microfinance

• Microfinance

https://store.theartofservice.com/the-microfinance-toolkit.html

Microfinance

1 Microfinance is a form of financial services for entrepreneurs and small businesses lacking access to banking and related

services. The two main mechanisms for the delivery of financial services to such clients

are: (1) relationship-based banking for individual entrepreneurs and small

businesses; and (2) group-based models, where several entrepreneurs come together

to apply for loans and other services as a group.

Microfinance

1 In some regions, for example Southern Africa, microfinance is used

to describe the supply of financial services to low-income employees, which is closer to the retail finance

model prevalent in mainstream banking.

Microfinance

1 For others, microfinance is a way to promote economic development,

employment and growth through the support of micro-entrepreneurs and

small businesses.

Microfinance

1 Proponents often claim that microfinance lifts people out of poverty, but the evidence is

Microfinance - Purpose

1 Traditionally, banks have not provided financial services, such as

loans, to clients with little or no cash income

1 In addition, most poor people have few assets that can be secured by a bank as collateral. As documented

extensively by Hernando de Soto and others, even if they happen to own land in the developing world, they

may not have effective title to it. This means that the bank will have little

recourse against defaulting borrowers.

1 Seen from a broader perspective, the development of a healthy national

financial system has long been viewed as a catalyst for the broader

goal of national economic development (see for example Alexander Gerschenkron, Paul

Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger)

1 Hopes of quickly putting them out of business have proven unrealistic,

even in places where microfinance institutions are active.

1 The industry has been growing rapidly, and concerns have arisen that the rate of capital flowing into

microfinance is a potential risk unless managed well.

1 As seen in the State of Andhra Pradesh (India), these systems can

easily fail. Reasons for failure include lack of use by potential customers, over-indebtedness, poor operating procedures, neglect of duties and

inadequate regulations.

Microfinance - Microfinance and poverty

1 In developing economies and particularly in rural areas, many activities that would be

classified in the developed world as financial are not monetized: that is, money is not used to carry them out. This is often the case when people need the services money can provide but do not have dispensable funds required for those services, forcing them to revert to other means of acquiring them. In his recent

book The Poor and Their Money, Stuart Rutherford cites several types of needs:

1 Lifecycle Needs: such as weddings, funerals, childbirth, education,

homebuilding, widowhood and old age.

1 Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or

death.

1 Disasters: such as fires, floods, cyclones and man-made events like war or bulldozing of

dwellings.

1 Investment Opportunities: expanding a business, buying land or

equipment, improving housing, securing a job (which often requires

paying a large bribe), etc.

1 The obstacles or challenges to building a sound commercial microfinance industry

include:

1 Inappropriate donor subsidies

1 Poor regulation and supervision of deposit-

taking MFIs

1 Few MFIs that meet the needs for savings,

remittances or insurance

1 Institutional inefficiencies

1 Need for more dissemination and adoption of rural, agricultural microfinance methodologies

Microfinance - Ways in which poor people manage their money

1 Rutherford argues that the basic problem poor people as money managers face is to gather a

'usefully large' amount of money

1 A poor family might borrow from relatives to buy land, from a

moneylender to buy rice, or from a microfinance institution to buy a

sewing machine

1 Most needs are met through a mix of saving and credit. A benchmark impact assessment

of Grameen Bank and two other large microfinance institutions in Bangladesh found that for every $1 they were lending to clients to finance rural non-farm micro-enterprise,

about $2.50 came from other sources, mostly their clients' savings. This parallels the experience in the West, in which family

businesses are funded mostly from savings, especially during start-up.

1 Recent studies have also shown that informal methods of saving are unsafe. For example, a study by Wright and Mutesasira in Uganda

concluded that "those with no option but to save in the informal sector are almost bound to lose some money—probably around one quarter of what

they save there."

1 The work of Rutherford, Wright and others has caused practitioners to

reconsider a key aspect of the microcredit paradigm: that poor

people get out of poverty by borrowing, building microenterprises

and increasing their income

Microfinance - Examples

1 An example of microfinance is the Saving Up program

1 FINCA, the Foundation for International Community Assistance, was formed in Latin America in the

1 According to Rutherford, there are three ways to save, known as basic personal financial intermediations;

saving up (deposit collectors), saving down (the urban moneylenders) and saving through (the merry go round)

(Rutherford, 2009).

1 Jyothi, from the city of Vijayawada in India, is used as an example of a saving up initiative

1 Another important basic personal financial intermediation is called the saving up and down; Rabeya’s “fund”

which takes place in Dhaka, Bangladesh

Microfinance - Microfinance debates and challenges

1 There are several key debates at the

boundaries of microfinance.

Microfinance - Interest rates

1 The high costs of traditional microfinance loans limit their

effectiveness as a poverty-fighting tool

1 According to a recent survey of microfinance borrowers in Ghana

published by the Center for Financial Inclusion, more than one-third of

borrowers surveyed reported struggling to repay their loans. Some

resorted to measures such as reducing their food intake or taking

children out of school in order to repay microfinance debts that had not proven sufficiently profitable.

1 In recent years, the microfinance industry has shifted its focus from the objective of

increasing the volume of lending capital available, to address the challenge of

providing microfinance loans more affordably. Microfinance analyst David Roodman contends that, in mature markets, the average interest

and fee rates charged by microfinance institutions tend to fall over time. However,

global average interest rates for microfinance loans are still well above 30%.

1 However, it remains to be seen whether such radical alternative

models can reach the scale necessary to compete with

traditional microfinance programs.

Microfinance - Use of loans

1 Practitioners and donors from the charitable side of microfinance frequently argue for restricting

microcredit to loans for productive purposes—such as to start or expand

a microenterprise. Those from the private-sector side respond that,

because money is fungible, such a restriction is impossible to enforce,

and that in any case it should not be up to rich people to determine how

poor people use their money.

Microfinance - Who should provide microfinance services?

1 Perhaps influenced by traditional Western views about usury, the role of the traditional moneylender has

been subject to much criticism, especially in the early stages of

modern microfinance

Microfinance - Who should provide microfinance services?

1 Modern microfinance emerged in the 1970s with a strong orientation

towards private-sector solutions. This resulted from evidence that state-owned agricultural development

banks in developing countries had been a monumental failure, actually undermining the development goals they were intended to serve (see the

compilation edited by Adams, Graham & Von Pischke).

Nevertheless, public officials in many countries hold a different view, and

continue to intervene in microfinance markets.

Microfinance - Reach versus depth of impact

1 This is true not only for individual institutions, but also for governments

engaged in developing national microfinance systems.

