From Business Day Online

The Central Bank of Nigeria (CBN) has re-stated its commitment to establish special court to hear cases on loan default in microfinance banks.

Olufemi Fabanwo, the Director of Other Financial Institutions Department in CBN, disclosed on Thursday in Lagos, saying that the apex bank had constituted a committee that would look into modalities of establishing the court.

The director was in Lagos to attend a meeting of the Committee of Microfinance Bank Directors in Nigeria. According to him, the court is vital to survival of the sub-sector.

Fabanwo said that the nature of service rendered by the sub-sector did not permit it to accommodate bad debts as it would distort its buoyancy and force operators out of business.

He said the apex bank had held in-depth discussions on the issue with the Ministry of Justice so that the court could be effective when established.

The CBN director advised the directors of microfinance banks to ensure that loans were given out to only the active poor.

According to him, this is the target group that need the loans from microfinance banks to trade.

He said that the reason for his advice was to make their loans recoverable easily.

“Beyond this, microfinance banks are to guide against too much investment in fixed assets, flamboyant office structures and exotic cars as the nature of micro financing does not permit this,’’ he said.

Speaking at the meeting, Olufemi Babajide, the Chairman of Lagos Chapter of National Association of Microfinance Banks, said that loan defaulters in microfinance banks were enjoying “reprieves”.

He said that the apex bank was now ready to establish the special court, “one year after it made the pronouncement’’.

He said that the delay in establishing the court had raised concern among operators of micro-finance banks as the delay was negatively affecting their activities.

“Some loans that would have been recovered, if the special court had been established, are already going bad,” he said. “The sub-sector needs the special court as quickly as possible.”

From Business Day Online

Nuhu Danjuma, a finance consultant, says Nigeria is the largest microfinance market in Africa, but that the sector has never benefited from cheap capital. Danjuma, who spoke in Abuja on Thursday, said that high interest rate charged on loans by the microfinance banks was because they did not have adequate operating capital.

His consulting firm works for the state-run Rural Finance Institution Building Programme (RUFIN).

“Currently Nigeria is the biggest microfinance market in Africa; there has been little or no access to external capital, which is cheap and also gives the operators enough window to trade with,” he said. “If you look at the history of microfinance banks in Nigeria, this sector is one of the few sectors that has never benefited from any cheap capital. “In other countries you find out that the government sets aside funds for on-lending.

“The reason why there are high interest rates in the microfinance sector locally is that the cost of capital has been very high because first they don’t have enough capital.

“And second the little they get from local commercial banks is very high, therefore they also need to lend at a high rate.’’

Danjuma said the firm was organising the first Nigeria International Microfinance Investment Forum in partnership with Microfinance Association of the United Kingdom on the platform of the International Fund for Agricultural Development (IFAD) and RUFIN. The consultant explained that the forum would hold in July and would bring international investors to Nigeria. The investors, he added, would finance projects and give funds and grants to microfinance banks.

“This platform is to actually bring what we call microfinance investment vehicles to the country; these are funding agencies globally that are interested in microfinance banks,’’ he said.

He said the investors would partner with IFAD and other 400 microfinance institutions.

He added that 10 international microfinance funding agencies, five local funding agencies and operators from Gambia, Cameroun and India had showed interest in the forum.

RUFIN is an IFAD project aimed at reaching out to rural agricultural producers and NGOs through microfinance banks. Danjuma said the project had 43 financial institutions and 33 microfinance banks that were working with cooperatives in the field of agriculture to facilitate savings, increasing and boosting agricultural production in the rural areas.

He observed, however, that the 43 microfinance institutions were under-capitalised.

“We realised that these 43 microfinance institutions working under the IFAD-RUFIN projects are under-capitalized.

“They over-sensitised the market at the grass roots so they do not have enough funding to lend to these people.’’

By Mandy De Waal, Daily Maverick

Loan sharks and micro-finance offices have mushroomed in South Africa’s inner-city centres. The lure is attractive – borrow R10,000 and create your dream life by growing your business. But in a country where half the population lives in poverty and much more live in debt, a greater understanding of how they use money could lead to more appropriate financial services.

