by Conner Brannen -

MICROFINANCE PAPER WRAP-UP: Why Microfinance Take-up Rates Are Low & Why It Matters, by Dean Karlan, Jonathan Morduch and Sendhil Mullainathan

By Dean Karlan, Jonathan Morduch and Sendhil Mullainathan, published by Financial Access Initiative, June 2010, available at: http://financialaccess.org/sites/default/files/RFN11_Why_microfinance_takeup_rates_are_low%286-17-10%29.pdf

Evidence indicates that under half of eligible households participate in microfinance. In this paper, Mr Karlan, Mr Morduch and Mr Mullainathan begin by reviewing why take-up rates are important and how they can be measured. Data from thirteen projects show that take-up rates vary from 2 to 84 percent of eligible individuals.

by Conner Brannen -

MICROCAPITAL BRIEF: International Finance Corporation (IFC) and Gesellschaft fur Technische Zusammenarbeit (GTZ) to Provide Technical Assistance to Philippines’ Central Bank to Spur Lending to Small and Medium-Sized Enterprises

The International Finance Corporation (IFC), a member of the World Bank Group, and Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ – German Technical Cooperation Center), a German government-owned international development organization, are providing technical assistance to the Philippines’ central bank in order to strengthen its supervisory and regulatory capacity for lending to small and medium-sized enterprises. A study last year by Asia Business Monitor showed that approximately 83 percent of small and medium-sized enterprises in the Philippines have experienced difficulties in accessing credit from banks. According to Will Beloe, IFC head of advisory services in the Philippines, greater support from central bank supervisors for commercial banks specializing in lending to small and medium enterprises is expected to increase credit flow to the sector.

by Julia Korn -

MICROCAPITAL BRIEF: Saija Finance Private Limited Addresses Shortage of Microfinance in Bihar, India

Since 2008 Saija Finance Private Limited, a nonbanking finance company with total assets of INR 11 million (equivalent to USD 240,000), has been providing microfinance services in the Indian state of Bihar, which according to a report by the National Bank for Agriculture and Rural Development (NABARD), has a credit-demand supply gap of 96 percent.

by Conner Brannen -

MICROCAPITAL BRIEF: Southern Sudan Holds Microfinance Conference with Sponsorship from United States Agency for International Development (USAID)

With sponsorship from the United States Agency for International Development (USAID), a government agency that provides international economic and humanitarian assistance, Southern Sudan recently held what was billed as its first microfinance conference. The aim of the conference, which was held in the regional capital of Juba, was to provide a forum for stakeholders to exchange views about the status of microfinance in Southern Sudan and to develop a strategy to improve microfinance in the region.

by Julia Korn -

MICROCAPITAL BRIEF: Vineet Sukumar of the Institute for Financial Management and Research (IFMR) Capital Defends Microfinance Securitization

Vineet Sukumar of the Institute for Financial Management and Research (IFMR) Capital has recently written a counter-argument to an article written by Daniel Rozas and Vinod Kothari and published by Microfinance Focus which argued that “microfinance securitization does not, in reality, separate ‘pool risk’ from ‘originator risk’ and hence should not be rated very differently from the originator of the portfolio.”

by Stefanie Rubin -

MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) Releases, “Microfinance Funders Profiles – A Short Guide for Young and Small Institutions Still Looking for a Match,” by Adrian Gonzalez

Microfinance Information Exchange (MIX) Lead Researcher, Mr Adrian Gonzalez, recently authored a report published by MIX discussing the funding sources for microfinance institutions (MFIs) in the lowest quartile in terms of size, age, profitability and portfolio quality.

by Conner Brannen -

MICROCAPITAL BRIEF: New Microfinance Company, Kongalend, Launched in Namibia to Support Purchase of Renewable Energy Products

A new microfinance company, Kongalend, has been launched in Windhoek, Namibia, to offer collateral-free loans to small and medium-sized enterprises as well as private households interested in purchasing renewable energy products. Loans between NAD 1,000 (USD 133) and NAD 2,500 (USD 332) will be issued not in cash, but rather through seven unnamed local partner companies that provide renewable energy technology.

by Conner Brannen -

MICROCAPITAL BRIEF: MicroRate Releases 5th Annual Survey: “State of Microfinance Investment: The MicroRate 2010 Microfinance Investment Vehicle (MIV) Survey”

MicroRate, a microfinance rating agency, has released its fifth annual survey evaluating trends in microfinance investment – “State of Microfinance Investment: The MicroRate 2010 Microfinance Investment Vehicle (MIV) Survey.” The 2010 MIV survey indicates that investor interest in microfinance funds and similar intermediaries remains strong despite the global recession. However, strong interest from investors is being offset by weaker demand for funding from microfinance institutions (MFIs). In 2009, MIVs grew by 22 percent, but assets actually deployed to MFIs only grew 11 percent. This leaves MIVs with rapidly increasing levels of liquidity. By the end of last year, competition forced rates below the minimum level that some MIVs deem necessary in order to be compensated fully for the risk involved.