Microfinance - Gender

1 Microfinance experts generally agree that women should be the primary focus of service

delivery

Microfinance - Benefits and Limitations

1 The limitations of microfinance are that through this savings plan

participants are losing money by having to pay a fee

1 When looking at a micro-finance initiative, there are three main benefits and limitations for the

model. These are based on a basic micro-finance initiative though they can be applied to many variations. When looking at the three benefits

and limitations, they revolve around three key ideas, poverty, mistrust,

and promoting change.https://store.theartofservice.com/the-microfinance-toolkit.html

1 Lastly, a microfinance initiative can promote larger poverty reduction

movements by increasing the financial knowledge of the average

citizen.

1 Secondly, when creating a microfinance project, time may be an issue

1 There are two ways in which the needs of the poor are not being met by micro finance

1 Also, there are complications associated with implementing micro-finance projects in

Canada

1 Microfinance helps the poor people get access or save funds over a

period of time with low interest rates

Microfinance - History of microfinance

1 Microfinance programmes also

need to be based on local funds

1 The history of microfinancing can be traced back as far as the middle of

the 1800s, when the theorist Lysander Spooner was writing about

the benefits of small credits to entrepreneurs and farmers as a way of getting the people out of poverty. Independently of Spooner, Friedrich Wilhelm Raiffeisen founded the first

cooperative lending banks to support farmers in rural Germany.

1 The modern use of the expression "microfinancing" has roots in the

1970s when organizations, such as Grameen Bank of Bangladesh with

the microfinance pioneer Muhammad Yunus, were starting and shaping the modern industry of microfinancing.

Another pioneer in this sector is Akhtar Hameed Khan.

Microfinance - Microfinance standards and principles

1 It could be claimed that a government that orders state banks to open deposit accounts for poor consumers, or a moneylender that engages in usury, or a charity that runs a heifer pool are engaged in

microfinance

1 Some principles that summarize a century and a half of development practice were encapsulated in 2004 by CGAP and endorsed by the Group of Eight leaders at the G8 Summit on

June 10, 2004:

1 Poor people need not just loans but also savings, insurance and money transfer

services.

1 Microfinance must be useful to poor households: helping them raise income, build up assets and/or

cushion themselves against external shocks.

1 "Microfinance can pay for itself." Subsidies from donors and

government are scarce and uncertain and so, to reach large numbers of

poor people, microfinance must pay for itself.

1 Microfinance means building permanent

local institutions.

1 Microfinance also means integrating the financial needs of poor people

into a country's mainstream financial system.

1 "Donor funds should complement private capital, not compete

with it."

1 "The key bottleneck is the shortage of strong institutions and managers."

Donors should focus on capacity building.

1 Interest rate ceilings hurt poor people by preventing microfinance

institutions from covering their costs, which chokes off the supply of credit.

1 Microfinance institutions should measure and disclose their

performance—both financially and socially.

1 Microfinance is considered a tool for socio-economic development, and can be clearly distinguished from

charity. Families who are destitute, or so poor they are unlikely to be able

to generate the cash flow required to repay a loan, should be recipients of charity. Others are best served by

financial institutions.

Microfinance - Scale of microfinance operations

1 Of these accounts, 120 million were with institutions normally understood to practice

microfinance

1 Considering that most bank clients in the developed world need several

active accounts to keep their affairs in order, these figures indicate that

the task the microfinance movement has set for itself is still very far from

finished.

1 By type of service, "savings accounts in alternative finance institutions outnumber loans by about four to

one. This is a worldwide pattern that does not vary much by region."

1 An important source of detailed data on selected microfinance institutions is the MicroBanking Bulletin, which is

published by Microfinance Information Exchange. At the end of 2009, it was tracking 1,084 MFIs that

were serving 74 million borrowers ($38 billion in outstanding loans) and

67 million savers ($23 billion in deposits).

1 The 2011 report contains information on the environment of microfinance

in 55 countries among two categories, Regulatory Framework and the Supporting Institutional

Framework

1 As yet there are no studies that indicate the scale or distribution of 'informal' microfinance

organizations like ROSCA's and informal associations that help people manage costs

like weddings, funerals and sickness. Numerous case studies have been published, however, indicating that these organizations, which are generally designed and managed by poor people themselves with little outside

help, operate in most countries in the developing world.

1 Help can come in the form of more and better-qualified staff, thus higher education is needed for microfinance institutions. This has begun in some

universities, as Oliver Schmidt describes. Mind the management

Microfinance - Microfinance in the United States and Canada

1 The average microfinance loan size in the US is US$9,732, ten times the size of an average microfinance loan

in developing countries (US$973).

Microfinance - Impact

1 According to reports, every domestic

microfinance loan creates 2.4 jobs

Microfinance - United States

1 In the late 1980s, microfinance institutions developed in the US.

They served low-income and marginalized minority communities.

By 2007, there were 500 microfinance organizations operating

in the US with 200 lending capital.

1 Change in social welfare policies and focus on economic development and

job creation at the macro level.

1 Encouragement of employment, including self-employment, as a

strategy for improving the lives of the poor.

1 These factors incentivized the public and private supports to have

microlending activity in the United States.

1 ACCION USA, an affiliate of ACCION International, offers microloans and other financial services to low- and moderate-income entrepreneurs for their small businesses who cannot

get financial support through traditional means. Accion Chicago

Accion Texas-Louisiana

1 Founded in 1997 in New York City, Project Enterprise provides support

to entrepreneurs and small businesses in lower income

communities through access to business loans, business

development services, and networking opportunities.

1 Based in New York and founded by Muhammed Yunus, Grameen America

provides micro-loans, savings programs, financial education, and credit establishment to low-income

entrepreneurs.

1 An example of a Microfinance startup, this organization was

founded by two Brown University students in 2009. Based in

Providence, Rhode Island, CGF provides credit-building business and consumer loans, financial coaching,

and free tax preparation.

1 RISE Financial Pathways (formerly

Community Financial Resource

Center)https://store.theartofservice.com/the-microfinance-toolkit.html

1 Based in Los Angeles, this first public-private partnership of its kind

provides micro-loans, SEED/expansion loans, high interest

savings accounts, financial education & counseling to low and moderate

income entrepreneurs and disinvested communities.

Microfinance - Canada

1 Microfinance in Canada took shape through the

development of credit unions

1 Efforts to transfer specific microfinance innovations such as solidarity lending from developing countries to Canada have met with

little success.

