MicroCapital » Interest Rates

MICROCAPITAL BRIEF: Cambodian Government: Microfinance Interest Rates of Up to 50 Percent Threaten Loss of Land, “Social Instability”

Natalie Baer — Mon, 23 Jan 2012 14:07:47 +0000

Cambodian government officials reportedly are looking to negotiate down the interest rates on microfinance loans, arguing that current rates are unsustainable for the country’s rural farming population and that defaults are causing many farmers to become landless. [1] The Cambodia Rural Development Bank, an autonomous public enterprise established by the government to fund microfinance institutions (MFIs), is negotiating with the 10 institutions it supports to lower rates. [1] [3] Meanwhile, MFIs argue that rural customers understand interest rates and that if rates were too high, they would go to other lenders. However, operating costs for MFIs also remain high, since farmers consult individually for loans rather than borrowing in groups, and much of MFIs’ funding comes from overseas, which is more expensive than local funding. [1]

According to the Cambodia Microfinance Association, a trade association of 26 MFIs, the aggregate gross loan portfolio of its members has increased almost 20 percent since December 2008 to USD 510 million as of March 2010. [2] Loan size average USD 500. [1]

By Natalie Baer, Research Associate

About the Cambodian Microfinance Association: The Cambodian Microfinance Association (CMA) is an NGO that was formally established in 2004 by seven microfinance institutions (MFIs). As of May 26, 2011, CMA has 26 active members. Its main function is to strengthen communication among MFIs and other groups such as government authorities, donors, creditors and investors.

Source and Resources:

[1] “Debt fears for farmers Calls for lower microfinance rates”
http://www.phnompenhpost.com/index.php/2012011153889/Business/debt-fears-for-farmers-calls-for-lower-microfinance-rates.html

[2] Mix Market: Microfinance in Cambodia
http://www.mixmarket.org/mfi/country/Cambodia/report

[3] Cambodia Rural Development Bank http://www.rdb.com.kh/data/about%20RDB.htm

MicroCapital Universe Profile: Cambodian Microfinance Association http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cambodian+Microfinance+Association+%28CMA%29#Description_140_word_limit_

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Government of Andhra Pradesh, India, Introduces Interest-Free Loans for Women in Self-Help Groups (SHGs)

Kristha Abores — Tue, 06 Dec 2011 05:03:46 +0000

On January 1, the government of the Indian state of Andhra Pradesh will introduce Vaddi Leni Runnam, a scheme that will provide women in self-help groups (SHGs) interest-free loans of up to INR 500,000 (USD 9,500) [1,2]. SHGs are units of 10 to 20 individuals that pool their savings, apply for group loans and lend internally to their members. In an effort to encourage good repayment habits, the interest waiver will only be sustained for members who make their payments on time. A budget of INR 14 billion (USD 268 million) has been set aside for this project [1].

In 2004, the Andhra Pradesh government introduced a similar scheme called Pavala Vaddi, which provides interest subsidies to SHGs. The initiative reportedly resulted in an increase in credit flow from INR 1,200 crore (USD 229 million) in the 2004-2005 fiscal year to INR 8,600 crore (USD 1.64 billion) in 2010-2011, as well as a nine percent reduction in poverty levels. Of the INR 16.2 billion (USD 310 million) that has been disbursed since the launch of the scheme, INR 8.75 billion (USD 167 million) was released during the current fiscal year [2].

By Kristha Abores, Research Associate

Sources and Additional Resources:

[1] Press Release from the Government of Andhra Pradesh, http://ipr.ap.nic.in/release/release.asp?relid=103991

[2] “Interest-free loans for SHG members from January,” http://www.thehindubusinessline.com/industry-and-economy/government-and-policy/article2659847.ece

MicroCapital.org article, October 12, 2011, “MICROCAPITAL BRIEF: Microfinance Institutions in India’s Andhra Pradesh State Seek Government, Commercial Bank Assistance in Restructuring Loans,” http://www.microcapital.org/microcapital-brief-microfinance-institutions…

MicroCapital.org article, September 22, 2011, “MICROCAPITAL BRIEF: Government of Andhra Pradesh, India, Launches Cooperative Microfinance Bank for Self-Help Groups (SHGs),” http://www.microcapital.org/microcapital-brief-government-of-andhra-pradesh-india-launches-cooperative-microfinance-bank-for-self-help-groups-shgs/

