SPECIAL REPORT: Small Business Diaries Benefit Entrepreneurs, Microfinance Institutions #EMW2023

e-MFP logoThe Financial Access Initiative (FAI) at New York University recently completed a study spanning seven countries, collecting data from firms with up to 20 paid employees. Researchers visited hundreds of these companies every few weeks for one year to support them in completing diaries of their financial lives. Among the takeaways are that the owners of the firms want to maintain stability and grow at a moderate pace and that they are most in need of

MICROFINANCE PAPER WRAP-UP: “Agritech and Fintech Providers in East and Southern Africa: A Landscape Assessment;” published by IFAD, SAFIN

The authors of this paper address: (1) the environment that financial institutions in East and Southern Africa (ESA) face when lending to agricultural micro-, small and medium-sized enterprises (MSMEs); and (2) how this lending can be increased via agricultural technology (agritech) and financial technology (fintech) firms. The challenges include

MICROFINANCE PAPER WRAP-UP: “Establishing a Financial Services Ombudsman in Mongolia: Experiences and Lessons from Armenia, Australia and Singapore,” by Massimiliano Gangi et al

This paper explores the potential of introducing an independent ombudsman system to address complaints by consumers against financial services providers (FSPs) in Mongolia by exploring existing dispute resolution systems in Armenia, Australia and Singapore.

Among the similarities of these three systems are:

MICROCAPITAL BRIEF: Bankingly, Woodcore Partner to Help FSPs in Africa to Offer Digital Financial Services

Bankingly, a Uruguay-based company that helps smaller financial services providers (FSPs) implement digital financial services, and Woodcore, a provider of core banking software with offices in Nigeria and the US, recently partnered on an effort to help microfinance institutions and other FSPs in Africa to add

MICROCAPITAL BRIEF: 60 Decibels Microfinance Index Data from 32 Countries Indicates Higher Confidence Among Group Borrowers, Greatest Debt Burden in Cambodia

This year’s second annual Microfinance Index from US-based impact measurement firm 60 Decibels draws on phone calls to approximately 32,000 users of microfinance services delivered by 115 financial services providers (FSPs) in 32 countries. In general, FSP clients reported higher confidence in dealing with economic shocks than

MICROFINANCE PAPER WRAP-UP: “Predictors of Microfinance Sustainability: Empirical Evidence from Bangladesh,” by Maeenuddin et al

This article examines the financial sustainability of microfinance institutions (MFIs) in Bangladesh. Using data from the MIX Market database, the authors develop a

MICROCAPITAL BRIEF: UN, EU Supporting SMEs Involved in Fisheries in Cambodia via Capfish-Capture Program

Capfish-Capture, a project organized by the UN Industrial Development Organization (UNIDO), is giving technical and financial support to small and medium-sized enterprises (SMEs) in Cambodia’s fishing industry to promote compliance with international food safety standards, allow SMEs to upgrade their machinery, connect SMEs with microfinance and venture capital, and increase academic research into post-harvest food technology. As of 2023, 28

SPECIAL REPORT: Agents for Impact – We Make Positive Impact Investable!

Founded in 2018, Agents for Impact (AFI) celebrates its fifth anniversary this year. This represents five years of continuous commitment to our mission, which is to build bridges between impact investors and fi­nancial services providers in developing markets across the world. Sustainability is central to our vision. We aim to create more investment opportunities by mea­suring risks (Risk), rendering impact measurable and comparable (Rating), and making sustainability and financial inclusion understandable for investors (Research).

To acknowledge our jubilee, we kick off 2023 by looking back at our achievements and bringing some of our milestones to your attention. Since its inception, AFI has provided investment advice and recommendations on around USD 285 million in impact in­vesting transactions. So far, we have done business in 16 coun­tries across the globe, facilitating debt financing to 32 financial institutions (including one more since the December 2022 figures shown in the graph below!) – each of which was ana­lyzed and selec­ted according to strict standards of sustainability, alignment with a number of the UN’s Sustainable Development Goals (SDGs), and

SPECIAL REPORT: ¡Viva el Cooperativismo – A Powerful and Efficient Way of Helping One Another!

