By Marie-Hélène Kennedy-Payen and Paul W. Neville, Master's candidates, Georgetown University School of Foreign Service
Princess Mathilde of Belgium
To commemorate the United Nations' International Year of Microcredit, students from Georgetown University organized the "Conference on Microfinance" on April, 22, 2005, which was sponsored by Georgetown University's McDonough School of Business, Net Impact, the Microenterprise Development Association, and the United Nations Capital Development Fund (UNCDF). Several distinguished speakers, including Her Royal Highness Princess Mathilde of Belgium, who is an Emissary for the Year, and two panels of experts reviewed current and future issues facing the world of microfinance. Over 200 faculty, professionals, and students attended the event.
The Future of Microfinance
After a welcome by Garance Genicot, Assistant Professor of Economics, and Leslie Payne, a student from the McDonough School of Business and organizer of the event, Elizabeth Littlefield, CEO of the Consultative Group to Assist the Poor (CGAP), spoke about the future of microfinance. She asserted that while microfinance is becoming mainstream finance in over 130 countries, the vast majority of the world's poor populations have not been reached.
According to Littlefield, several challenges affect the future of microfinance: improving efficiency and institutional capacity, reaching clients in sparsely populated areas, reaching the very poorest clients, and finding ways to attract domestic funders. In her opinion, the most important challenge is the application of technology that reduces transaction costs so that commercial players will have an incentive to get more involved.
Littlefield offered several predictions for the future of microfinance. Middle income countries, focused mainly on technology, will completely diverge from poor countries that remain dependent on NGOs and grants. Technology and improved infrastructure will allow a rapid increase of point of service systems. State banks will become the core providers of microfinance services. Revenue will be driven by fees from bank transactions rather than deposit interest. There will be a major consolidation of MFIs with mergers, bank partnerships, and the wind-downs of non-sustainable institutions. International funds will encounter more difficulties as MFIs focus more on savings and domestic funding. Finally, donors will focus more on higher risk markets such as rural clients and the very poor.
Challenges in the Industry
The first panel, "Challenges in the Industry", was moderated by Tom Easton, New York Bureau Chief of The Economist. The panel featured four professionals in microfinance: Asli Demirguc, Finance Research Manager and Advisor at the World Bank, Gil Crawford, General Manager, Warburg Pincus, Lawrence Yanovitch, Director of Policy and Technical Assistance at FINCA International and Charles Riemenschneider, Director of the North American Liaison Office in the Food and Agriculture Organization of the United Nations.
Asli Demirguc approached the topic from a perspective of data scarcity, highlighting the difficulties of measuring the effectiveness of the financial services sector in reaching household microenterprises. "This data would serve both public and private sectors", she said, by informing them who has access to financial services and therefore indicating to what extent the basic financial services are delivered to a wide population of households and micro and small enterprises. The importance in delivering financial services to a wide population is twofold. First: it would assure equality and growth opportunities because lower income inequality has shown to be linked to faster growth; and second, it would give wider access to help build political support for financial sector reforms. Demirguc explained that the World Bank has focused on gathering data from two main sources: financial institutions and regulators, which would give a sense of scale; and from household surveys, which would provide a better picture of the people who have or do not have access to financial services.
The second panelist, Gil Crawford, examined the challenges of microfinance from an investor's perspective and commented on the challenges for people trying to work in the microfinance industry. He zeroed in on the demand for local currency for financing microfinance institutions (MFIs) and explained that there was a lot of mismatching of assets and liabilities from international funds. This has resulted in extremely high costs for MFIs. In addition, Crawford emphasized the potential barriers posed by the legal environment and structure in recipient countries. He concluded by noting that while new, the industry was relatively sophisticated.
The third panelist, Lawrence Yanovitch, focused on the challenges still to come. From his personal experience working with the government of Afghanistan, Yanovitch addressed three questions. The first was, "Are the poor bankable?" He concluded stating that "I believe that not only the poor are bankable, but also the destitute are bankable". The second question, "Do poor people's businesses add value to the economy?" was answered with empirical evidence showing that microfinance clients generate margins of 50 to 100%. The final issue, "Why do NGOs have a dominant role in microfinance and why commercial banks do not enter microfinance more quickly" was linked to the fact that the incentive of banks is focused on shareholder returns while those of NGOs are focused on the double bottom line of social outreach and financial performance. In some countries where the government was convinced of the critical value of the microfinance sector, laws were passed to permit microfinance organizations to accept intermediate deposits and become regulated financial institutions under a specialized supervised regime. Yanovitch also emphasized the importance of non-bank financial institutions, which would blend social and financial objectives and would lead the way for commercial banks to enter the microfinance sector.
Charles Riemenschneider focused on the challenges of microfinance in the agricultural and rural sectors. He noted that "Agriculture has a disadvantage over a typical microcredit loan in that the turnover of capital is relatively slow". He also pointed out that the lack of coordination related to the data problems mentioned by the previous panelists. He felt that despite the progress made possible by microcredit for the urban poor, microfinance has not been as effective in meeting the needs of rural populations. Furthermore, systemic risks pertaining to the agricultural sector such as drought, plant and/or animal disease, are not considered by MFIs. Riemenschneider concluded by asking if MFIs, as they grow their resource base, their management networks and organization, were still serving their intended clientele. Riemenschneider called for a holistic approach to the diversification of products and services but reiterated that the key to success is the maintenance of a close relationship with the client.
Innovations in Microfinance
The second panel, entitled "Innovations in Microfinance", was moderated by Rhonda Schaffler of the United Nations Capital Development Fund. Robert Annibale, Global Director, Citigroup Microfinance Group, explained the reasons for Citigroup's unusual participation in microfinance: "Citigroup has established a microfinance group which is a business group working in partnership with people who have expertise in microfinance," he said. "This enables Citigroup to gain knowledge about developing and lending products to the poor. We realize that we haven't ever focused on this segment of population before". Annibale underlined the fact that it was a learning process that commercial banks have to go through. "The returns and credit losses on microfinance are enviable compared to our other portfolios".
Further discussion on innovations focused on scale; it was noted that microfinance must reach the large, under-served segments of the population who have no access to banking.
