Microfinance News Synopsis: Microfinance: Back to the Drawing Board

Microfinance Focus, July 19, 2010: Microfinance News Synopsis brings a compilation of industry headlines broadcasted by other news media from across the world.

Microfinance: Back to the Drawing Board: Yohane Mdeme owns a food market in Tanzania. Though poor and with little to no collateral, he applied for a loan of $850 through Kiva.org to expand his small business. Twenty years ago in such a place and for such a client, Mdeme would never obtain the capital to increase his business. No bank would have given out such a small loan, much less to a person without collateral. Yet Mdeme is well on his way to receiving his requested amount in full. This process, called microfinance, has been put on a pedestal by development economists thanks to its high repayment rates and ability to provide capital and growth where it used to be nonexistent. But recent research links its success with national economic growth, suggesting it only succeeds in economies that are already beginning to bloom. In other words, microfinance is less of a medicine for the sickest patients and more of a therapy for patients already on the mend. Despite some localized successes, most treatments for addressing world poverty [Miller McCune]

Microinsurance needed: MICROINSURANCE does not currently exist in Fiji on any large scale, says Reserve Bank of Fiji governor Sada Reddy. But he said its power to increase people’s financial security and fortify their level of social protection warranted informational exchange on the issue. Mr Reddy said this product was now the fastest growing microfinance product in the world, providing benefits to millions of mothers, farmers and small business owners around the world. “Because of this phenomenon, the RBF has reviewed the Insurance Act of 1998 to ensure that there are no restrictions hindering the introduction of this product here in Fiji,” Mr Reddy said. “We totally support any initiative or pilot project in microinsurance, and hope that insurance companies do take the initiative to explore the potential of this market,” he said. Mr Reddy made these comments at a gathering of insurance and banking executives [Fiji Times]

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