Category: Trends/Challenges

SPECIAL REPORT: On Microbusiness Support in Conflict Zones, a Discussion at European Microfinance Week

Major David Beskow of the US Military Academy told a crowd at European Microfinance Week, about distributing microgrants in eastern Baghdad, Iraq, largely to women shop-owners for refrigeration, generators or inventory. Funded by the Iraqi government and the US Army’s Commander’s Emergency Response Program, each grant ranged in size from USD 500 to USD 5,000. Although no repayment was required, each beneficiary business was documented through photos and other means before disbursal and after one and six months, in the presence of local police. Continue reading

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SPECIAL REPORT: European Microfinance Week Participants: Transparency, Competition, Product-specific Rate Caps Can Lower Microloan Interest Rates

To open the two-day conference portion of European Microfinance Week, which is hosted by the 130-member, Luxembourg-based European Microfinance Platform (e-MFP), panelists and attendees addressed “Balancing financial inclusion, market stability and client protection.” Narda Sotomayor, who leads the Department of Microfinance Analysis at Peru’s Superintendencia de Banca, Seguros y Administradoras Privadas de Fondos de Pensiones, stated that “MFIs [microfinance institutions] moving further down market to serve new people is risky, as this group has less financial education, less collateral. An institution’s credit portfolio can deteriorate quickly unless its lending methodology is revised as part of a dynamic process.” On the issue of increasing financial capability, she added, “We find synergies between financial education and stability. This also leads to benefits for institutions and the whole system.” Continue reading

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SPECIAL REPORT: Rural Action Group Discusses Product Ecosystems, Marital Strife at European Microfinance Week

The Rural Outreach & Innovation Action Group of the European Microfinance Platform (e-MFP) met today as part of a full day of Action Group meetings at European Microfinance Week, which is being hosted in Luxembourg by e-MFP, a 130-member NGO. Michael Tarazi, a senior financial sector specialist at CGAP (Consultative Group to Assist the Poor) argued against pushing lending products on new rural clients, instead proposing a multi-stage approach. For example, farmers can be offered mobile phones for free, with the promise of receiving information such as crop management suggestions via SMS (text message). Then crop buyers can purchase access to the farmers’ phones, such as to request the preparation of a wholesale load of crops from a group of the farmers at a given price. This can increase the income of the farmers, putting them in a better position to repay future loans for improvements to their processes. As Mr Tarazi put it, “Finance comes at the end; first you develop the digital ecosystem with other valued services such as information.” Continue reading

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SPECIAL REPORT: A Risk Management “Graduation Model” for Microfinance

MicroCapital: You will be speaking in a few days at European Microfinance Week. How will you describe the state of risk management within microfinance and where it fits in the broader context of the industry?

Kevin Fryatt: In the last several years, we have seen a lot of focus on new technology and serving clients better through new product development, savings mobilization and agent networks, amongst other avenues. Similarly, institutions’ balance sheets are getting increasingly diverse in the types of funding they are sourcing. But within this, the conversation of risk management isn’t happening. There’s a sense of cynicism within the leadership of microfinance institutions (MFIs) toward risk management. It is often misunder-stood and confused with the roles of internal audit or compliance. It is often very difficult to quantify the value of risk management. Continue reading

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MICROFINANCE PUBLICATION ROUND-UP: The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid, Strengthening Regulated SACCO Societies in Kenya, Microfinance Barometer

“The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid;” by Olivier Kayser, Lucie Klarsfeld and Simon Brossard; published by the Inter-American Development Bank; September 2014; available at http://www.iadb.org/en/publications/publication-detail,7101.html?id=75634

This report examines how private companies are using broadband, a high-capacity internet connection, to improve the efficiency and reach of their operations that are geared towards the “base of the pyramid (BOP) markets” [1]. Continue reading

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MICROCAPITAL BRIEF: Liberia Investing for Business Expansion (IBEX) Provides Technical Support, Access to $860k in Credit to Small, Medium-Sized Enterprises (SMEs) Via Banks

The Liberia Investing for Business Expansion (IBEX) program, a project of the United States Agency for International Development (USAID) that focuses on improving access to financial services for small and medium-sized enterprises (SMEs) by linking them with banks, provided clients in the agriculture, construction and trade sectors with access to loans totaling USD 860,000 from July to September 2014. Continue reading

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MICROFINANCE PAPER WRAP-UP: “The Next Stage of Financial Inclusion;” by Dean Karlan; Published by Stanford Social Innovation Review

“The Next Stage of Financial Inclusion;” by D. Karlan; published by the Stanford Social Innovation Review; fall 2014; 9 pages; available at: http://www.ssireview.org/pdf/Fall_2014_The_Next_Stage_of_Financial_Inclusion_1.pdf

This paper investigates the evolving role of nonprofit organizations in providing microcredit to people with low incomes. Continue reading

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MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD), Turkish Government Launch “Finance and Advice to Women in Business” 

