Paris Microfinance Network

Microfund a Working Musician

Calabash Music has come up with a neat idea for funding struggling (some more than others) musicians. They leverage the power of social networking online by allowing you to listen to and purchase tunes from up and coming artists struggling to produce new projects and albums. Using the Tune Your World web site you can search for new artists around the globe and purchase their clips online.
Your funds are sent directly to the artist to support the launch of new music projects.

Tune Your World operates on a people-to-people model: Musicians obtain funding for their recordings without giving up ownership or control and Fan / Sponsors are able to feel a personal connection with a music project and can get progress updates from musicians. Instead of buying music via a distribution network that prevents most of your money from getting to the artist, peer-to-peer microfunding lets you sponsor small amounts directly to a particular musician.

Mission Drift ?

There is a plethora of private capital continuing to enter the microfinance sector. But as microfinance moves more and more into mainstream banking, is some of its original mission getting lost in the shuffle? That's the implication of a landmark study released by Women's World Banking (WWB). The study examined what happened at 27 organisations as they morphed from non-governmental (typically not-for-profit) organizations into regulated financial institutions, and found that they often end up lending to a smaller percentage of women — the very people they often started to help.

The WWB study did find solid benefits associated with the evolution of microfinancing such as increased loan sizes and ability to offer additional demanded products. Commercialized MFIs, for instance, are able to reach more borrowers and offer important new products like savings accounts. But WWB also found evidence that such growth might be pushing institutions' interests to be more in line with those of their profit-seeking investors.

WWB studied 27 MFIs (in Latin America, Asia, and MENA) that had undergone this regulatory shift (or "transformation") and compared them with 25 that had not. Over a five-year period, MFIs that had become more traditional commercial enterprises saw active borrowers increase by 30% a year on average, compared with 15% for institutions that remained NGOs. In addition to reaching more clients with loans, the transformed MFIs were also able to significantly ramp up the number of clients with savings accounts.

However, the study also concludes a steep drop-off in the percentage of female clients in the years following transformation. Over five years, the percentage of clients who were women moved from an average of 88% to 60%. That is concerning not only because many institutions start out with the goal of serving female entrepreneurs, but also because women are more likely to pay for health care and education for their children — investments that can help further lift their families out of the cycle of poverty.

How can transformation benefits be best balanced with the original social mission of microfinance ?

Western Union Offers Mobile Phone Money Transfers

Western Union, hoping to boost its share of the money-transfer market, has teamed up with RadioShack, a consumer electronics retailer, and Trumpet Mobile, a small wireless company, to offer a service that lets people based in the US send money through their cellphones.

The service is aimed at immigrants to the U.S. who regularly send money to family members in their native countries. Many of these immigrants don't have bank accounts and send the money by taking cash to a transfer service such as Western Union or a host of other firms.

Western Union, which already has a big share of the US$300 billion global money-transfer market, hopes that the cellphone service will bring in new clients and encourage existing customers to use it for a broader range of money transfers including paying utility bills and sending money domestically. People without bank accounts can now pay these bills in a variety of ways, including at convenience stores.

To use the service, people need to buy a Trumpet prepaid phone at a RadioShack store. Customers can then load up to US$200 on their phones for cash transfer via Western Union's network either within the US or internationally.

Accion & EcoBank launch Microfinance Bank in Ghana

EB-ACCION Savings & Loans, a microfinance bank formed through a partnership between ACCION International and ECOBANK, the leading pan-African bank, has received its license to begin microfinance operations in Ghana.

EB-ACCION opened it's doors April 1st, delivering microcredit, savings and micro-insurance products to the Ghanaian market, thus helping small entrepreneurs to expand their businesses and improve their standard of living. EB-ACCION clients will be served by two branches in Accra, located in the marketplace neighborhoods of Tudu and Lapaz. Two more branches are scheduled to open in Accra this year. EB-ACCION expects to be the market leader serving microentrepreneurs in Ghana by 2010.

Over the next few years, the 2 partners, Accion and Ecobank, plan to open microfinance banks in at least 20 countries across Africa, thereby creating the largest regional platform for offering comprehensive financial services to the vast population of informal sector players that have been largely unbanked and underbanked. A statement by Ecobank said, when fully implemented, the plan has the potential of becoming one of the largest bank downscaling efforts in the world.

Dutch Fund Manager commits €200m to Microfinance

Further demonstrating the interest by institutional investors in social invesments, PGGM, the €88bn ($139bn) asset manager of Pensioenfonds Zorg en Welzijn, the Dutch healthcare pension fund, is making one of the world’s largest institutional commitments to microfinance by announcing an investment of €200m with specialist fund managers over the next two to three years.

PGGM has made its first investment worth €27m to the Dexia Microcredit Fund operated by Swiss fund manager BlueOrchard Finance. The initial allocation will make investments in microfinance projects in Africa, Asia, Latin America and Eastern Europe. Blue Orchard invests in financial institutions providing microcredit for families and small businesses that do not have access to regular financial institutions.

