Avendus Capital, an Indian investment bank, recently reported that it purchased INR 108 million (USD 2.4 million) in securitized debt from Grama Vidiyal Microfinance, a microfinance institution (MFI) operating in India’s state of Tamil Nadu. Securitization is a process by which lenders pool the receivables from loans for sale to investors such as banks, mutual funds and wealth managers.
Category: Trends/Challenges
MICROCAPITAL BRIEF: Climate Investment Funds (CIF) Forum Panelists: Microfinance Institutions (MFIs) Can Help Mitigate and Adapt to Climate Change
Government officials and executives from development institutions recently commented on the role that microfinance can play in helping poor and rural communities in developing countries address the ongoing problems associated with climate change at the recent Climate Investment Funds (CIF) 2011 Partnership Forum in Cape Town, South Africa.
MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs)
The Central Bank of Nigeria (CBN), Nigeria’s central banking authority, reportedly plans to announce new capital base minimums for microfinance banks (MFBs) by the end of June. A new capital requirement is expected to be established for those operating at the national level at NGN 2 billion (USD 12.8 million); the minimum for those at the regional level will decrease to NGN 100 million (USD 640,000) from NGN 1 billion (USD 6.4 million); and the minimum for those at the rural level, with one branch, will remain unchanged at NGN 20 million (USD 128,000).
MICROCAPITAL BRIEF: responsAbility Loans $6.7m to Interfisa of Paraguay, Ecofuturo of Bolivia, FIE Grand Poder of Argentina, Locfund
responsAbility Social Investments AG (responsAbility), a Swiss asset management company that invests in microfinance institutions (MFIs) and microfinance investment vehicles (MIVs), recently reported to MicroCapital that it made debt investments totaling approximately USD 6.7 million through MIVs it manages to Locfund, an MIV with offices in Costa Rica and Bolivia, and the following three MFIs: Interfisa, a financial intermediation company offering loans, voluntary savings and fund transfer services in Paraguay; Ecofuturo, a regulated Bolivian MFI that supports the development of small and micro-enterprises; and FIE Grand Poder of Argentina.
MICROCAPITAL BRIEF: Incofin VDK MFI Loan Portfolio Loans $5m to Mongolian Microfinance Institution XacBank
Incofin Investment Management (Incofin), a Belgian fund manager that invests in microfinance, recently reported to MicroCapital that it loaned USD 5 million from the Incofin VDK MFI Loan Portfolio to XacBank, a community development microfinance institution (MFI) in Mongolia.
MICROCAPITAL BRIEF: Afghanistan Rural Enterprise Development Program to Model Microfinance Strategy on Pakistan Poverty Alleviation Fund
The Afghan government reportedly has decided to model its microfinance programs after the Pakistan Poverty Alleviation Fund (PPAF), a government program that provides loans, grants and technical assistance to microfinance institutions (MFIs).
MICROCAPITAL BRIEF: Uganda Launches “Youth Entrepreneurship Venture Capital Fund”; Mobile Telecommunications Network (MTN), Uganda Youth Convention (UYC), Financial Empowerment Network (FEN) Launch Microfinance Savings Plan
Both the government of Uganda and a joint effort by Mobile Telecommunications Network (MTN), a mobile telecommunications company based in South Africa; Uganda Youth Convention (UYC), platform for empowerment and enterprise for youth; and Financial Empowerment Network (FEN), a local venture capital firm, recently launched programs to promote entrepreneurship and a “savings culture” among youth at a Job Convention for the Bunyoro Region of Uganda.
MICROCAPITAL BRIEF: Dutch Cooperative Investment Fund Oikocredit Invested 80% of New Loans in Smaller Microfinance Institutions During 2010, Reached 28m People, of Whom 86% are Women
Oikocredit, a Dutch cooperative investment fund, recently released its “Social Performance Report 2010” indicating that the organization reached approximately 28 million people through its microfinance partners, with nearly 1.2 million individuals directly benefiting from Oikocredit funding.
MICROCAPITAL BRIEF: Tanzania’s Akiba Commerce Bank Partners with Tanzania Electric Supply Company to Offer Microfinance Loans for Electricity Connections
In a joint initiative with Tanzania Electric Supply Company (TANESCO), Akiba Commerce Bank (ACB), a commercial bank in Tanzania, has launched Umeme (“Electricity”) Loans, which carry terms of six to twelve months and cover the cost of connecting electricity. The loan bears an annualized interest rate of 19.5 percent, which must be paid for up-front.
MICROCAPITAL BRIEF: Spurned by Commercial Banks, Indian Microfinance Institutions (MFIs) Raise Funds from Social Investors IFC, ACCION, MicroVest, ShoreCap, Aavishkaar, BlueOrchard
Indian microfinance institutions (MFIs), which have seen new lending from commercial banks dry up since the “Andhra Pradesh crisis” broke in late 2010, instead have been accessing funds from social and philanthropic investors including: International Finance Corporation (IFC), the private-investment arm of the World Bank Group; ACCION International, a US-based nonprofit organization; MicroVest Capital Management, a US-based family of microfinance investment funds; Shore Capital, a UK-based investment banking company; Aavishkaar Goodwell India Microfinance Development Company Limited, an India-based financing company; and BlueOrchard Microfinance Investment Managers, a Swiss manager of microfinance funds.
