Category: Trends/Challenges

MICROCAPITAL BRIEF: CARE International UK Launches New Microfinance Website, www.lendwithcare.org

CARE International UK, an affiliate of the aid agency CARE International, has launched www.lendwithcare.org, a microfinance website through which the public may provide funding to CARE’s partner microfinance institutions. Continue reading

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MICROFINANCE WRAP-UP: Microfinance Synergies and Trade-offs: Social versus Financial Performance Outcomes in 2008, by Adrian Gonzalez, Published by The Microfinance Information Exchange (MIX)

By Adrian Gonzalez, published by the Microfinance Information Exchange (MIX), August 2010, 15 pages, available at http://www.themix.org/sites/default/files/MIX%20Data%20Brief%207.pdf.

Adrian Gonzalez, a lead researcher for the Microfinance Information Exchange (MIX), conducted an econometric analysis to investigate whether there is a tradeoff between social performance (SP) and financial performance (FP) among microfinance institutions (MFIs) that reported data to MIX for the year 2008. Continue reading

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MICROCAPITAL BRIEF: John Cookson of Big Think Argues Socially Responsible, Profit-Maximizing Microfinance Are Mutually Exclusive; Cites Muhammad Yunus’ Appearance on “The Simpsons” as Proof of Mainstreaming

John Cookson, a writer for an online “forum for connecting people and ideas,” Big Think, recently wrote a blog entry entitled “Microfinance: For Community or for Gain?” which questions the present-day motives of microfinance institutions (MFIs) quoting Jonathan Morduch, Professor of Public Policy and Economics at the New York University Wagner Graduate School of Public Service. Continue reading

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MICROCAPITAL BRIEF: Vijay Pratap Singh, Co-founder and CEO of Ekgaon Technologies, Discusses the Future of Information and Communication Technology (ICT) in Microfinance Institutions (MFIs)

Mr Vijay Pratap Singh, co-founder and CEO of Indian information and communication technology (ICT) provider Ekgaon Technologies, recently was interviewed by microfinance news website, MicrofinanceFocus.com concerning the impact of ICT on microfinance. Mr Singh claims that up to now, new technology has been “reluctantly received” and “half-heartedly implemented” by microfinance institutions (MFIs). Of impediments to progress, he notes that some MFIs have been unwilling to modify operational models to accommodate the new technologies. More importantly, he claims that MFIs are unable to utilize the full potential of ICT because they are unwilling to invest in operational efficiency, specifically in human resources. Continue reading

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MICROCAPITAL BRIEF: Dr C Rangarajan, Chairman of the Indian Prime Minister’s Economic Advisory Council Asks Microfinance Institutions (MFIs) to Consider Borrowers’ “Repayment Capacity” To Avoid Default

Dr C Rangarajan, Chairman of the Indian Prime Minister’s Economic Advisory Council, recently asked India’s microfinance institutions (MFIs) to consider borrowers’ repayment capacity when setting interest rates on loans. Continue reading

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MICROCAPITAL BRIEF: SKS Microfinance IPO Experiences Strong Demand, Total Share Offer 13 Times Oversubscribed

When SKS Microfinance launched India’s first initial public offering (IPO) on July 28, 2010, the total share issue received bids for 13.55 times the overall shares on offer, with the institutional share offer oversubscribed by 20.3 times. Continue reading

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SPECIAL REPORT: The United States Agency for International Development (USAID) Launches The Knowledge-Driven International Development (KDID) Portal to Encourage Greater Effectiveness of Development Knowledge

The Knowledge-Driven International Development (KDID) Portal is a family of websites established to maximize the effectiveness of economic development assistance by connecting development practitioners to spread innovation and good practice. Continue reading

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MICROCAPITAL BRIEF: Finance Minister of Bangladesh, Ama Muhith, Calls Impact of Microfinance Small

During the recent Citi Micro Entrepreneurship Awards in Bangladesh, the Finance Minister of Bangladesh, Ama Muhith, commented that although microfinance has reached 30 million people in Bangladesh, 40 percent of people in the country remain below the poverty line. Continue reading

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MICROFINANCE PAPER WRAP-UP: Microfinance Programs and Better Health: Prospects for Sub-Saharan Africa; by Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch; Published by The Journal of the American Medical Association (JAMA)

By Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch, published by the Journal of the American Medical Association (JAMA), Volume 298, Number 16, October 2007, available at: http://jama.ama-assn.org/cgi/reprint/298/16/1925.pdf

In this paper, Paul Pronyk, James Hargreaves and Jonathan Morduch examine available evidence on the potential for microfinance to contribute toward achieving the United Nation’s (UN’s) Millennium Development Goals (MDG), with specific focus on improvements in health and the challenges and opportunities for expanding such outcomes in Sub-Saharan Africa, in particular. Continue reading

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MICROCAPITAL BRIEF: Indian Microfinance Institution Spandana Sphoorty’s Board Actively Evaluating an Initial Public Offering (IPO)

Spandana Sphoorty Financial Limited, an Indian microfinance institution, is evaluating an initial public share offering (IPO) following the recent launch of SKS Microfinance’s IPO, the first IPO by an Indian microfinance institution. Continue reading

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MICROCAPITAL BRIEF: International Finance Corporation (IFC) to Provide $25m to Federal Bank, a Private Commercial Bank in India, to Support Small and Medium-sized Enterprises (SMEs)

