Dr C Rangarajan, Chairman of the Indian Prime Minister’s Economic Advisory Council, recently asked India’s microfinance institutions (MFIs) to consider borrowers’ repayment capacity when setting interest rates on loans.
Category: Trends/Challenges
MICROCAPITAL BRIEF: SKS Microfinance IPO Experiences Strong Demand, Total Share Offer 13 Times Oversubscribed
When SKS Microfinance launched India’s first initial public offering (IPO) on July 28, 2010, the total share issue received bids for 13.55 times the overall shares on offer, with the institutional share offer oversubscribed by 20.3 times.
SPECIAL REPORT: The United States Agency for International Development (USAID) Launches The Knowledge-Driven International Development (KDID) Portal to Encourage Greater Effectiveness of Development Knowledge
The Knowledge-Driven International Development (KDID) Portal is a family of websites established to maximize the effectiveness of economic development assistance by connecting development practitioners to spread innovation and good practice.
MICROCAPITAL BRIEF: Finance Minister of Bangladesh, Ama Muhith, Calls Impact of Microfinance Small
During the recent Citi Micro Entrepreneurship Awards in Bangladesh, the Finance Minister of Bangladesh, Ama Muhith, commented that although microfinance has reached 30 million people in Bangladesh, 40 percent of people in the country remain below the poverty line.
MICROFINANCE PAPER WRAP-UP: Microfinance Programs and Better Health: Prospects for Sub-Saharan Africa; by Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch; Published by The Journal of the American Medical Association (JAMA)
By Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch, published by the Journal of the American Medical Association (JAMA), Volume 298, Number 16, October 2007, available at: http://jama.ama-assn.org/cgi/reprint/298/16/1925.pdf
In this paper, Paul Pronyk, James Hargreaves and Jonathan Morduch examine available evidence on the potential for microfinance to contribute toward achieving the United Nation’s (UN’s) Millennium Development Goals (MDG), with specific focus on improvements in health and the challenges and opportunities for expanding such outcomes in Sub-Saharan Africa, in particular.
MICROCAPITAL BRIEF: Indian Microfinance Institution Spandana Sphoorty’s Board Actively Evaluating an Initial Public Offering (IPO)
Spandana Sphoorty Financial Limited, an Indian microfinance institution, is evaluating an initial public share offering (IPO) following the recent launch of SKS Microfinance’s IPO, the first IPO by an Indian microfinance institution.
MICROCAPITAL BRIEF: International Finance Corporation (IFC) to Provide $25m to Federal Bank, a Private Commercial Bank in India, to Support Small and Medium-sized Enterprises (SMEs)
The International Finance Corporation (IFC), a member of the World Bank Group, will provide financing of USD 25 million to Federal Bank, a private commercial bank in India, to improve support for small and medium-sized enterprises (SMEs) and to boost international trade opportunities. The deal will “facilitate transactions in challenging markets, promote competitive financing and build bank relationships with new institutions, thereby reducing risk and enabling more smaller businesses to engage in trade.”
MICROCAPITAL BRIEF: Microfinance Consultant, Adam Sorensen, Questions Unitus’ Decision to Cease Microfinance-Related Activities
Microfinance consultant and Seattle native, Adam Sorensen, recently commented on the closure of the nonprofit organization Unitus, which is based in the US city of Seattle. As MicroCapital reported on July 8, 2010, Unitus has recently announced that it will discontinue its microfinance-related activities and will direct its remaining assets to ‘new early-stage, poverty-focused philanthropic activities.’ Mr Sorensen recently commented in the Seattle Times Newspaper about the closure of Unitus’ offices. He argues that Unitus represented a different kind of nonprofit in the microfinance industry, one that advocated for commercial capital. He notes that in 2009 roughly 50 percent of total funding for the microfinance industry came from donors and investors. Given Unitus’ preference for commercial capital, Mr Sorensen asserts that it “promised better results by bringing commercial discipline and business practices cultivated by the leading companies that it often recruited [staff] from.”
MICROCAPITAL BRIEF: Andean Development Corporation (CAF) Approves $5m Line of Credit for Caja Rural de Ahorro y Credito (CRAC) Nuestra Gente to Support Micro and Small Enterprises in Peru
The Andean Development Corporation (CAF), a multilateral financial institution working across Latin America, has approved a USD 5 million line of credit for Caja Rural de Ahorro y Credito (CRAC) Nuestra Gente, a microfinance institution in Peru, to finance micro- and small enterprises in Peru. According to Eleonora Silva Pardo, the director of CAF in Peru, the granting of this line of credit is part of CAF’s goal of improving support for the micro- and small enterprise sector in all of Latin America.
