blog.51give.com

April 22nd 2008 marks the 38th anniversary of Earth Day.  Started in 1970 in the US as a way to demonstrate public concern for the environment, Earth Day has become an international celebration.  It is the only holiday unconnected to a single religion, person, culture, or country and serves as a platform by which citizens of the world can come together united in a common cause that we all can agree on: the protection of our shared home.

John C. Whitikar  has an excellent article that sheds insight into the forces that came together to cause the first Earth Day.  He served as president Nixon’s Cabinet Secretary and relates what happened to cause the creation of the EPA (Environmental Protection Agency) in the US as a result of the first Earth Day celebration.  At that time in the US there were few laws specifically pertaining to the environment.  Businesses were given free reign to push the economy forward and little thought was giving to industrial by-products such as waste water, smoke, car and factory emissions, or types of pesticides and fertilizers used.  All was considered appropriate if it helped to enrich America.  Then a ground swell of public opinion, fanned by scientific research and increasing awareness by the news media, began to make people realize that pushing America forward could not be the only priority, especially if it led to such a lower quality of life and the pollution of their homes.

Balancing economic growth and environmental protection has long been a difficult task for not only the US, but for every country.  Public opinion polls show that most people are concerned about the environment, and most report they are willing to pay a little higher taxes if it means it will protect the environment.  However, everyone also wants an increased standard of living.  We all want to provide a better life for our children and provide them with the opportunities that we never had.  Unfortunately we can’t have both of these at the highest possible level.  We can’t have the highest possible economic growth while still creating the greenest and most pristine earth imaginable.  A balance must be struck between the two, and that is where the arguments begin.  Some would favor a greener earth and reduced economic growth while others feel that for them economic growth is currently slightly more important than creating more environmental regulations.   Both sides agree that both are important, but the balance between them is frequently argued.  This disagreement extends beyond people to cities, regions, organizations, governments, political parties, states, countries, and continents.  Each has a different experience with their surrounding environment and each is in a different stage of economic growth and so each has their own opinion about what the perfect mix is and how to achieve it.

One thing that is commonly agreed upon is that it will take more than just one action to solve the problem.  There is no one law to enact or no one action that will result in all types of pollution being cleaned up and all people benefiting economically.  It will take a variety of actions across many areas to more our world in the right direction.  Actions that have the power to both lift people economically and also protect the environment are especially helpful as they serve a dual purpose and benefit everyone. This is precisely what microfinance is able to do.  By providing people with small loans they are able to enrich their own life as well as their family’s without the bad environmental effects opening a large factory might have.  Often they are even able to begin environmentally helpful businesses such as farming local food, starting recycling facilities, harvesting wild medicinal plants, or creating jobs where they can work from home.  This is why we stay committed to the principles of microfinance. It has been proven to be an effective way to create economic gains and also to provide green jobs that can benefit the earth at the same time.

If you know of a micro-entrepreneur who’s been able to start a green business because of a micro-loan then please comment below and tell us about it, or post it in our forum to begin discussing it with other members.

Focus on coming regulatory framework and constraints in rural areas at the “Regional Workshop China” in Beijing, organized by the World Microfinance Forum Geneva (WMFG)

February 28^th, 2008

One of the keywords heard on the Regional Workshop China organized by WMFG, was the word “trust”. On one side there should be trust granted by the peasants who will borrow the money, to the microfinance institutions who lent the money on the other side. Especially with new technologies that 51give is introducing, trust is also a very important issue. A trust, which can only exist, if a right regulatory framework is provided for the correct implementation of microfinance in China. A reserved promise for this was made by the People’s Bank of China (POBC) at the end of the day.

The morning program had interesting speakers from UNDP, China Agriculture University and the Rural Development Institute of CASS (Prof. Du Xiaoshan). The attendance of Prof. Du made the discussion very lively and focused a lot on the existing problems on providing microfinance solutions in the rural sectors (time consuming, accessibility, practical problems that occur for simple financial transactions). The story of SDR Consulting, followed upon this by explaining the upcoming possibilities in microfinance by the use of new technologies as mobile networks.