MicroCapital.org article, August 15, 2011: “MICROCAPITAL BRIEF: Indian Government Publishes Draft of Microfinance Institutions Bill, Would Make Reserve Bank of India (RBI) Sole Regulator, Establish Microfinance Development Council, Microfinance Development Fund”,http://www.microcapital.org/microcapital-brief-indian-government-publish…

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: In Tanzania, Default Rates Up to 10% Push Commercial Lending Rates as High as 24%; Credit Bureau to Open in 2012

Cameron Milani — Tue, 11 Oct 2011 17:28:24 +0000

With default rates reportedly ranging from seven to 10 percent in Tanzania, commercial banks in the country are charging lending rates between 14 and 24 percent. Local newspaper The Citizen cites a report compiled by US-based consultancy Ernst & Young titled “The 2011 Tanzania Banking Sector Performance Review” as indicating that write-offs rose from TZS 18.5 billion (USD 10.8 million) in 2007 to TZS 105 billion (USD 61.1 million) in 2010. The report is not available online.

Meanwhile the Bank of Tanzania (BoT), the country’s central bank, is in the process of establishing the Credit Reference Bureau (CRB), which potentially will allow for the offering of lower rates to customers that regularly pay bills including electricity and water accounts. It has been reported that borrowers whose credit reports indicate they are reliable payers will not be charged interest rates over 15 percent. CRB is expected to become operational in 2012.

By Cameron Milani, Research Associate

About the Bank of Tanzania: Created by government decree in 1992, the Bank of Tanzania (BoT) is charged with using monetary policy to create price stability. This is in contrast to the goal of the Bank of Tanzania Act of 1965 whereby the bank was given multiple mandates. In its current efforts to achieve price stability, the bank formulates and implements monetary policy relating to refinancing, minimum reserves, open markets; foreign exchange interventions; and other instruments.

Sources and Additional Resources:

The Citizen, “Tanzania: High Default Risk Raises Lending Rates,” http://www.thecitizen.co.tz/magazines/31-business-week/14993-high-defaul…

MicroCapital.org article, February 8, 2010, “MICROCAPITAL BRIEF: MFTransparency Launches Microfinance Blog,” http://www.microcapital.org/microcapital-brief-mftransparency-launches-m…

MicroCapital Universe: Bank of Tanzania, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Tanzania

MICROFINANCE PAPER WRAP-UP: The Impact of the Global Financial Crisis on Microfinance and Policy Implications, by Gabriel Di Bella, published by the International Monetary Fund

Ashim Kar — Tue, 27 Sep 2011 05:46:27 +0000

Published by the Western Hemisphere Department of the International Monetary Fund (IMF) as IMF Working Paper No. WP/11/175, 2011, 41 pages, available at: http://www.imf.org/external/pubs/ft/wp/2011/wp11175.pdf

The author of this paper considers the following manifestations of the growth of the microfinance industry: the scaling-up of microfinance institutions (MFIs), diversification of funding structure (away from subsidized lending towards commercial borrowing), adoption of better management practices and information systems, and transformation of nonprofit NGOs into regulated financial institutions partially funded by private capital. In many countries, microcredit now constitutes a significant portion of both GDP and private sector credit. Consequently, abrupt changes in microcredit delivery in these countries may have adverse macroeconomic consequences. However, before the global financial downturn of 2007-08 it was hard to establish a relationship between MFIs’ usual performance indicators and international capital market developments and even domestic macroeconomic conditions.

This paper sheds some light in this area by reevaluating the issue of general risk of MFIs and finds, contrary to what was commonly believed prior to 2007, that MFI performance is linked to both domestic economic conditions as well as changes in international capital markets. The paper uses data from 353 MFIs over the period of 1998 to 2009. Regressions were performed for alternative cross sections, time periods and MFI groupings to establish whether relative systemic risk varies depending on location, legal status (regulated or un-regulated), institution type (NGO, bank, rural bank or co-operative etc.), purpose (for-profit or nonprofit) and age.

The study finds that during the global financial crisis microcredit growth rates worldwide sharply decreased as MFIs’ balance sheets were negatively affected both on the liability side (by the decrease in liquidity) and on the asset side (by increases in loan delinquency and write-off ratios). Also, MFIs’ relatively high interest rates and their lack of transparency in some countries resulted in government-mandated interest rate caps.

