FMO - Dutch entrepreneurial development bank’s Post

“Strategies for Reducing Microfinance Loan Default in Low-income Markets” (https://lnkd.in/dkpGju9M) is a study that discusses strategies microfinance leaders used to minimise MFI loan default after partnering with an NGO in Rwanda. More than 15,000 researchers worldwide to date, have downloaded the study. The feedback shows that those who have applied the strategies are yielding good results. The study provides useful advise to all rural development institutions, including governments, that aim to improve the economic status of rural people, the strategies that facilitate the achievement of this objective. To date, the paper has been downloaded in 157 countries worldwide. The highest 10 downloader countries according to https://lnkd.in/dFPx7fne include:

KCB Bank Group and Sida have rolled out a KES. 1 Billion guarantee scheme that will go towards de-risking #SMEs in their efforts to access #credit and support their #growth ambitions.     The 7-year guarantee facility will enable the #bank to strengthen its commitment to financing Small and Medium-Sized Enterprises which continue to experience challenges, especially with access to affordable credit.   KCB Bank Group Acting Director of #RetailBanking, Kungu Michael noted that the new instrument will provide much-needed momentum for SMEs to tap into the bank’s expanded portfolio of SME financing options to enable them to contribute fully to the growth of Kenya’s economy.   Risk-sharing facilities are a key tool to support knowledge gaps by lenders, broadening their SME lending while mitigating risk and allowing them to build capabilities and track records in serving niche market segments like SMEs and refugees.   “Sweden’s Development Cooperation through the Swedish International Development Cooperation Agency (Sida) aims to create opportunities for better living conditions for people living in poverty and under oppression. This initiative will enable Sweden’s engagement to go beyond the Official Development Assistance (ODA) and focus more on innovative financing approaches to mobilize domestic resources and external private capital to reach the most vulnerable communities in Kenya” - Caroline Vicini, Swedish Ambassador to #Kenya

The Taakulo Program provides microfinance opportunities to Somalia residents, especially those with diaspora family members, to start businesses and reduce the need for regular remittances. #Taakuloprogram #maalmicrofinance #maalkaqaadooomaalyeelo

It's a good opportunity for those small and medium businesses outside Addis Ababa to address their financial gap. Because its aim is to support those businesses influenced by war and political instability, most of those young people and migrated members of society will benefit from this project. Indeed, those banks also get better opportunities to address their existing and new customers (to be newly recruited) with finance because their previous requirements were very strict and not attained by those business sector owners. We are hoping similar funds will continue to address the lower-income part of society's financial gap. I admire First Consult working habit with different banks at a time. Keep it up.

Shining a spotlight on Kabeke Mulenga, Zambia's Microfinance Innovator extraordinaire. Mr Mulenga's brainchild, Emerald Finance, brought us MTN's Ka Starta: a game-changing mobile money microfinance product, revolutionising access to loans for all Zambians. Hats off to this visionary mind! #KabekeMulenga #MicrofinanceInnovator #GameChanger #IndustryInsights #ActuarialTrends #InsightfulAnalysis #MarketTrends #ActuarialOutlook #InsiderPerspective #MarketIntelligence #FinanceTrends #ActuarialForecast

Neo Banking....the future of banking is here! Apparently, Kenya pioneered this revolution with our MPesa. You see, only 4 out of 14 microfinance banks in Kenya posted profits as at the end of last year. Due to the strain in business as a result of lost business in both loans and deposits, most players found it hard to play catch up. A half of the licenced Microfinance Banks had to be taken over by foreign investors so as to have the necessary financial resources to shower up their financial ratios and be in good books with the Regulator. This is alarming to say the least -what is the cause of this and what can be done to rescue the situation? Is it a strategy problem or a market problem? Is the situation redeemable? I will delving into this and will lay bare, backed by figures, why we have a problematic Microbanking sector in Kenya. Keep it here for the hard facts courtesy of the #SentiviseSeries of case studies. #FinancialInclusion #BankingAndFinance #BusinessStrategy (Snapshot Courtesy of Umba Microfinance)

"When we fully enrolled on Wendi, within 3-4 months, we were able to disburse all the funds that we had, which had taken longer before. We had close to 16.2 billion Uganda Shillings, but we disbursed it over 4 months to 16,725 people, most of whom were not part of the traditional banking system. However, Wendi has brought them into financial inclusion. Transaction costs are cheap compared to mainstream banking, and our beneficiaries are also able to save on the same platform." - Moses Godfrey Otim, District Commercial Officer, Bukedea District Local Government. #Money #Mbarara #Banking #Payments #PDM #Government #Finance #Bank #Bukedea Bank of Uganda Parish Development Model Ministry of Finance Planning and Economic Development CEO East Africa Magazine Muhereza Kyamutetera

Last week, the Association of Microfinance Institutions in Rwanda (AMIR) and it's partners @brdbank and @mastercardfoundation visited #MFIs & #SACCOs in the #Districts of @rulindodistrict , @ngoma_district , @gicumbidistrict & @kirehedistrict. The objective of the visit was to determine the level of financial inclusion and access to finance for SMEs and Cooperatives as well as Agriculture Value chain financing.

Ethiopia's banking industry's credit concentration could potentially contribute to inflation Limited access to credit for smaller businesses: With a large share of loans going to a few big players (73.7% to borrowers exceeding Birr 10 million), smaller businesses may struggle to access financing for expansion or investment. This limits competition and innovation, potentially leading to higher prices for consumers due to a lack of alternatives. Reduced risk diversification: Concentrated lending increases banks' vulnerability if a large borrower defaults. To mitigate this risk, banks might raise interest rates across the board, making borrowing more expensive for everyone, including smaller businesses. This can ultimately translate to higher production costs and potentially inflated consumer prices. Urban bias and regional disparity: The near-exclusive focus on urban borrowers (99.8%) neglects the needs of rural entrepreneurs. This reduces economic activity in rural areas, potentially hindering agricultural production and increasing reliance on imported goods. Supply chain disruptions or import price hikes could then contribute to inflationary pressures. Diversifying loan portfolios and promoting financial inclusion in rural areas are crucial to fostering a more balanced and resilient Ethiopian economy.

Here's Part 3 of the Discussion The Feed the Future Nigeria Rural Resilience Activity developed a case study learning brief that is focused on the Activity’s approach and learnings from interventions around creating Access to Formal Financial services to participants through partnerships focusing on aiding vulnerable populations like rural women, youth, and internally displaced persons. Despite facing challenges such as cash shortages and inadequate infrastructure, the Rural Resilience Activity (RRA), funded by USAID, collaborates with financial institutions and service providers to extend financial services and empower communities economically. Through models like direct lending by Microfinance Banks (MFBs), commercial bank partnerships with Business Development Service Providers (BDSPs), and Fintech-led solutions for savings groups, the project aims to enhance financial inclusion and resilience in the region.   However, the success of these models varies, with factors like trust, technical capacity, and sustainability influencing outcomes. While some partnerships show promise, others face hurdles like low repayment rates and insufficient capital mobilization.   The lessons learned stress the importance of tailored solutions, ongoing support, and clear communication to ensure effective implementation and long-term impact, underscoring the complexities of fostering financial inclusion in fragile contexts like Northeast Nigeria. Discussion Points: What have we learnt so far? What makes RRA’s approach unique? What can we do differently?   Here is Part 3 of the Discussion #RRA #Finance #Access2Finance Standard Microfinance Bank Rindev Consulting Raphael Ehiabhi John Rachkara Nurein Abdulfattah Kevin Alufe Godswill Gana Margarita Aswani Nick Meakin #Part3