Category: Trends/Challenges

MICROCAPITAL BRIEF: PROPARCO, the Private Sector Arm of the Agence Francaise de Developpement (AFD), to Loan $12.5m to Lanka Orix Leasing Company (LOLC) for Small and Medium-sized Enterprises in Sri Lanka

Promotion et Participation pour La Cooperation Economique (PROPARCO), the private sector arm of the Agence Francaise de Developpement (AFD) – a bilateral development finance institution working on the behalf of the French government – will loan EUR 10 million (USD 12.5 million) to Lanka Orix Leasing Company (LOLC), a public company based in Rajagiriya that provides leasing finance to entrepreneurs and commercial entities, in order to improve access to credit for small and medium-sized enterprises (SMEs) in the North and East of Sri Lanka. Continue reading

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MICROCAPITAL BRIEF: United States Agency for International Development (USAID) to Issue $10m Bond to Fund PRIDE Tanzania Microfinance Loans to Women

The United States Agency for International Development (USAID), a US government agency that provides international economic and humanitarian assistance, has announced its intention to issue a USD 10 million bond to fund Promotion of Rural Initiative and Development Enterprises Limited (PRIDE Tanzania), a microfinance institution established in 1994, to make loans to women in Tanzania. Mr Alfonso Lenhardt, the US ambassador to Tanzania, said, “I have observed that when women are given loans they use the money wisely, have the perfect business spirit, support the community and finally repay the funds to the bank.” Continue reading

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MICROCAPITAL BRIEF: Nokia Launches Microfinance Scheme to Sell Mobile Phones to Poor People in Rural India

Nokia, a Finnish telecommunications company, is partnering with microfinance institutions (MFIs) to allow rural residents in the Indian states of Punjab and Haryana to use microloans to buy mobile phones. The company has already formed partnerships with several microfinance MFIs in the area, including SKS Microfinance, which is based in Hyderabad; Ujjivan, which maintains offices in Bangalore, Delhi, Kolkata and Pune; and Madura Microfinance, headquartered in Adyar. The payment scheme for the use each mobile phone will be as low as INR 100 (USD 2.14) per week. Continue reading

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MICROCAPITAL BRIEF: Grameen Foundation Releases Paper, “Measuring the Impact of Microfinance: Taking Another Look” by Professor Kathleen Odell

The Grameen Foundation, a US-based nonprofit organization, has released a paper, titled, “Measuring the Impact of Microfinance: Taking Another Look,” to address and inform the current debate surrounding microfinance’s efficacy in reducing poverty and ameliorating other social problems. Continue reading

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MICROCAPITAL BRIEF: Microfinance Valuations Too High? Too Low? Depends Who You Ask

In the global microfinance industry, the topic of valuation is being debated by investors and representatives of microfinance institutions (MFIs). In an article released by the Financial Chronicle, a Hyderabad-based business news publication, Padmaja Reddy, managing director at Spandana Sphoorty Financial, proposes that MFIs share similar business models with banks and non-banking financial institutions, but are unjustly undervalued. Investors respond that the risks involved in MFI investment are too high. In a related article, The Wall Street Journal, a US-based business newspaper, cites the risks involved in MFI investment. Avnish Bajaj, managing director of Matrix Partners India which has an investment in one of India’s largest microfinance institutions, states, “There are elements of bubble in this sector. Over-lending, lack of processes, excessive geographical concentration and excessive product concentration,” all increase investors’ level of risk. Continue reading

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MICROCAPITAL BRIEF: Microfinance Information Exchange Releases “Is Microfinance Growing Too Fast?” by Adrian Gonzalez Indicating Portfolio Quality Negatively Correlated with Increasing Number of Borrowers

The Microfinance Information Exchange (MIX) has released a paper by researcher Adrian Gonzalez entitled “Is Microfinance Growing Too Fast?” Continue reading

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MICROCAPITAL EVENT: The 2010 Asia Microfinance Forum in Colombo, Sri Lanka, from October 12 – October 15, 2010

Event Name: The 2010 Asia Microfinance Forum

Event Date: October 12 – October 15, 2010

Event Location: Cinnamon Grand Hotel, Colombo, Sri Lanka Continue reading

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MICROCAPITAL BRIEF: G20’s Financial Inclusion Experts Group (FIEG) Releases Nine “Principles for Innovative Financial Inclusion” at Leadership Summit in Toronto, Canada

The Financial Inclusion Experts Group (FIEG), a division of the G20 – a group of twenty finance ministers and central bank governors that discuss key issues in the global economy – released nine “Principles for Innovative Financial Inclusion” at the recent G20 leadership summit in Toronto. The principles are intended to form the basis of a concrete action plan for improving access to financial services for the poor, which will be released at the Seoul Summit in November. Continue reading

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MICROCAPITAL BRIEF: International Fund for Agriculture and Development (IFAD) Allocates $8m to Al-Amal Microfinance Bank in Yemen

The International Fund for Agriculture and Development (IFAD), an agency of the United Nations, has allocated a total of USD 8 million – equal parts equity and debt investment – to Al-Amal Microfinance Bank, a microfinance bank established by the Yemeni government in 2002. Yukiko Omura, the vice-president of IFAD, commented on the “importance of partnership between the Fund and the bank to enable the Fund to reach the poor people in rural areas to provide loans to small farmers, fishermen and other groups with low incomes.” Continue reading

