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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 8 / January 2005 |
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Links New publications and web sites for your information: Help your microfinance institution track and understand client exit in a simple and low-cost way by consulting the Imp-Act Practice Note “Learning from Client Exit.” The note explores the implications of client exit, as well as how to define and measure the phenomenon. It presents tools for learning which clients are exiting, and teaches readers how to create profiles for the various types of clients who have exited. The note also discusses the reasons behind client exit, and assesses ways to use information regarding client exit. To read the note, visit http://www.ids.ac.uk/impact/Publications/publications_practicenotes.html. Latin America and Microfinance: why the slow growth? The Inter-American Development Bank recently published a paper focusing on the slow growth trends felt in most of Latin America. The paper, entitled “Why does Latin America grow more slowly?” provides an overview of the most salient features of Latin American growth performance during the last four decades. Written by Juan S. Blyde and Eduardo Fernandez-Arias, the analysis sheds light on the strengths and weaknesses of long-run growth of Latin America comparing countries’ benchmark figures. The full text is available at: http://www.iadb.org/publications/index.cfm?language=English Is commercial microfinance the right choice for everyone? Microfinance adviser Heather Clark explores whether commercial microfinance is an appropriate solution for all situations in the latest edition of “Finance for the Poor” published by the Asian Development Bank. Commercialization, which occurs when formal financial firms provide services to microfinance institutions with an aim toward shifting their operations to a market-based model, ultimately aims to open more savings and lending avenues to the poor. While the commercialization approach has gained momentum in Asia—especially in the last few years—challenges still remain, and it is unclear whether this model works across the board. The full article is available at http://www.adb.org/Documents/Periodicals/Microfinance/finance-200453.pdf. Government Loans and Microfinance: The Armenian Example. In late 1996, the International Fund for Agricultural Development (IFAD) initiated a program in northwest Armenia designed to develop sustainable agricultural support services for 40,000 people living in three rural provinces. Nearly simultaneously, the government’s agricultural bank found itself at a critical juncture, ready to implement a strategic expansion. Maggie Dugan’s recent article in CGAP’s Case Studies explore the creative partnership that the two organizations created, which made sense for a growing microfinance operation and ultimately enabled US $4.5 million in credit to be extended to get the bank on solid footing, reaching self-sufficiency and expanding rapidly. For more information on this innovative partnership, visit http://www.cgap.org/direct/docs/case_studies/cs_15.php. The Asia Resource Center for Microfinance (ARCM), managed by the Banking with the Poor Network, is pleased to announce the initial versions of the first microfinance country profiles for Pakistan and Nepal. The profiles, still in the initial stages of development, include fact sheets on key organizations functioning in the nations, such as microfinance providers, donors and investors and supporting organizations. The profiles also include a listing of current issues in domestic microfinance initiatives, such as best practices and standards, national innovations and microfinance programs operating in the formal financial sector. Finally, the resource includes information about news and events, such as workshops (two are upcoming this winter, in Islamabad and Katmandu, respectively) and press coverage. The ACRM is based on dialogue
and information exchange at both national and regional levels within South and
Southeast Asia. Along with the Banking with the Poor Network, ARCM hopes to
provide a one-stop learning and information hub for Asian and international
microfinance actors. Currently, microfinance country profiles are only available
online at http://www.bwtp.org.
ARCM plans to focus next on Indonesia, Cambodia, Laos and Vietnam. For more
information, contact Pascal Marino, Microenterprise Development Program Manager,
at pascalmarino@fdc.org.au CGAP recently published “Ten Key Questions for Technology Investment Decisions” that every microfinance institution should ask before investing in technology specifically as it relates to the core business strategies of the organization. The questions offer guidance on what to expect from what type and what size of investment. The exploration of alternatives is encouraged as well as learning from the experiences of other institutions that have adopted similar changes. The questions are available at: http://www.cgap.org/iss_site/documents.html Dominican immigrants will send home a record-breaking $2.7 billion in 2004; nearly $1.6 billion will come from the metropolitan New York area, where the majority of the United States’ one million Dominican expatriates live, according to a recent study entitld "Sending Money Home: An Analysis of the Remittance Market Between the US and the Dominican Republic" by the Inter-American Development Bank and Columbia University’s Earth Institute. Because of their hefty contributions of this Dominican diaspora, Dominican expatriates play a crucial role in their impoverished country’s economy. More than 70 percent of Dominicans regularly send contributions to the Dominican Republic, which equates to 15 percent of the nation’s gross domestic product. “Two out of five adults in the Dominican Republic receive money from a relative living abroad,” Columbia University’s Donald F. Terry said. “This is the highest proportion of any of the Latin American countries we have analyzed over the past five years.” Earth Institute Director Jeffrey D. Sachs underscored the importance of deploying technology to lower the costs of these international money transfers and increase poor families' access to a wide variety of financial services. "The opportunities to leverage remittances for improved development outcomes are tremendous," said Sachs. "Early progress is showing remittances linked to education, community development, microfinance, entrepreneurship and diaspora philanthropy. The Earth Institute's research in this area aims to shed light on these financial flows." Research indicates that
Dominicans in the New York area have fewer institutional options and tend to
pay more for financial services than other Latin American immigrants, such as
Mexicans and Colombians, who use similar products. These increased expenses
are driven by the uncompetitive nature of the market, which is dominated by
money trader companies. Furthermore, Dominicans strongly prefer home-delivered
remittances, according to Earth Institute’s survey. More than 80 percent
of Dominican beneficiaries receive cash at their doorsteps, rather than having
to retrieve the money from an agency or wire service. “Banks have nothing
to compete with this overwhelmingly popular [service] and home delivery is a
culture that is difficult to change,” said Earth Institute survey specialist
Lenora Suki. “The problem is that it disconnects the people who receive
remittances from the banking system. As a consequence, they may be less likely
to save or invest.” For more information on the conference and the survey,
visit http://www.iadb.org/NEWS/docs/financialinstitutions_E.pdf.
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