Microfinance project

Five microfinance initiatives have been awarded grants of USD 50,000 each as winners of the 2003 Rural Pro-Poor Innovation Challenge (RPPIC).

The RPPIC is a global competition set up by IFAD and the Consultative Group to Assist the Poorest (CGAP) to support rural finance innovations with a focus on sustainability. Launched in late 2002, the RPPIC typically awards grants to organizations working with poor people in remote areas. However, candidates working with poor, marginalized clientele in urban or semi-urban areas may also be considered for funds.

The winners were judged against entries from more than 300 institutions. All the grant recipients are relatively small organizations, and plan to use the funds to serve mainly women and elderly people.

One of the winners, Fonkoze, a microfinance institution in Haiti. will use the money to improve low-cost remittance services for rural poor people. Three institutions in Uganda will share their USD 50,000 to finance village phone services, based on the successful Grameen Village Phone program in Bangladesh. Another grant will allow a finance centre in Bangladesh to expand its services among the elderly poor. An Afghani institution, whose microfinance services for women were previously limited to refugee areas, will use its grant to extend into rural areas. Two microfinance providers in Uzbekistan will partner to use their USD 50,000 to offer financial services to women in the largely poor Ferghana Valley.

In 2005, the winners will report on their projects' impact and lessons learned, and continue such reporting over a five-year period.

When IFAD announced the 2003 winners last November, it also released a shortlist of 10 finalists deserving donor support. The shortlist candidates will be considered for possible funding by IFAD, CGAP's donors and other external donors. For instance, the Guatemalan microfinance institution, FAFIDESS, was short-listed for its plan to use Palm Pilot technology to increase efficiency, reduce costs and improve service to its poor rural clients. The proposal has already been shared with IFAD's Latin America and the Caribbean division for possible grant funding in 2004.

Some proposals that did not make the shortlist have also been considered by IFAD for funding. Pride Africa, an American non-profit organization with regional offi ces in Kenya. was not a finalist due to its large size. But the organization's plan to use communication technologies to relay financial and market information to Kenyan farmers stirred great interest among IFAD's Eastern and Southern Africa division. Once the proposal was revised to complement existing IFAD projects in the area, IFAD awarded Pride Africa an IFAD/NGO Extended Cooperation Programme grant for USD 95,000 in 2003.

The proposal from Kamurj, a non-profit organization in Armenia. was not short-listed because it was already under consideration for an IFAD/NGO cooperation grant. In 2004, IFAD's Central and Eastern Europe and the Newly Independent States division hopes to back Kamurj's plan to help poor people set up farmer support groups, learn marketing skills and access markets and microfinance services.

Through the RPPIC, a total of 15 rural finance initiatives have received grants of USD 50,000. In 2002, 550 proposals were submitted and 10 were awarded grants. Winners of these grants began reporting their results in mid-2003.

In 2002, 24 proposals were short-listed. and two were picked up for additional funding after being reformulated to complement IFAD loan finance projects in the same regions: the CARE Gikongoro Program received USD 150,000 to increase access to credit services and markets for farmers and other micro-businesspeople in rural Rwanda; and the Mennonite Economic Development Associates program was given USD 150,000 to help organize self-managed savings and loan groups in Tanzania.

2003 Rural Pro-Poor Innovation Challenge Winning Proposals

Uganda: Grameen Foundation USA, Foundation for International Community Assistance (FINCA Uganda ), Ugandan Women's Finance Trust (UWFT) and Foundation for Credit and Community Assistance (FOCCAS) have developed an initiative to help Ugandan women start village phone businesses. Through the Grameen Foundation USA and in partnership with Uganda 's leading mobile phone carrier, MTN-Uganda, the three microfinance institutions will loan money to rural women so they can buy cellular phones and other equipment, and sell talking time to people in some of the most remote villages. While women earn income as the "village phone lady", the microfinancers will gain revenue by collecting interest and acting as "airtime" distributors. The institutions will use these returns to pay for research and training, and to help additional poor, rural families start village phone businesses.

Afghanistan . Parwaz has given loans to more than 250 women living in refugee camps outside Kabul since late 2002. The microfinance provider now seeks to expand its services to poor women in rural areas and will use its grant to cover operating expenses and loan funds. Parwaz is the first microfinancer to operate in Afghanistan and be led by Afghan women. Since Parwaz is staffed by local people, their operations are more cost efficient, and better equipped to deal with local power structures in areas where the central government has not fully established authority.

