Lessons Learned from Existing Geodata Projects

As part of the series of events for the Geodata for Inclusive Finance and Food (G4IFF) workstream, NpM hosted a webinar on Lessons Learned from Existing Geodata Projects. The webinar took place on April 10th and followed-up on a previous webinar and expert meeting on the potential of geodata. During this webinar speakers provided context of various geodata opportunities for financial institutions, and specific examples to delve deeper into the integration of geodata services and implications for end-users.

To share the key lessons learned, NpM prepared a brochure. It provides an overview from the perspective of Investors, Microfinance Institutions and FinTechs, and the Earth Observation sector.

We hope this information can benefit those interested in improving access to finance and food production for smallholder farmers.

MicroScore Tool

It has always been a pressing question how to measure success of capacity building programmes. While success can be measured on the output level, there was no suitable measure on effect level. On behalf of MicroNed (which later became NpM), Joost de La Rive Box designed an institutional scan to measure the performance of capcity building programmes. This tool combines four performance ratios: governance, institutional, services & social performance management and financial performance management.

The development of the first version of the MicroScore Tool was financed by Hivos in the context of the evaluation of their Seed Capital programme. The tool was then further developed, finalized, tested and translated in the MicroNed Capacity Building working group in which Cordaid took the lead. After a year of development and intensive pilot testing by MicroNed members as well as Terrafina Microfinance, the tool has now been finalized.

The tool helps MFIs and cooperatives to assess its performance and to reflect on its graduation. Consultants can use MicroScore in their first contact with a MFI as a guideline for baseline assessments and further on as a tool for progress monitoring. Desk officers at microfinance organizations should be able to better assess the proposals they receive from MFIs and consultants.

The MicroScore Tool is not intended to replace ratings. The ultimate aim is to enhance the effectiveness of capacity building programmes.

The MicroScore Tool is presented in three languages: English, Spanish and French, combined in one format, and is now available for download, free of charge.

Download the MicroScore Tool here.

A Billion to Gain? Dutch Contributions to the Microfinance Sector

Despite the crisis, the market for foreign funding in microfinance is expected to grow at 4 percent in 2012. The total market size of microfinance is estimated to be $80 billion globally. Foreign investors provide a share of $25 billion which makes them important both in terms of money and expertise.

The report provides insight into the unique contribution of Dutch funders in microfinance and came about in a partnership of ING, NpM and professor Lensink from the University of Groningen. Here are some of the main findings;

Impressive market share
The report highlights how the Dutch are unique in the sector. First, the Dutch contribution to the microfinance sector remains large, totalling $2,1 billion, giving them a market share of 8,4 percent. Among investors, the Dutch market share is an even more impressive 25 percent. Second, the members of the NpM are found to focus more on low-income countries compared to other foreign investors. Third, the NpM members invest directly in microfinance institutions more often than other foreign investors, allowing them to have more influence on their investments.

Driving seat
The report identifies five global trends. These are growth in direct lending, an expansion of services, the convergence of the formal and informal banking sector, adaptation of new technologies and an increased need for transparency. With their unique position of working closely with microfinance institutions (MFIs), the Dutch are currently in the driving seat while implementing initiatives to increase transparency and social performance. Considering these trends, the Dutch are now rethinking their future contributions to the sector by looking at opportunities for an increased focus on Africa, equity investments and SME financing.

Reinventing microfinance
Mark Cliffe, Chief Economist at ING, speaking at the event, argued that “the Dutch have a leading role in reinventing microfinance. Their expertise and leadership in transparency and responsibility sets an example for others to follow”. In the last few years microfinance has been hit both by the global financial crisis and criticisms of excessive emphasis on profits. With government budgets under pressure, he argued that “more emphasis will have to be placed on mobilising domestic savings to fulfil the industry’s goal of reaching the many hundreds of millions who remain financially excluded”.

Watch the video on the main findings of the ‘A Billion to Gain?’ report here.

Microfinance Impact Study 2011

The impacts of microfinance as a tool for achieving widespread poverty reduction are more complex and variable than previously believed. That’s one of the conclusions of the debate ‘Impact of microfinance: Taking stock of evidence’ at the Annual Conference of MicroNed on 28 June 2011. The Conference report has been published.

A wide range of representatives at the conference provided differing perspectives on impact (104 people joined us). Even the relatively simple and neutral objective of the conference to “take stock of evidence” proved difficult – with academics, researchers and practitioners applying different criteria of quality and usefulness.