The empirical findings suggest that links between MFI performance indicators and both domestic and international economic conditions are stronger than previously believed. In particular, MFIs in Mexico, Central America and the Caribbean (M-CAC); Eastern Europe; and the Middle East and Central Asia seem most sensitive to changes in the domestic and international economic environment, while from an institutional standpoint, banks and non-bank financial institutions show the closest links. These results suggest that MFIs’ increased attention to financial “sustainability”— ie, commercialization of portfolios and growth—have made them more similar to conventional financial institutions.

The paper also analyzes the factors behind MFI lending rates and interest rate spread. The Results indicate that average loan size, MFI productivity and age are correlated with differences in lending rate levels, ie, the rate at which loans are disbursed. Empirical evidence also suggests that more mature MFIs charge lower lending rates. Other variables tracking asset quality and MFI funding structure also appear to be correlated with lending rates. However, the study finds no significant link between lending rates (spreads) and domestic economic conditions.

Although these links are consistently observed across a number of regions, institution types, legal status, MFI purpose and age, the systemic risk of some MFI groupings appears to be higher. From a regional perspective, the results suggest that systemic risk is higher for MFIs operating in the M-CAC and EUR regions, while it is lower for those in the Asia-Pacific region and South America. From an institutional perspective, the systemic risk of banks and non-bank financial institutions appears to be higher, while for NGOs such systemic risk is lower. There is also some evidence that the systemic risk of for-profit institutions and younger MFIs is higher than that of nonprofit MFIs and more mature institutions.

Results in this study “also suggest that if the policy objective is to reduce interest rates, regulation should, in principle, aim at creating an enabling environment (a market structure) in which MFIs can operate, test their lending technology, introduce innovations allowing increases in productivity and efficiency, and exert a competitive pressure on each other.” Finally, the study suggests strengthening legal frameworks, generalization of the use of credit bureaus, improved corporate governance principles and timely and standardized reporting.

By Ashim Kar, Research Associate

Sources and Additional Resources:

Bella, G Di (2011). “The Impact of the Global Financial Crisis on Microfinance and Policy Implications”, International Monetary Fund (IMF) Working Paper No. WP/11/175, available at: www.imf.org/external/pubs/ft/wp/2011/wp11175.pdf

MicroCapital.org story, August 19, 2011, “MICROFINANCE PAPER WRAP-UP: Discovering Limits: Global Microfinance Valuation Survey 2011; By Frederic de Mariz, Xavier Reille, Daniel Rozas; Published by JP Morgan, CGAP (Consultative Group to Assist the Poor)”, http://www.microcapital.org/microfinance-paper-wrap-up-discovering-limits-global-microfinance-valuation-survey-2011-by-frederic-de-mariz-xavier-reille-daniel-rozas-published-by-jp-morgan-cgap-consultative-group-to-assist/

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MICROCAPITAL BRIEF: MFTransparency, Association of Ethiopian Microfinance Institutions (AEMFI) to Launch “Transparent Pricing Initiative in Ethiopia” with Funding from MicroNed

Rohan Trivedi — Thu, 08 Sep 2011 14:56:45 +0000

MFTransparency, a US-based nongovernmental organization (NGO) that collects and publishes information on microfinance product pricing, and the 30-member Association of Ethiopian Microfinance Institutions (AEMFI) plan to launch the “Transparent Pricing Initiative in Ethiopia” at the 2011 African Microfinance Conference in Addis Ababa, Ethiopia, on September 20, 2011. The initiative, which is partially funded by Netherlands-based microfinance network MicroNed, will promote the collection and dissemination of pricing information from Ethiopian microfinance institutions (MFIs) along with promoting ongoing discussions and seminars relating to social performance and client protection.

As of September 2011, pricing data from microfinance products in nine countries is available on the MFTransparency website. Another 16 countries are currently in the data collection stage.

By Rohan Trivedi, Research Associate

About MFTransparency:
MFTransparency is a US-based nongovernmental organization (NGO) that was launched in July 2008 to provide information on microcredit products and their prices. MFTransparency collects data on the interest and fees charged on microfinance loan products in order to calculate the effective interest rates on those loans. Its intention is to establish the industry standard for pricing disclosure and to facilitate a fair exchange of microfinance products between suppliers and consumers. According to its website, between the time of MFTransparency’s launch and December 2010, 691 industry stakeholders have endorsed its efforts, including microfinance institutions and apex banks serving 107 million clients worldwide. As of August 2011, data from microfinance products in nine countries is available on the MFTransparency website and sixteen countries are participating in the data collection stage.

