The return of China South America

你好 朋友 (hello friends),

China South America will be returning to cyber space tomorrow, Aug 11, 2009.

I apologize for the recent absence of updates, I have been traveling in China where access to sites such as this is limited.

We'll return to China South America's usual mix of current events relating to China & South America, commodity markets, micro finance and of course my own analysis and writing on the world.

~ Benito

[Microfinance] -- 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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Lack of China South America Updates -- Sorry! Lo Siento! 对不去！

I must apologize to all readers and internet surfers who have arrived at China South America in recent days to find that no updates had been made.

This blog was started in response to my personal interests in the following:

1- Sino-Latin American Foreign Policy; Economic and Political
2- Commodity Investment
3- Mining in South America
4- International Investment Opportunities
5- Microfinance in Peru, Bolivia and Colombia

Since graduating from American University in May 2008 with a degree in Economics I have been on a post-collegiate journey to find a greater purpose in life that can one day encompass some these interests.

Opportunity came a'knockin' and I now find myself a international businessman selling South American wines in China and Singapore.

Recent weeks have been particularly hectic with a few deals looming in the horizon this summer.

I promise to get back to the usual flow this weekend.

Thank You -- Gracias -- 谢谢

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

Micro-Insurance

As the US struggles to recover its economic standing in the world, the doors of change will be wide open. For better or worse... The structure of the American-US insurance industry will change in the next 8 years.

Micro-Insurance always took a back seat in my personal interests in the world economic development theories and tools. However, as this article highlights, the sector is growing and innovative ways to offer insurance to poor people are being tested. If a individual is able to grow his/her business from the ground up on monthly loans of a mere $60-120, why too should not they experience the economic benefit of having a life insurance plan if they pay for it. Surely, life insurance will be cheaper developing countries.

Microfinance has exceeded the expectations of most skeptics. Why can't Micro-Insurance do this too?

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PlaNet Finance to launch micro-insurance schemes

The UAE-based PlaNet Finance Group plans to introduce micro-insurance schemes in the region to reduce the impact of the crisis on micro entrepreneurs who have outstanding loans.

While the organised banking system has been severely hit by the financial crisis as individual and corporate customers fail to repay huge amounts of loans, the micro finance sector has been relatively unaffected. Even big insurance companies such as Allianz are interested in providing insurance to the poorest members of society.

Speaking to Emirates Business, Sawsen Ayari, Microfinance Expert and Programme Manager, PlaNet Finance UAE, said the agency is planning to expand its micro-insurance schemes across the Middle East and North Africa (Mena).

Through PlaNet Guarantee, a company specialised in the distribution of micro-insurance products, the group intends to spread micro-insurance facilities in several Mena countries. The company has a tie up with the global insurance company Allianz and successfully implemented a micro-insurance scheme in Egypt.

The current global financial crisis has created a situation to expand microfinance to other institutions in the region, Ayari said. The group is also working closely with leading pharmaceutical companies such as Pfizer.

Under PlaNet Finance's tie up with Allianz, it is providing micro insurance schemes for the first time in Middle East in Egypt, where premium rates are as low as $1 and cover loans of $1,500 (Dh5,509) to $2,000 availed by micro entrepreneurs, Ayari said.

"The global financial crisis has not directly affected microfinance institutions because they operate in areas not directly linked to global finance. Some entrepreneurs in travel and tourism may be hit, but it will take some time before micro entrepreneurs in the region can be affected. Such insurance schemes will insure their loan repayment capacity."

The group has microfinance institutions in Afghanistan, Egypt, Syria, Oman and Jordan.

Another company in the field, First Microfinance Foundation (FMF), successfully tested the first micro insurance scheme in the Mena region in Egypt, where it introduced credit life insurance to micro entrepreneurs. The FMF currently provides death and disability insurance to its clients.

Allianz Life Insurance covers the entire loan portfolio of the microfinance firm against a premium, which is paid upfront at each new loan disbursement.

Each new client is insured against death and disability, in case of which, the FMF gets 110 per cent of the initial loan amount and keeps the outstanding amounts to pay back the unpaid installments. The remaining balance is paid to the client's family in case of death due to disease or accident or to the client in case of permanent total disability.

About 100 loan officers of FMF are trained on death and disability insurance for the benefit of the company's 14,000 clients.

PlaNet Guarantee is targeted at people who do not have access to traditional insurance. Such clients also are not beneficiaries of social protection mechanisms to protect themselves against different risks such as health and natural catastrophes.

It works closely with the microfinance institutions that have strong presence on the ground. The company also works closely with insurance and reinsurance groups, health professionals and development agencies.

