Exclusive Global Microfinance Forum to
be held at the United Nations in November
November 7, 8, and 9, 2005
Location: UN Headquarters, New York City
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Panel
summaries and Forum recap |
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Opening
Ceremony |
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Panel
I: Financial
Sector Indicators and the
Blue Book on Building Inclusive
Financial Sectors |
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Panel
II: Taking Meaningful
Steps to Mitigate Financial Sector
Crises in Post-Disaster/Post-Conflict
Countries |
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Panel
III: Will the International
Private Sector Transform the
Landscape of Microfinance? |
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Panel
IV: Technology: Expanding
the Outreach of Microfinance |
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Panel
V: The Future of
Access to Finance |
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Panel
VI: Poor and Low
Income Clients: Exploring Their
Financial Needs |
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Panel
VII: Africa: Growth
and Access to Finance — The
Final Frontier |
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Panel
VIII: Migration:
The Changing Landscape of Banking |
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Panel
IX: Can "Access to
Finance" be a Policy Objective:
Member State Delegate Statements |
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Media
Advisory
Press
Release
List of Participants
Forum video
quicktime / windows
media player |
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1. Opening Ceremony
Chair: His Excellency
Mr. Aminu Bashir Wali (Ambassador
of Nigeria, Chair of the Second
Committee)
Welcoming Remarks: Mr. Kemal
Dervis (Administrator, UNDP) and
Mr. José-Antonio Ocampo (Under-Secretary-General
for United Nations Department of Economic
and Social Affairs)
Keynote Speaker: Her Royal Highness
Princess Máxima (The Netherlands)
Keynote speech by HRH Princess Máxima
Guest Speaker: Mr. Paul Wolfowitz
(President, The World Bank Group) View
Mr. Paul Wolfowitz's remarks
The Year of Microcredit 2005 has made
significant achievements towards
generating financial sector growth,
alleviating poverty and achieving
the MDGs. The Year exemplified cooperation
between UN agencies, such as UNCDF,
UNDESA, and UNDP, and the World Bank,
IMF, Citibank, VISA, high level advisors
and others. The Year raised awareness
of the importance of remittances
as part of microfinance and generated
public and private sector interest
and involvement. This increased awareness
was illustrated through G8, IMF,
the Data project, DFID and other
recognitions.
HRH Princess Maxima described microfinance
as a tool that is as necessary to
poor and low-income people as water and electricity. Through the Year, she
has interacted with many microentrepreneurs
and has witnessed the importance
of financial empowerment of women
and their families, as evidenced
by her meetings with microentrepreneurs
who are now opinion leaders in their villages. In order to better serve microfinance
clients like the women she has met, profitability is a critical next step
for microfinance. Microfinance must
be commercially viable in order to
reach a sufficient number of clients.
Governments, regulators and donors
must work together to support and
expand access to financial services.
Mr. Wolfowitz recognized the progress
of microfinance and also identified
the remaining obstacles. Microfinance's key power is that it helps microentrepreneurs
move from daily survival to planning for the future. His experiences
in Andhra Pradesh, India, reinforced
his belief that microfinance underpins
the MDGs and access to health care,
education, nutrition and women's
empowerment. The true power of microfinance
lies in continued access to financial
services, instead of one-off loans.
This broader, continued, and financially
sustainable access is critical for
development. A sufficiently wide
breadth of services and increased
data tracking are also necessary.
The World Bank's "Doing Business"
report is a good model; the Blue Book should serve a similar function
by increasing the awareness of obstacles
that still need to be overcome. These
include supporting systems, increased retail capacity, integrity of financial
markets, and better use of donor aid per CGAP's consensus on what constitutes
good practice.
As the Year of Microcredit ends,
we now begin putting words into action.
This Forum builds on that task by focusing on issues related to building
inclusive financial sectors. |
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2. PANEL I: Financial
Sector Indicators and the Blue
Book on Building Inclusive Financial
Sectors
During the past year, researchers associated with the UN International Year
of Microcredit focused on two major projects: The Data Project, which addresses
the lack of good information on access to microfinance, the extent of access,
and the terms of access; and the Building Inclusive Financial Sectors "Blue
Book" project, which addresses the obstacles standing in the way of increased
and improved access and avenues of opportunities to expand access to financial
services. This panel addressed the key questions and the results to date
of both projects.
