▶ http://www.ntv.co.ke In a bid to increase financing for small-scale farmers in the country, a new player has joined the market. Scope insight – a multinational firm – partnering with the Agricultural Finance Corporation of Kenya will be advancing loans to smallholder farmers in the country of a minimum of 50,000 shillings. The... 

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In a bid to increase financing for small-scale farmers in the country, a new player has joined the market. Scope insight – a multinational firm – partnering with the Agricultural Finance Corporation of Kenya will be advancing loans to smallholder farmers in the country of a minimum of 50,000 shillings. The firm has also launched an online portal that will see farmers get trained on financial literacy and loan sourcing. The move is expected to scale up capital for rural-based farmers who contribute over a half to the country’s food basket.

// By Sunday Williams, Daily Trust Nigeria The Central Bank of Nigeria (CBN) has said that 46.3 percent of Nigeria’s population is still financially excluded compared to South Africa, Kenya and Bostwana with 26.0 per cent, 32.7 per cent and 33.0 per cent, respectively. The CBN Governor Sanusi Lamido Sanusi made the remarks yesterday in Abuja... 

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From NTV Kenya ▶ Faulu Kenya is one of the few deposit-taking microfinance institutions in the country. As many of its peers convert into full-fledged banks, CEO John Mwara talks about the sources of its funding, the future of microfinance and how technology has shaped that sector. // Tweet Read More →

Faulu Kenya is one of the few deposit-taking microfinance institutions in the country. As many of its peers convert into full-fledged banks, CEO John Mwara talks about the sources of its funding, the future of microfinance and how technology has shaped that sector.

// By Fred de Sam Lazaro, PBS Newshour ▶ New rules aimed at regulating India’s microfinance industry, whose spectacular growth and near collapse strongly echo the U.S. subprime mortgage crisis, are set to take effect April 1. Neighboring Bangladesh’s supreme court will also resume hearing an appeal from Muhammad Yunus on April... 

New rules aimed at regulating India’s microfinance industry, whose spectacular growth and near collapse strongly echo the U.S. subprime mortgage crisis, are set to take effect April 1.

Neighboring Bangladesh’s supreme court will also resume hearing an appeal from Muhammad Yunus on April 4. Yunus was removed last month as head of the Grameen Bank, which he founded and grew into a billion-dollar cooperative, winning him and the bank the Nobel Peace Prize.

The future of what many experts agree is an effective tool to fight poverty in two critical markets could be at stake. In India and Bangladesh, roughly three-quarters of a billion people live on less than two U.S. dollars a day. We may also find answers to whether there’s room for profit-making in a business historically the realm of non-profits or cooperatives.

Yunus did not invent the concept of microlending. However, with media-savvy honed as a student in Colorado and Tennessee, he won international acclaim for his efforts based on a simple idea: that poor people are credit-worthy and if the terms are not usurious they can use credit to work their way out of poverty. The Grameen Bank’s 8.3 million borrowers would seem to bear that out. All of them also have savings accounts with the bank, totaling more than $1.4 billion.

Grameen’s success played no small part in spawning a commercial microlending industry in India. In less than a decade, there were $7 billion dollars in loans handed out. One company, SKS Micro Finance, raised $350 million in an initial public stock offering. However, the goal of many of the new commercial lenders seemed to shift away from helping the poor start new enterprises. They pushed loans with no questions asked; not about the purpose, not even whether borrowers had loans outstanding from other companies. The goal, it seemed, was to increase the number of borrowers and thereby attract the big investors.

In no time, people began taking out new loans simply to stay current on old ones, with predictable consequences. A spate of suicides in the southern state of Andhra Pradesh drew in political leaders, some exhorting borrowers to stop making payments. Banks stopped lending to microfinance companies, drying up their source of capital (unlike Grameen, which finances its loans through borrowers’ deposits, India’s commercial lenders rely primarily on private banks). The industry verged on collapse.

India’s government has agreed to infuse $22 million to make capital available to smaller microlenders, along with the new central bank rules. The move adds national regulations to local ones enacted earlier in Andhra Pradesh, including interest rate caps and closer scrutiny of credit limits and borrowers’ incomes.

