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MicroCapital Monitor - July 2017
Category: Microcredit | By SDR, 17-Aug-2017 | Viewed 295  Comments 0 | Source Bob Summers
560_705319033.JPG
https://www.microcapital.org/microcapital-monitor/
MICROCAPITAL MONITOR | PREVIEW EDITION JULY 2017 | VOLUME.12 ISSUE.7

A Selection of articles from the MicroCapital Monitor - July 2017



FIRST MERCHANT BANK ACQUIRING MALAWI'S OPPORTUNITY



First Merchant Bank, a Malawi-based financial institution, recently announced it will pay an
undisclosed price to acquire Opportunity International Bank of Malawi (OIBM), a
microbank affiliated with US-based NGO Opportunity International. The sellers are
Opportunity International and its British and Canadian affiliates. OIBM provides loan and
deposit services to 400,000 customers as of 2017. As of 2015, it reported 690,000 customers,
total assets of USD 38 million, deposits of USD 24 million and a gross loan portfolio of USD
9 million. Founded in 1971, Opportunity International provides loans, savings, insurance and
training to 14 million individuals - nearly all women - in 24 countries in Africa, Asia, Europe
and Latin America. First Merchant, which operates in Botswana, Malawi, Mozambique and
Zambia, reports assets equivalent to USD 455 million. Its primary shareholder, Magni
Holdings Limited, controls one third of the bank's shares. July 19. 2017

VISION MICROFINANCE FUNDS LEND $10M



During June, the two Vision Microfinance Funds of Austria's C-Quadrat
Asset Management extended credit totaling approximately USD 10
million to microfinance institutions (MFIs) in countries including Armenia,
Bosnia and Herzegovina, China, Colombia, India and Indonesia.
For example, an MFI in El Salvador will borrow funds to increase its
lending to micro-, small and medium-sized enterprises, including those
in rural areas. The MFI was founded in 1995 and partners with local
NGOs to build trust among clients and get more information about their
creditworthiness. The MFI also provides financial education to reduce
the risk of over-indebtedness. The name of the MFI and the amount CQuadrat
will lend it remain confidential. The Vision funds manage
assets with an aggregated value of USD 580 million. July 31. 2017

...................................

EAR TO THE GROUND



GROWTH THROUGH PARTNERSHIPS: THE REAL SHARING ECONOMY



If financial services providers are going to do a better job

of serving low income
households, we need innovation. And with fintechs (Financial Technology) dominating
the attention of both investors and donors, it can be tempting to equate
innovation with technology. But what if our greatest innovations are not
about technology at all? Indeed, many are about partnerships. Sure,
some of these partnerships involve technology, but there is much more to
a successful partnership model.

Of course, there are some big players that can develop a business model
and capture significant market share without partnerships. Kenya's
Safaricom is one that purposely builds out its own services, and its 66-
percent share of the telecom market offers a fertile platform from which
those services can flourish. Gentera, through its microfinance bank,
Compartamos, has over 3.3 million microcredit customers in Mexico,
Peru and Guatemala. Compartamos' market share of nearly 25 percent
in Mexico offers a similar business dynamic to that of Safaricom. For
example, Gentera has incubated the insurance broker Aterna in-house
and acquired remittance operator Intermex and the agent network
Yast's. Why partner when you can incubate or acquire?

Alas, not every company is positioned with the capital and captive
market to expand like Safaricom or Gentera. For most "little guys,"
partnerships are the only way to go. In microinsurance, for example, I
have seen insurers looking to enter revenue-sharing deals with MFIs that
allow both partners to have "skin in the game," incentivizing innovation
to improve client value. One of my most gratifying consultancies involved
a complex partnership among an insurer, an MFI, a reproductive
health NGO, a chain of funeral homes and a large supermarket. To
understand why it works, we have to understand the business interests of
each partner. The NGO needed a new revenue stream, the supermarket
wanted to build goodwill in the low-income segment and the funeral
home wanted to reduce its default risk. Meanwhile, the insurer needed to
offer value-added services to convince the MFI that it was looking out for
clients' best interests. In the end, everyone won, especially the clients.

Partnerships aren't always easy. In June, I was in Santo Domingo,
assessing a partnership between a provider of construction-related
technical assistance (TA) and an MFI providing housing loans. The
logistics of timing the TA so it didn't slow down the loan process were
complex. The TA often got sidelined, sometimes to the detriment of the
client and her construction plan.

A lot of thinking and implementing still needs to go into improving
partnerships if financial services providers are going to deliver products
that better meet the needs of low-income households. The innovation
that is needed may include an app or other technology solution, but it
also requires new models for revenue sharing, training partners' staff
members and distributing services.

Some of the bigger players in the sharing economy have been in the
spotlight recently, most famously Uber and its less than collaborative
approach. If these companies are turning out to be more valuable to
venture capitalists than to their users and staff, then perhaps we should
reconsider the definition of a sharing economy. Perhaps the "real"
sharing economy is about sharing revenue to meet the needs of users
and staff through mutually beneficial partnerships.

About the Author: Ms Barbara Magnoni

is President of EA Consultants, a
development-consulting firm based in New York. She has 25 years of international
finance and development experience and has worked with organizations including
Goldman Sachs, Chase and BBVA and has advised institutions such as the
International Finance Corporation, the US Agency for International Development
and the International Labour Organization. She may be reached at +1 212 734
6461 or bmagnoni@eac-global.com, or you may follow her on Twitter at
BarbaraatEA.

...............................

An invitation from Bob Summers, Executive Director of MicroCapital Monitor



Dear members and friends of Rotary International, MicroCapital is pleased to offer you a sampling of the news and information we offer each month on microfinance and other forms of impact investing through the MicroCapital Monitor!"

http://www.microcapital.org/downloads/monitor_volume12/MicroCapitalMonitorPreview_Jul2017.pdf

To get all the news and features we have to offer, we invite you to consider purchasing a subscription to the complete edition. If you'd like a complimentary sample of the latest, complete edition of the Monitor use this link to contact us :  https://www.microcapital.org/ask-a-question/

On the other hand if you know you want to subscribe what about this first time buyer's discount:
http://www.microcapital.org/AnnualDiscount

Sincerely,

Bob

Bob Summers
MicroCapital
Boston USA
+1 617 648 0043


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