By Asma Azmi

Microfinance Focus, Feb. 27, 2010: World’s poor are the major victims of any natural disaster striking our planet. Their meagre livelihood leaves them vulnerable to the post disaster upheavals. Faced with unemployment and unsteady market conditions, their lives become a constant struggle for daily sustenance.

Although there is always a surge in aid and grants to a disaster affected region, they are often poorly targeted and confronted with logistical issues and are thus rendered ineffective in the recovery process. Microfinance Institutions, on the other hand, with their locally spread network have, time and again, proved to be the first to lend a helping hand to the disaster victims and assist in rebuilding their disrupted lives.

HAITI QUAKE:

The potential of MFIs in providing relief work got officially endorsed when the US government placed cash in the hands of Fonkoze, the largest microfinance institution in Haiti, in a mission that required close cooperation of the U.S. military, the United Nations and multiple US government agencies to reach out to the victims of January 12th earthquake in Haiti. In the wake of this disaster, Fonkoze was the only bank able to stay open for customers making withdrawals and receiving money transfers. Despite the devastation, Fonkoze has been able to quickly reopen 37 of its 42 branches, including the main branch in Port-au-Prince. Within the first week of re-opening these branches, Fonkoze delivered more than $1 million in remittances and savings to Haitians.

BANGLADESH CYCLONE:

BRAC, an MFI in Bangladesh has provided emergency aid and rehabilitation in Bangladesh since its inception and carried out large-scale relief and rehabilitation activities there for cyclone and flood victims in 1987, 1988, 1991, 1998, 2000, 2004 and 2007. BRAC was one of the first on the ground to provide relief in the wake of Cyclone Sidr and mobilized USD 33.8 million for its initial relief and longer-term rehabilitation efforts. Over 10,800 people took shelter in 15 BRAC cyclone shelters constructed after Cyclone Sidr struck the region in 2007. BRAC staff was working around the clock since before Cyclone Aila hit the south-western coast of Bangladesh last year, to evacuate people and immediately launched relief efforts. BRAC used 10 million Taka (about USD 150,000) of its own funds to provide initial relief.

TYPHOON IN PHILIPPINES:

In the wake of disastrous typhoon Ketsana in 2009, the microfinance community of Philippines reacted promptly. ASKI, one of Kiva’s local microfinance partners personally delivered $26,000 of relief goods in dangerous areas to all affected communities based on their needs. It also set up a Disaster Council for future financial and logistical planning. It has also implemented mandatory crop insurance from the government of the Philippines for all agricultural loans.

CHINA QUAKE:

After the devastating earthquake of 2008 in China, Danone, of France along with Grameen Trust and CPAD (China’s State Council Leading Group Office of Poverty Alleviation and Development) signed a cooperative memorandum to set up the Grameen-CPAD-Danone Micro-Credit Initiative with a donation of 20 million yuan from Danone to assist the quake zone in its reconstruction. Grameen Trust provided technical backing for the initiative, CPAD offerred policy guidance and China Foundation for Poverty Alleviation (CFPA) was in charge of its implementation. Within few months of its implementation it has provided loan surpassing 16 million yuan to farmers nationwide.

LANKAN CONFLICT:

Sareeram an MFI in Batticaloa, Sri Lanka operates in the conflict affected North East Province. It was the first to bring relief when the Boxing Day Tsunami struck the area since it had good vehicles and officers on duty, whereas it took few days for the relief agencies and government bodies to arrive with aid. CARE India designed a lease-to-own product to help diversify income generating activities of fisherman affected by Tsunami. The product was introduced one year after the Tsunami to support sustainable livelihood activities and reduce the dependence on subsidies and grants.

Microfinance Focus, Feb. 26, 2010: IFC is currently seeking partners to deliver Business Edge training in Liberia, where it is supporting private sector recovery and growth. IFC is launching the Business Edge training product in Liberia in March to help micro-entrepreneurs in the country acquire the skills they need to succeed.