Steven Bernstein, Senior Advisor in the US Department of Treasury's Office of International Affairs and Director of the White House Africa Markets Initiative, spoke about the relationship between housing and microcredit. He also shared some lessons learnt from his personal experience. "The US government is interested in housing finances because of the stability issue", said Bernstein. "It is a good economic development tool for deepening capital markets and also strengthens the middle class, hence promoting democracy". Having worked in areas affected by natural disasters, Bernstein noticed the efficiency in providing incentives to people for paying back their loans, also called an aggressive servicing system. However, he learnt that the system is not sustainable when the loans are donor funded. The innovation could therefore come from microfinance institutions, as is the case in Nigeria where housing has not been funded by donors and therefore demonstrates that management of credit risk can be made.
Micheal Eber, Program Officer of Grameen Foundation USA, looked at the innovations in microfinance from a technology standpoint. He stressed that "the delivery of microcredit has to be done more and more efficiently". Therefore, the focus has to be shrinking the "digital divide" in developing countries. This involves delivering faster and more efficient communication devices for the purpose of creating virtual market places even in the poorest countries. These information technology advances would reduce costs even in the most rural of areas.
The final panelist, Ivan Mancillas, Human Resources Director of Financiera Compartamos, provided insight into the importance of human talent. He emphasized that time must be dedicated to training staff.
The International Year of the Microcredit
Her Royal Highness Princess Mathilde of Belgium, an Emissary for the International Year of Microcredit, provided the conference's keynote address. She focused on her travels to China, India and Nepal where she met many microfinance clients, particularly women. She said that the social importance of microfinance lies in giving poor people more credibility. Microcredit empowers them and protects them from unscrupulous money lenders. Microfinance may also be considered a tool to give poor people the opportunity to participate fully in economic life. Finally, Her Royal Highness highlighted the importance of constant innovation and stressed the importance of information technology in providing new and efficient financial services for poor people and their constantly changing needs. She stressed the importance of educating poor people and remained convinced that a good education was the key to the future.
By Elizabeth Littlefield, CGAP CEO and World Bank Director*
All of us who are involved in microfinance know that it is neither just nor economically tenable for financial systems in poor countries to serve only a tiny proportion of the population and exclude the vast majority. We are no longer alone in this. All over the developing world people are waking up to the fact that poor people need - and will pay for - a wealth of financial options, solutions and services, just like rich people. They are realizing that poor people represent a vast untapped market opportunity. And as a result we are witnessing poor people's finance becoming mainstream finance in most poor countries.
We have long outgrown the word microcredit. Today, the word microfinance doesn't even capture the scope and scale of what is happening in the world of finance for the poor. What was once a neat and tidy, well-delineated little sub-culture, now encompasses a dizzying range of delivery organizations and services, all increasingly interwoven with the rest of the financial sector. All around us, we are witnessing experimentation, and a surge of new entrants to the field. The result is an explosion of diversity: diversity of delivery channels, of services, of funding sources and, of course, clients.
The panoply of institutions includes new NGOs, Non-Bank Financial Institutions, cooperatives, commercial banks, postal banks, pawn shops, and retail shops providing "cash back", all learning from each other, partnering, and merging. At the same time we, as a growing community, are working on ever more diverse financial products and services: deposit services, credit lines and term loans, crop and life insurance, money transfers. And we are aiming to serve a staggeringly diverse clientele - a huge chunk of the world population - the urban micro-enterprise, the farmer, the rural household, the very poor and the sort-of-poor. We are also seeing ever-broadening sources of capital: donors, international financial institutions, private capital and, most importantly, domestic banks and capital markets. And we are working in nearly every developing country in the world.
We are aiming at a world where a wide variety of strong institutions jostle and compete with one another for poor people's business, innovating and improving services to earn their loyalty. We have set our sights high and the mission is ambitious. It requires passion and responsibility. It requires agility and humility. And it requires leaving our own egos behind. But, it's already happening. And happening fast.
So let us consider the evidence of this integration in three dimensions: institutions, funding sources and market infrastructure.
Increasingly diverse institutions
First, the delivery vehicles - the financial institutions. Access points for poor people to get financial services are exploding in three ways:
- leading microfinance institutions with social origins at their core are scaling up,
- banks and other institutions with commercial origins are using their branch infrastructure to reach out, and
- partnerships between socially-oriented microfinance institutions and banks are being forged to leverage each other's comparative advantages.
It is as if the commercial sector is coming down and the microfinance sector is building out and they are meeting in the middle.
Leading microfinance institutions with social origins are growing and becoming more professional, transparent and profitable. Some are getting licensed to take deposits. Hundreds are getting credit ratings every year. Several are tapping domestic capital markets. Consider institutions like Caja Los Andes and Bancosol. Fitch, a mainstream rating agency, recently gave both a higher rating than most of the domestic banks in Bolivia. Likewise, Compartamos in Mexico, which began operations in 1991 as a small NGO, became a self-sufficient, regulated financial institution in 2001 and is now a profitable bank that has twice tapped the markets by issuing local-currency bonds.
Microfinance institutions are experimenting with new technology to expand services, compete and bring down costs. Pride Tanzania is introducing biometrics into its credit data systems. Some MFIs are linking into international ATM networks, while others, like Prodem in Bolivia, have built their own low-functionality, low-cost ATMs with picture and voice prompts for illiterate rural clients. In Senegal, Brazil and South Africa, there are promising experiments with smart cards and wirelessly connected point of service machines that allow the till of a rural shop, gas station or lottery outlet to act as a bank branch. In Zambia, MFIs are testing cell-phone based banking for remote villages. This is how the leading MFIs are poised for an explosion in access points - not just bricks and mortar branches, but virtual ones too.
At the same time, dozens of purely commercial retail banks in places as widespread as India, South Africa, Brazil and Egypt are starting to use existing branch infrastructure to go down market to tap lower income retail clientele. Four factors are driving that: competition is driving banks into new markets; the excellent repayment rates microfinance has demonstrated make it an attractive proposition; banks are seeking to pump more product through their infrastructure; and finally, the advent of new technologies that promise to make smaller transactions more cost effective. For these reasons, commercial banks are now seeing the poor as a viable and even attractive market. The power of building out microfinance on such vast existing networks, without having to grow organically branch by branch, may bring millions and millions of poor people into the financial fold at breathtaking speed.
At CGAP we have identified over 200 such domestic retail banks or consumer credit companies getting involved in microfinance: Banque du Caire in Egypt, Unibanco in Brazil, Capitec, a consumer credit company in South Africa with 300 branches is looking to expand from salary-based lending into the microenterprise market. SBI in India, with 13,000 branches, is reaching down by acquiring the portfolios of dozens of microfinance institutions. Other Indian Banks are planning the build-out of 10,000 wireless Personal Computer kiosks in rural villages with low cost ATMs attached to them.
