Category: Trends/Challenges

MICROCAPITAL BRIEF: MoneyGram International to Extend Money Transfer Services to Two Cooperative Banks in India, Abhyudaya Co-op Bank Limited and Thane Janata Sahakari Bank Limited

MoneyGram International, a U.S. financial services company, will soon extend its money transfer services to two cooperative banks in India, Abhyudaya Co-op Bank Limited and Thane Janata Sahakari Bank Limited [1,2,3,4]. This brings the total number of banks in India offering MoneyGram’s money transfer services to 18, with Abhyudaya and Thane Janata Sahakari being the first cooperatives to do so [1]. MoneyGram has offices in New Delhi and Mumbai, and this deal will extend the company’s reach to “smaller cities and towns in the states of Maharashtra, Karnataka, and Gujarat” [1]. According to the World Bank, Indian remittances in 2008 totaled USD 52 billion [1]. Continue reading

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MICROCAPITAL BRIEF: Expert Points to Need for Microinsurance in Nigeria as Insurance Penetration Rate Worsens

According to the Managing Director of Insurance Brokers of Nigeria, Mr Prosper Okpue, the insurance penetration rate of Nigeria continues to worsen. His statement comes over a year after the World Bank issued a report citing that the Nigerian insurance industry had remained stagnant for 35 years and its world market share stood at a mere 0.01 percent (compared with South Africa’s 0.83%). The former president of the Nigerian Council of Registered Insurance Brokers attributed this to the fact that, “Only companies or government ministries will pay premium for their group life insurance. What happens to the informal sector where the bulk of the population can be found carrying out legitimate economic activities?” In response to the issue, Mr Okpue proposed a microinsurance scheme that would “help the people integrate insurance into their lives.” Further details have not been released. Continue reading

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MICROCAPITAL BRIEF: The International Labour Organization’s (ILO’s) Microinsurance Innovation Facility Opens Fourth Round of Innovation Grants

To spur the development of innovative microinsurance products, the International Labour Organization’s (ILO’s) Microinsurance Innovation Facility has opened its fourth round of grant funding. Since “insurance providers often lack the know how to reach this market and need to experiment to develop sustainable business models…[these] grants are there to support those risk takers, cover their start up costs and harness lessons learnt,” said Craig Churchill, team leader of the Microinsurance Innovation Facility. Since its founding in 2008, the Facility has provided 34 innovation grants, ranging from USD 20,000 to USD 600,000, to insurance companies, cooperatives, non-governmental organizations (NGOs) and other microinsurance providers. The deadline for the fourth round of grant proposals is March 2nd, 2010. More information can be found at www.ilo.org/microinsurance. Continue reading

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MICROFINANCE PAPER WRAP-UP: Microinsurance that Works for Women: Making Gender-Sensitive Microinsurance Programs by Anjali Banthia, Susan Johnson, Michael McCord, and Brandon Mathews

Written by Anjali Banthia, Women’s World Banking; Susan Johnson, Centre for Development Studies, University of Bath; Michael J. McCord, The MicroInsurance Centre; and Brandon Mathews, Zurich Financial Services. Published by the International Labour Office (ILO), Swiss Agency for Development and Cooperation, and Women’s World Banking as Microinsurance Paper No. 3 in 2009; Research supported by the ILO’s Microinsurance Innovation Facility and the Swiss Development Corporation; 37 pages, available at: http://www.microfinancegateway.org/gm/document-1.9.40879/microinsurance%20that%20work%20for%20women.pdf

This paper intends to analyze what the authors call a “gendered approach” towards providing microinsurance to the impoverished by discussing how microinsurance schemes can be designed to help poor women, who are especially vulnerable to health and income shocks. Microinsurance is a financial service that allows the poor to make regular premium payments (proportionate to the probability of risk they face) in order to protect themselves against vulnerability shocks. For microfinance institutions (MFIs), microinsurance services can serve as an additional source of revenue. This study is based on research that has shown that women face very specific roles as managers of risk for not only themselves, but their households as well. Continue reading

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MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Extends $10m Synthetic Local Currency Loan to AccessBank of Azerbaijan

At the Azerbaijan Investment Summit held in London on December 8th, AccessBank, an Azerbaijani microfinance institution (MFI) with total assets of USD 239 million, signed an agreement on the first synthetic AZN loan to be extended by the European Bank for Reconstruction and Development (EBRD). Under the synthetic local currency loan, EBRD will provide USD 10 million to AccessBank, but the actual loan obligation by AccessBank to the EBRD will be the AZN value of the provided funds, about AZN 8 million. Continue reading

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MICROCAPITAL EVENT: MicroInsurance Summit 2010: Evaluating Stategies for Delivery, Partner-Agent Models and Scalability, February 23-25, 2010, Le Meridien Piccadilly, London

Event Name: MicroInsurance Summit 2010: Evaluating Stategies for Delivery, Partner-Agent Models and Scalability

