Private Sector and Green Money: Triodos Bank and GLS Bank invest in the Egyptian company SEKEM

GLS Bank and Triodos Bank will buy approximately 20 percent of the shares of the Egyptian SEKEM Group jointly, for an amount of € 5 million. The two banks have worked closely with SEKEM for several years and have supported the company to develop into a prosperous and coherent agricultural business. Over the last ten years the company has enjoyed exponential growth. Helmy Abouleish, Chairman of the SEKEM Group welcomed the tightened relationship: "The two banks have always specialised in "Green Money". The integral concept of their financial products has, and will continue to play a central role for us, because our relationship is based on more than just money”.

Thomas Jorberg, Chairman of the GLS Bank, welcomed the co-operative approach of two of Europe’s leading sustainable banks: "We are proud to intensify our partnership and create a more direct link with the SEKEM Group.” Peter Blom, Chairman of Triodos Bank, added that: "SEKEM proves that a company can be successfully supported by a number of different partners. Together we can expand across borders.”

Further financing plans will be developed during the coming year. In this way GLS Bank and Triodos Bank plan to make additional contributions to SEKEM’s invest-ment plan of € 25 in the next 5 years.

(source: Triodos Bank website)

Interested in learning more on rural (microfinance)?

Here's the website for you:
The Rural Finance Learning Centre.


Rural Finance is about providing financial services for people living in rural areas. This Learning Centre aims to assist organisations in developing countries to build their capacity to deliver improved financial services which meet the needs of rural households and businesses.

Fundraising 2.0

For years, charitable organizations have relied on the same formula to solicit donations and raise support for their causes.

A video with a quiet ethnic music in the background.
Images of wide eyed, forlorn-looking children.
Announcing that X million people live on less than $1 a day.

While this type of presentation can tug on your heart the first couple times you see it, it can create the unfortunate side effect of hopelessness. The overwhelming nature of the statistics can make the potential donor feel that a donation will be only a proverbial drop in the bucket with no significant effect on the situation.

What is the local purchasing power of $1 anyway?

Then Kiva came along.

By encouraging person-to-person loans, they accomplish several very important things.

* Individualization - your money reduces poverty in the life of an individual, rather than a country with X million people.
* Sense of participation - the individual lender reviews loan applications, determines which businesses are the most deserving, and loans money as he or she sees fit.
* Sense of progress - as loan repayments are made, the lender receives updates by email. The effectiveness of microfinance is seen first-hand.

This blends rational business sense with philanthropy. Anyone with $25 could make a significant difference in the life of a person halfway around the world.

No melodramatic video needed.

Other microfinance organizations would do well to abandon the old method of fundraising and follow the new model Kiva has pioneered.

ACCION and its MFIs network exploring new business models.

Since 1973, ACCION has consistently pushed the boundaries of microfinance to reach more of the working poor with efficient, tailored financial products and services. Today, ACCION and its network of partner microfinance institutions (MFIs) are examining the current microfinance business model – and challenging the industry to identify where we can move beyond this traditional approach to reach the massive scale that is necessary to effect social change.

In designing this ‘New Business Model for Microfinance,’ ACCION and its Network partners are exploring how to overcome obstacles that limit outreach, and therefore social impact, examining the prevalence of cash transactions, the labor-intensive “high-touch” loan officer-client relationship, and the difficulty in reaching microentrepreneurs in rural areas with limited infrastructure. Key elements of the new model that ACCION thinks will surpass these and other challenges include a widely diversified product portfolio, integrated delivery channels (such as mobile phone banking and savings cards), solutions and tools for controlling risk, and a new look at core banking systems.

On October 3rd, ACCION staff and Network members will host a day-long workshop on the New Business Model for Microfinance in San Salvador, El Salvador, to coincide with the Inter-American Development Bank’s 10th Microenterprise Forum.

(source: ACCION newsletter)

Congratulations to BancoSol, Bolivia.

On September 4th, the Inter-American Development Bank (IDB) announced the winners of its annual Microenterprise Development Awards, recognizing microfinance institutions for excellence in promoting microenterprise. Among the prestigious winners is BancoSol, which won the award for regulated financial institutions. A microfinance pioneer in Bolivia, BancoSol was originally established in 1984 as a foundation to serve low-income entrepreneurs and became the world's first private microfinance bank in 1992. By 2007, it had more than 100,000 clients, a $170 million loan portfolio and $150 million in deposits according to the IDB.

(source: ACCION's newsletter)

Commercial microfinance: local action and global thinking.

Microfinance is growing considerably as a market niche for commercial banks all over the world. Investment funds are being created, the microfinance funds universe is blooming. Together with non commercial funds provided by NGOs and development agencies, several commercial and commercially oriented funds are being formed.

The most recent one is related to the Morgan Stanley Microfinance Institutions Group (MFIG), which will provide a wide range of investment banking services to MFIs, networks and other market participants. The services will range from debt and equity capital to corporate advice, risk management, foreign exchange and derivative products. It will also structure and distribute microfinance investment funds (source: CGAP).

For additional information on the microfinance funds universe, we suggest visiting the Microcapital website.

What is microfinance and where is the industry going?

When talking about the provision of financial services to the poor, for a long time people, included the UN, used the word "microcredit". In fact, 2005 was declared by the UN "International Year of Microcredit," not microfinance.

It has been clear for a while though that poor people, the target population of these kind of services, do not only need credit to establish or expand their income generating activities: they do need and require savings, money transfers (just think of the immigrant population living in Europe or the US), insurance, housing.

The microfinance industry and its services providers are aware of this and are trying to meet the microentrepreneurs' needs through the design and delivery of new services.

The world after all is changing, and so are the needs of poor people. Cell phone subscriptions in the developing world for example have grown rapidly since 2000, to 1.4 billion at the end of 2005. That number is nearly double the 800 million in advanced economies. Whoever travels to developing countries can confirm this. Everyone seems to own a mobile phone.
One of the latest innovations in microfinance thus is to provide financial services to the financially excluded through cell phones.

Recent studies have discovered that there is a connection between cell phone use in poor countries and economic growth. Through market researches in China, India and the Philippines, McKinsey & Co. found that raising wireless penetration by 10% can lead to an increase in GDP of about 0.5%, or around $12-billion for an economy the size of China. A separate London Business School study had similar findings.

Grameen Bank was one of the first to develop in Bangladesh GrameenPhone, the first and largest mobile-phone provider in the country. They are now counting 10 million customers, including 250,000 "phone ladies" who provide village phone service to the poor, supported by a Grameen Bank microcredit.

Welcome to the Microfinance Blog

The purpose of this blog is to provide news and insights on microfinance and microenterprise development.

Providing small loans to entrepreneurs has proven to be one of the most effective methods of reducing poverty in the world. Through articles, interviews, and news stories, our team of writers will seek to raise awareness of the possibilities available through this form of assistance.

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