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Editorial Editorial - PlanetFinance.org - PlaNet Finance Powered By Docstoc
					        December 2008 - January 2009                                     PlaNet Finance Newsletter


                                               Rural Microfinance

Editorial
Due to their efforts in fully opening their economies to trade, developing countries have ex-
tensively suffered the economic burden of the combined current financial crisis with the late
recession periods, mostly exposing the liability of their agricultural sector. Further than the
difficulties faced by populations (in particular in rural areas) in meeting the increase on raw
material and food prices, the main concern in addressing the issue is the lack of sustainable
wealth creation and insufficient income generated.

As mentioned in Katja’s article, the majority of poor people lives in rural areas and is highly
dependant on agricultural activities. In that way, pro-poor growth should favour the develop-
ment of rural activities, as well as higher productivity and income for rural populations.
                                                                                                       Cheikh Ahmadou Diop
Within this framework, microfinance appears as an important development tool bringing finan-                Microfinance Expert
cial services to the rural populations, whose activities are considered more risky and less pro-
fitable. Such characteristics highlight the need to adapt the provision of services such as sa-       Rural Microfinance Project
vings, credit, microinsurance, money transfers and financial transactions via mobile phones.
                                                                                                        PlaNet Finance Sénégal
In addition to promoting the creation of Income Generating Activities, supporting the develop-
ment of affordable and sustainable financial services contributes to strengthening rural popu-
lations. The advancement of “pro-poor” financial services should particularly boost investment
in the agricultural sector, but also be defined by inclusive policy-making (involving lassors,
local actors etc…)

PlaNet Finance’s resolution for 2009 is to support the evolution of rural microfinance and ena-
ble microentrepreneurs to generate sustainable enterprises via the reinforcement of exchange
plate-forms. In particular, experts will advocate for greater exchange opportunities, capitalisa-
tion and diffusion of best practices.

PlaNet Finance team wishes you a happy new year.


Microentrepreneur of the Month
Liu Qinghe, China, Gansu region.

Winner of “ International Microfinance Awards ” in the “ Women ” category and client of TWRDA (Tong Wei Rural
Development Association)
After graduating from primary school, Ms Liu attended vocational training, becoming familiar with
the use of sewing machines and textile manufacture. In the year 2000, she participated in the
“Women and Development” programme held by TWRDA microfinance programme. She not only
became the director of a loan centre for the program, but also through this new responsibility came
to recognize her own value.

At this point it was evident that Ms Liu’s own life situation was much better than before, but she
couldn’t help noticing the large number of young women who were out of work once the busy plant-
ing and harvesting seasons were over, for they didn’t have any skills to offer besides farming. The
“Women and Development” programme experience made her realize that she could help other
women reach their potential. Therefore, with TWRDA’s support, she set up some sewing machines
and taught classes of women how to cut and make up garments. Between 2002 and 2007, she ran
garment sewing and cutting trainings for 1,300 young farmer women and paid special attention to
22 young women who either were ultra-poor, or who had a disabled member of the family. These
days Liu Qinghe encourages her “graduates” to start their own small businesses, using her inte-
grated model of fabric purchasing, manufacturing, training and sales as a viable model for growth.
TWRDA is a PlaNet Finance partner for its microfinance and renewable energies program.
                                                              1
  Article of the Month

Supporting small farmers in developing countries: an answer to the food crisis?

What can be the role of microfinance services?