PlaNet Guarantee, which also acts as an insurance broker, works for the promotion of micro-insurance schemes around the world, with schemes running in 10 countries. It also provides consultancy service to microfinance institutions.

[Source] -- Emirates Business 24/7

Nononprofits Sometimes on Cutting Edge of Technology

[Microfinance] - PC World Article


One example is the way that microfinance agencies build databases and other back-end systems to manage their work. Some microfinance institutions are running on manual systems or spreadsheets, said Peter Bladin, founding director of the Grameen Foundation's technology center. "Given how transaction intensive this is, it's amazing they don't have more sophisticated technology," he said.

Microfinance organizations sometimes try to buy a system that has been developed for a similar business but find it doesn't quite fit. Or they may try employing software developed for banks but also find they don't work quite right. Customization of such software is too expensive and unrealistic for most microfinance institutions, Bladin said.

So Grameen helped drive the effort to create Mifos, an open-source management information system designed for microfinance. "The beauty is anybody with technical skills can have access to the source code and enhance it," he said. "We have people writing code around the world and feeding it back."

NetHope is also developing programs to support members. For instance, it is setting up an IT help desk that Accenture is helping with that will offer 24-hour technical support to employees of member companies.

Click here to read the full article from PC World

Weekend Newswire: South-South Cooperation

[Brazil - Saudi Arabia] -- Saudi Arabia and Brazil are natural allies

By Luiz Inacio Lula Da Silva

This week I will have the honor to be the first Brazilian President to officially travel to Saudi Arabia. I retain fond memories of the visit in 2000 of the then Crown Prince to Brazil. Since then, numerous high level visits have further strengthened the ties between our two countries and peoples.

Brazil prides itself on having roots in the rich cultural heritage of Arab civilization. Successive waves of immigrants from the Middle East have made their way to Brazil in search of a new horizons and a better life. Over the years they have contributed to forging present-day Brazil and to its diverse human landscape. Arab values, tastes and sensibilities are today an integral part of what it means to be Brazilian.

My trip to Saudi Arabia aims to explore and enhance these many-faceted affinities and the opportunities for cooperation that they offer. Much has been achieved over recent years, but much remains to be done if we are to fully realize the potential of two thriving economies that are making their mark on the global scene.


[China - Bahrain] -- Bahrain reviews construction ties with China
Co-operation between Bahrain and China in the construction sector was discussed at a key meeting.

Minster of State for Foreign Affairs and Tamkeen chairman Dr Nazar Al Baharna met a Chinese business delegation and discussed various issues of mutual interest.

Development of programmes that can reduce the dependency of construction companies on unskilled labour by introducing machinery and technological solutions was also highlighted.


[India - Kenya] -- Kenya, India to beef up ties in small industry sector
In yet another indication of India's growing interest in the East African region, the country's National Small Industries Corp (NSIC) has signed an agreement with Kenya Industrial Estates (KIE) to strengthen cooperation in the small scale industry sector.

KIE is a state-run agency of Kenya to promote indigenous entrepreneurship and small and medium enterprises (SME).

According to media reports here, the partnership involves technology transfer, and marks a major step towards improving Kenya's quality standards in manufacturing, production and human resources.

"The government is keen to forge a viable partnership with friendly countries, particularly in the spirit of south-south cooperation," Kenyan Industrialisation Minister Henry Kosgey was quoted as saying.


[Asia - Africa] -- Asian Foreign Direct Investment in Africa
Foreign direct investment (FDI) in Africa by developing Asian economies is growing and has the potential to reach much higher levels. The present report notes that Africa-bound FDI is still a small percentage of the rapidly climbing foreign investments being made by Asian transnational corporations.

The rapid economic growth in Asia can be expected to lead to increased Asian investments in Africa, in both natural resources and manufacturing. In particular, the rapid industrial upgrading taking place in Asia provides ample opportunities for Africa to attract efficiency-seeking and export-oriented FDI from Asian economies.

Philippine Postal Savings Bank launches new Microfinance program

Microfinance: Philippines


For readers out there who never thought their post office could double as a bank... think again.

Japan Post is said to be the largest holder of personal savings accounts in the world, with 224 trillion yen ($2.1 trillion) in household savings assets. The holding account for 25% of total household savings in Japan. Pretty substantial no?

The Philippine Postal Savings Bank (PPSB) has just announced it plans to launch a new microfinance facility for drivers and conductors belonging to transport cooperatives or associations accredited/ registered with the Philippines Office of Transportation Cooperatives.


"Under the microfinance facility, a transport cooperative or association can avail of an interest-free and no-collateral capital seed fund amounting to P5,000 per beneficiary. A group of 30 beneficiaries can borrow maximum of P150,000 for a one-year term."

