Microfinance needs active clients and skilled, efficient workforce

Livemint.com, a news organization partnered with the WSJ from India, ran a interesting piece today about the Microfinance industry. Good reading for readers looking for a nice synopsis of what exactly is Microfinance.

I have a included a excerpt of the article I feel is especially relavant and worthy of your attention. If you would like, you can click here to access the greater article from Livemint.com.

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Microfinance calls for active, participating clients as well as skilled and efficient work force. Its main challenge remains recovering timely repayments, considering the unstable nature of the clients’ cash flows, making efficient risk management critical to the success of an MFI.

There is also a need for constructive collaboration between the formal sector finance institutions and MFIs, in which the former provides funds and the latter extends savings and loan facilities to the urban poor. On the demand side, focus must be to organize and make clients more participative. They must be made accountable to the use of the credit given. Savings must be encouraged. On the supply side, the concentration must be to transform MFIs into professionally managed, externally regulated entities. There must be uninterrupted supply of services to clients. The profitability and viability of the service must be given importance. All MFI credit models lack an appropriate legal and financial structure and so there must be a more formal environment to regulate and coordinate the activities of MFIs. Government should provide an enabling legal and regulatory framework which encourages the development of a range of institutions and allow them to operate as recognized financial intermediaries subject to simple supervisory and reporting requirements.

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Kiva Launches Online Microfinance in the United States

[Microfinance] — United States

The website That Pioneered Online Microloans to Entrepreneurs in Developing Countries Now Brings Same Opportunity to U.S. Entrepreneurs in Partnership With Maria Shriver, First Lady of California

Kiva.org — the world’s first person-to-person micro-lending website — has launched a pilot expansion in the United States, allowing individuals anywhere to make small loans to U.S. entrepreneurs through the Kiva.org website.

Kiva.org brings its global, online micro-lending platform to the United States at a financial tipping-point for many small businesses. Small businesses represent more than 87 percent of all businesses in the United States, and, on average, these microenterprises are responsible for 900,000 new jobs created per year.(1) Despite these statistics, more than 10 million business owners faced difficulty obtaining business capital — even before the credit crisis and economic slowdown.

Beginning today on Kiva.org, through partnerships with local microfinance institutions ACCION USA and Opportunity Fund, individuals will be able to browse and lend to small businesses across the United States. Through Kiva’s website (www.kiva.org), a loan of $25 can be made to support an entrepreneur, and the specific progress of the loan can be tracked, from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds or relend to another entrepreneur, thereby continuing the lending cycle.

“Most people think of microfinance as something that helps people in the developing world alone, but the impact of microfinance can be felt in any community that supports creative, industrious entrepreneurs,” said Premal Shah, President of Kiva.org. “Kiva’s micro-loan model is extremely relevant to low-to-moderate income, U.S. based entrepreneurs, especially given the current economic conditions which makes access to credit a very real problem. The Internet could become a significant source of community driven, low-cost capital for the everyday small business owner in the U.S., and Kiva.org is excited to expand its platform to the U.S. at a time when the need for such capital is greatest.”

[Source] — Marketwire

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Las Flores Group — Kiva.org
Ayachucho, Peru

Loan request — $188 loan / per entrepreneur

Donate here @ Kiva.org

The members of Las Flores Community Bank are from the Paltamarca community, in the Pachamarca Distrint, of the Churcampa Province. The Paltamarca community is located at 2800 M.S.N.M. For the most part, the population is engaged in farming activities. They produce corn and raise livestock.

Paulina is married and has seven children. Paulina has a store in her house where she sells general groceries. Paulina needs a loan for 400 PEN to buy groceries and plastic products. Paulina’s dream is for her children to become professionals.

Rufina is married and has five children. Rufina buys small animals and sells them in the different fairs. She also sells food and drinks. Rufina plans to use the loan to buy more products to expand her business. Rufina’s dreams are to expand her business and devote her time to fattening her animals.

Rosa is married and has seven children. Rosa buys and sells small animals and cheese. Rosa needs a loan for 200 PEN to buy a pig. Rosa’s dreams are to educate her children and to devote her time to fattening her animals.

Group Name:	Las Flores Group
Group Members:	Olga Donitila Julia Julia Paulina Ignacia Rosa Rufina Donatilda Martha
Location:	Ayacucho, Peru
Primary Activity:	Retail
Loan Amount:	$1,875.00
Loan Use:	Buy rice, sugar, drinks, small animals and grain
Repayment Term:	9 months – View details below
Lenders Repaid:	Monthly
Date Listed:	Jun 8, 2009
Date Disbursed:	May 30, 2009

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