Business Edge is an interactive learning program that offers skills training to help managers increase their knowledge and run more efficient businesses. The product has helped thousands of entrepreneurs in emerging markets improve their skills and businesses.

IFC held a Business Edge training session in Monrovia from February 22 to 26, for 20 local consulting firms and individual consultants. IFC will in March launch a program called “Enhancing SME Consulting Skills” targeting a vast audience of consultants.

Also in March, IFC will host an event in Monrovia to promote Business Edge to about 50 members of Liberia’s business community, including banks, financial institutions, firms, microfinance institutions and SMEs.

Business Edge will help SMEs become better suppliers, distributors and clients.  Therefore IFC will seek to develop partnerships with large corporate firms which work with SMEs to create and enhance linkages that will improve performance along the value chain.

Business Edge includes class sessions featuring high-quality training material from the global market to offer small business owners and managers a practical means to improve their efficiency and profitability.

Microfinance Focus, Feb 27, 2010: Women’s World Banking (WWB), a global network of 40 microfinance providers and banks, today announced the appointment of Kathryn C. Mayer to Director of the Center for Microfinance Leadership (CML). Center for Microfinance Leadership is a newly established wing of WWB aims to cater the need of skilled, trained leaders and managers in the Microfinance sector.

Ms. Mayer brings more than 20 years of global private sector leadership development experience to CML.  She led Citigroup’s Human Resources team in redesigning their performance review process and is the author of Collaborative Competition™:  A Woman’s Guide to Succeeding by Competing, a tool to empower women to succeed through practicing healthy competition in the workplace.

“Kathryn has shown tremendous ingenuity in helping top level executives achieve their potential,” said Mary Ellen Iskenderun, president and CEO of Women’s World Banking. “She is truly a stellar addition to the Center for Microfinance Leadership, which plays a central role in developing strong female managers in the field of microfinance.”

“This is truly a remarkable opportunity to join an organization that invests so heavily in female independence through business and leadership development,” Ms. Mayer said. “I am looking forward to building upon that legacy.”

Leadership programs organized by CML include “Women in Leadership,” aimed at women CEOs and senior managers, “Advanced Leadership,” aimed at men and women leaders of the top 200 microfinance institutions, and one-on-one coaching for a small cadre of leaders with the greatest potential to effect change.

Microfinance Focus, Feb 26, 2010: Queen Sofia of Spain, Princess Máxima of The Netherlands, Former Peruvian President Alejandro Toledo, Kenya’s Deputy Prime Minister and Finance Minister Uhuru Kenyatta, Nobel Peace Prize Laureate Muhammad Yunus, BRAC Chair Sir Fazle Abed, and other microfinance leaders from the region will address the Africa-Middle East Regional Microcredit Summit to be held April 7-10, 2010 in Nairobi, Kenya.

A program featuring visionary leaders discussing cutting-edge topics includes World Bank Vice President for Finance, Janamitra Devan, chairing a plenary session titled: “Breakthroughs in Using Micro-savings and Microcredit to Better End Poverty: A Vision for the Future of Microfinance in Africa and the Middle East.”  Confirmed speakers include Sir Fazle Abed, Chair of BRAC, and Ingrid Munro, Founder of Jamii Bora, sharing their groundbreaking work in Africa and around the world.

A workshop titled: “What is the Cutting Edge in Managing and Measuring Social Performance?” will include: Christian Loupeda, Director of Credit with Education for Africa and Asia at Freedom from Hunger; Mr. Abebual Zerihun, Director of Research and Evaluation at BRAC Uganda; Mrs. Nadia Laraj, Social Performance Consultant for Sanabel; Ms. Refilwe Mokoena, Research and Development Coordinator for the Small Enterprise Foundation in South Africa; and Ging Ledesma, Director of Social Performance at Oikocredit in The Netherlands.

The summit is being sponsored by Craft Silicon and Citi Foundation and a group of more than 20 sponsors, said a press release.

