Posted by admin on 22 February, 2010
Microfinance networks are continuing to grow and respond to the demands of the global industry by working to improve internal processes and financial planning, effectively measure success and capacity, and to develop innovative and demand-led services.
Hosted by the SEEP Network and Sanabel, the Microfinance Network of Arab Countries, representatives of the 12 microfinance networks participating in the Citi Network Strengthening Project (CNSP) met in Cairo, Egypt 1 – 4 February to discuss and learn about tools developed by the SEEP Network as a part of the CNSP.
The BWTP Network joined other national and regional level networks from Asia, Latin America, Africa, the Middle East and Eastern Europe to share experiences and continue to work towards building a strong microfinance infrastructure at both regional and national levels.
The twelve microfinance networks selected to participate in the Citi Network Strengthening Program represent nearly 60 countries, over 1,300 MFIs and microfinance organization members, and more than 36 million clients.
By participating in the meeting in Cairo the BWTP Network is committed to building relationships with networks across the world and particularly in Asia, and to adopting best practices for microfinance association management as they are developed, so as to better serve its members and regional stakeholders.
To read more about microfinance networks, following this link to the BWTP Network’s ‘Microfinance in Asia’ publication which includes a chapter on their role: (http://www.bwtp.org/files/MF_Trends_Challenges_Opportunities_ELECTRONIC.pdf).
To hear industry perspectives from microfinance network representatives click here.
The SEEP Network Development Exchange can be visited by here.
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In line with the Bangko Sentra ng Pilipinas’ (Central Bank of the Philippines – BSP) objective of increasing access to much-needed financial services, the Monetary Board approved yesterday the marketing, sale and servicing of microinsurance products by rural, cooperative and thrift banks. This approval presents an enormous potential of allowing the network of nearly 3,500 rural, cooperative and thrift banking offices, subject to certain prudential rules and regulations, to serve as distribution points for authorized microinsurance products offered by licensed insurance providers. Since many of these banks already have existing relationships with microfinance clients, they can more readily deliver a full range of financial services needed by their clients. Banks are ideal insurance distribution channels as they are the trusted financial institutions in the countryside and have a deeper knowledge and understanding of the low income market. This can only translate into better delivered products as well as lower transaction costs, ultimately benefiting the poor clients. The BSP also envisions that this issuance will provide the impetus to eliminate informal insurance schemes as well as put an end to the unauthorized provision of insurance products.
Microinsurance is defined by the Insurance Commission (IC) as an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events. The features of the microinsurance product, which are appropriately designed for the needs and capacity of the low-income sector, include a limitation on the amount of premiums, contributions, fees and charges not to exceed five percent of the current daily minimum wage and a ceiling on the guaranteed benefits not to exceed 500 times the current daily minimum wage.
In recognizing that microinsurance products are a complementary component of the primary business of rural, cooperative and thrift banks considering their relationship with their microfinance clients, these banks are allowed to present, market, sell and service microinsurance products. As part of the approval, the necessary rules and regulations have been put in place to ensure the safe and sound delivery of these services. The Bank must ensure compliance with the relevant laws and rules on the sale of microinsurance products as set by the IC; must ascertain that all the necessary approvals and licenses from the IC are in place as well as verify that the authorized insurance provider has adequate consumer protection mechanisms. These rules and regulations are consistent with the recently approved National Strategy and Regulatory Framework for Microinsurance which was inked by the Insurance Commission, Department of Finance, Securities and Exchange Commission, BSP and other relevant offices in January 2010.
Recent events like the super typhoons have brought to fore the importance of adequate protection against death, injury, loss of property and other contingent events. This move by the BSP is an important response to this urgent need for microinsurance especially for the poor who are more vulnerable to various risks.