The impact of microcredit is highly variable and any overall judgement is unclear. The early wave of positive results has been replaced by more rigorous yet more modest evidence of outcomes. Quantifiable studies that have attempted to attribute impact of programmes have provided little evidence that microcredit alone will achieve poverty reduction.

Policy Guidelines for Donor Support to Member-owned Financial Institutions in Rural Sub-Saharan Africa

The Rural Finance Working Group presents the study: “Policy guidelines for donor support to member-owned financial institutions in rural Sub-Saharan Africa

This study by the Rural Finance Working Group proposes separate policy guidelines for saving groups and financial cooperatives as both require specific expertise. The Rural Finance Working Group was formed under MicroNed and has been led by Terrafina Microfinance.

Paying Taxes to Assist the Poor? Balancing Social and Financial Interests

The report addresses tax avoidance related to inclusive finance and its relevance in the global discussion. In the report the NpM members have agreed that they “should, in principle, invest in the country where the activities take place. Second, NpM and its members hold that there is no justification for profit shifting or the deliberate structuring of companies – including the use of SPVs – with the sole purpose to avoid taxation. Nevertheless, NpM acknowledges that investors may have sound reasons for investing in developing countries through SPVs set up in jurisdictions that are particularly apt for attracting and transferring capital to microfinance entities in developing countries”.

NpM Annual Report 2013

In October 2012 MicroNed and the Netherlands Platform for Microfinance merged into NpM, Platform for Inclusive Finance. 2013 was its first year as the new platform. An important change has been the active shift in focus: from microfinance to inclusive finance.

Find here the first Annual Report of NpM, Platform for Inclusive Finance (2013).

Enjoy your read!

A Billion to Gain? Dutch Contributions to and Trends in the Microfinance Sector

In 2012 NpM and ING presented the ‘A Billion to Gain?’ study on Dutch contributions to and trends in the microfinance sector. NpM took the initiative to update this information and made an analysis of the data resulting from the CGAP Funder Surveys 2010, 2011, 2012 and 2013. The ING Economics Department has, in cooperation with Israel Unger (researcher involved in the last two studies of ‘A Billion to Gain?’), checked and translated the analysis into a full report. The editorial board included members of the Ministry of Foreign Affairs (IOB), Triple Jump, ING and NpM.

One of the interesting outcomes is that despite diminishing government support and turbulence in international financial markets, the Dutch investments grew from € 2.1 billion in 2010 to € 2.5 billion in 2013. It is expected that this trend will continue and that the Dutch microfinance sector will grow with 9% in 2014 and 10% in 2015.

To read the full report, click below. Please note that the report involves a correction (erratum) made based on some findings. There is also an infographic about this report available.

Client Protection in Microfinance: The Current State of Law and Regulation

EY, in cooperation with NpM, carried out an exploratory research on client protection. Josien Sluijs, director NpM: “The goal of the research was to identify how the guidelines that have been self-imposed by the sector, are actually facilitated by law and regulation, thereby focusing on overindebtedness, responsible pricing and transparency.”

The research, that includes cases of 12 countries worldwide, has incorporated two types of MFIs: the ones with a banking license and thus deposit taking, and those which are not taking deposit.

In addition, to complete the report, NpM created a ‘Bookmark’ including more general information on law and regulation with regard to client protection. For the ‘Bookmark’ with links to extra sources, click here.

NpM Annual Report 2014

In October 2012 MicroNed and the Netherlands Platform for Microfinance merged into NpM, Platform for Inclusive Finance. 2013 was its first year as the new platform. This year set the stage for an important change: the active shift in focus from microfinance to inclusive finance.

In 2014, NpM has further explored new topics and established new forms of cooperation, both within and beyond the microfinance sector. For example, in cooperation with EY, NpM has via a joint research shed light on the important topic of client protection in microfinance.

Overall, 2014 has been a year of organising large projects, like the ‘A Billion to Gain?’ Conference with ING, during which a research on the social impact of microfinance in India and Ghana has been presented. Besides this kind of projects, NpM also actively participated in international activities taking place in the sector, for example the European Microfinance Week which is organised by the European Platform for Microfinance (e-MFP).

In the NpM Annual Report 2014, one can read about this and all other activities in more detail.

Enjoy your read!

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