MICROCAPITAL BRIEF: Pension Fund Regulatory and Development Authority (PFRDA) Launches NPS-Lite, Program of The National Pension System, to Reach Economically Disadvantaged in India
Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by the government of India to regulate and develop the pension sector, has launched a new offering under the National Pension System (NPS), entitled NPS-Lite, to promote saving among the economically disadvantaged population. The NPS-Lite model is designed to facilitate small investments from the poor via low administrative and transactional costs.
MICROCAPITAL BRIEF: “Ethical Investment: Can it outperform other funds?”: Rob Robbins Examines Performance of Ethical Investments
Rob Robbins, founder of ‘Investing for the Soul,’ a US-based online “ethical investment” magazine, insists ethical investments can outperform their mainstream rivals. Ethical or socially responsible investment is an investment strategy that seeks to maximize both financial return an social good. According to Mr Robbins, “Most studies of ethical or socially responsible investment funds find that their performance is roughly similar or sometimes higher than returns from conventional investments.”
MICROCAPITAL BRIEF: South Korean Government Launches Sunshine Microfinance Loan Program under Smile Microcredit Bank for Low-income Households
The South Korean government has launched “Sunshine Loans,” a new offering under Smile Microcredit Bank – a state-run microfinance program established in 2009 to provide unsecured loans to low-income households through partnerships with the private sector. Over the next five years, the program is slated to extend KRW 10 trillion (USD 8.45 billion) to low-income households. The program will be implemented by a variety of financial institutions, including the National Agricultural Cooperative Foundation, the National Federation of Fisheries Cooperative, the National Credit Union Federation of Korea, the Korean Foundation of Community Credit Cooperatives and several unnamed private mutual savings banks.
MICROCAPITAL BRIEF: National Microfinance Bank (NMB) Launches ‘Juhudi’ Loan Program to Improve Access to Microcredit in Tanzania
The National Microfinance Bank (NMB), a commercial bank in Tanzania, has announced its intentions to provide ‘Juhudi’ loans of TSH 5 million (USD 3,300) to TSH 500 million (USD 330,000) to entrepreneurs in the country. According to Mr Kees Verbeek, the chief commercial officer of NMB, the issue for entrepreneurs is not whether loans are available, but rather if the interest rates, which reportedly vary between 18 to 25 percent in Tanzania, are affordable. Juhudi loans will be distributed at a 15 percent annual interest rate.
MICROCAPITAL BRIEF: Group of 20 (G-20) and Ashoka’s Changemakers Announce Small and Medium Enterprise (SME) Finance Challenge 2010
The Group of 20 Finance Ministers and Central Bank Governors (G-20), a group of leaders from 20 economies, and the US-based nonprofit, Ashoka, have announced that they will be holding a worldwide contest for the best models that catalyze finance for small and medium-sized enterprises (SMEs). The challenge is open to all private sector participants, including private financial institutions, private investors and companies, socially responsible investors, foundations and civil society organizations.
The goal of the Challenge is to identify catalytic and well-targeted public interventions to unlock private finance for SMEs. Maximizing leverage of scarce public resources is at key part of the Challenge.
MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) Releases French Edition of 2009 Arab Microfinance Report
The Microfinance Information Exchange (MIX) in partnership with Sanabel, a nonprofit organization dedicated to advancing Arab microfinance, and CGAP (Consultative Group to Assist the Poor), an independent policy and research center housed at the World Bank Group, recently released the French edition of its 2009 Arab Microfinance Analysis and Benchmarking Report.
MICROCAPITAL BRIEF: Microfinance Experts Express Concern Over Rapid Growth of Microlending by For-Profit Organizations in India
An article in the Financial Times titled, “Microfinancing Spreads Beyond India’s Grassroots,” discusses recent concerns raised by some microfinance experts surrounding the increase in microlending by profit-oriented companies in India.
MICROFINANCE PAPER WRAP-UP: A Business to Call Her Own: Identifying, Analyzing and Overcoming Constraints to Women’s Small Businesses in Latin America and the Caribbean, by Jennifer Powers and Barbara Magnoni, Published by the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB)
By Jennifer Powers and Barbara Magnoni of EA Consultants, Published by the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB), April 2010, 100 pages, available at: http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=35282406
The authors of this study focused on the differences between male and female entrepreneurs in six countries in Latin America: Guatemala, Nicaragua, Colombia, Bolivia, Mexico and Peru.
MICROCAPITAL BRIEF: SKS Microfinance Launches India’s First Initial Public Offering (IPO) by a Microfinance Institution
SKS Microfinance has launched India’s first initial public offering (IPO), anticipation of which stretches at least back to a report by MicroCapital on March 29, 2010.