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In response to a rapidly evolving microfinance sector in Pakistan, the Pakistan Microfinance Network (PMN) has developed two innovative benchmarking software applications to inform its annual and quarterly publications and provide greater access to information for all stakeholders. The benchmarking software is indicative of the growing utilisation of technology by microfinance associations to monitor and provide up-to-date information of their respective sectors and make this information freely available to industry stakeholders.
The Pakistan Microfinance Review (PMR) is an annual publication tracking financial performance indicators for the microfinance industry in Pakistan. These financial indicators were developed in collaboration with the Microfinance Information eXchange (MIX) and the first report published in 2003. To facilitate accessibility and utilization of the data collected, in 2008 PMN developed the PMR software (www.pmronline.info). The PMR tool can be used for trend analysis as well as comparative analysis of a total of 88 indicators. Data from the software is exportable into excel format. The PMR software is updated annually (in June every year) and is accessible free of cost to all internet users.
MicroWATCH is a quarterly publication tracking outreach indicators for the microfinance industry in Pakistan and was introduced in 2006, while the supporting software was developed in 2007-08. This software has three options: 1). Geographical representation of outreach data for microcredit, microsavings, and micro-insurance, 2). Market highlights indicating market leaders in different categories, 3). A query builder facility, which allows users to customize available data to their information needs. It tracks a total of 29 indicators and is supported by maps, tables and graphs. The software is accessible via the PMN website (www.microfinanceconnect.info) and is also a free service provided by PMN.
This and other benchmarking technology is providing increased levels of transparency and standards by which to measure MFI performance both nationally and internationally. As a first point of contact for a range of stakeholders, most notably investors, donors and policy-makers, benchmarking is a valuable service provided by microfinance associations and will continue to grow in importance as sectors rapidly evolve across the region.
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After the restoration of democracy in Nepal in 1990, the limitations of government development initiatives were not producing widespread and measurable impact on the lives of poor. The main reason for this limited success was that community participation was not fully utilised and little attention was given to the importance of self-help development. This meant that a critical mass of local resources was not harnessed, while many government-led development programs were not sustainable.
Within the context of this development scenario, a small group of development practitioners and policy makers established a non-governmental organization (NGO) based on their shared vision of “self-help development”. Their goal was to work with the poor rural masses to begin a process of self-help development by changing the dependency mind-set of the community people.
This shared vision of helping people to help themselves gave birth to “Centre for Self-help Development (CSD)” - a NGO, in August 1991. Since then, CSD has been effortful to raise awareness of the rural poor so as to help them to initiate their own institution building and carry out various programs generating both financial and social capital.
CSD has continued to grow in its provision of microfinance, specifically through its Self-help Banking Program (SBP). The SBP microfinance program has been successful in creating a track record of delivering quality micro finance services to poor and disadvantaged households. The SBP has focused primarily on delivering savings and credit services, complemented with other community development activities, to those who have no access to formal source of finance. Initially, CSD received operational support from ChFDP/GTZ, DANIDA to meet the operational cost for SBP. Similarly, seed capital in the inception of SBP followed by branch scale-up fund has been received from Grameen Trust, Bangladesh. The other source for lending fund has been obtained from Rural Microfinance Development Centre (RMDC), commercial banks and IFAD through NRB.
In December 2009 CSD held its 18th annual general meeting. A highlight of the meeting was the presentation of progress report of the fiscal year 08/09, which reported that CSD’s microfinance program, the Self-help Banking Program (SBP), has an enrolment of over 49,000 women.
The SBP outreach is based on 26 branch/sub-branch offices which, provides services to 49,310 poor women in 12 hill 12 districts of Nepal. It is estimated that more than 248,900 populations have been getting benefit from the program. According to the 08/09 progress report, CSD has disbursed 1,586.605 million rupees to the deprived families till the year. The total amount of Rs. 1,295.914 million has been collected during this period.
Shrestha has also presented the report of community development program and training support program at the meeting. With the view of positive impact shown by the program, SBP has been set forth the goal of expanding outreach gradually, presenting the report Shrestha said.
