You are currently browsing the monthly archive for February 2011.
> Posted by Michelle Romeu
This week, we highlight a pair of face-offs. The first is a debate between Felix Salmon and Matt Bishop, and the second, a kerfuffle involving Grameen Bank and a Norwegian television network. Rounding out the blogosphere’s best are Brazil and microsavings.
- NextBillion spotlights Beleza Natural, a Brazilian salon founded by a former nanny and hairdresser, two former McDonald’s assistants, and an ex-cab driver—one of the best base-of-the-pyramid success stories. For a bilingual bonus, the post also links to the original Portuguese version on NextBillion Brasil.
- Charissa Sparks of the MediaGlobal blog discusses the benefits of microsaving, and includes helpful advice about the best and safest microsaving methods. Read the rest of this entry »
> Posted by Center Staff
The Smart Campaign is proud to announce the launch of its first-ever e-learning course, which allows industry professionals to experience interactive simulations of a series of scenarios involving client protection and financial education in microfinance.
The course’s initial scenario takes participants to Occlo, a microfinance institution in a fictional country, which is facing troubles due to client distrust, limited staff experience, political strife, and other issues. The user is challenged to reduce the impact of these factors and improve Occlo’s situation.
The course was created to make the case for client protection and financial education, and to assist users in thinking about ways to implement the Client Protection Principles in their own organizations.
“I think the course we developed meets both of these goals, both by giving the user an opportunity to see the impact of these principles on a microfinance organization, and by exposing them to ways that they could consider implementing the principles in their own organization,” said e-learning developer Amanda Warner, who created the module in collaboration with a team from ACCION International and the Smart Campaign. Read the rest of this entry »
> Posted by Center Staff
The Council of Microfinance Equity Funds (CMEF) recently responded to the Reserve Bank of India’s invitation to comment on the Malegam Committee Report.
Sixteen members of CMEF, which brings together the leading private entities that make equity investments in MFIs in the developing world, have invested Rs. 8.1 billion (813 crores; US$178 million) of equity in Indian microfinance institutions, and other members are in negotiations with potential investee institutions. As direct investors in MFIs, CMEF members place great importance on their corporate governance role as board directors, shareholders and guardians of the double bottom line.
The CMEF concern is that “Although implementation of many of the proposed recommendations would indeed add to a sustainable development of the sector — through the enhanced institutionalization of transparency in pricing, client protection and corporate governance — it is our opinion that several recommendations could seriously set back the clock for microfinance in India.” Read the rest of this entry »
> Posted by Connie Gonzalez, Director of the Portal de Microfinanzas, INCAE/CGAP
The Spanish Microfinance Gateway, called Portal de Microfinanzas, is an affiliate language site of the Microfinance Gateway (www.microfinancegateway.org) managed by INCAE Business School in Costa Rica. The Microfinance Gateway is a service provided by CGAP, housed at the World Bank, which has sites in English, Arabic, French, and Spanish.
INCAE Business School launched the Portal de Microfinanzas in September 2009, and the site has grown considerably since then. The goal of the Portal is to develop, collect and disseminate key resources on microfinance and small business development, tailored to the specific needs of practitioners, investors, researchers, donors, and others in Latin America and the Caribbean. It does so by offering up-to-date and relevant information on an open platform available to users.
Though similar to the other language affiliate sites, the Portal de Microfinanzas offers some interesting features that are worth highlighting, including:
- ¡Actualízate! This is an open space for individuals and organizations to share documents, presentations, results and opinions on innovative initiatives and trends in the sector. Users who are interested in contributing to this section can send an email to . Read the rest of this entry »
> Posted by Anita Gardeva
There is little doubt that the Malegam Sub-Committee Recommendations will have serious implications for microfinance providers in India if they are passed. But what might the consequences be for clients?
In order for financial inclusion to have a positive impact on clients it needs to result in quality financial services. Financial services that lack quality will not be effective tools to help the poor manage their limited and volatile resources.
Quality financial inclusion means that financial services are convenient, affordable, suited to client needs, and flexible. It also means that products are delivered in a sustainable manner, with strong client protection practices operating, and with dignity for clients.
