‘My Own Home’

There is a reason to smile for low-income earners in Nigeria following as plans to introduce a public-private partnership initiative in on the way. The mission of the initiative is to increase access to housing finance in Nigeria. The program seeks to introduce mortgage guarantee insurance and microfinance scheme to empower Nigerians to own homes.

The project, which has been labeled ‘My Own Home’ will constitute of 8 microfinance banks that have been selected for the stimulation of housing finance to low-income earners. The institutions will empower low-income earners to access flexible housing finance for incremental construction and home improvement. The organizations will assist in various ways inclusive of funding a piece of land, establishing the foundation for an existing property and advancing the construction in different stages.

If the client maintains a clean repayment record from the selected finance institutions, It will support the client until their construction is completed. The selected microfinance institutions will benefit from technical assistance worth $ 15 million piloted by LAPO Microfinance Bank. Lack of sufficient finances to service mortgage does not block one from owning a home with the introduced microfinance mortgage that allows one to acquire progressive loans.
‘My Own Home’ scheme also educates young people on the importance of owning a home. It does not necessarily require one to spend all their life savings to live the dream.

http://allafrica.com/stories/201706190607.html
https://guardian.ng/property/cbn-picks-eight-microfinance-banks-for-fgs-my-own-home-scheme/

Recovery of Microfinance Loans in Post Demonetization India

 

Development of microfinance institutions has significantly empowered people to access financial services to develop themselves. However, the organizations are facing challenges of recovering the loans. In India, post demonetization has brought the crisis in the recovery of the loans. It has resulted in the non-repayment of the loans for extended periods of time which make the institutions stagnant in their operations.
Delinquencies of loan repayment showed significant rise following the 2016 move by the Indian government to demonetize all ₹500 (US$7.80) and ₹1,000 (US$16) banknotes. The government hoped to curtail the shadow economy and stop the use of illicit cash which is a corrupt act. The delinquency rates rose multiple times to 10.82% in 2017 from 0.45 % in 2016.The move advanced the stress of microfinance loans.
According to the rating firm, recent activities have enabled improvements in the commercial vehicle and the construction equipment loan recovery. There is hope for the normalization of the situation following the developments witnessed in the currency circulation which is expected to bring relief to the sector. Questions in local geographical and loan waivers are still uncertainties despite the developments.
Demonetization the Early Delinquency Index (EDI) rose to 153bp where one basic point (bp) is equal to 0.01% to 6.86 % by February 2017. Higher delinquencies were experienced with loans acquired between 2016 and 2015.

http://economictimes.indiatimes.com/industry/banking/finance/recovery-of-micro-finance-loans-still-a-concern-post-demonetisation-india-ratings/articleshow/58733315.cms

Microfinance: Steps Towards a Pro-Poor Financial Service

Despite the many advancements witnessed globally, most rural areas tend to be marginalized and lack access to crucial services compared to the urban areas. A few commercial banks and microfinance institutions are have stepped forward to expand their operations to the countryside. The moves are facilitating the poor in the rural areas to access formal financial services and reserves to cope with emergencies. Services from microfinance institutions have low risks and high returns and are thus suitable for the poor people who invest in the small hey get.

An increasing proportion of the rural community now makes use of the sustainable financial services provided by the microfinance institutions at the village centers. The institutions also empower the rural residents by building financial knowledge and skills through financial literacy courses and competencies to rural populations. The training plus the loans issued enable the rural resident’s o advance from their hand-to-mouth survival to making plans for a new and improved future.

Governments and donors can contribute to the expansion of service offered by microfinance institutions to expand in various ways. It includes facilitating an enabling environment for the continuity and expansion of the services inclusive of infrastructure and increased security measures. The stakeholders can also support innovations and linkages in the rural areas to promote growth and development.

https://www.ifad.org/who/president/archive/tags/1651524
https://www.giz.de/en/worldwide/17492.html

 

 

There is More Than Just Giving Loans

The wave of microfinance hit India`s financial markets in 2010 and influenced the activities of many small business owners and entrepreneurs. Initially, it was a practical approach to poverty alleviation through the insurance of micro-credits. Microfinance empowered the poorest in the society to advance their operations to nurture sustainable livelihoods. There is more than just lending money. Money lending is one way of solving the existing problem, but there is need to ensure the situation does not affect the borrower gain.
Soon, microfinance in India and other places was in crisis.

Lenders failed to uphold ethical practices in their operations. Checks on credit-worthiness were not conducted neither were any training programs offered to the borrowers on how to utilize and invest the money in enabling payback when the time comes. The institutions are now business platforms facilitating profitable processes, but they have failed to ensure the loans create and maintain better livelihood to the poor segment in the country.