In the late 1990s, Wall Street equity manager Daryl Collins came to South Africa. Driving through the Cape Flats, the native New Yorker would pass by townships like Langa and Khayelitsha. Collins was sent to South Africa to manage a financial portfolio, but her imagination was captured by what was going on inside those shacks.

“I kept wondering: ‘What is happening inside there and how are people managing their money?’ I decided to shake my life up a little. I moved away from asset management to become an academic at UCT. I lectured in finance and during that time went to see Stuart Rutherford about his work on Financial Diaries in Bangladesh. A light bulb went on in my mind and I knew that this is what I wanted to do,” Collins says.

Rutherford is a renowned independent researcher and financial services pioneer for the poor. He lives in Bangladesh where he invents new financial services for the marginalised, who often don’t have access to funds that suit their specific needs outside of their communities.

After meeting Rutherford in India, Collins came back to South Africa and, together with the FinMark Trust and the Ford Foundation, started a South African version of the Financial Diaries.

This research evolved into a book called Portfolios of the Poor: How the World’s Poor Live on $2 a Day by Collins and Rutherford, with Jonathan Morduch and Orlanda Ruthven. The local portfolios in the book come from a year’s worth of fieldwork overseen by Collins in Langa in Cape Town, Diepsloot in Johannesburg and Lugangeni, a rural village in the Eastern Cape. The field work will continue this year, expanding into Kenya and beyond.

“When we first started doing this research we thought that people might say no to us very easily, given that we wanted to keep financial diaries of their lives. Surprisingly, if you approach people in the right way, and if you’re well vetted by the community, people are actually quite generous of their time,” says Collins, adding: “In part it is a matter of paying people respect and respecting their time. You develop a relationship with the community and with people, and that’s how you gain their help and trust.”

Contrary to popularly held myths about the poor, Collins found that people living in poverty have careful, accurate if not complex financial lives. “They save, they take credit, they have their own businesses, they are very active credit givers and they insure themselves: they have burial insurance and personal insurance. What the research showed us is that these people had very active portfolios that they were managing,” Collins says, speaking to iMaverick from the US.

One thing Collins never appreciated about marginalised locals is how helpful stokvels are in terms of getting people to save. “Of the people we surveyed, about 21% of what households made each month was put into a stokvel saving. It is a matter of discipline. People would make sure they go to the bank and put money in every month because other people were counting on them for that money. We found that people were much more likely to follow through on a savings plan like that,” she says.

Stokvels work in different ways in South Africa. Some use banks, while for others it’s a matter of keeping the money somewhere safe in an elected member’s home. “Or the people in the stokvel would lend their money out to people in the community. They would charge very high rates – the rates in the townships are about 30% per month,” Collins explains.

“In places like Diepsloot, people would spend a lot of money on transport, but food is still the big winner and people in this township would spend about 30 to 35% of their money on food. A fair amount of money is spent on funeral plans,” she says.

“What surprised me is that people in rural areas were just as financially literate as people in urban areas. In rural areas people were lending and borrowing back and forth quite a bit. They arranged credit from each other and the local shops on an informal basis. They were involved in stokvel societies and a lot of them had bank accounts and were getting their social grants through bank accounts,” says Collins.

The research looked at access to capital and here Collins says the assumption that a pipeline to loans equals an escape out of poverty is false. “Access to capital doesn’t necessarily mean that people living in poverty will automatically increase their revenues or profits. It is not as if people make money and open one shop after another to become incredibly successful. I think it is important to remember that not everyone is an entrepreneur, and not everyone has that appetite for risk.”

Collins says often what’s preferable to what could be a projected dream of entrepreneurial success is to prevent vulnerability, so that marginalised families aren’t wiped out by one financial shock. “If a big financial crisis or need hits a family, access to smaller amounts of cash could mean they don’t get themselves heavily into debt or sell all their assets.”

“I came out of this research thinking that aspiring to capital or aspiring to microfinance is not as grounded in reality as one would like to think. What is probably more realistic is a slower path out of poverty. A path where people are able to make adequate money for nutrition, to pay for schools and have business opportunities that are sustained and don’t get derailed,” she says.

