By Anayo Onukwugha, Leadership The Nigeria Deposit Insurance Corporation (NDIC) has said that about 76.8 per cent of rural dwellers in Nigeria do not patronise financial institutions, especially commercial and micro-finance banks in the country. Managing Director of NDIC, Alhaji Umaru Ibrahim, disclosed this yesterday in Port Harcourt during the opening... 

-->

By Providence Obuh, Vanguard The Nigerian Deposit Insurance Corporation (NDIC) has tasked operators of microfinance banks in the country to improve on premium rendition to it. Managing Director of the corporation, Alhaji Umaru Ibrahim made the call during the MfB operators’ workshop in Abuja, the first in six series to hold in other states including... 

-->

By Nazifi Dawud Khalid, Daily Trust Kano — The Nigeria Deposit Insurance Corporation (NDIC) has announced its decision to publish names of people who were operating dubious and unlicensed financial institutions called ‘wonder banks’ that promise hefty monetary rewards for customers who make deposits in their banks with the intent to... 

-->

By Mohammed Awad, Bikya News ADDIS ABABA: Ethiopia women are praising efforts over the past month to increase their empowerment within the business sector of the country. In recent weeks, Ethiopian women have been able to increase their living by applying for loans at a nationwide bank launched by women for women. “Without the new loan I have... 

By Mohammed Awad, Bikya News

ADDIS ABABA: Ethiopia women are praising efforts over the past month to increase their empowerment within the business sector of the country. In recent weeks, Ethiopian women have been able to increase their living by applying for loans at a nationwide bank launched by women for women.

“Without the new loan I have got in the past few weeks, I would not have been able to start the process of creating my own medical clinic in the village,” Hallelujah Desalign told Bikyanews.com. She recently established a small clinic about an hour outside Addis Ababa that gives women pre-natal care and children now have access to daily healthcare and medicine.

“It’s all because of the banking system and how women are helping women out,” she added.

She was referring to last month’s launch of a bank pushed by 11 Ethiopian women and some 7400 shareholders with the aim to serve and support women and empowerment in the country.

“This is a great time for women in Ethiopia,” an economic consultant for the government told Bikyanews.com. “We are seeing initiatives that are helping to make better business opportunities for women and this will help boost our overall economy.”

Meaza Ashenafi, Chairperson of Bank Board of Directors, told reporters that 64 percent of the shareholders are women.

Meaza revealed that the Bank has been launched with initial capital of 120 million Ethiopian Birr (about 18.5 Ethiopia Birr equals 1 US dollar), to be raised to 500 million Ethiopian Birr in two years time.

The Chairperson noted that it is women’s initiative potentially to be one of the biggest banks in Ethiopia.

The bank launched its services with two branches in Bole and Bambis areas of Addis Ababa.

The Chairperson stated that they would expand the bank’s services by opening other branches in different parts of the country and also by using mobile bank.

“We have launched the bank, the first women’s bank in the country; and potentially be one of the biggest banks in Ethiopia. It is women’s initiative. It was promoted by eleven Ethiopian women and we have over 7,000 shareholders,” she said.

She said they wanted to use mobile bank as it has huge potential to reach all.

Speaking at the launching ceremony, Mekonnen Manyazewal, Ethiopian’s minister of trade, noted that the bank initiated by Ethiopian women would have its contribution to development activities in the country.

The bank has said that it provides bank services uniquely in a manner it improves citizens’ saving culture and loan services that promotes investment in the country.

-->

LANCASTER, PA USA & NAIROBI, KENYA June 18th, 2013 – MFTransparency, in partnership with Planet Rating and under the sponsorship of the Agence Française de Développement (AFD), will host the second African Microfinance Pricing Transparency Leadership Forum in Nairobi, Kenya from June 18th – 19th 2013. The event will bring together leading... 