Click here to read more on this development from Business World Online

Will Microfinance be able "feed itself," or will the global crisis catch up to it?

Banks think small to achieve big; focusing on microfinance

India's Microfinance sector is doing well, so well that the leading private and foreign banks in the country are planning to increase their MFI operations.

This article from the Hindu, MFI institutions are usually "fund-starved" in even the best of times due to the incredible demand that is unleashed as soon micro-credit becomes available to dis-enfranchised poor working within the context of a extra-legal economy.

"Despite the financial crisis, MFIs have been the least affected as they have managed to maintain the quality of the business. RBS will continue to expand its MFI portfolio and expects to grow the size to Rs 450 crore by the fiscal-end," RBS Vice-President Moumita Sen Sarma said.

Additionally the lender does not expect any deterioration in the asset quality of MFI units in 2009-10.

The question I ask to those interested in starting a discussion is how long can the Microfinance sectors in developing nations go unaffected by the greater global recession and continue to grow?

Microfinance generally targets the poor people in countries where poor do not have access to modern financial instruments like loans, savings accounts. Many times they lack access to even the most simple of modern technologies, like a cell phone.

Is it possible for Microfinance to "feed itself?"

Consider this cycle. A poor migrant has just emigrated from the Andes mountains to Lima, Peru. After years of struggling to make ends meet, living in a hut constructed out of garbage on a sand dune in the Atacama desert, this woman secures a loan to buy a blender. She can now make tasty juices from all of Peru's delicious fruits that she can sell to people waiting for the bus in her shanty town (Pueblo Jovenes as they are called in Lima).

Technically speaking wealth and economic activity have been produced in this corner of Peru's extralegal sector. This woman is able to pay back her loan with interest so that the lender makes money, she is able to earn a new stream of revenue which she can then spend in the greater economy on goods and services and maybe, just maybe she will eventually be able to afford something like schooling for her children.

How long can this last? Even if money is made available for Microfinance, how long will those workers waiting for the bus in the Shantytown remain employed? If they do lose their jobs does this mean the demand for juice will disapear? Or is there such a high demand for simple services like cold juice in the extra-legal economy that this woman who took out a micro-loan will continue to be able to do business?

Is demand from the underbelly of the world's developing nations so great that it can support itself and continue to grow even in the face of declining growth in the official economy in these countries (ie: the export, financial and real estate sectors)?

In the article from the Hindu it seems Indian banks remain confident growth in the microfinance sector will remain robust.

"We could nearly double our MFI portfolio over the last year. We have been working closely with 30 top MFIs to finance their projects and look forward for more such tie-ups in the future," ICICI Bank General Manager (Agri, Rural and Micro Banking) Kumar Ashish said.

Foreign banks too...

"We are shortly launching a project in rural Maharashtra with a leading MFI... HSBC assists the MFIs to build up a strong business model in a number ways," HSBC Group General Manager and CEO Naina Lal Kidwai said.

What do you think?


About the Hindu

The Hindu, started in 1878 as a weekly, became a daily in 1889 and from then on has been steadily growing to the current circulation of around 11,80,000 copies and a readership of about 4.05 million.

The Hindu's independent editorial stand and its reliable and balanced presentation of the news have over the years, won for it the serious attention and regard of the people who matter in India and abroad.

The Hindu uses modern facilities for news gathering, page composition and printing. It is printed in twelve centres including the Main Edition at Chennai (Madras) where the Corporate Office is based. The printing centres at Coimbatore, Bangalore, Madurai, Hyderabad, New Delhi, Vizag, Thiruvanathapuram, Kochi, Vijayawada, Mangalore and Tiruchirapalli are connected with high speed data lines for news transmission across the country.

Microfinance in focus: Bolivia's MFI sector set for slower but solid growth in 2009

Bolivia's microfinance sector remains in a good position to cope with the economic slowdown and is set for slower but solid growth this year, the executive secretary of Bolivia's microfinance institutions' association Asofin, Fernando Prado, told BNamericas.

"Fortunately, we haven't felt the [financial] crisis in the microfinance sector in Bolivia," said Prado, speaking on behalf of the eight microfinance institutions associated with Asofin, which control 90% of the total loans held by the country's specialized microlenders.


In 2008, Asofin members expanded their loans 42%, three times the rate reported by banks, which grew lending by 14%.

While banks have seen demand for their products decline, demand for microcredit remains very high, Prado said.