These days the current international         titutions to offer their services cost      (GTZ) pointed out success stories
financial crisis attracts far more of the    effectively in rural areas. Small-scale     about cooperation with local partners
public and media attention than issues       farmers’ income is subject to seasonal      and organisations in rural areas such
that are just as important such as the       fluctuation. They often do not have         as savings and credit cooperatives.
food crisis or climate change. The hig-      land titles to collateralise their loans    These partners enhance the local sa-
hly dramatic food insecurity in the          and transaction costs are high due to a     vings- and investment cycles and
world today has become more urgent           lack of infrastructure and lower popu-      some of them even offer a wider pro-
than ever: the number of starving peo-       lation density. Furthermore agriculture     duct range to their clients including
ple has increased by 50 million to a         activities do not lead to quick returns     professional marketing of agricultural
total of 900 million people between          so rural microfinance institutions can-     products. The latter is of special impor-
2006 and 2007.                               not count on rapid repayments – as an       tance as small-scale farmers often face
                                             essential characteristic of microfinance    major difficulties in storage and distri-
Microfinance experts gathered during a       lending technology.                         bution of their products rather than
panel discussion at the French embas-                                                    producing them. This is one reason
sy in Berlin on November 13th, 2008          Technical Innovations seem promi-           why poverty in rural areas did not de-
to discuss the role small-scale farmers      sing to offer accessible and fairly         crease while food prices increased
could play in improving food security        priced saving services to the rural         considerably in the last year.
and the challenges of offering adapted       poor.
microfinance products.
                                             Sébastien Duquet of PlaNet Finance
                                             stressed the fact that the access to        « Is microfinance the key to develop-
                                             these services is as important as the       ment?» asked the host of the evening,
                                             costs for the services for the clients.     Mr. Ralf Südhoff of WFP(UN World
Access to microfinance                       Mobile banking – microfinance services      Food Programme). « Can it eradicate
                                             carried out with a mobile phone – can       poverty for good?» Worku Tsega of
services can provide re-                     offer reasonably priced and convenient      Wisdom Ethiopia – a microfinance ins-
levant contribution to                       services even to clients in remote rural    titution (MFI) – stressed: Poverty is a
food security in the lon-                    areas. Mobile banking offers accounts       complex issue and microfinance servi-
                                             linked to telephone providers which         ces cannot replace public social securi-
ger run.                                     makes transactions simple and ensures       ty schemes, health systems or infras-
                                             the safe deposit of savings. While only     tructure. Nor can microfinance replace
                                             one billion people around the globe         humanitarian assistance in crisis situa-
                                             have access to financial services, three    tions but it can be helpful – if wisely
                                             billion own a mobile phone. This calls      applied – in order to cope with crises
Many of the poor, suffering from             for an innovative approach to banking       in a better way and maybe - in the
the food crisis, are small-scale far-        to be taken into account for the future.    longer run – even prevent these crises
mers.                                                                                    from happening. Due to the sustainabi-
                                             Microinsurance is needed to pro-            lity of the services, large donors such
Small-scale farmers seem to be the           tect small-scale farmers from busi-         as the European Union support microfi-
appropriate target group for microfi-        ness related risks.                         nance programmes, stated the tempo-
nance products in order to alleviate
                                                                                         rary director of the EU commission in
food insecurity. 75% of the poor popu-       Michael Anthony of Allianz explained
                                                                                         Germany, Mrs. Dietlind Jering.
lation in developing countries live in       successes of micro insurances. Espe-
rural areas and 2/3 of them work in          cially big insurers are capable of diver-
the agricultural sector. Furthermore         sifying the risks and therefore can of-
they are all the more vulnerable while       fer adequate coverage. For example                               Katja KIRCHSTEIN
generating their income, e.g. because        index-based insurance, like weather-               PlaNet Finance Deutschland e.V :
of crop failure due to increased floods      based crop or livestock insurance, is
and draughts – worsening in the re-          offered to small farmers in rural areas.              kkirchstein@planetfinance.org
cent years because of climate change.        The index can for example be based on
Microfinance services in the form of         rainfall data in the region over the past
savings, micro credits or micro insu-        30 years.
rances can help them to overcome
acute losses of income due to natural        However, these insurances can be
                                                                                                  Useful Links
disasters or to diversify sources of         ineffective and too costly in marginal      http://www.ruralfinance.org/
income by developing new business            farming areas and in areas where wea-
activities. Microfinance can thus contri-    ther trends are highly unpredictable.       http://www.ifpri.org/themes/microfina
bute to the smoothening of consump-                                                      nce/microfinance.htm
tion and therefore ensure food security
to an extent.                                                                            http://www.inafiinternational.org/publi
                                             Additional services are needed so           cations.html
Offering microfinance services in            that poor farmers can actually be-
remote areas is a challenging mis-           nefit from their activities.
sion.
                                             Wolfgang Bücker of Deutsche Gesell-
It is very difficult for microfinance ins-   schaft für Technische Zusammenarbeit


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            News

Microfinance and banana pro-           New rural finance products in Madagascar

duction in Belize.                     PlaNet Finance teams and Pohl Consulting have completed a 16 month programme
                                       aimed at developing new financing techniques in rural Madagascar.
In December, PlaNet Finance
completed a project aimed at           This programme is centered on integrated rural development, which aims at going
accompanying banana producers          from a subsistence economy to a market economy. The global objective is to in-
in the south of Belize.                crease investments in rural areas in the goal of reaching economic growth and to
                                       start reducing poverty. Activities are concentrated on five zones of intervention
Indeed, microentrepreneurs have        (Vakinankaratra/Amoron’i, Mania, Menabe, Boeny, Diana, Atsinanana).
to face various difficulties such as
the lack of access to financing        Financial products developed are the microleasing, mixed credit (intended for cou-
and insufficient training to deve-     ples), the « Grenier Communautaire Villageois » (allowing the storage of products
lop their activities.                  and obtaining credit), the «Crédit Global Garanti» (allowing to finance combined
                                       needs). Moreover, two insurance products, one death/disability insurance product,
PlaNet Finance has reinforced a        one crop index insuranse product, were proposed to MFIs and to insurance compa-
local    financial    intermediary     nies.
(TTCU) in order to promote ac-
cess to financing and providing        This programme ended with 6 regional workshops and a national workshop brin-
training for the workers in the        ging together actors in finance, microfinance and agricultural sectors in Madagas-
banana sector in Belize.               car.

