Dr Ike Abugu, President of the Nigerian Association of Small and Medium Enterprises (NASME), has called the lack of skilled workers employed in microfinance as the reason why he feels microfinance has been unable to impact the economy and fulfill its promise. Dr Abugu commented, “The kind of people that went into microfinance was spillover from the commercial banks so they still had this banking mentality. They did not have the skills, knowledge and expertise to run microfinance banks.”
Category: Trends/Challenges
MICROCAPITAL BRIEF: PlaNet Finance China Reports One Third of Chinese Have No Access to Financial Services
A report released by PlaNet Finance China, a nonprofit acting to promote development of the microfinance sector, suggests that one third of China’s people have no access to financial services [1]. According to population data from the CIA World Factbook, this would total roughly 446 million people, a segment greater than the total population of all but one other nation, India [2].
MICROCAPITAL BRIEF: A New Study Published by the Microinsurance Innovation Facility of the International Labour Office Indicates 2.1% of the Potential African Market Is Covered by Insurance
According to a recent study entitled “The Landscape of Microinsurance in Africa” published by the Microinsurance Innovation Facility of the International Labour Office (ILO) 2.1 percent of Africa’s 700 million working poor have insurance coverage. The study found that, assuming a feasible insurance coverage level of five percent of gross domestic product (GDP), the potential size of the microinsurance market would be USD 25 billion, as compared to the current market size of USD 257 million.
MICROCAPITAL BRIEF: Jamaican Government to Provide $8m in Loans to Support Microenterprises
The government of Jamaica has announced it will provide JMD 750 million (USD 8.3 million) in loans to support microenterprises, which would bring the total funds available to micro-, small and medium-sized enterprises (MSMEs), through both the public and private sector, to JMD 6.7 billion (USD 75 million), according to Jamaican Commerce Minister, Karl Samuda.
MICROCAPITAL BRIEF: The Associated Chambers of Commerce and Industry of India (ASSOCHAM) Calls for Government-Owned Microfinance Institutions (MFIs)
The Associated Chambers of Commerce and Industry of India (ASSOCHAM), an organization representing approximately 100,000 Indian companies, plans to call attention to lacking rural microfinance service by asking the national government to operate microfinance institutions (MFIs) in those areas. ASSOCHAM reportedly argues that those MFIs currently serving rural India charge prohibitive annual interest rates of between 36 and 60 percent [1].
MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Provides $1.3m Loan to Albanian Leasing Company LandesLease Serving Small and Medium-sized Enterprises
The European Bank for Reconstruction and Development (EBRD) has provided a EUR 1 million (USD 1.3 million) loan to LandesLease, an Albanian leasing company, to expand its services to small and medium-sized enterprises (SMEs).
MICROCAPITAL BRIEF: SHARE Microfin Ltd of India Raises $11m Through Non-Convertible Debentures (NCD) with Assistance from Standard Chartered
SHARE Microfin Ltd, an Indian microfinance institution (MFI) with 2.4 million clients and a gross loan portfolio of USD 353 million, recently raised INR 500 million (USD 11 million) through a private placement of two-year, non-convertible debentures (NCD).
MICROCAPITAL BRIEF: Microfinance Invesment Vehicles’ (MIVs’) Total Assets Reach $3.6b in 2009 Despite Decreasing Yields and Stalled Industry Growth
Total assets of the top ten microfinance investment vehicles (MIVs) grew by 23 percent in 2009, reaching USD 3.6 billion, while MIVs’ investments in microfinance institutions (MFIs) grew by only 12 percent, according to a report by CGAP (Consultative Group to Assist the Poor), an independent policy and research center.
MICROCAPITAL BRIEF: Andhra Pradesh Government to File Criminal Cases Against Microfinance Institutions (MFIs) Using Coercion
The government of the Indian state of Andhra Pradesh recently announced it would file criminal cases against any microfinance institution (MFIs) found to have used coercion to recover loans.
MICROCAPITAL BRIEF: In Ecuador, Cap on Interest Rates Pressures Microlenders to Increase Loan Sizes, Sell to Larger Institutions
Ecuador’s central bank, Banco Central del Ecuador (BCE), recently further reduced the cap on annual interest rates to 30.5 percent from 33.9 percent for retail microlenders, and to 27.5 percent from 33.3 percent for all others lenders [1]. Since 2007, when the national government enacted banking reforms allowing the central bank to set a maximum interest rate for all banking institutions, the cap for microlenders has been dropping. According to Javier Vaca, the executive director of Red Financiera Rural (RFR), an Ecuadorian network of organizations that is focused on facilitating and promoting access to financial services, this forces microlenders to increase the average amount of their loans. Some are left with no choice but to sell their portfolios to larger institutions with lower fixed costs [2].