Franchising and other partnership arrangements which allow banks and microfinance institutions to exploit their competitive advantages blur the edges between microfinance and the formal financial world even more. At CGAP we have counted at least 280 such partnerships worldwide.
As MFIs reach up and commercial banks reach out, we are finally together building the architecture of a fully-fledged financial sector.
Sources of Funding
The vast majority of microfinance loan portfolios are - and will increasingly be - funded by domestic savings and local banks. And that is as it should be. Our overall aim is clearly to help build domestic financial markets that function efficiently for their populations, re-channeling the vast pools of domestic savings into productive loans for the poor. To have these systems function effectively we need strong local financial intermediaries. Safe and strong institutions can provide poor people with both a safe place to save money outside the household, and also a place to borrow money when needed at other times of the year. External funds are needed to build the institutions and their human capacity, but external funds have a far lesser role in building financial intermediaries than in building roads and bridges.
In the meantime, donors still have an important role, especially in improving the effectiveness of the five hundred million to one billion dollars a year they currently spend in microfinance.
There is also increasing interest amongst mainstream social investors, as witnessed by the 58 new investment funds recently launched. However, over 90 percent of the so-called 'private' socially responsible money is really public money at its origin (much of it from IFC, or its European equivalents). The sector is fragmented too - the funds are too small and too numerous given the universe of institutions that are suitable for such investments. But the microfinance fund industry is young and will no doubt consolidate and shift around. The main concern I have is that of the $185 million invested in these funds, over three quarters of it is in debt, and of that, two thirds is in hard currency. This is a real problem as we have a strong indication that most borrowing microfinance institutions do not understand the risks, and if they did, they could not hedge them. This brings me back to the importance of focusing on building domestic markets, with domestic sources of funds.
The Financial Market Infrastructure
When we talk about the financial market infrastructure, we are really talking about three interrelated aspects: high quality information on financial performance at the institutional level; shared information systems with client credit histories, like credit bureaus; and new technologies that enable financial institutions to make smaller and smaller transactions more cost effectively. It is the coming-together of these three dimensions of the financial market architecture that will enable the exponential growth we have been working towards for so long.
The industry is making excellent progress on the quality of information on financial performance as the systems and standards now in place are being taken up and used. Financial reporting is improving at a healthy pace as microfinance and international financial reporting standards converge, and the quality of audits improves. The Microfinance Information Exchange (the MIX), a centralized database for microfinance reporting - now has 420 microfinance institutions and over 50 funds reporting high quality data. Over the last four years, the number of MFI credit ratings has increased from just fifty a year to over two hundred and fifty last year. At the same time, mainstream agencies are starting to get involved through local affiliates (Moody's just rated Acleda Bank in Cambodia). The industry is making moderate progress on creating credit bureaus with formal microcredit information - they now exist in thirteen countries, including in isolated countries like Turkey, with another ten on the way.
This information infrastructure is allowing MFIs and funders to connect, facilitating the allocation of capital and stimulating improved performance. All in all, we are seeing the early development of new delivery technologies that just might revolutionize microfinance.
So, this is an overview of the good news. But there still remain significant challenges.
Challenges Ahead
The main challenge to significant expansion is efficiency and institutional capacity. There are still far too many small, weak and inefficient institutions operating and soaking up valuable donor subsidies. While efficiency is stunning in Asia (5 percent), and making steady progress in Latin America, it is stuck at nearly 0.5 percent in Africa. Investing money is easy. But investing human capital in the slow, hard work of building strong institutions that are well managed and efficient, is what is really needed.
Reaching sparsely populated rural areas remains one of the major challenges. Could technology be the answer here?
The other persistent challenge is reaching the very poorest clients - the destitute and hungry who have no incomes - with grant instruments that enable them to stabilize and climb up onto the ladder of financial services. The micro-grants program of ABA and several programs in India, China and Bangladesh are promising but still very small, and donors will never have enough funds to do justice to the problem. Here we need the governments to recognize and act on their obligations, perhaps with donor help.
Next on my list of priorities: keeping our eye on the ball of building domestic markets, which means finding ways to bring in domestic funders. We need to understand the incentives and disincentives of local banks to lend to microfinance in local currency and design instruments that encourage their entry into the market.
But perhaps the most important question facing our industry today is the extent to which technology will be able to bring down transaction costs to enable commercial players to really serve this market globally. The secret to microfinance has been that poor people repay faithfully. We know that they do so because they value the access to services. Do we think they might pay back money into a machine as faithfully as they have paid back their loan officer at weekly meetings?
If the answer is yes - and if we were able to build national identity systems that underpinned credit scoring models, and to develop the delivery technologies - could thousands of commercial banks reach the last mile of a poor, rural community profitably without loan officers, except perhaps at account opening?
The challenge today is to roll out the methodology refined by microfinance institutions on a mass scale: to engage more types of distribution systems, more technologies and more talent to create financial systems that work for the poor. The time has come to make microfinance fully part of the mainstream, so it can boost equitable economic growth while at the same time lifting millions of people out of poverty with self-determination, self-respect and dignity.
*Based on remarks made at the International Year of Microcredit and Georgetown University Conference on Microfinance, Washington DC, April 19, 2005.
Asli Demirguc, Finance Research Manager, Development Research Group and Adviser Financial Sector Operations and Policy, the World Bank
I was asked to speak about challenges in microfinance, and the challenge I want to focus on is the lack of data. I will talk a bit more broadly about access to finance issues in general and the challenges we face in the area of data collection because this also very much applies to the microfinance area. And as we all know, microfinance is more and more being re-defined more broadly as providing services for the poor.
At the World Bank we have a large project on developing and gathering data on Financial Indicators, and an important part of this effort is to develop indicators on access to financial services. So today, I'll share with you our objectives, what we have been working on, and hopefully what we expect to accomplish.
First let me tell you a little bit about why we are interested in doing this work.
Although financial sector data is considered to be the most complete and readily available, when it comes to the reach of the financial sector, in other words information about who has access to what financial services, particularly when it comes to households and micro-enterprises, it tends to be very limited. We don't even have cross-country comparable data on "what proportion of households use formal financial services" what proportion "has a savings account?" or "has a loan?"
