Microfinance Focus June 30, 2011: Mobile financial services could serve a population of nearly 2 billion in developing countries according to a recent study by the Boston Consulting Group.

The report titled ‘The Socio-Economic Impact of Mobile Financial Services’ commissioned by the Telenor Group produces an analysis of mobile financial services in Pakistan, Bangladesh, India, Serbia and Malaysia.

The study finds that the impact of mobile financial services ranges from a 20 percentage point increase in financial inclusion in Pakistan (from 21% to 41%) to a 5 percentage point increase in Malaysia (from 90% to 95%). The other three countries are likely to experience an impact of around 10-12 percentage points.

“MFS could accelerate economic growth by up to 5% in the case of India, where it helps fuel entrepreneurship and new business creation. GDP in Pakistan, Bangladesh and Serbia could be between 2-3% higher in 2020 as a result of MFS, while the impact on Malaysia is more modest, at around 0.3%, reflecting the smaller financial inclusion impact,” says the report.

It further adds that the additional growth would be associated with an increase in employment, creating up to 4 million additional jobs in India, as well as an increase in tax revenues for governments, spurred by the increase in economic activities.

The report also explains that MFS will help reduce income inequality by increasing opportunities for the poorest segments of society to experience the benefits of financial services, and hence mitigate income and expenditure volatility.

“In addition to a reduction in measured inequality, MFS brings many other important benefits within reach, in particular, education and healthcare, for example, by providing access to insurance to help mitigate the impact of unexpected shocks. These will in turn have critical long-term impact on development, especially rural development,” says the report.

The report concludes that MFS has the potential to be a powerful tool for economic and social development for all the 5 countries mentioned in the report. For such potential to be realized, multiple elements must be established. And finally, regulators have to create a supportive environment that manages risk but also makes room for flexibility and innovation as the MFS ecosystem evolves.

Microfinance Media buzz brings a compilation of industry headlines broadcasted by other news media from across the world.

1. VCCircle: Taj Capital Partners Backs Out Of PIPE Deal In Capital Trust

Boutique investment firm Taj Capital Partners, which was in the process of investing around Rs 16.4 crore ($3.8 million) in Delhi-based financial services firm Capital Trust Ltd, has called off the deal due to regulatory changes hitting the microfinance sector. (Read More) News Published by VCCircle

2. BN: Kiva Set to Raise Awareness of Microlending

With more than 10 million U.S. small businesses in need of additional capital, microlending website Kiva.org has teamed up with Visa on a new program designed to raise awareness and understanding of microfinance opportunities. (Read More) News Published by Business News

3. GN: Clinton Global Initiative Project To Make Domestic Small Business Loans

There was good news for entrepreneurs coming out of the June 29 opening session of the Clinton Global Initiative America event in Chicago, Illinois. (Read More) News Published by Gaebler

4. TT: Mango provider seeking $5.4m

Transfer Solutions Providers (TSP), the Mango card and payment processing system provider, is in the midst of seeking to raise $5.438 million from private investors (Read More) News Published by The Tribune

5. HP: Celebrating 30 Years of Social Entrepreneurship

Social entrepreneurship today enjoys the high regard it has long deserved — fully 30 years after the organization that launched the movement was born. (Read More) News Published by The Huffington Post

6. TOI: Rs 3.17 crore agri loan disbursed

In view of the current kharif season, Rs 3.17 crore agriculture loan was disbursed among 1,400 farmers haling from all blocks in the district. (Read More) News Published by The Times of India

7. Guardian: Microinsurance and its role in healthcare

On the sixth floor of DKV insurance in Barcelona, I watch Carlos Martínez shuffle through his schedule. An appointment is hard to get with the Director of the Department of General Services (Read More) News Published by The Guardian

8. Informante: Trustco announces final dividend

Trustco Group Holdings Limited announced on Tuesday a final dividend of two cents per ordinary share. The Board of Directors of Trustco resolved on June 24, 2011, that a final dividend of two cents per ordinary share be declared for the financial period ending 31 March 2011. (Read More) News Published by Informante

9. Finextra: Mobiles to bank the unbanked

According to the research, carried out by Boston Consulting Group, there are over 2.5 billion adults in the developing world who are unbanked – 72% of the population. (Read More) News Published by Finextra

10. Reuters: Mobile banking to help 2 bln people by 2020: study

Mobile financial services are expected to improve the lives of around 2 billion people in developing countries within a decade and boost economies, a Boston Consulting Group study found. (Read More) News Published by Reuters Africa

Microfinance Focus June 30, 2011: Boutique investment firm, Taj Capital Partners on Wednesday announced withdrawal of investment in Delhi based non banking finance company, Capital Trust Ltd citing current crisis in the Microfinance industry.

