Microfinance News

Microfinance Support Group SPTF 2010 annual meeting to take place in Bern

Microfinance Focus — Sun, 14 Mar 2010 06:49:16 +0000

Microfinance Focus, March 14, 2010: The Social Performance Task Force (SPTF), a support group for microfinance institutions announced its next annual meeting in Bern , Switzerland which will take place on June 30 to July 1, 2010, according to information release on their website. The meeting sponsored by Swiss Agency for Development and Cooperation SDC, Liechtenstein Development Service, Ford Foundation and CGAP.

SPTF consists of over 600 leaders from various microfinance stakeholders since 2005. The task force has been charged with clearly defining social performance and addressing questions about measuring and managing social performance and Promote and support the management of social performance by Microfinance institutions globally.

During this two-day meeting, each working group will give an update on its work during the previous year, as well as the challenges and opportunities of the coming year. Additional sessions will address the most important themes as voted by SPTF members. The final portion of the meeting will focus on determining SPTF priorities for the coming year.

There will be pre-meetings on June 28 and 29 which includes a day-long introduction to social performance and the SPT and post-meetings on July 2.Related Posts:

Share/Save

The American Red Cross with Haiti Microfinance inst Fonkoze to support 16,000 families

Microfinance Focus — Sun, 14 Mar 2010 05:55:39 +0000

Microfinance Focus , March 14, 2010 : The American Red Cross issued a two-month progress report describing its efforts since the January 12 earthquake and sharing its plans to address longer-term needs such as emergency and longer-term shelter. To promote livelihoods and complement ongoing aid distributions in Port-au-Prince and reach additional families in need, the American Red Cross announced March 10 that it will provide financial assistance to help an initial 16,000 families purchase and replace essential items over the next six months through a partnership with Haiti’s largest microfinance institution, Fonkoze.

“Financial assistance gives families choices; they can evaluate how best to cope with and recover from their losses, which ultimately provides a sense responsibility and empowerment,” said David Meltzer, senior vice president of international services with the American Red Cross. “The program will also help stimulate the fragile economy and restore livelihoods for not only the families directly receiving aid, but also farmers, store owners and service providers in the community.”

Among this group receiving financial assistance from the American Red Cross are 6,000 host families in rural communities now caring for loved ones who fled the disaster zone. An additional 10,000 women who have lost their homes, business or both will also receive a grant to help meet their families’ immediate needs as well as a small loan to restart their businesses and restore their families’ source of income, said the report.Related Posts:

Share/Save

Freedom from Hunger research explored insights on Microfinance and Healthcare needs

Microfinance Focus — Sat, 13 Mar 2010 12:27:37 +0000

Photos by Karl Grobl: Burkina Faso (Source: Freedom from hunger)

Microfinance Focus, March 13, 2010: Freedom from Hunger has been working with three Microfinance Institutions in India, Bolivia, and Burkina Faso to develop and test the feasibility of specific health loans products, said Marcia Metcalfe, Director, Microfinance and Health Protection at Freedom from Hunger in a discussion forum of Microfinance Focus.

Explaining the learning experiences of action research with Bandhan, a Kolkata based Indian Microfinance institution, she said, “ Market research findings indicates that clients had access to healthcare providers (public and private) but were challenged by affordability, total out-of-pocket expenditures for health, and how to manage the shocks of major illness or accident. In this case, clients did have a slight preference for private vs. public providers and this was related to dependability.

“After about a year and a half Bandhan has disbursed about 2,000 health loans and has 0% PAR on the health loan portfolio. Interest rates are somewhat lower than the regular business loan and clients have a year to repay, she added.

In Burkina Faso, they have experiences similar learning with their partner microfinance institution. “In Burkina Faso, RCPB (Réseau des caisses populaires du Burkina Faso) developed and piloted a health loan product that is linked to health savings. The combination enables clients to use savings for frequent/low-impact health needs and then also access health loans (also at lower rate than for business loans) for less frequent, but higher impact health events. PAR is also 0%, clients are extremely happy with this combination, and RCPB is proceeding with scaling these products to enable availability to all of its clients, she explained.

