Originally published: March 14, 2007
Source: GMA News, Philippines
BY JOSEFA L. CAGOCO, Reporter/BusinessWorld
A little over half a year after heavy criticism of a move to expand direct state lending led Malacañang to reconsider, a revamped microfinance program will finally be implemented this month in just two provinces and under one government department.
Industry players and experts, however, remained critical, saying the move to limit direct government lending to one agency and to areas where small financial institutions have not set up shop are not enough safeguards to reduce the state’s potential exposure to defaults. The government, they said, should stay out of the business of lending completely.
The government’s microfinance intervention will be piloted this month by the Department of Social Welfare and Development (DSWD), which will be the conduit for P100 million from the National Livelihood Support Fund (NLSF).
President Gloria Macapagal Arroyo had wanted the government to embark on an active microfinance campaign to stimulate livelihood. So she repealed Executive Order (EO) 138 in August last year, reallowing state agencies and corporations to provide directed credit services previously limited to government financial institutions through EO 558.
After microfinance firms, multilateral institutions and even the Finance department criticized the move, Malacañang was forced to refine the directive via EO 558-A, issued in November, which charged only the DSWD to act as a conduit in areas where no microfinance services exist, with the People’s Credit Finance Corp. (PCFC) overseeing implementation of the project.
As early as September, during its 25th anniversary, Mrs. Arroyo had identified the NLSF as the main funding source. In November, the DSWD and the NLSF agreed to partner for a microfinance program called Kapakanan (Kakayahan, Pagtitiwala, Aksyon at Puhunan).
The program will pave the way for improvement of fund access, preferably to non-farm enterprising poor in areas not served by microfinance institutions (MFIs), implementing rules signed last month by the both agencies state.
To read the entire article, please click here: http://www.gmanews.tv/story/34342/Govt-to-roll-out-revised-lending-plan/_/1/
Monday, March 19, 2007
Friday, March 16, 2007
Top investor sees U.S. property crash
Originally Published: March 14, 2007
Source: Reuters
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.
"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
"When markets turn from bubble to reality, a lot of people get burned."
The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.
"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.
Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
Source: Reuters
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.
"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
"When markets turn from bubble to reality, a lot of people get burned."
The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.
"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.
Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
Tokyo Star Bank Provides US$4.8Mln Revolving Credit Facility to MicroCredit Enterprises
Originally published: March 15, 2005
Source: MicroCredit Enterprises
MicroCredit Enterprises, a California based not-for-profit venture that provides philanthropic guarantor-backed microloans to aid third-world poor, announced today a US$4.8 million revolving credit facility has been established with the Tokyo Star Bank, a leading Japanese financial institution. The financing will assist MicroCredit Enterprises in helping the estimated 1.1 billion desperately poor people who survive on less than US$1 a day.
Tokyo Star Bank’s International Business Team was instrumental in the execution of the transaction, underscoring the Bank’s commitment to corporate social responsibility on a global scale. The revolving credit facility allows MicroCredit Enterprises to on-lend money to the poor, mostly women, in developing countries, through microloans. The impoverished loan recipients generally have no credit history, no collateral and no formal education.
"We’re extremely excited to be partnering with the Tokyo Star Bank, a company that shares our desire and dedication to reversing the cycle of poverty in economically distressed countries," said Jonathan Lewis, Founder & CEO, MicroCredit Enterprises. MicroCredit Enterprises’ model includes the necessary aspects of sustainability, ensuring the loans reach entrepreneurs who will build businesses which quickly affect positive development in their communities.
Source: MicroCredit Enterprises
MicroCredit Enterprises, a California based not-for-profit venture that provides philanthropic guarantor-backed microloans to aid third-world poor, announced today a US$4.8 million revolving credit facility has been established with the Tokyo Star Bank, a leading Japanese financial institution. The financing will assist MicroCredit Enterprises in helping the estimated 1.1 billion desperately poor people who survive on less than US$1 a day.