There’s this romantic view of poverty – shared by opportunists in financial services – that one bigger lump sum will be invested by those in poverty to grow their businesses and raise them up out of poverty fairly soon. It’s the dream sold by many a loan shark to many a marginalised person who isn’t an entrepreneur.

“Maybe what they need is much smaller amounts of money that help them patch cash flows so that they can ensure they can keep these businesses going,” says Collins. “I think that microfinance is very backward. What these institutions normally do is to give a sum of money that is much larger than most people need, imagining that people will make an investment and try to grow their businesses. Mostly what people were trying to do is just to keep their businesses ticking over.”

Collins says her experience was that what people need is much smaller amounts of money, but on a higher frequency basis. “Instead of giving somebody R10,000 and saying: ‘Here. Go buy a new shack and open up a spaza shop’, rather say: ‘In January when you need to pay all your school fees, and you don’t have enough money because you’ve spent it on Christmas – and you can’t buy stock – come and borrow R1,000. Pay it back in a month or so when you get back on your feet.’ It is much smaller amounts that are needed more often in these communities,” she says.

The bottom line for people living in financial destitution is that access to lump sums of capital isn’t automatically going to lift them out of poverty within a generation. This is possibly why there are so many mushrooming micro-finance businesses in inner city centres that are doing so well. They’re staying in business by helping people become indebted, while stokvels are likely a more useful way of getting households in poverty through a cash crunch.

Poverty doesn’t only make the poor vulnerable, it makes society vulnerable. Everyone knows the stats because they’ve been bandied about so much. Half our population lives below the poverty line, which means making do with only R500 a month. There has been a slight improvement in these numbers since 1993.

While the government’s patting itself on the back for marginally reducing poverty, it might want to take a look at an Oxfam report published earlier this year. Called Left behind by the G20? the report predicts that a million more people will be pushed into poverty locally and that the number of people living in absolute poverty may increase.

“Looking ahead, inequality in South Africa is so high that our model predicts that, even if it remains static and is accompanied by strong GDP growth of around 3.7 percent, the number of people living in absolute poverty in South Africa is likely to increase. The poverty rate would fall, but not enough to offset the impact of a rapidly growing population, so the absolute number of people living in poverty would still rise,” says Caroline Pearce, who co-authored the report.

“The fact is poor people missed out on their fair share of the prosperity of the boom years and have been hit hardest by the crisis that followed,” says Pearce.

The Oxfam report goes further to compare inequality in net household income using the gini coefficient. The results for our country are damning. South Africa is the most unequal country in the G20 by a “considerable distance”.

Data on how income is shared in this country shows that the biggest concentration of wealth is at the top end of the income scale. Increases in inequality have escalated since 2000, and the report states that: “Strong economic growth in South Africa will not stop the number of people living in poverty increasing by 2020 unless inequality is brought under control.”

While South Africa’s elite class increases the gap between itself and those living in poverty, it would be wise for the former to pause for a moment to understand what growing inequality means: if poverty makes for a compliant populace that’s more accepting of tyranny in the short term, in the long term it could prove fuel for insurrection and instability, just the right forces to profoundly threaten elite wealth.


LINK TO ORIGINAL ARTICLE

From Insurance Today

The rise and growth of microinsurance in developing parts of the world can play a central role in the empowerment of women, according to Mark Byrne, founder and chairman of investment vehicle Haverford.

Upwards of 80% of all microinsurance products have so far been distributed in favour of the male population in the developing world, but Mark Byrne, founder and chairman of investment vehicle Haverford, said developing and promoting products specifically tailored for women could play a prominent part in strengthening the role of women in some of these societies.

“There’s an enormous opportunity to make a contribution to the empowerment of women in the developing world,” Byrne said. “Most of the product that has happened already has been pretty male-centric.”

Microinsurance is one of the ultimate examples of high-volume/low-premium insurance coverage around and is typically offered in developing economies where the penetration of traditional risk-management products is not very high.

According to Byrne, microcredit has already changed the lives of between 150 million to one billion people around the world. But microinsurance is only getting started, as it has the potential to help some three billion people around the world.

