Microfinance: Evolution, Achievements and Challenges (Key Writings on Microfinance) - Softcover

Softcover

ISBN 10: 1853395617 ISBN 13: 9781853395611

Verlag: Practical Action Publishing, 2004

Inhaltsangabe

Selected by Malcolm Harper, this compilation comprises fourteen articles on the major developments in microfinance in the last twelve years. Some show how certain aspects of the field have changed quite dramatically, others cover issues which have continued throughout the period to preoccupy practitioners and policy makers, and others raise critical and worrying concerns about the future of microfinance. All have been written by experienced authorities, with practical experience, and several are widely regarded as seminal contributions. The reader will be useful for students and others who are looking for a wide-ranging introduction to microfinance, for national and international policy makers and donors, and for people who work in the field and are looking for a broad overview of trends and alternative strategies. Includes an introduction by Malcolm Harper, founding editor of the journal "Small Enterprise Development".

Über diesen Titel

Über die Autorin bzw. den Autor

Malcolm Harper taught at Cranfield School of Management until 1995, and since then has worked mainly in India. He has published on enterprise development and microfinance. He was Chairman of Basix Finance from 1996 until 2006, and is Chairman of M-CRIL, the microfinance credit rating agency.

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Microfinance

Evolution, Achievements and Challenges

By Malcolm Harper

Practical Action Publishing Ltd

Copyright © 2003 ITDG Publishing
All rights reserved.

ISBN: 978-1-85339-561-1

Contents

Preface, vii, 
Introduction MALCOLM HARPER, 1, 
1 Financial innovations for microenterprises – linking formal and informal financial institutions HANS DIETER SEIBEL AND UBEN PARHUSIP, 11, 
2 Savings mobilization and microenterprise programmes MARIA OTERO, 25, 
3 Raising the curtain on the 'microfinancial services era' STUART RUTHERFORD, 37, 
4 Towards a more market-oriented approach to credit and savings for the poor HENRY R. JACKELEN AND ELISABETH RHYNE, 52, 
5 Microinsurance – the risks, perils and opportunities WARREN BROWN, 72, 
6 Regulating microfinance – the options ROBERT PECK CHRISTEN AND RICHARD ROSENBERG, 87, 
7 Commercial banks and women microentrepreneurs in Latin America GLORIA ALMEYDA STEMPER, 109, 
8 Credit for the rural poor – the case of BRAC in Bangladesh A.M.R. CHOWDHURY, M. MAHMOOD AND F.H. ABED, 121, 
9 The effects of liberalization on access to bank credit in Kenya PENINAH W. KARIUKI, 132, 
10 'Are you poor enough?' – client selection by microfinance institutions GRAHAM A.N. WRIGHT AND ALEKE DONDO, 142, 
11 The holy grail of microfinance: 'helping the poor' and 'sustainable'? CHRISTOPHER DUNFORD, 150, 
12 Is microdebt good for poor people? A note on the dark side of microfinance DAVID HULME, 155, 
13 The managed ASCA model – innovation in Kenya's microfinance industry SUSAN JOHNSON, NTHENYA MULE, ROBERT HICKSON AND WAMBUI MWANGI, 159, 
14 Empowered to default? Evidence from BRAC's micro-credit programmes SHAHIN YAQUB, 172, 

CHAPTER 1

Financial innovations for microenterprises – linking formal and informal financial institutions

HANS DIETER SEIBEL and UBEN PARHUSIP

This paper was first published in June 1990.

