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> Posted by Center Staff
Two new articles about the Smart Campaign report “Implementing Client Protection in Microfinance – The State of the Practice, 2011″ are now online:
- “Microfinance Industry Embraces Accountability, Report Finds,” a write-up from Philanthropy News Digest, leads by noting that “While problems remain, 88 percent of rated MFIs received overall passing marks for their client protection practices.”
- “The Smart Campaign’s ‘State of the Practice’ report claims that the effort to embed client protection deeply in the microfinance industry is still young, but is thriving,” says the Microfinance Focus article “Microfinance Industry Embracing Client Protection – Smart Campaign Report.”
Have you read?
IFC to Finance the Smart Campaign’s Microfinance Client Protection Initiatives in India
‘Client Protection: Are We There Yet?’ – Smart Campaign Director Isabelle Barrès Blogs at CGAP
The Only Solid Basis for Microfinance Having a Bright Future?
> Posted by Center Staff
Haitian vendors at work in Port-au-Prince, Jan 20, 2010.
Besides containing a nice nod to the Smart Campaign‘s work on a process for certifying MFI client protection practices, Daniel Rozas’ post “Rethinking Multiple Borrowing” on MF Focus offers a fresh take on a much-mulled topic.
Rozas, who recently authored the report “Weathering the Storm” for the Center for Financial Inclusion, argues that despite press reports to the contrary, multiple borrowing is not the result of “heavy market penetration, or even saturation.”
Rozas looks at the phenomenon through the lens of Haiti, which he recently visited. (His post therefore brings to mind Alex Counts’ book project on Fonkoze, the Haitian MF pioneer.) Rozas begins his post:
Some time ago, I had a conversation with a microfinance investor. What is the greatest challenge facing the sector? – I asked. His answer: multiple borrowing – multiple borrowing getting people into too much debt; multiple borrowing transforming micro-enterprise lending into consumer finance; multiple borrowing rewriting the traditional relationship between MFIs and their clients.
Of course, multiple borrowing is present in all of these cases. But thinking about multiple borrowing along these lines misunderstands the basic situation. Multiple borrowing isn’t a reflection of some recent or extreme developments to be ascribed to runaway growth, greed, or willing ignorance. Nor is it some foreign element to be excised from microfinance. No, multiple borrowing is an intrinsic part of the practice, one that has been with us for years. Nor, despite press articles to the contrary, is it a result of heavy market penetration, or even saturation.
This is a realization I came upon during a recent trip to Haiti. Haiti, you see, is a relatively unpenetrated market, with peak numbers on MIX showing about 120,000 borrowers, or about 1.2% of the population. And yet the feedback from loan officers on the ground was that multiple borrowing is widespread, some suggesting that as many as 50% of their clients have loans with other MFIs. And this wasn’t a case of saturation in one place and nothing elsewhere – I heard similar stories both in the capital and in the regions. Read the rest of this entry »
> Posted by Beatriz Marulanda, Mariana Paredes, Lizbeth Fajury, Franz Gomez - Co-authors of “Taking the Good from the Bad in Microfinance: Lessons Learned from Failed Experiences in Latin America.”
[Editor's note: This guest post accompanies the release of "Weathering the Storm: Hazards, Beacons, and Life Rafts," Daniel Rozas' examination (with extensive case studies) of lessons in microfinance crisis survival.]
First of all, we would like to thank Daniel´s mention of the work we did for Calmeadow, with support from the MIF/IDB, IAMFI, Deutsche Bank Foundation, and the Center for Financial Inclusion at ACCION International. We would also like to take the opportunity to comment that although he mentions just Beatriz Marulanda as author of “Taking the Good from the Bad in Microfinance: Lessons Learned from Failed Experiences in Latin America,” it was really a joint endeavor in which Mariana Paredes, Lizbeth Fajury, and Franz Gomez all participated and deserve equal credit.
Apart from highlighting the very entertaining style in which the paper is written, it is interesting that the author found similar causes for the crises in the 10 MFIs analyzed, despite using cases from outside of Latin America. In extension of our findings, Rozas adds two causes of crisis – financial vulnerability and macroeconomic crisis. With regard to the latter, he mentions, as we did, that these are present in many of the cases but in most cases they are just a “trigger that sets off institutional weaknesses already present” – a claim with which we completely agree. Also similar to our findings, Rozas concludes that in most of the cases, the crisis did not have a single cause but instead was a combination of elements that ended up creating great difficulties for the MFIs which were analyzed. Read the rest of this entry »
> Posted by Center Staff
The Center for Financial Inclusion today releases “Weathering the Storm: Hazards, Beacons, and Life Rafts,” which explores the crisis-management experiences of ten MFIs in Asia, Africa, Europe, and the Americas.
The new white paper, which was written by Daniel Rozas and sponsored by Calmeadow, Deutsche Bank, and Credit Suisse, maps out the ways in which MFIs most commonly get in trouble and offers a blueprint for sound management and crisis control.
Rozas’ new Microfinance Focus blog series, which is largely based on the white paper, will examine the many facets of risk in microfinance. As he notes in his introduction to the series, some of the MFIs “were able to execute successful turnarounds, while others failed outright, but in the process they all left behind a set of valuable lessons for the rest of the industry.”
Today’s post, “Part 1: Bring Microfinance into Politics,” begins:
It seems wherever you turn these days, politics is getting into microfinance. In Andhra Pradesh, the state government exercised its prerogative to kill off an entire industry. Next door in Bangladesh, Prime Minister Hasina decided to hound Yunus out of Grameen Bank, no matter the cost. The No Pago (No Pay) movement in Nicaragua counted on the support of the country’s president. What’s the industry to do in the face of such onslaught? Read the rest of this entry »
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