As he explained, helping women get a stronger foothold in developing parts of the world is one example of how insurance can assist society: “Being able to offer a woman who wants to start a cloth co-operative or a roadside shop insurance to do that will have an enormous impact in the third world over the next generation.”

He added: “Having been working on it for a couple of years now, I have to say I remain extraordinarily excited about the potential for microinsurance to make a very big impact in the world.”

LINK TO ORIGINAL ARTICLE

Managing Directors, Heads of Operations (HOPs)/Bank Accountants jobs at Microfinance Banks nigeria 2012

Vacancies: Managing Directors, Heads of Operations (HOPs)/Bank Accountants

Applications are invited from suitably qualified persons interested to persue a career in microfinance banking to fill in the various positions in the 15 No Microfinance Banks located in 15 different local government areas in Kebbi State (Land of Equity)

Position: Managing Directors

Qualification:

• Persons are required to have a Bachelor’s Degree / HND in any of Banking / Finance Accounting, Economics, Business Administration with (7) years cognate working experience. Additional qualification and experience is an added advantage
  

Description

• Will focus on the establishment and optimization of day-day operations of the bank, Provides leadership in the area of visioning, corporate/strategic planning, relationship management and execution.
• Manage bank’s activities to ensure maximum profits commensurate with the best interest of all stakeholders.

Position: Heads of Operations (HOPs)/Bank Accountants

Qualification:

• A good university degree as stated above with not less than (5) years working experience in a microfinance bank. Additional qualification and experience is an added advantage.
  

Description

• Oversees the operations and general management of the bank’s operations, Monitor businesses to ensure that they efficiently and effectively provide needed services while staying within budgetary limits. Responsible for timely delivery of all statutory reports to CBN, NDIC & other reports to Mgt, letters and statements of Accounts, Oversee core banking operations entailing funds clearance and transfer, cash management
• Custodian of the banks General ledger, collation of data & financial information, Treasury Management, Monthly account preparation, Assets & Liability Mgt, Periodic budgets, Develop arid sustain systems & procedures for maintaining proper financial records.

Method of Application:

Send applications and CVs to the Secretary Kebbi State Steering committee on Microfinance banks on or before 25^th May, 2012 through ismaila.yamma.@yahoo.com only applications received through the designated channel will be processed. Shortlisted candidates will be contacted

From AFP

DHAKA — Bangladesh on Wednesday set up a commission on the future of pioneering Microfinance institution Grameen Bank and 54 related businesses headed by Nobel laureate Muhammad Yunus.

Yunus was sacked as the head of Grameen Bank last year and the new commission is likely to raise fears about further interference in his anti-poverty work, which has earned plaudits around the world.

“The commission will review and recommend the regulatory institution and mechanism of Grameen Bank as to how to bring the bank under the purview of state regulatory agencies,” the government order said.

It will also review “institutions, companies and enterprises established by the Grameen Bank,” the order said, referring to the 54 offshoot businesses which Yunus still heads.

The move comes 10 days after US Secretary of State Hillary Clinton visited Bangladesh and threw her support behind Yunus and asked the government not to undermine Grameen Bank.

The commission was expected to look into the structure of the profitable network of ventures that include Grameen Bank’s multi-billion-dollar stake in Grameenphone.

Despite winning the 2006 Nobel Peace Prize, Yunus was removed from the helm of Grameen by the Bangladesh central bank in a move seen as engineered by an envious government.

Supporters say the step was retaliation after Yunus previously hinted at joining politics to break the logjam in a country bitterly divided for decades between two political parties.

His Microfinance model of giving small loans to help poor, often female, workers has been credited with lifting millions of people out of poverty around the world.

Yunus was in Paris and unavailable for comment, his representatives said.

The government of Blue Nile issued a decision forming the high council of Microfinance in the state. The decision was supported by the federal government by allocating 2 billion pounds for microfinance. The Governor of Blue Nile during the inauguration of Bank of Sudan branch in Damazin said that they have become more assured that the process of development will be launched in the state to alleviate poverty with the opening of central bank of Sudan, pointing out to the announcement made by assistant of governor of bank of Sudan Mohammed Ali Elshaikh that the central bank will focus its efforts to expand microfinance in the state. The Governor commended Central bank of Sudan for its speedy response to their demand for supplying hundred tractors for the agricultural season, affirming that they are now on their way to the state.