According to the World Council of Credit Unions (WOCCU), a credit union is “a customer/member-owned financial cooperative, demo­crati­cally controlled by its members, and operated to maximize the econo­mic benefit of its members by providing financial services at competitive and fair rates.” In short, savings and credit cooperatives (SACCOs) are member-based institutions that intermediate savings into loans, enabling low-income populations to accumulate savings and create a source of credit at reasonable rates. Cooperatives represent an economically viable avenue for changing people’s lives, based on the powerful idea that

SPECIAL REPORT: Looking Back to Plan Ahead – The Year of AFISAR

AFISAR© (the Agents for Impact Sustainability Alignment Rating) builds trust and credibility in the microfinance sector. With our part­ners, we engage in an active rating process, inspiring discussion and increasing awareness and understanding of the UN’s SDGs and envi­ronmental, social and governance (ESG) factors, taking a deep dive into the poten­tial of finance to transform people’s lives, especially the lives of mem­bers of vulnerable groups. Placing active dialogue at the centre of the AFISAR© rating process, we address sustainability with strategic decision-makers and support our partners to further align their opera­tions to the SDGs.

Having clocked five years of rating experience, culminating with the Year of AFISAR© in 2022, we would like to share some reflections:

Local presence is key Our rating team has grown bigger and stronger: we have a new colleague, Abhinav Soni, who is based in

MICROCAPITAL BRIEF: Publish What You Fund Releases DFI Transparency Index Ranking Disclosure Record of 30 Development Finance Institutions

Publish What You Fund, a UK-based NGO aimed at increasing the transparency of international development efforts, today launched its DFI Transparency Index, which examines and ranks the operational transparency of 30 development finance institutions (DFIs). The rankings are based on

MICROCAPITAL BRIEF: MFR Releases Impact Assessment Rating Service for Microfinance Institutions

Microfinanza Rating (MFR), an Italy-based rating agency focusing on “inclusive and sustainable finance,” recently unveiled its Impact Assessment service, which it describes as offering “external, reliable and independent validation of the changes generated by the financial institution’s activities, in its clients’ li[ves].” The assessment uses indicators based on

MICROCAPITAL BRIEF: 60 Decibels Microfinance Index Offers Impact Data from 18k Customers of 72 MFIs

Impact-measurement firm 60 Decibels recently released data it has assembled from 18,000 clients of 72 microfinance institutions (MFIs) that serve 25 million people in 41 countries. The report is based on a survey exploring changes in factors such as income, stress level, number of employees and ease of affording loan repayments, as well as levels of

SPECIAL REPORT: Pratibha Singh of Agents for Impact, Arunkumar Padmanabhan of Svasti Discuss the AFISAR Rating, Microfinance, Impact and Much More!

This is part of a series of features sponsored by Agents for Impact (AFI), a German impact investing firm whose products include the AFI Sustainability Alignment Rating (AFISAR©) tool. AFISAR© is a trust mark – in microfinance and other forms of social business – signifying a commitment to positive and enduring change for people and the planet, based on the UN Sustainable Development Goal (SDG) framework.

AFISAR© helps MFIs leverage the market’s growing focus on sustainability performance to raise capital from international investors and, particularly, impact investors. The rating helps investors and social businesses understand their strengths and weaknesses and devise effective strategies to minimize negative impact and maximize positive impact to the benefit of the organization – its employees, clients and other stakeholders – as well as the environment.

The conversation below outlines the AFISAR© rating process carried out in the “direct partnership” format by a leading MFI like Svasti Microfinance. Direct partnership offers a conti­nu­ous and immersive experience to facilitate sustain­able transi­tions. The active dialogue and engagement embedded in the AFISAR© process enable the MFI as well as asset mana­gers to embark on a journey that leads to long-term sustainable develop­ment. AFI highly values long-term partnerships with organizations sharing our mission of achieving the UN SDGs. We take this so serious­ly that a rating above the sustain­ability threshold is required for the disbursement funds.

To date, AFI has used AFISAR© to rate 35+ microfinance and SME finance institutions in Asia, East Africa and Eastern Europe, helping the institutions demonstrate their SDG competency and alignment.

