You are currently browsing the monthly archive for October 2011.
– Posted by Sergio Guzmán
We wish this was a joke, really we do. According to BBC Mundo, “The mayor of Zaragoza, Spain, launched a campaign to alert its inhabitants who have yet to pay the outstanding contributions to the cemeteries, that it shall remove the remains of their loved ones.” According to the source, stickers will be placed on the gravestones of those persons who have failed to pay upkeep fees. Warning of action was sent in March, via collections notices in the mail, and given the lack of response, the mayor chose the course of action described.
Talk about appropriate collections practices, eh? This seems like a very eerie, unorthodox, and frankly Scrooge-like way of collecting past-due debts. Does anyone have examples of inappropriate collections practices they want to share?
Happy Halloween and Feliz Dia de las Brujas to everyone!
Image credit: Albus Dumbledore
Have you read?
Vampires: Can They Make Financial Education More Fun?
> Posted by Charlotte Connors
My generation is the first in four in my family not to go into the shoe business. Instead, I work in the microfinance industry, and never expected the two to show up in the same story. On my way home from work last night, I was taken in by an NPR piece about a credit crisis in Wenzhou, China resulting in the suicide of a shoe entrepreneur. He owed 60 MILLION DOLLARS to loan sharks and other underground lenders because private business owners in China have very little access to loans from state banks.
Having spent the last three years focused on client protection in microfinance and the Client Protection Principles, the circumstances that Shen Kuizheng found himself in (owing US$15,000 in interest every day), seem to make the case for more attention to the prevention of over-indebtedness in China. But, where do you start when state-run banks only lend to state companies? “Shadow financing has grown dramatically in recent years.This summer, it stood at US$2.6 trillion — nearly one-third of all lending in China,” according to GaveKal, a global financial research firm based in Hong Kong. Read the rest of this entry »
> Posted by Danielle Donza
I recently cried my way through the book Eleven Seconds, the true life story of Travis Roy, a Boston University hockey player who becomes paralyzed within eleven seconds of his first college hockey game. As a Vermonter and a hockey player, the book hit close to home in many ways, but more than anything it made me truly appreciate the importance of the Center’s Financial Inclusion for Persons with Disabilities (PWD) program, which promotes equal and fair access to quality financial products and services for persons with disabilities.
I knew not to expect a happy ending but was surprised to find myself feeling that the saddest part of Travis’s story is not his tragic accident but rather the difficulty he faces in trying to reintegrate into society as a person with a disability, especially since the latter seems preventable. Beyond the obvious mobility and independence issues, Travis struggles more with the fact that he is simply ignored in his wheelchair. Once the “big man on campus” as a scholarship hockey star, when he returns to school, no one even acknowledges him. It almost seems easier for Travis to overcome his physical limitations than his societal ones. Even when Travis gains celebrity-like status because of his accident, he still feels invisible. Read the rest of this entry »
> Posted by Center Staff
Ela R. Bhatt, founder of the Self-Employed Women’s Association (SEWA) in Gujarat, was recently appointed to the board of directors of the Reserve Bank of India (RBI).
Bhatt, who is sometimes called the “mother of Indian microfinance,” helped start the Mahila Sewa Co-operative Bank in 1974, two years before Muhammad Yunus initiated the project that would later become Grameen Bank.
Bhatt was interviewed by the New York Times blog India Ink. Among the major points she made to interviewer Vikas Bajaj:
- “The future of microfinance sector, as such, is not dark. One, because of women – amongst the poor, women are a big part of it. They have proved themselves everywhere.”
- “The poor need a full package of financial services, savings, credit, insurance — I also add housing — social security, financial literacy, pensions and counseling. If the purpose is poverty reduction, that whole package of financial services is needed.” Read the rest of this entry »
$350,000 grant will fund training, on-site assessments, and tools to foster adherence to Client Protection Principles at leading Indian MFIs.
Washington, DC, October 25, 2011 — The Smart Campaign, a global initiative to incorporate strong client protection principles across the microfinance industry, received a grant of US$350,000 from the International Finance Corporation (IFC) to help Indian MFIs incorporate client protection practices into their operations.
The Campaign will work with Indian MFIs to develop the tools and resources they need to deliver transparent and prudent financial services to all clients. The grant will fund training sessions, on-site assessments and tools to institutionalize adherence to the Smart Campaign’s Client Protection Principles, which include: (1) appropriate product design and delivery, (2) prevention of over-indebtedness, (3) transparency, (4) responsible pricing, (5) fair and respectful treatment of clients, (6) privacy of client data, and (7) mechanisms for complaint resolution.
