by the MicroCapital Team -

SPECIAL REPORT: “Capital in the Age of COVID” at European Microfinance Week

European Microfinance PlatformAt this presentation on the effects of the COVID-19 pandemic on financial inclusion, which was subtitled “Navigating the Uncharted Sea of Insolvency,” Lucia Spaggiari of MFR (formerly known as Microfinanza Rating) predicted that the solvency challenges brought on – or simply exacerbated – by the pandemic may haunt institutions for the next 10 years. Although she described the solvency challenges of 2020 as “not drastic,” 22 percent of financial services providers (FSPs) in her dataset still significant solvency risk. Ms Spaggiari believes this may increase to as high as 34 percent over the next two years.

As for the potential effects on clients, there are clusters of greater risk among: FSPs in sub-Saharan Africa, where 17 percent of institutions are in danger; smaller FSPs, those with assets under USD 10 million; FSPs with

by the MicroCapital Team -

SPECIAL REPORT: Aligning Incentives, Setting Realistic Expectations for FSPs’ Outcomes Measurement at the e-MFP Investors Action Group

European Microfinance PlatformDuring European Microfinance Week last week, Célia Fernandez of the French NGO Comité d’Echange, de Réflexion et sur les Systèmes d’Epargne-Crédit (CERISE) described LabODD, a project to help mission-driven organizations measure their progress toward the UN Sustainable Development Goals (SDGs). LabODD is a four-year project funded by the French government’s Agence Francaise de Developpement. Among its outputs is a brief due out in December 2021 that will cover outcomes management for financial services providers (FSPs). Cécile Lapenu, also of CERISE, described several trends that will be presented in the brief.

The demand of impact investors for accountability from FSPs is growing. However, the focus now is more on measuring outcomes – which can be associated plausibly with the work of FSPs – rather than impacts – which must be shown to result from

by the MicroCapital Team -

SPECIAL REPORT: Private, Public Funders on Green Microfinance, Climate Adaptation, Biodiversity

European Microfinance PlatformToday, at the first plenary of European Microfinance Week 2021, climate adaptation was the hot topic – in contrast to climate mitigation, which is more of a preventative measure. The panelists argued that the scale of funding for climate adaptation is much too small and that many of those most in need still lack access to funding. These groups include smallholder farmers, women, youth and members of indigenous groups. Meanwhile, financial services providers (FSPs) are reporting that

by Arin Atluri -

MICROCAPITAL BRIEF: Moneylenders Arrested for Extortion, Impersonating Uganda Microfinance Regulatory Authority Staff

Police in the Buikwe district of Uganda recently arrested six employees of Moskal Enterprises Uganda Limited, a moneylending firm based in the Luwero district, for impersonating staff of the

by Arin Atluri -

MICROCAPITAL BRIEF: Kestra Financial, TriLinc Global Collaborate to Expand Retail Access to Impact Investments

Two US-based firms, Kestra Financial and TriLinc Global, recently agreed to collaborate to give Kestra’s 1,800 registered representatives access to TriLinc’s impact funds, which have a total volume of USD 1.2 billion. TriLinc’s funds, which target low- and middle-income countries, seek

by the MicroCapital Team -

MICROCAPITAL BRIEF: CERISE, SPTF Invite Microfinance Institutions to Join Client Protection Pathway

Two NGOs, Comité d’Echange, de Réflexion et sur les Systèmes d’Epargne-Crédit (CERISE) of France and the US-based Social Performance Task Force (SPTF), recently announced the Client Protection Pathway, a free service through which financial service providers (FSPs) may get support and recognition for improving the ways they serve clients. The first step in the pathway is to agree that “Our organization has

by the MicroCapital Team -

SPECIAL REPORT: People Power: A New e-MFP Paper Shines a Light on the Human Resources Landscape in Financial Inclusion

Human resources (HR) is a critical success factor for financial institutions to become – and remain – competitive in a changing and increasingly complex business environment. Although most institutions would agree that HR functions – recruitment, onboarding, performance manage­ment, training and development, among others – are important, some questions remain: How can HR functions be carried out in a strategic and sustainable way? Are MFIs in a strong position to develop and retain the workforce they need to pursue their business and social objectives? How can they strengthen their capacity in these areas?