Yet we have been doing a lot of analysis, showing the importance of the formal financial system on economic development - the linkages between financial development and growth have been well established in the last ten years, at the country level, at the industry level, at the firm level. But the indicators used in these studies, like bank credit to the private sector divided by GDP, or liabilities of the financial sector divided by GDP, are good in measuring size of the financial sector - not its reach.
So we are very interested in better understanding the importance of access to different financial services by households and enterprises on poverty alleviation and growth. And to do this, we want to develop and compile access indicators to benchmark and monitor access to financial services around the world. And we thought the International Year of Microcredit - with its emphasis on data - was a good time to step up our efforts in data collection and analysis.
Who would use this data? Potential users include both public and private sector.
In the private sector, knowing who has access to what financial services is a first step in designing ways of profitably delivering financial services for different income groups. Providers need to know the market size, product and service needs, price sensitivity and so on. Policymakers at all levels have a wider perspective but they also seek to know who has access to which financial services, and which financial services are the most important in order to benchmark countries both cross-country and over time and to guide their policy interventions. And of course researchers have a keen interest in analyzing this data to better understand that access to which types of financial services are most closely associated with desired outcomes such as poverty alleviation and growth in productivity and growth. These findings would feed back into data collection and design of indicators to focus on those that have greatest impact. This would also help identify best practices in financial sector reform.
We have been talking about "access to financial services" but of course defining access is not easy.
For data collection exercises to be long lived and useful, we need to develop a conceptual framework to guide the data collection exercise. What we generally collect from different sources tends to be "usage information" not necessarily "access" and we need both an understanding of supply and demand factors in interpreting the data.
Conceptually, thinking about which indicators to monitor, we will consider the different functions of the financial sector - such as savings mobilization, allocation of funds, monitoring users of funds and so on - and our access indicators should ideally capture to what extent these basic financial services are delivered to a wide population - to low income households and micro and small enterprises.
Conceptually, delivering these basic services to a wide population would serve two purposes. First, this would assure equality of growth opportunities. Actually there is accumulating evidence that lower income inequality is linked to faster growth, and the most plausible explanation for this relationship is because wider access to credit would allow individuals to exploit growth opportunities more fully. And secondly, wider access would help build political support for financial sector reforms.
So what are the goals of our exercise?
- Ultimately we want to identify and monitor a few basic "headline" indicators which are strongly related to desired outcomes of poverty alleviation and growth.
- We want to compile and regularly update this cross-country data for each country to help with benchmarking/policy interventions.
- In doing so we also want to pull together individual country databases at the household, enterprise, and financial institution level for research, including market research.
To do this, we have been trying to gather data from different sources. Some of this is pulling together existing data, others are new data collection efforts. Today I will tell you a bit more about two of these sources: Providers surveys and Household surveys.
Provider surveys are surveys of financial institutions and their regulators.
In order to get cross-country detailed data from regulators and providers, we have recently prepared two surveys.
One surveys the regulators in 106 developed and developing countries and asks questions on the:
- Number of bank branches
- Number of ATMs
- Number and value of loans and deposit accounts
- Size distribution of loans and deposit accounts
We already have data on up to 90 countries collected.
As part of the same exercise, we are also surveying the top five banks in each of these countries to construct indicators of barriers to access for households and small businesses. The questionnaire has questions on the following to allow us to construct indicators of barriers and costs associated with access to financial services.
- Factors banks consider when deciding where to locate a branch or ATM.
- Documentation requirements to open accounts.
- Minimum balance requirements, account fees, restrictions for different types of deposit accounts.
- Interest rates on deposit accounts.
- Loan application procedures and documentation.
- Loan fees, interest rates, and collateral and paperwork requirements for different types of loans
- Factors influencing credit and collateral decisions
- Payment services and fees
And so far we have been able to collect information from 54 participants in 35 countries.
Other provider surveys that exist are the ones on microfinance. There is one dataset put together by CGAP which sets out the number of clients reached by a wide range of microfinance suppliers, including not only specialized MFIs but also other non-traditional intermediaries with large numbers of small clients. This is to determine how many poor and near poor clients are being served.
Moving from outreach to operations of MFIs, there is also database called Mix that provides balance sheet, income statement and product information on more than 200 institutions in developing countries. It is assembled by the Microfinance Information Exchange, with a summary published in MicroBanking Bulletin.
The second source is the household surveys.
This is the most direct but costliest way of getting information on access to financial services by households and micro enterprises.
General household surveys - like the living standards surveys - tend not to be focused only on finance but nevertheless include modules which ask questions on whether households have savings/checking accounts in formal or informal institutions, how much etc. There are also questions on whether households borrow, how much, for what purpose, from whom, at what terms. And reasons if their loan application was turned down. More recently there have been stand-alone financial access surveys, both by the World Bank and by other institutions such as the FinMark Trust. These tend to provide more detailed information.
What we are doing here is to first pull together all existing household surveys to get this information. We do have household information from 45 developing countries - 25 of these are Living Standards Surveys, there is some time-series dimension because a number of them start in mid-1990s and are repeated.
Also on-going is the work with more detailed finance surveys. The Bank has done a number of them already, in Brazil, in India, Colombia, Mexico and so on. These have much more detailed information compared to household surveys. For example there are questions that help us understand the motivation for product choice, reasons for credit refusal and so on.
There is also work outside of the Bank - such as the detailed access survey conducted by the FinMark Trust for South Africa, Namibia, Swaziland, and Lesotho. Through their surveys they construct an overall index of access with different dimensions. Also in a few villages they are doing detailed surveys which document in detail all the financial transactions of the poor - this is the financial diary approach.
So as you can see, moving forward, there is a lot to do:
- Collect new data, put together existing sources.
- Identify basic indicators.
- Analyze which indicators are associated with desired outcomes.
- Identify people and partners to collaborate with, activities, meetings, events to share.
- Pilots on specific countries for in-depth data work, capacity building, joint learning on access.
We hope at the end of all this work we will have a much better understanding of access to financial services and its impact on growth and poverty alleviation.
*Remarks made at the International Year of Microcredit and Georgetown University Conference on Microfinance, Washington DC, April 19, 2005.
By Steven A. Bernstein, Senior Advisor and Director, White House Initiative on African Mortgage Markets, United States Department of the Treasury*
One of the most important determinants of a successful microlending operation is the successful management of credit risk. Or, more simply, keeping loan delinquencies to an acceptable level. The need to keep a portfolio current is important for the obvious reason that an institution needs its loans to be repaid if it is to survive and thrive. On a higher, systemic level, maintaining low delinquencies is critical for minimizing moral hazard than can result in mass defaults across a financial system.