LANCASTER, PA USA & NAIROBI, KENYA June 18th, 2013 – MFTransparency, in partnership with Planet Rating and under the sponsorship of the Agence Française de Développement (AFD), will host the second African Microfinance Pricing Transparency Leadership Forum in Nairobi, Kenya from June 18th – 19th 2013. The event will bring together leading regulator, policymakers, and microfinance experts with the objective of facilitating the development and implementation of pricing disclosure policies for African microfinance markets. Ms. Caroline Rozières, Microfinance Investment Officer at AFD in Paris, and Mr. Chuck Waterfield, Chief Executive Officer (CEO) of MFTransparency, will be making the opening remarks for the forum.

The second African Microfinance Pricing Transparency Leadership Forum will build on the previous event, which took place in October 2011 in Nairobi, Kenya, and shall provide policymakers and regulators with the opportunity to provide feedback on new developments in their markets and exchange their experiences in facilitating client protection and pricing disclosure in the microfinance industry. The regulators and policy makers attending this forum represent 7 African countries, as well as a range of experts from other regions.

The content of the forum includes:

• Training on pricing transparency calculations and pricing disclosure policy development
• Working sessions under the theme of policies for improve pricing and stakeholder decision- making, including means of constraining lenders (through truth-in-lending approaches and interest rate caps) and the different means of communication to the client and to the market
• Working group exercises for applying the knowledge generated from the event to the development of pricing disclosure policy

The African Microfinance Pricing Transparency Leadership Forum is organized by a Steering Committee composed of representatives of MFTransparency, AFD, AFMIN, CGAP and UNCDF.

“Transparent and comparable pricing is key to the protection of microfinance clients,” said Yves Boudot, Director of AFD’s Sub-Saharan Africa Department. “This Forum constitutes a unique opportunity for African Microfinance Leaders to exchange experiences and develop policies for transparent pricing disclosure in their local markets. It will help to build standards for the African microfinance industry and for donors committed to fostering responsible practices in microfinance.”

Emmanuelle Javoy, Managing Director of Planet Rating, commented “The detailed and standardized microcredit pricing data gathered by MTTransparency in partnership with Planet Rating finally allows having a clear picture of the current pricing structure of microfinance market across Sub-Saharan Africa. This very rich database is a gold mine for anyone who wants to help microfinance move towards more transparency. It can notably be used by regulators at the time of creating or updating Truth-in-Lending legislations adapted to the realities of microfinance.”

Chuck Waterfield commented “Our first conference with the same group of regulators generated both a higher level of understanding of the complexities of pricing in microfinance and a great deal of interest in how to shape legislation to fix market flaws and make the microfinance market work more smoothly and transparently. This follow-up event will assist legislators as they move forward in that process.”

The African Microfinance Pricing Transparency Leadership Forum is part of a larger MFTransparency initiative, also funded by AFD, called the African Regulator Project. Through this project, MFTransparency seeks a lasting impact on the policy and practice of pricing disclosure and client protection in microfinance in Africa. Our goal is to work with policymakers and regulators so that the interests of different stakeholder groups, including clients, financial institutions and funders, are met in a resilient and transparent microfinance industry.

The second African Microfinance Pricing Transparency Leadership Forum is a closed event, attendance is by invitation only.

###

About Agence Française de Développement (AFD)

The Agence Française de Développement (AFD) is a public development finance institution that has been working to fight poverty and foster economic growth in developing countries and the French Overseas Communities for seventy years. It executes the policy defined by the French Government.
AFD is present on four continents where it has an international network of seventy agencies and representation offices, including nine in the French Overseas Communities and one in Brussels. It finances and supports projects that improve people’s living conditions, promote economic growth and protect the planet, such as schooling for children, maternal health, support for farmers and small businesses, water supply, tropical forest preservation, financial inclusion and the fight against climate change.

In 2012, AFD approved €7 billion to finance activities in developing countries and the French Overseas Communities. The funds will help get 10 million children into primary school and 3 million into secondary school; they will also improve drinking water supply for 1.79 million people. Energy efficiency projects financed by AFD in 2012 will save nearly 3.6 million tons of carbon dioxide emissions annually.

 

FormoreinformationonAFD, pleasevisithttp://www.afd.fr.