MICROCAPITAL BRIEF: African Development Bank (AfDB) Loan Guarantee Scheme Provides Loans to Women Whose Businesses are Too Big for Microfinance
The lack of access to finance for women entrepreneurs in Africa was a theme of the recent annual meeting of the African Development Bank (AfDB) held in Lisbon, Portugal. A report presented at the AfDB meeting showed that women entrepreneurs face a number of hurdles that make it difficult for them to obtain financing, while a study by AfDB estimated that the USD 19 billion-demand for finance from women entrepreneurs reflects an opportunity for finance institutions as well as for job creation.
MICROCAPITAL BRIEF: After Farmers Reject Bank Cards, China’s Harbin Bank “Cash Caravans” Bring Microfinance to Villagers
Harbin Bank, a commercial bank headquartered in the Chinese province of Heilongjiang, has designed a mobile operation to facilitate access to finance for farmers. A three-vehicle fleet, which consists of an armored jeep accompanied by a police car and a mobile loan station, carries some CNY 10 million (equivalent to USD 1.54 million) in bank notes to rural locations.
MICROCAPITAL BRIEF: Microfinance Expands in Rural Kyrgyzstan as Lending Shifts to Agriculture
Kyrgyzstan’s microcredit sector reportedly has been growing in recent years and extending to outlying regions. The growth of microcredit in rural regions has corresponded to an increase in agricultural business following the June 2010 ethnic riots in the country.
MICROCAPITAL BRIEF: Lauro González of Getulio Vargas Foundation’s Microfinance Studies Centre, Marcelo Azevedo Teixeira of Banco do Nordeste do Brasil (BNB) Praise Brazil’s National Productive Microcredit Programme, Argue More is Needed
Between August 2004 and August 2010, Brazil’s National Productive Microcredit Programme, which was developed in an effort to expand access to credit among formal- and informal-sector entrepreneurs, generated the equivalent of approximately USD 4 billion dollars in credit for low-income households [1]. Lauro González, coordinator of the Microfinance Studies Centre of Brazil’s Getulio Vargas Foundation was recently quoted as stating, “the number of holders of small-scale loans rose from 200,000 to more than one million” since the launch of the programme in 2003 [1]. Marcelo Azevedo Teixeira, manager of the Urban Microfinance Unit at the state-run Banco do Nordeste do Brasil (BNB), stated, “The initiative has played an important role in strengthening and expanding credit for the low-income population…. New actors entered the market, new products were developed, and regulations evolved, which made it possible to coordinate the activities of different institutions” [1].
MICROCAPITAL BRIEF: Financial Sector Deepening, Microfinance Opportunities Announce “Financial Diaries” Research Indicating M-Pesa Users Better Prepared for Health Emergencies, Most E-Money Transfers Are Among Family, Friends
Financial Sector Deepening Kenya (FSD Kenya), a Kenyan trust that seeks to develop the capacity of the financial services industry, in partnership with Microfinance Opportunities, a microenterprise resource center based in Washington, DC, recently hosted a workshop on “financial diaries”, which are year-long surveys that examine financial management in poor households. The following findings, based on the implementation of the diaries in Kenya, were announced: 1) low-income households handle “a lot of cash” on a weekly basis, 2) 95 percent of transactions are in cash, with the remaining 5 percent made through M-Pesa, 3) 80 percent of e-money flows are among family and friends, 4) 75 percent of M-Pesa remittances are cashed out, mostly within a day and 5) M-Pesa users are “less vulnerable to health shocks” [1].
MICROCAPITAL BRIEF: Government of Ghana Budgets $10m to Support Ghana Interbank Payment and Settlement System (GHIPSS) to Reach Rural Customers Through “E-Zwich” Biometric Identification System
The government of Ghana has budgeted EUR 7.5 million (USD 10.6 million) to support the Ghana Interbank Payment and Settlement System (GHIPSS) in an effort to ensure high-quality delivery of financial services and to better serve the under-banked population of Ghana. Ghana’s Finance Minister, Dr Kwabena Duffuor, has been quoted as stating “the funds would allow GHIPSS to implement a countrywide biometric system as well as undertake a rural banking project that uses the National Switch and Smart card payment system, branded as e-zwich…This technology will permit offline transaction and fingerprint recognition making it highly suitable for rural areas and for the uneducated people in our country” [1]. Goals regarding the number of people to be reached and schedule of the project have not been disclosed.
MICROCAPITAL BRIEF: Microfinance Institution (MFI) Fonkoze Initiates Claims Process for Clients Affected by Heavy Rains in Haiti
Fonkoze, a Haiti-based microfinance institution (MFI), has initiated the claims process for its clients that were affected by recent heavy rains in Haiti. Torrential rains have caused mudslides, flooding and widespread destruction of property in Haiti during June 2011. In response, Fonkoze will be making payments under its catastrophe recovery product, which was launched in January 2011 as a required add-on bought by all Fonkoze clients at the time of their loan disbursement. Clients who have lost their homes or their business as a result of the rains will receive a cash payout of HTG 5,000 (USD 125) to meet emergency needs such as food, shelter, water and temporary shelter. Fonkoze reports, “these clients will also receive a reimbursement of the balance of their existing loan and a new loan when they are ready to restart their business” [1].
MICROFINANCE EVENT: Munich Re Foundation to Host Seventh International Microinsurance Conference, November 8 – November 10, 2011, Rio de Janeiro, Brazil
Event Name: Seventh International Microinsurance Conference
Event Date: November 8 – November 10, 2011
Event Location: Rio de Janeiro, Brazil