Moderator: Mr. José-Antonio
Ocampo (Under-Secretary-General for
United Nations Department of Economic
and Social Affairs)
Panelists: |
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Mr. Richard Weingarten (Executive
Secretary, UNCDF) |
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Ms. Asli Demirguc-Kunt (Finance Manager,
The World Bank Group)
UN presentation on Access
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Mr. Raghuram Rajan (Economic Counselor
and Director of Research, IMF) |
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The Blue Book project
guides how expanded access can be
approached and accomplished. It was
intended to provide a set of options
that are based on experiences for
developing countries. Key topics
include the proper nature of government
involvement, how affordability and
sustainable interest rates can co-exist,
how to promote consumer protection,
how many financial institutes should
exist and who should play which retail
roles, whether regulators will support
access, how to fashion financial
infrastructure such as credit records
and how the government should support
financial sectors.
Among the conclusions of the Blue
Book, it is highlighted that there
is a need to provide greater access
to financial services, a need which
has been thus far been limited by
perceptions that this market is not
profitable, and that an encouraging,
stable investment environment does
not exist. Regulations that allow
for consumer recourse and legal ramifications
for non-payment can help make microfinance
a viable enterprise. Further, technology
can reduce costs and enhance sustainability.
The Data Project is also assembling
quality data to become the basis
for future policy. UNCDF is building
inclusive financial sectors by
helping set base lines for financial
sector assessment, creating a multi-stakeholder
participatory process with central
and local governments, and working
with countries to implement monitoring
processes. Focusing on these
three microfinance objectives will
particularly enhance prospects of
achieving the MDGs in sub-Saharan
Africa.
The World Bank is developing
financial sector data that links
financial development and growth.
The data will be used by the
private sector to design economically
viable services and will be used
by policy makers to understand
which financial services are
most closely associated with
poverty alleviation and growth.
Defining access to financial
services is more difficult than
usage. It is important to monitor
lead indicators that are regularly
updated in order to create individual
country databases at the household
level. Data must be gathered
through surveys of regulators,
banks and MFIs so as to be comparable
internationally.
Finally, three issues contribute
to the access problem: poor people
feel more comfortable in informal
environments; false ideas stating
that the poor aren't profitable
or trustworthy remain pervasive;
and, an enabling infrastructure
doesn't exist since there is
limited political demand from
poor people. To surmount these
barriers, the poor must be educated.
Legal changes will also make poor
people more profitable. Repossession
of collateral must become easier,
technology must be used to decrease
costs, and national IDs for credit
history purposes should be increased.
Financial services to the poor
must be expanded. Regulatory
changes to make poor people profitable
and to ensure safety and soundness
of MFIs are needed. It is also
important to enlist the middle
class in poor areas since they
are often largely unbanked and,
when they are targeted, it will
lead to greater financial access.
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3. PANEL II: Taking Meaningful
Steps to Mitigate Financial Sector Crises
in Post-Disaster/Post-Conflict Countries
Wars, political turmoil, and natural and other disasters can devastate the
livelihoods of individuals and endanger the safety of financial sectors.
Microfinance plays an important role in the mitigation of the impacts of
disasters.
Moderator: Mr. Robert Davies (Chief
Executive Officer, The Prince of
Wales International Business Leaders
Forum)
Panelists: |
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Mr. In Channy, (General Manager of ACLEDA
Bank Plc., Cambodia)
Intervention of In Channy, the General Manager
of ACLEDA Bank |
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Dr. James D. Rogers (Governor, Central
Bank of Sierra Leone) |
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Ms. Fatu Kanu (Microentrepreneur, Sierra
Leone) |
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Ms. Shakila Sarajulldin (Microentrepreneur,
Afghanistan) |
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Mr. B.S. Kusmuljono (Board Commissioner,
Bank Rakyat Indonesia)
The Experience of
Bank Rakyat Indonesia
in Aceh and Nias Island |
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Microfinance has proven
itself to be a crucial tool in post
conflict/crisis situations. In the
months following tsunami in December
2004, those areas with trading relationships
with multinational corporations rebuilt
faster because they had existing
records and business identities.
