WHO’S WHO IN MICROFINANCE: The Legatum Group

The Legatum Group, founded in 2006 from the de-merger of Sovereign Global, is a collection of investment organizations based in Dubai, United Arab Emirates. The separate companies comprising Legatum include Legatum Capital, a global investment firm; Legatum Global Development, a socially-responsible investment firm that also provides grants and policy advocacy services to promote sustainable development; the Legatum Center for Development and Entrepreneurship at MIT; and the Legatum Institute, which is an independent policy advisory firm. Continue reading

MICROCAPITAL STORY: Central Bank of Nigeria Laments Poor Participation in Microfinance Industry In Northern Nigeria

Originally reported by Nigerian news agency This Day, Mathius Kura, the Plateau State Branch Controller of Central Bank of Nigeria (CBN), a bank aligned with the Nigerian government to drive regulation and policy, noted the irony in how little participation there is in microfinance bank industries in the northern states of Nigeria. Kura was speaking at a one-day workshop – Micro-finance, Problems and Prospects – organized by the Chartered Institute of Bankers of Nigeria (CIBN).  Kura observed that the Anambra state alone has over 100 microfinance banks; a value that surpasses that of the entire north put together, excluding Kwara State. Continue reading

MICROCAPITAL STORY: Rising Interest Rates and New Reserve Bank of India Capital Adequacy Requirements Put Pressure on Indian MFIs

Recent increases in the cost of borrowing for many organizations around the world and new capital adequacy requirements are putting pressure on Indian Microfinance Institutions. According to The Times of India, both Equitas Micro Finance India (Equitas) and Madura Micro Finance ltd (Madura) are raising interest rates due to increases in the cost of borrowing. Also, SKS Microfinance (SKS) has begun looking for new sources of private equity funding, citing both the reserve requirements and increased interest rates. Continue reading

MICROCAPITAL STORY: United Nations International Fund for Agricultural Development (IFAD) Loans $27m to Support Nigerian Microfinance Sector Development

The United Nations’ International Fund for Agricultural Development will provide USD $27 million in debt capital to support the expansion of microlending activity in Nigeria, with the goal of creating a sustainable rural financial system in the West African nation. Co-financed with nonprofit Ford Foundation, the financing aims to build ties between Nigerian MFIs and formal financial institutions in twelve Nigerian provinces. While Nigerian MFIs currently provide services to a variety of demographics, IFAD hopes that the capital infusion will particularly improve access to financial services to women, young people, and other marginalized groups. It is unclear whether IFAD’s financial assistance will be allocated to a Nigerian government agency such as central bank, or if it will be allocated directly to MFIs operating in-country. Continue reading

MICROCAPITAL STORY: Microfinance Institutions (MFIs) in Nigeria in Talks about Establishing an Inter-Bank Money Market

According to the Vanguard, microfinance institutions (MFIs) in Nigeria are in talks with Government Banks, known as discount houses, about establishing an inter-bank money market. The market would allow MFIs to lend to each other on a short term basis, allowing them to earn extra returns or cover temporary shortfalls in liquidity. The practice is common in banking sectors around the world. Continue reading

MICROCAPITAL STORY: Bank of Bangladesh Says Only 13% of Population has Access to Banking System

The Governor of the Bangladesh Bank, the country’s central bank, recently made stated that only 13 percent of the country utilizes banking services, comprising a total of 19 million bank accounts. The New Nation, a Bangladeshi newspaper, in an article covering the new figures, argued that a lack of savings and a focus by banks on rich clients were the main causes of the problem. Continue reading

MICROCAPITAL STORY: German Technical Report Shows Over 60% of Sri Lankan Population has Accessed Microfinance Services

A survey conducted the German Technical Corporation (GTZ), a government aid agency, shows that 60 percent of Sri Lankan households have utilized microfinance services and 82.5 percent of households have accessed some sort of financial services (pg 7). Despite the already high adoption of microfinance services and apparent preference for state-run Samurdhi banks, the report suggests that further improvements could be made by instituting market-based reforms (pg 8). The report also suggests that poverty alleviation remains “modest” despite the high penetration of financial services (pg 8). Continue reading

MICROCAPITAL STORY: Controversy Arises Over Pay for Employees of Microfinance Institutions (MFIs) in Nigeria

Controversy has arisen over the governance and operations of microfinance institutions (MFIs) in Nigeria. A recent Daily Sun article reported that Pastor Kehinde Alaba, Managing Director and Chief Executive Officer of Lagos State University Micro Finance Bank (LMFB), believes that government restrictions hinder the ability of MFIs to provide quality financial services to the poor. Meanwhile, members of the Central Bank of Nigeria (CBN) recently made comments suggesting that MFI mangers were acting inappropriately and it may be necessary to revoke the licenses of egregious offenders. Continue reading