by Conner Brannen -

MICROCAPITAL BRIEF: Microfinance Institution Village Financial Services Private Limited (VFS) Partners with Hindustan Unilever Limited (HUL) to Improve Access to Safe Drinking Water via Microloans in India

Village Financial Services Private Limited (VFS), a microfinance institution (MFI) in eastern India, has signed a memorandum of understanding with Hindustan Unilever Limited (HUL), a consumer goods company based in Mumbai, India, to improve access to safe drinking water. The partnership will enable poor households to take a loan at a zero rate of interest to buy HUL’s Pureit water purifiers.

by Conner Brannen -

MICROCAPITAL BRIEF: Women of Worth (WOW), Mircofinance Scheme in Guyana, to Help Single Mothers Access Loans, Expands to Essequibo

The Women of Worth (WOW), a microcredit scheme that aims to help single mothers start small businesses in Guyana, has now expanded to the region of Essequibo. As reported by MicroCapital at the time, WOW was launched in June by the Guyana Bank for Trade and Industry Limited (GBTI), a commercial bank.

by Conner Brannen -

MICROCAPITAL BRIEF: Village Enterprise Fund Receives $25,000 Grant from Disney Conservation Fund (DWCF) to Support Development Conservation Program in Uganda

The Village Enterprise Fund (VEF), a microenterprise development program in East Africa, has received a USD 25,000 grant from the Disney Conservation Fund (DWCF), an awards program for the study and protection of the world’s wildlife and ecosystems sponsored by the media and entertainment conglomerate, the Walt Disney Company, to support a new integrated development/conservation program. The grant will be used to expand VEF’s development/conservation program surrounding Uganda’s Budongo Forest – a conservation area in East Africa that is home to roughly 600 chimpanzees. The Budongo program empowers local communities to start sustainable, diversified small businesses in a way that supports long-term conservation goals.

by Julia Korn -

MICROCAPITAL BRIEF: Mercy Corps Establishes “Fund for Rebuilding Communities through Micro-enterprise” for Post-Riot Relief in Kyrgyzstan

Mercy Corps, a global relief and development agency based in the US, has informed MicroCapital that it has established a facility called “Fund for Rebuilding Communities through Micro-enterprise (FRCM)” to give grants for the rebuilding of small businesses that were damaged during the recent violence in Kyrgyzstan.

by Conner Brannen -

MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) Receive $84m in Private Equity Investment in the First Half of 2010

Indian microfinance institutions (MFIs) have reportedly attracted private equity investment totaling INR 3.86 billion (USD 84 million) between January and June of this year – an increase of approximately 15 percent over the first half of 2009. According to unnamed “industry experts,” the increase is a result of the high profitability of the majority of Indian MFIs, brought about by the high interest rates that MFIs charge (30-60 percent per year) and high repayment rates (exceeding 95 percent).

by Matthew Fox -

MICROCAPITAL BRIEF: Massachusetts Institute of Technology (MIT) Press Releases “The Economics of Microfinance,” Second Edition, By Beatriz Armendriz and Jonathan Morduch

The Massachusetts Institute of Technology (MIT) Press has released the second edition of “The Economics of Microfinance,” by Beatriz Armendriz and Jonathan Morduch. The first edition, published in 2007, provided an overview of microfinance by addressing a range of issues, including lessons from informal markets, savings and insurance, the role of women, the place of subsidies, impact measurement and management incentives. It endeavored to integrated theory with empirical data, citing studies from Asia, Africa and Latin America and introducing ideas about asymmetric information, principal-agent theory and household decision-making in the context of microfinance.

by Conner Brannen -

MICROCAPITAL BRIEF: More Details Emerge After Examination of Microfinance Institutions (MFIs) by Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC)

Following growing complaints of fraudulent practices leveled against several microfinance institutions (MFIs) and the failure some, the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) conducted an examination of the sector, which has revealed some irregularities and unethical practices.

by Julia Korn -

MICROFINANCE PAPER WRAP-UP: The State of Iraq’s Microfinance Industry by The Louis Berger Group Incorporated, Produced for the US Agency for International Development (USAID)

By The Louis Berger Group Incorporated, produced for the US Agency for International Development (USAID), June 2010, 56 pages, available at: http://www.imfi.org/files/StateOfIMFI_USAID_en.pdf

The authors of this paper report that Iraq’s microfinance industry was established in 2003 and is now comprised of 14 microfinance institutions (MFIs) spread out over Iraq’s 18 provinces.