Many above poverty line families fall into poverty trap because they lack access of affordable and timely finance and other safety net measures like microinsurance. Health loans and health savings can be products could be an effective safety net for microfinance clients to manage the impact of illness. “Financial Diaries of the Poor”, a recent book point out that the poor use a variety of sources of funds to finance their needs. “There are too few affordable and appropriate health micro insurance schemes or mutual available to the poorest, and although health loans and health savings may not be total solutions, they are important and valuable as products that can be sustainably provided by MFIs, said Metcalfe.Related Posts:

Share/Save

Dia Capital to provide Rs 5 cr ($1.1M) to Orissa-based Annapurna Microfinance

Naagesh Naaraayana — Sat, 13 Mar 2010 08:34:55 +0000

Microfinance Focus, March 13, 2010: Microfinance venture firm Dia Vikas Capital is investing Rs 2.5 crore ($550,000) for a 49% stake and another Rs. 2.5 crore in the form of convertibles loans in Orissa (India) -based NBFC microfinance institution Annapurna Micro Finance Pvt. Ltd, a microfinance arm of People’s Forum.

Dia Vikas Capital is a 100% subsidiary of global microfinance services provider Opportunity International Australia.

Annapurna Microfinance is a new venture of 20-year-old NGO People’s Forum, which is active in Orissa in health,
educationa and rehabilitation segments and entered microfinance five years ago. Annapurna has recently transformed into a Reserve Bank of India (RBI) regulated Non-Banking Financial Company (NBFC).

This was the company’s first round of fundraising. Dibyajyothi Patnaik, Chief Financial Officer and Director of Annapurna Microfinance, told Microfinance Focus that the MFI is looking at raising funds worth Rs 7.5 to 8 crore in two to three years time.

Currently, Annapurna is operating in the self-help group (SHG) model of microfinance in coastal and central Orissa in 12 districts with 30 branches. It has client base of 50,000 and 140,000 members in 7,850 SHG groups.

Mr Patnaik said the MFI is also planning to expand its operations into Bolangir, Subarnapur and Sambalpur in Orissa and reach other remote districts in the state where there are no microfinance institutions. It has plans to widen its operations in neighbouring state Chhattisgarh in future.

Since SHG model is based on promoting savings from members and to make them financially aware and achieve fiscal discipline, Mr Patnaik said the experience of People’s Forum will help them widen their reach in Orissa.

Dia Vikas Capital has earlier invested in Arth Finance in the northern part of India and a Kerala-based microfinance firm EMFIL.Related Posts:

Share/Save

Political meddling triggered microfinance crisis in Pakistan: Kashf Bank CEO

Microfinance Focus — Fri, 12 Mar 2010 15:15:05 +0000

Ghazanfar Azzam

Microfinance Focus, March 12, 2010: Uncertain political and economic environment, high inflation, rising poverty, over indebtedness, absence of credit bureaux are some of the factors that led to a crisis situation in Pakistan’s microfinance, said Kashf Microfinance Bank CEO Ghazanfar Azzam, in an exclusive interview with Microfinance Focus,

Lahore-based Kashf Microfinance Bank Ltd (KMBL) in Pakistan started operations in Oct 2008 though the Kashf Foundation initiated its micro-finance programme in 1996 based on the Grameen methodology With 15,200 individual borrowers, the microfinance bank has a loan portfolio of Pak Rs 438 million ($5.1 million). It has 55,000 deposit customers with total deposits amounting to Pak Rs 325 million ($3.8 million). KMBL has 27 realtime online branches in three most populous provinces of Pakistan — Punjab, Sind and N.W.F.P., with 450 staff members. Here are the excerpts from Ghazanfar Azzam’s interview with Microfinance Focus:

Microfinance Focus: A recent report from CGAP says that one of the reasons of microfinance crisis in Pakistan could be attributed to high growth. What is your opinion about the findings?

Ghazanfar: It was due to a combination of factors and high growth was one of them. Uncertain political and economic environment, high inflation, rising poverty, over indebtedness as there were no credit bureaux also contributed in disturbing the environment. However, what triggered the crisis was meddling by newly elected public representatives in need for cheap popularity who were later on joined by crooks selling fake court and government orders announcing that loans had been written off.

I think it needs to be seen in the context. The environment was already ripe for this as the new government didn’t know how to handle such situation . Food inflation was so high, utility prices were raised time and again, fuel prices were sky-rocketing and due to lack of electricity and other shortages, people were hard pressed. The ground was ripe for the new breed of politicians to meddle and they did meddle. Hence, the culture of loan remission came into picture as governments used to do when banks were in the public sector. So, 2008 was a very difficult year for people and the country and political intervention was the last straw.

Undeniably, there was a rapid growth of microfinance in the last few years and in some urban areas it had resulted in over indebtedness but the institutions didn’t have adequate capacity to confront a situation like this. Loan officers were good at lending but not in recoveries where whole community ganged up and refused to pay.

In fact, Microfinance Banks are in a better position to deal with such crises due to risk management structures in place and tight regulation. MFIs were and are much simpler organizations lacking tools and resources to fight organized defiance. In fact, group lending started working against MFIs and even the groups that used to provide social collateral started working against the institutions en-block.