About Planet Rating

Paris-based Planet Rating is a global rating agency specialized in microfinance, focused on providing all microfinance stakeholders with the information they need for sound growth of the sector. Founded in 1999, Planet Rating has provided more than 650 financial and social ratings of MFIs, playing a vital role in professionalizing the sector for over a decade. Planet Rating provides high quality and unbiased rating reports, and offers a global geographic coverage through its six offices located in Paris, Lima, Dakar, Nairobi, Beirut, and Manila. For more information on Planet Rating, please visit www.planetrating.com.

About MicroFinance Transparency

MicroFinance Transparency (MFTransparency) is an international non-governmental organization founded in 2008 with the purpose of facilitating transparent markets through pricing disclosure, education and policy advisory. MFTransparency represents an industry movement toward transparent practices and responsible microfinance. Based in the United States, the group has organized transparent pricing efforts in 29 countries on four continents. Grameen Bank’s Dr. Muhammad Yunus and Elizabeth Littlefield, former CEO of CGAP, as well as over 1000 industry professionals and organizations have committed to transparent pricing by endorsing MFTransparency and its initiative. For more information on MFTransparency, please visit www.mftransparency.org.

For questions relating to this press release please contact:

 

Ms. RanyaAbdel-Baki

ProgramManager, MicroFinanceTransparency

Email: ranya@mftransparency.org

Website: www.mftransparency.org

 

 

MagaliMévellec

AgenceFrançaisedeDéveloppement

Email:mevellecm@afd.fr

Website:http://www.afd.fr/

-->

Mr Olufemi Babajide, Chairman, South-West Chapter of the National Association of Microfinance Banks (NAMBs), on Tuesday expressed concern over the inadequate funding of the Nigeria Incentive-based Risk Sharing for Agricultural Lending (NIRSAL) programme. Babajide, who expressed the concern in an interview with the News Agency of Nigeria (NAN)... 

Mr Olufemi Babajide, Chairman, South-West Chapter of the National Association of Microfinance Banks (NAMBs), on Tuesday expressed concern over the inadequate funding of the Nigeria Incentive-based Risk Sharing for Agricultural Lending (NIRSAL) programme.

Babajide, who expressed the concern in an interview with the News Agency of Nigeria (NAN) in Lagos on Tuesday, said that the designated microfinance banks were unable to access the N75 billion NIRSAL agricultural intervention funds.

According to Babajide, NIRSAL stipulates that the microfinance banks should provide the funds for the farmers and later sought for refinancing from the Central Bank of Nigeria (CBN).

Babajide said that the microfinance sub-sector was not financially buoyant to provide such huge financial services to the farmers.

“NIRSAL is saying we should provide the funds for the farmers then we now seek a refinancing but we don’t have that kind of money. That’s the truth.

“We have MFBs that have about 10,000 farmers that have opened account with them. CBN is saying give all of them money.

“If 10,000 farmers opened account with a microfinance bank and they need N100,000 each, that’s one billion. They say we should go and give them, then we now come for reimbursement.

“Is that practicable? So all the hopes we had that this thing would take off successfully had been dashed.“

Babajide said that the plan was that the project would commence in the first quarter of 2013 when farmers would begin farming for the season.

He said that the association proposed that the farmers should provide 10 per cent of whatever amount they intend to borrow from the microfinance banks.

Babajide said that the association would provide 15 per cent of the funds, while the CBN would provide 75 per cent.

“This NIRSAL programme ought to have taken off in the first quarter of the year so that we disburse loan to farmers for the planting season.

“So, the plan last year was that by first quarter, we would disburse funds to the farmers. Now, we cannot do that; the reason being that we don’t have money.

“So what we propose is that let the farmers put down 10 per cent, we will add 15 per cent, then they should give us 75 per cent so that we can give the farmers.

“For instance, if a farmer needs N100,000, the farmer would provide N10,000, we would provide N15, 000, let CBN give us N75,000, then we give the N100,000 to the farmers.“

SOURCE: NAN

-->

Another credit union network named Renaissance Cooperative Credit Unions, RECCU-Cam Ltd now exists in Bamenda, North West regional chief town, according to a local English language newspaper, the SUN. It was officially registered on May 30, 2013 but its constituent assembly held earlier in Bamenda on Saturday May 11. However, the league is still... 