About the Association of Ethiopian Microfinance Institutions (AEMFI):
Established in Ethiopia in June 1999, the Association of Ethiopian Microfinance Institutions (AEMFI) is a nonprofit organization serving as a medium through which microfinance practitioners can interact to advance their goals and work towards the expansion of the microfinance industry in Ethiopia. AEMFI members include registered and licensed microfinance institutions, institutions indirectly involved in microfinance activities and individuals. As of 2011, the association includes 30 members.

About MicroNed:
MicroNed is a microfinance network of Dutch development finance organizations that includes: Cordaid, a Catholic humanitarian agency; Hivos, a nongovernmental organization (NGO) that provides grants and technical assistance; the Interchurch Organization for Development Co-operation (ICCO), which provides financial services to socially-oriented organizations; Ofxam-Novib, an investment fund that supports microfinance institutions; and the Rabobank Foundation, a microfinance-focused initiative of the Rabobank financial services group.

Sources and Additional Resources:

[1] MFTransparency Press Release: “MFTransparency and the Association of Ethiopian Microfinance Institutions to Launch the Transparent Pricing Initiative in Ethiopia”, http://www.mftransparency.org/pages/mftransparency-and-the-association-of-ethiopian-microfinance-institutions-to-launch-the-transparent-pricing-initiative-in-ethiopia/

MicroCapital.org story, August 31, 2011: “MICROCAPITAL BRIEF: Chuck Waterfield of MFTransparency Explores Ideas to Make Microfinance Prices More Transparent”, http://www.microcapital.org/microcapital-brief-chuck-waterfield-of-mftransparency-explores-ideas-to-make-microfinance-prices-more-transparent/

MicroCapital.org story, August 14, 2011: “MICROCAPITAL BRIEF: MFTransparency, Mozambican Association of Microfinance Operators (AMOMIF) Launch Transparent Pricing Initiative in Mozambique”, http://www.microcapital.org/microcapital-brief-mftransparency-mozambican-association-of-microfinance-operators-amomif-launch-transparent-pricing-initiative-in-mozambique/

MicroCapital.org story, June 22, 2011: “MICROFINANCE EVENT: Fifth African Microfinance Conference, Addis Ababa, Ethiopia, September 19 – September 22, 2011”, http://www.microcapital.org/microfinance-event-fifth-african-microfinance-conference-addis-ababa-ethiopia-september-19-–-september-22-2011/

MicroCapital Universe Profile: MFTransparency, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MFTransparency

MicroCapital Universe Profile: Association of Ethiopian Microfinance Institutions (AEMFI), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Ethiopian+Microfinance+Institutions

MicroCapital Universe Profile: MicroNed, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroNed

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Brazilian Government to Expand National Program of Oriented Productive Microcredit (PNMPO), Subsidize Reduction in Microcredit Interest Rates

Rohan Trivedi — Tue, 30 Aug 2011 12:22:49 +0000

In an effort to broaden access to microfinance and encourage lending by private banks, the Brazilian government is expanding its National Program of Oriented Productive Microcredit (PNMPO in Portuguese), an initiative through which the government provides funding to microfinance institutions (MFIs) and other financial service providers for on-lending to small businesses and microentrepreneurs. The key changes will be a reduction in annualized interest rates paid by clients, from approximately 60 percent to 8 percent per year, and the cost of opening a line of microcredit will fall from 3 percent to 1 percent of the borrowed value.

The Brazilian government reportedly plans to spend up to BRL 483 million (USD 300 million) over the next two years to support the reduction in interest rates. As of March 31, 2011, PNMPO reported a loan portfolio of BRL 977 million (USD 600 million) with an approximate outreach of 908,000 active borrowers.