An overview of CSD programming is available here:
The CSD BWTP Network member page: www.bwtp.org/csd.html
The CSD Mix Market profile: www.mixmarket.org/mfi/csd
Posted by admin on 28 January, 2010
As the Asian microfinance industry reflects on a year of challenges resulting from the global financial crisis, the BWTP Network secretariat has taken a look at reporting on the industry from 2009. This summary suggests a strong but slowing sector and hints at challenges for 2010.
MFI Benchmarks for Asia with the Mix Market
In late 2009 the Mix Market released its 2008 MFI Benchmarks – ‘the first to reflect the impact of the global economic slowdown on microfinance institutions’. A brief review suggests the following broad snapshot:
- In Asia there are currently 49 million borrowers amounting to 11.2 billion dollars worth of loans. The majority of borrowers.
- The majority of borrowers are in the key markets of India and Bangladesh;
- The top ten largest institutions in the region also come from India and Bangladesh; with the state-owned (and BWTP Network member) Vietnam Bank for Social Policies topping the list.
- Growth rates amongst the Indian institutions in the top ten (SKS, Spandana, SHARE, Bandhan, AML and SKDRDP) grew at an average of 72%.
- While growth slowed internationally, Asia remained relatively stable at just over 40%.
- Sri Lanka achieved the largest growth in 2008, while Cambodia, India and the Philippines remained strong.
- Cambodia rates a special mention exhibiting large growth while also demonstrating a high gross loan portfolio relative to borrowers; this, compared with a significant drop in India, reflects highly varied loan sizes across the region.
- In terms of financial performance, there were only a slight increase in returns in Asia; however it was the best performing region globally. Profitability was achieved in most markets with the exception of Afghanistan.
For an more extensive overview of the region, including all data for 2008, visit the Mix Market: www.themix.org. Thanks to Liz Larson, Asia Regional Manager at the Mix.
The Microfinance Investment Climate
In terms of investment, CGAP’s ‘Microfinance Investment Vehicle Survey 2008’ highlighted the fact that they continued to perform steadily despite the global economic crisis. As of end-2008 103 MIVs were operating internationally and these experienced a total of 31% in 2008. Of the total microfinance portfolio internationally Asia and the Pacific still only accounted for 11% of all MIV investment, despite a 55% growth rate in 2008. Of this, the majority of MIV activity is concentrated in India with and increased focus on India. Trends for 2009 are not expected to be so strong, despite anecdotal reports throughout 2009 that the industry in Asia has remained relatively robust.
In August 2009, at the Asia Network Summit in Singapore, the national microfinance networks of Asia of the region continued to report that the effects of the economic crisis had yet to have strong effects on member MFIs. The only exception was Cambodia, where PAR increases and over indebtedness was recognised by the Cambodia Microfinance Association as a growing issue. With over 80% of its microfinance funding coming from foreign sources, this provided an interesting insight into the effects of this sourcing of funding.
The MIV Performance and Prospects survey and brief can be found on the CGAP website at: http://www.cgap.org/p/site/c/template.rc/1.26.11139/
The Asian Network Summit attendees can be seen at: http://www.youtube.com/user/BankingwithPoor.
The Risks to Microfinance
Also published by the CSFI in 2009 was the Microfinance Banana Skins 2009 survey sponsored by Citi and CGAP. The survey covered a global sample of practitioners, investors, regulators and observers of the microfinance sector and focuses on determining the biggest risks to the industry as identified by these stakeholders.
Although Asia and the ‘Far East’ as a percentage of the survey was underrepresented at only 22% of respondents, the disaggregation of the data highlights regional concerns which will no doubt spill over into 2010.
While Asia showed ‘liquidity risk’ as the major danger for the industry, countries of the ‘Far East’ – South East Asia and China – nominated ‘competition’ as the greatest risk. While the impact of the global financial crisis in terms of both liquidity and credit risk was reflected across Asia, issues relating to management such as corporate governance, staffing, technology and management quality still remain identifiable challenges in the region.