The International Finance Corporation (IFC), a member of the World Bank Group, will provide financing of USD 25 million to Federal Bank, a private commercial bank in India, to improve support for small and medium-sized enterprises (SMEs) and to boost international trade opportunities. The deal will “facilitate transactions in challenging markets, promote competitive financing and build bank relationships with new institutions, thereby reducing risk and enabling more smaller businesses to engage in trade.” Continue reading

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MICROCAPITAL BRIEF: Microfinance Consultant, Adam Sorensen, Questions Unitus’ Decision to Cease Microfinance-Related Activities

Microfinance consultant and Seattle native, Adam Sorensen, recently commented on the closure of the nonprofit organization Unitus, which is based in the US city of Seattle. As MicroCapital reported on July 8, 2010, Unitus has recently announced that it will discontinue its microfinance-related activities and will direct its remaining assets to ‘new early-stage, poverty-focused philanthropic activities.’ Mr Sorensen recently commented in the Seattle Times Newspaper about the closure of Unitus’ offices. He argues that Unitus represented a different kind of nonprofit in the microfinance industry, one that advocated for commercial capital. He notes that in 2009 roughly 50 percent of total funding for the microfinance industry came from donors and investors. Given Unitus’ preference for commercial capital, Mr Sorensen asserts that it “promised better results by bringing commercial discipline and business practices cultivated by the leading companies that it often recruited [staff] from.” Continue reading

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MICROCAPITAL BRIEF: Andean Development Corporation (CAF) Approves $5m Line of Credit for Caja Rural de Ahorro y Credito (CRAC) Nuestra Gente to Support Micro and Small Enterprises in Peru

The Andean Development Corporation (CAF), a multilateral financial institution working across Latin America, has approved a USD 5 million line of credit for Caja Rural de Ahorro y Credito (CRAC) Nuestra Gente, a microfinance institution in Peru, to finance micro- and small enterprises in Peru. According to Eleonora Silva Pardo, the director of CAF in Peru, the granting of this line of credit is part of CAF’s goal of improving support for the micro- and small enterprise sector in all of Latin America. Continue reading

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MICROCAPITAL BRIEF: Pension Fund Regulatory and Development Authority (PFRDA) Launches NPS-Lite, Program of The National Pension System, to Reach Economically Disadvantaged in India

Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by the government of India to regulate and develop the pension sector, has launched a new offering under the National Pension System (NPS), entitled NPS-Lite, to promote saving among the economically disadvantaged population. The NPS-Lite model is designed to facilitate small investments from the poor via low administrative and transactional costs. Continue reading

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MICROCAPITAL BRIEF: “Ethical Investment: Can it outperform other funds?”: Rob Robbins Examines Performance of Ethical Investments

Rob Robbins, founder of ‘Investing for the Soul,’ a US-based online “ethical investment” magazine, insists ethical investments can outperform their mainstream rivals. Ethical or socially responsible investment is an investment strategy that seeks to maximize both financial return an social good. According to Mr Robbins, “Most studies of ethical or socially responsible investment funds find that their performance is roughly similar or sometimes higher than returns from conventional investments.” Continue reading

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MICROCAPITAL BRIEF: South Korean Government Launches Sunshine Microfinance Loan Program under Smile Microcredit Bank for Low-income Households

The South Korean government has launched “Sunshine Loans,” a new offering under Smile Microcredit Bank – a state-run microfinance program established in 2009 to provide unsecured loans to low-income households through partnerships with the private sector. Over the next five years, the program is slated to extend KRW 10 trillion (USD 8.45 billion) to low-income households. The program will be implemented by a variety of financial institutions, including the National Agricultural Cooperative Foundation, the National Federation of Fisheries Cooperative, the National Credit Union Federation of Korea, the Korean Foundation of Community Credit Cooperatives and several unnamed private mutual savings banks. Continue reading

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MICROCAPITAL BRIEF: National Microfinance Bank (NMB) Launches ‘Juhudi’ Loan Program to Improve Access to Microcredit in Tanzania

The National Microfinance Bank (NMB), a commercial bank in Tanzania, has announced its intentions to provide ‘Juhudi’ loans of TSH 5 million (USD 3,300) to TSH 500 million (USD 330,000) to entrepreneurs in the country. According to Mr Kees Verbeek, the chief commercial officer of NMB, the issue for entrepreneurs is not whether loans are available, but rather if the interest rates, which reportedly vary between 18 to 25 percent in Tanzania, are affordable. Juhudi loans will be distributed at a 15 percent annual interest rate. Continue reading

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MICROCAPITAL BRIEF: Group of 20 (G-20) and Ashoka’s Changemakers Announce Small and Medium Enterprise (SME) Finance Challenge 2010

The Group of 20 Finance Ministers and Central Bank Governors (G-20), a group of leaders from 20 economies, and the US-based nonprofit, Ashoka, have announced that they will be holding a worldwide contest for the best models that catalyze finance for small and medium-sized enterprises (SMEs). The challenge is open to all private sector participants, including private financial institutions, private investors and companies, socially responsible investors, foundations and civil society organizations.
The goal of the Challenge is to identify catalytic and well-targeted public interventions to unlock private finance for SMEs. Maximizing leverage of scarce public resources is at key part of the Challenge. Continue reading

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