As the microfinance industry has evolved so have the methods for managing credit risk. Currently the trend is toward adopting more formal systems. At the same time, successful microlenders are tempering these formal systems with a customer service approach that meets the special needs of low-income and informal sector clients.
Determinants of Credit Risk
The basic components of credit risk are a borrower's willingness and ability to repay a loan. Ability to repay a loan is straight forward. It refers to a borrower having the financial resources to make a scheduled loan payment. It is most often measured by a borrower's income and financial obligations. In short, a borrower needs to be able to afford the scheduled payments on a loan. Unemployment and overspending are the primary contributors to a reduction in a borrower's ability to repay a loan.
A borrower may have the financial resources but be unwilling to continue to pay a loan. Determinants of a borrower's willingness to repay a loan are complex and determined by economic, legal and moral incentives. For example, empirical studies consistently show that the likelihood of default rises as the value of the asset decreases relative to the amount still owed on the loan. In other words, borrowers, at all income levels, do not want to keep paying for an asset that has little or no value. Legal systems and community pressure also contribute to a borrower's willingness to repay a loan.. If borrowers know that there will not be any consequences if they fail to repay a loan then the likelihood of default will increase.
Determination of a borrower's willingness and ability to repay a loan is critical if a microlender is to minimize credit risk. Furthermore, once a loan has been granted, it is critical that the microlender does everything possible to ensure that the borrower maintains the loan in good standing. There are three operational areas on which a microlender should focus to minimize credit risk. These include loan design, underwriting and loan servicing.
Loan Design
Appropriate loan design is critical for both a borrower and a lender. If a loan becomes too expensive then a borrower will be unable to repay the loan. On the other hand, the interest rate, at a minimum, should cover the lender's costs as a lender cannot sustain operations if it loses money on its loans. This balance between the affordability needs of borrowers and costs to lenders is not necessarily difficult to achieve if both sides have realistic expectations. While volumes can be written about this subject there are two important lessons that have been learned over the years:
1. Interest Rates Are Relative: Often well meaning people get upset over what appear to be usurious interest rates being charged by microlenders. For a legitimate lending operation to be sustainable it must cover operating costs, credit risk and funding costs. Sometimes these costs are high and the resulting interest rate is high. That said, what has been documented over the years is that households in most countries do not focus on the interest rate but rather focus on the payment. As long as they know what the payment will be, and can afford it, the interest rate is irrelevant.
2. Long Term Loans Need a Variable Interest Rate: Loans greater than five years present special issues for a lender. These kinds of loans, which are used for housing and the purchase of large assets, are difficult to offer as affordable fixed-rate products in many countries. The reason for this is largely macro economic instability. In the presence of inflation, a fixed rate loan will lose value and eventually cost more to fund than it earns. This means that the lender will need to embed a variable component to the loan interest rate. The key for affordability is to make sure that loan payment increases are capped both in frequency and amount.
Loan Underwriting
Loan underwriting is the process of determining a borrower's credit worthiness, or in other words his or her ability and willingness to repay a loan. It is the most important function that a microlender can perform to minimize credit risk. In commercial banking loan underwriting relies on the availability of financial information on a borrower from standard and formal sources. Sources of information include income tax returns, payroll stubs and contributions to pension funds. Unfortunately, in most markets in which microlenders operate this information is not available either because it is not kept or because the borrower exists outside the formal financial sector. This means that in order to underwrite, the microlender will need to gather its own information on a borrower. While labor intensive, successful microlenders have developed effective procedures for doing this.
Determination of ability to pay is primarily a function of a borrower's income and financial obligations. This is usually expressed as the ratio of a borrower's monthly payment obligations to the borrower's gross income. Typically, a higher ratio corresponds to a lower ability of a borrower to repay a loan. In the absence of formal information sources, verification of income and obligations can be done though a process of interviewing and observation.
For example, successful microlending programs will often verify income by sending a person out to interview an applicant's employer. If the applicant is self employed, the microlender will interview the borrower's customers or even spend an afternoon watching the applicant's business to estimate sales receipts. Interviews are also conducted in the borrower's home to establish the number of dependents, possible financial obligations (e.g., payments being made on a car or appliance) and to give the microlender a general sense of the moral character of the borrower. It is also important to mention that proof of regular receipt of remittances can also contribute to household income and be used to qualify for a loan.
Willingness to pay is usually measured by the loan-to-value ratio (LTV). This is a measure of how large a loan is compared to the value of the collateral put up for the loan. Willingness to repay usually falls as the LTV increases. This is usually very difficult for microlenders. Establishing a borrower's willingness to repay a loan thus becomes a qualitative exercise that incorporates the interview and observation process mentioned above as well as an assessment of a community's history in repaying loans.
Microlenders can, and do, perform comprehensive underwriting of their clients without the benefit of formal systems. The trade-off is time and cost. These methods are necessarily labor intensive but without them microlenders run the risk of originating loans that will default.
Loan Servicing
Loan servicing is the act of collecting payments and maintaining the balance of a loan. It is a critical function for preserving the value of a loan portfolio; good loan servicing can help ensure that high credit risk borrowers maintain their loan in good standing whereas poor loan servicing can result in defaulting of loans from what were once low credit risk individuals. Loan servicing is also the function that many lenders, both commercial and microlenders, fail to execute properly when dealing with lower income clients.
In commercial banking, loan payments are made by bank draft or by directly debiting payroll or a bank account. Things are not always so easy in the world of microfinance. The typical borrower usually does not have access to a bank account and often does not receive a formal salary. This means that for many customers of microlenders making loan payments can be difficult and put them in the position of making the choice to take time off from work (and possibly get fired) in order to deliver a loan payment or choose not to make a payment. Microlenders and others such as low-income mortgage lenders have made a lot of progress in payment collection. Some of the more important lessons learned are as follows:
1. Make it easy for a borrower to pay. Successful lenders will set up payment kiosks in communities. The kiosks are typically open before the typical work day starts and after it ends. Another effective method, albeit more labor intensive and potentially more dangerous, is door-to-door collections.
2. Provide positive incentives for payment. Borrowers respond well to positive incentives for good payment history. Microlenders and mortgage lenders have successfully used incentives such as payment rebates, small appliances and food to achieve very high levels of repayment. For example, one Mexican lender offered a free bag of corn meal if a borrower made timely payments for six months. The result was a delinquency rate of less than 1%.