“Due to ongoing turmoil and uncertainty prevailing in the Microfinance sector the investor Taj Capital Partners Pvt. Ltd has expressed their concern to go ahead with the investment. Consequently, the Company would not be able to complete the issue of share or warrants,” Capital trust announced on June 29.

Capital Trust Limited (CTL), was incorporated on 23rd August, 1985, as a Non-banking financial services company assisted by a team from Banking, Finance, Commerce, Law and other allied subjects. Capital Trust focuses on microfinance activities from hiring-purchase and lease of two wheelers, plant and machinery and office equipment to businesses and consumers.

Taj Capital Partners is a boutique investment firm providing growth capital to midsize companies in India. The company focuses on acquiring minority interests in small and medium sized listed or unlisted companies, in sectors with potential driven by promoters.

Microfinance Focus June 30, 2011: IFC, a member of the World Bank Group, is partnering with the Bank of Sierra Leone and the Equipment Leasing Association of Nigeria to expand the use of leasing in Sierra Leone so that smaller businesses in the country can acquire the equipment or vehicles they need to grow.

The three organizations recently hosted an investment forum in Lagos that showcased leasing as an alternative financing mechanism suited to smaller businesses that cannot afford to purchase expensive pieces of equipment. Nigeria hosted the event because it is a strong leasing industry that is able to attract investors from across Africa and other regions.

Public and private sector organizations, including domestic and foreign banks operating in Sierra Leone, the country’s National Revenue Authority, and its Investment and Export Promotion Agency, attended the Lagos forum. Sierra Leone’s independent leasing company, Consumer Finance and Leasing, also participated in the forum.

IFC’s Leasing Facility Program in Sierra Leone is training private enterprises, business associations, financial institutions and regulatory agencies on the use of leasing. The program also offers consulting services to the leasing industry.

Microfinance Focus, June 29, 2011: Reaching its 15th year, The Global Microcredit Summit 2011, organized by Microcredit Summit Campaign will be held in Valladolid Spain from November 14-17, 2011. Gathering thousands of delegates from more than 100 countries, the Valladolid Summit will be joined by Queen Sofia of Spain, Prince Talal of Saudi Arabia, Nobel Peace Prize Laureate Muhammad Yunus, Sir Fazle Abed of BRAC and other renowned leaders from the microfinance field.  Microfinance Focus is an official media partner for the Summit.

Assembling a full range of stakeholders including practitioners, advocates, investors, UN agencies, donors, domestic government agencies, and many more, the Summit will set the backdrop for substantive discussions on the major issues of international microfinance. Delegates will have the opportunity to participate in a series of plenary sessions, more than 50 workshops (click here), over 40 associated sessions, a variety of day-long courses, field visits and other events.

Engaging keynote speakers from across the broad microfinance spectrum will embark on a series of pressing challenges facing the field and chart the future course for microfinance by sharing actionable knowledge with the attendees.

The Summit’s plenary sessions will drill down on the emerging issues of the sector including, developing a seal of excellence for poverty outreach and transformation, building partnerships with corporations and other entities to speed the end of poverty, and using microfinance plus agricultural services to improve rural livelihoods and food security. (View plenary session here)

The Summit provides the attending delegates an opportunity to present their work. They can apply to host Associated Sessions on a topic of their choice or organize and exhibit.

RESULTS Educational Fund launched Microcredit Summit in 1997 as a nine year campaign to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the end of 2005. This historic event, held in Washington, DC, brought together over 2,900 delegates from 137 countries.

Since its launch, the Microcredit Summit Campaign has been leading, supporting, and guiding the microfinance field to address failures in reaching the very poor. The success of the first phase of the Campaign, during which those with microloans grew from reaching 7.6 million of the world’s poorest families in 1997 to more than 100 million in 2007, fuelled the decision to extend the Campaign.