Microfinance Focus: How do you see the relevance of Islamic microfinance in Pakistan? Do you have any plan for piloting /implementing such operational practices?

Ghazanfar: Whether Islamic or traditional, microfinance institutions and banks need to offer efficient and need-based financial products and services at affordable and competitive prices. Other things being equal, there is a significant segment of population of Pakistan that will welcome Islamic microfinance. However, people, barring a minority, will not go for Islamic finance or products if these are not competitive and offer a real advantage to consumers.

Microfinance Focus: Please share your learning and comparative experience before and after Banking licence.

Ghazanfar: We are already offering five depository products based on research and feedback received from the market. We are also adding more products on the lending side. We do offer realtime online transfer of funds and are about to offer pay orders, bank drafts and ATM facilities to our customers. Going forward, we are actively looking at increasing our outreach through kiosks and branchless banking models.

Microfinance Focus: What is current equity holing structure of Kashf microfinance Limited? Any new equity investment on Card?

Ghazanfar: Kashf Holidng Company holds 51% shares, followed by IFC (19%) and 10% each by Women’s World Banking, ShoreCap Exchange (Both US) and Triodos Bank (Netherlands). We are looking at the possibility of raising more capital.

Microfinance Focus: Your bank has achieved the fastest growth in Pakistan compared to your peer banks. What are the factors attributed to such growth?

Ghazanfar: Kashf did have experience in microlending and there is tremendous demand in Pakistan as coverage of microfinance is hardly 7-8%. Similarly, on savings side, commercial banks do not want mainstream population with small savings to flood their branches and their policies are designed to restrict their services to people who have substantail savings. On the contrary, Kashf Bank has designed products that help people with no money to build their savings over a period of time. This strategy is helping us to bring large numbers of customers in our fold.

Microfinance Focus: We would you like to learn from your personal experience, why did you join the Microfinance Sector, how rewarding it is for you?

Ghazanfar: Commercial banking in Pakistan is very well developed, courtesy a large number of national and international banks. However, commercial banks have four million borrowers in a population of 170 million. Coverage on the savings side is also 10-15% of the adult population. When I realized, after working for banks for over 20 years that banking is only for the elite and the rich, I became seriously interested in microfinance.

Microfinance Focus: Would you like to share with us any other factors associated with microfinance?

Ghazanfar: Access to financial services along with Education and Health plays a key role in economic and social development of a society. We lag behind in all three. Therefore, Education, Health and Microfinance should be top priorties for the policy makers in countries like ours.

Related Posts:

Share/Save

MicroGraam, ‘e-bay’ of microfinance, launches online marketplace

Naagesh Naaraayana — Fri, 12 Mar 2010 12:10:44 +0000

Microfinance Focus, March 12, 2010: Bangalore-based MicroGraam has launched India’s first auction- and reputation- based microfinance online marketplace (http://www.micrograam.com) that enables people to invest at the lowest interest rate that the free market will bear.

Funded by entrepreneurs Sekhar Sarukkai and Rangan Varadan, MicroGraam uses mobile and Internet technologies, and uses open marketplaces, to bring down interest rates paid by low-income borrowers to levels that are traditionally reserved for the more affluent populations, and as much as half of what they may pay with main stream MFIs.

Based on auction model, MicroGraam is a marketplace where investors bid for the project to lend and the one bidding the lowest interest rate gets to lend for the loan. The interest rate depends on the bid rate.Essentially, it eliminates the need for intermediaries to fix interest rates. Instead, lenders, borrowers, and facilitators are accommodated on the same table, on equal footing, for online bargaining This approach of bringing together lenders and borrowers as equals is a first for the Indian market.

The repayment to the investors are made on a quarterly basis that includes principal and interest. The investment disbursement process ensures that the money reaches the Field Partner. In most cases, we recommend the investors to transfer investment amount directly to the Field Partner’s Bank account. The disbursement of the amount to the borrower is the responsibility of the Field Partner.

“We plan to ensure that the money reaches the borrower by way of audit at periodic intervals. In the future, when the borrowers have Bank accounts the money can be transferred directly to Borrower’s Bank account,” explained Sneha Kini of MicroGram.