3. Be proactive in dealing with delinquencies. Rather than wait until a loan goes into default, a microlender should investigate a loan within weeks of it first becoming delinquent. Often, the cause of a delinquency is due to illness or unemployment. If caught early enough a lender can give the borrower assistance as well as workout a equitable repayment plan.
Conclusion
As microlenders expand their operations and become integrated into the formal financial sector, the need for strict discipline in managing credit risk will grow. Developing sustainable sources of funding and equity investment will require well managed loan portfolios and the requisite finance systems. That said, successful microlending will also require lenders to make sure their operations meet the needs of their clients. Through this nexus, it is likely that microlenders will evolve into effective community banks that, in the near future, will provide critical financial services to the 80% of the world's population that is currently un-banked.
*Based on remarks made at the International Year of Microcredit and Georgetown University Conference on Microfinance, Washington DC, April 19, 2005.
By Michael Eber, Program Officer, Grameen Foundation USA
How will easy, affordable and reliable access for a person in a remote village be provided? When will this person have the ability to make a simple one-minute call, send a complaint to the local government, or make a loan payment without undo cost or travel difficulty? The microfinance industry is answering these questions with technological innovations.
With programs like MIS automation, Mifos, and MTN villagePhone Uganda, the Grameen Foundation USA (GFUSA) supports microfinance institutions (MFIs) to improve their overall effectiveness. Microfinance is often considered one of the most effective strategies in the fight against poverty, yet it currently reaches less than five percent of individuals worldwide who could benefit from such services. As microfinance institutions (MFIs) move to scale up their operations, they recognize the need for accurate and comprehensive information for internal planning and a system that will improve their ability to manage funds, sustain their services and maintain accountability to clients and investors. The existing manual and spreadsheet systems widely employed today do not facilitate this information exchange.
GFUSA's approach to automated MIS focuses on installing systems in months rather than years at costs of hundreds of dollars versus thousands of dollars. Prior to automation, a partner's growth was stagnant, with loan officers carrying documents into the field. Often, these were the sole information linking clients' loan information to the MFI. Revision of daily transactions were non-existent, a system of checks and balances could not be completed in less than two weeks, and the executive director did not receive meaningful information to make timely decisions. With an automated MIS, the organization's processes are optimized and efficient, and enable non-sustainable partners to reach self-sufficiency sooner. As a result, each dollar is invested away from administrative tasks and instead, put in the client's hands. The new system is timely and the data is accurate providing easy access to historical data, and providing greater credit monitoring and reporting. These management systems are impacting MFIs and borrowers' lives.
Mifos is a management information system designed to be used by microfinance institutions globally. It is designed to provide a fast and flexible system to better manage large numbers of borrowers. Open Source development offers a credible response to solution development by third party vendors and in-house developers of microfinance operational systems. The grassroots philosophy, low margins, and innovative tendencies of the emerging microfinance industry make it a good match for Open Source Systems development.
For borrowers like Angilina Wandera, these advances are impacting lives. Angilina lives in Buumulimba where she owns a dressmaking shop. When FOCCAS, a villagePhone Uganda partner, provided the opportunity for Angilina to purchase a village phone kit with a microfinance loan under the MTN villagePhone Uganda Project, the entrepreneur accepted. The village phone has turned her dressmaking shop into the height of social activity and increased sales, allowing Angilina to provide for eleven children. Launched in July 2003, MTN villagePhone Uganda currently has 1,500 phones and plans to have 5, 000 phones within the next five years. For a flat rate per minute, villagePhone users are allowed to call anywhere in the world and receive incoming telephone calls for free. The villagePhone saves time, money, and reduces travel costs. The program is now being piloted in Rwanda.
With initiatives like MIS automation, Mifos, and MTN villagePhone Uganda, GFUSA is answering the call of the future.
*Based on remarks made at the International Year of Microcredit and Georgetown University Conference on Microfinance, Washington DC, April 19, 2005.
By Isabelle Delalex, Programme Manager, UNCDF
How should the constraints preventing the vast majority of "bankable" people in the world from gaining access to financial services be addressed? To answer this daunting question, The United Nations Capital Development Fund (UNCDF) and the Financing for Development Office (FfD) of the United Nations Department of Economic and Social Affairs (UNDESA) invited financial sector stakeholders from the world over to participate in a series of innovative consultations that have taken place over the past several months. The process culminated at a May 4 and 5 Global Meeting hosted by the International Labour Organization in Geneva and chaired by UN Under-Secretary José-Antonio Ocampo, where over 130 experts in finance gathered in roundtable discussions to address the challenges of building inclusive financial sectors. An analysis and synthesis of these consultations will contribute to the drafting of the "Blue Book on Building Inclusive Financial Sectors" due for publication by early November.
The idea to organize this dialogue on the constraints and opportunities to building inclusive financial sectors was the brainchild of Peter Kooi, Director of the Microfinance Unit at UNCDF, and was launched in the context of the International Year of Microcredit; at the same time, the Blue Book process was taken up as a follow-up to domestic finance issues raised in conjunction with the Monterrey Consensus. The partnership between UNCDF and the Financing for Development Office of UN DESA is based on a commitment to collective and coherent action on the interconnected policy challenges regarding access to appropriate financial services for households and micro-, small and medium-sized enterprises in developing countries.
A New Forum for Cooperation and Debate
Central Bankers, donors, state institution officials, commercial service providers, academics and practitioners address matters relating to poverty reduction from different perspectives. They seldom interact in working groups around the same table to discuss ways and means to provide the unbanked with access to financial services. But over the past few months, the Blue Book consultations have provided venues for these stakeholders to share their experiences. Kathryn Imboden, Senior Policy Advisor for the Blue Book project remarks: "Participants at the multi-stakeholder dialogues are ready to share experiences and are often surprised to hear that their counterparts from a world away are talking about the same issues. There is proven value in debating collectively the options and choices to foster the development of more inclusive financial sectors. This format has allowed key issues to percolate to the surface, based on specific experiences and direct concerns at the country and regional levels."