Haiti . Fonkoze serves as the country's alternative bank for the organized poor, and will spend its USD 50,000 educating poor people about its financial services and reaching the poorest of its potential clients. Fonkoze will pay for publicity in ethnic Haitian print media and radio, in Haiti and the US. to broaden awareness of its services, particularly its remittance service. The remittance service costs a flat fee of USD 10 per transfer, rather than the average USD 0.25 per dollar that other transfer companies charge. In addition, Fonkoze offers better currency exchange rates, the option to collect funds in rural areas, and the ability to link transferred funds to other financial services, such as savings accounts.

Bangladesh . Resource Integration Centre (RIC) works to establish the creditworthiness of older clients in Bangladesh and provide them with access to microfinance. An established NGO with about 35,000 clients, RIC will use its grant money to expand its reach among older clients and continue researching the potential of microfinancing for seniors. Older people in Bangladesh. especially women, are often unable to earn wages. Excluded from the workforce because of a preference for younger workers, their limited physical capacity, or a range of other reasons, they often add to the financial hardships of already poor families or fall into abject poverty themselves.

Uzbekistan . Microfinance Program (MFP) Barakot, and the Microfinance Centre (MFC) for Central and Eastern Europe and the New Independent States will share USD 50,000 and pool their efforts to deliver improved financial services to poor women in the Ferghana Valley. The MFP and the MFC will work together to study local needs and causes of vulnerability in the valley, where more than 4 million people live in extreme poverty. The results will help develop more effective microfinance products to meet the specific needs of the local clientele. The two institutions will also use the grant to document learning and share it with other rural microfinancers. MFP Barakot is a microfinance NGO that serves poor Uzbek women, and the MFC is a technical resource centre that supports regional microfinance practitioners.

2003 Rural Pro-Poor Innovation Challenge Shortlist

1. Guatemala . FundaciГіn de AsesorГ­a Financiera a Instituciones de Desarrollo y Servicio Social (FAFIDESS) sought to use a grant to introduce Palm Pilot technology to its rural operations, with the objective of

making its microfinance services by increasing staff productivity and lowering transaction costs. FAFIDESS is a microfinance institution that uses community banks, solidarity groups and individual credit to give loans to low-income women.

2. Tanzania . KCGA Udzungwa (KUS) and ROA Kiruvi (RKS) Savings and Credit Cooperative Societies proposed using a grant to build their loan funds, so they could diversify member services and reach people who are often denied bank financing. KUS and RKS are rural microfinance institutions operating on a cooperative membership basis, with most of their clients involved in the sugarcane industry.

3. Togo . Cerles des Amis Unis pour la Sante (CAMUS), an organization working to improve healthcare access for uninsured, vulnerable people in poor rural areas, sought a grant to help keep its operations afloat and adequately managed. CAMUS uses taxi-moto drivers to communicate directly with people in remote areas, spreading health-related awareness and education. It also provides savings and loans services to facilitate access to pharmaceuticals and medical services.

4. Togo . Tous Impliques dans la Mobilisation des Ressources Locales et la Promotion des Actions Communautaires (TIMPAC) is a microfinance institution that applied for an RPPIC grant to pilot a savings program aimed at helping families afford their children's education. TIMPAC already provides more than 7,000 clients with a variety of services, featuring a strong focus on entrepreneurship for poor women.

5. Uganda . Support Organization for Micro-Enterprises Development (SOMED) proposed using RPPIC funds to help highly vulnerable people become microfinance clients, through savings services, education, training and more. Working in rural areas, SOMED aims to empower extremely poor people, especially women, by giving them access to financial services and entrepreneurial skills.

6. Bangladesh . Jagorani Chakra, an NGO operating on local, regional and national levels, pursued grant support to help raise the socioeconomic status of women previously excluded from development or microfinance programmes. Jagorani Chakra runs programmes that target very poor women and help them organize, mobilize savings and access local loan resources.

7. Uzbekistan . Daulet is an NGO that works to improve poor families' living standards by encouraging women to become entrepreneurs and self-employed with microloans. An RPPIC grant would have helped Daulet conduct market research, expand its reach into rural areas and diversify its services.