1 Founded by Sandra Rotman in 2009, Rise is a Rotman and CAMH initiative that provides small business loans,

leases, and lines of credit to entrepreneurs with mental health

and/or addiction challenges.

1 Formed in 2005 through the merging of the Civil Service Savings and Loan Society and the Metro Credit Union, Alterna is a financial alternative to Canadians. Their banking policy is based on cooperative values and

expert financial advising.

1 Access Community Capital Fund

1 Based in Toronto, Ontario, ACCESS is a Canadian charity that helps

entrepreneurs without collateral or credit history find affordable small

loans.

1 Montreal Community Loan

1 Created to help eradicate poverty, Montreal Community Loan Fund provides accessible credit and

technical support to entrepreneurs with low income or credit for start-ups or expansion of organizations

that cannot access traditional forms of credit.

1 Using the community economic development approach, Momentum offers opportunities to people living in poverty in Calgary. Momentum

provides individuals and families who want to better their financial

situation take control of finances, become computer literate, secure

employment, borrow and repay loans for business, and purchase homes.

1 Founded in 1946, Vancity is now the largest English speaking credit union in Canada.

Microfinance - Micro Finance in India

1 Loans to poor people by banks have many limitations including lack of

security and high operating cost and so Microfinance was developed as an alternative to provide loans to poor

people with the goal of creating financial inclusion and equality.

1 Muhammad Yunus a Nobel Prize winner, introduced the concept of Microfinance in Bangladesh in the

form of the "Grameen Bank"

1 Micro Finance is defined as, financial services such as Saving A/c,

Insurance Fund & credit provided to poor & low income clients so as to help them to rise their income &

there by improve their standard of living.

1 From this definition it is clear that main features of Micro

Financing:

1 1) Loan are given without security

1 4) Maximum limit of loan under micro

finance ₨25,000/-

1 6) Micro Finance is different from Micro Credit- under Micro Credit,

small amount of loans given to the borrower but under Micro Finance besides loans many other financial

services are provided such as Savings A/c, Insurance etc. Therefore Micro Finance has wider concept as

compared to Micro Credit.

Microfinance - "Inclusive financial systems"

1 The microcredit era that began in the 1970s has lost its momentum, to be

replaced by a 'financial systems' approach. While microcredit achieved a great deal, especially in urban and

near-urban areas and with entrepreneurial families, its progress in delivering financial services in less

densely populated rural areas has been slow.

1 The new financial systems approach pragmatically acknowledges the

richness of centuries of microfinance history and the immense diversity of

institutions serving poor people in developing world today. It is also

rooted in an increasing awareness of diversity of the financial service

needs of the world’s poorest people, and the diverse settings in which

they live and work.https://store.theartofservice.com/the-microfinance-toolkit.html

1 Brigit Helms in her book 'Access for All: Building Inclusive Financial

Systems', distinguishes between four general categories of microfinance

providers, and argues for a pro-active strategy of engagement with all of

them to help them achieve the goals of the microfinance movement.

1 These include moneylenders, pawnbrokers, savings collectors,

money-guards, ROSCAs, ASCAs and input supply shops. Because they

know each other well and live in the same community, they understand

each other’s financial circumstances and can offer very flexible,

convenient and fast services. These services can also be costly and the choice of financial products limited

and very short-term. Informal services that involve savings are also risky; many people lose their money.

1 These include self-help groups, credit unions, and a variety of hybrid

organizations like 'financial service associations' and CVECAs

1 The Microcredit Summit Campaign counted 3,316 of these MFIs and

NGOs lending to about 133 million clients by the end of 2006

1 The increasing use of alternative data in credit scoring, such as trade

credit is increasing commercial banks' interest in microfinance.

1 With appropriate regulation and supervision, each of these

institutional types can bring leverage to solving the microfinance problem. For example, efforts are being made to link self-help groups to commercial

banks, to network member-owned organizations together to achieve

economies of scale and scope, and to support efforts by commercial banks to 'down-scale' by integrating mobile banking and e-payment technologies into their extensive branch networks.

Microfinance - Microcredit and the web

1 Due to the unbalanced emphasis on credit at the expense of

microsavings, as well as a desire to link Western investors to the sector,

peer-to-peer platforms have developed to expand the availability

of microcredit through individual lenders in the developed world

1 The volume channeled through Kiva's peer-to-peer platform is about $100 million as of November 2009 (Kiva facilitates approximately $5M in

loans each month). In comparison, the needs for microcredit are

estimated about 250 bn USD as of end 2006. Most experts agree that

these funds must be sourced locally in countries that are originating

microcredit, to reduce transaction costs and exchange rate risks.

1 There have been problems with disclosure on peer-to-peer sites, with

some reporting interest rates of borrowers using the flat rate

methodology instead of the familiar banking Annual Percentage Rate. The

use of flat rates, which has been outlawed among regulated financial institutions in developed countries, can confuse individual lenders into believing their borrower is paying a

lower interest rate than, in fact, they are.

Microfinance - Microfinance and social interventions

1 Such interventions like the "Intervention with Microfinance for AIDS and Gender Equity" (IMAGE) which incorporates microfinancing

with "The Sisters-for-Life" program a participatory program that educates

on different gender roles, gender-based violence, and HIV/AIDS infections to strengthen the

communication skills and leadership of women "The Sisters-for-Life" program has two phases where

phase one consists of ten one-hour training programs with a facilitator

with phase two consisting of identifying a leader amongst the

group, train them further, and allow them to implement an Action Plan to

their respective centres.

Microfinance - Microfinance and social interventions

1 This approach shows, that microfinance can not only help

businesses to prosper; it can also foster human development and

social security

Microfinance - Impact and criticism

1 Most criticisms of microfinance have actually been criticisms of

microcredit. Criticism focuses on the impact on poverty, the level of

interest rates, high profits, overindebtedness and suicides.

Other criticism include the role of foreign donors and working

conditions in companies affiliated to microfinance institutions, particularly

in Bangladesh.https://store.theartofservice.com/the-microfinance-toolkit.html

1 The impact of microcredit is a subject of much controversy. Proponents

state that it reduces poverty through higher employment and higher

incomes. This is expected to lead to improved nutrition and improved

education of the borrowers' children. Some argue that microcredit

empowers women. In the US and Canada, it is argued that microcredit

helps recipients to graduate from welfare programs.

