FAQ: Microfinance
From Thoric Cederstrom <Thoric@Counterpart.org>
The organization that I work for, Counterpart International, has a very
successful microfinance program in neighboring Viet Nam. If you write me
directly, I will put you in contact with my colleagues there.
From Chris Pelham <chris.pelham@acadiau.ca>
You may wish to contact the Small Medium Enterprise Working Group of the Asia
Pacific Economic Cooperation. They have completed studies and have an interest
in microfinance programming.
http://www.apecsec.org.sg/content/apec/apec_groups/working_groups/small_and_medi\um_enterprises.html
From J Kim Wright <jkimwright@earthlink.net>
One of the experts in the field of microfinance is Results and they're very
helpful.
http://www.results.org
From Lindsay Stevens <ljstevens@bendbroadband.com>
Try
http://www.trickleup.org
From Lilly Diaz
Villeda <lillymse@yahoo.com>
I am a consultant living in Phnom Penh. I have been supporting the Cambodian
Microfinance Association and working as a consultant in the region in MSE
development. CMA is a 11 member association of microfinance institutions in
Cambodia that provide microfinance (credit, savings) to poor households in
Cambodia. Some of the leading MFIs in terms of size include: AMRET, TPC,
Prasac, Vision Fund Cambodia, AMK to name a few. All together they serve about
280,000 clients throughout 22 out of Cambodia's 24 provinces. ACLEDA Bank is a
lead Cambodian bank that also serves the poor through a range of financial
services. A recent book was published, When there Was No Money, by Heather
Clark (2005). It is a good read about the history of this bank and how the
microfinance sector began here in this post conflict setting since 1993/1994.
For more specific information about some of the MFIs, you should check out the
web site:
http://www.mixmarket.org/en/home_page.asp Seven MFIs report their
financial data to this website and you will be learn about each MFI's history,
and key performance data as of 2005. Cambodia has a pretty dynamic and
interesting MF sector. I recommend you read the recent CGAP CLEAR Report
(2005) which looks at the entire microfinance sector, including issues in the
enabling/business environment and other aspects of market infrastructure that
are essential to stimulate microfinance in Cambodia. That report can be found
at:
http://www.microfinancegateway.org/content/article/detail/25943
From
Suzanne Ainley <ainley@nottawasaga.com>
I was in Cambodia about 3 years ago as part of a UN mission team. We were
working on setting up a project for revitalizing one of the many resettlement
cities outside Phom Penn. I was loooking at entreprises as part of the team.
Cambodia is interesting in that there wasn't at the time (3 years ago) much
understanding of the entrepreneurial sector within the city or country. With
the unique political past of the country, much of the historic business past was
lost it is in the process of re-emerging. UN-Habitat (Peter Swan) was there when
I was and I would suggest you see if he is still around, he may be a valuable
connection. The garment industry seems to be what is seen as the pinnacle of
success and if an area is able to get a factory. My recommendation had been to
conduct an assessment (using BR+E survey methods) to understand the natural
entrepreneurial enterprises which were emerging. Access to credit may be only a
small part of what is needed by small businesses to make their enterprise
successful, without asking the entreprenuers directly, how will you know what's
best to do? Check out
http://www.brei.org/ and
http://www.omafra.gov.on.ca/english/rural/br_e/bre-index.htm for information
on BR+E (Business Retention and Expansion)
From Brandy Bertram" <bb@microbusiness.org>
May I also suggest that in addition to the lending structure, you focus plenty
of attention on entrepreneurial and financial skill development? Our repayment
rate, even including our peer (traditional grameen model loans of no credit and
collateral) and youth loans is 97%. We attribute this success largely to the
emphasis we place on skills development that centers on income generating
activities. I'd be happy to share some best practices, or, if you're looking
for a good packaged core curriculum that is available in Spanish, is flexible
for varied literacy levels and introduces basic business and money concepts, I
would send you to www.makingcents.com.
From Darlene M. Johnson <djohnson@childcarechoices.net>
When we established this type of program, we first got a grant for a "start-up"
fund. Then we worked with a bank that agreed to provide a loan at no interest as
long as we under-wrote the loan to guarantee payment. We then took all the apps
and just submitted the approved names to the Bank. All payments were made to the
bank just as in any other loan. If they failed to make a payment, the bank
contacted us and we contacted the participant. We found this
actually helped to improve their credit for future use and for the participants
to take it more seriously as it was actually a bank loan. In approving the
loans, however, one needs to be realistic as to if the household can afford even
a very small loan. Too many defaults and your pool of funds will quickly dry
up.
From Debra Joyal <scorpiosnakeeight@yahoo.com>
I am the Program Manager for a nonprofit Community Financial Services Centre,
that will launch services in the fall of 2006, in the North End core area of a
major Canadian City. One of the programs I will be offering to our target
market, (which mainly consists of marginalized people, minorities and seniors),
is a micro-loan fund. Our goal is to give the people an alternative to the
proliferation of predatory money-marts and paydays lenders, who are not yet
regulated in Canada... and make huge profits from people who can least afford
it, and are excluded from the AAA lenders for a multitude of reasons. I have
solicited funds from a financial institution to capitalize our loan pool,
developed a micro-loan criteria, client documents, operations manual etc.
pursuant to our Canadian Laws. I have secured grant contributions to our
project from all three levels of government for a two year pilot project (it's
taken me about a year of negotiating). Our project is the first "double bottom
line" enterprise of its kind in our Province. Although we are still in the
pre-launch stages, I would be happy to share any of my research with you... to
help you get started. Good Luck!