Pratibha Singh (pictured): How did you become interested in microfinance?
Arunkumar Padmanabhan: I was a lawyer and had worked for some years with ICICI Bank. Based on that experience, I wanted to set up a com­mercial business in the social impact space. We started in the slums of Mum­bai, and now we have expan­ded to eight states in India with 220,000 borrow­ers across 120 branches.

PS: What makes the Svasti model unique?
AP: The key to success in this field is based on three aspects: people, process and technology. Our vision follows the “people-first” approach. Tech­nology and innovation are driving forces as well, and we have built all of our systems from the ground up. That gives us a signifi­cant competitive advantage. Meanwhile, we have focussed on client protection and social impact from a very early stage in our develop­ment. With AFISAR©, we have become one of the few companies that is measuring its perfor­mance based on the SDGs. Constantly trying to improve in impact-driven areas is of great strategic importance.

PS: What is at stake for

SPECIAL REPORT: AFI SDG Rating Analyst Pratibha Singh, FINCA Tajikistan CEO Sergey Kim Discuss the AFISAR Rating, Microfinance, Impact and Much More!

This is part of a series of features sponsored by Agents for Impact (AFI), a German impact investing firm whose products include the AFI Sustainability Alignment Rating (AFISAR©) Tool. The AFISAR© rating is a trust mark – in microfinance and other forms of social business – signify­ing a commitment to positive and enduring change for people and the planet based on the UN Sustainable Development Goal (SDG) framework.

AFISAR© helps MFIs leverage the market’s growing focus on sustainability per­formance to raise capital from inter­national investors and, particu­larly, impact investors. The rating helps investors and social businesses unders­tand their strengths and weaknesses and devise effective strategies to minimize negative impact and maximize positive impact to the benefit of the organization – its employees, clients and other stakeholders – as well as the environment.

The active dialogue and engagement embedded in the AFISAR© rating process enables the MFI as well as asset managers to embark on a journey that leads to long-term sustainable development. A rating above the sustainability threshold on the scale (see below) is favorable for the disbursement funds. To date, AFI has used the AFISAR© Tool to rate 30+ micro­finance and SME finance institutions in the Caucasus, Central and South Asia, East Africa and Eastern Europe, helping the institutions demonstrate their SDG competency and alignment.

Pratibha Singh (pictured): How did you become interested in microfinance?
Sergey Kim: My professional career started in 1998 in the field of microfinance. I was working as a loan officer for a UN microcredit project, which made it possible for me to have a close look at the ground-level realities concerning credit operations. After finishing my graduate degree, I chose FINCA because the job was close to people.

I have worked with FINCA since 2006 and have been in Tajiki­stan for the last 12 years. FINCA Tajiki­stan has been active since 2004 and is now amongst the top

SPECIAL REPORT: Measuring Impact with Agents for Impact’s AFISAR Tool

Agents for Impact: Driving Positive Impact… Together!

The 17 Sustainable Development Goals (SDGs) outlined by the UN in 2015 provide a blueprint for a just and sustainable world. While actors across a range of professional arenas are rushing to catch up with the SDGs, the term “impact” is being thrown around loosely to give the impression that the desired goals have been reached. It is tempting to assume certain businesses have a positive impact on the SDGs, simply based on intuition. However, some might negatively impact the SDGs or elicit both positive and negative outcomes in the long run. Without proper tools for impact measurement and assessment, we can only get so far!

Agents for Impact (AFI) understands how essential it is to improve the practice of impact measurement through stable and coherent frameworks. To deliver on this promise, we have designed a specialized investment approach to support microfinance institutions (MFIs) that exhibit strong commitment to and proven track records of progress toward the SDGs. To evaluate an MFI’s performance, AFI peels back the surface to deploy a strong assortment of cohesive and rigorous assessment tools, including financial analysis and addressing social performance indicators; sustain­ability factors; and

MICROCAPITAL BRIEF: L-IFT Adds Features to Finbit Financial Diaries App

The Netherlands-based company Low-income Financial Transformation (L-IFT) recently added several features to its Finbit system for creating financial diaries to track the transactions and various attributes of individuals and small enterprises. Finbit includes both an app for Android phones and a portal for accessing the data collected.

The app can act as a financial diary, tracking every daily expense and instance of incoming funds, including purchases, savings, loan disbursements and loan payments as well as number of hours worked. Its new features are more oriented toward the owners of small businesses, including