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> Posted by Center Staff
The Microfinance Banana Skins report, now in its third year, reflects changing perceptions of risk in a dynamic and fast-moving industry. This year’s report shows that microfinance has come of age, and with that, new issues have arisen. In an increasing number of markets, the rapid rate of growth and outreach means that microfinance is confronting the same forces of competition, credit cycles, and consolidation seen in other sectors.
This survey explores the risks facing the microfinance industry at a time when hard questions are being asked about its future, prompted by growing doubts about its effectiveness as a source of small-scale finance for the poor.
One of the respondents summed up the significance of these doubts, saying they could “dissipate the fairy dust that has historically coated everything related to microfinance.” Many of the risks explored in this report reach the heart of the debate about where microfinance goes next. Read the rest of this entry »
> Posted by Anita Gardeva
ACCION International, creator of the Microfinance Cracking the Capital Markets Conference series, is partnering with Citi Foundation and EDA Rural Systems to organize Microfinance Cracking the Capital Markets South Asia 2010, in Delhi, India, June 23-24, 2010. Registration is now open!
Microfinance Cracking the Capital Markets will bring together major institutional, private and social investors that are currently involved in microfinance or interested in entering the sector. Mainstream investors like KKR India, ICICI Prudential and Sequoia along with microfinance veterans such as Dilli Raj (SKS Microfinance), Eric Savage (Unitus Capital),Vijay Mahajan (Basix), and Royston Braganza (Grameen Capital india), will share their thoughts on the most pressing questions facing Indian microfinance investment today, including:
- What innovative financing structures are available to institutions seeking capital?
- Are Indian MFIs overvalued as some investors perceive?
- Are there too few MFIs in India to satisfy the vast investment appetite?
- Who are the region’s potential MFI leaders in the next decade? Read the rest of this entry »
> Posted by Elisabeth Rhyne
The dialogue goes on about IPOs in microfinance – even before the much-anticipated SKS IPO. In today’s Forbes article, two of the strongest proponents of IPOs make their case…
Microfinance Goes Public – How capital markets can help fight poverty.
By Michael Schlein and Michael ChuIndia’s largest microfinance institution, SKS, recently filed a draft prospectus to sell shares on the India stock exchange in an initial public offering. This IPO will be an historic milestone for the poor in India and beyond, opening the door to assisting them on a scale never seen before in this region.
Microfinance’s journey from non-profit into the heart of capitalism is a hot topic these days, and this IPO will be no exception. Specialized media, the business sector, the development community, philanthropy and the microfinance industry–all will debate the ramifications of this event… Read more >
> Posted by Kanika Metre
Recently, a friend of mine recommended that I read Dambisa Moyo’s book Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa. This provocative New York Times bestseller, argues that aid (specifically government-to-government aid) has been an unsuccessful development tactic in Africa and has in fact, been detrimental to economic growth in Sub-Saharan African countries.
Whether you agree with Moyo or not, the book provides significant insights about why Africa has lagged behind Asia and Latin America, and her recommendations for pulling Africa out of poverty are well thought out. Though her dominant focus is on the necessity of changing trade policies and increasing foreign direct investment, she also makes a point of highlighting microfinance, which she calls “a powerful development tool” in her chapter on “Banking the Unbankable.”
> Posted by Kelley Mesa
The USAID Speakers Corner online discussion featuring Elisabeth Rhyne and Deborah Drake starts tomorrow. They will be exploring the challenges presented by microfinance institutions during periods of transition. Participants are encouraged to share their own experiences, questions, and comments.
To learn more and register for the discussion, click here »
> Posted by Kelley Mesa
During periods of transition at MFIs – whether it be transformations, mergers, or acquisitions – institutional stakeholders often encounter challenges with organizational governance and the alignment (or misalignment) of interests among founders, management, board members, staff, donors, and investors. Such issues not only complicate an already-difficult transition, but also sometimes delay or even derail the entire process.
The Center’s Elisabeth Rhyne and Deborah Drake will be hosting a USAID Speakers Corner online discussion from April 13-15 to explore the challenges presented by transitions. Participants are encouraged to share their own experiences, questions, and comments.
To learn more and register for the discussion, click here »
To read learn more about aligning interests during MFI transformations, check out the Center’s recent paper »
> Posted by Kelley Mesa
Personal interests are often at stake as microfinance institutions transform from nonprofit to commercial entities. In its latest interview, Microfinance Gateway speaks with Center for Financial Inclusion Managing Director Elisabeth Rhyne on the new paper “Aligning Interests” that challenges the microfinance industry to openly discuss these human stumbling blocks.
Click here for the interview >
Click here for the Aligning Interests paper >
> Posted by Anita Gardeva
In our quickly-commercializing microfinance industry, we might think that the role of public funds is becoming obsolete. But as governments increasingly take interest in microfinance, they still have opportunities to play important roles. To discuss this, last week an all-star panel of microfinance experts testified in the first of a series of microfinance-related testimonies before the House Subcommittee on International Monetary Policy and Trade. The panel included Wagane Diouf of Mecene Investment (formerly Africap), Susy Cheston of Opportunity, Elisabeth Rhyne of the Center for Financial Inclusion, Robert Annibale of Citibank, Damian von Stauffenberg of MicroRate, and Don Terry, former head of the IDB’s Microfinance Investment Fund.
Subcommittee Chairman Rep. Meeks (D-NY) put this question to the panelists: How can public and private funds most effectively promote financial inclusion for all? The panelists’ recommendations were unanimous: Public funds should go where private funds cannot or do not dare to go. Funding “trophy” MFIs—as Mr. von Stauffenberg put it when referring to tier-one, highly-successful MFIs—would not only be a poor use of tax dollars but could also have a “toxic” effect on the recipients.
The panelists pointed out that there are a number of ways that public funds can be used that could accelerate progress towards full financial inclusion, including: Read the rest of this entry »
> Posted by Alex Silva
In nearly every transformation of a non-profit MFI over the past decade, the board members and senior managers have recognized and aligned the personal interests of powerful stakeholders in the NGO, typically using some sort of financial incentive. However, this process of recognizing and aligning interests has been neither transparent, nor based on any type of industry standard – precisely because there has been no comprehensive documentation of this information or discussion of this complex, sensitive, and often personal issue. In failing to openly address this topic, institutions can further complicate an already-difficult transition process, delaying or even derailing it. There are many examples of potential transformations and mergers that never came to pass, at least in part because the misalignment of stakeholders’ interests proved to be a key stumbling block. Other times, the lack of transparency can create an image problem that can stain the reputation of an otherwise successful institution preparing to scale up its mission and outreach.
Earlier this month, a group of nearly forty microfinance practitioners and investors met in San Salvador to discuss the recently-published the paper Aligning Interests, sponsored by the Center and Calmeadow. Read the rest of this entry »
> Posted by Kelley Mesa
The next stop on Elisabeth Rhyne’s book tour will be San Francisco. She will be speaking on her new book, Microfinance for Bankers and Investors, on September 16 at an event hosted by the Silicon Valley Microfinance Network. Click here for more information…
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