Reflecting its emphasis on the abiding social imperative of microfinance, ‘mission drift’ was a fast riser in 2009 for Asia and reflects concerns with the rapid growth in MIVs and foreign investment, competition, and the outreach imperative. At the same time,
Concerns over ‘political interference’ across Asia reflects the expected regulatory over-reaction in some areas to both the global financial crisis and criticism of microfinance in the media in several countries over 2009; in many cases this has been warranted and the regulation of the industry with be a core issue in 2010.
The Microfinance Banana Skins 2009 survey findings can be found at: http://www.csfi.org.uk/Microfinance%20Banana%20Skins%202009.pdf
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RMDC held its Eleventh Annual General Meeting on December 4, 2009 in Kathmandu. The meeting approved the report presented by the Chairman Mr. Ashoke Shumsher Rana on behalf of the Board of Directors and the financial statements of the fiscal year 2065-066 (2008/2009). In the fiscal year 2065-066, the Centre earned an operating profit of Rs. 92.97 million.
At the present, including reserve and surplus, the total capital fund of the Centre is Rs. 716.8 million. The AGM decided to increase the authorized capital of Rs.640 million to Rs. 1,000 million and issued & paid up capital of Rs. 320 million to Rs. 520 million by issuing share to general public and domestic and foreign institutional investors. With the increment in the issued & paid up capital, the Centre’s total capital fund including reserves and surplus will reach around 917 million.
Up to the end of the fiscal year 2065-066, the Centre has approved loans amounting of Rs. 4,032.2 million and disbursed Rs. 3,313.9 to 79 MFIs. The Centre has maintained 100% repayment of its loan dues (both principal and interest) on time from its partner organizations in eleven years of its operation without any overdue loan and has also been able to earn profit from the first year.
Up until mid-July 2009, the Centre provided microfinance services to 800 thousand poor & deprived families, through its partner MFIs. On the occasion the chairman Mr. Rana said that the Centre has targeted to reach out additional 150,000 poor & deprived families in the current fiscal year. The Centre has also initiated micro enterprise loans to graduated clients of MFIs and to other individual micro entrepreneur clients of savings and credit cooperatives.
The Centre has provided training to 11,835 staff and officials of microfinance institutions on microfinance operation, accounting, financial analysis, delinquency management, credit appraisal, organization management etc. It has also provided training support to 424,258 clients of its partner organizations with a view to enhance their organizational, leadership and income generating capacity. The microfinance operators are helping the borrowers to generate self-employment to the poor & deprived families by providing loan without collateral. The repayment rate of the Centre’s partner organization is maintained around 99%. This shows that poor are also bankable and credible.
Although, there is a high growth in the number of microfinance institutions in Nepal in the decade of 2000, the access of microfinance services in the hills and remote areas of the country is very limited. In order to promote microfinance service in such areas, the Centre has started sending field teams to identify potential MFIs and appraise & approve the loans onsite. The Centre has also a soft loan scheme of up to Rs. 1 million @ 2% interest rate to the microfinance institutions or their branch operating in such areas. At present the Centre has identified nineteen districts namely Achham, Bajhang, Bajura, Bhojpur, Darchula, Dolpa, Humla, Jajarkot, Jumla, kalikot, khotang, Manang, Mugu, Mustang, Okhaldhunga, Sankhuwasabha, Solukhumbu, Taplejung and Tehrathum for this purpose.
Rural Microfinance Development Centre (RMDC) is an apex organization of microfinance in Nepal and is a prominent member of the BWTP Network. In 2009 RMDC and the BWTP Network produced the Microfinance Industry Report: Nepal. The report is available at: www.bwtp.org/resources.html.