By Rohan Trivedi, Research Associate

Sources and Additional Resources:

[1] Invest in Brazil: “Brazil expands Federal Microcredit Program”, http://investinbrazil.biz/news/brazil-expands-federal-microcredit-program-78k9

MicroCapital.org story, August 25, 2011: “MICROCAPITAL BRIEF: Central Bank of Brazil Publishes ‘Inclusao Financeira’ Calling for Increased Financial Inclusion, Urging Microfinance Institutions (MFIs) to Boost Transparency, Product Innovation, Financial Education”, http://www.microcapital.org/microcapital-brief-central-bank-of-brazil-publishes-“inclusao-financeira”-calling-for-increased-financial-inclusion-urging-microfinance-institutions-mfis-to-boost-transparency-pro/

MicroCapital.org story, June 21, 2011: “MICROCAPITAL BRIEF: Laura González of Getulio Vargas Foundation’s Microfinance Studies Centre, Marcelo Azevedo Teixera of Banco do Nordeste do Brasil (BNB) Praise Brazil’s National Productive Microcredit Programme, Argue More is Needed”, http://www.microcapital.org/microcapital-brief-lauro-gonzalez-of-getulio-vargas-foundations-microfinance-studies-centre-marcelo-azevedo-teixeira-of-banco-do-nordeste-do-brasil-bnb-praise-brazil’s-national-productiv/

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: MFTransparency Announces First Microfinance Data Submissions for Transparent Pricing Initiative in the Philippines

Rohan Trivedi — Mon, 22 Aug 2011 13:04:02 +0000

MFTransparency, a US-based nongovernmental organization (NGO) that collects and publishes information on microcredit products and pricing, recently received the first data submissions from Filipino microfinance institutions (MFIs) that are participating in its “Transparent Pricing Initiative.” Sixteen MFIs have so far submitted data to the program, which expanded to the Philippines in March 2011 in partnership with the Microfinance Council of the Philippines (MCPI), an association of MFIs in the country, and the Rural Bankers Association of the Philippines (RBAP), a nonprofit organization that supports the rural banking sector. The project is sponsored by MicroNed, a Netherlands-based technical service provider and microfinance consultant, and Luxembourg Development Cooperation, the country’s agency in charge of allocating international aid. Through this initiative as well as efforts in 23 other countries, MFTransparency is aggregating and publicizing pricing data, as well as organizing training sessions that cover topics in transparency and consumer protection.

The first sixteen MFIs to submit data are ASA Philippines, Ahon Sa Hirap, Incorporated (ASHI), Kasagana-Ka Development Center Incorporated (KDCI), Rizal Microbank, Jaime V Ongpin Foundation Incorporated (JVOFI), Rangtay sa Pagrang-ay Incorporated (RSPI), Community Economic Ventures Incorporated (CEVI), Kazama Grameen, Alalay sa Kaunlaran Incorporated (ASKI), Rural Bank of Liloy Incorporated (RBLI), People’s Bank of Caraga (PBC), Hagdan sa Pag-uswag Foundation Incorporated (HSPFI), Bangko Kabayan, Simbag sa Pag-Asenso, TSPI Development Corporation and 1st Valley Bank. According to an MFTransparency press release, 32 additional MFIs in the Philippines have begun the data submission process.

The data will be posted on the MFTransparency website after it has been processed and standardized. Data from microfinance products in nine other countries is available on the MFTransparency website as of August 2011.

By Rohan Trivedi, Research Associate

About MFTransparency:
MFTransparency is a US-based nongovernmental organization (NGO) that was launched in July 2008 to provide information on microcredit products and their prices. MFTransparency collects data on the interest and fees charged on microfinance loan products in order to calculate the effective interest rates on those loans. Its intention is to establish the industry standard for pricing disclosure and to facilitate a fair exchange of microfinance products between suppliers and consumers. According to its website, between the time of MFTransparency’s launch and December 2010, 691 industry stakeholders, including microfinance institutions and apex banks currently serving 107 million clients worldwide, have endorsed its efforts. Data from microfinance products in nine countries is available on the MFTransparency website as of August 2011. Sixteen countries are currently participating in the data collection stage.

About Microfinance Council of the Philippines (MCPI):
Microfinance Council of the Philippines (MCPI) is a trade association for microfinance-related organizations in the Philippines. MCPI is a network of 36 lenders and 9 service providers that seeks to further develop the microfinance industry in the Philippines in partnership with government agencies and institutions including Bangko Sentral ng Pilipinas (BSP), Department of Finance-National Credit Council, National Anti-Poverty Commission, People’s Credit and Finance Corporation, Land Bank of the Philippines and the National Economic and Development Authority.