By Nagesh Narayana

Microfinance Focus, Feb 26, 2010: Presenting the Union Budget 2010-11 to parliament on Friday, India’s Finance Minister has reiterated the UPA government’s commitment to expanding financial inclusion and expanding the microfinance programmes, by doubling allocation to Micro-Finance Development and Equity Fund to Rs. 400 crore (INR 4,000 million).

He has also increased allocation by Rs 100 crore (INR 1,000 million) each to the Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund — the two major microfinance funds created by NABARD to lend to SHGs. Another key focus in the budget is to provide banking to majority of rural people through the Business Correspondent model and extend the model’s coverage of products to insurance and other services.

Lead Bank Scheme:

Targeting the ‘Aam Aadmi’, the budget referred to the High Level Committee on the Lead Bank Scheme that was crucial to Business Correspondent model to reach the unbanked rural people and extend microfinance services. While operational modalities were not spelt out, the programme seeks to provide appropriate banking facilities to habitations with more than 2,000 population.

Another significant feature is setting a deadline, i.e., March 2012. While the deadline is not realistic, it denotes the seriousness to carry out financial inclusion drive. Secondly, it seeks to extend to other products like insurance and other services, which has long been the demand of the microfinance institutions. The target that the budget has set is to cover 60,000 habitations. With the RBI’s recent modifications in the proposed Business Correspondent model facilitating non-SHG microfinance institutions, this is possible but the industry’s demand to make it more liberal is yet to be answered.

Rural Employment:

Apparently, the finance minister is not inclined to have given enough allocation to NREGA, the much-talked-about rural employment guarantee programme. Renamed Mahatma Gandhi National Rural Employment Guarantee Scheme, NREGA has completed four years of implementation during which it has been extended to all districts covering more than 45 million households.

Last year, Pranab Mukherjee allocated Rs.39,100 crore (INR 391,000 million) in his 2009-10 budget, marking an increase of 144% over 2008-09 budget. Surprisingly, in 2010-11 budget, the figure has been rounded off to nearest figure at Rs.40,100 crore (INR 401,000 million) and no explanation has gone into the budget for this static figure. It certainly indicates that the government seeks to cap the rural employment programme at this level. Otherwise, those who have worked for more than 15 days during the preceding financial year under the NREGA have been extended the Rashtriya Swasthya Bima Yojana (insurance cover) under the budget which will benefit the below poverty line workers and their families in rural areas.

Financial Inclusion & Microfinance:
The microfinance programme this year received a boost in terms of more allocation to the twin-funds managed by NABARD for financial inclusion. Set up in 2007-08 the Financial Inclusion Fund and the Financial Inclusion Technology Fund, have been key in government’s actions programme to achieve financial inclusion. With an additional Rs.100 crore (INR 1,000 million) for each of these funds, the government has cleared the decks for functional phase of ensuing Business Correspondent model in rural areas.

In addition, the programme for linking Self Help Groups (SHGs) with the banking system, re-designated as the ‘Micro-Finance Development and Equity Fund’ in 2005-06 with a corpus of Rs.200 crore (INR 2,000 million) has seen doubling of allocation to Rs. 400 crore (INR 4,000 million) in the current budget. A positive delopment indeed but the focus is likely to be in the northeastern and eastern region, where many anti-poverty programmes have yielded little result in terms of improving the financial access norms to the poor and rural households.

Access to banking services:

One important point that the finance minister made in his opening remarks was to ensure the growth of  banking system to meet the needs of a modern economy, expansion in geographic terms and improve access to banking services. While the RBI is considering giving some additional banking licences to private sector players, Non Banking Financial Companies (NBFCs) could also be considered, if they meet the RBI’s eligibility criteria. While this addresses the long-time demand of NBFCs to raise deposits from the members, it is unlikely to help the microfinance sector’s emerging MFI-NBFCs which have been seeking similar privilege.

