by the MicroCapital Team -

SPECIAL REPORT: Strong Motivation to Save, “Extreme Resilience During Times of Crisis” Despite Microfinance Institutions’ “Smothering” Loan Offers Pre-pandemic

During European Microfinance Platformthe plenary titled “Creating an Environment for Effective and Inclusive Savings” on day two of European Microfinance Week, Stuart Rutherford of the Hrishipara Daily Diaries Project suggested thinking of savings as two separate services – collection and storage. While storage is primary for a person with regular paychecks deposited into a bank electronically, collection is critical for cash earners. This is why the service of a susu worker, who collects deposits frequently door-to-door and then returns “withdrawals” periodically, is so valuable that people are willing to pay fees for it.

Luis Treviño Garza of the Alliance for Financial Inclusion noted that savings is an “important factor for resilience, especially for vulnerable groups.” He added that “from the regulator’s perspective savings is really crucial… above credit.”

Mr Rutherford said that “all the diaries I’ve [collected in Bangladesh] show that poor people have a strong propensity to

by the MicroCapital Team -

SPECIAL REPORT: Digitizing Microfinance – Silver Lining of the Pandemic?

Ciprian European Microfinance PlatformPanturu of Belgium-based cooperative PHB Development opened a European Microfinance Week session on financial services providers (FSPs) moving toward digital services with a joke: “Who got the FSP to ‘go digital,’ the CEO, the CFO?” The answer, of course, is “COVID!”. Unlike before the pandemic, when FSPs were looking into digital services and clients were often unconvinced, Mr Panturu said, “Now there is a clear pull from the customer side.”

Jessica Schicks of the Belgian Investment Company for Developing Countries (BIO) agreed, “Client uptake has been a challenge in past. COVID is helping overcome digital literacy and trust issues.” However, she warned,

by Kate Finster -

MICROCAPITAL BRIEF: Juvo, Mastercard to Promote Alternative Credit Scoring Platform to Microfinance Institutions, Banks in Latin America, Caribbean

Juvo, a US-based financial technology (fintech) startup that uses transaction data analysis to create credit profiles for individuals in emerging markets, recently partnered with Mastercard to distribute its Financial Identity as a Service (FiDaaS) platform to financial services providers in Latin America and the Caribbean (LAC). For people without traditional credit histories, the FiDaaS platform uses

by the MicroCapital Team -

SPECIAL REPORT: During Pandemic, VSLAs Support Members Struggling with Barriers to Income, Education, Gender-based Violence, Lack of PPE

During European Microfinance Platforma European Microfinance Week session on village savings and loan associations (VSLAs), speakers from several affiliates of Switzerland-based CARE International described their organizations’ responses to the COVID-19 pandemic. As the pandemic set in, they surveyed members of VSLAs, which commonly include 30 women, in various formats to learn how they were adjusting to the pandemic and what support they need.

Maryam Garba Usman of CARE Nigeria described her organization’s survey of 100 VSLAs, largely via an interactive voice response telephone system. The team also used a mobile app to distribute information on COVID-19 and a range of gender-related issues. Most groups continued to meet in person, incorporating social distancing. In addition to accessing financial services, VSLA members addressed problems such as gender-based violence, child marriage, interruptions to children’s education and

by Romil Pandey -

MICROCAPITAL BRIEF: Accion Venture Lab Invests Equity in TerraMagna, Fintech Using Satellite Imagery to Help Agribusinesses Lend to Farmers in Brazil

Accion Venture Lab, a unit of US-based nonprofit Accion, recently took an equity stake of undisclosed size in TerraMagna, an agricultural financial technology (fintech) startup in Brazil that partners with retailers of farming inputs on underwriting and funding loans to smallholder farmers. To review loan applications, TerraMagna uses a

by the MicroCapital Team -

SPECIAL REPORT: Lessons from Giving Away, Selling Microinsurance with Remittances

As European Microfinance Platformpart of the ongoing search for models that can make microinsurance profitable, the Luxembourg-based nonprofit ADA partnered with UAE-based insurtech Democrance to sell policies to migrant workers in Dubai as they send money to family in their home countries. The incentive for remittance providers to participate is that the draw of microinsurance can increase their customer base and allow differentiation from competitors.