A key question among development experts is how to scale up ideas such as microfinance. India’s experience suggests that a “mission-driven” and social business approach such as Grameen’s is the way to go. Other analysts say Grameen’s success itself has inevitably drawn it into parochial Bangladeshi politics, and many of the country’s prominent thinkers have resented the international spotlight and perceived interference that Yunus has brought to what they consider a national issue.

Riding on the court’s decision — or perhaps a settlement with government officials — is the continued control of Grameen by its borrowers, one of the world’s most spectacular examples of what Yunus calls a social business.

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In an exclusive interview with NDTV, Vikram Akula, founder of SKS Microfinance, talks about the challenges faced by the company and microfinance sector as a whole because of MFI Act enacted by Andhra Pradesh. Akula says Andhra continues to be a challenge for the company and expect that over time the issue will get resolved. ▶ Tweet Read More →

Insurance companies have to re-think their marketing strategies in a bid to boost their margins, amid low uptake of products and services made available to the consuming public. Most players are now diversifying their product portfolios, while rolling out offerings targeted at the lower end of the market, replicating a business model that has... 

▶ In regions of Georgia left in tatters after its conflict with Russia over South Ossetia in 2008, a microfinance programme has given a second breath to residents still struggling to rebuild their lives. With funding from the European Union (EU), the United Nations Development Programme (UNDP) teamed up with seven local microfinance institutions... 

In regions of Georgia left in tatters after its conflict with Russia over South Ossetia in 2008, a microfinance programme has given a second breath to residents still struggling to rebuild their lives.

With funding from the European Union (EU), the United Nations Development Programme (UNDP) teamed up with seven local microfinance institutions to assist displaced persons, women entrepreneurs, small-scale farmers, and other socially and economically vulnerable communities to start up small businesses.

“These loans were the perfect instrument to rekindle dragging local economies, using energy and creativity that were already here,” said Inita Paulovica, deputy head of UNDP Georgia. “From growing lilies to farming trout, start-ups have sprung to life by tapping into existing resources to create new opportunities.”

From July 2009 to June 2010, the programme issued more than 3,000 microloans to people living in the three regions of Georgia hit hardest by the armed conflict: Shida Kartli, Samegrelo and Mtskheta-Mtianeti.

The micro businesses — primarily in agriculture, trade and services — were financed with loans ranging from US$400 to $3,000. Altogether, the microloans totalled some $2.6 million.

For three-quarters of recipients, these were the first loans they had ever received, offering their first chances to succeed professionally and move forward to better lives.

More than half of the microloans went to women, and some 70 percent to small-scale farmers — a tenth of whom were internally displaced persons, uprooted during the war and unable to return to their home villages.

Dali Chilachava lives in a small town in Samegrelo, the region that borders breakaway Abkhazia and is home to more than 80,000 displaced persons. She fled from her village in Abkhazia in 1993 when the first separatist conflict broke out there. Unable to find a stable source of income, Chilachava’s family struggled in extreme poverty for 12 years, until they found their rescue in growing lilies for sale.

With a loan of $400 from the EU/UNDP programme, Chilachava and her husband improved the production of lilies in their greenhouse. The small family business now has a strong client base, shipping flowers in cigarette boxes to customers throughout Georgia, and they are thinking of applying for another loan to buy more land and build a cooling facility to store their flowers.

“We started four years ago with one little stem, and now you can see the result,” Chilachava said. “It is good to know you have a guaranteed income and your work pays off.”

More than 3,500 people — including many of the microloan recipients — have also taken part in hundreds of skills trainings and business consultations organized under the programme to assist them in designing and launching their own small businesses.

After fleeing her home village of Tamarasheni, which was almost completely destroyed during the conflict of 2008, Tea Babutsidze received her first loan of about $400 to open a small office in Gori, Shida Kartli.

The UNDP-sponsored training helped Babutsidze to design and launch her business, which provides other small businesses with online tax-declaration and bill-paying services, and helps them to photocopy documents.

“I feel more confident about my future,” Babutsidze said. “My business is small now, but it is getting on very well, and I am sure I will find ways to make it a really successful enterprise.”

The microfinance project was part of a broader, joint EU/UNDP program providing early recovery to impoverished households in conflict-affected parts of Georgia.

Launched in January 2009, that umbrella program also involved vocational education and training, as well as restoration of small- and medium-size infrastructure critical to creating economic opportunities, utilizing $5.7 million of EU funding over the course of 18 months.