The lack of recent global data on MFIs’ HR management practices has made it difficult to answer these questions. To address this, the European Microfinance Platform’s (e-MFP’s) HR Action Group has conducted a large-scale

by the MicroCapital Team -

SPECIAL REPORT: Non-performing Loan Management and Investment – a New Executive Education Offering from Frankfurt School

This year, Europe is emerging from the deepest recession in a gen­eration. But this has not been a normal recession. The number of insolvencies has come down over the last year, and non-performing loans (NPLs) are close to a historic low. Numerous government sup­port measures, such as tax rebates, furlough schemes, moratoria and the suspension of insolvency proceedings were highly effective in temporarily bridging enterprises’ liquidity shortfalls.

However, most of these support measures have come to an end, and many firms’ liquidity buffers are depleted. Meanwhile, a range of sectors will need to confrontSustainable World Academy a fundamental reshaping of their business models. The European Systemic Risk Board, tasked with the big financial stability issues in Europe, speaks of a coming tsunami of insolvencies.

In developing countries, the COVID-19 crisis will be more protracted, and a full recovery is less certain. Many mid-sized companies entered the crisis with significant leverage levels, and the more numerous micro­enterprises are poorly

by the MicroCapital Team -

SPECIAL REPORT: “Financial Inclusion Compass 2021” Reveals a Sector Grappling with the Consequences of COVID-19 – and Trying to Look Beyond It

InEuropean Microfinance Platform 2018, e-MFP launched the first Financial Inclusion Compass, a new annual publication series to collate sector opinions on emerging short-, medium- and long-term trends in the financial inclusion sector. e-MFP is delighted to now publish the English language version of the Financial Inclusion Compass 2021 – the fourth in the series.

The survey on which this paper is based was open in May 2021, with financial services providers (FSPs), investors, donors, researchers and support services providers evaluating and describing the importance of various current Trends, rating future New Areas of Focus, and providing open-comment qualitative input on the expected (and hoped-for) direc­tion of financial inclusion progress.

The survey had two main sections: in Section 1, respondents rated from 1-10 the current importance of a list of 20 Trends and evaluated a list of 16 future New Areas of Focus to rank their highest five in terms of future significance. Optional comments on each were possible. Section 2 had three optional and open-ended questions, with a focus on the impact of the pandemic.

The Compass received 125 responses from 39 countries. A plurality of respondents were FSPs, followed by consultants/support services pro­viders, infrastructure organisations, funders and researchers. On the main geographic focus of respondents’ work, a plurality selected Global, followed by Sub-Saharan Africa, Asia and Latin America.

Trends

Two new trends, introduced in response to the uniquely challenging context of the pandemic, took the top two spots

by the MicroCapital Team -

SPECIAL REPORT: Unlock New Value from Lending Operations: 6 Reasons Why Digital Loan Origination Holds the Key to Lasting Success


If your organization still relies on paper-driven lending processes, you’re missing out on opportunities to cut costs, boost efficiency and tap into new markets. Read on to discover the top reasons you can’t afford to delay making the move to digital loan origination.

Loan origination has long been a complex, highly manual process. It typically involves piles of paperwork, in-person visits and rigorous checks that cost financial providers serious time, money and effort. But this lending landscape is changing fast: Borrowers increasingly expect

by the MicroCapital Team -

SPECIAL REPORT: How Do We Build the Right Skills for a Sustainable Future?

There is no doubt that sustainability considerations recently have found their way into many areas of our lives. The global Fridays for Future movement is just one of several calls to action to significantly reduce carbon emissions and make the world more climate-resilient and socially equitable – and thus a better place to live. The adoption of the Paris Agree­ment and the UN’s Sustainable Development Goals (SDGs) are Sustainable World Academydriving demand for low-carbon goods and services around the world. Thus, the sustainability wave has spilled over into the real economy and the finan­cial sector, forcing stakeholders to rethink legacy business models and practices. Environmental, social and governance (ESG) con­sidera­tions, being the main pillars for sustainability, have become key drivers for investment and other business decisions, as sustain­ability-related risks (e.g. climate change) have started to gain wide recognition.