Another credit union network named Renaissance Cooperative Credit Unions, RECCU-Cam Ltd now exists in Bamenda, North West regional chief town, according to a local English language newspaper, the SUN.

It was officially registered on May 30, 2013 but its constituent assembly held earlier in Bamenda on Saturday May 11.

However, the league is still waiting for an authorization from the Minister of Finance to go operational.

Judith Bih Anye, secretary of the constituent assembly and President of Azire Credit Union, one of the biggest unions in CamCCUL now member of the newly formed network says the decision to leave stems from the manner in which the CamCCUL network is run.

Located in the commercial avenue, Bamenda’s Wall Street, the head of office RECCU-Cam Ltd has 253 as its postal address.

Two years ago controversy sparked over term of office for elected officials- two years renewable once.

Cracks started surfacing In December 17, 2006 when an extra ordinary general assembly was convened to amend the by-laws governing the cooperative credit unions in Cameroon. Most presidents at the time would have left the governing organs at the end of 2007 or 2008 as provided by the 1992 law on common initiative groups and cooperative societies in its article 23.

By 2009, Musa Shey Nfor, re-elected last June 1 as President of CamCCUL had spent six years as President of his credit union, Bamenda Police Credit Union, BAPCCUL, instead according to Judith Bih Anye, he remote controlled the league to amend the mandate to five years renewable once.

It was a lee way for some presidents to seek reelection in order to benefit from a two-year extension.

“We are in illegality as the trend towards the manipulation of texts is continuing, especially as the new pretest is the implantation of the OHADA Uniform Act on CIGs and cooperative societies,” Mme Bih Anye told the SUN last year.

But, according to Shey Musa Nfor, “an international law (OHADA Uniform Act on CIGs and cooperative societies) supersedes the national law (1992 law on common initiative groups and cooperative societies) when there is contention”.

“We simply applied the law,” he noted while calling his opponents loan defaulters with vested interest to head CamCCUL.

Another contention is the formula to use in splitting assets between the faithful and departing credit unions from CamCCUL.

SOURCE: Business in Cameroon

-->

Investment firm Gold Coast Securities will start operating its Micro finance firm in Liberia in 2 months time. The company says its background checks have revealed huge prospects exist for the business in the West African country. The Board Chairman, Abakah Jackson says they are therefore ready for the business in the new market. He spoke to JOY BUSINESS... 

-->

Stakeholders in the micro finance institutions from the five member countries of WAIFEM (The Gambia, Ghana, Liberia, Nigeria and Sierra Leone) yesterday commence a four-day regional course on microfinance operations and regulations. Organised by the West African Institute for Financial and Economic Management (WAIFEM), the course currently under... 

Stakeholders in the micro finance institutions from the five member countries of WAIFEM (The Gambia, Ghana, Liberia, Nigeria and Sierra Leone) yesterday commence a four-day regional course on microfinance operations and regulations.

Organised by the West African Institute for Financial and Economic Management (WAIFEM), the course currently under way at the Paradise Suites Hotel in Kololi, was designed to among others enhance participants’ understanding of the features, operations and contributions of microfinance institutions to the financial intermediation process.

The course comes in the light of the fact that while the gap between the supply and demand for microfinance services is huge, one of the major constraints is the lack of capacity in operating sustainable institutions.

In a statement delivered on his behalf by Basiru Njai, first Deputy Governor of the Central Bank of The Gambia, Amadou Colley, Governor of the Central Bank of the Gambia, said poverty is arguably the most challenging economic problem, and it is estimated that over two billion of the world’s population are living in conditions of extreme poverty, of which rural poverty accounts for nearly 63 percent of world-wide poverty, reaching 90 percent in some countries.

‘Ironically, we live in a time of greater material abundance, of greater availability and transferability of capital and technology around the world more than humanity has ever had,’ Colley stated.