As 51give always emphasizes mobile networks should be more explored; as according to market research 50 percent of the peasants in rural areas already have a mobile phone. Mobile phones can be used to make communications to remote areas easier, but can also be used for mobile payments and in the near future even cash transactions. An area which 51give supports in the future by providing their internet and mobile platform for microfinance (for more information look at www.51give.com). One of the existing problems with mobile payments is off course that there should always be a unique identification of the client. Which is quite hard with all the prepaid phones going around. Off course there are already some solutions available for these practical problems.

A very detailed contribution to the workshop came from Mr. Bold Magvan from XacBank Mongolia about this subject. He told that they already did a project in Mongolia in which they used mobile phones to make transactions so peasants could do there repayments by mobile phone through a network of agents. This makes it possible that farmers for example do not have to travel for two days to make repayments. Off course mobiles phones also offer the possibility to function as informationportals. For example the service that Cellbazaar is providing can be extended to use for more microfinance purposes; let’s say the availability of all kinds of agricultural information about the region.

The overall feeling amongst the participants of the workshop was that, due to the efforts made in the last two to three years, now everything will fall into place very quickly; ‘ We are almost there … ’ as GTZ mentioned. The wishes about the new regulatory framework, necessary for providing the right settings for enabling microfinance in China, are clear and on their way and with the new coming technologies available we just have to do it. That means a new interesting year for microfinance has started.

At the end of May of this year there will also be a new interesting conference held in Ulaanbaatar, Mongolia, the 11^th Conference of Microfinance Institutions organized by the Microfinance Centre. For more information about 51give, please look at www.51give.com.

This is the forum website for World Microfinance Forum Geneva http://microfinanceforum.org/

International Finance Corporation (IFC) of the World Bank Group Uses USD 2.5m to Promote Microfinance in China

Microfinance in China continues to gain international recognition as the IFC signed an agreement to loan Zhong An Credit USD 2.5 million to bolster their range of services in China. Zhong An Credit is a Caymen Islands holding Company with microlending operations in China that provides small unsecured loans to entrepreneurs and small businesses. This cash infusion will enable Zhong An credit to extend their lending services while also providing needed capital for their overhead operations. The IFC provides capital and consulting services to quality microfinance institutions around the world in an attempt to grow them quickly to expand their impact on the local communities.

This sizable loan signals the IFC’s approval of Zhong An Credit’s current work and Mamta Shah, IFC Director for Global Financial Markets, Asia, Europe, Middle East and North Africa, has said, “This agreement with Zhong An Credit is a first step in what we expect to be a long-term relationship. It is also a first step in IFC’s efforts to build a presence in the country’s microfinance sector.”

Currently Zhong An Credit has 21 branches in Shenzhen and a branch in Hebei Province. With increased funding and support from the IFC they are seeking to open more branches in Shenzhen and other parts of the country. Discussions with the relevant authorities are ongoing and they hope to expand their impact shortly. The IFC is also aware of the impact their support of Zhong An Credit will have on the credibility of Microcredit’s ability to be sustainable in China. Richard Ranken, IFC Director for East Asia and Pacific, said, “We are very pleased to partner with Zhong An Credit in our efforts to provide more funding opportunities to local small businesses that are underserved by the traditional banking sector. Building viable microfinance institutions is a vital part of IFC’s strategy in China, especially in poor and rural areas. This project will have a strong demonstration effect and show that microfinance lending is commercially viable.”

IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment. Through their in-country advisory group, Private Enterprise Partnership for China (PEP-China), located in Chengdu, Sichuan province they identify organizations with technically sound businss models that have good prospects of being profitable. The recipients must also support activities that benefit the local economy and satisfy social and environmental regulations of the IFC and the host country. The IFC’s mission is to help poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed USD 8.2 billion and mobilized an additional USD 3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries.

Original press release available here.

Summary Copyright of 51Give Limited

First loan facility by an international bank to a microfinance institution in China. What impact will this have on the overall industry maturity?

