From Copenhagen Capacity The municipality of Copenhagen is introducing a new microfinance initiative for the unemployed, reports Danish Radio (DR) The municipality of Copenhagen is establishing its own “bank” where unemployed citizens can apply for capital to start their own business. From 2013, people who have taken early retirement or who are... 

By G. Naga Sridhar, The Hindu Business Line Microfinance institutions are charging very high service charge on the sale of micro-insurance products, according to the Insurance Regulatory and Development Authority. In his message at a national conference here on Tuesday on Financial Inclusion — Integrating Insurance into Total Package, Mr J. Hari... 

The Central Bank of Nigeria (CBN) at the weekend said that the Micro, Small and Medium Enterprises Development (MSMEs) fund was not meant to bail out distressed micro-finance banks. The Director, Other Financial Institutions Development (OFID) department of the CBN, Mr. Olufemi Fabanwo, made the clarification at the 2nd Annual General Meeting (AGM)... 

The Central Bank of Nigeria (CBN) at the weekend said that the Micro, Small and Medium Enterprises Development (MSMEs) fund was not meant to bail out distressed micro-finance banks.
The Director, Other Financial Institutions Development (OFID) department of the CBN, Mr. Olufemi Fabanwo, made the clarification at the 2nd Annual General Meeting (AGM) of the National Association of Micro Finance Banks (NAMB) in Abuja.

Fabanwo said the fund, which was initially established as Micro Finance Development Fund (MDF), was changed to MSMEs Development Fund.

“The MSMEs fund is not medicine for those who are weak, the MSME fund is going to be assessed by institutions that have shown proven record of performance; it is not for any micro finance bank.
“It is not a bailout fund. There is going to be a social window for capacity building in any area that will augur well for the development of the sub-sector.’’

The director said CBN was not satisfied with the level of returns rendition and the audited accounts of micro-finance banks. He said that only about 70 per cent rendition had been recorded by the apex bank since the end of the last financial year.

Fabanwo, however, added that the MFBs had recorded greater stability after the September ‘sanitation’ carried out by the apex bank in which 244 licences of MFBs were revoked. He stressed the need for micro-finance banks to update their subscriptions annually, warning that the apex bank would not hesitate to penalise defaulters.

Khartoum: Khartoum State workshop organized to prepare Microfinance strategy has called for formulating a strategy consistent with the national strategy. The speakers at the yesterday’s workshop, organized by the Ministry of Guidance and Social Development, stressed on the necessity of mapping the productive projects in the state and applying clear... 

LONDON, May 15 (Bernama) — A microfinance provider in south Indian state Karnataka has been selected alongside seven other organisations from Peru, Indonesia, Cambodia and Afghanistan as a finalist for the Ashden Awards, the world’s leading green energy prize. The finalists will compete for over 120,000 pound prize money with the winners... 

By Crusoe Osagie, This Day Live The Federal Government has commenced moves to position the Small and Medium Enterprise sub-sector in Nigeria as growth drivers for the economy. The Minister of Trade and Investment, Mr. Olusegun Aganga, who disclosed this recently, said with the move, SMEs in Nigeria would soon become vibrant enough to drive the... 

By Crusoe Osagie, This Day Live

The Federal Government has commenced moves to position the Small and Medium Enterprise sub-sector in Nigeria as growth drivers for the economy.

The Minister of Trade and Investment, Mr. Olusegun Aganga, who disclosed this recently, said with the move, SMEs in Nigeria would soon become vibrant enough to drive the required level of growth in the economy.

He spoke while briefing journalists on the sidelines of the recent World Economic Forum meetings, in Addis Ababa, Ethiopia.

Aganga said in the last year of the President Goodluck Jonathan administration, the results of new SME policies and schemes, in terms of job creation, had shown that, if given the necessary support, SMEs would provide the foundation for sustainable growth and poverty alleviation in Nigeria.

He therefore said that the priority, currently, for the Ministry of Trade and Investment was the SME sector, noting that the ministry had put plans in place to remove the major barriers to SME growth (access to affordable finance, low level of business support and high cost of operation) to boost the development of the sub-sector.

The minister said a committee, comprising of experts in the different fields relating to the major bottlenecks in the sector, was already being set up to ensure that the country achieved a turnaround before the end of this administration, adding that vehicles had already been created to achieve this goal.