According to the Central Bank Governor, there is an important link between economic growth and poverty reduction, and studies have confirmed that sustained economic growth of 7-8 percent per annum, that is inclusive, is the most effective and efficient means of reducing poverty.

Noting that faster and sustained economic growth requires inter alia access to financial services including microfinance, Governor Colley said efforts targeted at ensuring the poor have access to finance started with the introduction of micro-credit in the early 1970s in Bangladesh, India and Latin America.

He highlighted some of the challenges facing the microfinance sector, among them institutional weaknesses in areas such as planning, governance, poor management, limited access to long-term financing; limited diversification of products; weak networks; and costs and risks associated with setting up microfinance in rural areas.

He noted that as the custodian of the financial system, the Central Bank of the Gambia continues to perform its role as supervisor, regulator and promoter of microfinance in The Gambia.

To unleash the potentials of microfinance, Colley noted that the CBG is committed to the maintenance of a benign macroeconomic environment, and that there is a strong link between price stability and financial stability.

‘Price instability and volatility in financial markets which it engenders are probably the most serious of the risks that financial institutions have to cope with,’ he said, adding that almost in every case where there has been serious threat of systematic financial disturbance, it can be traced to macroeconomic policy failures of one kind or another.

Speaking on behalf of the Director General of WAIFEM, Professor Akpan H. Ekpo, the Director of Financial Management at WAIFEM, Ousman Sowe, said WAIFEM was established in July 1996 by central banks of The Gambia, Ghana, Liberia, Nigeria and Sierra Leone principally to build sustainable capacity for improved macroeconomic and financial management in the constituent countries.

“In order to ensure highest quality in its programmes, WAIFEM has extensive technical partnerships with reputable institutions including the International Monetary Fund, the World Bank, African Development Bank, Commonwealth Secretariat, Debt Relief International, and the World Trade Organization, among others,’ he stated.

According to him, the objective of the course is to enhance participants understanding of the features, operations and contributions of microfinance institutions to the financial intermediation process.

He noted that one of the key goals of the millennium development programme is poverty reduction, and microfinance has been viewed as a veritable instrument or a major process that will effectively address the issue of poverty by making available to the majority of the poor greater opportunity for sustainable progress and development.

He said while the gap between the supply and demand for microfinance services is huge, one of the major constraints is the lack of capacity in operating sustainable institutions.

Ogbonnaya Agu, programme manager of WAIFEM, delivered the vote of thanks.

SOURCE: The Point (Gambia)

-->

Prof. Badr El Din A. Ibrahim. Islamic microfinance- challenges and potentials. In his article published in CGAP website Mohammed Khaled once asked a valid question: why Islamic microfinance cannot provide what is required by Muslims, as conventional microfinance?. It is ture that ways of conventional microfinance do not meet Islamic countries’... 

Prof. Badr El Din A. Ibrahim.

Islamic microfinance- challenges and potentials.

In his article published in CGAP website Mohammed Khaled once asked a valid question: why Islamic microfinance cannot provide what is required by Muslims, as conventional microfinance?. It is ture that ways of conventional microfinance do not meet Islamic countries’ requirements. Moreover, studies conducted few years back shows that about only 2 percent of the microfinance loans provided worldwide were made under Islamic modes.

Most commentators believe that there is an enormous potential for Islamic microfinance market niche, but few Islamic finance providers are working in this industry. While others see the constraints in the lack of understanding of the standard new sharia’ models, and the lack of support from potential partners and sponsors. A pessimistic view against a large-scale Islamic microfinance was expressed by Malcolm Harper in a crossfire debate with the author of this article when he argued that “sustainable application (of shariah-compliant partnership finance) to microfinance is difficult on a large scale, if not impossible”. (emphasis added).

A superior model, needs to be on the right track.