It is especially important in post
conflict/disaster areas to listen
to consumers in order to design
appropriate financial products that
can be integrated into the mainstream,
instead of being viewed as specialized
small projects. MFIs and commercial
banks can learn from each other and
work together to adequately address
the needs of individuals in these
areas. Finally, the importance and
cost-effectiveness of investing in
conflict prevention rather than repair,
regardless of location was also discussed. The microentrepreneurs on this panel
provided vivid examples of how microfinance
can assist and promote rebuilding efforts in a post disaster/conflict environment.
Ms. Fatu Kanu rebuilt her home using microfinance after 11 years of warfare
in Sierra Leone. She has successfully
repaid six loans, sent her children
to college and expanded her businesses
with her profits.
Similarly, Ms. Shakila Sarajulldin
was able to provide for her family
since the time of the Taliban government
in Afghanistan because of her access
to microfinance services. Many Afghani
women in similar circumstances now
can clothe their children and provide
shelter due to microfinance services.
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4. PANEL III: Will the International
Private Sector Transform the Landscape
of Microfinance?
One of the most important developments in microfinance in the last few years
has been the increased participation in the industry by the private sector,
which has demonstrated that microfinance is a viable commercial business.
A CGAP survey conducted in 2003 identified over 225 commercial banks and
other formal financial institutions that are engaged in microfinance.
Moderator: Mr. Matthew Bishop (Chief
Business Writer, The Economist)
Panelists: |
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Mr. Bo Cutter (Managing Director, Warburg
Pincus) |
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Ms. Doris Köhn (First Vice-President,
KfW Bankengruppe) |
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Mr. Roderick (Rory) Stear (Executive
Chairman, Freeplay Energy Group) |
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Mr. Khalid Sheikh (Senior Vice President,
Group Risk Management-Emerging Markets
Analysis & Multilateral Organisations,
ABN AMRO) |
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Mr. Israel Moreno (General Manager, PATRIMONIO
HOY, an initiative of CEMEX)
Why is CEMEX into Microcredit? |
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Microfinance, originally
nurtured by nonprofits, must now
become a for-profit, private sector
industry to expand its clientele.
In order for this shift to occur,
the private sector must accept microfinance
as a profitable investment. This
assertion is one that is supported
by the Advisors Group to the Year
of Microcredit.
Microfinance is a dual-objective
investment: both profit generating
and also a development initiative.
Microfinance cannot be sustainable
without the private sector; however,
since many people still do not believe
that they can earn profits from microfinance,
fundraising has been hindered. The
recent $100 million donation from
Omidyar Foundation to Tufts University
to be used in a Microfinance Endowment
is evidence of attempts to change the perception and management of microfinance
funds. This donation accounts for a quarter of all equity ever raised in
microfinance and will be responsibly
managed. As a historical analogy,
private equity became important in
the U.S. when major endowments and
pension funds invested in the field.
Similarly, deep, diverse capital
markets that serve the poor can be
developed with strong private sector
emphasis.
Once the private sector accepts microfinance
as a profitable venture, there are
various development agencies, such
as KfW, the German development bank,
which view their role as a link between private sector and social/development
work. Through these partnerships between various agencies and organizations,
markets and local issues can be better understood, governance structures
will be appropriately addressed and technology will be advanced to address
the needs of microfinance clients.
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5. PANEL IV: Technology:
Expanding the Outreach of Microfinance
A wide range of technologies, such as ATMs, personal digital assistants and
biometrics, are available to help microfinance providers improve efficiency,
monitoring and supervisory capacity, increase transparency, and expand their
client bases. Yet many microfinance institutions struggle to obtain access
to and select the right technologies.
Moderator: Mr. Matthew Piasecki (Chief
Commercial Officer, Visa International)
Panelists: |
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Mr. Simon Willis (Global Head of eGovernment,
Internet Business Solutions Group, Cisco
Systems Inc.) |
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Mr. Vikram Akula (Founder and CEO, SKS
Microfinance) |
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Mr. Henrik Parl (Managing Director, Eurogiro) |
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Technological advancements
have the potential to expand the
outreach of microfinance to a greater
extent than previously realized.
Electronic payments contribute to
a robust banking system, develop
jobs and use technology to explore
new markets. Furthermore, technology
helps deliver remittances at lower
prices.
Mr. Akula described how technology
has transformed microfinance by describing
the typical day of a loan officer seven years ago at SKS Microfinance. The
loan officer traveled to field sites
with huge amounts of cash, recorded
transactions on paper, and then returned
to the office to re-enter all of
the collected information into ledgers.