Original Press Release

Standard Chartered and China Foundation for Poverty Alleviation Sign Loan and Co-operation Agreements

First loan facility by an international bank to a Microfinance institution in China; initial facility of RMB 20 million

18 Jan 2008, Beijing: Standard Chartered Bank (China) Limited (Standard Chartered) today signed loan and co-operation agreements with China Foundation for Poverty Alleviation (CFPA) in the Great Hall of the People, witnessed by Premier Wen Jiabao of the People’s Republic of China and British Prime Minister Gordon Brown. This is the first time an international bank will provide credit loan facilities to an organisation dedicated to Microfinance projects in China.

According to the agreement, Standard Chartered will provide the initial amount of RMB20 million as credit loan facility to CFPA, who will finance the Microfinance projects aiming to provide financial support to farmers and owners of micro-enterprises in ten counties of seven provinces in China, most of which are nationally designated as “poor counties” by the Government.

Standard Chartered and CFPA will also establish a strategic partnership to cooperate on best practices sharing and technical issues. Under this agreement, Standard Chartered will bring to CFPA its global expertise in wholesale rural finance, while CFPA will share its domestic retail Microfinance execution experience to assist Standard Chartered in launching rural finance related business in China.

Katherine Tsang, CEO and Executive Director of Standard Chartered Bank (China) Limited, said,
“We are most delighted to work with CFPA. Standard Chartered supports the Chinese government’s policy of expediting the reform of rural financial system, and is committed to actively involve in Microfinance projects. We believe our joint efforts will help enhance productivity, increase income levels and improve living standards of farmers; while supporting the government in alleviating poverty in the rural areas at the same time.”

Duan Yingbi, Chairman of China Foundation for Poverty Alleviation, said,
“Our cooperation with Standard Chartered, on one hand, relieves CFPA’s loan fund shortage, expands our project scale, and helps more of the poor to increase their income. On the other hand, CFPA can learn from Standard Chartered about their international financial management knowledge, experience as well as best practices. In this way, CFPA can also improve on our microfinance management in terms of proficiency and efficiency, thus promoting a more sustainable development of our microfinance program and helping more of the poor in China.”

Peter Sands, Group Chief Executive of Standard Chartered PLC, said,
“This initiative is part of Standard Chartered’s commitment at the second Clinton Global Initiative to establish $500 million Microfinance facility across our markets by 2011, which is estimated to benefit 4 million people currently excluded from participation in the financial sector. Standard Chartered now provides Microfinance facilities to 13 countries in Asia and Africa, and by bringing our experience into China we endeavour to significantly contribute to the financial services industry in China’s rural areas.”

The official opening of MicroCred Nanchong was Dec 15th 2007.

Will the model to lend to small business owners be the way forward in China?

MicroCred serves micro and small entrepreneurs and rural households who meet the following criteria :

• 18 – 60 years-old
• Hold a national ID, a residential permit, or a passport
• Own and operate a business
• Have a minimum of one year of experience in the business sector.
• Work in the same area within the same industry for more than 6 months

BEIJING, Nov 5, 2007 (Xinhua via COMTEX) — MicroCred Nanchong, the first wholly foreign invested company in China offering microfinance services, has started trial operation in Nanchong City in the southwestern Sichuan Province.

The bank with an aggregate investment of 55 million yuan (about 7. 37 million U.S. dollars) from MicroCred SA of France, International Finance Corporation, FW Bankengruppe of Germany and American International Group, targets small firms, rural households and self- employed businessmen.

Its financial services range from credit loans to secured loans to mortgage loans. The loans vary between 5,000 yuan and 75,000 yuan ( 670 U.S. dollars to 10,054 U.S. dollars) at a monthly interest rate of 1.1 percent. The minimum loan period is three months while the maximum is 18 months.

MicroCred Nanchong sources said that its financial services were not available to individuals. More outlets and services were possible if the trial operation went smoothly.

As the unprecedented business model was still nascent, MicroCred Nanchong is not allowed to take deposits and has yet to acquire the license required for financial institutions. The Nanchong Bureau of the China Banking Regulatory Commission, however, is responsible to guide and supervise its operation.

MicroCred Nanchong has secured a business license from the Sichuan Provincial Bureau of Industry and Commerce to start the trial operation.