At the session titled “Building an Enabling Environment for Low-Income Housing Finance,” R V Verma, former Chairman of the National Housing Bank (NHB) (India) and consultant to the World Bank Group, said that “pushing the formal financial system to reach out to the informal sector [presents] a lot of challenges, but also huge opportunities. As part of financial inclusion, housing microfinance has a very important role.” Mr Verma went on to describe the market in India, which has an outstanding mortgage balance of INR 13 trillion (USD 200 billion) but a shortage of 24 million housing units. He also explained efforts to mitigate risk for housing lenders – both credit risk and issues with land title. Among the tools in use is a central registry of outstanding property loans. Mortgage insurance is also available even to informal workers – when lenders are willing to issue them loans.
Adedeji Adesemoye of the Central Bank of Nigeria described his institution’s efforts to address Nigeria’s shortage of 17 million housing units via resources including a loan package of USD 300 million awarded by the World Bank’s International Development Association (IDA) in 2012. While much of this package was for refinancing mortgages, USD 15 million of it was earmarked for housing microfinance. That portion was disbursed to nine microfinance institutions to test lending to existing (non-housing) clients for land acquisition, incremental construction and
At the SAM (Semaine Africaine de la Microfinance) plenary on “Public Solutions to Promote Entrepreneurship in Africa,” Kennedy Komba of the Alliance for Financial Inclusion (AFI) explained that his institution’s SME (Small and Medium-sized Enterprise) Working Group comprises 53 regulatory and policy-making bodies. To facilitate the growth of entrepreneurship, these agencies have created collateral registries, adjusted lender liquidity ratios, updated know-your-customer frameworks and established rules for digital financial services. Trainers in Zambia used a financial education game to reach 5,000 people, of whom 80 percent were able to improve their businesses as a result. In Ghana, the Ministry of Agriculture and the Bank of Ghana collaborated to boost local value chains in an effort to reduce costly
Linden ‘Mark’ Mahfood and Robert Taylor recently launched Mundo Finance Limited, a Jamaican firm offering “short-term business loans, trade financing and personal loans” as well as financing for “solar installations in partnership with” Alternative Power Sources. Mundo CEO David Lee reports that his company’s interest
The Whole Planet Foundation, an affiliate of US-based grocer Whole Foods Market, announced it has secured donations of USD 2.2 million (as of March 17) towards its goal of raising USD 3.2 million by the end of March 2017 to grant for microlending through
TriLinc Global Impact Fund (TriLinc) recently announced that it has approved the disbursal of USD 36.8 million to fund term loans and trade finance transactions for small and medium-sized enterprises (SMEs). The term loans will be disbursed to 10 different companies
The Indonesian government recently announced it plans to grow the portion of its Kredit Usaha Rakyat (KUR) program that is used for agriculture, fishing and manufacturing from 22 percent of the program total to 40 percent. The remainder of KUR lending is for trading and services.
Alliance Microfinance, an NGO owned by The Mission Alliance of Norway, recently committed USD 2 million in equity to assist Banco D-Miro of Ecuador in renegotiating USD 80 million in loans to achieve “reduced interest expense and extended amortization.” The Mission Alliance
LOLC (Cambodia) Plc, a microfinance institution (MFI) that is 60-percent owned by LOLC Micro Investment of Sri Lanka, recently received approval from the National Bank of Cambodia to offer leasing services. It is reportedly the first MFI to gain such permission. Beginning in March, LOLC (Cambodia) expects to offer both businesses and
The Nepalese central bank, Nepal Rastra Bank, reportedly has capped microloan rates at 18 percent per year following complaints of microfinance institutions (MFIs) “distributing high dividends by charging borrowers, who are often poor people in rural areas, exorbitant rates…as high as 30 percent.” This follows the declaration of
The government of Zimbabwe recently liberalized its Microfinance Act with provisions such as extending the validity of microfinance institution (MFI) license renewals from one to three years. Zimbabwe’s Finance Minister, Patrick Chinamasa, was quoted as saying financial institution “charges are just too high. With MFIs, it mostly has to do with the fact that investment in the sector is just too low, so companies just end up passing their costs to clients…. Zimbabwe seeks to unlock economic opportunities, especially for the women and youths by expanding access to savings,
“How to IPO Successfully and Responsibly: Lessons From Indian Financial Inclusion Institutions”; by Anna Kanze; published by the Center for Financial Inclusion (CFI) at Accion; Fall 2016; 25 pages; available at: http://www.centerforfinancialinclusion.org/storage/documents/How_to_IPO_Final.pdf
This report draws upon two recent initial public offerings (IPOs) in the financial inclusion industry – those of Equitas and Ujjivan, both microfinance lenders in India – to make the case that institutions can use IPOs to strengthen their capital base while remaining committed to their social missions.
At Friday’s closing session of European Microfinance Week, representatives of Luxembourg-based MyBucks, US-based Opportunity International and India-based MicroSave argued about the risks and rewards of digital finance services. Vicki Escarra, the CEO of Opportunity International, said, “What we’ve done over the past five years to get to very rural areas is to use these digital channels.… To focus on women in Africa – not just women, but women living in
Paul Luchtenburg, who serves as coordinator for the UN Capital Development Fund in Myanmar, described several of the contrasts in the microfinance industry in Myanmar at European Microfinance Week Thursday. Five years into civilian rule, Mr Luchtenburg says “I’ve never seen a government work so hard. You go to a meeting and the results go up the leadership chain that night…. There’s this rapid push for development.” To accept deposits, institutions must pay at least 10 percent per year and be deemed “sustainable” by the government. However, lending rates are capped at 2.5 percent per month, a level that all of the panelists agreed was too low, especially for serving rural areas. Rommel Caringal, the CEO of the local unit of US-based VisionFund, said, “The inconsistency is causing big problems, but
The government of Kenya recently passed legislation to cap the interest rates on bank loans at 4 percent per year above an undisclosed benchmark reference rate and also set the minimum deposit interest rate at 70 percent of the reference rate.
Microcred Senegal, a for-profit affiliate of the France-based NGO Positive Planet, recently issued its first bond, raising CFA 3.7 billion (USD 5.6 million) in the African market.
Arman Financial Services Limited, a non-banking finance company based in the Indian state of Gujarat, recently announced it is reducing interest rates on its two-wheel vehicle and microfinance loans.
Intellegrow, an India-based subsidiary of Intellecap Group specializing in venture debt, and Symbiotics, a Switzerland-based firm investing in smaller companies, recently launched a small and medium-sized enterprise (SME) debt pool program, benefiting Indian entrepreneurs from “impact” sectors including, but not limited to, food and agriculture, healthcare, and waste management.
Equitas Small Finance Bank Limited, a subsidiary of India’s Equitas Holdings Limited, recently began operations with three branches in Chennai, offering deposit accounts with interest rates of six to 7.5 percent per year.