This amounted to over 100,000 manual
entries a year, making it virtually
impossible to isolate and correct
past errors. The process has been
revolutionized because of the automated branch offices offered by SKS. While
initially a costly investment of more than 250,000 USD, today SKS has some
of the lowest costs of any MFI in
the world, averaging 6% in comparison
to the industry average of 20%, including
300% annual client growth. They also
automated their loan meetings via
a smartcard handheld pilot application,
which represented tremendous cost
savings. It saved costs and eliminates
cash in the system. Future applications
could include integration with VISA's payment system, biometric identification
at local markets, cell phones used to verify transactions for illiterate
clients, etc.
Another issue in which technological
advancements are playing a leading
role is that of remittances. However,
due to the nature of remittances,
common standards are needed in order
to develop technology that will adequately
address the needs of poor people and also be user-friendly across borders.
The profit opportunity for technology
and microfinance is just becoming
evident. Other challenges include
infrastructure limitations in developing
areas. For instance, SKS's computers
all require backup generators.
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6. PANEL V: The Future of
Access to Finance
This panel discussed the commercialization of microfinance institutions,
the diversification of financial services, and the impact of technological
advances while addressing the question of whether integrating microfinance
into the formal financial sector will expand access to finance for poor and
low-income people around the world.
Moderator: Mr. Tom Easton (Chief
Financial Correspondent, The Economist)
Panelists: |
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Mr. Yi Gang (Assistant Governor, People's
Bank of China) |
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Dr. Stanley Fischer (Governor, Bank of
Israel) |
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Dr. Arthur Vayloyan (Member of the Executive
Board and Head of Private Banking Switzerland,
Credit Suisse) View comments |
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Sir Ronald Cohen (Chairman, Social Investment
Taskforce)
The Challenge of Social Entrepreneurship & Investment |
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Although microfinance
institutions have successfully reached
millions of people, in order to maximize
access to financial services, the
private sector must become more involved.
The private sector has greater capacity
and technical expertise to mobilize
capital. For example, despite initial
hesitation as to whether microfinance
networks could work on a commercial
level, Citibank has now demonstrated
that the private sector can successfully
provide microfinance by working in
cooperation with existing financial
institutions.
Since large, international institutions
like Citigroup have high expenses
per transaction, they do not need
to be the provider of services in
the field; however, they can accept
the liabilities of the institutions
that do so. Institutions in the field
can develop new products and provide
remittance services directly to their
clients at more reasonable prices.
Visa, ING, Deutsche Bank and Credit
Suisse are also working to form partnerships
with local institutions in order
to expand access to finance. Although
charity will always be necessary
because there will always be people
who cannot be reached by the private
sector, these alliances between the
private sector and local institutions
promote microfinance as a commercial
enterprise.
Substantial capital cannot be received
unless there are demonstrable
social returns to compensate for
the minimized financial returns.
These metrics must be created before
they can be presented to investors.
However, a World Bank study shows
that with heavy government involvement,
there was less access to microfinance.
In addition, one of the greatest
consequences that must be addressed
by large institutions is currency
risk.
From the perspective of microfinance
institutions, there are various
obstacles which must be addressed:
more data is needed, credit rate
ceilings must be fought, financial
sector regulations should be
reviewed so that they do not
hamper small institutions, and
regulators should be trained
to understand the unique environment
surrounding MFIs.
In order to move beyond philanthropy,
it is necessary for microfinance
to involve entrepreneurship,
market forces, as well as government
leadership. Governments should
allow for a regulatory framework
that provides incentives to increase
the supply of capital. In addition,
governments should refrain from
making direct investment decisions.
China is an example of how government
can promote private sector involvement.
China's experimental MFIs are currently supported by the government,
however, to involve the private sector, China will provide incentives
such as making non-collateralized lending more effective and providing
credit lines so businesses do not need to fill out paperwork for
every loan. In the past, China
has encouraged borrowing for
production, as well as non-production
investment, such as for education,
marriage, funerals or consumer
loans. China needs to integrate
commercially viable MFIs into
the financial regulatory framework
and improve supervision to prevent
future financial risk. Although there is enormous opportunity
for development in China, the question
remains as to whether the private
sector can operate on a scale of
this size. When examining the industry
as a whole, loans are rarely in excess
of $1000, so the maximum potential
with a billion people is a trillion
dollars. This is less than a single
financial institution in the United States. However, this does
not make microfinance any less important.