A Variety of Visions for the Future
Participants at the Geneva meeting debated issues such as closing the gap between client demand and the financial services offered, the process toward the integration of micro and SME finance into the financial sector, as well as the deployment of governments' policies and incentives to deepen outreach. A Banker from Chile said: "A vision of integration is through savings mobilization. The more formalized an MFI, the better". About demand and supply issues at the client and retail institutional levels, an International Year of Microcredit National Committee member from Kenya said: "only 1% of the population has access to insurance. If we are talking about building inclusive financial services, we need to include insurance as one of those services. But insurance companies need information about risks, and MFIs lack the know-how to offer insurance products. In this context I see partnership models as appropriate".
Some comments raised complex issues, such as the role of government institutions or the parameters of a microfinance regulatory framework. "Are we asking too much of the regulators? Over-regulation at the grass-roots level can be damaging. India's microfinance sector is growing fast because the government decided that some institutions should not be regulated," said the Managing Director of a microcredit rating agency in India.
The two-day marathon also raised broadly shared concerns, such as the degree of foreign exchange risk incurred by taking on international debt. The importance of savings mobilization was underlined over and over: "The mobilization of domestic savings is preferable to leveraging international debt because turning to international funding means taking on foreign exchange risk" one participant said.
Further Discussions Held On-line
Beyond the Geneva meeting, the Blue Book process as a whole elicited much discussion about the vision for the future, identifying options and choices in fostering inclusive financial sectors. Issued raised during the two-day meeting were echoed by MFI practitioners from all over the world in an on-line survey carried out by UNCDF earlier this year. In the survey, MFI practitioners and scholars shared their visions of microfinance. A Banking Supervisor from sub-Saharan Africa said his vision is of: "Appropriate products accessible to the poor, to meet their needs: to build houses, pay school fees, secure instant access savings, to obtain low cost flexible loans, and appropriate insurance products." Another Banking Supervisor from sub-Saharan Africa added that he hopes the future will bring "health insurance products for AIDS affected countries." A commercial lender from Latin America stressed the importance of sound legal environments where, "Microfinance institutions share the same legal framework as banks." A German academic working in Indonesia, India, Uganda and Benin underscored the importance of regulation and sustainability; he sees, "A financial system comprising a broad range of properly regulated and supervised financial institutions, including local financial institutions in private, communal and cooperative ownership, mobilizing their own resources domestically, covering their costs and making a profit."
Closing the gap between client demand and the financial services offered was a recurring theme in the on-line survey. A practitioner from Bosnia and Herzegovina suggested: "All financial institutions should be vertically connected in order to fullfil the needs of the clients." A US Investor operating in Central America hoped for: "Easy access to a competitive array of financial services for all…Access does not mean provision, but equal access opportunity should exist." Responders were careful to address the limits of inclusion: "A financial sector's degree of inclusiveness could be defined by the extent, speed and cost to which one's financial proposition finds a response. This does not necessarily mean that everyone has access to financial services," remarked a donor from a multi-lateral agency.
How to best serve the needs of all sectors of the population was a key topic that frequently came up in the survey. A Colombian academic sees an inclusive financial sector as key to "helping poor people afford financial instruments and manage risk." A programme manager in Africa suggested the need for a "shared vision and agreed strategies for the development of a financial sector that serves the needs of all segments of the population. The sector will include a wide range of financial institutions that are providing access to different kinds of financial products and services suited to the needs and circumstances of different market segments, with opportunities for institutional linkages to maximize results and impact."
Working towards Inclusive Financial Sectors
The Blue Book process has been most notable for providing a rare opportunity for financial sector stakeholders to present and at times defend their unique perspectives. Putting aside their singular viewpoints, participants contributed to a very constructive consultation process. Exploring questions of demand and supply at the client and retail institutional levels; integration of micro and SME finance into the domestic and international markets and the policy environment, choices and strategy options fostering poor clients' access and the integration of informal financial services providers into the banking system were outlined as reference points.
The stakes are high for the ultimate clients: Blue Book dialogue participants took the issues seriously and contributed with commitment, energy and extensive experience to identify the best paths to building inclusive financial sectors to achieve the Millennium Development Goals.
For more information, please visit: http://www.uncdf.org/bluebook/index.php
The United Nations is pleased to announce that Bollywood leading actress Aishwarya Rai has graciously accepted an invitation to become a spokesperson for the International Year of Microcredit 2005. As a spokesperson for the Year, Rai will play an active role in raising awareness of the main goals and priorities of the United Nations' poverty alleviation efforts. She will also promote the activities of the International Year of Microcredit and work to extend its public outreach. In particular, she will be appearing in a public service announcement for the Year.
Rai explained, "Throughout my travels, I have learned that we can do much more to help women and children who are economically vulnerable. By giving low-income women access to credit and savings, they can increase their incomes, build assets and better the lives of their families. They are able to spend their money on what is important to them: medical care, better food and education for their children. In my home country of India, I have seen the beauty in empowering women. It is up to us to give them a chance and along with the United Nations and microfinance we are doing just that."
Rai's position as a spokesperson for the International Year of Microcredit is an extension of her dedication to issues close to her heart, namely, the worldwide ill treatment of women, children, the elderly and animals. She has channeled her passion into the creation of her own Aishwarya Rai Foundation, an organization that offers help to those less fortunate through various development projects. The foundation is currently working to establish The City of Hope, Faith and Care medical center in the Indian villages of Mumbai and Poona. It will serve those suffering from life-threatening diseases such as cancer and HIV/AIDS.
Global interest in the International Year of Microcredit 2005 continues to grow. Many initiatives are underway to help meet the Year's objectives of promoting awareness of microfinance and building inclusive financial sectors. All of the initiatives undertaken by the Year are designed to encourage innovation and strategic partnerships. For more information, contact christina.barrineau@undp.org or visit our website at www.yearofmicrocredit.org.
National Committees
An unprecedented global response to the call for building inclusive financial sectors is now underway, through the establishment of National Committees. Member states were requested to establish national coordinating committees to facilitate activities and to create a dialogue on best practices for building inclusive financial sectors in their country. Each National Committee assesses the challenges that poor people confront in accessing financial services and decides upon activities and initiatives to address these issues. Key factors that are stressed throughout this process include membership diversity and partnership, creativity, effectiveness in communication and outreach, the level of governmental support, private sector engagement, and increased public awareness.
To date over 90 countries in all levels of development have pledged their support to the International Year of Microcredit. National Committees or Focal Points had been established for 46 countries, comprising high-level representatives from 35 governments, 60 United Nations local offices, 41 multinational agencies, 177 microfinance networks, 13 central banks as well as key members of the private sector and civil society.