Event Date: February 23-25, 2010

Event Location: Le Meridien Piccadilly, London

Event Website: http://www.hansonwade.com/events/microinsurance-summit-2010/index.shtml

See Our Comprehensive Event Calendar Here:
http://microfinanceassociation.ning.com/events Continue reading

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MICROCAPITAL BRIEF: LeapFrog Invests $6.8m in AllLife, a South African HIV and Diabetes Microinsurer

LeapFrog Investments, a for-profit, private equity microinsurance fund, has invested ZAR 50 million (USD 6.8 million) in AllLife, a South African insurer for people with HIV and diabetes. AllLife provides life insurance only to those who follow an appropriate health monitoring and treatment program, enabling it to maintain more competitively priced coverage. Mr. Ross Beerman, Managing Director of AllLife said: “These are potential policyholders, willing to pay for reasonably priced insurance and willing to take steps to manage their disease so that they lead long and productive lives. From a business risk and profitability perspective, of course they’re insurable – we simply had to invent systems to monitor and support them in the right ways.” Continue reading

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MICROFINANCE PAPER WRAP-UP: Insurance in Developing Countries: Exploring Opportunities in Microinsurance, by Lloyd’s 360 Risk Insight and MicroInsurance Centre L.L.C.

Published by Lloyd’s 360 Risk Insight and the MicroInsurance Centre in November 2009, 38 pages, available at: http://www.lloyds.com/NR/rdonlyres/5CFE7CAF-0075-415C-B0F2-BEBF0323059E/0/Microinsurancereport_Nov2009.pdf

Produced by Lloyd’s, an insurance and reinsurance market, and the MicroInsurance Centre, a consulting and advocacy company, this report describes the current landscape of microinsurance and lays out the means and benefits of entering this emerging market. Continue reading

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MICROCAPITAL.ORG BRIEF: Citi Arranges $21.7m Syndicated Agricultural Loan to Microfinance Institution BURO Bangladesh

Citi has recently arranged a syndicated agricultural loan, which is a large loan made by multiple banks to a single borrower, to BURO Bangladesh, one of the country’s microfinance institutions (MFI). The 5-year loan of USD 21.7 million is claimed to be the “first ever syndicated agricultural term financing facility” in Bangladesh.  Executive Director of BURO Zakir Hossain stated that the increased funds will help BURO extend its services to more rural areas to increase food security throughout the country. Continue reading

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MICROFINANCE PAPER WRAP-UP: Microfinance Tradeoffs: Regulation, Competition, and Financing, by Robert Cull, Asli Demirgüç-Kunt & Jonathan Morduch

Written by Robert Cull, Asli Demirgüç-Kunt and Jonathan Morduch, Published by the Financial Access Initiative in September 2009, 24 pages, available at: http://financialaccess.org/sites/default/files/FAI_Microfinance_Tradeoffs.pdf

Using evidence from global surveys on microfinance institutions (MFIs), the authors examine the trade-offs between “meeting social goals and maximizing financial performance.” The authors mainly use 2005 data from the Microfinance Information Exchange’s “MicroBanking Bulletin” [1]. This study covers the broad topics of contracts, commercialization, regulation, and competition. The authors started with a dataset on 124 MFIs in 49 countries and, after incorporating “additional observations, data, and variables,” the authors increased their sample to, at largest, 346 MFIs in 67 countries. Continue reading

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MICROCAPITAL BRIEF: SEEP Practitioner Learning Program Seeks Applicants to Share Best Practices in Scaling Up Youth Microfinance

The Small Enterprise Education and Promotion (SEEP) Network’s Practitioner Learning Program (PLP) “Reaching Scale in Youth Financial Services” is accepting applications through Monday, December 14, 2009. PLP is a learning project that will explore innovations in youth financial services to help microfinance and microenterprise institutions better respond to the growing need for appropriate and accessible products for people 12 through 24 years old. The PLP will focus on understanding the stages organizations must move through to achieve scale. The goal is to expand the number of youth clients served by appropriate financial services and to improve the quality and breadth of service provision to youth. Continue reading

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MICROCAPITAL BRIEF: Microfinance Information Exchange Releases Worldwide Benchmark Data, Plus Reports on Tajikistan and Ecuador

The Microfinance Information Exchange (MIX) recently released “2008 MFI Benchmarks” covering financial and performance data from 1084 microfinance institutions (MFIs) worldwide, reflecting the impact of the financial downturn. Blaine Stephens, COO and director of analysis at MIX said, “By the end of 2008, MFI growth rates had already begun to slow, leaving MFIs faced with higher operating costs.” He attributed part of these costs to . “Increasing portfolio arrears in a number of markets shift[ing] the focus of MFI staff from making productive new loans to instead following up with current clients to encourage them to make payments.” Also newly available are reports covering 104 institutions providing microfinance in Tajikistan and 47 MFIs in Ecuador. Continue reading