About Rural Bankers Association of the Philippines (RBAP):
The Rural Bankers Association of the Philippines (RBAP) is an organization founded to promote the rural banking industry in the Philippines. Founded in 1955, RBAP was established by representatives from the original eighteen rural banks operating in the Philippines. RBAP’s mission is to support its 599 members to offer banking services to their constituencies, comply with regulatory requirements and to promote the welfare of the communities in which they operate. Financial information is not available for Rural Bankers Association of the Philippines (RBAP).

Sources and Additional Resources:

[1] MFTransparency Press Release: “ASA Philippines Leads the Philippine Microfinance Industry in Pricing Transparency and Client Protection”, http://www.mftransparency.org/pages/2011/08/19/asa-philippines-leads-the-philippine-microfinance-industry-in-pricing-transparency-and-client-protection/

[2] MicroCapital.org story, March 20, 2011: “MICROCAPITAL BRIEF: MFTransparency, Rural Bankers Association, Microfinance Council of the Philippines to Launch Transparent Pricing Initiative”, http://www.microcapital.org/microcapital-brief-mftransparency-rural-bankers-association-microfinance-council-of-the-philippines-to-launch-transparent-pricing-initiative/

MicroCapital.org story, June 20, 2011: “MICROCAPITAL BRIEF: MFTransparency Announces First Microfinance Data Submissions for Ghana Transparent Pricing Initiative”, http://www.microcapital.org/microcapital-brief-mftransparency-announces-first-microfinance-data-submissions-for-ghana-transparent-pricing-initiative/

MicroCapital Universe Profile: MFTransparency, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MFTransparency

MicroCapital Universe Profile: Microfinance Council of the Philippines (MCPI), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Council+of+the+Philippines+%28MCPI%29

MicroCapital Universe Profile:: Rural Bankers Association of the Philippines (RBAP), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Rural+Bankers+Association+of+the+Philippines+%28RBAP%29

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Association of Microfinance Institutions in Rwanda (AMIR) Cautions Microfinance Institutions (MFIs) Against “One-Size-Fits-All” Approach, Particularly in Rural Areas

Alex Pattee — Sun, 12 Jun 2011 22:53:01 +0000

The Association of Microfinance Institutions in Rwanda (AMIR), an 84-member organization that was established in 2007 to build the capacity of the microfinance industry in Rwanda, has cautioned microfinance institutions (MFIs) in Rwanda regarding the risks of offering the same financial products to all clients.

AMIR Executive Secretary Rita Ngarambe told The New Times, a Rwanda-based news source, “MFIs must know that products that work here in town cannot work well in rural areas, they need to craft new products that will help these poor people access financial services….Because of this problem of MFIs using the same products, it is affecting them greatly especially with increasing Non Performing Loans, poor governance and operational risks” [1].

Ms Ngarambe also points out that AMIR has embarked on training MFIs on financial reporting, accountability and customer service in an effort to assist them in tackling the challenges they are facing, especially those in rural markets.

By: Alexandra Pattee, Research Associate

About the Association of Microfinance Institutions in Rwanda (AMIR): AMIR is an organization that was established in 2007 to build the capacity of the microfinance industry in Rwanda. As of March 2011, AMIR consists of 84 members that serve poor and middle-class families throughout the country. The association is governed by a general assembly and board of directors from Rwandan microfinance institutions (MFIs). Membership to AMIR is open to all MFIs that have been registered by Rwanda’s central bank.

Sources and Resources:

[1] The New Times, “MFIs Warned On Financial Product Duplication”, http://www.newtimes.co.rw/index.php?issue=14644&article=41782

MicroCapital.org Brief, May 31, 2011, “Rwanda’s Bank of Kigali Announces Three Microfinance Products Targeting Rural Financial Inclusion”, http://www.microcapital.org/microcapital-brief-rwanda’s-bank-of-kigali-announces-three-microfinance-products-targeting-rural-financial-inclusion/

MicroCapital.org Brief, April 19, 2011, “Urwego Opportunity Bank of Rwanda Introduces Mobile Banks to Increase Access to Financial Services in Rural Areas”, http://www.microcapital.org/microcapital-brief-urwego-opportunity-bank-of-rwanda-introduces-mobile-banks-to-increase-access-to-financial-services-in-rural-areas/

MicroCapital.org Brief, November 1, 2010: Rwandan Government Launches 7-Year Program for Economic Recovery, Aims to Reach 80% of Population With Financial Services, http://www.microcapital.org/microcapital-brief-rwandan-government-launches-7-year-program-for-economic-recovery-aims-to-reach-80-of-population-with-financial-services/