The target population is migrants from India and the Philippines, who are generally tech savvy and aged 25 to 45 years old. Most workers earn up to AED 4,000 (USD 1,100) per month and send about a quarter of that amount home. Rise, a UAE-based facilitator of financial services to migrants, enrolled 1,000 customers by

by Kate Finster -

MICROCAPITAL BRIEF: The Currency Exchange Fund (TCX) Raises $200m in Equity from EU, IFC, KfW, PROPARCO to Manage FX Risk for Microfinance, Other Impact Investments

The Currency Exchange Fund (TCX) recently raised a total of USD 200 million in equity financing that it will use to lower the foreign-exchange risk of third-party impact investments in developing nations. TCX hedges emerging-market currencies to support investments

by the MicroCapital Team -

SPECIAL REPORT: Protecting Consumers, Tracking Business Cash Flows, Cutting Costs for Digital Microfinance

During European Microfinance Platform a session entitled “Digital Credit Beyond Consumer Finance” at European Microfinance Week 2020, Michael Rothe, the co-founder of UK-based Flow, argued that there are both good and bad players in digital lending. He said that “most development finance institutions think digital credit is dangerous” and that “because providers are not being differentiated, Flow is being lumped in with” consumer finance. In fact, Flow is a fintech that lends to businesses only. During the COVID-19 pandemic, some Flow customers – many of whom operate shops that offer mobile-money services as a sideline – had to close down due to government restrictions on travel and trade. However, those that remained open saw an uptick in transactions. This is partially because governments encouraged the use of mobile money in an effort to minimize virus transmission. While other lenders stopped operating during the early days of the pandemic, Flow continued to lend, resulting in brand loyalty that Mr Rothe describes as very high. The ratio of the firm’s portfolio at risk peaked at

by the MicroCapital Team -

SPECIAL REPORT: Danone, Incofin, Water.org: WASH Sector is Already Investible

During European Microfinance Platformone of the Friday sessions of European Microfinance Week 2020, Dina Pons of Belgium-based Incofin Investment Management explained a partnership with France-based food company Danone through which the organizations are building a 10-year equity fund to invest in expanding access to clean water in developing countries. Since 2007, the Danone Communities arm of Danone – mostly funded by its employees – has invested in access to drinking water on a proof-of-concept basis. Now Danone believes the sector has matured from the incubation stage to the investible stage. The company selected Incofin to help it invest in proven models, with a technical assistance component and monitoring of factors such as affordability, limiting plastic usage and

by the MicroCapital Team -

SPECIAL REPORT: Minimizing Setbacks for Women, Girls Under COVID-19; Taking Advantage of the Pandemic to Liberalize Regulation, Boost Access to Digital Financial Services

Mary European Microfinance PlatformEllen Iskenderian of the US-based NGO Women’s World Banking (WWB) spoke today, the closing day of European Microfinance Week, about the impact of the COVID-19 pandemic on women and girls. Of the challenges they face, she said “COVID didn’t create these gaps, but it shines a bright light on the fissures, and we don’t want to see these grow larger.” As an example, she cited the strides made in recent years in terms of enrolling girls in primary education. She called this the single most powerful tool for creating development impact. However, one of the first things she has seen families in developing countries doing in response to COVID-19 is taking their daughters out of school.