In the future, microfinance will
continue to grow more rapidly. It
will need more transparent and clearer
data to demonstrate that it is a
profitable activity. The microfinance
market is where venture capital was
20-30 years ago. It will grow substantially
over the next five years, as evidenced by the increased number
and quality of people involved from private sector – Citibank,
Deutsche Bank, Credit Suisse. It is clear that the microfinance
sector is gaining substantial momentum. Further, technology
is changing fast. As the cost of
providing modern technology declines,
we will be able to supply processing services much more cheaply.
Finally, government involvement needs to become more positive
in order to reach many more people with microfinance five
years from now.
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7. PANEL VI: Poor
and Low Income Clients: Exploring
Their Financial Needs
Poor people use a wide range of
financial services, including purchasing
land or other assets, making home improvements,
and addressing life cycle needs such as education
or marriage; seasonal events such as those
relating to harvest, school fees, or festivals;
and emergencies such as illness, theft or
natural disasters. This panel examines the
array of products and services that can help
poor people make choices, take advantage
of opportunities, and smooth incomes, what
types of providers are necessary to serve
this market, and the costs and risks associated
with reaching this segment of the population.
Moderator: Dr. Jonathan
Morduch (Associate Professor
of Public Policy and Economics,
New York University)
Panelists: |
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Dr. Robert Townsend (Charles E. Merriam Distinguished
Service Professor in Economics and the College,
University of Chicago)
View
notes |
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Ms. Xu Xiaoen (Microentrepreneur, China) |
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Mr. Milkov Machaca (Microentrepreneur,
Peru) |
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Mr. Fouad Abdelmoumni (Executive Director,
Association Al Amana) |
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Mr. Andrey Vladimirovich Sharov (Director,
Department of State Regulation of Economy,
Ministry of Economic Development, Russia) |
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It is crucial to gain a better
understanding of the demands and needs
of microfinance clients in order to expand
and improve access to financial services.
Many people who do not have assets choose
not to use financial services because
they believe that those services do not
suit their needs. One way to overcome
this obstacle is to evaluate the impact
of current financial institutions and
services on their customers. This will
develop a scorecard of the use and importance
of specific services offered in precise
regions. It will also highlight where
many people in theory have access to
financial services but choose not to
use them because the services are not
tailored to their needs.
In order to understand the whole
economy and how it is put together,
a comprehensive research database
archive must be created which, matched
with a geographic data system, will
be able to trace specific trends.
For example, using the data that
has been collected in various surveys
in Thailand, it is possible to
understand how their economy works
in terms of supply and demand and
gain a sense of where their equilibrium
lies. With an appropriate database,
the financial services offered can
be tailored according to this equilibrium.
The majority of the population
served by microfinance is successful
at improving their scale in income.
Therefore, it is important to
recognize that their needs are
also constantly changing and
growing. The most immediate need
is access to capital, which often
leads directly to the opportunity
to save. Other significant needs
include liquidity transfers and
non-financial requirements such
as training, equipment and housing.
The microentrepreneurs on this
panel stressed the need to improve
technology and training centers,
raising the option of involving
universities, governments, and
research institutes to help train
microentrepreneurs in technical
skills and legal restrictions. Technological
advancements, such as the internet,
were discussed as a method they would
like to try in order to increase
the flexibility of their transactions.
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8. PANEL VII: Africa:
Growth and Access to Finance — The
Final Frontier
There is a notable lack of information
about microfinance in Africa and what kinds
of financial services people need. This panel
discusses what we know about the extent and
distribution of microfinance in Africa, the
hurdles to building inclusive financial sectors,
and possible ways to improve the reach and
effectiveness of microfinance institutions
in Africa.
Moderator: Sir Nicholas Stern,
FBA (Head of UK Government Economic
Service)
Panelists: |
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Her Excellency Mrs. Maïmouna Sourang Ndir
(Minister of Small and Medium Enterprises,
Republic of Senegal) |
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Mr. René Azokli (Managing Director, PADME) |
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Ms. Chrissie Akulila Candu Katundu (Microentrepreneur,
Malawi) |
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Mr. James Mwangi (Chief Executive, Equity
Bank Ltd., Kenya) |
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There is talent and vibrant
activity for the private sector in Africa
through family farms and small businesses.
