Post on 19-Mar-2016
description
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Microfinance
Anja Elise Ø. HusebøStrømme Microfinance anjaelise.husebo@stromme.org
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Objectives of the day
• Caracteristics – components of MF• MF traditions• Methods of MF• Questions
Microfinance
Empowering people
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Microfinance - components
• Demand• Product• Supply
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Demand
- seasonal events /consumption- lifecycle events- emergency- investment
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Product
Product - service- credit- insurance- transfer- saving
Microfinance - Microcredit
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Supply
• Supply - provider - Non Governmental Organisations (NGO)
- Microfinance Institutions (MFI)- Banks- Internal groups
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Guarantee
• Trust• Savings• Guarantee• Signature from well known person• Collateral – furniture /TV etc
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Bank upside down
Rich – PoorMan – WomanLarge loan – Small loanLarge loss – Small lossPapers – IlliteracySecurity – TrustYou go to the bank – MF comes to you
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History
• 1700: Irish loan fund system• 1800: Co-operatives in Germany• 1900: South America• 1970: Micro credit, Grameen and ACCIóN• 1980: Developing with interest rates, Bank
Rakayat Indonesia• 1990: Microfinance• Now – new markets, new products
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Description
”Microfinance comprises financial intermediation targeting the enterprising (economically active) poor. These normally have no access to formal financial services.
The target group (mainly women) are offered a number of financial products, like savings, credit and insurance. Loans are given mainly for productive purposes and are repaid after a short period and at (relatively) high interest rates. Guarantees are normal individual or social/group guarantees.
Such financial intermediation is offered by a variety of institutions from big banks to small NGOs.”
Bistandstorget
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Microfinance - types
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Community Managed MF (CMMF)
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$
SMF
FGH
FGH
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Institutional MF
$
SMF
FGH
FGH
$
$
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Types
Number ofproducts
Flexibility
MFI
ASCA
ROSCA
BankSHG/ SfC/VSLA/Worth/Myrada
MDI
Community Managed Microfinance (CMMF)
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I am now dressed nicely
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I am sending my son to school
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I am fat now
I am a business woman
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I am dreaming again
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Strømme Microfinance AS
• CMMF • Institutional MF
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Strømme Foundation - MF
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Questions
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Interest rates
• The alternative”The most expensive loan is the one you never got.”
• Paradox: they return
Interest rate:• Cost of capital• Risk• Transaction costs
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The poor cannot save
• Traditions – in kind saving• ”Savingsled” MF (CMMF)
• Saving up• Saving down• Saving through
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Client Protection Principles
• Avoidance of Over-Indebtedness • Transparent and Responsible Pricing • Appropriate Collections Practices
• Ethical Staff Behavior • Mechanisms for Redress of Grievances • Privacy of Client Data
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So… is it working
• How well is it working – could it be better?
• Expectations• Contextual differences
It doesn’t matter where you’re coming from. What matters is where you’re going.
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Abbreviations
• MF – Microfinance• CMMF – Community Mangaged Microfinance• MFI – Microfinance Institution• MDI – Microfinance Deposittaking Institution• ROSCA – Rotating Savings and Credit Associations• ASCA – Accumultaing Savings and Credit Associtaion• SHG – Self Help Groups• SfC – Saving for Change (EPC – Epargne pour changement)• VSLA – Village Savings and Loans Associations