On the positive side, Ms Iskenderian noted “a silver lining, that

by the MicroCapital Team -

SPECIAL REPORT: Resilience Among Microfinance Institutions? “Region of Crisis” Relatively Stable; “Moratorium Veil” Yet to Lift

As European Microfinance Platformpart of the opening day of European Microfinance Week, Mohammed Khaled of the World Bank Group’s International Finance Corporation stated that the effects of the COVID-19 pandemic on the microfinance sector in the Middle East and North Africa (MENA) so far have not been as bad as was feared earlier in 2020. Most of the large microfinance institutions (MFIs) in the region have maintained 30-day portfolio-at-risk (PAR) ratios below 4 percent. Mr Khaled said, “Among leading MFIs, PAR did not rise as high as expected. We thought [it might rise to] 10 percent to 20 percent, but many MFIs have kept things under control.” Part of the reason for this, he believes is that “this is

by the MicroCapital Team -

SPECIAL REPORT: European Microfinance Week Launches with Arguments for Client Protection, Community Approaches, Savings vs Credit, Biscuits vs Guns

European European Microfinance PlatformMicrofinance Week 2020 launched today with Action Group meetings; opening remarks from Christophe Schiltz of Luxembourg’s Ministry of Foreign and European Affairs; and a keynote address by Ela Bhatt, the founder of India’s Self-Employed Women’s Association.

Mr Schiltz commented on the need for continued emphasis on client protection as the COVID-19 pandemic stresses both financial services providers (FSPs) and households. He also quoted from the European Microfinance Platform’s (e-MFP’s) COVID-19 Financial Inclusion Compass that the pandemic has created the opportunity to improve the financial inclusion sector in ways “that the gravitational pull of the status quo would never allow in more normal times.”

Ela Bhatt noted that her organization and others were focused on savings back in the 1970s before microcredit became

by Romil Pandey -

MICROCAPITAL BRIEF: CommBanane from Dimagi, SIDA, UNCDF Facilitates Digital Loans to Cooperatives of Banana Farmers from Baobab Sénégal

Dimagi, a US-based provider of technical assistance to development organizations, recently developed CommBanane, a digital platform providing financial solutions to small-scale banana farmers via cooperatives in Senegal. CommBanane serves as a “data tracking system” for agricultural production and can be accessed by farmers to apply for

by Nathan Kiplagat -

MICROCAPITAL BRIEF: BSP Promoting E-money Usage, Financial Access in the Philippines via “Digital Payments Transformation Roadmap 2020-2023”

Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, recently released its Digital Payments Transformation Roadmap 2020-2023, which outlines steps for reaching: (1) half of retail sales volume being paid via digital channels; and

by Romil Pandey -

MICROCAPITAL BRIEF: Paraguay Borrows $15m from IDB, Seeking to Boost Productivity Among 8,500 MSMEs

The Inter-American Development Bank (IDB), whose membership comprises 48 nations, recently issued a 24-year loan of USD 15 million to the government of Paraguay with the goal of increasing the productivity of 8,500 micro-, small and medium-sized enterprises (MSMEs). Paraguay plans to use the funds for technology innovation and a national network of “productivity centers” providing

by Romil Pandey -

MICROCAPITAL BRIEF: Fintechs E9pay, Nium Offer Personal, B2B Money Transfers Between South Korea, Europe, India, Indonesia, US

Nium, a Singapore-based financial technology (fintech) infrastructure platform, recently partnered with E9pay, a digital remittance provider in South Korea, to allow E9pay clients to send remittances to and from India, Indonesia, the US, and other markets, including in Europe. These clients include

by Romil Pandey -

MICROCAPITAL BRIEF: 10 Fintech Startups in Zambia Join FinTech4U Accelerator from BongoHive, UNCDF

The UN Capital Development Fund (UNCDF) and BongoHive, a Zambia-based provider of technology consulting, co-working space and other support to entrepreneurs, recently selected 10 financial technology (fintech) startups for the second iteration of the FinTech4U Accelerator Programme. “For the Fintechs, joining the programme is an opportunity that

by Kate Finster -

MICROFINANCE EVENT: 17th Annual Global Microfinance Forum; April 22-23, 2021; NOW VIRTUAL

Originally planned to take place in person in Prague, this virtual event is centered on helping actors in the microfinance industry to prosper in the context of future economic and regulatory environments. Session topics include repayment suspensions due to the COVID-19 pandemic,