PlaNet Finance was launched on
bid by the European commission
to settle this project.                                            2-
                                       PlaNet Guarantee launches a 2-year micro insurance programme with FMO

Study on Nepalese small and            On December 8th 2008, PlaNet Finance signed a 2-year Agreement with FMO,
                                       the entrepreneurial development bank of the Netherlands, for the develop-
medium enterprises                     ment of innovative microinsurance products specially designed to protect MFIs
                                       and microentrepreneurs in Latin America and Africa.
PlaNet Finance was selected by
the SEDF bank and the Interna-         The strategy will be implemented through PlaNet Guarantee, PlaNet Finance’s
tional Finance Corporation to car-     subsidiary dedicated to microinsurance.
ry out a study on the « SME/
SMI » sector in Nepal. The objec-      The project aims at implementing funeral insurance, hospitalization plans and
tive of this project is to analyze     crop insurance through different delivery channels. It will be carried out in 8
the financial services needs and       countries: Argentina, Colombia, Guatemala, Peru, Côte d’Ivoire, Egypt, Mali,
demands of Nepalese « SME »
                                       and Senegal. Foremost, the project will start in January 2009 with the reali-
The first phase of the study, that     sation of market studies in order to draw conclusions on the microinsurance
was completed in December, was         products adapted to each context.
aimed at segmenting and analy-
zing the « SME » sector. In the
second phase that will be put in
place in the semester of 2009,

                                                            January—
                                                   Agenda - January— February 2009
our teams will be devoted to de-
veloping new products intended
for small and medium entrepri-
ses.                                     Events in France organised by PlaNet Finance :

Youth in precarious situations in        January 20: CFM training on the theme « Microfinance products ». More info:
Morocco                                  http://www.cfm.org

The youth in precarious condi-           February 2: PlaNet Finance/Ernst & Young breakfasts on the theme
tions project will end after 2           « Financing and support to Very Small Entreprises and microentreprises in the
years in activity.                       world and in France ». Information: lespetitsdejeuners@planetfinance.org

This project was aimed at fighting       February 3: CFM training session on the theme « Individual credit in microfi-
youth unemployment in a country          nance ». Information cfm@planetfinance.org
where 40% of the population is
under the age of 25. This pro-           Worldwide events:
gramme has set out to reinforce
the capacity of professional inser-      January 21-23: International Conference on microfinance, Pondichery, India.
tion associations, the training and      More info: http://www.pondiuni.edu.in/icomfi2009/
accompanying of young beneficia-
ries as well as the development of       January 22-23: Microfinance as a Tool for Peacebuilding, Cali, Colombia.
a microcredit product. Thus, on          More info: http://microfinance.alvaralice.org/?q=node/1&l=en
100 young people, 66 have either
found a job or an internship or          January 26-27: Implementing the EU Microcredit Initiative - What can we
they have continued their studies.       learn from developing and transforming countries?, Berlin, Germany. More
                                         info: http://www.chabal.eu/64.html



                                                         3
           PlaNet Finance

  PlaNet Finance is an international organisation whose mission is to fight against poverty through the develop-
  ment of microfinance.

  As a microfinance expert, PlaNet Finance provides a diversified set of service to help increase access to
  financial services for the poor :

         PlaNet Finance Advisory Services, the technical assistance and consulting provider;

          PlaNIS, the business unit specialised in microfinance fund advisory, structuration and management;

          Planet Rating, the microfinance rating agency;

          MicroCred, the microfinance investment company;

          PlaNet Guarantee, the microinsurance specialist;

          FinanCités, the venture capital company for microentrepreneurs in French deprived urban areas.

         Microfit, Software solutions for microfinance institutions.

         PlaNet University/ CFM, training center on microfinance

Based in Paris, PlaNet Finance is active in more than 60 countries with an international network of 40 offices.




In 2008, PlaNet Finance Advisory Services managed 101 programs with microfinance institutions (MFIs), reaching al-
most 9 million clients. Planet Rating conducted 96 rating missions, and MicroCred now runs 4 microfinance institu-
tions. PlaNet Guarantee has been able to provide microinsurance products to 140 000 microentrepreneurs. PlaNIS
set up the financing for 40 MFIs mainly on behalf of responsAbility funds /Credit Suisse and MicroFund for a total of
USD 80 million. In one year, FinanCités financed 21 microentreprises in France for a total of EUR 1 million.

PlaNet Finance gathers more than 550 staff.
                                    You can download PlaNet Finance’s Annual Report on

                                                   www.planetfinancegroup.org




              For suggestions or comments, please contact: communication@planetfinance.org
                                 Published by PlaNet Finance 13, rue Dieumegard 93 400 Saint-Ouen France
                                                            All right reserved
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