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> Posted by Center Staff
Last week witnessed a historic step forward for microfinance — perhaps not quite on the scale of Pocantico, but earth-shaking nonetheless.
Forty investors signed the new Principles for Investors in Inclusive Finance, which were launched at the second annual Responsible Finance Forum in The Hague.
“Investors in microfinance can’t act like absentee landlords, enjoying the returns but not fixing the plumbing,” said one investor at the forum.
The initiative to develop these principles began with Princess Maxima of the Netherlands, in her role as the United Nations Secretary General’s Special Advocate for Inclusive Finance, along with a group of Dutch investors. This explains the preponderance of Dutch investors among the 40 initial signatories: 23 of the founding signers are from the Netherlands, eight from the United States, five from Switzerland, and one each from India, Germany, Belgium, and Norway. Read the rest of this entry »
> Posted by Michelle Romeu
Amazon, blog series, currencies, and more: the ABCs of this week’s Top Picks:
- NextBillion offers a blog series that brings various Brazilian BoP and social business issues to light. Eduardo Diniz focuses on banking and financial inclusion in Brazil’s parts of the Amazon, complete with a video that highlights the region of Autazes.
- Two posts (and another series) for the price of one: David Roodman weighs in on CGAP’s latest series on over-indebtedness and underscores Rich Rosenberg’s key comment
- On the mobile banking front, CGAP’s Technology blog ponders the question of different mobile currencies.
- Micro-enterprise and “merry-go-rounds”: The MasterCard Foundation’s blog profiles youth entrepreneurship and financial access in Kibera, a low-income neighborhood in Nairobi.
> Posted by Anita Gardeva
Your last chance is fast approaching to apply for the 2011 HBS-ACCION Program on Strategic Leadership for Microfinance, which will take place April 25–30th at the Harvard Business School campus in Boston.
The program is tailored to meet the needs of executives of institutions ranging from MFIs to private-sector commercial banks and service providers. In addition, this year we invite investors and regulators engaged in expanding financial inclusion to apply.
The 2011 course marries the best in strategic business thinking with the most important advances in microfinance through:
• An intensive immersion into the microfinance industry and the operations of leading microfinance institutions
• Addressing key challenges of doing business at the base of the financial sector, including succeeding in highly Read the rest of this entry »
> Posted by Center Staff
A snippet of news we came across recently draws an intriguing line between Matt Damon, microfinance, and access to safe drinking water in Africa.
Reeta Roy, the president and CEO of The MasterCard Foundation, penned the post for the foundation’s blog many weeks ago. But the story’s still fresh: an organization called Water.org is powering a “market-driven and sustainable approach [that] facilitates the collaboration between microfinance institutions and NGOs in order to provide financial products to communities living in poverty so they can access clean water and sanitation.”
“About 60 percent of the population in Sub-Saharan Africa lacks access to clean water, and 30 percent to sanitation,” writes Roy. “Annually, this gap results in 800,000 deaths due to diarrheal diseases, 88 million missed days of school, and $20 million in lost time collecting water. Sub-Saharan Africa loses nearly 5 percent of its GDP each year due to the water crisis — the value of which exceeds all foreign assistance in the region.”
The poor in many developing countries, notes Roy, pay 12-15 times more for access to clean water than their higher-income neighbors in the same city.
Despite this clear existence of market demand, there have not been sustainable ways to finance basic water needs until Water.org introduced WaterCredit in South Asia. Read the rest of this entry »
> Posted by Center Staff
Tunisia’s regime change is creating immediate challenges for everyone who lives there, but also hopes for political reform and new opportunities. It may be possible for microfinance to contribute to a new Tunisia offering greater freedom and economic opportunity.
The events of the past week have been difficult for everyone. Michael Cracknell, of Enda Inter-Arabe (enda-ia), the only best-practice microfinance institution in Tunisia, reports that several clients have lost their lives. Beyond that, some of the MFI’s branches have been damaged. Throughout, Enda Inter-Arabe has continued to operate, in recognition that clients, especially some whose businesses have been damaged, need access to services more than ever.