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Much anticipated regulatory changes in Thailand have resulted in dismay within the local microfinance sector and continue a long-established pattern of disappointing policy-making in the country. The new laws have created new requirements for obtaining microfinance licences. For the next three years, only local banks will be given licenses. The Bank of Thailand has informed some MFIs that they will not qualify for licenses as they are not working on a national level.
In addition, the government is initiating a 6,000 million baht ($180 million USD) microfinance program in April 2010. They will be using the same village banking methodology as most of the current MFIs (including BWTP members Common Interest and Plan) and will offer subsidised interest rates as low as 9%. The government program therefore threatens the viability of some long-established and successful institutions.
In a blow to the burgeoning sector, the Thai Minister of Finance has also stated that he wants all existing lending programs to merge with the newly established government program in order to streamline and make the system more efficient. Initial discussions have already started among some of the MFIs.
The move will further setback efforts to increase microfinance investment in the region and harks back to the populist policies of the Thaksin government which included subsidised credit to farmers and product promotion through the OTOP-program (One Town One Product).
The BWTP Network will soon publish a Microfinance Industry Report: Thailand which outlines the history of microfinance efforts in the country and outlines recommendation which have disappointingly not been heeded within the current laws.
For more information and updates on developments visit: http://www.microfinancethailand.com/.
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Bangladesh Education Extension Services (BEES) in Bangladesh have been a BWTP Network member since 2007. Throughout its 35 year history has complemented a thriving microfinance program with a range of development programs aimed at mostly disadvantaged, deprived of all kinds of human rights, social security as well as vulnerable to HIV-AIDS/STIs & ill health.
BEES provides microfinance program which offers general loans, sectoral program loans, and micro-enterprise development program loans and insurance.
An overview of BEES programming is available here:
The BEES BWTP Network member page: http://www.bwtp.org/bees.html.
The BEES Mix Market profile: http://www.mixmarket.org/mfi/bees/data.
Posted by admin on 30 November, 2009
October 12 – 15 2010, Colombo, Sri Lanka
The Banking With the Poor Network (BWTP) and The Foundation for Development Cooperation (FDC), with funding from the Citi Foundation, are pleased to convene the Asia Microfinance Forum 2010 in Colombo, Sri Lanka, October 12-15, 2010. This milestone event will bring together leading microfinance practitioners, policymakers, financiers, academics and advocates from around the world to outline their visions and priorities, and explore new ideas, opportunities and partnerships.
The BWTP network actively promotes the development of microfinance in Asia through research, advocacy, policy dialogue, information sharing and capacity building. The Asia Microfinance Forum 2010 in Colombo, Sri Lanka, will build upon the success of the previous Asia Microfinance Forums (Beijing, 2006 and Hanoi, 2008) and aims to help prepare the microfinance industry in Asia for a wide range of future challenges and opportunities.
More details will be announced shortly on our website – www.bwtp.org – and in next month’s newsletter.
Posted by admin on 18 November, 2009
Read through to the end to watch Asia’s microfinance networks discuss the effect of the Global Financial Crisis and more!
Regional information sharing and collaboration between microfinance practitioner associations in Asia was further strengthened at the Asia Microfinance Summit 2009 held in Singapore 27 – 28 August. Hosted by the BWTP Network and funded by the Citi Foundation, SEEP and ADA, the ANS 2009 was attended by representatives of 13 national level and 2 regional microfinance practitioner association from countries across Asia.
These networks were:
- Afghanistan Microfinance Associations;
- The Banking With the Poor Network;
- Cambodia Microfinance Association;
- Centre for Microfinance (Nepal);
- China Association of Microfinance;
- The Credit and Development Forum (Bangladesh);
- Indonesia Microfinance Association;
- Lao Microfinance Working Group;
- Lanka Microfinance Practitioners Association;
- Microfinance Council of the Philippines;
- Pakistan Microfinance Network;
- Sa-Dhan (India);
- South Asian Microfinance Network;
- Vietnam Microfinance Working Group.