Dr. Sarukkai adds “Think of MicroGraam as ‘eBay’ of microfinance. It shifts the power away from investors who could traditionally demand any interest, and towards an open marketplace with a balanced representation from all parties involved in the microfinancing ecosystem”. In addition to the launch of the marketplace,

Diraviyaraj, Founder and Secretary of YNEEW-Youth’s Network to Educate and Empower the Weak — a decade old grassroots NGO says “Since these transactions in MicroGraam involve tri-parties (lender, borrower and facilitators like us), we believe this will be very successful and will become the default platform of choice”. He added “We have mobilized crores and crores of rupees for microfinance needs for our communities from banks but have never been acknowledged with due returns with what we serve upon. The partnership with MicroGraam is a breath of fresh air that brings new life into our grass roots communities”.

Dr. Varadan says “Investors can confidently invest in people of their choice based on reputation ranks derived from audit of dozens of field partners. We have more than four crores of demand today even with our hand-picked set of field partners — we expect this to increase ten fold within a year or two”.

MicroGraam plans to roll out new mobile and Internet solutions that will unleash additional value in these financial transactions.

Related Posts:

Share/Save

Featured: Sam Daley-Harris – Champion of Microfinance movement

Microfinance Focus — Thu, 11 Mar 2010 19:15:32 +0000

By Denise Hughes,

Microfinance Focus, March 12, 2010: Fearless and focused tenacity are the key character traits of Sam Daley-Harris, Director of the Microcredit Summit Campaign. He is the man behind a movement. I first met him in 1999 when I was interested in working for the Microcredit Summit. He interviewed me for the position of Communications Director and it was trial by fire. There is no other way forward with Sam but, shear good performance. It was a few days before the release of the Campaign’s State of the Microcredit Summit Campaign Report which was being unveiled at a press conference at the United Nations. I remember thinking, I don’t know much about microfinance but I will do my best because there is really something interesting about this man. It was in the way that he challenged me to perform. He asked me to see how many members of the media I could get to attend his press conference. After nearly ten hours of talking to reporters I had ten people who said they would attend. He further challenged me. He said come back tomorrow and let’s see how many more you can get. After the challenge was over he offered me the position. This began a long road of challenges.

Sam Daley-Harris

I have worked with Sam for many years now to promote microfinance in many corners of the world. One thing is certain, he never gives up and he rarely gives in. He is headstrong in his beliefs and he knows what he wants to see happen and goes out each year and refocuses this movement on its core: “Targeting microfinance to end poverty.”

Sam believes that microfinance is one of the best tools to end poverty if we just focus on reaching the very poor and use microfinance as a platform for providing other needs from health to education. He believes almost anyone, no matter how poor, can rise to the challenge, start with savings, take out a microloan, work their way out of poverty and transform their life and the life of their family. He believes microfinance is one tool that can help break the cycle of intergenerational poverty….

To Read the full Story Download (Free ) the Latest Issue (March 2010) of Microfinance Focus

Related Posts:

Share/Save

Model Metrics to deliver Mifos to Central Africa via Amazon Web Services

Naagesh Naaraayana — Thu, 11 Mar 2010 14:02:06 +0000

Microfinance Focus, March 11, 2010: Model Metrics, the leader in cloud computing services for the enterprise and an Amazon Web Services Solution Provider, announced on Thursday it has partnered with Global Business Assist and Grameen Foundation’s Mifos™ Initiative to migrate the Mifos platform to Amazon Web Services to support Global Business Assist’s microfinance programs in Africa.

The Mifos platform is a centralized open source technology platform that provides microfinance institutions with the technology they need to reliably and securely process, track and record the flow of funds, and maintain accountability to their borrowers and investors.

Model Metrics donated its time to work with Global Business Assist volunteer Stephen Kaufman to migrate the application from a web hosting service to the cloud. With web hosting service providers, Kaufman had encountered challenges in delivering Mifos cost-effectively, consistently and securely to micro financiers in developing countries around the world. Kaufman turned to Model Metrics for assistance in taking the Mifos platform to the cloud to provide a greater level of security and reduce the downtime required for offline testing, repairs and management.

Model Metrics utilized Amazon Elastic Block Store (EBS) to provide block level storage volumes for use with Amazon Elastic Compute Cloud (EC2) instances. Elastic IP addresses and Amazon Simple Storage Service (S3) enables bundled Amazon Machine Images (AMI). Multiple instances mean that additional bandwidth can easily be added if needed.

“Amazon Web Services strengthens the delivery of this one-of-a-kind technology solution,” said Adam Caplan, Model Metrics chief executive officer. “Amazon Web Services positions Global Business Assist for future growth and evolution so it can continue to deliver its remarkable, innovative services for the good of the people.”

Kaufman, who serves as chief technology officer of a global brand development firm in addition to his work as a volunteer and board member for Global Business Assist, says, “Donors want to know exactly where their money is going, and Mifos helps Global Business Assist ensure that level of accountability and visibility. People expect a certain level of transparency. Now they can easily follow their funds to the end user, and see how it is being used and how it is being repaid.”