MICROFINANCE EVENT: Convergences 2015, Conference to Design Road Map for Microfinance In Next Decade, May 25 to May 26, 2010, Paris, France
Event Name: Convergences 2015
Event Date: May 25 to May 26, 2010
Event Location: City Hall, Paris, France
Event Website: http://www.convergences2015.org/
MICROFINANCE EVENT: The Swiss Agency for Development and Cooperation (SDC), Liechtenstein Development Service (LDS), CGAP (Consultative Group to Assist the Poor) and The Ford Foundation Co-host the Social Performance Task Force (SPTF) 2010 Annual Meeting in Bern, Switzerland, June 28 – July 2, 2010
Event Name: Social Performance Task Force (SPTF) 2010 Annual Meeting
Event Date: June 28 – July 2, 2010
Event Location: Kursaal Bern Congress and Culture Centre, Bern, Switzerland
Event Website: http://www.sptf.info/page/2010-annual-meeting
See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events
MICROCAPITAL BRIEF: Plan for New Law to Regulate Microfinance Sector in Uganda Announced
A new law to regulate the microfinance sector in Uganda is expected before the reading of the 2010/2011 budget in June [1]. The plan was announced by Ruth Nankabirwa, the microfinance state minister at the third Financial Inclusion Advisors Conference recently hosted in the capital, Kampala. According to Ms. Nankabirwa, membership in the microfinance sector has grown from 644,318 in 2008 to 1,154,715 in 2009. A large proportion of funds within the sector are unregulated – there are over 1,340 microfinance institutions (MFIs) in Uganda that are not regulated. Ms. Nankabirwa argues that regulating the microfinance sector will increase consumer confidence and encourage more people to use its services.
MICROCAPITAL BRIEF: Central Bank of Kenya Allows Banks and Deposit-Taking Microfinance Institutions to Launch Agency Banking Services
The Central Bank of Kenya (CBK) has passed a law allowing banks, deposit-taking microfinance institutions (MFIs) and mortgage finance companies to open branches through third parties, or agency banks.
MICROCAPITAL BRIEF: The National Association of Microfinance Banks (NAMB) to Partner with Universities to Facilitate Capacity Building in Nigerian Microfinance Sector
Chief Jethro Akun, the Vice President of the National Association of Microfinance Banks (NAMB) in Nigeria, has announced plans to partner with the National University Commission (NUC), a parastatal under the Federal Ministry of Education established in 1962, to facilitate the offering of courses in microfinance banking at the university level. According to Mr. Akun, the partnership is necessary as the microfinance sector needs more “manpower” to achieve growth in the sector. He also believes that courses in microfinance banking will help to allay many of the fears of the general public over the viability of microfinance banks [1].
MICROCAPITAL BRIEF: Rwandan Microfinance Institution Urwego Opportunity Bank (UOB) Reports Lending Fosters Social Reconciliation
Radio Netherlands Worldwide recently reported that microfinance in Rwanda is “booming” and the Netherlands is contributing to this “success” [1]. One of the potential effects of the rise of microfinance in Rwanda is social reconciliation. Faustin Zihiga, the Chief Operating Officer of Urwego Opportunity Bank (UOB) of Rwanda, the largest microfinance bank in Rwanda among those reporting to the Microfinance Information Exchange (MIX Market), suggests that in group-lending programs, survivors of the genocide mix in the same groups as perpetrators of the genocide. They begin to associate themselves by their group, not by their ethnic background. According to Zihiga, the social change is often even more visible than the economic change that microfinance brings about [3].
MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) Releases 2009 Brazilian Microfinance Report
The nonprofit Microfinance Information Exchange (MIX) recently released the 2009 benchmarking report on the microfinance sector in Brazil, available in Spanish.
MICROCAPITAL BRIEF: Pro Mujer Releases First Issue of Publication on Innovative Microfinance Services
Pro Mujer, an international microfinance organization serving 202,000 clients in Latin America, recently released the first issue of a publication that will evaluate field research on new microfinance services.