These national and regional microfinance networks, as representatives of microfinance providers in developing countries, play an increasingly important role in facilitating growth and development in microfinance. These networks are professional associations that represent a wide spectrum of microfinance providers and act as catalysts for change in the sector. The Asia Network Summit 2009 is a unique opportunity for networks based in Asia to talk about shared challenges and opportunities in the spirit of a shared goal of increasing access to financial services in the region.
The SEEP Network ‘Building Strong Networks’ Workshop
The Asia Network Summit began with a pre-event, ‘Building Strong Networks’, which was attended by nine microfinance networks and hosted by the SEEP Network. Predominantly attended by ‘nascent’ networks in the early stages of their growth, the workshop focused on some of the central challenges facing the development of effective practitioner networks including governance, operations, human resource management, financial viability, the provision of member services and external relations. The ‘Building Strong Networks’ workshop reaffirmed the shared challenges of networks, but also highlighted the challenges unique to different networks in what is a diverse microfinance landscape in Asia.
Asia Network Summit 2009 – Serving Members, Advocating and Communicating, Social Peformance Management.
Based on the results of a network survey of lead issues pertinent to the sector, attendees at the ANS 2009 participated in workshops on member service delivery, advocacy and communication and social performance management. Each of these consisted of presentations from network leaders on each issue, and workshops focused on providing tools for networks in improving their overall effectiveness within their respective industries.Copies of the presentations made by network representatives can be found by following the links at the bottom of this item.
The Asia Network Summit Evening Forum – A Global Financial Crisis?
In addition to workshops on a range of issues central to the role of microfinance networks, an evening public forum was held on the 27th August where network representatives answered questions on a range of topics, including challenges and opportunities facing the microfinance industry. Discussed were issues such as diverse as the role of networks in regulatory change, consumer protection, microfinance and the elderly, client over-indebtedness, the role of peer to peer lending and network sustainability.
However it was the question regarding the effects of the Global Financial Crisis (GFC) on the networks respective industries that was of greatest interest to those in attendance.
The general consensus of all representatives was that the effects of the GFC have not yet been felt greatly by member microfinance institutions in terms of access to funding, however while client repayment rates are yet to drop drastically; the effect of clients has been noticeable.
Although there has been some minor fluctuations in liquidity access, across the region, according to the network representatives this has yet to have any major impact on their members. The fact that many industries continue to source funding locally has meant that exposure to international financial markets has somewhat insulated industries including China, Pakistan, India and Nepal. An interesting counterpoint to that of the Cambodia Microfinance Association, whose members have recognised large scale affects , due greatly to the fact that the microfinance sector in Cambodia sources 80% of its funding from foreign sources.Some of the other reason discussed for this reduced impact was the foresight and timely government intervention (for example in India and Pakistan) and a surprising robustness of remittance flows (Philippines and Bangladesh).
However, a note of caution must be raised in light of the recognition by all networks that the downturn internationally has had an effect on clients in all countries, be it increased food and oil prices, currency fluctuations and reduced demand for exports from all countries.
While all networks were confident that in the short-term MFIs will be able to weather the storm, there was a recognition that the increasing pressures on clients may soon translate into difficulties ahead.
Click here to view video of the Asia Network Summit 209 Evening Forum and watch Asia’s microfinance networks discuss the effects of the Global Financial Crisis and more.
Links to presentations from the ANS 2009 can be found here:
Member Services
Ms Mehr Shah, Pakistan Microfinance Network, ‘Service Menu and Industry Life Cycle Curve’.
Mr. Alan Sicat, MCPI, ‘A network Experience on Starting a New Set of Service too Members’.Advocacy and Communication
Achla Savyasaachi, Sa-Dhan, ‘Policy making landscape of microfinance in India’.
Social Performance Management
Lalaine M. Joyas, MCPI, ‘SPM @ MCPI: Approaches and Experiences’