“Micro, Small and Medium Enterprises remain the backbone of the development of any economy and the driving force of national growth. In Nigeria, there are currently over 17 million Micro, Small and Medium Enterprises, employing over 31 million Nigerians. They account for over 80 per cent of the total number of enterprises in Nigeria and employ 75 per cent of the total workforce,” Aganga said.

“But their contribution to the nation’s GDP is still relatively low, due to major constraints in the operating environment, which have limited their abilities to create jobs and perform the vital role of enhancing economic growth and development,” he added, noting that in the next three years, Nigerians should expect more SMEs with enhanced productivity.

He said, already, a national database had been developed in partnership with the National Bureau of Statistics, which was the first step in the effective tackling of the problems of the sector. According to him, there would also be a national SME Policy that would address the major problems in the sector.

He said the Bank of Industry was already executing matching programmes with state governments on SMEs and deepening financing penetration, using microfinance banks.

The minister said his ministry had also begun regular interaction with SME desks of banks to develop unconventional but workable means of providing affordable finance for SME growth.

He said, “For instance, we have started getting round collateral issues related with funding through cross-guarantees by members of cooperatives and setting up special intervention funds for critical sectors such as textiles.

“We are implementing the One Local Government One Product initiative to open up the rural areas for industrial development, employment generation and wealth creation; and we are partnering the Lagos Business School to develop Business Support Services,” Aganga said.
Other efforts, he said, included developing small hydropower plants in strategic areas where they could serve SMEs; creating financial inclusion by setting aside special funding schemes for women and mechanics; and establishing integrated industrial parks to enhance the productivity and profitability of SMEs; among others.

In a meeting with the Director-General, World Trade Organisation, Mr. Pascal Lamy; Aganga also reiterated the government’s commitment to deepening regional trade, saying it would open many doors for Nigeria in terms of job creation.

By Onyinye Nwchukwu, Business Day Online The much awaited Micro-finance development fund, proposed to enhance financing in the Microfinance sub-sector and boost the economy, will come on stream before the second quarter of the year ends, authorities at the Central Bank of Nigeria (CBN) confirmed to BusinessDay at the weekend. Femi Fabanwo, Director,... 

By Onyinye Nwchukwu, Business Day Online

The much awaited Micro-finance development fund, proposed to enhance financing in the Microfinance sub-sector and boost the economy, will come on stream before the second quarter of the year ends, authorities at the Central Bank of Nigeria (CBN) confirmed to BusinessDay at the weekend.

Femi Fabanwo, Director, Other Financial Institutions Department of the CBN, confirmed that the operational guidelines for the fund were being finalised and would be presented to the apex bank’s management soon, for approval. The fund is expected to be co-funded by government, the CBN, as well as the private sector, Fabanwo explained.

It would be recalled that the CBN had announced that it would set up the fund to hopefully improve access to affordable and sustainable finance by microfinance institutions and microfinance banks.

That promise was also repeated earlier this year, at the apex bank’s sixth Annual Microfinance Conference and Entrepreneurship Awards, held in January, raising concerns among operators of microfinance institutions who have been hoping to draw on the fund to expand their businesses.

Explaining the delay, Fabanwo said the apex bank was carefully drafting the guidelines to ensure that the fund would serve its purpose when finally rolled out.

He also confirmed that the fund would have several windows, including commercial and social components, in order to enhance its operations and outreach and that it would also support capacity building activities of the MFBs and MFIs.

According to him, the fund’s operational guidelines would be benchmarked against global practices which according to him, would mean that the international community, especially the multilateral agencies may be invited to make input to the document.

Announcing the proposed fund last year, CBN governor, Sanusi Lamido Sanusi had explained that the apex bank was working on deepening the financial markets through the introduction of new products and appropriate control structures.

He also noted that the MDF when established, would assist in addressing teething challenges of underfunding for microfinance institutions in the country.

It would further complement past and current efforts aimed at strengthening the microfinance sub-sector of the financial system, improve financial inclusion and by implication, improve the nation’s Gross Domestic Product (GDP) rate significantly, the governor had stated.

By Tafirenyika Makunike, New Zimbabwe WHEN I was in Zimbabwe recently, I could not help but notice a resurgence of activity in the microfinance sector which had largely gone aground during the past hyperinflation days. I spoke to four or five microfinance entrepreneurs and most of them peg their interest rates for the investors in the region around... 