1 Critics say that microcredit has not increased incomes, but has driven

poor households into a debt trap, in some cases even leading to suicide. They add that the money from loans is often used for durable consumer goods or consumption instead of

being used for productive investments, that it fails to empower women, and that it has not improved

health or education.https://store.theartofservice.com/the-microfinance-toolkit.html

1 The available evidence indicates that in many cases microcredit has facilitated the creation and the

growth of businesses

Microfinance - Role of foreign donors

1 The role of donors has also been questioned

Microfinance - Working conditions in enterprises affiliated to MFIs

1 There has also been criticism of microlenders for not taking more

responsibility for the working conditions of poor households,

particularly when borrowers become quasi-wage labourers, selling crafts or agricultural produce through an organization controlled by the MFI

Microfinance - Further reading

1 Adams, Dale W., Douglas H. Graham & J. D. Von Pischke (eds.).

Undermining Rural Development with Cheap Credit. Westview Press,

Boulder & London, 1984.

1 de Aghion, Beatriz Armendáriz & Jonathan Morduch. The Economics of

Microfinance, The MIT Press, Cambridge, Massachusetts, 2005.

1 Branch, Brian & Janette Klaehn. Striking the Balance in Microfinance:

A Practical Guide to Mobilizing Savings. PACT Publications,

Washington, 2002.

1 Dowla, Asif & Dipal Barua. The Poor Always Pay Back: The Grameen II

Story. Kumarian Press Inc., Bloomfield, Connecticut, 2006.

1 Floro, Sagrario & Pan A. Yotopoulos, Informal Credit Markets and the New

Institutional Economics, Westview Press, Boulder Col., 1991, ISBN 0-

8133-8136-3.

1 Hirschland, Madeline (ed.) Savings Services for the Poor: An Operational

Guide. Kumarian Press Inc., Bloomfield CT, 2005.

1 Khandker, Shahidur R. Fighting Poverty with Microcredit, Bangladesh

edition, The University Press Ltd, Dhaka, 1999.

1 Ledgerwood, Joanna and Victoria White. Transforming Microfinance

Institutions: Providing Full Financial Services to the Poor. World Bank,

1 Mas, Ignacio and Kabir Kumar. Banking on mobiles: why, how and for whom? CGAP Focus Note #48,

July 2008.

1 Rai, Achintya et al. Venture: A Collection of True Microfinance

Stories. Zidisha Microfinance, 2012. (Kindle E-Book,

http://www.amazon.com/Venture-Collection-Microfinance-Stories-

ebook/dp/B009JC6V12.)

1 Raiffeisen, FW (translated from the German by Konrad Engelmann). The Credit Unions. The Raiffeisen Printing & Publishing Company, Neuwied on

the Rhine, Germany, 1970.

1 Robinson, Marguerite S., The microfinance revolution, The World Bank, Washington D.C.,

1 Roodman, David, Due Diligence: An Impertinent Inquiry into Microfinance,

Center for Global Development, 2012.

1 Seibel Hans Dieter & Shyam Khadka, "SHG Banking: a financial technology for very poor microentrepreneurs",

Savings and Development, Vol. XXVI, n. 2, 2002, ISSN 0393-4551..

1 Sinclair, Hugh. Confessions of a Microfinance Heretic. Berrett-Koehler Publishers, 2012.

1 Rutherford, Stuart. The Poor and Their Money. Oxford University Press, Delhi, 2000.

1 Wolff, Henry W. People’s Banks: A Record of Social and Economic

Success. P.S. King & Son, London, 1910.

1 Maimbo, Samuel Munzele & Dilip Ratha (eds.) Remittances:

Development Impact and Future Prospects. The World Bank, 2005.

1 Wright, Graham A.N. Microfinance Systems: Designing Quality Financial Services for the Poor. The University

Press, Dhaka, 2000.

1 United Nations Department of Economic Affairs and United Nations Capital Development Fund. Building

Inclusive Financial Sectors for Development. United Nations, New

York, 2006.

1 Yunus, Muhammad. Creating a World Without Poverty: Social Business and

the Future of Capitalism. PublicAffairs, New York, 2008.

1 Yunus Muhammad, Moingeon Bertrand & Laurence Lehmann-

Ortega, "Building Social Business Models: Lessons from the Grameen

Experience”, April-June, vol 43, n° 2-3, Long Range Planning, 2010, p.

308-325."

Long-tail - Microfinance and microcredit

1 The banking business has used internet technology to reach an

increasing number of customers. The most important shift in business model due to the long tail has come

from the various forms of microfinance developed.

1 As opposed to e-tailers, micro-finance is a distinctly low technology business

1 Grameen Bank in Bangladesh has successfully followed this business

model. In Mexico the banks Compartamos and Banco Azteca also service this customer demographic,

with an emphasis on consumer credit. Kiva.org is an organization

that provides micro credits to people worldwide, by using intermediaries

called small microfinance organizations (S.M.O.'s)to distribute crowd sourced donations made by

Kiva.org lenders.

Joint and several liability - Microfinance

1 In trying to achieve its aim of alleviating poverty, Microfinance

often lends to group of poor, where each member of the group is jointly

liable to each other

Micro-finance - Microfinance and poverty

1 In developing economies and particularly in rural areas, many

activities that would be classified in the developed world as financial are not monetization|monetized: that is, money is not used to carry them out. This is often the case when people

need the services money can provide but do not have dispensable funds required for those services, forcing them to revert to other means of

acquiring them.

1 In his recent book The Poor and Their Money, Stuart Rutherford cites several types of needs:Stuart

Rutherford. The Poor and Their Money. Oxford University Press, New

Delhi, 2000, p. 4. isbn =0-19-565790-X

1 * Lifecycle Needs: such as weddings, funerals, childbirth, education,

homebuilding, widowhood and old age.

1 * Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or

death.

1 * Disasters: such as fires, floods, cyclones and man-made events like

war or bulldozing of dwellings.

1 * Investment Opportunities: expanding a business, buying land or

equipment, improving housing, securing a job (which often requires

paying a large bribe), etc.

1 As Marguerite Robinson describes in The Microfinance Revolution, the

1980s demonstrated that microfinance could provide large-

scale outreach profitably, and in the 1990s, microfinance began to

develop as an industry (2001, p.54).

1 * Inappropriate donor subsidies

1 * Poor regulation and supervision of deposit-

taking MFIs

1 * Few MFIs that meet the needs for savings, remittances or

insurance

1 * Institutional inefficiencies

1 * Need for more dissemination and adoption of rural, agricultural microfinance

methodologies

Micro-finance - History of microfinance

1 Microfinance programmes also need

to be based on local funds

Micro-finance - History of microfinance

1 The modern use of the expression microfinancing has roots in the 1970s

when organizations, such as Grameen Bank of Bangladesh with

the microfinance pioneer Muhammad Yunus, were starting and shaping the modern industry of microfinancing.