Unique Identification Authority:

Allocation of Rs 1,900 crore (INR 19,000 million) to the Unique Identification Authority of India as it enters into its operational phase and begin issuing UIDs next year, a long-term goal to achieve financial access for the poor and rural households will become a reality in near future.

Microfinance Focus, Feb 26, 2010: Advans Banque Congo has completed a capital increase bringing total capital to $13 million, the Kinshasa-based microfinance institution announced yesterday in a statement. The capital increase was in response to new minimum capital requirements for commercial banks as set by the Congolese central bank, the bank said in a statement.

Advans Banque Congo was incorporated in July 2008 and obtained its commercial bank license in May 2009. Following this capital increase, subscribed exclusively by existing shareholders, the shareholding structure is now as follows:

Investor      Share capital (US$)  Share Capital (%)

Advans SA     6,549,000                   50.38
AfDB               2,150,000                   16.54
IFC                  2,150,500                   16.54
KfW                 2,150,500                   16.54

TOTAL          13,000,000                  100.00

This amount of capital is substantial for a young microfinance bank, according to Advans, but is justified in the medium term when considering the market potential for micro and SME finance, in a country which counts around 200,000 bank accounts for a total population of 67 million, it said in the statement.

Advans Banque Congo offers a range of financial products to meet the needs of micro, small and medium sized enterprises (MSMEs) and low-income households, including productive loans, deposits, forex, and national and international money transfers. With one branch in Kinshasa and after 6 months in operations, Advans Banque Congo already serves 1,800 clients for a loan portfolio of $800,000 and total deposits of $640,000. In 2010 the bank plans to open 3 new branches in Kinshasa to pursue its fast expansion, announced Advans Banque Congo.

Microfinance Focus, Feb 26, 2010: Financiera Independencia, a Mexican microfinance lender of personal loans to lower income segment individuals, announced that on February 24, 2010 its Board of Directors authorized the Company to submit a request for a Banking License in Mexico, according to a press release.

The Company expects that the process of having a banking license and operating as such will take approximately 18 months. It is important to note that the Mexican Banking and Securities and Exchange Commission (CNBV) has discretionary authority to grant banking licenses in Mexico and the fact that Independencia requests a banking license does not imply that such license will be granted.  In addition to receiving authorization from the CNBV, to begin operating as a bank the Company has to implement material changes to its existing operational systems and branch network.

Mr. Noel Gonzalez, Independencia’s Chief Executive Officer, commented: “We believe there is considerable growth potential in Mexico to provide financial services to low-income individuals and we’ve made excellent progress in our goal of becoming the leading player in this segment. A banking license will allow us to be in a better position to maximize the growth opportunities available in our market. It will also bring us closer to becoming a one-stop-shop offering a broader array of products and services that meet our customers’ financial needs.”

According to the official statistics ,  as of December 31, 2009, Independencia had a total outstanding loan balance of Ps.4,812.3 million, operated 199 offices in 143 cities throughout 31 of Mexico’s 32 federal entities and had a total labor force of 9,643 people. The Company listed on the Mexican Stock Exchange on November 1, 2007, where it trades under the symbol “FINDEP”.

Microfinance Focus, Feb 26, 2010: The ADB Board of Directors today approved a sovereign loan of $50 million and a partial credit guarantee of up to $250 million through an innovative financing program to help India develop and expand its micro, small, and medium enterprises. The $50 million loan will go to the to the state-owned Small Industries Development Bank of India (SIDBI) to fund enterprises that have become too large to tap traditional microfinance but are unable to access conventional bank funds – the so called ‘missing middle sector’ of MSMEs. Around 30,000 MSMEs are expected to benefit from the project, which has the potential to create at least 7,500 jobs, the report said.

SIDBI will be the borrower and executing agency for the loan, which will be implemented over 5 years. The PCG facility will be available for 3 years following approval from ADB’s Board of Directors.

“The objective of the project is to remove key bottlenecks to MSME financing and development, thus helping pave the way for sector growth, competiveness and employment creation,” said Peter Marro, Senior Investment Specialist in ADB’s South Asia Department.