Tokyo Star Bank’s International Business Team was instrumental in the execution of the transaction, underscoring the Bank’s commitment to corporate social responsibility on a global scale. The revolving credit facility allows MicroCredit Enterprises to on-lend money to the poor, mostly women, in developing countries, through microloans. The impoverished loan recipients generally have no credit history, no collateral and no formal education.
"We’re extremely excited to be partnering with the Tokyo Star Bank, a company that shares our desire and dedication to reversing the cycle of poverty in economically distressed countries," said Jonathan Lewis, Founder & CEO, MicroCredit Enterprises. MicroCredit Enterprises’ model includes the necessary aspects of sustainability, ensuring the loans reach entrepreneurs who will build businesses which quickly affect positive development in their communities.
Thursday, March 15, 2007
IFC Helps Strengthen Commercial Microfinance in Pakistan
Source: International Finance Corporation
Originally Published: March 13, 2007
Karachi, March 13, 2007—IFC, the private sector arm of the World Bank Group, recently signed an advisory services agreement with Tameer Microfinance Bank to help the institution expand its outreach and provide greater access to finance in Pakistan. IFC also disbursed a $3.7 million long-term loan to the bank in December 2006 to support its rapid growth in lending. The project will be managed by IFC’s advisory services facility for the region, the Private Enterprise Partnership for the Middle East and North Africa.
Advisory services are part of a broader IFC program to help Tameer Bank launch innovative microfinance solutions and find commercially viable ways to reach its growing client base. The project will assess the demand for branchless banking in Pakistan and related technology development, develop new products for rural areas, and provide training to its growing middle management.
Michael Essex, IFC’s Director for the Middle East and North Africa, commented, “We are pleased to support Tameer’s efforts to ramp up its services to microentrepreneurs in Pakistan. IFC’s support is designed to help Tameer achieve outreach and scale, as well as meet the large demand gap, estimated to be at least 7 million households, for finance from small-scale entrepreneurs.”
Nadeem Hussain, President and CEO of Tameer Microfinance Bank, said, “We value our ongoing collaboration with IFC a provider of equity, debt, and advisory services. We would like to underscore that a commercial approach to microfinance is critical to maximizing outreach and effectively supporting the entrepreneurial activities of Pakistan’s underserved population. We look forward to a long-term and broad based partnership with IFC.”
About Tameer Microfinance Bank
Tameer is a private sector-led microfinance bank whose vision is to emerge as a global benchmark for commercial microfinance. It provides basic financial services and flexible loan products—including deposits, local remittances, and life insurance—to low-income entrepreneurs and salaried individuals, many of whom are women with little to no access to finance through mainstream commercial banks. Tameer’s services, which include individual lending and savings products, are designed to help its clients improve their incomes and businesses and move out of poverty. As of February 2007, the bank had some 28,000 active clients and had disbursed over $15 million to low-income entrepreneurs in Pakistan.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.
About IFC PEP-MENA
IFC PEP-MENA is a multidonor facility for advisory services that supports private sector development across the Middle East and North Africa. IFC PEP-MENA focuses on improving the business enabling environment, strengthening financial markets, supporting SME development, and promoting privatization and public-private partnerships. From its inception through FY06, IFC PEP-MENA has committed more than $20 million in advisory projects. Its activities are funded jointly by IFC and the following donors: Canada, France, the Islamic Development Bank, Japan, Kuwait, the Netherlands, the United Kingdom, and the United States.
Originally Published: March 13, 2007
Karachi, March 13, 2007—IFC, the private sector arm of the World Bank Group, recently signed an advisory services agreement with Tameer Microfinance Bank to help the institution expand its outreach and provide greater access to finance in Pakistan. IFC also disbursed a $3.7 million long-term loan to the bank in December 2006 to support its rapid growth in lending. The project will be managed by IFC’s advisory services facility for the region, the Private Enterprise Partnership for the Middle East and North Africa.
