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From the Editor
01.03.2007
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Crossfire: ‘Payday lenders and similar businesses provide an essential service at a reasonable price’
01.06.2014
Payday lending in the UK and other developed countries usually involves small amounts lent for quite short periods and attracting high interest rates, and thus shares many of the features of microfinance. Russell Hamblin-Boone and Fraser Sutherland discuss the role of payday lending in the UK. -
Microfinance approaching middle age
01.06.2014
The article describes the performance of agricultural credit programmes during the 1950s–1970s and suggests that they later influenced the microfinance industry. Early features and problems of the microfinance industry are described, followed by a discussion of the challenges currently faced by the industry. The authors argue there is little evidence showing that micro-loans are lifting substantial numbers of people out of poverty, although loans may help take the edge off poverty. The article concludes that more attention should be given to deposits and to lending to small- and medium-sized industries -
Taking stock of the Nigerian microfinance banking sector: lessons from an assessment of 25 MFBs in five states
01.06.2014
Microfinance practices in Nigeria are unique relative to other countries. Although NGO-microfinance institutions are present, regulated, deposit-taking microfinance banks (MFBs) dominate the landscape. With roughly 870 MFBs licensed by the Central Bank of Nigeria, the microfinance banking sector is large but still quite young – established in 2005. It was within this environment that the GIZ ‘Pro-poor Growth and Promotion of Employment in Nigeria (SEDIN)’ programme commenced a CAMEL & Social Performance Management (SPM) rating of 25 MFBs in five states. The results of the rating provided excellent holistic insight into the current practices of Nigerian MFBs and displayed a number of curious, at times worrying, trends within the sector. Subsequently, this stock-taking paper attempts to discuss what key policy implications may resonate from these findings. -
Improving access to finance for small- and medium-sized enterprises in the road sector: the CrossRoads Guarantee Fund in Uganda
01.06.2014
Credit guarantee funds are a tried-and-tested instrument to improve access to finance. This paper aims to share experience from the CrossRoads Guarantee Fund in Uganda. The Fund was established in 2012 as one of the interventions under the CrossRoads Programme funded by the Department for International Development (DFID) and the European Union (EU) to build capacity and competitiveness in Uganda's roads sector. The objective of the Fund is to improve access to finance for contractors/consultants. The Fund has created significant benefits and impacts that include enabling contractors to secure bid securities and performance bonds valued at Ugandan Shillings 11.7 bn (US$4.7 m); improving relationships between financial institutions and contractors; and significant crowding-in by financial institutions. Important lessons to guide scaling up or replication of similar initiatives are emerging. First, a guarantee fund creates significant behaviour change on both the supply and demand sides of the financial services market. Second, high leverage and impact can be achieved from a modest investment. Third, fund access conditions should be stringent enough to minimize moral hazard. Fourth, fund utilization, leverage, and outreach depend on work flow. Finally, protracted procurement processes raise costs and undermine the effectiveness of a guarantee fund. -
Domestic migration and remittances in India: Rajasthani tribal migrants working in Gujarat
01.06.2014
The focus of this paper is on tribal migrants from southern Rajasthan, working in the neighbouring state of Gujarat. The objectives of the study were to achieve insights into these migrants’ livelihoods and remittance sending practices and their attitudes towards these, and to examine the potential for improvement in money transfers. Most migrants interviewed were in paid employment, largely in the construction and service sectors. They mainly take money home themselves or ask fellow migrants to do this for them; remittances are used for a wide variety of both production and consumption needs. This hand-to-hand system of money transfers has advantages for both senders and receivers, although some remitting migrants have suffered loss of money through theft. With high rates of mobile phone ownership, it is possible that using banking correspondents, a relatively recent innovation in the country aimed at reducing financial exclusion, in conjunction with mobile banking, could combine the valued qualities of informal and formal money transfer systems. Even so, proposals to develop new remittance products for domestic migrants must be clear as to the added value they bring to existing systems and contexts, for both senders and receivers, and for the agents involved in the process. -
Building frontline market facilitators' capacity: the case of the ‘Integrating Very Poor Producers into Value Chains Field Guide’
01.06.2014
Utilizing the case of the Integrating Very Poor Producers into Value Chains Field Guide, the article provides its strengths (extensive tools and worksheets, case studies from recovery and development settings) and limitations (very brief overview of market systems, only focuses on the implementation phase of market development, only focuses on integrating the very poor into markets). The knowledge assessment results of two workshops lead the author to question how much is learned in workshop settings. The online survey showed that the most used section of the Field Guide was ‘Linking Very Poor Producers with Buyers & Suppliers’. The 70 per cent experiential, 20 per cent from others, and 10 per cent formal ratios regarding learning led the author to recommend more on-the-job learning. Extensive feedback from the users provided lessons on improved tool design and capacity building for tool users. The article concludes with a number of recommendations: frontline workers need written guides; translate guides; include a monitoring and evaluation system; get organizational commitment to build frontline market facilitators' capacity; more research into the different methods of building capacity (workshops; written guides; a monitoring and evaluation system; and online and in person training events are likely the most effective combination). -
Development numbers: the political economy of data production from ‘above’ and ‘below’
01.06.2014
A review of two books collectively; Poor Numbers: How We Are Misled by African Development Statistics and What to Do About it and Who Counts? The Power of Participatory Statistics -
From the Editor
01.06.2007