Mifos is led and driven by the Grameen Foundation, and extended by the Mifos community of microfinance institutions, IT professionals and software developers. A global community of paid and unpaid developers and IT specialists collaborate to write code, conduct peer reviews, find and fix bugs, and build new features into the platform, while a network of locally-based Mifos deployment and support specialists assist with implementation.

Related Posts:

Share/Save

CGAP, DFID join hands to boost mobile banking for the unbanked

Naagesh Naaraayana — Thu, 11 Mar 2010 13:47:56 +0000

Microfinance Focus, March 11, 2010: CGAP, an independent microfinance center based at the World Bank, announced on Thursday a new partnership with the UK Department for International Development (DFID) to expand ongoing global efforts to use information and communication technologies (ICT), especially mobile phones, to increase access to basic financial services for the poor.

In addition to a 2006 grant from the Bill & Melinda Gates Foundation and CGAP funding, DFID will provide GBP 8 million to the CGAP Technology Program.

“Giving people access to financial services can help them lift themselves out of poverty. I am therefore pleased that the DFID-supported Technology Program at CGAP will work to improve poor people’s access to financial services such as payments, savings, loans, and insurance.

The Program will also support the delivery of social protection payments in developing countries and make the transfer of international remittances cheaper and safer,” said UK Minister for Development Gareth Thomas.

The announcement builds on more than six years of work on mobile banking and access to finance. In that time, CGAP has provided financing and technical advice to projects with more than a dozen providers in Asia, Africa, and Latin America to develop innovative banking solutions, and conducted in-depth policy assessments of 13 countries.

“The idea that a mobile phone could replace a bank branch has gone from concept to reality at an amazing pace. Now with support from DFID and the Bill & Melinda Gates Foundation, it’s time to get beyond the early excitement of the past few years and shift into the build-out stage for mobile money so that millions of poor people everywhere get access to formal financial services,” said Stephen Rasmussen, manager of the CGAP Technology Program.

Communication technologies such as point of sale devices and ATMs, but also notably mobile phones, are increasingly connecting poor people to the financial grid. With CGAP technical support and Bill & Melinda Gates Foundation funding, CGAP’s project partners in India, Mongolia, Pakistan and the Philippines have created the world’s first mobile phone-enabled savings accounts aimed at reaching poor, unbanked people.

“Savings is a highly neglected financial service available to the poor, and despite what most people may think, the poor do need a safe place to save money,” said Amolo Ng’weno, deputy director at the Bill & Melinda Gates Foundation. “Mobile phones and other front-end technology solutions can bring low-cost financial services to poor people, giving them opportunities to build financial security and improve their lives.”
Related Posts:

Share/Save

WWB 2010 conference to focus on microfinance challenges and new opportunities

Naagesh Naaraayana — Thu, 11 Mar 2010 12:08:50 +0000

Microfinance Focus, March 11, 2010: WWB will hold this year’s conference on microfinance institutions on March 23 and 24, 2010 in New York, bringing together leading professionals from the mainstream financial sector and the microfinance industry, including senior managers of microfinance institutions (MFIs) and social and commercial investors.

The objective of the conference is to provide each group unique opportunities to network, discuss concrete funding deals, learn about industry capital markets transactions, and tackle key industry issues. This year’s conference will discuss the lessons learned from a challenging year and focus on the way forward. Panel topics will include:

* Regional updates on the effects of the financial crisis with a prognosis for 2010
* Questions on what the experiences of 2009 have taught us about the responsibilities of lenders and MFIs in setting appropriate lending standards
* Reflections on return expectations in microfinance
* Unique insights on identifying the next generation of rising MFIs
* An assessment of the role of microfinance as a socially responsible investment

WWB MFI COMPETITION:

The conference will also host the acclaimed annual WWB MFI competition, where MFI senior managers are supported by JPMorgan volunteers in tackling a specific industry challenge. Teams present their proposed solution to a panel of judges during the conference, providing the audience the opportunity to meet MFI managers and gain insights from their work with the volunteers.

In 2001, WWB sponsored the first microfinance capital markets conference, spearheading efforts to convene MFIs, investors, rating agencies, bankers and other financial system players to provide them the opportunity to network among peers, discuss innovative financial solutions, and learn from each other. In 2009, the conference attracted more than 300 participants representing 39 countries, including over 60 senior managers from MFIs globally and more than 50 microfinance investors.

J.P. Morgan is sponsoring the 2010 capital markets conference. Related Posts:

Share/Save