Another pioneer in this sector is Akhtar Hameed Khan.

Micro-finance - Microfinance standards and principles

1 It could be claimed that a government that orders state banks to open deposit accounts for poor consumers, or a moneylender that engages in usury, or a charity that

runs a Heifer International|heifer pool are engaged in microfinance

1 #Poor people need not just loans but also savings, insurance and

Electronic funds transfer|money transfer services.

1 #Microfinance must be useful to poor households: helping them raise income, build up assets and/or

cushion themselves against external shocks.

1 #Microfinance can pay for itself.Helms (2006), p. xi Subsidies from donors and government are

scarce and uncertain and so, to reach large numbers of poor people,

microfinance must pay for itself.

1 #Microfinance means building permanent local institutions.

1 #Microfinance also means integrating the financial needs of

poor people into a country's mainstream financial system.

1 #Donor funds should complement private Financial capital|capital, not compete with it.

1 #The key bottleneck is the shortage of strong institutions and managers.

Donors should focus on capacity building.

1 #Interest rate ceilings hurt poor people by preventing microfinance

institutions from covering their costs, which chokes off the supply of credit.

1 #Microfinance institutions should measure and disclose their

performance—both financially and socially.

1 Microfinance is considered a tool for socio-economic development, and can be clearly distinguished from

charity. Families who are destitute, or so poor they are unlikely to be

able to generate the cash flow required to repay a loan, should be

recipients of charity. Others are best served by financial institutions.

Micro-finance - Scale of microfinance operations

1 Of these accounts, 120 million were with institutions normally understood to practice

microfinance

1 By type of service, savings accounts in alternative finance institutions outnumber loans by about four to

one. This is a worldwide pattern that does not vary much by

region.Christen, Rosenberg Jayadeva. Financial institutions with

a double-bottom line, pp. 5-6

Framework

Micro-finance - Microfinance in the United States and Canada

Micro-finance - Microfinance and social interventions

1 Understanding the impact of a microfinance-based intervention of

women's empowerment and the reduction of intimate partner

violence in South Africa

Micro-finance - Microfinance and social interventions

1 Pro Mujer uses a “one-stop shop” approach, which means in one

building, the clients find financial services, business training,

empowerment advice and healthcare services combined.Microinsurance -

Healthy Clients http://www.dandc.eu/en/article/pro-mujer-why-microfinance-institutions-should-offer-healthcare-services-too

United Nations Relief and Works Agency - UNRWA Microfinance Department

1 UNRWA's Microfinance Department (MD) aims to alleviate poverty and support economic development in

the refugee community by providing capital investment and working

capital loans at commercial rates. The programme seeks to be as close to self-supporting as possible. It has

a strong record of creating employment, generating income and

empowering refugees.https://store.theartofservice.com/the-microfinance-toolkit.html

1 With operations in three countries, the MD currently has the broadest

regional coverage of any microfinance institution in the Middle

1 The MD works by extending micro-credit and complimentary services to small entrepreneurs, households and

businesses

1 The MD conceives of its mission in the context of the United Nation’s broader vision of building inclusive

financial services for the poor

1 In the intervening six years it has grown into the second largest

microfinance provider in Syria, where it is also the first institution to reach operational self-sufficiency, and the

fifth largest in Jordan

1 The department focuses its outreach on poor urban areas, which are both centres of commercial and industrial

activity and host a high concentration of Palestine refugees

1 'Products and Services:'

1 Through its branch offices the MD provides a range of credit products. Existing products available in the

MD’s markets include the following:

1 :'Microenterprise Credit (MEC):' targets the overwhelming majority of

regional businesses which employ fewer than five workers, most of whom enjoy no access to formal

credit and are vulnerable to shocks. The loans range from USD 300 to

USD 8,500, and are designed to help such businesses build-up and

maintain reserves of short-term working capital.

1 :'Microenterprise Credit Plus (MEC+):' allows mature microenterprises who

seek to expand capital and grow employment to expand MEC

borrowing with more extended repayment horizons. Eligible clients

include formal enterprises and borrowers who have demonstrated repayment ability over several loan

cycles.https://store.theartofservice.com/the-microfinance-toolkit.html

1 :'Solidarity Group Lending (SGL):' designed for groups of women

entrepreneurs who are collectively and individually responsible for

repayment. Starting at USD 400, with a maximum ceiling of USD 5,000, the SGL sustains microenterprise, as well

household expenditures on education, health, and basic needs.

1 :'Women’s Household Credit (WHC):' an adaptation of the SGL loan, first piloted in Syria to accommodate

home-based enterprise by women, allowing them to build up household assets used for business. Unlike the SLG product, it does not work on a

group-lending model. Average disbursements are in the range USD

150 to USD 800.https://store.theartofservice.com/the-microfinance-toolkit.html

1 :'Consumer Loan Product (CLP):' supports low-income and working-class family consumption, regular

investments in education and health, as well as emergency outlays.

1 :'Housing Loan Product (HLP):' helps poor families with no access to

mortgage facilities improve, expand or acquire housing.

1 :'Small and Medium Enterprise Business Training (SMET):' an

enterprise training program in Gaza that trains participants in subjects such as book-keeping, taxation,

tendering, computing and e-commerce.

Cooperative banking - Microcredit and microfinance

1 The more recent phenomena of microcredit and microfinance are

often based on a cooperative model They focus on small business

lending. In 2006, Muhammad Yunus, founder of the Grameen Bank in

Bangladesh, won the Nobel Peace Prize for his ideas regarding

development and his pursuit of the microcredit concept.

Fairplay For All Foundation - Microfinance

1 People living in areas like Payatas rarely have access to financial instruments such as credit and

savings. Through FFA’s microfinancing programs, families of the children the charity works with can avail of low-interest or interest-

free loans, usually for medical emergencies or for starting small

businesses. Any income generated is then reinvested for future

microfinancing needs.

Islamic banking - Microfinance

1 Already, several microfinance institutions (MFIs) such as FINCA

Afghanistan have introduced Islamic-compliant financial instruments that

accommodate sharia criteria.

Microfinance Information Exchange

1 'Microfinance Information Exchange, Inc.' (commonly known by its acronym 'MIX') is a

non-profit organization that acts as a business information provider in the microfinance sector. Founded by the Consultative Group to Assist the

Poor (CGAP) and sponsored by the Bill and Melinda Gates Foundation, CGAP, Citigroup|Citi

Foundation, Deutsche Bank|Deutsche Bank Foundation, IFAD, and Omidyar Network, MIX is

headquartered in Washington DC, and has regional offices in Peru, Morocco, and India.