The work will be carried out in a number of ways:
- Client Protection Principles Training – The Campaign will conduct eight training sessions, each to be attended by staff from eight to ten MFIs, focused on building the Client Protection Principles into company policy and practice. Read the rest of this entry »
> Posted by Center Staff
“Why can’t women repay their loans sometimes?” This is a question whose answer has industry-wide implications, not least against the backdrop of the Smart Campaign’s focus on over-indebtedness.
Aurélie Dagneaux and her colleagues are putting this question under the microscope while at Fundación Paraguaya, where she’s visiting as an ACCION International Ambassador. The Ambassadors, who have been deployed around the world in 2011 to look into the industry “on the ground,” have a blog you can find here. You can also subscribe.
Besides a previous post from Dagneaux, the Center blog has also showcased reports from Ambassadors Nirav Chheda, Pamela Chang, David Firth Bard, Stephen Matthew Lee, Jason Loughnane, Wei Wei Pan, and Leah Vinton.
Dagneaux’s post “Why Can’t You Repay Your Loan?” begins:
Together with Mary Helen, another ACCION Ambassador, and along with 3 interns from Fundacion Paraguaya, we are conducting a study to determine “causes of arrears among women’s committees”.
In simple words: “Why can’t women repay their loans sometimes ?”
1. The problem
The portfolio at risk (PAR30 for the experts) [that is the part of Fundacion Paraguaya’s loan portfolio that is at risk of not being repaid by the clients] is currently very low among group lending’s clients (women who borrow in groups of 15 to 30): less than 1%. That is particularly low compared to the 4% of individual lending. Yet, this percentage has recently been increasing. And worrisome, defaulting on a loan (ie not being able to repay it) now happens to women who are in their very first loan cycle, after only 1 month of taking out a credit. Read the rest of this entry »
> Posted by Center Staff
This week’s highlights of the blogosphere include a look at the Arab Spring through the lens of Tunisia, a discussion of where mobile phones can take Big Data (and us), and reflections on what we need to know in order to improve financial access.
- Jonathan Morduch poses “Ten Research Questions on Improving Financial Access,” and argues on the Financial Access Initiative blog that these queries need to be answered “if we are to make informed decisions on how to improve financial access.”
- Grant Tudor, writing about “The Age of Big Data” on NextBillion, maps out the thinking that’s been done on a new era where mobile phones may help resolve our data dilemmas.
- How is the industry responding to the new challenges and opportunities created by the Arab Spring? In “From Microcredit to Microfinance: New ambitions for Tunisia” on CGAP’s Microfinance Blog, Emna Kallel and Alice Negre examine some answers.
Have you read?
Mexico, Mobile Banking & Shodh Yatra – Top Picks of the Microfinance Blogosphere – September 30, 2011
Energy Drinks, Lebanon, & Impact Investing – Top Picks of the Microfinance Blogosphere – September 14, 2011
Andhra Pradesh, Haiti & Corporate Capital – Top Picks of the Microfinance Blogosphere – August 22, 2011
Financial Ed, Mobile Money, & Savings – Top Picks of the Microfinance Blogosphere – August 3, 2011
Women, India, & Tourism – Top Picks of the Microfinance Blogosphere – July 19, 2011
Armenia, Andhra Pradesh & Pakistan – Top Picks of the Microfinance Blogosphere – June 13, 201
> Posted by Sergio Guzmán
In the midst of the greatest economic downturn since the 1930s, the national student debt in the United States now exceeds US$1 trillion. Reportedly, it is now surpasses the national credit card debt! This is a matter of concern, not only because students are borrowing at an unsustainable rate, but because of the consequences that this might have for the economy and society itself. Young people are sometimes going to great lengths to make ends meet and pay their debts, as one Huffington Post article notes. Working on the Smart Campaign, this really rings the over-indebtedness bell. Does anyone else agree?
College education in the US is growing more costly, sometimes reaching $42,000 per year as is the case for Sarah Lawrence College, which is pointed to as the most expensive of the 25 most expensive private universities. As the article explains, the average 2011 college graduate leaves the university $27,000 in debt! That is significant if you take into account that these students have not yet begun earning income and the unemployment rate for persons under 25 is a whopping 54%.