The Governor expressed his pleasure that the opening of the branch coincided with the opening of the first phase of cement wall for heightening Roseiris Dam.

Deputy Governor of Bank of Sudan Mohammed Ali Alshaikh confirmed that the central bank will compensate the state for what it has missed during the previous years, pointing out that the bank will completely play the role tasked on it besides its endeavour to make the micro-finance successful in the state.

Ad-Damazin branch is the fifth branch that was opened by the central bank during the current year to expand its services to include all states of Sudan. The central bank will open other two branches in Aldain and Zalingi towns.

By Haffiya Elyas, Sudan Vision

By Obinna Chima, This Day Live

As part of efforts to ensure that they smoothly migrate to the International Financial Reporting Standards (IFRS), Microfinance Banks (MFBs) in Lagos State had embarked on capacity building programmes.

Chairman, Lagos Chapter of the National Association of Microfinance Banks (NAMB), Mr. Olufemi Babajide, who disclosed this in an interview with THISDAY.

MFBs were expected to start reporting based on IFRS from next year.
Their counterparts in the commercial banking segment, last week disclosed that, in conjunction with the CBN, they had contributed a total of N500 million to fund the IFRS Academy.

The IFRS represents a set of generally accepted accounting principles (GAAP) used by companies to prepare financial statements. It IFRS aims at providing a global framework on how public companies prepare and disclose their financial statements. It also provides general guidance for the preparation of financial statements.

But Babajide said: “We started training our members on IFRS since last year. We have also held three capacity building programmes on IFRS this year. Although it is expected to commence next year, we have asked our members to prepare.”

On the cost associated with conversion to IFRS, NAMB Lagos boss said his group had identified firms that would see them through the conversion.

“We are beginning to see some consulting firms that are willing to take us through the process with charges that are moderate. We are seriously working to ensure that all our members comply,” he added.

Commenting on the directive by the CBN that MFBs and other financial institutions should adopt a uniform financial year-end, Babajide, said most MFBs in Lagos State had already complied with the directive, saying that before the announcement, the chapter had adopted a uniform year-end.

According to him, the MFBs took the decision in 2009, when the apex bank initially directed commercial banks to adopt a uniform financial year-end.

“About 90 per cent of our members have adopted a uniform,-accounting year-end. Only very few of us are remaining and we know that soon, they would also align with the common year-end,” he added.

The Lagos NAMB boss argued that operators in the industry had since the intervention of the regulator ion 2009, enhanced their capital, installed the necessary infrastructure and are waiting for the release of the microfinance development fund (MDF) to revive their operations.

“We also want the CBN to collaborate with the association, to create a law that will compel the three tiers of government to set aside one per cent of their budget, to be disbursed through microfinance banks to alleviate poverty in Nigeria. Once all these things are put in place, then we would be well positioned to deliver microfinance banking services efficiently,” Babajide declared.

By William Pesek, Today Online

The iPhone has become a symbol of something Steve Jobs never envisioned: Chinese sweatshops.

Any of us (full disclosure: This includes me) who use one of Apple’s smartphones, iPads or iPods is, at least indirectly, supporting the exploitation of electronics factory workers in China.

Yet, what if the iPhone is a key to ending the poverty that forces so many Asians to toil in such abhorrent conditions?

The buzz phrase “financial inclusion” is getting increasing attention these days. It refers to the world’s unbanked masses, what bankers like to call “the other three billion”. That’s the estimated number who lack access to the most basic of financial services. In nations such as India and the Philippines, a key answer may be mobile phones. Poor Asians who lack bank accounts often have one.

That has banks turning to experts on mobile device networking systems, such as Mr Jay Collins. Working for Citigroup in New York, he is one of modern finance’s true alchemists, endeavouring to find ways for the poor to move, pay, collect and store money on mobile devices.

No more wasting an entire day at the bank. No more public officials skimming money off the top. No more turning to loan sharks.