Microfinance Information Exchange - Business Information Provider

1 In providing objective data and analysis on microfinance providers, MIX hopes to promote transparency (market)|financial transparency in the industry, build the

information infrastructure in developing countries, and offer those involved in microfinance (practitioners, funders,

policy makers, academia) a way to gain a better understanding of MFI operations,

challenges, and performance trends.

Microfinance Information Exchange - MIX Market

1 MIX Market is MIX’s platform for delivering microfinance information.

Described as the “microfinance information clearinghouse,” MIX

Market provides online data on over 1800 microfinance institutions (MFIs)

and 100 investors.

1 'MIX Market Statistics' – As of July 20, 2010, 1,834 MFIs were reporting data to MIX. Those MFIs total $43.8 billion

USD in gross loan portfolio, $23.7 billion USD in deposits, 81.4 million

borrowers, and 593.1 in average loan balance per borrower.

1 'Data Collection and Analysis' - After receiving self-reported data from

MFIs, MIX Financial analyst|analysts “review the data, ensuring there are

no outliers and extremes. [They] double check against source

documents such as audits and ratings, and standardize [the data]

according to internationally accepted accounting standards and to provide

for a more useful intra-regional comparison.”

1 'Data Products' - The main data products of the MIX Market include 'MFI Profiles' (including Economic

indicator|Financial Indicators, wikt:trend|Trends, and

Benchmarking|Benchmarks), 'Country-level and Regional profiles', 'Funding Structure Data', and 'Social

Performance Reports'.

1 * 'MFI profiles' – The most basic medium through which data can be accessed on MIX Market is through individual MIX Market MFI profiles

which provide financial, operational, and social performance data as well

as relevant documents, such as audits. With this data, users can view

and compare performance data of several MFIs (by countries,

indicators, and trends), create customizable performance and trend reports, and create benchmarks to view aggregated data in median

values.

1 * 'Country-level and Regional Profiles' – These options permit a wider

perspective on MFI performance data, allowing users to view

information on a country-level scale or a regional scale. MIX Market

currently has country profiles for 115 countries divided into six regions: Africa or Sub-Saharan Africa (SSA), Latin America and The Caribbean

(LAC), East Asia and the Pacific (EAP), Middle East and North Africa (MENA),

Eastern Europe and Central Asia (EECA), and South Asia (SA).

1 * 'Funding Structure Data' – Launched in June 2010, MIX Market’s

Funding Structure Data provides information on debt financing

sources for microfinance institutions. The Funding Structure Data cover over 15 billion USD of outstanding debt, ranging from local to foreign, public and private funding sources, and covering 86 countries and 890 MFIs, representing over 90% of all

borrowers. The database allows users to aggregate data by country, funder

type, and other variables.

1 Additionally, MIX manages the Social Performance Task Force (SPTF)-sponsored 'Social Performance

Indicators Blog', which a medium for learning and exchange on topics related to social performance in

microfinance

1 MFIs, funders (public and private funds that invest in microfinance), MFI networks, and microfinance

service providers (academic institutions, Investment management|fund managers, development

programs, peer-to-peer lenders, private corporations, raters/external evaluators, advisory firms, and governmental and regulatory agency|

regulatory agencies) can create and update these profiles with their most recent business information

(including company overview, website and other contact information, and products) as well as

financial and operational data and documentation.

Microfinance Information Exchange - Publications

1 The semiannual 'MicroBanking Bulletin' publishes financial and

portfolio data provided voluntarily by MFIs and organized by peer groups. It includes peer reviewed articles from

microfinance practitioners and academics on topics related to

transparency and benchmarking.

1 'Regional Analysis, Benchmarking, and Trend Reports' are published yearly after the end of the data collection and provide industry

analysis including updates on broad economic, legal, and performance

developments. These reports include regional benchmarks for financial and operational indicators for the

upcoming year and provide a means by which to continually evaluate MFI

performance.

1 'Data briefs' draw on MIX Market datasets to provide empirical and

theoretical analysis on broader topics within the microfinance industry.

Microfinance in Tanzania

1 'Microfinance in Tanzania' began with NGOs and SACCOs (Savings and

Credit Cooperative Organizations) in 1995 and has continued to grow with

the increased success of microfinance internationally.

1 There are additional organizations involved in microfinance in Tanzania, including FINCA International|FINCA,

PRIDE and SEDA as well as the Tanzania Postal Bank

1 A recent 2005 survey done by the Bank of Tanzania (the overseer of microfinance

under the Ministry of Finance) updated the directory of microfinance practitioners and includes basic information on microfinance

institutions including commercial banks, financial institutions, financial Non-

Governmental Organizations (NGO), Savings and Credit Cooperatives Societies (SACCOs)

and Savings and Credit Associations (SACAs)

Microfinance in Tanzania - National Microfinance Bank

1 It plans to add 16 more branches and offices that can offer microfinance services.

1 The primary microfinance product offered and stressed are savings deposits which is the easiest to

obtain at NMB and quite reliable as well.

1 NMB’s specific strategy towards microfinance is unique in that they link large corporate customers to

microfinance loan customers. NMB calls this the Kilombero strategy after

they linked the loans given to the Kilombero sugar Company to sugar cane out-growers. The Kilombero

strategy encourages growth through loans for the use of capital and growth to both small and large

enterprises.

1 NMB encourages and expands microfinance in

three ways:

1 * Loans to micro and small enterprises for the purchase and inventory and supply of goods

1 * Add-on services such as money transfers and payroll services to both the large corporate clients and micro

and small enterprises

Microfinance in Tanzania - AKIBA Bank

1 Being a bank without as much outreach as a bank such as the

National Microfinance Bank, AKIBA has an easier time focusing on its

microfinance operations and is able to measure its success at a quicker

and easier than NMB

1 AKIBA attributes its success to providing services outside the normal

financial institution in teaching invaluable business practices as well as focusing on savings and deposits.

The growth in deposits can be attributed to the increase in micro

loans and the motivation for attaining loans through microfinance as well as additional success in other

banking areas.https://store.theartofservice.com/the-microfinance-toolkit.html

1 In preparation for these challenges, AKIBA has every intention to remain in microfinance and anticipates great

success.