A few key facts found on Dino Grandoni‘s post “Americans Now Owe More Than $1 Trillion in Student Loans” on The Atlantic Wire:
- “Last year marks the first year American students took out more than $100 billion in loans to pay for school, averaging $4,963 per student in 2010.”
- “Students are borrowing twice as much as they were a decade ago, adjusted for inflation, so that that $1 trillion student loan bill is double what it was five years ago.”
- “The default rate on student loans — which, unlike almost every other type of loan, survive even after bankruptcy — jumped from 6.7 percent in 2007 to 8.8 percent in 2009. Default rates were highest at for-profit schools.”
Providers must be aware of suitability and affordability of products. The sub-prime housing crash of 2007 left many lessons, among them that bubbles will burst. It is important for us to remember that this lesson applies not only to complex structured finance in the US, but also to any financial services provider. Are there any lessons for the microfinance industry in this case? As microfinance providers diversify their product offering (credit types, savings, insurance, remittances, payments) what are some of the key aspects they should consider?
Image credit: Kit
Have you read?
Consequences of Over-indebtedness: Lessons from India
Microlenders ‘Need Systems’ to Handle Client Problems
‘We Need to Keep Learning About Over-indebtedness’ – Beth Rhyne on CGAP Microfinance Blog
> Posted by Center Staff
“Microfinance institutions may be able to help distribute and fund the purchase of low-cost sun-powered lamps, according to a report by the Washington-based Center for Financial Inclusion,” write reporters Simon Clark and Lananh Nguyen in a recent Bloomberg article.
“Microfinance and Energy Poverty: Findings from the Energy Links Project” co-author David Levaï is quoted in the October 10 article, which places the report’s findings in the context of the International Energy Agency’s first-ever estimate of the cost to end energy poverty.
The Center for Financial Inclusion at ACCION, USAID and FHI 360 recently released “Microfinance and Energy Poverty: Findings from the Energy Links Project” to disseminate the results of a three-year field project focused on leveraging microfinance institutions and savings groups in Africa to build a market and distribution channels for affordable solar lighting in rural villages on the continent.
The project, Energy Links, catalyzed and helped build distribution networks to get tens of thousands of low-cost solar-powered LED lanterns to rural populations in Mali, Uganda and Tanzania. In rural and remote areas of Africa, only 20 percent of the population is connected to electricity grids.
For more information, check out “Microfinance and Energy Poverty: Findings from the Energy Links Project” and the project page here.
Have you read?
CFI Releases Report on Microfinance and Energy Poverty
Artisanal Solar Lamps
Barefoot Power Blinds Competition in Lighting Contest
> Posted by Leah Wardle
A kid named Boyie is a popular radio disk jockey in Kenya. At 19 years old, he has a nationally syndicated radio show playing daily on 21 stations and half of Kenya’s mostly low-income youth say they’ve listened to him. He’s so popular that he also stars in his own monthly comic book series, Shujaaz (“Heroes”), read by about 10 million people in the past 20 months. The ladies love him and the guys copy his dreadlocks. But someone else answers his calls, texts, and Facebook messages (which flood in by the thousands), because Boyie is a cartoon character.
A cartoon character can be more powerful than a real person when it comes to influencing the thoughts and behavior of Kenyan youth, argues Rob Burnet, director of Well Told Story, the Kenyan communications company behind Boyie and Shujaaz. He and his team are using virtual characters to reach Kenyan teenagers through comic books, radio shows, and virtual media with messages of social change. Their methods may hold creative new ideas for microfinance practitioners looking to connect with clients.
It’s something else to witness the compelling struggle of a teenage head-of-household, living in a slum, facing multiple challenges and pleading siblings, yet still setting aside a little bit each week. Now tell the story with colorful images and dramatic plots that resonate with the experience of the audience, and deliver through easily available media, and they readily absorb the messages as they follow the lives of the quirky characters.
Microfinance practitioners might take a page from Shujaaz to increase the transparency of financial information for clients. Transparency means providing full information (like detailed product terms and prices) in a way that is meaningful to the client. That means clients can absorb the information because it’s presented in their own language, and they feel comfortable with the medium. To reach this goal, Well Told Story’s model would suggest practitioners ask themselves three important questions: Read the rest of this entry »
Facebook
Twitter
Recent Comments