Advisory services are part of a broader IFC program to help Tameer Bank launch innovative microfinance solutions and find commercially viable ways to reach its growing client base. The project will assess the demand for branchless banking in Pakistan and related technology development, develop new products for rural areas, and provide training to its growing middle management.
Michael Essex, IFC’s Director for the Middle East and North Africa, commented, “We are pleased to support Tameer’s efforts to ramp up its services to microentrepreneurs in Pakistan. IFC’s support is designed to help Tameer achieve outreach and scale, as well as meet the large demand gap, estimated to be at least 7 million households, for finance from small-scale entrepreneurs.”
Nadeem Hussain, President and CEO of Tameer Microfinance Bank, said, “We value our ongoing collaboration with IFC a provider of equity, debt, and advisory services. We would like to underscore that a commercial approach to microfinance is critical to maximizing outreach and effectively supporting the entrepreneurial activities of Pakistan’s underserved population. We look forward to a long-term and broad based partnership with IFC.”
About Tameer Microfinance Bank
Tameer is a private sector-led microfinance bank whose vision is to emerge as a global benchmark for commercial microfinance. It provides basic financial services and flexible loan products—including deposits, local remittances, and life insurance—to low-income entrepreneurs and salaried individuals, many of whom are women with little to no access to finance through mainstream commercial banks. Tameer’s services, which include individual lending and savings products, are designed to help its clients improve their incomes and businesses and move out of poverty. As of February 2007, the bank had some 28,000 active clients and had disbursed over $15 million to low-income entrepreneurs in Pakistan.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.
About IFC PEP-MENA
IFC PEP-MENA is a multidonor facility for advisory services that supports private sector development across the Middle East and North Africa. IFC PEP-MENA focuses on improving the business enabling environment, strengthening financial markets, supporting SME development, and promoting privatization and public-private partnerships. From its inception through FY06, IFC PEP-MENA has committed more than $20 million in advisory projects. Its activities are funded jointly by IFC and the following donors: Canada, France, the Islamic Development Bank, Japan, Kuwait, the Netherlands, the United Kingdom, and the United States.
Tuesday, March 13, 2007
Microfinance Securitization = Transformation
John Gage
14 March, 2007
The uncertainty in the residential mortgage industry has been an important topic of conversation over the past few months. The residential mortgage market is now one of the largest in our economy. One large component of this market is the securitization of these mortgage loans.
According to the Commercial Mortgage Securities Association, "in the roughly 35 years that residential mortgages have been securitized, about 55 percent of the total single family loans outstanding have been packaged into residential mortgage backed securities." One of the primary reasons that Americans can get a residential mortgage at such affordable interest rates is due to the enormous amount of capital in the market that invests in bonds backed by residential mortgages.
So I am sure you are wondering, what does this have to do with microfinance. I truly believe that in order to bring the millions of people in our world out of poverty, we need to find a cost effective way to tap into the capital markets to fund microfinance.
The securitization of microloans is already being performed by groups such as BlueOrchard, however I do not think that many people know that this is going on, nor do they know the impact that it could have on the industry.
This post is the first in a series where I will begin discussing microfinance securitization, the impact that I feel it could have on our world, and the challenges that we face in this area.
My prayer is that it would spur discussion on this topic and reveal different solutions and ways that millions of dollars can be invested in microfinance through the capital markets. I also pray that God will bless the microfinance industry and that most of all, we can use it to further his Kingdom.
14 March, 2007
The uncertainty in the residential mortgage industry has been an important topic of conversation over the past few months. The residential mortgage market is now one of the largest in our economy. One large component of this market is the securitization of these mortgage loans.
According to the Commercial Mortgage Securities Association, "in the roughly 35 years that residential mortgages have been securitized, about 55 percent of the total single family loans outstanding have been packaged into residential mortgage backed securities." One of the primary reasons that Americans can get a residential mortgage at such affordable interest rates is due to the enormous amount of capital in the market that invests in bonds backed by residential mortgages.