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MICROCAPITAL BRIEF: Microfinance Expansion Suggests Increased Default Risks Says Financial Times

As part of its ‘BeyondBrics’ publication on business markets in emerging countries, the Financial Times (FT), a business news organization based in London, England, has predicted increased default risks in microfinance institutions (MFIs). James Fontanella-Khan, an online editor for FT, states, “Microfinance is expanding fast in emerging countries. The number of financial institutions piling in to grab a slice of the market is expanding at an even faster rate.” Continue reading

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MICROCAPITAL BRIEF: Vishwavir Ahuja Joins Board of Ratnakar Bank, a Commercial Bank in Kolhapur, India

Vishwavir Ahuja, the former CEO of the Indian division of Bank of America, has joined the board of Ratnakar Bank, a community bank based in rural Kolhapur, as an independent director. According to Mr Ahuja, he hopes to transform the “relatively-unknown rural bank into a major player with a focus on inclusive growth.” Some have speculated that Mr Ahuja’s position on the board will lead to a greater influx of funding through unspecified “connections” with investors at Mumbai-based Centrum, a financial services firm established in 1977. Continue reading

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MICROCAPITAL BRIEF: Grameen Capital India Appoints Sanjay Nayar as New Director

Sanjay Nayar, the CEO of Kohlberg Kravis Roberts & Co (KKR) – a global alternative assets manager – has been named to the board of directors of Grameen Capital India, a Mumbai-based social business that promotes growth in the microfinance sector in India. Prior to joining KKR, Mr Nayar was the CEO of Citigroup India and South Asia. Continue reading

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MICROCAPITAL BRIEF: Microfinance Institutions (MFIs) in Nigeria Demand Direct Access to ‘Meso’ Credit Scheme from the National Poverty Eradication Programme (NAPEP)

Microfinance institutions (MFIs) in Nigeria want to bypass commercial banks to access government money in the form of a ‘meso’ credit scheme designed by the National Poverty Eradication Programme (NAPEP) – a government agency responsible for coordinating and monitoring all poverty eradication activities nationwide – to provide loans of between NGN 500,000 (USD 3,300) and NGN 50 million (USD 331,000) for agricultural processing in rural areas. The current regulations mandate that the meso credit funds be distributed to commercial banks for on-lending to qualified microfinance banks at “competitive rates.” Continue reading

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MICROCAPITAL BRIEF: International Finance Corporation (IFC) and IFC Capitalization Fund Agree to Invest $140m in Bank South Pacific (BSP) of Papua New Guinea to Extend Financial Services in Pacific Islands

The International Finance Corporation (IFC), a member of the World Bank Group, and the IFC Capitalization Fund, a USD 3 billion global equity and subordinated debt fund, have signed an agreement to invest USD 140 million in Bank South Pacific (BSP), one of the largest commercial banks in Papua New Guinea, in an effort to expand financial services across the Pacific Islands. Continue reading

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MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) and Global Impact Investing Network (GIIN) to Share Data With $187,000 Grant From Rockefeller Foundation

The Rockefeller Foundation, a US-based grantmaking organization, has awarded a USD 187,000 grant to two other US-based nonprofits, Microfinance Information Exchange (MIX) and the Global Impact Investing Network (GIIN), to “increase transparency and comparability across microfinance and the broader impact investing industry.” The grant will be used to develop a data feed that will allow GIIN’s Impact Reporting and Investment Standards (IRIS) project, which was created to develop a common framework for defining, tracking and reporting the performance of “impact capital,” to access data from MIX. Continue reading

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MICROCAPITAL BRIEF: Societe Generale de Banques du Senegal (SGBS) and Obopay Launch Yoban’tel, a Mobile Money Transfer and Bill Payment Service, in Senegal

The Societe Generale de Banques du Senegal (SGBS), a private commercial bank with CFA 400 billion (USD 743 million) in total assets, and Obopay, a US-based mobile payment service established in 2005, have united to launch Yoban’tel, a mobile money transfer and bill payment service, in Senegal. The system will allow the use of any mobile phone to transfer money or pay bills using SMS (short message service, also known as text messaging). Continue reading

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MICROCAPITAL BRIEF: Three Directors of Impact Microfinance Bank Limited Arrested for Fraud in Nigeria

Three directors of Impact Microfinance Bank Limited, a microfinance institution established in 2008 with headquarters in Lagos, have been arrested for fraud. The three men – 49 year-old Innocent Akpan, 45 year-old David Obieke and 45 year-old Joseph Nwabuwanne – were arrested after several depositors complained that they could not access their funds. The suspects allegedly mismanaged the depositors’ money and subsequently could not honor clients’ deposits. Continue reading

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MICROCAPITAL BRIEF: Pakistan Microfinance Network (PMN) Discussion Indicates Need for Greater Focus on Rural Areas

The Pakistan Microfinance Network (PMN), an organization established in 1995 and comprised of 12 microfinance institutions (MFIs) throughout Pakistan, recently held an organized discussion regarding Pakistan’s rural finance market. Continue reading

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