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MICROFINANCE EVENT: National Conference on Microinsurance on December 10-11, 2009 in New Delhi, India

Event Name: National Conference on Microinsurance

Event Description: The goal of this conference is to facilitate discussions between practitioners, regulators, actuaries, and researchers on issues related to the provision of microinsurance in India, while especially focusing on more vulnerable states with lower Human Development Indices (HDI). Specific topics to be discussed include: (1) Microinsurance issues and innovations regarding weather, health, and other livelihood products, (2) Distribution models: relevance and operational challenges, (3) Role of microinsurance in financial inclusion, and (4) Role of policy makers in facilitating proper environment. Continue reading

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MICROCAPITAL.ORG BRIEF: The Life Insurance Corporation of India Extends Microinsurance Policies to Cover All Workers in 255 Rural Indian Villages

All 11,500 workers under the National Rural Employment Scheme (NREGS) in the Saikul area of Manipur, India, are now registered microinsurance policyholders under the Life Insurance Corporation of India (LIC). NREGS, enacted by the Indian Parliament in 2005, works to improve financial inclusion in rural areas, especially for people living below the poverty line. The 11,500 workers, spanning across 255 villages, will receive a total of Rs 150 million (USD 3.2 million) upon maturity of the insurance policies, which range between 5 to 15 years. Continue reading

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MICROCAPITAL.ORG BRIEF: Warba Insurance Company of Kuwait Launches “Micro Insurance Policy”

Warba Insurance Company (WIC), established in 1976 as a Kuwait Shareholding Company, has added microinsurance to a list of its insurance products. WIC currently offers motor, marine cargo, group life, health, individual life, property, accident and travel insurance. The “Micro Insurance Policy” will provide life, accident and disability insurance, as well as repatriation benefits to low-income nationals and expatriates. The policy will provide compensation of KD 2,000 (USD 7,011) in case of death and KD 4000 (USD 14,022) in the case of death due to accident. It will also cover seven kinds of disability and expenses for transferring the remains of the dead to his home country up to KD 500 (USD 1,753). Mr. Anwar Al-Sabej, WIC’s Assistant General Manager, stated, “In spite of the current economic crisis, WIC’s Individual Life Division has recorded 68 percent growth in the number of policies and 157 percent growth in premiums up to October 2009 as compared to last year figures.” Continue reading

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MICROCAPITAL.ORG BRIEF: Faulu Advisory Services of Kenya has Acquired Trustmark Insurance to Diversify Services, Provide Microinsurance

Faulu Advisory Services (FAS), a fully owned subsidiary of Faulu Kenya, has acquired Trustmark Insurance Brokers in an effort to include microinsurance among its microfinance services. The price of the acquisition has not been disclosed. Faulu Kenya is a deposit taking microfinance company, which, until now, has offered credit and savings products for low-income Kenyans. FAS provides business advisory services for the microfinance industry. Mr. George Maina, CEO of FAS, commented, “It’s a strategic move on our side to venture into insurance brokerage. For now, we shall continue offering services that the brokerage used to have,” which include life and health insurance. According to the Business Daily, less than a million Kenyans currently have life insurance coverage, representing a 2.5 percent penetration rate. Continue reading

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MICROCAPITAL.ORG BRIEF: SCOR Invests in LeapFrog Investments to Gain Experience in Microinsurance Sector

According to The Review, an insurance magazine, the Paris-based reinsurer, SCOR Group, has invested an undisclosed amount in LeapFrog Investments, a microinsurance fund with USD 44 million in equity. A statement issued by SCOR stated, “Our investment in LeapFrog is a demonstration of [our] support of a socially-responsible sector such as microinsurance.” SCOR also said that the “strict investment return criteria applied … to all its investments” was also applicable in this instance. Additionally, SCOR’s CFO, Mr. Paolo de Martin, will be joining LeapFrog’s advisory board. Continue reading

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MICROFINANCE PAPER WRAP-UP: Banks and Microbanks, by Robert Cull, Asli Demirgüç-Kunt & Jonathan Morduch

Written by Robert Cull, Asli Demirgüç-Kunt & Jonathan Morduch, Published by the Financial Access Initiative in September 2009, 54 pages, available at: http://financialaccess.org/sites/default/files/CP%20Banks%20and%20Microb…

This paper is intended to determine whether or not the presence of banks in 38 developing countries affects the profitability and outreach of microfinance institutions (MFIs). In other words, does competition from larger banks cause MFIs to lose some of their more “profitable” customers, resulting in a smaller average loan size and depressed profits? A smaller average loan size, as well as an increase in women customers as a result of competition, would be indicators of a greater depth of outreach in terms of “poor and excluded groups,” according to the authors. Bank penetration is measured in both “branches per capita” and “branches per square kilometer.” Data from 328 MFIs was used for this study. Continue reading

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