The Summit’s two goals for 2015 are to ensure that 175 million of the world’s poorest families, especially the women of those families, are receiving credit for self-employment and other financial and business services and that 100 million of the world’s poorest families move above the US$1.25 a day poverty threshold. With an average of five per family this would mean that 500 million people would have risen above $1.25 a day nearly completing the Millennium Development Goal on halving absolute poverty.

For Registration and further details, click here

Microfinance Focus June 29, 2011: Personal microlending website Kiva.org, and Visa Inc., a global company in payments, today announced Kiva City, a new program to provide small businesses access to microloans in U.S. cities.

The Kiva City program was launched as part of a commitment announced by President Bill Clinton at the Clinton Global Initiative America conference in Chicago.

Kiva City partnership aims to create job growth and economic recovery by connecting Kiva’s global network of 592,000 individual lenders with the owners of small businesses throughout the country. With very few microfinance institutions operating at scale in the U.S., Kiva City will help local communities come together and bring Kiva to their city, particularly those whose small business communities have been most impacted by the recent economic downturn.

According to a new study by the Economist Intelligence Unit, commissioned by Kiva and Visa, 20 of the nation’s 50 largest metropolitan statistical areas have lost at least one percent of their small businesses from 2006 to 2008. This represents approximately 15,000 businesses.

The Kiva City program launching today in Detroit, is ranked fifth in the study’s list of the top U.S. small business trouble spots. The microloans, made possible through Kiva’s lending partnership with microlender ACCION USA, a member of the ACCION Network in the U.S., will offer Detroit area small businesses an additional option for accessing capital that can be used to fund operations, ranging from purchasing equipment and paying rent, to hiring and retaining employees, to offering promotions.

Microfinance Focus June 29, 2011: Seattle-based nonprofit organization investing in microfinance and sustainable poverty solutions Global Partnerships (GP) was recently selected in the inaugural ImpactAssets 50, a list of private debt and equity fund managers that deliver social and environmental value addition to financial returns.

Since 2005, Global Partnerships has created four debt funds-ranging from $2 million to its most recent fund of $25 million-that provide affordable loans to a select portfolio of microfinance organizations and cooperatives, its partners. GP prioritizes organizations that reach people most in need of credit, such as the rural poor, and which provide borrowers with not just microloans but ‘microfinance-plus’ services such as preventive health care, business education and agricultural training.

‘Impact investing’ refers to investment vehicles built to solve the world’s social challenges, while offering investors social and financial returns. The ImpactAssets 50 is intended to help investors make sense of the expanding universe of impact investing, and provide financial and impact information on each manager.

ImpactAssets is a nonprofit financial services company launched by Calvert Foundation in 2010. It leverages support from the Rockefeller Foundation, Cordes Foundation, and several other leading philanthropic and financial services sponsors.

Microfinance Focus June 29, 2011: Patrimonio Hoy, the housing microfinance program of CEMEX, is expanding its lending program to low-income families in Mexico and four other Latin American countries with a partial credit guarantee of up to $10 million from the Inter-American Development Bank (IDB). As many as 750,000 families are expected to benefit over the next five years through this project.

Patrimonio Hoy is one of Latin America’s social enterprises that provide low-income families earning of less than four times the minimum wage in Mexico with access to microloans for construction materials and labor as well as technical assistance for the purpose of building or renovating their homes.

The IDB guarantee will allow the company to expand its offering of credit products that will, for example, allow them to pay for labor costs related to construction besides materials. The guarantee will also allow the company to scale up its operations in Colombia, Costa Rica, Nicaragua and the Dominican Republic.

The partial credit guarantee was approved on June 22 and the signing agreement is scheduled to take place during the BASE, the First Forum for the Development of the Base of the Pyramid, in São Paulo on June 28.

Patrimonio Hoy was created in 1998 to offer housing microfinance to low-income families, which are at the base of the pyramid in Mexico.

The partial credit guarantee was provided by the IDB’s Opportunities for the Majority Initiative (OMJ). In 2008, the initiative approved a $10 million partial credit guarantee to support the expansion of CEMEX’s Mejora tu Calle, an urban infrastructure improvement program in partnership with local governments that provides microcredit for families to finance street paving and the construction of sidewalks.

Created three years ago, OMJ has invested over $160 million to help develop base-of-the-pyramid business models to integrate the poor into the formal economy, improve their standards of living and promote greater social inclusion.

Microfinance Media buzz brings a compilation of industry headlines broadcasted by other news media from across the world.

