Rich IPO Brings Controversy to SKS Microfinance
Strom, S. & Bajaj, V.
SKS Microfinance, an Indian MFI, is being backed by wealthy investors and is about to raise up to US$350 million in a stock offering closely watched by philanthropists around the world. SKS was established as a "social enterprise" — a business based on the concept of doing well by doing good.
But the IPO, one of the field’s biggest stock offerings yet, has led to a dispute between two charitable microfinance organizations that had helped Akula to start SKS. It is unclear what will happen with the money those groups will make from the IPO.
Microlending Gains Ground in US as Recession Increases Demand for Small Loans
Shevory, K.
Innovations from the "developing" world are increasingly finding a place in the United States as people cope with the recession and lack of liquidity. As part of last year's economic stimulus bill US$54 million was granted to the Small Business Administration for lending and technical assistance to microlenders. Cities like San Francisco and New York have expanded or introduced their own microfinance programs. This year loan applications at many of the country's 362 microfinance outfits have more than doubled.
To meet this rising demand in the United States, Grameen Bank, which has lent $9.4 billion through more than 2,500 of its branches worldwide, has opened four new branches in New York and one in Omaha in the last two years, under the name Grameen America. Similarly, the erstwhile overseas microlending "middleman", Kiva, has helped lend $900,000 to 137 American companies through www.kiva.org.
Malaysia's Poverty Program Achieves the World's Highest Microcredit Repayment Rate
The Amanah Ikhtiar Malaysia (AIM) poverty eradication program has placed Malaysia as the world's best in managing micro-credit financing, said its chairman, Datuk Amir Hamzah Ahmad. He said that AIM recorded the world's highest microcredit repayment rate at 99.2 percent and 90 percent of 253,000 borrowers had moved out of the hard core poverty line.
Amir Hamzah said families with a household income of not more than RM650 (US$202) per month, regardless of race, were entitled to various types of credit products that aim to help increase their income.
He said AIM has already provided micro-credit loans amounting to RM4.1 billion (US$1.2 billion) to 253,000 women borrowers nationwide and that 99 percent of them had successfully repaid the loans.
Peruvian Microlenders to Grow Faster than Traditional Banks
Peru's microfinance association, ASOMIF, estimates that the sector will grow two or three times faster than the traditional banking sector. However, at the end of April, the country's MFIs saw their collective credit portfolio reach 16.6bn soles (US$5.86 billion), up 19.3% compared to April 2009. The credit portfolio of the banking sector as a whole grew by only 9.73% during the same period.
ASOMIF manager Jorge Arias noted that for July 2010, he expects microlenders to report credit portfolio growth of approximately 25% as compared to the same month last year in 2009.
South Korean Microfinance Loans May Triple in 2010
Microfinance loans in Korea may triple this year as the government seeks to share the benefits of economic recovery with all social classes, said Kwon Hyouk Se, vice chairman of the Financial Services Commission. Samsung Group, Hyundai Motor Group and other businesses and banks have committed 2 trillion won (US$1.6 billion) over 10 years to provide microfinance loans.
Korea is using microfinance loans to ensure self- employed people earning low incomes can secure funds to run their businesses if they are unable to borrow through traditional channels. SMILE Microcredit Bank, a state-backed microfinance initiative that began in December 2009, has already generated 91 billion won (US$76 million) in loans.
Agricultural Bank of China's Micro-Credit Loan Program Expands Rapidly
Agricultural Bank of China (ABC) loaned 82.9 billion yuan (US$12.2 billion) in micro-credit to Chinese farmers in the first three months of the year, compared with 67.3 billion yuan (US$10 billion) in the whole of 2009.
Starting in April 2008, ABC's micro-credit business, which makes loans of 3,000 to 50,000 yuan in size (US$442 to US$7,300), has helped 15 million farmers across the country, Lu Chuan, an ABC official told Xinhua Saturday.
Save the Date Oct. 21-23: Microfinance Impact and Innovation Conference in New York City
The Financial Access Initiative (FAI), Innovations for Poverty Action (IPA), the Jameel Poverty Action Lab (J-PAL), CGAP, Moody's Corporation, and Deutsche Bank are sponsoring the Microfinance Impact and Innovation Conference taking place in New York City October 21-23, 2010.
The conference was created as a unique forum for both communication of accumulated knowledge as well as the generation of innovations in both microfinance product design and research. Sessions are relevant to all stakeholders such as funders, practitioners and policymakers and will cover questions such as:
* What is the impact of microfinance on the poor?
* How do interest rates affect the demand for microfinance products?
* How to design appropriate consumer regulation?
* Does business training help microenterprises?
* How to increase savings behavior among the poor?