I do believe that the Islamic microfinance model is a superior one capable of solving many microfinance challenges, hithero the current practices are on a wrong track and they are still undergoing the trials phase. In fact, the Islamic microfinance spread is very weak and not-market-oriented in most cases. The experiments so far (except few limited banking experiments) being set up by donors or religious groups are based on a number of short-lived, non-market models and mechanisms, and are not integrated into the financial system. They have yet a wide room to develop like their conventional counterparts, particularly in volume and type. Up to date, with the exception of Bank Rakyat Indonesia and the Sudanese full-fledged Islamic banks providing microfinance and other few Islamic banks (which apply the best practices and therefore sustainable with no subsidy), most of the Islamic microfinance programmes are using funds of Sadagat & Zakat (alms), Wagf (endowments), and Quard Hassan (interst-free loan), as well as donors and government resources. These non-market models (which are suitable as complementary with the Islamic microfinance in providing needs suh as housing and other necessities), grant microfinance at lower interest rates that distorted the local microfinance market and also gave the impression that the Islamic microfinance is not a lucrative business, therefore it should be carried only outside the banking system.

Merits of Islamic microfinance.

The Islamic microfinance, basd on a partnership mode, is fair and does not require poor clients’ payment, or lead to a loss of the livelihood of the poor in the case of project failure beyond the client’s control. It also does not require strong guarantees. Islamic partnership formulae can also avail of the best non-material guarantee such as sustainability of the project, credit records of the individuals and the tied follow-up by the granting institution Moreover, instead of advancing loans to the poor, which can be utilized for another purpose, the Islamic versions dictate buying the assets or the necessary raw materials or enter with the partner in joint closely monitored transactions. Furthermore, Islamic finance also allows the Islamic banking system to bear its social responsibility towards the economically-active poor, and considers treatment of poverty as part of its social responsibilities.

In addition, the net rewards (and the return on capital) of Islamic partnership arrangement are greater than the net income (and the returns on capital) from paying the typical interest rate. For example, a US$ 100 capital loan to a poor client from a conventional bank charging 36 percent interest per year and generating a 50 percent rate of return on capital ($50 dollar) ends up with total return on capital of $14 per year (14 percent rate of return on capiral per year, a little more than 1 percent per month). With total partnership agrrement assuming the same capital investment equally shared by the bank and the client, and the same rate of return to the client of 50 percent, the picture is quite different. If the partner gets 20 percent of net profit as a reward of his management and the bank gets 5 percent, then the total non-capital shares out of the net profit of $50 is $12.5 ($10 partner’s reward for management and $2.5 for the bank’s following up). The remaining profit ($37.5) is distributed equally and the partner gets $18.75 ($37.5/2). The total partner’s return therefore is $28.75, and the return on capital will be 28.75 per cent (2.4 percent per month, compared with a little more than 1 percent for the interest loan).

A Need for a workable market-oriented Islamic microfinance model.

Despite the huge demand for the Islamic microfinance, banks and financial institutions which apply the Islamic formulae are still slow in meeting it. The Islamic microfinance industry is still required to prove that it is capable of extending finance bridges to the poor on sustainable and market-based oriented manner. With some exceptions, all other Islamic banking and non-banking microfinance experiences have limited outreach, and are perhaps not sustainable.

Despite of mertis of a typical Islamic microfinance, there is lack of a workable Islamic microfinance model. I do believe that the past experiences on Islamic microfinance can only be considered as isolated trials in the making of this type of finance. Moreover, the application of shariah-compliant Islmaic microfinance has not gone far enough to detect and to solve the constraints facing it. A refined Islamic microfinance system would probably requires more time and extensive theoretical and practical efforts.

In the meantime, Islamic microfinance providers can start using and improving the existing opportunities of Islamic microfinance on a large-scale, but this should be on the basis of the successes that governed some sustainable institutional Islamic microfinance experiences via banks. For example, the relative success of government-owned Bank Rakyat Indonesia (via strong outreach, the saving component, avoidance of subsidy, effective leadership, strong commitment and political support) is one experience that can be seen. Moreover, the relative success of the Sudanese experience (as a full-fledged nationally-supported experience that managed to build, organize & coordinate microfinance institutions, councils and units) is also worth looking at.

The author is an economist specialized in microfinance and the President of Microfinance Unit, Central Bank of Sudan.

-->