1. allAfrica: Kenya: Chase Bank Licensed to Operate Micro-Finance Institution

The Central Bank of Kenya (CBK) has licensed another micro-finance institution as it seeks to make financial services accessible to more people. (Read More) News Published by allAfrica

2. BD: Microfinance way out in funding climate change projects

Projects to fight climate change are being designed all around the world. But only five per cent of them can be financed with the current international funds, which means resources have to be used more wisely. (Read More) News Published by allAfrica

3. BS: No waiver for Future Financial promoter on personal guarantee

Banks are not likely to waive their demand for a personal guarantee from the promoter of Future Financial Services for restructuring the debts of the company, bankers familiar with the development have said. (Read More) News Published by Business Standard

4. NT: CBN issues new guidelines for microfinance banks

IN continuation of its holistic overhaul of the banking sector, the Central Bank of Nigeria (CBN), on Tuesday, released a new set of guidelines for microfinance banks (MFBs) operating in the country. (Read More) News Published by Nigerian Tribune

5. HT: Microcredit Knocks Softly on Cuba’s Door

A microcredit system could begin operating in Cuba as part of reforms adopted by the government of Raul Castro to modernize the country’s socialist economic system. (Read More) News Published by Havana Times

6. BD: Rates to rise due to debits for WDAS, T-bills

Following the commissioning of its N220 million Ikoyi head office recently, the fixed asset of NPF Microfinance Bank plc is expected to double by end of 2011 financial year, said Florence Adebayo, chairman of the bank. (Read More) News Published by Business Day

7. BD: Is non-interest banking a ‘wise banking’ option for economic growth?

Let’s remove our minds from whether non-interest banking or the Sharia of it component is constitutional or not. Those in the legal profession are qualified to tackle that aspect. (Read More) News Published by Business Day

8. IRIN News: MYANMAR: Government open to microcredit expansion

Myanmar President Thein Sein’s statement in May that a sustainable microfinance system should be established has sparked interest among aid workers and those already involved in the country’s embryonic microfinance system. (Read More) News Published by IRIN News

9. DS: Use social business to achieve MDGs

Bangladesh yesterday celebrated the second Social Business Day along with a dozen countries, urging all nations to use the new economic theory to speed up efforts to reach millennium development goals. (Read More) News Published by Daily Star

10. TN: Micro-credit scheme to be extended to rural areas

The Islamabad Capital Territory (ICT) Administration will extend the micro-credit scheme in the rural areas of Islamabad for the economic development of women. (Read More) News Published by the News

Microfinance Focus June 29, 2011: The European Investment Bank, in close consultation with Incofin IM has appointed Frankfurt School of Finance as the TA service provider for offering technical assistance facility in Incofin IM’s Rural Impulse Fund II (RIF II).  The European Investment Bank has contributed EUR 1 million for RIF II microfinance institutions’ (MFIs) located in African, Caribbean and Pacific (ACP) countries.

Incofin IM’s Rural Impulse Fund II (RIF II) is a EUR 97 million fund that invests in microfinance institutions targeting rural areas in developing countries. RIF II‘s main objective is to improve the outreach and impact of rural MFIs while providing a fair financial return to shareholders.

Starting August 2011, Frankfurt School of Finance will provide tailor-made TA operations for RIF II portfolio MFIs in the ACP region. Frankfurt School of Finance is a bank training and consultancy institute in Germany with experience in providing technical assistance and training to MFIs worldwide.

After the investment managers of Incofin IM have identified areas for TA intervention in the RIF II portfolio MFIs in ACP countries, Frankfurt School of Finance will constitute the relevant expert team for the TA assignment and perform the TA activities on-site. The TA service provider will act upon EIB’s and Incofin IM’s instructions and will make sure that the TA services are timely delivered as well as duly monitored and reported.

The objectives of the RIF II TA facility are twofold. On the one hand it aims to support the overall development of the targeted microfinance institutions by improving operational, strategic, financial and organizational aspects. On the other hand it will promote innovation in rural microfinance, especially with regard to product design and outreach methodologies for rural areas.

The TA funding of EIB will be attributed to portfolio companies in the ACP region only. The RIF II TA Facility aims to fund technical assistance interventions in MFIs in other countries as well. The total TA budget of RIF II will amount to approximately EUR 2.5 million.