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Guest blogger Tomas Bilbao is Executive Director of the Cuba Study Group with which the Center for Financial Inclusion has collaborated. Bilbao shares his strongly held views on how efforts to reverse positive policy changes announced by the Obama Administration in April of 2009 would hurt the budding entrepreneurial class in Cuba and would represent an obstacle to needed change.
For over 50 years, US policy toward Cuba has had the single aim of isolating Cuba from the outside world and forcing the collapse of the island nation’s economy in hopes of bringing about regime change. Other than a small, vocal group in Miami and Washington, the rest of the world now acknowledges the obvious truth that US policy has been a categorical failure. It is less often recognized, however, that US policy may actually have made change on the island less likely. An amendment last week proposed by Florida Rep. Mario Diaz-Balart, a longtime defender of the status quo in US policy toward Cuba, is the most recent evidence of this fact.
Last week, Rep. Diaz-Balart introduced an amendment to the FY2012 appropriations bill, which, if signed into law, would roll back the positive steps taken by President Obama to allow Cuban-Americans to travel and send money to their families in Cuba. “The changes [implemented by the Obama Administration] have been the largest source of revenue of [Castro’s] dictatorship,” stated Rep. Diaz-Balart. Rep. Diaz-Balart’s statement to the Miami Herald reflects a profound disconnect with the realities on the ground inside Cuba as well as human disconnect regarding the impact of these policies on Cuban families both on the island and in the diaspora. Read the rest of this entry »
> Posted by Center Staff
Sixteen industry leaders and philanthropic funders have sent a letter to the US Commodity Futures Trading Commission (CFTC) requesting that MFX Solutions be offered “relief” from aspects of new legislation aimed at regulating the finance industry.
Among the signatories to the June 24 letter to CFTC Chairman Gary Gensler are ACCION International President Michael Schlein, Calvert Foundation CEO Lisa Hall, and Omidyar Network Managing Partner Matt Bannick.
The letter expresses concern that the proposed rules for the Dodd-Frank legislation could harm MFX Solutions, “a microfinance industry cooperative facility that allows microfinance funds to hedge the currency risk on their loans and thereby provide the local currency loans the industry needs.” Read the rest of this entry »
> Posted by Center Staff
Where, what, or who is the “real” India? Or for that matter, the real China, Paraguay, or Tanzania?
ACCION International’s Ambassadors are mulling such questions from their financial and philosophical angles, not to mention culinary and meteorological. We’re cross-posting their blog insights from time to time, and you can go straight to the source by subscribing.
We recently highlighted Jason Loughnane and Leah Vinton‘s takes on events on the ground in Tanzania and Paraguay; this week, David Firth Bard grapples with the “what’s the real?” question from Bihar.
His June 20 post starts out:
At last I have arrived in Patna, the home of ACCION partner Saija Finance Private Limited. At ACCION, we frequently and proudly note that Saija is at work in one of the most challenging and underserved places on earth: Bihar, India’s poorest state. With an overall literacy rate hovering below 50% (and among women, only 33%), lagging infrastructure, high incidence of crime, and a legacy of political corruption, there are certainly many challenges to overcome here, and not just for microenterpreneurs.
> Posted by Julie Shea
As investors increasingly seek out social impact investing opportunities, microfinance continues to present an attractive opportunity for achieving double bottom line goals.
However, some countries are way ahead of the pack in terms of their social impact investing efforts. Investing in microfinance has gained particular traction in certain European countries, specifically the Netherlands and Switzerland, while investors in the US and UK have been less responsive to microfinance investment opportunities.
One example of social investing in microfinance coming out of the Netherlands is the Dutch Triodos Bank, which as of December 2009 had 236 million euros under management in its four microfinance funds. Read the rest of this entry »
> Posted by Beth Rhyne
What is responsible financial performance? In other words, “How much private gain is appropriate for organizations serving the poor?” The Social Performance Task Force (SPTF), meeting this week in Den Bosch, the Netherlands, is putting this controversial question on the microfinance industry’s agenda – opening a debate that is sure to be both complex and emotionally-laden.
As an opening salvo, the Task Force is proposing that standards addressing the following questions become part of the Social Performance “Universal Principles”:
- What are acceptable levels of profit?
- How can we tell if organizations are charging clients for their own lack of efficiency?
- What levels of executive compensation are fair? Read the rest of this entry »
> Posted by Center Staff
Alex Counts, president and CEO of Grameen Foundation, speaks with community members in Banda Aceh, Indonesia.
We’re excited to learn that Grameen Foundation CEO Alex Counts is writing a book about Fonkoze, the leading microfinance institution in Haiti.
