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Microfinance and DanChurchAid

Microfinance and DanChurchAid



Very general introduction to microfinance in DanChurchAid, a Danish NGO

Very general introduction to microfinance in DanChurchAid, a Danish NGO



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Microfinance and DanChurchAid Microfinance and DanChurchAid Presentation Transcript

  • Microfinance in DanChurchAid Popcorn and politics – May 15, 2008 ODR
  • Agenda
    • A very recent history of microfinance in DCA
    • Why you and DCA should care about microfinance
    • What is microfinance outside DCA?
    • What is microfinance inside DCA?
    • Questions for debate
  • Microfinance and DCA - a very recent history
    • 1978: DCA supports microfinance-like schemes in Bangladesh
    • 2004: A set of guidelines are drafted
    • 2006: A group is set up to make microfinance more systematic in DCA
    • 2006-7: Survey of microfinance by Biliana
    • 2007-8: New microfinance guidelines are made, approved by Core group and Board (May)
    • 2008 (Oct): ODR to work 10-20% with microfinance
    Danish NGOs evaluate and discuss their microfinance activities
  • Why you and DCA should care about microfinance
    • Sustainability: The microfinance promise
      • World’s best 1000 microfinance banks are completely sustainable (and this is what has made the sector grow - graph).
      • LWF’s 138 Village Banks in Cambodia are sustainable
      • Pass-on-the-gift is better that not passing not the gift
    • Donors want it
      • Danida wants it, EU wants it, private donors wants it
    • DCA is using it a lot
      • – but not always very profesionally, constructively, nicely
  • What is microfinance globally – outside DCA?
    • Dinner suggestions: Small loans for very poor women, so they can start a business and work themselves out of poverty – in a group with their neighbours.
    • Not just loans – savings, insurance, money transfers
    • Usually not the poorest – cash-use and lending require resources which the poor do not have
    • Not just women (but mostly) – men too
    • Not just to start a buisiness– perhaps to grow a business
    • Microfinance alone can rarely get people out of poverty – other things are needed
    • Not just groups – more and more toward individuals
  • What is microfinance globally – outside DCA?
    • Definition:
    • Financial services, for example savings, credit, money transfers and insurance, adapted and targeted poorer groups.
  • Facts in global microfinance
    • 130.000.000 clients in 2006
    • Interest rate at 15 to 60%
    • Used as a tool for development and poverty reduction since at least 1930
    • Different inside DCA because the normal MF:
    • Does not reach the poorest of the poor
    • Require bank-like competencies
  • What is microfinance in DCA? - in the sector
    • Formalized microfinance institutions
      • A part of our world: 130m poor clients, fastly growing, sustainable, on the ground
    • Informal microfinance institutions
      • Rotating savings and credit schemes, co-operative banks, village banks
    • Other market-based micro tools
      • Pass-on-the-gift systems, seed banks, more
    Poorer, more vulnerable groups reached
  • What is microfinance in DCA? - activities
    • Formalized microfinance institutions
      • Create links: Know you financial market
      • Enhance inclusion: Who’s not reached?
      • Advocacy/consumer protection: Responsible microbanking
    • Informal microfinance institutions
      • Facilitate establishment and development of informal providers - Malawi
      • Integrate with programmes and projects – LWF Camb
      • Advocacy: Inclusive microbanking
  • What is microfinance in DCA?
    • Other market-based micro tools
      • One goat, ten goats - Ethiopia
      • Seed banks more effectively - Uganda
      • Others
  • What is microfinance in DCA?
      • Principles
      • Promote more than provide
      • Do savings more than credit
      • Know the financial market and what it can do for you
  • Questions for debate
    • Considering the programmes, projects and countries you know of, where and how could/does microfinance – or market-based microtools – contribue?
    • What are the main pitfalls and challenges to be considered?
    • How do we improve what we’re already doing?
      • Quality control, competence building, knowledge management?
  • Why you and DCA should care about microfinance: Demand