1 One interesting aspect of AKIBA is that 80% of their customers have never held a bank account of any

form of savings account at an institution before. This is because

most banks have turned these people down due to their lack of prior credit. AKIBA attributes their success

to being able to gain these clients and then teaching them “the culture

of savings.https://store.theartofservice.com/the-microfinance-toolkit.html

Microfinance in Tanzania - CRDB Ltd.

1 However, unlike the other three commercial banks in microfinance, its primary source of funding comes

from The Danish International Development Agency (DANIDA)

which serves as one of CRDB’s single largest share-holders.

Microfinance in Tanzania - CRDB Ltd.

1 And its total loans and advances (including microfinance loans to

smaller microfinance institutions) is US$ 60 million.

Microfinance in Tanzania - Tanzania Postal Bank

1 The Tanzania Postal Bank is the 4th commercial bank” that is involved in

microfinance. Like the National Microfinance Bank, the Tanzania

Postal Bank was created by an Act of Parliament and like the previous three banks, it too is under the Companies Registrar and under

Microfinance institution

1 'Microfinance' is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main

mechanisms for the delivery of financial services to such clients are:

(1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based

models, where several entrepreneurs come together to apply for loans and

other services as a group.

Microfinance institution

1 For others, microfinance is a way to promote economic development,

employment and growth through the support of micro-entrepreneurs and

small businesses.

Microfinance institution - Interest rates

1 The high costs of traditional microfinance loans limit their

effectiveness as a poverty-fighting tool

Microfinance institution - Benefits and Limitations

1 The limitations of microfinance are that through this savings plan participants are losing money by having to pay a fee. The

user can also pay back their loans whenever they choose therefore encouraging a

borrower to have various outstanding loans. The lender is also vulnerable in that there is no guarantee of the loan being repaid in the

given arranged timeframe, and the consequences to defaulting are not defined.

Microfinance institution - Scale of microfinance operations

Framework

Microfinance institution - Microfinance in the United States and Canada

Microfinance institution - United States

1 In the late 1980s, microfinance institutions developed in the United States. They served low-income and marginalized minority group|minority

communities. By 2007, there were 500 microfinance organizations

operating in the US with 200 lending capital.

1 # Change in social welfare policies and focus on economic development and job creation at the macro level.

1 # Encouragement of employment, including self-employment, as a

strategy for improving the lives of the poor.

1 *'RISE Financial Pathways (formerly

Community Financial Resource Center)'

Microfinance institution - Micro Finance on the Indian Subcontinent

1 Loans to poor people by banks have many limitations including lack of

security and high operating costs. As a result, microfinance was developed as an alternative to provide loans to poor people with the goal of creating

financial inclusion and equality.

1 The National Bank for Agriculture and Rural Development (NABARD) took this idea and started the concept of

microfinance in India

1 Microfinance is defined as, financial services such as savings accounts, insurance funds and credit provided to poor and low income clients so as to help them increase their income, thereby improving their standard of

living.

1 In this context the main features of microfinance are:

1 * Loan given without security

1 * Maximum limit of loan under micro finance

₨25,000/-

1 * Microfinance is different from Microcredit- under the later, small

loans are given to the borrower but under microfinance alongside many

other financial services including savings accounts and insurance.

Therefore microfinance has a wider concept than microcredit.

1 In June 2014, CRISIL released it's latest report on the Indian Microfinance Sector titled

India's 25 Leading MFI's.[http://indiamicrofinance.com/microfinance-companies-in-india-2014-2015-2.html Top

Microfinance Institutions in India for 2014] CRISIL Report, June 2014. This list is the most

comprehensive and up to date overview of the microfinance sector in India and the

different microfinance institutions operating in the sub-continent.

Microfinance institution - Inclusive financial systems

1 The microcredit era that began in the 1970s has lost its momentum, to be

replaced by a 'financial systems' approach. While microcredit

achieved a great deal, especially in urban and near-urban areas and with entrepreneurial families, its progress in delivering financial services in less

densely populated rural areas has been slow.

1 ;Informal financial service providers: These include moneylenders,

pawnbrokers, savings collectors, money-guards, ROSCAs, ASCAs and

input supply shops

1 ;Member-owned organizations: These include Self-help group (finance)|self-

help groups, credit unions, and a variety of hybrid organizations like 'financial service associations' and

CVECAs

1 ;NGOs: The Microcredit Summit Campaign counted 3,316 of these

MFIs and NGOs lending to about 133 million clients by the end of 2006

1 The increasing use of alternative data in credit scoring, such as trade

credit is increasing commercial banks' interest in microfinance.

[http://www.infopolicy.org/_working/files/downloads/South-Africa-

compressed-web.pdf Turner, Michael, Robin Varghese, et al

1 With appropriate regulation and supervision, each of these institutional types can bring

leverage to solving the microfinance problem. For example, efforts are being made to link

self-help groups to commercial banks, to network member-owned organizations

together to achieve economies of scale and scope, and to support efforts by commercial banks to 'down-scale' by integrating mobile banking and e-payment technologies into

their extensive branch networks.

Microfinance institution - Microcredit and the web

1 In 2009, the US-based nonprofit Zidisha became the first peer-to-peer microlending platform to link lenders

and borrowers directly across international borders without local

intermediaries.[http://www.microfinancefocus.com/news/2010/02/07/zidis

ha-set-to-expand-in-peer-to-peer-microfinance-julia-kurnia/ Zidisha Set

to Expand in Peer-to-Peer Microfinance, Microfinance Focus,

Feb 2010]

1 The volume channeled through Kiva (organization)|Kiva's peer-to-peer

platform is about $100 million as of November 2009 (Kiva facilitates approximately $5M in loans each

month). In comparison, the needs for microcredit are estimated about 250

bn USD as of end 2006.[http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000219174.pdf Microfinance:

An emerging investment opportunity]. Deutsche Bank

Research. December 19, 2007.

1 MicroFinance Transparency

Microfinance institution - Microfinance and social interventions

1 Pro Mujer uses a “one-stop shop” approach, which means in one

building, the clients find financial services, business training,

empowerment advice and healthcare services combined.Microinsurance -

Healthy Clients http://www.dandc.eu/en/article/pro-mujer-why-microfinance-institutions-should-offer-healthcare-services-too

Microfinance institution - Mission Drift in Microfinance

1 Mission Drift refers to the phenomena through which the MFIs

or the micro finance institutions increasingly try to cater to customers who are better off than their original

customers, primarily the poor families

Microfinance institution - Mission Drift in Microfinance

1 (2009) “Microfinance Mission Drift?” But in either way, this problem of

selective funding leads to an ethical tradeoff where on one hand there is

an economic reason for the company to restrict its loans to only the

individuals who qualify the standards, and on the other hand there is an ethical responsibility to

help the poor people get out of poverty through the provision of

capital.