So I am sure you are wondering, what does this have to do with microfinance. I truly believe that in order to bring the millions of people in our world out of poverty, we need to find a cost effective way to tap into the capital markets to fund microfinance.
The securitization of microloans is already being performed by groups such as BlueOrchard, however I do not think that many people know that this is going on, nor do they know the impact that it could have on the industry.
This post is the first in a series where I will begin discussing microfinance securitization, the impact that I feel it could have on our world, and the challenges that we face in this area.
My prayer is that it would spur discussion on this topic and reveal different solutions and ways that millions of dollars can be invested in microfinance through the capital markets. I also pray that God will bless the microfinance industry and that most of all, we can use it to further his Kingdom.
IIM-B grads refuse jobs abroad
Roshni Menon
CNN-IBN
13 March, 2007
Bangalore: Kunal Mahipal was the only student in IIM Bangalore last year to opt out of the placement process and go the entrepreneurial way.
Mahipal took the road less travelled but now that is not the case anymore as many are following in his footsteps like this year Mahadeo Chitale, who decided to ignore the corporate ladder and join an NGO that deals with microfinance.
“If someone comes to me I would tell him to go through the recruitment process especially if he is a fresher. He should build his contacts before deciding to start independently,” says Chairman, Placement Commission, IIM-B, Sourav Mukherjee.
Chitale is the only student who refused a corporate offer this year. But the trends in IIM Bangalore's placements this year have been interesting.
For example, The Sun Group, a private equity firm, recruited a student for the post of vice-president.
Firms like McKenzie and Barclay Capital, too, made plum offers but what has stood out is the fact that five students have rejected offers from foreign investment banks to work for private equity and consultancy firms in India.
“A lot of people ask me if I have taken the right decision by staying back in India. I don’t feel I have comprised and I know I have made the right choice,” says a student, Manasi Prasad.
Now, the placement season at IIM-B is not about salaries any more.
Most people consider IIM degrees to be a one-way ticket to multinationals abroad but with the emerging trends it seems more students are opting to start their own businesses and choosing to work with Indian companies.
CNN-IBN
13 March, 2007
Bangalore: Kunal Mahipal was the only student in IIM Bangalore last year to opt out of the placement process and go the entrepreneurial way.
Mahipal took the road less travelled but now that is not the case anymore as many are following in his footsteps like this year Mahadeo Chitale, who decided to ignore the corporate ladder and join an NGO that deals with microfinance.
“If someone comes to me I would tell him to go through the recruitment process especially if he is a fresher. He should build his contacts before deciding to start independently,” says Chairman, Placement Commission, IIM-B, Sourav Mukherjee.
Chitale is the only student who refused a corporate offer this year. But the trends in IIM Bangalore's placements this year have been interesting.
For example, The Sun Group, a private equity firm, recruited a student for the post of vice-president.
Firms like McKenzie and Barclay Capital, too, made plum offers but what has stood out is the fact that five students have rejected offers from foreign investment banks to work for private equity and consultancy firms in India.
“A lot of people ask me if I have taken the right decision by staying back in India. I don’t feel I have comprised and I know I have made the right choice,” says a student, Manasi Prasad.
Now, the placement season at IIM-B is not about salaries any more.
Most people consider IIM degrees to be a one-way ticket to multinationals abroad but with the emerging trends it seems more students are opting to start their own businesses and choosing to work with Indian companies.
Banks see big future in small loans in India
Source: Reuters
12 March, 2007
MUMBAI: Microlenders have been helping farmers buy a buffalo and women set up weaving businesses for nearly three decades in India, most successfully in the wealthier southern states.
Now, rapid economic growth and the entry of more foreign banks and private equity firms, coupled with improving infrastructure and new technologies, is encouraging large Indian and international lenders to enter the space.
It is easy to see why: defaults are few and the potential to sell other financial services is large. Plus, growing competition is forcing banks to look at India's underserved 600,000 villages.
