Category: Trends/Challenges

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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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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MICROCAPITAL.ORG BRIEF: Muang Thai Life Assurance Taps Into Rural Market of Microinsurance

Muang Thai Life Assurance (MTLA), which is among the top five insurance companies in Thailand, is planning to expand access to its microinsurance program in rural areas of Thailand. The program has already been running for four years. Annual premiums range from 1,200 to 10,000 baht (USD 36 to USD 301) for coverage of 50,000 to 150,000 baht (USD 1,506 to 4519). Premiums are calculated based on factors such as the types of crops grown, the number of harvests per year, and the size of a client’s potential income. According to Mr. Sara Lamsam, president of MTLA, “at this preliminary stage, we have yet to expect [the program] to boost sales, but in the future our brand would definitely be in the forefront of their minds once the communities are financially strong enough and have a better understanding of the importance of savings.” As part of its microinsurance program, MTLA also educates people on money management and savings. Continue reading

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MICROFINANCE PAPER-WRAP UP: Technical Guidelines: “Microfinance Against Child Labour” by Judith van Doorn and Craig Churchill

Written by Judith van Doorn and Craig Churchill. Published February 2004 for Social Finance Programme of International Labor Organization for International Program on the Elimination of Child Labour. 46 pages, available at: Geneva, February 2004. http://www.oit.org.pe/ipec/documentos/microfinance_guideline.pdf Continue reading

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MICROCAPITAL.ORG BRIEF: Survey on Sri Lankan Microfinance by the German Agency for Technical Cooperation (GTZ GmbH) and Promotion of the Microfinance Sector (ProMis) Program Draws Conclusions About the National Industry

A collaborative, countrywide microfinance survey in Sri Lanka performed by the German Agency for Technical Cooperation (GTZ GmbH) and the Promotion of the Microfinance Sector (ProMis) Program, organizations from the German and Sri Lankan governments, respectively, has reached several conclusions about Sri Lankan microfinance [1,2,3,4]. It found that there are over 10,800 outlets through which microfinance providers operate in Sri Lanka [1]. In total, microfinance providers have amassed Rs. 126 billion in savings and deposits, the equivalent of over USD 1.1 billion [1]. There are also 26 million savings accounts with microfinance providers in the country [1]. Additionally, the ratio of loan volume to savings volume is one to 2.6, while the ratio of loans to savings accounts is one to 5.9 [1]. Lastly, the report drew some more general conclusions about Sri Lankan microfinance. For example, Sri Lanka has a “diverse range of institutions” that provide microfinance services, but the industry is “lacking innovative approaches which could overcome the inherent barriers in access to microfinance” [1]. Continue reading

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MICROCAPITAL.ORG BRIEF: Chinese Association of Microfinance (CAM) Calls for Microfinance Reform in Country

During the China Microfinance Summit Forum 2009, Secretary General of the China Association of Microfinance (CAM) Bai Chengyu, stated that microfinance institutions (MFIs) must refine their systems of assessing social impact by enforcing better regulations and decision-making processes. Mr. Bai argued that in order for domestic MFIs to truly cater to poverty alleviation, they should not require borrowers to provide collateral in exchange for loans. He cited data from the People’s Bank of China (PBC), which details that 87.1 percent of total loans issued by the end of 2008 were collateral loans, whereas 12.9 percent of total loans were non-collateral loans. Continue reading

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MICROFINANCE PROFILE: MicroEnsure

Name of Organization or Microfinance Investment Vehicle: MicroEnsure

Overview: MicroEnsure, a subsidiary of Opportunity International, was established in 2005 as a microinsurance intermediary.

Description:

MicroEnsure was founded in 2005 as a wholly owned subsidiary of Opportunity International, a global non-profit microfinance network created in 1974. It was known as the Micro Insurance Agency until 2008. As an insurance intermediary, it provides a range of low-cost products including health, life, property and weather index-based insurance to over 3.5 million poor clients across six countries: Ghana, India, the Philippines, Tanzania, Uganda and Kenya. In 2008, MicroEnsure received a USD 24.2 million grant from the Bill and Melinda Gates Foundation to help expand its insurance products to the poor in Africa, Asia and Latin America. In 2009, it won the Financial Times award for Achievement in Basic Needs Financing. Continue reading

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MICROFINANCE PROFILE: LeapFrog Investments

Name of Organization or Microfinance Investment Vehicle: LeapFrog Investments

Overview: LeapFrog Investments is a for-profit, private equity fund focused on microinsurance and financial inclusion

Description:

LeapFrog Investments was founded in 2007 by Dr. Andrew Kuper. It is a for-profit, private equity fund aimed at earning large returns by investing in and supporting microinsurance initiatives. LeapFrog has raised USD 44 million from a range of public and private investors, including the European Investment Bank, the Omidyar Network, FMO, Triodos-Doen and Hivos-Triodos, ACCION International, Calvert, and Felipe Medina (a senior Goldman Sachs wealth manager). The LeapFrog team has also committed USD 1 million of their own personal money into the fund. The fund focuses on ventures in Africa and Asia, with initial target countries including South Africa, Kenya, Ghana, India, Indonesia, Pakistand and the Philippines. Continue reading

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MICROFINANCE EVENT: 2009 SEEDFINANCE Micro No More Stakeholders Conference

Event Name: 2009 SEEDFINANCE Micro No More Stakeholders Conference

Event Description: The Micro No More Stakeholders Conference is a forum to network form partnerships with development workers, support providers, and various stakeholders in the microfinance industry. There will be workshops and plenary briefings on topics such as “microfinance standards and regulations, mobile banking, microremittance, risk management, sustainable energy, housing microfinance, microinsurance, social performance and fair economic development.”

Event Date: November 26, 2009-November 27, 2009 Continue reading

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MICROFINANCE EVENT: “Doing Good and Doing Well” – A Conference on Responsible Business

Event Name: “Doing Good and Doing Well” – A Conference on Responsible Business

Event Description: This event provides an opportunity for students, professors and professionals to discuss careers that are both profitable and socially responsible. The topics include microfinance, social entrepreneurship, corporate citizenship, public-private partnerships, renewable energy and socially responsible investing. There will be various speakers, a Career Forum, interactive panels, networking events, and a Venture Seminar to “facilitate the investment process of worthwhile start-up companies.”

Event Date: February 26-27, 2010 Continue reading

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