Microfinance institution - Role of foreign donors

1 The role of donors has also been questioned

Innovations for Poverty Action - Microfinance

1 IPA performs many evaluations of microfinance programs and products, including microcredit, microsavings, and microinsurance. IPA is part

of the Financial Access Initiative (FAI), a consortium launched with the support of a $5

million grant from the Bill Melinda Gates Foundation with the goal of increasing

knowledge about microfinance and communicating research lessons to a broad

spectrum of policy makers, microfinance institutions, and the public at large.

Innovations for Poverty Action - Microfinance

1 Some examples of IPA's research on microfinance include examinations of

the impact of group liability and commitment savings

Microfin360 - Partners' links[http://www.microfin360.com/index.php/en/component/content/art

icle/10-community/9-list-of-partners List of partners][http://datasoft-bd.com/functional-domains/microfinance Microfinance Clients]

1 #Bangladesh Association for

Community Education (BACE)

1 #Center for Community

Development Assistance (CCDA)

1 #Centre for Rehabilitation Education

Earning Development (CREED)

1 #Environment Council Bangladesh

1 #Integrated Community

Development Association (ICDA)

1 #Mohila Bohumukhi Sikkha Kendra

(MBSK)

1 #New Era Foundation

1 #Patakuri Society

1 #Social Advancement Through Unity (SATU)

1 #Shariatpur Development Society (SDS)

1 #Social Upliftment Society (SUS)

1 #Thengamara Mohila Sabuj

Sangha|Thengamara Mohila Sabuj

Sangha (TMSS)https://store.theartofservice.com/the-microfinance-toolkit.html

National Bank for Agriculture and Rural Development - Microfinance and NABARD

1 Thus the Reserve Bank of INDIA and NABARD has laid out certain guidelines in 06-07 for the

commercial banks, Regional Rural Banks and Cooperative Banks to

provide the data to RBI and es data regarding loans given by banks to

the microfinance institutions.

MercyCorps - Fostering microfinance

1 Partnering with banks and founding banking institutions, Mercy Corps

facilitates microfinance around the world.[http://www.mercycorps.org.uk/

topics/microfinance/11281 Microfinance Partners #124; Mercy

Corps]

1 * AFS (Ariana Financial Services

Group), Kabul

1 * CFPA (Chinese Foundation for Poverty

Alleviation), China

1 * MICRA (Microfinance Innovation Centre for Resources and Alternatives), Indonesia

1 * PATRA (Poverty Alleviation in the

Tumen River Area), China

1 * CHAM (Community Health and Microcredit),

Guatemala

Microcredit Summit Campaign - Microfinance access

1 By December 31, 2010, the Campaign counted more than 3,600

microfinance institutions that reported reaching more than 205 million clients with a current loan

1 According to the [http://www.microcreditsummit.org/pubs/reports/socr/2012/WEB_SOCR-

2012_English.pdf State of the Microcredit Summit Campaign Report

2012], out of the total number of clients reached in 2010, 137.5 million

were among the poorest and 82.3 percent (113.1 million) were women.

1 The growth in the number of very poor women reached has gone from

10.3 million at the end of 1999 to 113.1 million at the end of 2010. This

is a 1,001 percent increase in the number of poorest women reached

from December 31, 1999 to December 31, 2010. The increase

represents an additional 109.9 million poorest women receiving

microloans in the last 11 years.http://www.microcreditsummit.

org/SOCRs/SOCR2009_English.pdf

1 Of the 137.5 million poorest clients, 122.5 million of them (89 percent) are being served by the 85 largest individual institutions and networks reporting to the Campaign, all with 100,000 or more poorest clients.

Cooperative banking - Microcredit and microfinance

1 The more recent phenomena of microcredit and microfinance are

often based on a cooperative model. These focus on small business

lending. In 2006, Muhammad Yunus, founder of the Grameen Bank in

Bangladesh, won the Nobel Peace Prize for his ideas regarding

development and his pursuit of the microcredit concept.

Queen Rania of Jordan - Microfinance

1 In September 2003, Queen Rania accepted an invitation to join the

Board of Directors of the Foundation for International Community

Assistance (FINCA), thus formalizing a relationship of support and

advocacy which began in 2000.[http://www.villagebanking.org/site/c.

erKPI2PCIoE/b.2394309/k.2E2B/Press_Wire.htm FINCA’S FINCA

International Welcomes Queen Rania Al Abdullah, First Lady of the

Hashemite Kingdom of Jordan, to Its Board of Directors], 15 September

Queen Rania of Jordan - Microfinance

1 An emissary for the United Nations’ International Year of Microcredit in 2005,

Queen Rania’s belief in microfinance and her partnership with FINCA has generated more Jordanian micro-businesses, with the official opening of FINCA Jordan in February 2008.

[http://www.jordantimes.com/?news=5963searchFor=FINCA%20Jordan Queen highlights power of microfinance, tours FINCA Jordan microbusinesses], 26

February 2008.

Bangko Sentral ng Pilipinas - Microfinance and financial inclusion

1 In 2000, the [http://www.bsp.gov.ph/regulations/la

ws_gbl.asp General Banking Law] mandated the BSP to recognize

microfinance as a legitimate banking activity and to set the rules and

regulations for its practice within the banking sector. In the same year, the

BSP declared microfinance as its flagship program for poverty

alleviation. The BSP has become the prime advocate for the development

of microfinance. To this end, the Bangko Sentral aims to:

1 # Provide the enabling policy and regulatory

environment;

1 # Promote and advocate for the development of sound and sustainable microfinance

operations.

1 The Bank is active in promoting a financial inclusion policy and is a

leading member of the [http://www.afi-global.org Alliance for

Financial Inclusion]

United Nations Relief and Works Agency for Palestine Refugees in the Near East - UNRWA Microfinance DepartmentFrom UNRWA's page and

subpages about the Microfinance Department [http://www.unrwa.org/what-we-do/microfinance] No update date

shown; accessed 2014-08-25

1 Key Figures - cumulative as of 2014:

For More Information, Visit:

• https://store.theartofservice.com/the-microfinance-toolkit.html

The Art of Servicehttps://store.theartofservice.com

microfinance

microfinance institutions

microfinance lifts people

delivery of financial

supply of financial

form of financial services

related services

small businesses

individual entrepreneurs

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