[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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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

Twenty-nine countries protest reintroduction of US Dairy Export Subsidies

Twenty-nine countries at the World Trade Organization criticized the United States on Wednesday for reintroducing export subsidies on US dairy products, calling the handouts a dangerous retreat into protectionism and warning of “subsidy wars."

Brazil, speaking on behalf of 23 developing countries, told a WTO meeting that Washington was promoting a "murky protectionism" that weakens the global trading system at a time when global commerce is already shrinking at a record pace.

Australia, on behalf of agricultural exporting countries, said the announcement Saturday by US Agriculture Secretary Tom Vilsack of subsidies for 91.000 tonnes of mainly powdered milk, butter and cheese was unfair to countries trading fairly, and potentially damaging to global economy's recovery.

The subsidy decision under the US Dairy Export Incentive Program follows a similar move by the European Union in January.

[Source] -- MercoPress

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I would like to take a moment to reflect on a old post I wrote a little under a year ago, on June 19, 2008. It is one third about Southern Copper Peru (PCU), one third about sky rocketing commodity prices, and one third about a intense protest I witnessed in Tarapoto, Peru in 2002. I was in Tarapoto during a family trip to the region to visit my maternal grandfathers home town of Rioja. I may be a bit biased but the province of San Martín is a beautiful region of Peru I highly recommend people visiting Peru check out.

I'm going to reflect specifically on the third topic—the protest. If would like you can click here to read my entire post from 6/19/2008.

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In 2002 I was visiting Tarapoto, Peru. The city is located in the Peruvian province of San Martin, Peru. Rice workers had paralyzed the region because US subsidies had made locally produced rice more expensive than imported rice from the US--which ironically was also widely available in this region of Peru which a large amount of rice.

Tarapoto, Peru

By my fourth day in the city protesters had taken over the town square and blocked the roads to my grandpas home town of Rioja. As a tourist who was fortunate to have family in the city I was able to to get back to Lima before the city was forced to shut down. My family and I were woken up at 6am one morning and quickly informed by my grandpa's brothers we needed rush through the back roads of the jungle and get to the airport as soon as possible. Once we arrived at the airport we were rushing into a back office with other tourists holding US, Canadian and European passports, until a flight could take us all to Lima... all the while protesters attempted to rush the airport gates.

It is ironic food prices are now so high, Tarapoto's Rice industry is now growing rice and actually making a profit, although US subsidies still aren't help the overall market. The fact and main point I am attempting to get across is that all it took for protesters to paralyze the region was to create a blockade one highway--leaving the city isolated.

Click here to view a excerpt from the only link to an English language article I was able to find that still had an active link.

If you can read Spanish, I have found two articles. The first article describes how the situation unfolded. The second article explains the accord which was eventually reached by the protesters and the government.

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Benito's conclusion... The United States needs to re-think their protectionist policies, especially when it comes to such goods as cotton, food and other agricultural commodities. Easier said than done, but no less a necessary change that needs to happen sooner than later.

Does anyone really care what the IMF thinks?

Apr 22 (Retuers) - For the first time since the end of World War II, the International Monetary Fund is projecting that the world economy has fallen into a severe recession.

IMF statistics are widely used when proving a point in journalism, academic research or any other type of report. There are a handful of sources to turn when you need a legitimate source and the IMF's wonderful website is one of them.

It's full of statistics, economic research, news and pages dedicated to just explaining to you what the heck the IMF does... sounds like a exhilarating experience no?

There is already a raging debate among academics, economists and politicians if the good produced by the IMF outweighs the bad.

You don't see IMF economists, moving markets with their speeches on major news networks.

This is because they don't and they can't. When it comes down to it the IMF has true little power to influence momentum in markets. Financial markets don't care about what the chief economist at the IMF thinks or says because anyone in the business probably has a research department in their company that has already come to the same conclusion. Heck, I could have Googled what these IMF guys said in this Reuters video.

China's currency swaps help expand yuan's reach -- Caijing

Li Tao and Zhang Man of Caijing, a financial news publication of China report on the rising influence of China's currency the Renminbi (yuan). The two write:

The cross-border exchange of regional currencies has become an important way to defend against the global economic downturn and promote trade. To circumvent a shortage of dollars and other currencies, as well as reduce exposure to exchange rate volatility, developing countries in eastern and central Asia as well as South America have implicitly recognized the Chinese yuan as a currency for settlements and, in some cases, reserves.

China is willing and eager to help ease liquidity in the financial system... as long as it gets some justified financial clout out of it.

So far China has established the following currency swaps:


Dec 12 - China and South Korea sign a 180 billion yuan currency swap framework agreement.

Jan 20 - China and Japan sign a 200 billion yuan currency swap between the People's Bank of China -- and the Honk Kong Monetary Authority.

Feb 8 - China signs a currency swap agreements with Malaysia's central bank for 80 billion yuan

March 11 - China signs a 20 billion yuan deal with the National Bank of Belarus

March 24 - China signs a 100 billion yuan swap deal with the Central Bank of Indonesia

Click here to read more on this topic from Caijing