CUTTING OUT MIDDLEMEN

That also goes for small and mid-size enterprises, which account for almost half of all employment in developing Asia. Owners and managers could make payments to suppliers and employees directly into accounts connected to mobile phone SIM cards, eliminating any number of middlemen all looking for their cut. The more cash and credit these businesses get their hands on, the more Asians they can hire.

“We view this as our killer app that could transform banking and reduce poverty and corruption at the same time,” Mr Collins says.

Citigroup isn’t an altruistic venture. It’s championing this revolution because of the potential profits: Loads of new customers, deposits and, of course, fee income. Just as George Soros’ Quantum, Goldman Sachs Group and Nomura Holdings invested in microfinance, Citigroup realises there’s money to be made even from those with little of it.

The potential of mobile banking deserves far more attention than it’s getting from governments. Asia’s poor would suddenly have a way to manage income, build assets, invest in the future and buy insurance to prepare for risks like health crises or natural disasters.

MOBILE FINANCE ECOSYSTEM

Political leaders should facilitate the technology’s growth with regulations and oversight to ensure security against hacking and scams. They should commit to distribute certain salaries, benefits and subsidies on mobile systems. They should step up efforts to raise financial literacy in the region.

“The perfect-world, mobile-finance ecosystem would sound like a symphony orchestra, where the various industry and government participants show up at the same time, with the same sheet of music, and play in harmony,” Mr Collins says. “Currently, players appear at different times and places, with their own music and tempo.”

There are big benefits here for governments. Phone transactions create a cyber-trail to give tax authorities and national-security officials greater insight and influence over the movement of money. It adds a level of transparency that Asia’s current cash-based environment doesn’t.

India’s potential is a great example. The Boston Consulting Group reckons increased mobile finance would be a boon to growth. In last year’s report, it predicted a 5-per-cent jump in gross domestic product, a US$50 billion (S$62.8 billion) increase in tax revenue annually and the creation of 600,000 new businesses by 2020. We’re not talking sweatshop jobs, but decent-paying ones in air-conditioned buildings.

NOT A QUICK FIX BUT …

The Asian Development Bank’s experience in Afghanistan also is instructive. The Manila-based lender has made more than US$100 million in loans to help mobile phone providers extend coverage to parts of the nation with no telecommunications infrastructure. The financing also supported the creation of mobile phone banking services.

It had a couple of unanticipated consequences, both for the better. First, fewer government soldiers were going AWOL. It was feared that they were conspiring with local tribal leaders who might be supporting terrorism. It turned out that they had been disappearing to take their pay back to their home villages. Second, soldiers suddenly were getting more money. Superiors could no longer pocket big chunks of their wages.

Mobile phones are hardly a quick fix. The causes of poverty, and the ways to address it, are as diverse as they are complicated.

For many, though, exclusion from the banking world is a formidable barrier to better lives. Imagine the ripple effects should mobile phone consumer finance take hold.

Banks once gave out toasters to new customers. Free iPhones, anyone?

Tokyo-based William Pesek won the 2010 Society of American Business Editors and Writers prize for commentary.

By Favour Nnabugwu, Vanguard

National Insurance Commission, NAICOM, has condemned the expansion drive of the country’s insurance companies in foreign countries over and above their spread in the country, at the expense of the nation’s untapped market such as micro-insurance.

The commission was particularly peeved by those companies that cannot boast of 10 offices in Nigeria but have offices in other countries such as Rwanda, Ghana, Gambia, Cameroon, Uganda and Sao Tome and Principe, among others.

Commissioner for Insurance, Mr. Fola Daniel, expressed his frustration at the inaugural meeting for diagnostic study of micro-insurance by German’s Deutsche Gasellschaft fur Internationele Zusam-menarbeit, GIZ, and Access to Insurance Initiative, AII, in Abuja, yesterday.

The GIZ, Daniel said, had a time line of 24 months to develop and market micro-insurance for Nigerian insurance market, noting that 80 per cent of the country’s populace lived in the rural areas that insurance companies needed to reach.

The idea to develop and market micro-insurance, he said, was mooted by the commission which invited a combination of experts from Brazil, Canada, India, etc, under GIZ to help the country.

undertake a research study of the country’s micro-insurance, leveraging on their experience and success stories in the interest of the country’s insurance sector.