Date post: | 22-Dec-2015 |
Category: |
Documents |
View: | 217 times |
Download: | 0 times |
MicrofinancingMicrofinancingPresented by:Presented by:
Myasnik PoghosyanMyasnik PoghosyanRamiel BetnisanRamiel Betnisan
Kari RothKari Roth
IntroductionIntroduction
Existence of extreme povertyExistence of extreme poverty
Fight against global povertyFight against global poverty
Lack of traditional financingLack of traditional financing
Help poor to help themselvesHelp poor to help themselves
A profound effect of microfinanceA profound effect of microfinance
Defining MicrofinanceDefining Microfinance
What is Microfinance ?What is Microfinance ? MicrofinanceMicrofinance is a proven “micro” is a proven “micro”
financial solution that helps poor financial solution that helps poor people to help themselves.people to help themselves.
Provision of several financial Provision of several financial services such as services such as microcreditmicrocredit, , microsavingsmicrosavings, and , and microinsurancemicroinsurance
Origins of MicrofinanceOrigins of Microfinance
1864-Friedrich Wilhelm Raiffeisen1864-Friedrich Wilhelm Raiffeisen Village-bank movement in GermanyVillage-bank movement in Germany Reached 2 million farmers by 1901Reached 2 million farmers by 1901
1900-Alphonse Desjardins 1900-Alphonse Desjardins ““Caisse Populaire” movement QuebecCaisse Populaire” movement Quebec Member-owned financial co-operativeMember-owned financial co-operative
1970’s- A new wave of microfinance1970’s- A new wave of microfinance An early pioneer Akhtar Hameed KhanAn early pioneer Akhtar Hameed Khan
Revolutionary idea of “microcredit”Revolutionary idea of “microcredit”
The Key Role of MFIThe Key Role of MFIss
Reaching out to the very poor Reaching out to the very poor
Delivering microfinance servicesDelivering microfinance services
Educating local communitiesEducating local communities
Collecting weekly loan paymentsCollecting weekly loan payments
Providing additional social servicesProviding additional social services
Models of MFIsModels of MFIs
The Grameen Bank modelThe Grameen Bank model Focus on womenFocus on women Borrower group Borrower group Five members guarantee each otherFive members guarantee each other
The Village Bank modelThe Village Bank model Latin America and AfricaLatin America and Africa External accounts and internal accountsExternal accounts and internal accounts
Credit UnionsCredit Unions Self-help GroupSelf-help Group
Grameen BankGrameen Bank
ComCommmunity Development Bankunity Development Bank Makes small loans without requiring Makes small loans without requiring
collateralcollateral Accepts deposits, provides other Accepts deposits, provides other
services, and runs several services, and runs several development-oriented businesses development-oriented businesses including fabric, telephone and including fabric, telephone and energy companies energy companies
Founder, Founder, Muhammad Muhammad YunusYunus, were , were jointly awarded the jointly awarded the Nobel Peace PrizeNobel Peace Prize in 2006.[1] in 2006.[1]
Grameen BankGrameen Bank
SSelf-help group elf-help group Group of five individuals are Group of five individuals are
loaned money, but the whole loaned money, but the whole group is denied further credit if group is denied further credit if one person defaults one person defaults
(97%) loan recipients are (97%) loan recipients are women women
High payback rates—over 98 High payback rates—over 98 percent percent
Grameen BankGrameen Bank
Of the total equity of the bank, the Of the total equity of the bank, the borrowers own 94%, and the remaining 6% borrowers own 94%, and the remaining 6% is owned by the Government of Bangladesh is owned by the Government of Bangladesh
Total number of borrowers is 6.67 million, Total number of borrowers is 6.67 million, and 97% of those are women and 97% of those are women
The Bank has 2,247 branches (as of May, The Bank has 2,247 branches (as of May, 2006) covering 72,096 villages, with a total 2006) covering 72,096 villages, with a total staff of over 18,795 staff of over 18,795
Since inception, total loans distributed Since inception, total loans distributed
amounts to (US$ 5.72 billionamounts to (US$ 5.72 billion) ) Out of this, Tk 258.16 billion (US$ 5.07 billion) has Out of this, Tk 258.16 billion (US$ 5.07 billion) has
been repaid. been repaid.
Rural Telephone Rural Telephone ProgrammeProgramme
Bangladesh has one of the lowest Bangladesh has one of the lowest telephone densities of the world. telephone densities of the world.
Grameen Phone, a sister company of the Grameen Phone, a sister company of the bank, is already the largest mobile bank, is already the largest mobile telephone provider of the country telephone provider of the country
Grameen Telecom, another sister company Grameen Telecom, another sister company of Grameen Bank, brought radio-of Grameen Bank, brought radio-telephones and mobile phones to almost telephones and mobile phones to almost half of the villages of Bangladesh. half of the villages of Bangladesh.
Distributed loans to almost 139,000 poor Distributed loans to almost 139,000 poor women in rural areas to pay for the women in rural areas to pay for the phones.phones.
Woman and MicrofinancingWoman and Microfinancing
Economic developmentEconomic development Reduce birth ratesReduce birth rates Improve healthImprove health Improve nutritionImprove nutrition Improve educationImprove education
Types of Businesses Types of Businesses WeavingWeaving EmbroideryEmbroidery Raising LivestockRaising Livestock Basket makingBasket making Growing fruits & VegetablesGrowing fruits & Vegetables
Advantages of Advantages of MicrofinancingMicrofinancing
Easy to obtain Easy to obtain Do not need collateralDo not need collateral Offer development servicesOffer development services Used for any purpose provided it is Used for any purpose provided it is
business relatedbusiness related Microloans administrated on a local Microloans administrated on a local
level, easier to develop a relationship level, easier to develop a relationship with your lenderwith your lender
OpportunitiesOpportunities
Disadvantages of Disadvantages of MicrofinancingMicrofinancing
Big LenderBig Lender MFIMFI
Total Amount Total Amount to be lentto be lent
$1,000,000$1,000,000 $1,000,000$1,000,000
Cost of CapitalCost of Capital 10%10% 10%10%
Number of Number of LoansLoans
11 10,00010,000
Size of LoansSize of Loans $1,000,000$1,000,000 $100$100
Administrative Administrative costs per loancosts per loan
$30,000$30,000 $20$20
Default RiskDefault Risk 1%1% 1%1%
Resulting Resulting Interest RateInterest Rate
10%+3%+1%= 10%+3%+1%= 14%14%
10%+20%10%+20%+1%=31%+1%=31%
http://ies.fsv.cuni.cz/storage/sylab/148_w07_microinstitutions_eldc.pdf - Micro Institutions Lecture 7
Challenges/RecommendationsChallenges/Recommendations
Better accessibility Better accessibility Provide more formal Provide more formal
trainingtraining Tax incentives Tax incentives Performance-based Performance-based
microfinancingmicrofinancing
Questions?Questions?