Comments for Microfinance Africa

Comment on Kenya: Burden of microfinance to the poor by Jack Meyers

Jack Meyers — Mon, 23 Apr 2012 13:44:36 +0000

Last year I was involved in the reorganization of a micro finance organization in Kenya. While I agree in principle with the article regarding the burden of micro finance among the poor, I do not necessarily agree that the model i.e. group guarantees is the only model for micro finance. I also do not agree that rates of 20% or so are necessarily confiscatory. There is a high degree of risk associated not only with lending to people not business savvy, but also lending to traditional, low surplus agriculture. Traditional lending at the village level, when present, is typically 100 % of the loan amount and usually taken in kind at the farm gate.
My contention is that the burden for lending is equally if not more on the heads of the lending organization, than on the borrower. It is necessary for the lending organization to understand the vagaries of agricultural production, establish loans that are secured by sound banking practices (whether to the group or the individual) and followed by periodic trips to the farming area. In addition, lenders need to be trained extension agents, recognizing suitable cultural practices and assuring that funds extended are applied to the crop and not for personal needs.
Finally, it should be mentioned that traditional farmers are extremely risk adverse and reluctant to take on financial burdens that they cannot repay should a crop fail. There are a number of ways that this affect can be minimized such as: low level and adaptive technology, increased harvest efficiency, storage, marketing. Another way to minimize risk is to place some development burden on society as a whole. By this I mean the creation of a “buy-down” account directed at each individual borrower in which either the necessary up front collateral is offset by a percentage or the interest rate is reduced. The cost to society is insignificant compared with to the wastage contributed to “consultancy studies and pilot programs” that do little to address the real problems of rural poor and self sustainability of small farmers. In fact my guess is that redirecting one tenth of the amount of funds spent by bilateral and multilateral donors into educating micro finance lenders and injecting funds into “buy-down” accounts would reap significant benefits.
I did create such an account, which was put into practice as a test. The results were initially successful, but in a surprising way. It turns out that poor farmers are rational participants in decision making when given the means to apply money to the decision making process. As an example when one lady was given a 10% buy down on her loan for a milk cow (a previously unattainable proposition), she analyzed the production and market parameters associated with having a milk cow, did some research and decided her risk/reward was better in planting potatoes for seed. She would have never done those projections if she did not have the access to funds that were previously beyond her.

Comment on Nigeria: Lagos Trade Course Key to Jobless Residents’ Wealth by Shola

Shola — Thu, 12 Apr 2012 09:24:40 +0000

Its a very good initiative but how can one locate d centres for the skill acquisition programme? I live in Palmgroove nd i’m yet to see any1 dat knows where its being held, i only see it on T.V. Pls how can i know any centre thats close to palmgrove cos i’m really interested

Comment on Central Bank of Nigeria Governor, Sanusi looks for a way out for microfinance banks by WOGBO GODSTIME OGECHI

WOGBO GODSTIME OGECHI — Wed, 11 Apr 2012 06:45:52 +0000

i am a Nigeria and i need help i want Nigeria government to help me i and my little sister need help so that we can survive i have my complete waec result my sister needs to be in secondary school but no money i am 26years old i only do some hard work so that i can feed my 13 year old sister we need help from our fellow Nigeria more especially from the bank. help us with any amount that can turn things around for us please i bank with first bank but no money in my account my account number is 2017879910 my phone number is 08136946087

Comment on Nigeria: Expert Blames Distresses In MFBs On Wrong Banking Model by Enrique

Enrique — Thu, 29 Mar 2012 19:26:30 +0000

Let’s complete the roll call of iosevtnrs: Citibank & Standard Chartered (both guaranteed by Grameen Foundation – coincidence); Blue Orchard & Incofin (two large European microfinance funds); Oxfam is a donor; ASN Bank (an “ethical” Dutch bank also advised by Triple Jump, who advised Calvert Foundation, another coincidence); and of course Kiva, who recently conceded that the interest rate was not 57% as stated by 83% – still a bargain compared to most LAPO clients who pay 126%.Planet Rating (an independent rating agency, like Moody’s) just rated LAPO and awarded them a 3-point downgrade since their last rating. The rating repeated the questions regarding the legality of capturing savings, family connections in the LAPO board, extortionate interest rates etc.The previous rating by MicroRate was enlightening on the subject of the high client desertion rates at LAPO, but this rating was withdrawn in August last year when MicroRate cited anomalies in the data provided to them by LAPO (www.microrate.com).What is interesting is that this information has been in the public domain for so long, and yet the iosevtnrs miraculously seemed to have “missed” it. This is presumably unrelated to the huge profitability of LAPO.The poor are getting screwed, as usual. The ultimate iosevtnrs in LAPO are being deceived about the actual use of their funds. And a few people inbetween make a tidy sum thanks to loan-sharking interest rates. Not much, it appears, is being achieved by microfinance once again.