Microfinance institutions should accompany money lending with mentoring programs and consistent training to the borrowers. It reflects an altruistic desire the money lenders to see the borrowers succeed and become lifetime partners instead of seeing them struggle to repay the loans that never empowered them

http://economictimes.indiatimes.com/small-biz/money/effective-microfinance-requires-mentoring-from-grassroots/articleshow/57217878.cms

Understanding Microfinance

The support of entrepreneurial skills through Microfinance has empowered entrepreneurs, low-income earners, and small business owners to access financial services. Beneficiaries are often denied access to the services by banks for their lack of a stable income and collateral. The banking service is a platform for customers with limited resources to launch productive activities and expand small businesses to become self-sufficient.

Services from Microfinance Institutions

Microfinance provides loans to clients in two models. The relationship-based banking is directed towards individual entrepreneurs and small business owners. The group based models prompt entrepreneurs to unite and apply for loans and other services jointly. The institutions offer savings services through savings account plans and other features such as insurance plans for protection of their money and investments against probable risks. Additionally. Microfinance provides money transfer services for secured transactions.

Microfinance banking services are efficient and sustainable means of poverty alleviation. It empowers individual to achieve self-sufficiency and make businesses successful translating to thriving communities. It facilitates generation of employment, boosting the local economy, and improving lives by enabling them to access quality healthcare, education and proper feeding habits.

Why Microfinance impose interests

Microfinance institutions have established terms and conditions for the business including interests on loans that must be paid I specified durations. The interests and other charges facilitate the systems running costs to remain operational and finance training activities for their clients.

https://www.deki.org.uk/about-microfinance/?gclid=CjwKEAjw6e_IBRDvorfv2Ku79jMSJAAuiv9YrdBmnFAQaoN2bOSR6y6NTS07SMPPdGQTVgnF28wxohoCenHw_wcB

Money Lenders Association now Micro-Credit Association

Ghana’s Money Lenders Association has made alterations to its brand, and will from now be referred to as the Micro-Credit Association, Ghana (MCAG). Senior administrators at the organization have pointed out that it’s a reposition move meant to further pave way for more efficient and effective services to customers. Board Chairman Regina Kumi mentioned that the name change was also a bid to negate the notion wherein money lenders are regarded as loan-sharks who trick customers into a debt cycle. She also revealed that the MCAG was one of the nation’s micro finance corporations approved by the BoG, rolling out services under Tier 3 & 4 of BoG classifications of micro finance institutions. She said that one of the undertakings the Association is committed to is providing micro finance facilities to the low class population. A key approach she stressed on (applicable to all financial institutions) was the use of signage depicting operation licenses within a business premise, to in turn boost public/clientele confidence.

Reference

https://www.ghanabusinessnews.com/2017/04/19/money-lenders-association-now-micro-credit-association/

Microfinance for Sari-Sari Stores Philippines

In the Philippines, small variety stores on roads, known as the sari-sari stories, go a long way to providing small quantities of essential goods to the general low-income public. Millions of these stores are preferred to meet and greet, and share information about routine events.

Hence, it is essential that this economic pillar of sari-sari stores is protected, and helped in making the model more sustainable. A social entrepreneur Mark Ruiz, who founded Hapinoy in 2007, aims to stabilize these chain of stores by providing microfinance and training in business skills to the owners. Since most of the shop owners are women, it is essential to provide microfinance in a manner that helps them grow in a sustainable manner. Hapinoy currently trains 5,000 owners, while increasing their capacity by 1,000 more soon. Globally, women are the biggest recipients of microfinance loans and credits.

As per Ruiz, women are more diligent in returning the amounts, while they are more productive. “Moreover, when a woman head of household earns, its also been seen that it directly benefits the children – whether it be nutrition, education, etc. As such, women can truly catalyze development in the household and in the community.”

Throughout the globe, women empowerment, and their ability to help their families improve the quality of their lives is the central theme in microfinance lending. These micro entrepreneurs, serve as economic catalysts for any nation. Apart from providing small microloans without the need for bank accounts and credit checks, Hapinoy is also partnering with technology firms to help provide mobile banking and store management structure. It will help streamline the remittance system in place with the Overseas Filipino workers (OFWs). “A Hapinoy nanay with a mobile smartphone, a data connection, and mobile money form the core pillars upon which the foundation of the future of sari-sari stores will be built. We’re seeing it now in remittances and bills payment, but quite rapidly we will see applications in mobile commerce and mobile trading networks.” Nanay is usually referred to as a mother or sari-sari store owners.

References

https://www.forbes.com/sites/chynes/2017/04/28/how-mobile-phones-and-microfinance-empower-women-in-the-philippines/2/#687253125b46

http://www.philstar.com/business/2017/02/12/1671227/pg-pilots-program-sari-sari-stores