In the past, credit programmes including subsidies and neglecting savings mobilization have undermined rural finance. In recent years, the number of countries has been growing in which banks mobilize savings and practise commercial banking; but the rural poor still have to rely on informal financial institutions, which are better adjusted to local conditions. During the early 1980s, a novel approach entered into the debate: linking informal and formal financial institutions, with financial self-help groups acting as intermediaries between microentrepreneurs and the banks. This reduces transaction costs substantially, for the benefit of both. Within APRACA (Asian and Pacific Regional Agricultural Credit Association), Indonesia has been the first to implement such a pilot project. In a favourable policy climate, a project was designed which incorporates the major features of sustainability, such as reliance on institutional capacity, co-operation between governmental and private voluntary bodies and pre-existing grassroots organizations, domestic resource mobilization, market forces, flexibility and socio-cultural adjustment. In 1989, 30 bankers, 30 private voluntary organization (PVO) staff and 815 self-help group staff were trained. From May to September, a first set of some 20 bank units, 10 PVOs and 100 self-help groups entered into their initial financial transactions.

In most developing countries, policies for rural financial development have been based on three fallacies concerning their target groups: rural micro-entrepreneurs are unable to organize themselves; they are too poor to save; and they need cheap credit for their income-generating activities or small enterprises.

Three financial policies resulted from these assumptions: credit-oriented development banks and special programmes were set up which ignored savings mobilization; credit was subsidized; and generous credit guarantee schemes were set up to cover anticipated losses. The consequences of these policies did not contribute to the self-sustained growth of rural finance, nor did they sufficiently benefit the rural poor:

* Subsidization meant that the scope of credit remained severely restricted. There was no built-in growth factor which would have resulted from internal resource mobilization. The level of credit was directly tied to the amount of subsidies available. Small numbers of relatively large loans went to medium and large enterprises; and the masses had no, or little, access to institutional finance.

* Banks were not motivated to give their customers a thorough screening and to recover their losses, while borrowers felt little motivation to repay their loans. This resulted in high default rates and in continuous programme decapitalization.

* Subsidies led to the misallocation of production factors.

Around 1980, a reorientation among rural financial policy makers began. Mounting international debts, increasing shortages of internal and external credit supplies and a growing dissatisfaction with state-nurtured and seemingly ineffective credit programmes led to a rethinking, centring around such concepts as self-help, self-sustained growth and institutional viability. In terms of financial systems, this meant an emphasis on savings mobilization in particular, as a prime mechanism of internal resource generation. Development assistance was intended to promote, not to replace, self-help and personal effort.

It was then found that although microentrepreneurs in developing countries may be poor, they are able to save, and they are capable of forming their own self-help organizations. However, they usually face a number of problems:

* Institutional finance is inaccessible to the majority of microenterprises.

* Concessionary financial programmes for microenterprises have largely failed. They are not viable economically; in terms of impact, they reach only a minute proportion of their target group.

* There is a wealth of human, organizational and institutional resources which, as long as it is not mobilized and appropriately linked, may remain untapped. Such resources include microenterprises, informal, semi-formal and formal financial institutions, private voluntary organizations and governmental agencies and programmes.

* Conventional approaches to rural microenterprise finance face high transactional costs for both lenders and borrowers. At low interest rates they are unviable for banks; at market rates, they may be unviable for most of the potential borrowers.

* Credit programmes without a savings component ignore savings as a means of internal resource mobilization; at the same time, they ignore the savings habit as a psychological basis for investment and repayment behaviour.

* Confined to their own resources and membership, and barred from access to banks, most self-help groups of microentrepreneurs have been unable to make the most of their potential. Operating outside the formal sector, they have tended to keep the economy near stationary, and to contribute more to its stabilization than to rapid development.

The APRACA programme

APRACA (Asian and Pacific Regional Agricultural Credit Association) is an association of central banks, rural development banks and rural commercial banks, and is one of four Regional Agricultural Credit Associations (RACA) originally promoted by the United Nations Food and Agriculture Organization (FAO). Established in 1977 with an emphasis on agricultural credit, it subsequently broadened its scope towards rural finance. At a workshop held in May 1986 in Nanjing, China,...

Details zur Ausgabe

• Verlag: Practical Action Publishing
• Erscheinungsdatum: 2004
• Sprache: Englisch
• ISBN 10: 1853395617
• ISBN 13: 9781853395611
• Einband: Taschenbuch
• Anzahl der Seiten: 176
• Herausgeber: Harper Malcolm
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Nicht verfügbar