector professionals, the initiative aims to develop and expand inclusive business models. The initiative partakes in research, analysis and development of strategies in order to raise awareness and educate about the possibilities of expanding opportunities to the poor.

By Sarah Knapp, Research Assistant

Additional Resources:

The United Nations Development Programme (UNDP): “Creating Value for All: Strategies for Doing Business with the Poor”

Growing Inclusive Markets Initiative: Heat maps, Strategy matrix

The equivalent of USD 11,585 was awarded in recognition of Srijan 2008 Best Business Idea Award to G. Muralidhar and Vepoor Murali for their enterprise: the Pochampally Chenetha Kalanetha Collectives. The collective aims to serve weavers of Pochampally, a village near Hyderabad, India. The money will be used connect the weavers through collective organization, eventually provide financial services and facilitate market research. Last year the emerging enterprise had an annual turnover of the equivalent of USD 2.3 million.

The equivalent of USD 4,634 was awarded to Praseeda Kunam of Samhita Microfinance for the Most Promising Business Idea- I Award. Launched in 2007, Samhita Microfinance operates in the central Indian state of Madhya Pradesh. It is the microfinance branch of Samhita Community Development Services, which as of April 2008 has partnered with international nonprofits Unitus, Opportunity International Australia, and the Michael and Susan Dell Foundation. Samhita aims to use economic, health and technological services to focus on poor rural women. Its total equity as of February 5^th 2008 was the equivalent of USD 20,284.

Micro-equity investment firm, Synergics, launched by entrepreneurs V. Hitendra Shankar and K. Naveen Chand, also received the equivalent of USD 4,634, for the Most Promising Business Idea- II Award. These entrepreneur’s aim to use Synergics funding to jointly-operate start-up microenterprises through equity, guarantees to commercial banks and professional business development services. No current financial information on Synergics is available.
The Srijan Business Plan Competition is sponsored by Intellicap, Standard Chartered Bank, Aavishkaar Goodwell and Financial Express. MicroCapital has reported on a variety of Intellecap’s previous microfinance initiatives here, including Intellecap research, publications, investments made in Intellecap and Intellecap’s fellowship program.

By Sarah Knapp, Research Assistant

Additional Resources:

Aavishkaar Goodwell

Business Wire Press Release

Financial Express.

Intellicap

MicroCapital.org: 3rd Annual Srijan Microfinance Competition, Intellecap Announces In-house Partnership between its India Development Gateway and its Srijan Competition

Pochampally Chenetha Kalanetha Collectives

Standard Chartered Bank

Synergics

Established in 2002, the Italian Trust for Microenterprise Development provides micro-credit and technical assistance to projects in the Latin America and Caribbean Region with funding ranging from USD 258,000 to USD 520,000. It is financed by the Italian Ministry of Foreign Affairs and as of December 2007, the trusts investment’s had summed USD 8.8 million. The trust has done 16 previous projects with the IDB.

Established in 1965, IPRU aims to promote education, housing improvement projects and microfinance throughout Uruguay. The IDB project has designated the allocated funds to youth and women programs for entrepreneurship and employment. Though no specific information is available on how IPRU will delegate the funds from IDB, previous IPRU micro-loans are characterized by a USD 3,100 maximum, a 24 month repayment period and an interest rate at 25 percent. IPRU does not report to MIX Market, the microfinance information clearinghouse.

By Sarah Knapp, Research Assistant

The Inter-American Development Bank: Annual Report 2007, Multilateral Investment Fund (MIF), Press Release, Project Proposal, Social Entrepreneurship Program (SEP)
Italian Trust for Microenterprise Development.
Uruguayan Institute for Economic and Social Development