According to the report, MSMEs provide livelihoods for an estimated 65 million people in India, many of them women living in slums and other poor and isolated communities. However, the sector’s development has been hamstrung by the inability of these enterprises to tap adequate, competitively priced-long term funds. The global economic crisis, which squeezed credit further, and caused job and wage cuts, has made it even tougher for MSMEs, especially female-dominated microenterprises.

The project has been designed to avoid duplicating or countering support for MSMEs provided by other donor agencies. The loan has also been structured to ensure women get ample assistance, with 30% of the funds provided through SIDBI’s direct lending operations to go to qualified female MSME entrepreneurs.

The loan, from ADB’s ordinary capital resources, has a 15-year term, with a grace period of 3 years and an interest rate determined in accordance with ADB’s LIBOR-based lending facility. It includes a government guarantee to ADB.

Microfinance Focus, Feb 25, 2010: Nexus Venture Partners, a 1,500-crore venture capital fund based in Mumbai, specializing on rural credit and microfinance, will hold a seminar on “Microfinance in India — Where is it headed?” in Mumbai on March 4, 2010, said a press note. It will be part of their “Coffee with Nexus” series.

“The objective is always to foster entrepreneurship and help companies scale in various sectors including MFI is organising a series of conferences on Microfinance for professionals and stakeholders in the sector,” it said. “In this event various experts in MFI from banks, MFIs and i-banking community will share their thoughts on this space and what they envisage is future of this space. It will also enable to connect professionals and entrepreneurs interested in this space with each other,” the statement added.

The schedule of the seminar:

Series: “Coffee with Nexus”

Event title: “Microfinance in India – Where is it headed?”

Date: Thursday, March 4th, 2010

Time: 3-6PM

Agenda:
3PM-3:30PM :: Networking over Coffee
3:30PM-4PM :: “MFI landscape in India” – Yes Bank
4PM-4:45PM :: “Fund raising – How to prepare yourself?” – Grameen Capital, Aavishkar and Unitus Capital
4:45PM-5:30PM :: “Bank’s view on MFI” – ICICI, DCB, HSBC and Yes Bank
5:30PM-6:00PM :: Open discussion on MFI – Opportunities, Challenges and Risks

Location: Nexus Venture Partners,

G-02 & 03, Sarjan Plaza, 100, Dr. Annie Besant Road, Worli, Mumbai

Landmark: Close to Atria Mall, Behind IBP Petrol Pump

Fees: Free
RSVP: manoj@nexusvp.com

Microfinance Focus, Feb 24, 2010: ACCION is reaching the jungles of Brazil to provide its microfinance products to the microentrepreneurs living and working there.

Called Microfinancas, ACCION’s new microfinance company will serve the Amazonas region, where the company said less than 10 percent of the 1.9 million low-income resident microentrepreneurs have access to financial services from a bank or microfinance organization. It was in Recife, Brazil that ACCION first pioneered the concept of microlending, in 1973.

Joining ACCION as an equity partner in the new venture is the Multilateral Investment Fund (MIF) of the Inter-American Development bank (IDB), which will assume an 18.1 percent stake. Private investor Luiz Felipe D’Avila and other private investors will assume a total of 8.5 percent. ACCION will hold 73.4 percent of the organization.

ACCION Microfinanças will begin operations in Manaus, the largest city in Amazonas, with plans to extend services to cities throughout Brazil’s northern region. The northern region, comprising seven states with a total population of about 14.7 million, is home to an estimated 1.9 million microentrepreneurs, only 8 to 10 percent of whom have received any kind of loan from a bank or microfinance organization.

“We are particularly excited by the prospect of extending financial access in Amazonas, one of the most underserved regions of a country where microfinance, overall, remains nascent,” said Michael Schlein, President and CEO of ACCION. “This underscores our commitment to deliver such services to some of the developing world’s most needy regions, and follows closely on the announcement of our investment in Saija Finance, a microfinance startup in Bihar, India.”