New Benchmarks for MFI Equity Investments Show Outstanding Results
Investors in MFI equity capital in 2005 and 2006 experienced overall increases in shareholder value in US$ terms of 308% and 148% respectively, and a composite increase of 295%, by the end of 2008, according to a new series of benchmarks. Wall’s Street Advisor Services released the first of a new series of benchmarks for equity investments in MFIs. The WSAS MFI Shareholder Value Indexes (WSAS MFI SVIX). The series offer investors and researchers, for the first time, measures of changes in shareholder value of a broad, geographically-diversified, and consistent set of MFIs, organized by the start periods of MFI equity investment into ‘Investor Vintages’.
MIT Press Publishes Second Edition of The Economics of Microfinance
The microfinance revolution has enabled more than 150 million of the world’s poor to benefit from new financial tools and services. This is illustrated by the second edition of The Economics of Microfinance by Beatriz Armendáriz and Jonathan Morduch. “The new edition of The Economics of Microfinance will enable students of international development, economics and finance to not only understand the global expansion of financial markets in poor communities, but also to drive further growth of the sector,” says Morduch.
The second edition has been updated throughout to reflect the latest data, with new material on commercialization, credit contracts, savings and insurance, gender, impact and governance.
A sample chapter is available for download at MIT Press.
European Microfinance Award Closing Date Extended to Sep 1, 2010
European Microfinance Platform has extended the closing date for the 3rd European Microfinance Award to September 1, 2010. The objective of this year's award is to highlight initiatives in the development of value chain finance. The award of EUR100,000 (US$125,000) from the Luxembourg Ministry of Foreign Affairs - Development Cooperation will be presented on November 30, 2010 during European Microfinance Week. The award will be given to an institution based in a developing country that is active in the financial services sector and judged as making a contribution to enhancing value chain finance.
Microfinance actors from developing countries are invited to apply but they need the support of an e-MFP member (e.g. letter of recommendation). Further details about how to apply are given in the application form, which is available in English, French, and Spanish at www.e-mfp.eu. Applications should be sent to contact@e-mfp.eu.
Responsible Microfinance
23 Jun 2010, Tucker, B.
Presentation at 2010 USAID Economic Growth Officers' Conference, 21-25 June 2010,Washington, DC
This presentation explores how MFIs can facilitate responsible microfinance practices by analyzing the challenges and opportunities that face the industry.
Does Microcredit Really Help the Poor?
2010, Sjamsoeddin, I.
Making self-employment and small enterprise possible for the poor
Financial system contributes to the economic growth by ensuring efficient resource allocation to the most needed sector. It provides channels by which funds are transferred from those with surplus fund to those with deficit. The system prevents funds to be left abundant yet it ensures that funds are well used in productive activity. In this case, both the surplus unit and the deficit unit are better off. The surplus unit earns return from the fund lent whilst the deficit unit receives the capital needed to consume. This is how financial system supports the economy to develop and grow further. The above argument has ignited the idea of providing loan to the poor as part of development programs. Such loan provision might help the poor to lift themselves out of poverty by providing necessary capital to set up a productive-income-generating activity. It is strongly believed that microcredit will make self-employment and small enterprise possible for the poor, a requisite condition to jump out the poverty line.
Sustainable Microfinance: The Balance Between Financial Sustainability and Social Responsibility
July 2010, Luong, Q.
Using microfinance as a tool to alleviate poverty
Microfinance has been recognized as an effective tool to alleviate poverty. This study explores how to create a sustainability model of microfinance to fulfill obligations related to both social responsibility and financial sustainability by integrating remittance flows and cross-border microenterprise activities into microfinance business. It employs a mixture of methodology including primary data collection, secondary data collection and case studies of MFIs in Sub-Saharan Africa.
The Role of NGOs in Promoting Empowerment for Sustainable Community Development
2010, Nikkhah, H. & Redzuan, M.
Reviewing the roles, functions and programs of NGOs
This paper illustrates the contributions NGOs make to the communities they work in. NGOs have many programs, functions and roles which empower communities to progress towards sustainable development. This paper reviews some of these functions and programs such as microfinance and capacity building.
Recent Development in the Impacts and Mechanisms of Microfinance
29 Jun 2010, Pariente, W.
Paper presented at "Microfinance Dialogues 2010: University Meets Microfinance", 17-18 June 2010, Leibniz Universität Hannover, Germany
As microfinance has grown in scope and scale, critical voices are increasingly on the rise. On the one hand, skeptics question the impact of access to financial services on income, wealth and well-being; others project that with the increasing emphasis on financial performance MFIs might drift from their original social mission. This paper addresses the criticism by developing new impact evaluation methodologies and implementing management approaches that focus on maintaining a balance between financial and social performance.