1 / 30

Microfinance

Microfinance. The users Benefit Organizations Profitability and reaching the poor , a trade off ? Why high interest rate? When doesn´t microfinance work? The role of regulation and supervision Governments role. Why microfinance ?.

ananda
Download Presentation

Microfinance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Microfinance The users Benefit Organizations Profitability and reaching the poor, a tradeoff? Why high interest rate? Whendoesn´tmicrofinance work? The role of regulation and supervision Governmentsrole

  2. Whymicrofinance? • Poorpeopleneeddiveresefinancial services • Poorpeople lack access to formal financial services • Informal services, private moneylenders • Savingsclubs, in items, savings associations • Formal banks have a tradition of not serving the poor

  3. Microfinance is; • Basic financial services • Loans • Savings • Money transfer services • microinsurance

  4. Poorpeopleuse it for; • Runtheirbusinesses • Build assets • Smoothconsumtion • Manage risk

  5. Interest rates • Average; about 28% • To onlend small amounts to many recipients is moreexpencivethanprovidinglargesums to few recipients • Number of employees • Product design • National financial situation

  6. Who are the MF users? • Vulnerablenoon-poor • Upperpoor • Poor • Verypoor

  7. Upperpoor • Financial activepoor • People that allreadyhavesome sort of income • Microentrepreneurs

  8. Moore about the MF users; • Women are a majority • 33% men • Someorganizaionsonlywomen • Operating small business • Some are entrepreneurs by willothers by necessity

  9. What differens does it make?

  10. Whatdifferencedoes it make? • Wedont´know!

  11. Is microfinance a goodtool? • So far no study support the theory of upliftment of poorpeople by; • Improvingincome • Growingcapacity of small scalebusinesses

  12. What is microfinancedoing? • Incomesmothening • Important for the poorest • Cash management on householdlevels • Cost-effectiveaid

  13. Poorpeople like MF • Numbers of MFI increasingeveryyear • MFIsdon’thave to advertice • High repayment rates • People return for more services

  14. Poorpeoplesay • They like microfinance • They trust MFIs in general • Theyfind the services to suitable for theirneeds

  15. Who are the organizations? • NGOs • Commercial banks • Cooperatives • Government-ownedorganizations • Profit making • Non-profit making

  16. Governement • Cgapearliermessage; governments shouldcreategood national structures for microfinance, not provide microfinance services themselves • Today the ”tone” is less strict on this issue. This is due to the fact that there are governementsglobaly that are MF providers

  17. The role of the government • Pormotingfinancial access • Protectingcustomars • Providingfinancial services directly

  18. Profitability and outreach • Microfinance history • 1960; subsidized credit to farmers • 1970; Grameen Bank credit to women • 1990; CGAP commercialfinance • 2000; commericial approach with doubdts

  19. Povertylending • Poorpeople lack access to formal Financial services • Subsidizedloansinstead of ordinaryaid grants • Empowerment • Livelihood • Genderedpoverty • Grassroot

  20. Commercial microfinance • Microfinance revolution • Increasingnumber of organization and users • Manypoor still lack access to financial services • Poverylending: limited expansion, aiddependence, less protection of poorpeople and theirmoney

  21. The bus and the passengers • Muchfocus has been on the bus • A need to bring in the passengers, the road and the destination • Women are goodfor MF organizations... • High interest rates • ”A school with no toilet...”

  22. commercialisation • Outreach! • Goal: to cover the cost • Interest rates has to be set according to this • The organizationneed a certainamount of users • Repayment rates has to be keept high • It is easier to cover costsif the users are ”not so poor”

  23. Toopoor for MF? • It is expensive to be poor • Poorpeople still havecosts to cover • Poorpeopledofindways to cover theirfinancialneeds • Again; poorpeoples alternatives are expensive • Still, if lack of shelter, food and cloths, credit might not be the answer

  24. Microfinance today • Profit minded commercialactors • Non-profit actors and social investors • Commersialmicrofinance • New technique • Regulation

  25. Howmany, howmuch? • Hard to estimate • Few are keepingreccords • 80% (of 4.5 billion) lack access to formal financialinsitutions

  26. Howmany, howmuch? • 2007, 154,8 million microfinanceusers • Microfinanceproviders: 3,350 • Increasing by 30% and year

  27. Microfinance is complicated • It tries to combinepovertyreduction with market orientedthinking • What is good for the organisation and the development of financial systems does not necessarycorrolate

  28. Focus: outreach • The general aim is to provide MF to people that are excluded from financial services • Focus is on the services theymightneed • Especially credit • But the effects in macrolevels as well as microlevels is unclear • Microfinance in history, the Swedish case

  29. Creating financial services to the poor • First savings bank 1820 • Lower the cost of the increasingnumber of poor in the cities • Registered as ”selfhelp organisations” • Non-profit, reinvestments in local society • Importantproviders of credit to entrepreneurs • Insidelendingas logic

  30. litterature • www.cgap.org • M. Robinson ”The Microfinance Revolution” • M. Yunus ”De fattigas Bankir” • Hospe and Lontz ”Livelihood and Microfinance” • D. Collins et al. Portfolios of the Poor • M. Harper ”What is wrongwhitMicrofinance?”

More Related