The European Bank for Reconstruction and Development (EBRD), a UK-based multilateral financial institution, along with the European Union Delegation to Turkey, the Turkish Employment Agency and the Ministry of Labour and Social Security of the Republic of Turkey recently launched the “Finance and Advice to Women in Business” program, an initiative that aims to strengthen and increase the role of women in the Turkish economy. Continue reading

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MICROCAPITAL BRIEF: International Monetary Fund (IMF) Releases 2014 Financial Access Survey (FAS)

The International Monetary Fund (IMF), a US-based organisation that is part of the United Nations, has released the results of its 2014 Financial Access Survey (FAS), a publication that provides data and analysis on financial inclusion around the world. Continue reading

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MICROCAPITAL BRIEF: Call for Applicants for $227k Ashden International Sustainable Energy Awards Open until November 4, 2014

Ashden, a UK-based nonprofit established in 2001 that promotes the use of sustainable energy, has issued a call for applicants for the 2015 Ashden International Awards, which will recognize development programs with a focus on reducing carbon emissions and increasing access to sustainable energy. Continue reading

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MICROCAPITAL BRIEF: Développement international Desjardins (DID), International Co-operative Alliance (ICA), Proxfin Members Endorse Draft Declaration on Food Security, Job Creation, Access to Healthcare

On the occasion of the recently convened International Summit of Cooperatives, Développement international Desjardins (DID), a Canadian nonprofit corporation that specializes in providing technical support and investment for the community finance sector in emerging economies; the International Co-operative Alliance (ICA), a Belgium-based nonprofit with 271 member cooperatives in 94 countries; and microfinance institutions (MFIs) that are members of the Proxfin Network, an international network of 30 community finance institutions coordinated by DID, endorsed a Draft Declaration to tackle the “challenges of food security,” “employment crisis,” and “access to health care and services”[1]. Continue reading

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MICROCAPITAL BRIEF: United Nations Global Compact, Gate Global Impact Launch Gateway 2.0 to Fund Socially Responsible Projects

The United Nations (UN) Global Compact, an initiative to encourage businesses to adopt sustainable and socially responsible policies, and Gate Global Impact (GGI), a US-based regulatory-compliant electronic marketplace that focuses on impact investing, have launched Gateway 2.0, a website enabling small and medium-sized enterprises (SMEs) listed on the UN Global Compact Social Enterprise Hub to access financing for sustainable and “socially responsible” projects [1]. Continue reading

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MICROCAPITAL BRIEF: African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB), World Bank Group (WBG) Issues Joint Statement on Climate Finance

A group of multilateral development finance institutions, the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Inter-American Development Bank (IDB) and the World Bank Group (WBG), recently issued a joint statement on climate finance. Continue reading

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MICROCAPITAL BRIEF: Sodexo, Bluedrop Learning, Global Impact Announce Commitments to Middle East, Women-Owned Small, Medium-Sized Enterprises (SMEs) at 10th Clinton Global Initiative Annual Meeting

The tenth annual meeting of the Clinton Global Initiative (CGI), an initiative of US-based nonprofit Clinton Foundation, is being held in the US city of New York from September 21-24, and has entertained new commitments as well as progress reports on earlier commitments to address global challenges [1][2]: Continue reading

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SPECIAL REPORT: Clinton Global Initiative Members Emphasize Empowering Women and Girls for Fifth Consecutive Year

In the US city of New York today, at the tenth annual meeting of the Clinton Global Initiative, an effort by the US-based Clinton Foundation to connect public and private organizations to address problems such as poverty and climate change, a major focus was placed on empowering women and girls for the fifth consecutive year. Lilianne Ploumen, the Dutch Minister for Foreign Trade and Development Cooperation, argued that it is critical to reach out to those with whom you generally disagree in order to seek common ground from which progress is possible. Regarding issues facing women and girls, Minister Ploumen argued that “leveling the playing field” for females involves more than economics, but extends into areas such as inheritance law, safety in transportation, and the passage and enforcement of laws against domestic violence. Continue reading

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MICROCAPITAL BRIEF: Borrowing in Cambodia from Microfinance, Commercial Banks Forecast to Increase by 147% to $14b by 2020

The latest outlook published by the Credit Bureau of Cambodia (CBC), a provider of credit information to organizations and consumers in Cambodia, forecasts that the total number of customers of microfinance institutions (MFIs) and commercial banks will increase from 1.9 million to 3.3 million individuals by 2020 and that these customers will borrow a total of USD 14 billion by that time, up from USD 5.7 billion [1]. Continue reading

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MICROCAPITAL BRIEF: FirstRand Bank Downscaling into Microfinance in Suburban Mumbai, India

Under a pilot project named “Easy Banking,” FirstRand Bank, a commercial bank based in South Africa, is providing financial services to shops and other small businesses in areas of suburban Mumbai, such as Bandra and Lokhandwala, based on the rationale that competition is too fierce in areas with higher population densities. Continue reading

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