Click here to access this article from BNAmericas

Investment in Microfinance Industry remains robust

OVER 80 PERCENT OF INVESTORS HAVE NOT REDUCED THEIR MICROFINANCE INVESTMENT PORTFOLIO DUE TO THE GLOBAL RECESSION

Microfinance Insights Survey Reveals Views of 160 Microfinance Stakeholders; Latest issue features KIVA, Citi India, Kashf-Pakistan, Unitus, Grameen, Koota
MUMBAI, India, March 13, 2009 - As the recession spreads to developing countries around the world, and the effects of the crisis set in, Microfinance Insights explores how the microfinance sector is coping with the global recession. In the March/April 2009 issue, Global Crisis & Microfinance, sector stakeholders, from institutional investors to microfinance institutions and their clients, reveal how they have been affected by the liquidity crisis and speculate on when it will end.

Microfinance clients, many of whom are below the poverty line, have felt the squeeze with rising food and energy prices, decreases in remittances and less availability of loans. Many microfinance institutions (MFIs), particularly those not permitted to mobilize deposits, have struggled to maintain the liquidity to continue loan cycles without interruption. As the situation worsens, equity investors continue to show interest in investing in large microfinance institutions, confident that many established MFIs will weather the crisis.

Click here to read more about this from einnews

A world without poverty -- ACCION & LendtoEndPoverty.org

Microfinance is a topic i've touched upon before on this site (See June 17, 2008 post). In this turbulent time, Microfinance borrowers believe it or not but are still paying back their loans despite the credit crisis.




Microfinance is an effective, long-term solution to ending poverty that empowers poor families with the financial resources they need to improve their lives.

But there is an urgent need to expand these services. Right now, microfinance is only reaching 10-20% of the estimated 500 million people who would benefit from these life-changing opportunities.

As you'll see in the two-minute video, microfinance has the power to improve the lives not just of individuals, but of families and entire communities around the world.

~ ACCION Video Link courtesy of Youtube

The growth of the Micro-Finance Industry in Peru: Mi Banco of Peru helps thousands overcome poverty

Microfinance, is a economic development tool which aims to reduce poverty and empower the global poor with the skills and means to generate sustainable development through, providing small "micro-loans" and other financial services to poor entrepreneurs whom otherwise lack the knowledge or means to acquire them from the formal sectors in their home countries.

In 2006, over 10,000 Micro-finance Institutions where in active operation within 85 countries; financing 150 million micro-entrepreneurs all over the world and offering an array of financial services otherwise inaccessible for poor people in the developing world.

(Note decided to re-publish, or in this case change the publication time of this post with editions / update from yesterday June 19 to today June 20.)

ACCION International, Established in 1961 and a leader in microfinance since 1973, ACCION has over 45 years of experience in the field of international economic development. Please visit the following pages to learn more about who we are, what we do, and how we do it.

In Peru, ACCION International is partnered with a local Peruvian bank called Mi Banco, which serves as ACCION's main avenue in which to access the Peruvian market on a wide scale, would ordinarily be impossible or very difficult to say the least due to the restrictions in place by formal Peruvian Institutions which at the moment impede many smaller MFI's from evolving into a official bank which can accept deposits and make loans.

I would like to especially extend my gratitude, to a dear professor of mine, whom I was fortunate enough to have on multiple occasions while attending American University, who was a true inspiration. A charismatic and energized teacher who drew upon his real world experience in business, international development and financial management/ investments in over 20 countries-- and a individual whom I truely respect a great deal: Dr. Ghiyath Nakshbendi. International Business Professor at American University Kogod School of Business, he single handedly created and organized the first course to be offered in the Washington D.C area focusing on Micro-Finance. To that I give him my most esteemed gratitude and respect for his forward thinking of mentoring students in what is a very fast growing and continuously more influential field of study and work.

The video below truely describes the power of Microfinance and micro-credit. Consider these ladies, who relied and used micro-credit through to survive... Having to cope with 3 currencies, 4 presidential elections, 1 dictator, hyper inflation, terrorism, violence, abusive husbands... and still prospered beyond what would have in any other shape or matter have been possible.

I use the word prosper loosely here, for they are will working hard, in a hard world and face adversity and challenges on a daily basis. No less it is a incredible example of the power of micro-credit and MFI's and the inspirational ability of such individuals to persevere through such difficult times.

Last, they are a success story so to speak, many examples persist which are sad case studies. Despite this all, progress through the use of Microfinance institutions is being made, especially in comparison to past methods of poverty alleviation.





Great Video below describing what is one of the first cities in the America's... Special thanks to Five Talents International, helping with international development around the world.



And to end this post -- a bit of mixing modern pop culture with helping the dis-empowered, historically ignored, people of the 3rd world.

The power and capabilities of Microfinance to help the global poor is truely unimaginable. I'll personally be investing assets of my own in the Microfinance / Bank / public traded traded company-- Compartamos.

Described here in Businessweek

Summed up in a nice poppish music video / footage from this youtube video