Paris Microfinance Network

New Microfinance Lending Site: myELEN.com

Launching in November, the online portal myELEN.com will be the first institution to bring microfinance to the Czech Republic. While microfinance has become a relatively common phenomenon in the United States, the myELEN project will be unique in Europe when it launches in several weeks’ time, says Linda Hanyková, executive director of Microfinance, the company behind the My Electronic Loan Exchange Network (myELEN) project.

Loans granted through myELEN would range between 5,000 Kč and 157,000 Kč ($267–8,396). The site will also allow investors to make donations or interest-free loans. Through myELEN.com, investors can lend money to selected Mexican entrepreneurs — farmers, food venders, weavers, grocers — or associations of entrepreneurs, which are listed on the Web site along with their photos and business plans. Though it does bear an ethical streak, most investments made through the site will return annual yields between 5 percent and 10 percent, depending on the amount of money invested.

Annual rates by microfinance institutions in Mexico run between 40 percent and 110 percent. However, local banks and other lenders charge even higher rates while providing little educational and counseling assistance to borrowers. Rates charged by myELEN would depend on the individual business and amount loaned, Hanyková said.

Today, myELEN cooperates with only one microfinance partner based in Mexico, an NGO named FIPS. But the project’s idea is to work with many other reliable microfinance institutions in Mexico and elsewhere, so that investments are diversified to reduce the risk of unrecoverable loans, said Tomáš Hes, an economist and one of myELEN’s founders.

IFC Equity Investments in Latin America

Today, the IFC (International Finance Corporation) reinforced it's microfinance investment strategy in Latin America/mexico with an 18% equity purchase (roughly $7.1 million) of Banco Amigo, a new player in
Mexico’s microfinance sector. IFC’s investment in Banco Amigo provides long term funding for Banco Amigo to scale-up its loan portfolio as it begins to grow its portfolio and intermediate savings; and equity allows IFC to be a long term partner and support Banco Amigo’s regional expansion, and introduction of new products.

For Banco Amigo this surge of funding is great news to help expand their reach. They began operations in late 2005 as a non-bank financial institution and received its banking license in November 2006. In May 2007, Banco Amigo opened for business after receiving approval from Mexico’s National Bank and Stock Market Commission. The bank aims to place an emphasis on providing credit to low-income women entrepreneurs, as part of its mission to promote microfinance for smaller businesses. They currently offer loans up to 10,000pesos after providing an address & ID card, and they promise the cash within 24hours. Furthermore they offer savings accounts incentively tied to the credit accounts.

The Banco Amigo investment follows a recent string of IFC investments in MiBanco Peru of a US$7 million subordinated loan, a long term loan up to $29 mill, and an acquisition of a 6.5% stake in Mibanco, valued over US$6Mln. This is the 2nd financing agreement between MiBanco & the IFC. MIBANCO is Peru’s largest specialized microfinance bank with more than 170,000 clients across the country. To date, MIBANCO has provided more than one million loans to low-income individuals and small businesses in Peru, many of whom had little or no prior access to formal credit institutions.

Linking Remittances and Microfinance

- Submitted by Julia Blue

To highlight the growing opportunities for MFIs to tap into the roughly $200 billion per year sent by international migrant workers to their home countries, USAID's Microfinance After Hours Seminar series hosted the session "Linking Remittances and Access to Microfinance: Opportunities and Challenges" on May 17th in Washington, DC.

Speakers included David Grace of WOCCU , Manuel Orozco of Inter-American Dialogue , and Kai Schmitz of Microfinance International Corporation

According to Manuel Orozco, a typical bank in a major recipient country now derives around 20% of its income from remittances. The resulting linkages with international financial institutions are modernizing the money transfer system and regulatory environment in recipient countries, and demand for financial intermediation is increasing as remittance recipients generally have a higher propensity to save than non-recipients. MFIs are often better placed than banks to offer money transfer services to remittance recipients, especially for clients in rural areas.

Mr. Orozco described several business models adopted by MFIs that offer remittance services:

proprietary models, in which an MFI opens a bank account in a remitting country to collect and transfer remittance payments to its clients;

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BBVA Spain dives into Microfinance

With a serious commitment of funds, BBVA plunges itself into the Microfinance sector by announcing a new fund for €200million for investment in Latin America and other emerging markets. They are launching the BBVA Microfinance Foundation to manage these funds, they initially aim to target four organisations to lend money: Caja Nor and Caja Sur in Peru and the Corporacion de la Mujer in Bogota and Medellin in Colombia.

Manuel Méndez, director of the BBVA Microfinance Foundation said, “This is the first time that a large international banking group commits itself to microfinance in such a clear, direct and distinctive manner. Microfinance business requires a radically different approach compared to conventional banking. Therefore, we are going to enter the microfinance world via a purpose-specific institution which will acquire significant holdings in specialist organisations, developing a range of services and unique policies for risk approval and management."

Pro Mujer Peru gets Grameen Growth Guarantee

Announced January 03, 2007, the Grameen Foundation transacted a Growth Guarantee leveraging US$600,000 for Pro Mujer Peru. The financing comes from the largest bank in Peru, Banco de Credito de Peru, & is secured by a US $300,000 guarantee. This is great news for Pro Mujer as the funds can be used to drive their objective of reaching at least 72,000 poor women by 2009 & offering the means to improve livelihoods. This is the first Growth Guarantee for Grameen in Peru. This type of financial structuring can boost MFIs in gaining local support.

The success of the programs & operational activities at Pro Mujer international has attracted funding from many organizations such as Unitus, the Calvert Foundation & the Bill & Melinda Gates Foundation who in April 2006, awarded Pro Mujer a $3.1-million grant.

Founded in 1999 & leveraging the experience of already established Pro Mujer offices in Bolivia & Nicaragua, Pro Mujer Peru serves mainly districts in southern Peru, and offers many services such as loans, savings, business training, healthcare and education. Pro Mujer is dedicated to supporting poor women in Peru thru a variety of healthcare, counseling & family support programs. They have over 30K clients & support women via group lending. The financial services offered help women improve the livelihood of their families, self-improve & grow or launch entrepreneurial projects.