By Tafirenyika Makunike, New Zimbabwe

WHEN I was in Zimbabwe recently, I could not help but notice a resurgence of activity in the microfinance sector which had largely gone aground during the past hyperinflation days.

I spoke to four or five microfinance entrepreneurs and most of them peg their interest rates for the investors in the region around 10 percent per month. You immediately shudder to think what borrowers in this sector are expected to pay.

Microfinance institutions provide unsecured lending where loans are not backed by collateral and therefore riskier for the institution and more expensive for the borrower. The higher the interest rates, the greater the capacity of a microfinance institutions to transfer the cost of defaults to the performing clients.

Some institutions apply coercive collection mechanisms to ensure that payment gets prioritised. Some extend further loans to clients who may already be debt-stressed.

Micro-loans from microfinance institutions are generally easily accessible to the greater public than formal bank loans. Unfortunately, there does not seem to be sufficient regulation of the sector in Zimbabwe.

If the current wave of micro loans were focussed on developing and building SMEs in the country, I would have been very excited. But I found that the major reason many people in Zimbabwe are taking debt like performance-enhancing steroids is to fuel their insatiable desire for consumption.

When we mention drugs, most minds race to extreme drugs like morphine heroin or even cannabis. When I worked in the pharmaceutical industry, modern medicine always amazed me. If you break your leg in a car accident, you would welcome an urgent injection of morphine. I would characterise morphine as a wonder drug which unfortunately has gained notoriety from inappropriate use. Similarly, debt when correctly used can fuel wealth accumulation faster for entrepreneurs yet it can also ruin lives.

In the days of the decline of the Zimbabwe dollar and rapid inflation growth, borrowing made everyone look like a genius. Whatever was borrowed then, even with an interest rate with a couple of zeros behind it, you always ended up repaying the debt in less real value than originally borrowed.

There is an urgent need to increase client financial education. Microfinance can fulfill its societal mission of expanding financial inclusion by increasing transparency, pricing disclosures and building strong markets. Many financial products are opaque and do not make clear the implications of accessing the funds.

By Hope Moses-Ashik, Business Day Online As a follow up to the certification programme for microfinance banks, the Central Bank of Nigeria (CBN) in collaboration with the Nigeria Deposit Insurance Corporation (NDIC) and Financial Institutions Training Centre (FITC)will be organising a one-week mandatory training programme for Directors of all Microfinance... 

By Hope Moses-Ashik, Business Day Online

As a follow up to the certification programme for microfinance banks, the Central Bank of Nigeria (CBN) in collaboration with the Nigeria Deposit Insurance Corporation (NDIC) and Financial Institutions Training Centre (FITC)will be organising a one-week mandatory training programme for Directors of all Microfinance Banks (MFBs) in six locations in June, 2012.

The programme is aimed at exposing these directors to microfinance fundamentals and in the process, equipping them with essential skills needed to operate their institutions efficiently, such that these institutions will be well positioned to effectively discharge their developmental role in the national economy, going forward. Key topics to be covered during the training programme include;introduction to microfinance, managing microfinance banks, financial statement analysis and planning, risk management, corporate governance, and regulatory issues and management of microfinance banks.

To ensure national coverage and facilitate participation of all microfinance banks across the country, the training programme will be held at six centres over a three week run. The centres are Port Harcourt and Enugu from June 4th to 8th, 2012; Ibadan and Abuja from June 18th to 22nd, 2012 and the two centres in Lagos from June 25th to 29th, 2012. Additional details on this programme are on the FITC website, http://www.fitc-ng.com.

In order to ensure affordability by all microfinance banks, the course fee has been significantly subsidised by the CBN and NDIC. In furtherance of this, each microfinance bank is expected to nominate two of its directors to attend the training programme.

It is expected that at the end of this mandatory training programme, the microfinance banks that participate in the programme, will be in the right position to support the Federal Government’s aspiration to transform the national economy, as experienced in the emerging markets and the developed economies by delivering on their respective institution’s mandates.

From Business Day Online The Central Bank of Nigeria (CBN) says it has developed an exposure draft on Financial Inclusion Strategy to improve the percentage of Nigerians key into the cash-lite policy. The bank disclosed this in a statement issued by the Development Finance Department and posted on its website on Wednesday. It said that the development...