MicroCapital’s Microfinance Universe Profile: Association of Microfinance Institutions in Rwanda (AMIR), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Microfinance+Institutions+in+Rwanda+%28AMIR%29

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Myanmar’s (Burma’s) Banned Opposition Party, National League for Democracy (NLD) to Launch Microfinance Program

Alex Pattee — Tue, 31 May 2011 05:03:26 +0000

The National League for Democracy (NLD), a banned political opposition party in Myanmar (formerly known as Burma), is reported to be planning the launch of a microcredit program to provide small, interest-free-loans in South Okkalapa Township of Burma’s capital city, Rangoon.

The program is reported to be planning a launch on June 1, 2011, at which point it will offer loans of MMK 20,000 (USD 24) to 50 individuals, including vendors and others without access to traditional forms of credit. Irrawaddy, a Burma-based news source, reports that the program will prioritize women who earn their living on a daily basis and that individuals who receive funding will be required to repay MMK 700 (USD 0.85) per day.

There are no microfinance institutions in Myanmar that report data to the US-based nonprofit Microfinance Information Exchange as of May 2011.

By: Alexandra Pattee, Research Associate

Sources and Resources:

[1] Irrawaddy, “NLD Members to Launch Microcredit Program”, http://www.irrawaddy.org/article.php?art_id=21339

MicroCapital.org Article, October 27, 2009, “Burmese Military Authorities Plan First Microfinance Lending Program on Burma’s Western Border”, http://www.microcapital.org/microcapitalorg-story-burmese-military-authorities-plan-first-microfinance-lending-program-on-burmas-western-border/

MicroCapital.org Article, April 14, 2009, “Japan Gives USD 84,000 to Support Microcredit on the Thai-Burmese Border Through the Grassroots Human Security Projects Scheme”, http://www.microcapital.org/microcapital-story-japan-gives-usd-84000-to-support-microcredit-on-the-thai-burmese-border-through-the-grassroots-human-security-projects-scheme/

MicroCapital.org Article, July 4, 2008, Microfinance Institution MBEG (Myanmar Business Executive Group) to Support Burmese Cyclone Victims with $45k in Microloans”, http://www.microcapital.org/microcapital-story-microfinance-institution-mbeg-myanmar-business-executive-group-to-support-burmese-cyclone-victims-with-45k-in-microloans/

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Journalist Lewis Mwanangombe Argues Microfinance Institutions, Banks Fail to Provide Adequate Financial Services in Zambia

Alex Pattee — Mon, 30 May 2011 05:03:52 +0000

A recent article published by Inter Press Service (IPS), an Italy-based global news agency, written by Lewis Mwanangombe, a Zambian journalist who writes for the Associated Press and the Pan-African News Agency, highlights the limited availability of financial services in Zambia. Referencing a World Bank report, Mr Mwanangombe points out, “less than eight percent of Zambian adults have bank accounts. For the millions who make their living in the informal economy, this prevents them from earning interest on any savings they have or securing credit needed to expand small businesses beyond mere survival” [1].

Mr Mwanangombe highlights the limited access at both sides of the marketplace as follows, “Commercial banks have little interest in lending – or even banking – small entrepreneurs’ money” and many microfinance institutions (MFIs) decline to lend small-business entrepreneurs “anything more than a million Zambian kwacha – the equivalent of 75 dollars” [1]. “At the other end of MFIs’ potential market, the half of the population living on less than a dollar a day, who will have neither a formal income nor furniture against which to secure a microloan, have little option but to turn to loan sharks, commonly known as ‘kaloba’” [1].

The eight MFIs in Zambia that report to the US-based nonprofit Microfinance Information Exchange (MIX), as of 2009 serve 31,340 active borrowers and 27,369 depositors.

Sources and Resources:

[1] Inter Press Service (IPS), “Zambia: Microfinance Beyond the Reach of the Poor”, http://www.ips.org/institutional/

MicroCapital.org Article, August 27, 2010, “Zambian Minister of Finance and National Planning Reaffirms Commitment to Build Financial Infrastructure for Low-Income Groups and Microfinance Institutions (MFIs)”, http://www.microcapital.org/microcapital-brief-zambian-minister-of-finance-and-national-planning-reaffirms-commitment-to-build-financial-infrastructure-for-low-income-groups-and-microfinance-institutions-mfis/

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