Grameen-Veolia Water deal to help Bangladesh

Nobel laureate Muhammad Yunus unveiled a deal between his Grameen bank and French group Veolia Environment to provide clean water to poor rural communities in Bangladesh.

The Bangladeshi economist also sought support from President Nicolas Sarkozy for creating more microcredit schemes to fight poverty, particularly in Africa. Sarkozy told Yunus that France would continue and step up its efforts to provide access to loans to the poor and noted that more than a third of France's African aid funding was now directed toward microfinance.

After discussions with Sarkozy, Yunus sat down with top business leaders at the Elysee including billionaire Vincent Bollore and announced the creation of the new joint company with Veolia Environment. Called Grameen-Veolia Water, the company will operate several water treatment plants in Bangladeshi villages, with the goal of bringing clean water to 100,000 people.
The project represents investments worth 500,000 euros (790,000 dollars).
Full Story from AFP

The MIX 2007 Top 100 MFIs Report

The Microfinance Information eXchange (MIX) has released the 2007 Global 100: Rankings of Microfinance Institutions report. It is a ranking of the top performing microfinance institutions (MFIs) throughout the developing world, based on data from MIX's publicly available database.
The composite rankings are based on a number of criteria and were developed in an effort to present the leading, most well-rounded institutions.

The MIX Global 100 highlights leading microfinance institutions through the lens of various aspects of performance. The MIX Global 100 by category offers a snapshot of MFI results, identifying the leading performers in each of seven categories within outreach, scale, profitability, efficiency, productivity and portfolio quality. In order to widen the lens of financial service provision, outreach and scale tables include separate rankings for deposit mobilizing institutions. This year’s rankings of efficiency also use a new measure to minimize the influence of loan size and neutralize differences across country environments in ranking MFI transaction costs.

The 2007 MIX Global 100 surveyed 820 institutions, an increase of nearly 40 percent over the 2006 sample set. Leading performers were drawn from a diverse sample of MFI that served over 53 million borrows with over USD 24 billion in loans and held USD 15 billion in deposits from 64 million microfinance clients.

Microfinance in Sudan

The recognition of microfinance as one of the priority sectors for Sudan started only in the mid-1990s. The financing regulations of the Bank of Sudan are still being revised, and lack proper identification of microfinance activities.

In microfinance, traditional Islamic financial products, such as the murabaha,
the salam, the musharaka and the mudaraba play an important role in Sudan. For example, the murabaha is a buy and resell contract, under which the bank purchases the goods ordered from the client and resells it to the customer at a marked-up price, usually on a deferred payment basis. This is the preferred product and is also the closest to standard interest-bearing financial contracts. The salam is also a buy and resell contract, but here the bank purchases the goods from the client, who then delivers the goods in the future. Mainly used for agriculture, the bank pays the farmer on the day the contract is signed and the farmer delivers the crop to the bank after harvest.

A number of banks, NGOs and social funds have been involved with microfinance in the Sudan, and more MFIs are slowly being launched. Over 100 local and foreign NGOs, in direct coordination with gov’t authorities, are active in providing microcredit, emergency loans, medical care and educational services to poor people in the Sudan. In addition, many rural development projects include components of microfinance support.

Microfinance NGOs have been much closer to grassroots operations than have the formal lending institutions. The main NGOs active in microcredit have between 15-20,000 clients and registered repayment rates on average of 85 percent. Their success is often due to being community-based; often having simpler procedures; adopting flexible collateral terms; and sometimes creatively partnering with the formal banking system; they finance a variety of activities, i.e. they are not confined to "productive activities"; and they adopt different microfinance mechanisms and approaches. NGO microfinance institutions face problems, however, in shifting from providing grants to providing credit, when credit is newly introduced to customers after a period of charity-based operations. They also face sustainability problems when moving from donors to commercial sources of funding.

Some of the MFIs making a difference in Sudan include SUMI, the Sudan Microfinance Institution, Aljawda Microfinance Bank launched in December 2007 and Five Talents International, whom have recently launched a program in Sudan. SUMI is an innovative and high-risk microfinance institution based in southern Sudan helping small borrowers eager to grow their fledging businesses. Isaac Sadik, a used clothes dealer and tailor, started his business in 2001 with $40 he had raised by selling a bicycle. “I joined SUMI in November 2003 with a loan of Ush200,000,” says Sadik. “My stock has increased to Ush350,000. In fact, my stall is now too small so I am looking for space to construct another stall.”

Working with a consortium of partners including the Episcopal Church of Sudan, Five Talents will be assisting a village banking project in Wau Diocese, which was started in September 2005, and currently has 270 members. This is one of the first projects of this type in southern Sudan.