The recommendations proposed by the Malegam Sub-Committee are focused on preventing client over-indebtedness. They include a loan size cap (Rp. 25K), an interest rate cap (24 percent), a limit on the number of MFIs that can serve one client (two), and the number of self-help groups that a person can be a member of (one). If passed into law, the recommendations would also require that 75 percent of every microfinance loan be used for income-generating activities. Finally, the proposed rules would make it hard for NBFC-MFIs to provide individual loans or develop other financial services.
These rules look like strong medicine for preventing over-indebtedness and protecting clients, but they would have debilitating side effects. If passed, they would move the Indian microfinance industry backwards in other aspects of quality, such as product suitability and flexibility, and even affordability and convenience in the long term.
If the medicine that the RBI decides to prescribe to alleviate problems of over-indebtedness comes with a list of negative side effects, at which point are the side effects worth the cure? Read the rest of this entry »
> Posted by Center Staff
The Center for Financial Inclusion will be closed on Monday, February 21 in honor of Presidents’ Day.
Thank you for visiting our blog, and we invite you to check back tomorrow for our latest post on quality, “Will Indian Microfinance Clients Get a Bitter Spoonful of Medicine?”
> Posted by Center Staff
Andhra Pradesh’s shadow is long, and particularly dark where it falls across the media. But beyond the bleaker headlines are stories of a different kind, about countries where microfinance is working.
The Center’s managing director, Beth Rhyne, this week published an article on this topic in The China Daily. It may cast a new light on microfinance for the newspaper’s nearly 400,000 readers, many of whom hail from Asia’s business and investor community.
Here are some excerpts from “Five Countries Where Microfinance Works”:
- “Indian policymakers created a perfect storm for a microfinance shipwreck … MFIs, locked out of the ability to provide a range of services, had no other channel for growth than unbridled credit expansion.”
- “Tiny Bolivia got many things right … competition between … strong institutions brought interest rates in Bolivia below 20 percent, among the lowest microfinance rates in the world.”
- “Cambodia and Mongolia followed Bolivia’s example. Acleda Bank in Cambodia and Xac Bank in Mongolia … added savings and other services, offering a solid range of products.” Read the rest of this entry »
> Posted by Claire Alexandre and Ignacio Mas, Bill & Melinda Gates Foundation
It is commonly perceived that there is tension between the goals of financial inclusion and those of law enforcement. Many people point at the enhanced money laundering and terrorist financing risks which would arise if two to ten times more people were able to do financially what you and I can already do. (A little help on the math: That’s what it means to achieve universal financial inclusion in developing countries that currently have coverage rates in the 10-50 percent range.)
Enlightened policy makers on both sides talk about the need to be reasonable, to find the right balance between these two objectives through risk-based regulations.
This plea for balance is nice, and it’s nicer still to see more and more policy makers striving to be aware of the multiple agendas. But the trade-off isn’t between these two objectives, it’s elsewhere. Read the rest of this entry »
> Posted by Jon Pattee
Have you checked out the Center for Financial Inclusion’s Client Protection Library? It’s so well-hidden, it took me 15 minutes to find a link to it. And I’m the webmaster.
Before I do the obvious and create a major home page link to this below-the-radar resource, I wanted to spotlight the library’s country profiles. They’re pulled together from documents in other languages and diverse sources including law, public policy, banking, and microfinance.
- Bolivia
- Bosnia and Herzegovina
- Brazil
- Ecuador
- Ghana
- Haiti
- India
- Kenya
- Mexico
- Peru
- The Philippines
- Venezuela
> Posted by Center Staff
Do you depend on Fair Trade coffee to keep yourself from falling asleep while reading this blog?
That coffee is supposed to be produced with the minimum harm and the maximum good. To verify such claims, whether about your cup of joe, hand-woven rugs, or any other items, Fair Trade depends on reliable certification processes.
Can certification play a similar role in microfinance?
The Smart Campaign recently announced plans to launch a certification process that will enable MFIs worldwide to show that they follow the Campaign’s core Client Protection Principles as verified by third-party assessors. Read the rest of this entry »
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