Even wealthy private investors are looking at microfinance, where in addition to the halo of a do-gooder, returns can be as much as 2 percentage points more than from conventional products.
"Time was when banks didn't take microfinance seriously, when they regarded it as corporate social responsibility rather than a serious commercial opportunity," said Siddhartha Chowdri of Accion Technical Advisors, a technical partner of Yes Bank India's for microfinance. "They realise now that the poor are good credit risks, and that they have a need for capital their whole lives."
India's microfinance market is estimated at 130 million homes, with moneylenders and other informal sources accounting for more than 80 per cent of borrowings.
Informal credit in rural India is estimated at US$5.4 billion (RM18.9 billion), according to the All India Debt and Investment Survey. More than 40,000 bank branches have lent nearly US$3 billion (RM10.5 billion) in the 10-year period to 2006, mostly to groups of poor women, it said.
State lenders including leader State Bank of India have a long record of lending to the poor to help meet a priority lending requirement, or 40 per cent of all lending.
Private lenders ICICI Bank, HDFC Bank, UTI Bank and Yes Bank have launched microfinance arms recently. Global heavyweights, including ABN Amro, Standard Chartered Bank, HSBC Holdings and Citigroup are also eyeing the space.
"We were the first organised lender here ... the moneylenders used to threaten my staff," said Anil Jadhav at Hindustan Cooperative Credit Society Ltd. in Kurla, a Mumbai suburb.
HCCS, which has lent sums as small as 1,000 to 2,500 rupees (RM80.5 to RM199.5), sends an officer to the borrower's home to assess need and ability to repay, and the risk of default. Jadhav estimates overdue loans are 0.9 percent of all loans disbursed.
12 March, 2007
MUMBAI: Microlenders have been helping farmers buy a buffalo and women set up weaving businesses for nearly three decades in India, most successfully in the wealthier southern states.
Now, rapid economic growth and the entry of more foreign banks and private equity firms, coupled with improving infrastructure and new technologies, is encouraging large Indian and international lenders to enter the space.
It is easy to see why: defaults are few and the potential to sell other financial services is large. Plus, growing competition is forcing banks to look at India's underserved 600,000 villages.
Even wealthy private investors are looking at microfinance, where in addition to the halo of a do-gooder, returns can be as much as 2 percentage points more than from conventional products.
"Time was when banks didn't take microfinance seriously, when they regarded it as corporate social responsibility rather than a serious commercial opportunity," said Siddhartha Chowdri of Accion Technical Advisors, a technical partner of Yes Bank India's for microfinance. "They realise now that the poor are good credit risks, and that they have a need for capital their whole lives."
India's microfinance market is estimated at 130 million homes, with moneylenders and other informal sources accounting for more than 80 per cent of borrowings.
Informal credit in rural India is estimated at US$5.4 billion (RM18.9 billion), according to the All India Debt and Investment Survey. More than 40,000 bank branches have lent nearly US$3 billion (RM10.5 billion) in the 10-year period to 2006, mostly to groups of poor women, it said.
State lenders including leader State Bank of India have a long record of lending to the poor to help meet a priority lending requirement, or 40 per cent of all lending.
Private lenders ICICI Bank, HDFC Bank, UTI Bank and Yes Bank have launched microfinance arms recently. Global heavyweights, including ABN Amro, Standard Chartered Bank, HSBC Holdings and Citigroup are also eyeing the space.
"We were the first organised lender here ... the moneylenders used to threaten my staff," said Anil Jadhav at Hindustan Cooperative Credit Society Ltd. in Kurla, a Mumbai suburb.
HCCS, which has lent sums as small as 1,000 to 2,500 rupees (RM80.5 to RM199.5), sends an officer to the borrower's home to assess need and ability to repay, and the risk of default. Jadhav estimates overdue loans are 0.9 percent of all loans disbursed.
Subscribe to:
Posts (Atom)