In each country the National Committee has a high degree of flexibility with the activities and events that are coordinated. Already hundreds of conferences and seminars have been planned throughout the Year and 27 countries have even developed a formal public awareness campaign to reach even the remotest region. Such awareness raising activities focus on introducing quality financial services to the poor and lower income people and are designed to reach a wide-ranging audience. Many governments realizing the benefits of microfinance have initiated innovative ideas at promoting the Year.
Global Microentrepreneurship Awards Program
In November of 2004, the Global Microentrepreneurship Awards (GMA) successfully rallied the world to come together and highlight the achievements of and pay tribute to low-income entrepreneurs. It is in this spirit that the 2005 GMA Programme carries on. The overwhelming success of the 2004 pilot-event has led to a formal collaboration between Citigroup, the United Nations, and student groups from universities across the globe that is known as the GMA Student Alliance. More than 30 countries are participating in this year's award programme, bringing together thousands of microfinance clients, students, private and public sector professionals, senior government officials and UN agency staff. Similar to the 2004 programme, stock exchanges throughout the world have also pledged their support. This year over 30 stock exchanges will invite winning contestants to once again ring the opening bell, sending an even stronger signal to the world that building inclusive financial sectors can play an important role in poverty alleviation.
Country Teams have been created to design and coordinate the awards programme specific to each country. Country Teams consists of in-country and out-of-country individuals from the public and private sectors, UN agencies as well as students. The diversity of each individual team allows the contest to be designed in a manner that takes into consideration the unique nuances of the local business and economic environment.
The Blue Book Project
Initiated by the Year, and led by the United Nations Capital Development Fund and the Office of Financing for Development of the United Nations Department of Economic and Social Affairs, the Blue Book on Building Inclusive Financial Sectors used an international dialogue among a wide variety of financial sector experts to address the question of "why so many bankable people are unbanked." Held throughout the Year, and culminating in a global meeting in May, the result will be presented to the General Assembly of the United Nations in September, and officially launched on November 8, 2005, at the Year Forum on Building Inclusive Financial Sectors.
The Data Project
Although there is a broad consensus that microfinance is widely and increasingly used, there is little hard data about who provides it, in what form it is provided, who receives it and at what cost. In the fall of 2004, the Year brought a small group of expert statisticians and researchers from the Bretton Woods Institutions and the United Nations together with governments and the private sector to address current data gaps, anticipate future needs and build agreement on the best way to move forward. As a result of this pioneering process, the World Bank and the UK's Department for International Development (DFID) have moved forward, along with the Central Bank of West African States (BCEAO), to develop indicators on the quality of financial access. Preliminary results will be launched on November 8, 2005, at the Year Forum on Building Inclusive Financial Sectors, as a critical first step in assembling this vital information.
"Made by Microentrepreneur" Products
A collection of 25 products, labeled with the logo of the Year, will convey to the public the importance of microentrepreneurs and will be sold through an "online boutique" on the website www.shopmicro.org. The chosen products will represent various world regions, male and female entrepreneurs, young and older craftspeople, various media as well as different market segments. The story of the product and artisan will be told in a pamphlet with the purchase of each product to illustrate the link to microfinance. National Committees and partner organizations are also invited to market and sell these products.
The online store currently has products from Macedonia, Colombia, Rwanda and Bangladesh. The store seeks involvement from microfinance institutional leaders, corporate partners and celebrities who will promote the products.
Newsletter
Microfinance Matters is a monthly web publication from UN Capital Development Fund that was started by the Secretariat in January 2004. The newsletter now reaches over 6,000 direct subscribers and expects to have a circulation of more than 10,000 by the end of 2005. In addition to our subscription list, the newsletter is also distributed through various microfinance outlets, reaching an estimated additional readership of well over 50,000 people worldwide. Microfinance Matters takes advantage of the Year to promote innovative partnerships, raise public awareness, and share effective practices and expertise on building inclusive financial sectors. By inviting reader opinions, the newsletter is developing into a platform for discussion and debate. Contributors to date range from Central Bank Governors to Ambassadors to microfinance clients.
Film Projects and Public Service Announcements
The film short: "Microfinance: In Their Own Voices," a collection of client stories produced by Sterling Van Wagenen for the International Year of Microcredit, has been distributed to UN Information Centers and target broadcasters. The film is in demand from many parties, including National Committees, conference organizers, universities and others to promote microfinance messages. In addition, the Secretariat has offered input into a number of documentary film and television productions on microfinance. Films on microfinance produced for the Year will be made available on the Year website.
Public Service Announcements for the Year have been filmed featuring Aishwarya Rai, Anggun, Souad Maasi, and Karina. Anggun's PSAs aired at the Pavarotti and Friends Concert in Johannesburg, South Africa on April 2 to an audience of 20,000. The PSAs were produced by Citigroup and are available in English, French, Spanish and Indonesian. Citigroup has agreed to distribute the PSAs internationally with its advertising package. The PSAs will also be distributed through the Year website, microfinance providers, and National Committees throughout the world. Plans are underway for an additional promotion campaign through posters, postcards and decals and to secure additional mainstream celebrities to promote the objectives of the Year.
Patrons Group
The Emissary and Spokespersons Groups raised awareness of the objectives of the Year starting with the launch event last fall in New York. Princess Mathilde of Belgium has participated in an array of activities including visits to microfinance clients in China, Mali, and India and speaking engagements at universities in Europe, Asia and the United States. Princess Maxima of the Netherlands recently visited entrepreneurs, MFIs and government and Central Bank officials in Uganda and Kenya. Anggun has engaged in promotional trips to Indonesia, performed in benefit concerts, and has promoted the logo of the Year on her most recent album.
Year of Microcredit Website
The official website of the Year (www.yearofmicrocredit.org) provides extensive information about the Year, its objectives and activities, National Committee contact information and a calendar of national, regional and international events. The site serves newcomers to microfinance, industry practitioners, UN country teams and agencies, and donors. Organizations may link to the website (guidelines on how to do this are available on the site). The site also includes multiple languages to support our international audiences. Key areas include an events calendar, media resources, an interactive microfinance education area, an experts forum, international contact information for all Year country teams, and information about key sponsors and patrons group.
Special Events
Hundreds of microfinance meetings, conferences, forums and other events are being organized and scheduled to celebrate the Year and raise debate on how to improve financial services for those people living in poverty. Please see the official Year website (www.yearofmicrocredit.org) for an updated calendar of events and activities.
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