This talent and vibrant activity can
be encouraged and supported through microfinance
initiatives. Microfinance has been growing
in Africa at tremendous rates, both in
terms of the number of institutions reached
and the quantity of persons; however,
this expansion has not been wholly inclusive.
There still exists a large proportion
of the African population that cannot
access financial services, and there
are data, transaction, regulation, training,
infrastructure, capacity, and integration
obstacles preventing greater access to
microfinance and its effective use as
a poverty reducing and development mechanism
in the region.
Governments and institutions have
been working to overcome these obstacles
and have achieved some success; however,
more work needs to be done. The data
available needs to be improved, as
well as its organization. Development
partners and governments can help
identify and shape the collection
and use of data. Transaction issues
abound. Growth in the sector means growth in transactions, and there
is a need to build capacity to manage
the transactions safely and securely,
as well as to make them simpler so
that the borrowing process does not
discourage potential borrowers. There
needs to be greater collaboration
between government and microfinance
practitioners to develop regulation that will protect and develop the
microfinance sector. Also, training
needs to be provided to banking sector
supervisors so that they can effectively
manage changes in this dynamic sector.
Training programs should also be
provided to microfinance borrowers.
Liza Troskie, a microentrepreneur winner from South Africa, noted
that loans are ineffective if the
borrowers do not know how to use
them. Infrastructure and capacity
pose other challenges, especially
how to ensure greater access to microfinance
and promote sustainable and viable
programs. Finally, the need to integrate
the microfinance and banking sectors,
or at the very least develop stronger
associations and links between the
two is a reoccurring and important
issue.
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9.
PANEL VIII: Migration: The Changing Landscape
of Banking
In 2000, there were 175 million persons living outside of their country of
birth. Massive global population movements can dramatically impact the financial
sector, particularly through the desire of migrants to send remittances to
their home countries. But migration also makes it difficult for people to
establish credit histories.
Moderator: Mr. Goanpot Asvinvichit
(President and CEO, Government Savings
Bank, Thailand)
Panelists: |
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Ms. Diana L. Taylor (Superintendent of Banks
for the State of New York) Talking
points |
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Dr. Luigi Zingales (Robert C. McCormack
Professor of Entrepreneurship and Finance,
University of Chicago) |
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Mr. Ajay Banga (Co-head of the Global
Consumer Group, Citigroup) |
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Migration remittances have
proven to be a crucial tool in aiding
the reduction of global poverty. By providing
a substitute for local savings, remittances
can be particularly helpful for financial
development where there is a lack of
local economic infrastructure; recipients
often dedicate remitted money to food,
education, and to finance microenterprises.
As a substantial source of foreign exchange,
remittances frequently provide a more
significant monetary impact than foreign
aid, and can even comprise a greater
proportion of the economy than trade
in some countries.
Still, with an unknown volume of
transactions occurring illegally
within the informal sector, it has
been difficult to calculate accurate
remittance figures. Estimates of
global remittances range from $100-$300
billion, numbers that grow rapidly
by 15-20%. United States and Saudi
Arabia provide the greatest source
of remittance activity, with most
of the money funneling to Mexico,
India and the Philippines. Of the
estimated $20-$30 billion that flowed
between the US and Mexico in 2003
(a 23% increase over 2002), only
3% of transactions were performed
by banks. Though institutions such
as Western Union account for a portion
of the traffic, much must be attributed
to informal providers. It is estimated
that 50-200% of known remittance
is illegal.
There are some 300 thousand Thai
workers living in Taiwan who
continue to remit their earnings
through informal financial services
because of convenience – formal
institutions require formal identity,
which is something that illegal
emigrants cannot provide. For
customers using money transmission
services, accessibility is key.
With no credit history, or perhaps
no experience in using a bank,
the only option is the informal
sector. In a post 9/11 world,
financial institutions must pay
increased attention to these
types of transactions, and they
often avoid the risk of remittance
transactions altogether. In the
face of such issues, the Government
Savings Bank in Thailand is exploring
the possibility of aiding its
Thai workers in Taiwan by providing
loans to the workers' families
living in local, rural areas.