Press reports indicate that the latest turn of events seems to be for the better – a calming of the streets, and more peaceful demonstrations for change. Meanwhile, markets have remained open, and public services such as electricity, gas, water, and transportation have continued to function.
Read the rest of this entry »
> Posted by Center Staff
The Nicaraguan microfinance industry suffered a profound crisis in 2009 and 2010 as a result of both the international financial downturn and the domestic No Pago (No Payment) Movement. Heightened by political interference, these events took a toll on Nicaraguan MFIs and left them both illiquid and unpopular. As reported by La Prensa, more than 100,000 clients have stopped receiving credit. The industry served some 324,000 clients before the crisis, while today it serves an estimated 225,000. Total portfolio dropped from US$420 million in 2008 to US$170 million at present. Despite heavy write-offs, members of the Nicaraguan microfinance institution association (known by its Spanish acronym, ASOMIF) have an estimated portfolio at risk of 19 percent. There have been cases of failure.
Although this news is bleak, there are glimmers of improvement. The sector appears to have stopped deteriorating and overt support for the No Pago from the government seems to have lessened. The IMF has put some pressure on the government to support the microfinance sector. A few institutions are seeing signs of recovery. According to an IMF Document, the Nicaraguan government will seek the approval of a Microfinance Law that will enhance “the supervision, transparency, and efficiency of the sector… in particular, the regulatory framework applicable to unsupervised microfinance institutions.”
In previous posts we examined the nature of the No Pago Movement and the Moratorium Law. Here, we ask: What can the microfinance industry as a whole learn from these events? Read the rest of this entry »
> Posted by Center Staff
Beth Rhyne’s latest contribution to the Huffington Post examines a range of “safe” practices that can make microfinance healthy for MFIs and clients alike.
Like sex, microfinance can be safe if practiced responsibly. Recently, however, we’ve seen that not all participants in the microfinance industry are practicing safe microfinance. As happens with that other risky activity, the players in microfinance face temptations that lure them away from healthy long term relationships. One need look no farther than Andhra Pradesh, India, where the temptation for lenders to grow very fast in order to win market share, prestige and profits caused them to woo many clients into excessive debt — with predictably bad consequences for both clients and lenders.
To read the rest of this piece and find out about other microfinance articles by Beth Rhyne on the Huffington Post, click here.
> Posted by Center Staff
Microfinance has grown rapidly in recent years and provides access to financial services to millions of people worldwide who are at the base of the global income pyramid. It is an effective tool that opens new opportunities for many who otherwise would not be able to take advantage of these services and products.
Some microfinance markets, however, are showing signs of over-indebtedness and overheating. In light of the potentially negative repercussions of over-indebtedness, every effort should be made to prevent these markets from overheating. Read the rest of this entry »
> Posted by Center Staff
The thrust:
“Sacrificing Microcredit for Megaprofits,” Dr. Muhammad Yunus’ piece on the opinion pages of the The New York Times on Friday, January 14th. The Nobel Prize winner makes his point: “I never imagined that one day microcredit would give rise to its own breed of loan sharks.”
The parry:
“Muhammad Cronus?,” Matthew Bishop’s next-day response on the blog Philanthrocapitalism. The US business editor and New York bureau chief of The Economist counters: “[T]he idea that leading commercial microlenders like SKS and Compartamos are loan sharks is outrageous.”
The riposte:
“If Mr Yunus has his way,” Bishop writes, “[the] supply of growth capital will be choked off and hundreds of millions of people will be left waiting for financial inclusion.”
> Posted by Michelle Romeu
With a look at the past year and many things to look forward to in the new one, Top Picks of the Microfinance Blogosphere is back in action:
- To start 2011 with a tribute to 2010, check out the Best Ideas of 2010 blog series, focusing on what the past year meant for NextBillion and the Base of the Pyramid idea.
- The MasterCard Foundation and Microfinance Opportunities have announced their partnership with Financial Inclusion Network and Operations Ltd. (FINO), through which they will work to extend financial education to branchless banking clients. Head over to the MasterCard Foundation blog for more information on the project.
Read the rest of this entry »
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