The COVID-19 pandemic: A (final) push for sustainability?

The fragility of unsustainable business models and lack of practices for a resilient and robust economy – as well as survivability – became

by Sophie Fiala -

MICROCAPITAL BRIEF: CDC Updates Environmental, Social, Governance (ESG) Toolkit for Financial Services Providers, Adding Climate Component

CDC Group, a development finance institution backed by the UK government, recently launched an updated environmental, social and governance (ESG) toolkit to assist financial services providers (FSPs) in addressing common ESG challenges such as corruption, money laundering, and gender-based harassment and violence. It is targeted at

by Bradley Shulman -

SPECIAL REPORT: Online Event: Strengthening Cybersecurity to Boost Financial Inclusion in Africa; July 13, 2021

The Midi de la Microfinance 53rd Midi de la Microfinance, held by Luxembourg-based NGO ADA Microfinance, will focus on cybersecurity as it relates to financial inclusion in Africa. This includes suggested “points of attention and concrete actions” microfinance institutions may use to minimize the risks associated with

by Sophie Fiala -

MICROCAPITAL BRIEF: CDC Group Announces $50m Risk-sharing Facility with Absa Bank to Boost Lending to Households, MSMEs in Africa

CDC Group, a development finance institution backed by the UK government, recently announced a risk-sharing facility of USD 50 million in partnership with Absa Bank Limited, which is based in South Africa and operates in 14 African countries. Under the agreement, CDC will

by the MicroCapital Team -

SPECIAL REPORT: SAM 2021 to Take Place in Kigali, Rwanda, October 18-22; “One Is Not Born Resilient But Becomes Resilient: Fostering Inclusive Finance to Better Overcome Crisis!”

From ADA: It’s official! The largest event in inclusive finance on the African continent, the long awaited African Microfinance Week (AMW 2021), will take place in Kigali, in the land of 1,000 hills and mountains: Rwanda. From October 18 to October 22, 2021, the SAM will address the theme of resilience, a concern that is all the more important in these particular times.

This notice is the first in a

by the MicroCapital Team -

SPECIAL REPORT: Online Event; COVID-19 Surveys: Better Understanding the Impact on MFIs and Their Clients to Better Act; June 9, 2021

Two Midi de la MicrofinanceLuxembourg-based NGOs, ADA Microfinance and Grameen Crédit Agricole Foundation, along with Belgium-based Inpulse Investment Manager will present their analysis of the responses to five surveys they have conducted since 2020 regarding how the COVID-19 pandemic is affecting microfinance institutions (MFIs). This event, part of the Midi de la Microfinance series, will offer “lessons learned” from the surveys, with the goal of helping MFIs improve the ways they prepare for and react to crises. Among the speakers will be Jacques Afetor, Director of Togo-based

by the MicroCapital Team -

SPECIAL REPORT: Christoph Pausch on the European Microfinance Award 2021: Inclusive Finance and Health Care

MicroCapital: Why was “Inclusive Finance and Health Care” chosen as the topic of the European Microfinance Award 2021?

Christoph Pausch: As the past year has shown us all with such unfor­tunate clarity, health is everything. Being healthy allows education to play its role in opening new opportunities; it allows people to earn, invest and employ others; it keeps the economy growing and lets groups and societies prosper. And the opposite is true as well: without health – without health care to help people recover from serious health shocks and to stop minor health issues from becoming serious – it’s so hard for people to prosper.

This is especially true for the global poor – the financially excluded – who typically have volatile and precarious incomes and live in countries without high-quality universal health care. They not only need access to health care, but also the ability to pay for it. Too often this can mean taking on debt and selling income-generating assets or even

by Aakansha Shenoy -

MICROFINANCE PAPER WRAP-UP: “Crisis Roadmap for Microfinance Institutions: COVID-19 and Beyond,” by Julie Abrams, Published by CGAP

The author structures this publication as an 11-step “roadmap” for microfinance institutions (MFIs) to respond to the COVID-19 pandemic and its economic impacts as well as to develop resilience going forward.