8. Chile . FundaciГіn Miguel Kast Rist applied for funds to carry out a microenterprise project in Loncoche, an area predominantly inhabited by indigenous people and farmers. Working mostly with young, poor women who head households in indigenous and rural communities, this organization helps poor people overcome poverty by offering them training and education on microenterprise management.

9. El Salvador: AsociaciГіn Cooperativa de Aprovisionamiento, Ahorro y CrГ©dito la Guadalupana de Chirilagua de Responsabilidad Limitada sought RPPIC support to expand one of its family transfers and remittances projects. This financial cooperative works with local churches, government and institutions like Catholic Relief Services to provide savings and credit services to rural and hard-to-reach clients, mainly women.

10. Peru . Entidad de Desarrollo para la PequeГ±a y Microempresa (EDPYME) Confianza S.A. planned to use the USD 50,000 grant to extend its rural reach, develop new products and optimize its lending technology. Among this institution's wide variety of financial services, it offers support to promote entrepreneurship among poorer people, mostly female heads of households.

2002 Rural Pro-Poor Innovation Challenge Winners

1. India. International Justice Mission (IJM) is using RPPIC funds to obtain the legal release of individual victims of bonded labour. The money also helps IJM prevent bonded labour - also known as "debt bondage," when a person's labour is demanded as a means of repaying a loan - by offering microfinance and microenterprise opportunities, through local finance institutions, to former bonded labourers and people at risk.

2. Peru. PRIMSA, a microcredit NGO, is using their grant to seed a contingency fund for small producers' associations. PRISMA works with community banks and solidarity groups, and is developing a pilot program to help small farmers manage risk and access credit.

3. Honduras: AsociaciГіn Proyectos y Iniciativas Locales para el Autodesarrollo Regional de Honduras (PILARH) is using their USD 50,000 to extend credit for poor farming families to access land. The association offers loans and social services to families with small businesses, mostly in agriculture.

4. Mexico. Conservation International's Conservation Coffee Program is using its RPPIC award to bring low-interest loans to small-scale coffee farmers in Colombia via the Colombian Coffee Federation. The programme offers credit services, business programmes, and training in sustainable agricultural practices to poor coffee farmers in Mexico and Colombia.

5. Nepal. Small Farmer Cooperatives Ltd is using its grant to establish a trust fund at the Small Farmers Development Bank, which will allow it to extend more deeply into remote areas of Nepal. A system of innovative cooperatives, Small Farmer Cooperatives offers a range of savings, insurance, and credit products designed to fit agricultural activities.

6. Kyrgyzstan. Bai Tushum Financial Foundation is using its award to develop new financial services for disadvantaged women working in the diary industry. The foundation will provide loans to individual women purchasing milk cows, and to groups of women buying dairy equipment.

7. Kyrgyzstan. Kyrgyz Agricultural Finance Corporation has an extensive branch network that is utilizing its RPPIC grant to offer a new product - microsavings. The corporation is also working with NGOs to reach more poor people and educate them about the benefits of savings.

8. Albania. Mountain Areas Finance Fund (MAFF) is spending its grant to extend the geographical reach of its financial services, and to diversify its range of products. MAFF serves remote highland villages with little access to financial institutions, adapting its services to the needs of local people.

9. Moldova. Moldova Microfinance Alliance (MMA) is using its USD 50,000 to set up savings and credit associations in three new locations - all small rural villages. MMA is also installing cash machines at its 20 best-performing associations, linking them to the alliance's partner commercial bank.

10. Togo. Association pour la Promotion des Groupements Agricole is using its grant money to support credit programmes that help expand and diversify the income-generating activities of its clients. mainly poor women.

2002 Rural Pro-Poor Innovation Challenge Shortlist

  • AREGAK ( Armenia )
  • CRECER ( Bolivia )
  • FINRURAL ( Bolivia )
  • BASIX ( India )
  • SPANDANA ( India )
  • PRIDE AFRICA ( Kenya )
  • IMMCC ( Philippines )
  • DAULET ( Uzbekistan )
  • MERCY CORPS ( Uzbekistan )
  • AGRIFLORA ( Zambia )
  • UMEC ( Senegal )

Source: www.ifad.org

Category: Payday loans

Similar articles: