MICROFINANCE PAPER ROUND-UP: Graduation Programming in Uganda, Financial Lives of Farmers in DRC, Funding Local-currency Microlending in Myanmar

“The Impact of Variations of Ultra-Poor Graduation Programming in Uganda;” by Richard Sedlmayr, Munshi Sulaiman and Anuj Shah; published by Innovations for Poverty Action; February 2018; 4 pages; available at https://www.poverty-action.org/sites/default/files/publications/VE%20Results%20Brief.pdf

Village Enterprise is a US-based NGO that offers microenterprise services in Africa such as cash transfers, mentorship, financial education and business education with the goal of helping participants achieve financial stability and increased income. This study includes a sample of approximately 6,000 Ugandan households in 138 villages that accessed Village Enterprise programs. The researchers studied a control group and groups engaged in four sets of interventions: (1) unconditional cash transfers equivalent to USD 300; (2) cash transfers coupled with training on how to manage the money; (3) cash transfers with training plus mentoring; and (4) all three of these services plus participation in business savings groups.

The fourth intervention – the full graduation program – had the largest impact. These participants’ annual consumption per capita, assets and cash inflows increased by an average of USD 24, USD 15 and USD 12, respectively. In addition, participation in the savings groups sometimes improved social conditions for women. The unconditional cash transfers – alone or with training – did not result in clear improvements.

“An In-depth Look at the Financial Lives of Mavuno Farmers,” published by Mavuno, February 2018, 11 pages, available at http://www.microfinancegateway.org/sites/default/files/publication_files/an_in-depth_look_at_the_financial_lives_of_mavunos_farmers_3.pdf

Mavuno, an NGO in the Democratic Republic of Congo that seeks to end extreme poverty by fostering local communities and businesses, studied the budgeting and spending behaviors of 267 farmers in 10 regions of the country over six months. Roughly half of the participants were microborrowers, and 60 percent were female.

The goals of the survey were to: (1) boost the understanding of farmers’ spending and savings habits; and (2) determine whether there are relationships between the use of microfinance services and improved financial health. When comparing the Mavuno members (microfinance program participants) to incoming members (non-participants), the researchers found that women members were more likely to seek occupations outside of agriculture. Furthermore, the researchers found a positive relationship between the length of participation in Mavuno’s programme and food expenditures as well as participation in social interactions such as financial contributions to community projects and extended family members.

“Blended Finance in Myanmar: TCX’s Role in Realizing Financial Inclusion Through Innovative Partnerships in Myanmar,” published by The Currency Exchange Fund (TCX), February 2018, 11 pages, available at https://www.tcxfund.com/wp-content/uploads/2018/02/TCX-Myanmar-case-study.pdf

In 2011, following the end of military rule, Myanmar opened its economy to international trade and investment. The authors argue that despite its potential as a trading hub between China and India, the country remains hampered by an underdeveloped financial system; a 13-percent interest cap on lending; and unstable macroeconomic factors, such as a high risk of currency devaluation. Indeed, the MMK/USD exchange rate increased from 6.5 in March 2012 to 1,340 in March 2018. These factors discouraged international investors from investing in the country, including its microfinance institutions (MFIs). This plus the urban orientation of most MFIs has greatly limited access to finance for rural entrepreneurs, notably farmers.

In response, the Livelihoods and Food Security Trust Fund (LIFT), a UN-managed funder of small businesses in Myanmar, partnered with The Currency Exchange Fund (TCX), a Netherlands-based entity that offers currency-risk management products in developing markets. LIFT facilitated an interest-rate subsidy of USD 10 million, and TCX arranged currency swaps with international funders, enabling the kyat-denominated equivalent of USD 80 million to flow to 11 MFIs to serve approximately 300,000 clients.

Sources and Additional Resources

Village Entreprise:
http://villageenterprise.org/

Innovations for Poverty Action:
https://www.poverty-action.org/

Mavuno:
https://www.mavuno.org/

The Currency Exchange Fund (TCX):
https://www.tcxfund.com/

LIFT:
https://www.liftfund.com/

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