Comment on African Agriculture: an abiding investment venue for India by mohammed

mohammed — Tue, 06 Mar 2012 21:55:58 +0000

Hi, there exists an opportunity for a farmers co op in mozambique, to supply seeds, tractors and implements and also technical farming assistance. The opportunity to buy back produce from developing farmers and to set up food processing plants , here is a real chance to get your foot in the door in the African market. Buildings and infra structure available to purchase, fertile land available, private growers ready to plant with minimal assistance , turnkey business projects, only serious investors may apply. Contact via email.

Comment on African Agriculture: an abiding investment venue for India by olowa oluwaropo pius

olowa oluwaropo pius — Thu, 23 Feb 2012 12:12:49 +0000

MY COUNTRY IS A PLACE WHERE THE COUNTY’S POPULATION IS GROWING EVERYDAY IN GEOMETRIC PROGRESSION RATE WHILE THE FOOD PRODUCTION GROWTH RATE IS ZERO. WE ARE OVER 150 MILLION IN POPULATION AS AT LAST COUNT. MY COUNTY IS BLESSED WITH RICH SOIL FOR ALL TYPE OF AGRICULTURE AND THOUSANDS OF UNUSED ACRES OF LAND THAT ARE UNUSED. WOULD WAN TO KNOW GIVEN THE RIGHT ENVIRONMENT IF YOUR COMPANY WILL LIKE TO INVEST IN NIGERIA? 90% OF WHAT IS BEING CONSUMED RIGHT NOW, ARE ALL IMPORTED.
MANAGER OPERATIONS, RUSHMORE BUSINESS CONSULT

Comment on Leadership Voices: Interview with Roshaneh Zafar, Founder and President, Kashf Foundation by iraq veteran forced to sue bank of america and aetna for pts .

iraq veteran forced to sue bank of america and aetna for pts . — Mon, 20 Feb 2012 23:17:15 +0000

As part of my main project at FIDA, I have been getting to grips with what this microfinance business is all about.

Comment on Micro Finance and Small Loans Centre (MASLOC)to create opportunities to link producers with buyers by George Tofah

George Tofah — Thu, 16 Feb 2012 14:35:26 +0000

Good afternoon sir/madam,my name is George Tofah i am working with maxmart company for ten years,i want a help for my Brother and my sister,my sister is having a provisions store and i want a loan for her so that she can get more goods in the shop pls.and my Brother is a driver and i want a loan car for him work and pay pls,i am ready to guarantee for them pls.l hope to hear a reply from u soon pls,my contact0243161320

Comment on Nigeria: Enhancing cashless economy through mobile banking by Pastor Eben Ayer

Pastor Eben Ayer — Wed, 15 Feb 2012 10:16:16 +0000

This informaion needed to be shared with Ghana Association of Microfinance Companies(GAMC), an unbrella body of all microfinance companies operating in Ghana for such innovatives taking place in Africa so that Ghana does not lag behind the all for financial inclusion for all across the globe.

Comment on Microfinance: Track credit histories, urge repayment by Febri

Febri — Sun, 12 Feb 2012 08:23:32 +0000

I live in Benin City (this is defferint from Republic of Benin) which the Head Office of LAPO is. I have known LAPO for over 15 years and how it has grown into a national organization providing loans to poor women mainly. I do not know much about other issues raised by Holden, but I know that LAPO has obtained an approval from Central Bank of Nigeria as a microfinance bank. I feel this case study was done with out-dated information. Holden did you get in touch with the people at LAPO while preparing this rather detailed case study? I think it is only fair you consider doing an up-date fastOsa Edosomwan