This serves a dual purpose of
both ensuring the emigrants that
a formal banking system is taking
care of their families back home,
and increasing business – and
eventually confidence – in these
formal banks.
The more remittances are channeled
through formal banks, the more
they can effectively contribute
to financial and economic development.
Both banks and regulators can
serve a role in improving the remittance industry. Banks have an opportunity
not only to intercede in the payment flow of remittances, but also to
forge a banking relationship
with those who need it. Compared
to money transmitter businesses,
banks can offer remittance services and savings tools with local transaction
capability, helping to lower the cost of sending money, as well as financially
empowering the family at the local level. Citibank, the second largest
provider of formal remittance
services for money flowing into
India, has launched "Access Account".
This product allows clients to
directly deposit their salaries
free of charge into accounts
they can then use to transfer
money. The client becomes entitled
to loans after six months, and
they are able to build credit
history without the requirement
of a credit card. After initiation,
this product accounted for 15-20%
of checking accounts opened within
Citibank.
In addition to understanding
the risks involved, regulators
must do their part to facilitate
the improvement of formal remittances;
they must effectively interpret
laws and ensure that the relevant
parties understand the application
and compliance of these laws. In order to enable the sharing of information,
inter-regulatory agreements must be established.
Further improvement of financial services
to the un-banked requires a strong
commitment and passion from the formal
sector. One innovation may come in
the form of allowing credit history
to transcend international borders.
At present, credit history is established
country by country; only a few multinational banks allow
their clients to transfer their credit
history abroad. In order to achieve
this objective, credit bureaus must be established in more countries,
and they must be willing to participate in helping clients
build an international credit history.
Credit Unions like WOCCU offer further
innovation by allowing clients to
access some financial services without
the requirement of credit history
altogether.
Besides formal banks,
there are other ways to channel
remittances. Supermarkets, mobile
phones, and gas stations are all
alternative points of distribution
for the "last mile" of remittances
to families at the local level. To facilitate the growth
of these alternative points of
distribution, banks must seek out
more creative and innovative ways
to distribute remittance. Perhaps
the 660 thousand post offices worldwide
could play a role? |
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10. PANEL IX: Can "Access
to Finance" be a Policy Objective: Member
State Delegate Statements
Ministers and representatives of Member
States will discuss challenges, results
and problems remaining, in the building
of more inclusive financial sectors.
Chair: His Excellency Mr. Francis K. Butagira (Ambassador of Uganda, Chair of
the Third Committee)
Closing statement: Dr. Stanley Fischer (Governor, Bank of Israel; Chair of the
Advisors Group to the International Year of Microcredit)
Statement of the Advisors Group
Delegate
Statements
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Bangladesh |
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Belgium |
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China |
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Ghana |
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Jamaica, on behalf of G77 and China |
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Luxembourg |
– |
Morocco |
– |
Russia |
– |
Senegal |
– |
South
Africa |
– |
United Kingdom |
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Gala
Press
Release
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Agendas,
Brochure and General Information
Click
here to view the Forum brochure
Dignitaries, celebrities, high-level government
officials, corporate CEOS and microfinance clients
will gather at the United Nations headquarters
in New York this fall for an historic microfinance
event.
"The International Forum to Build Inclusive
Financial Sectors" will be held November
7- 9 and will unite diverse members of the microfinance
community to celebrate the successes of the International
Year of Microcredit 2005. More than 500 representatives
from over 100 countries will gather to debate
how to dramatically increase the availability
of financial services for poor and low-income
people. The goal of the Forum is to adopt an
action plan for building inclusive financial
sectors, bringing the world one step closer to
achieving the Millennium Development Goals of
poverty eradication.
The event includes a gala dinner celebration
of the worldwide winners of the 2005 Global Microentrepreneurship
Awards. Corporate sponsorships are available
for the gala dinner.
The Forum will conclude with a seminar on regulation
and supervision to be held on November 9. Discussions
will focus on how to balance supervision and
regulation with innovation and flexibility in
order to promote the growth of microfinance.
The event is hosted by the Federal Reserve Bank
of New York, and co-sponsored by the New York
State Banking Department and UNCDF.
Forum
Agenda (Nov 7 - 8)
Forum
Agenda (Nov 9)
For more information, please contact forum2005@uncdf.org.
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