From George Kenefic <gknmcdlf@covad.net>
While I'm not an expert in this field, I have studied form afar the entities and
philosophies that strive to address the issues you bring up. The two that I'd
say have significant track records are Grameen (the source for the concept of
effective microloan programs, in my opinion) and ACCION International, which
drew inspiration from Grameen. Since I don't know the capacity of your
organization to administer the daily operations of a microloan program, let me
contribute some thoughts on the matter. ACCION International is a program
focusing on individual entrepreneurial activity, although they do group lending,
and the effectiveness of such enterprises (the borrowers') clearly depends on
there being an accessible market for said enterprises. One would question the
long-term consequences to the program and the sociological impact of lending
money to business persons who won't be able to repay the loan. The beauty of
the Grameen model was that it put the money/resources in the hands of groups, of
women initially, that were in charge of "daily operations" in their villages.
Each member of the group was held accountable by the rest of the group for the
proper management and disposition of the funds. The success of this concept
flew in the face of the 'conventional' wisdom of the day. In traditional areas
throughout Mexico and Latin America, there exists the principle of the "tanda"
by which each of the members of the group in turn gets the money which the
entire group recycles. The common element of these last two is, of course, the
administrative function that the entrepreneurial group takes on in addition to
the fiduciary obligation to repay the loan. This ownership feature is what can
make this sort of program succeed with insular groups, and has the added
advantage of being able to be adapted as needed if the need arises to partner
with a "host" organization in the locale, such as a church. I hope some of this
may be of use. Good luck.
Moderator's Note: More information about ACCION International can be found at http://www.accion.org/ They've published a whole series of books, articles, and so on, about management of microfinance programs. Information is in the "Microfinance Resources" portion of their website. Many articles can be downloaded free of charge. (Thank-you to Bruce Curtis for sending us this information.) Visit the Grameen Bank's website at: http://www.grameen-info.org/bank/index.html Notable quote from their website: "As of July, 2004, it [the Grameen Bank] has 3.7 million borrowers, 96 percent of whom are women. With 1267 branches, GB provides services in 46,000 villages, covering more than 68 percent of the total villages in Bangladesh."
From <roses4life@aol.com>
I am part of a non-profit called The Sound Essence project. Our work is focused
in Mongolia at this point in time. Besides assisting five students to attend
college in UlaanBaatar, we started a microfinance project with five women that
want to start a bakery. The people are also very poor in the country of
Mongolia. One of our members is Mongolian and she was able to write the
following in her native language.
- Simple loan application with the question of how they were going to use the money
- A loan payment schedule that is very attainable
- A percentage rate that is below the country's, for example the interest will be 10%
- A request for the women to set up their own checking account so that we can easily transfer the money to them
- The schedule of repayment will be over 5 years
- After the first loan is paid, the ability to borrow a larger amount
The bakery has begun, called The Blessing Bakery. Due to the economic situation they are not able to purchase an oven so they bake in the one women that has an oven's house and then sell on the street, to neighbors, to store fronts, etc. Our history is short, but for this moment all is going as planned.
From Ben Murphy" <Bmurphy@cfcrochester.org>
KIVA's model is certainly worth examining.
http://www.kiva.org Probably worth contacting AVINA as well.
http://www.avina.net
From Andrew (Drew) Tulchin" <drew@socialenterprise.net>
It is my honor to share with you the paper "Positioning Microfinance
Institutions for the Capital Markets", available for download at
www.socialenterprise.net/resources.html in the first section entitled: Social
Enterprise Associates' Emerging Topics Paper Series. This is pertinent to US
social entrepreneurs, as well. This work has been in development for quite some
time. Given feedback from industry readers, I am encouraged to share it with a
wider audience. While I continue as a full time employee at the Grameen
Foundation USA in the growing Capital Markets Group, the paper is from work
previously developed with thanks to Brigham Young University's Microenterprise
Conference. The paper is geared towards US domestic, as well as international,
microfinance managers, industry practitioners, investors, bankers, and others
interested in supporting the microfinance industry to grow faster. It is meant
to foster dialogue on an important topic critical to the industry's future
rather than assert one opinion as 'correct'. Comments and feedback are highly
encouraged. Please feel free to share this email and the paper with others.
From Susan Cornell Wilkes" <scwilkes@adventuresingiving.com>
My husband, Jim Klobuchar, a retired newspaper columnist in Minnesota, and I
have written a book about microfinance on four continents: The Miracles of
Barefoot Capitalism. We wrote it for the lay reader because there are so few
Americans who know about microcredit and its incredible effectiveness as a tool
for development. We make presentations and have found that people, whatever
their means, respond to this way of intervening in world poverty. I am writing
because we are interested in any innovative uses of microfinance, overseas
primarily, but also here. One major issue is reaching financial sustainability
in programs/institutions involved in microfinance. Anyone interested in the
book can find it on Jim's website:
www.jimklobuchar.com.
Andrew (Drew) Tulchin <drew@socialenterprise.net>
We are pleased to share with you the working paper entitled: Microfinance and
the Double Bottom Line - Working Paper on Measuring Social Return for the
Microfinance Industry. It is available for download for free on the
website of Social Enterprise Associates (http://www.socialenterprise.net/resources.html).
Look for "NEW" in red letters. The paper investigates the Double Bottom
Line, that revenue generating activities produce financial, as well as
social, return, as it pertains to microfinance. As this is a working paper,
we invite your comments, criticisms, thoughts, and ideas to advance these
central ideas of social return in the microfinance industry. Comments received
before December 18, 2003, will be taken into consideration for the next
editing round. All commentators will be acknowledged in the final
publication. Recommendations of potential publications for this paper, as
well as appropriate venues to expand discussion of social return and its value
for microfinance specifically and economic development broadly, are highly
encouraged. This paper was written through funding provided by the Ford
Foundation, Mexico Office, through a grant to the MicroCapital Institute.