The National Bank of Cambodia (NBC), the central bank of the country, recently revoked the licenses of 11 microfinance institutions (MFIs) for failing to maintain compliance with a “diverse” range of rules. The MFIs, which are classified as “rural credit operators,” reportedly comprise a
A new program called Microinsurance Master is offering two weeks of training at Pioneer Microinsurance, a Philippines-based firm with 18 million customers, followed by eight weeks of remote coaching intended to help participants “focus on client-centric solutions that reduce the vulnerability of low-income people and
During the closing day of European Microfinance Week, Imran Matin of the US-based nonprofit Innovations for Poverty Action (IPA) stressed the importance of not just whether women will use financial services, but “what account ownership will translate into in terms of achievement.” Foreshadowing a theme of the session, he added that “intra-household dynamics is very important and also particularly difficult to measure.”
Bdour Al-Hyari of Jordan’s Microfund for Women (MFW) described a long-running insurance product offered by her microfinance institution (MFI). The coverage provides cash to clients who are hospitalized or have a family member who is. While health issues were a major cause of default in the past, women who got “hospital cash” from MFW reportedly repaid their loans at a rate of
During the closing day of European Microfinance Week, Karima Wardak of the UN Capital Development Fund argued that copying digital financial services from country to country is not working. The same is true of country-specific “products that were designed in board rooms,” she said. Gilda Zarate Chabluk of Innate Motion, a consultancy with staff in 27 countries, launched the discussion of how concepts of human-centered design can sidestep these problems. All staff involved in a project should observe and talk to end-users early in the design process. She suggests a meeting at the home of the end-user that lasts about two hours, with most of that time focused on the user’s life rather than the product. The idea is to create the product with the users not for the
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
On the first day of conference sessions at European Microfinance Week, experts in the social performance of microfinance institutions (MFIs) discussed how tools developed over the last ten years have reached a level of maturity warranting their wider rollout.
Cecile Lapenu of France-based Cerise described SPI4, the fourth iteration of a set of Social Performance Indicators intended to simplify reporting and provide a common language for different stakeholders to discuss social performance management (SPM). SPI4 incorporates the Smart Campaign’s Client Protection Principles and the Social Performance Task Force’s Universal Standards for SPM. It also includes optional modules on poverty, gender and the environment. To date, 432 SPI4 audits have been completed on institutions in 88 countries.
Jurgen Hammer of the Luxembourg-based Grameen Credit Agricole Foundation explained his organization’s use of the SPI4/ALINUS (Aligning Investors’ Due Diligence to the Universal Standards) framework to evaluate and benchmark the social performance of its partner MFIs. The foundation was meeting or exceeding the benchmark data in all categories except
Two organizations that facilitate lending to people and small businesses with limited credit histories, US-based Entrepreneurial Finance Lab (EFL) and Singapore-based Lenddo, recently merged. Prior to the merger, the organizations had completed a total of 5 million
The National Bank of Cambodia (NBC) continues to resist suggestions that it soften the decree it made in December 2016 that all financial institutions boost their local-currency lending to 10 percent of their portfolios by December 2019. NBC Director General Chea Serey reportedly said foreign banks struggling to meet the new threshold should partner with microfinance institutions (MFIs) because
CGAP (the Consultative Group to Assist the Poor), a nonprofit research center seeking to expand financial services in poor regions, recently announced the establishment of the Platform for Economic Inclusion (PEI) to “accelerate innovation and scaling of graduation-style programming.” Initiated by Bangladeshi NGO BRAC (formerly the Bangladesh Rehabilitation Assistance Committee) in 2011, the graduation approach involves: targeting only
MicroCapital: Do you find that microfinance institutions (MFIs) tend to underinvest in human resources (HR)?
Rüdiger Meister: Definitely! Despite the efforts of many consultants in this field, the crucial role of HR management remains under-estimated. Technical assistance interventions, which often accompany investments into MFIs, tend to focus on discrete areas rather than following a holistic and structured approach to capacity building.
There is also a problem of short-term versus long-term thinking. In the short term, the MFI will function even if there are weaknesses in HR management. But in the long term, the MFI will have to pay for mistakes in areas such as
During October 2017, MicroFinanza Rating (MFR) issued a Microfinance Institutional Rating (MIR) of BB with a Stable outlook to Rangtay sa Pagrang-ay Microfinance of the Philippines. MFR also updated the MIRs of three affiliates of US-based Pro Mujer Incorporated: Pro Mujer Argentina’s was confirmed at BB+ with a Positive outlook; Pro Mujer Nicaragua’s was confirmed at BBB+ with a Stable outlook; and Pro Mujer Mexico’s was upgraded
At the SAM (Semaine Africaine de la Microfinance) conference in Addis Ababa, a wide variety of vendors presented their wares. Among these were several core banking system providers. Antonio Separovic of Oradian previously had set the stage for the conversation at the fintech (financial technology) session organized by Dutch development bank FMO. He argued that microfinance institutions (MFIs) shouldn’t start by thinking about whether to buy a new system, but about where the MFI wants to go and how to get there. “Fintech may be able to reduce the friction to do these things,” he said.
Cameron Goldie-Scot of Musoni agreed: “It’s about what are the challenges in your organization? Is it too expensive to handle cash in rural areas? Do you have trouble getting
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
During the SAM (Semaine Africaine de la Microfinance) conference today, Willie Mzumala of Malawi’s Tapika Food Products described how he has grown his business over 13 years to employ 9 people year-round plus additional seasonal staff. However, he still is offered loans at interest rates as high as 45 percent. In addition to affordable financing, he sees a need for small and medium-sized enterprises (SMEs) to get help with marketing, getting international exposure and standardizing quality.
Richard Muteti of the Kenya National Federation of Jua Kali Associations repeated Mr Mzumala’s call for help with standardization and more affordable financing. Among other barriers to SME success, he cited lack of appropriately
Today at the SAM (Semaine Africaine de la Microfinance) conference, Laura Foschi of ADA addressed the question of “how to support enterprises as they make the transition from micro- to small and medium-sized.”
Rebecca Rouse of Innovations for Poverty Action (IPA), described how randomized controlled trials can help determine “how can we best create value, spaces and opportunities for small and medium-sized enterprises (SMEs) and SME growth.” For example, evaluating the effectiveness of a business training program is much more enlightening when
Italy’s MicroFinanza Rating (MFR) issued two microfinance institutional ratings during September. Palestine’s Asala Company for Credit and Development was assigned a grade of BB+ with a “stable” outlook, and Inkunga Finance of Rwanda was assigned a grade of
HuaXia Finance, an online peer-to-peer lender in China, recently began holding customer funds at Ping An Bank, a Chinese bank, under a “formal online banking depository management system” in order to comply with tightened requirements of the China Banking Regulatory Commission. Michael J Beda, the Director of Expat Investment at HuaXia, tells MicroCapital that his is “the first company to
During July and August, Italy’s MicroFinanza Rating (MFR) issued five microfinance institutional ratings. Morocco’s Attadamoune Micro-Finance was assigned the grade B+ with a stable outlook. Ecuador’s Fundación Espoir and Albania’s FED Invest both earned grades of BB with stable outlooks. Two institutions earned grades of