Counts, who we interviewed for our “Microfinance Matters” series, joined other friends of Grameen Bank to establish Grameen Foundation in 1997.
Counts is taking readers to the core of his writing process through a blog that tracks his research and observations. He describes what he’s uncovering as a story of “resilience, solidarity and triumph.”
Today’s post, “Re-discovering Fonkoze — An Organization on the Move … And, Emerging Themes,” finds him recounting his first hours on the ground:
I am not new to Fonkoze, but even so, during my first 26 hours in the country I learned a lot. Part of this is because it is impossible to understand everything about a complex institution, and also because things are always in flux at this most entrepreneurial of organizations.
Read the rest of this entry »
> Posted by Beth Rhyne
Today my hat is off to the four specialized microfinance rating agencies – Planet Rating, MicroFinanza, M-CRIL, and MicroRate – who are part of the Smart Campaign Certification Task Force and work with it to develop the methodology for certifying financial institutions on the Client Protection Principles. The Smart Campaign staff is very grateful to the rating agencies for the commitment and cooperation they are dedicating to creating a consensus on how to certify. That cooperation will enable the first Client Protection Certifications to take place in 2012. I am truly impressed by the knowledge the raters have acquired through examining dozens and dozens of microfinance institutions.
I was particularly struck by their warnings about some of the worst practices they have seen during rating visits recently. These are all practices that Client Protection certifiers will look out for.
- High-priced credit life insurance. Some financial institutions provide mandatory credit life insurance at a premium well above what they pay to insurance companies or what it costs them to self-insure. Read the rest of this entry »
> By Sergio Guzmán
Bosnia, Morocco, India, Nicaragua – as we’ve learned from harsh experience, over-indebtedness concerns not only MFIs and their financial sustainability, but also clients who want to preserve their livelihood and policymakers who must look after the macroeconomic stability of a country.
Good news. Peru’s microfinance association, ASOMIF, is working with its members by recognizing that over-indebtedness, as set forth in the Smart Campaign’s Client Protection Principles, is an important issue that can best be dealt with through industry-facing initiatives.
Peruvian MFIs are striving to avoid client over-indebtedness by restricting the number of loans customers can have with other MFIs, especially in urban areas where the credit market might be saturated.
ASOMIF President Fernando Valencia Dongo on June 12 told the Peru News Agency that each MFI is aware of specific zones of saturation and that they are paying special attention to such areas to avoid client over-indebtedness.
The success of ASOMIF’s initiative depends entirely on all Peruvian service providers taking some basic actions to reduce both their own and their clients’ exposure to risky debts.
Image credit: CIA World Factbook
Have you read?
‘We Need to Keep Learning About Over-indebtedness’ – Beth Rhyne on CGAP Microfinance Blog
Study on Over-indebtedness in Microfinance Markets Published
> Posted by Sergio Guzmán
Who really sets the agenda for the microfinance industry? This is a question haunting every major conference I attend. Is it MFIs, donors, investors, or governments? Who?
A recent UK government report by the All-Party Parliamentary Group on Microfinance once again raises this question for me. The report’s strong message is that the microfinance sector is “unbalanced”: While access to loans has expanded greatly in the last 15 years, access to other financial services (savings, insurance, and remittances) has not. The report urges the UK’s Department for International Development to play a central role in “refocusing” the sector.
I fully agree that the microfinance industry has come a long way but that there is still much work to do to bring a balanced suite of service to those who need it. Diversification of products is a call to the industry that we at the Center have repeatedly made. Read more about it here.
However, one thing that concerns me about the Parliamentary Group’s report is how it narrows the vision of the relevant actors that affect change in the industry. It calls on high-level donors and government agencies to steer the industry in a new direction; in other words, bring the industry back into its fold. Read the rest of this entry »
> Posted by Center Staff
Amy Kazmin’s Financial Times article “Microfinance: Making a Profit from Loans to Poor Carries Risks” includes a summary of the Smart Campaign’s Client Protection Principles and a series of quotes from CFI Managing Director Beth Rhyne.
Kazmin’s June 15th article quotes Rhyne as saying, among other things, that “People have never focused on this particular set of issues – over-indebtedness, collections practices, what to do when clients have problems.”
“When they were small, they could handle client problems on a case-by-case basis. But when it’s big, they need systems to do it,” adds Rhyne.
The article, which focuses on turbulence in India’s microfinance sector in the wake of the Andhra Pradesh debacle, also contains insights from other industry leaders, including CGAP head Tilman Ehrbeck and Sam Daley-Harris, director of the Microcredit Summit Campaign.
To read the full article, click here (free registration with the Financial Times may be required).
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