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Microfinance

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Title: Microfinance for Poverty Alleviation in Myanmar
Date of publication: May 2014
Description/subject: Abstract: "Microfinance has become a significant global phenomenon, as an effective means of providing financial services to poor and low-income people who don't generally have access to these services from formal financial institutions_ In recent years the concept of Financial Inlclusion has become increasingly widespread in the realization that the underserved population requires a broad range of such services, not merely savings and credit, to enable them to conduct their financial lives more efficiently. Microfinance assists poor people in gaining access to usefully large sums of money which they require for different purposes. It does so by means of innovations in loan contracts, which allow microfinance institutions (MFIs) to limit losses despite lacking good information on borrowers, and without requiring collateral as security. The main innovation is the "group lending" mechanism, to apply social pressure for contract enforcement. Another vital factor that strongly influences repayment is the promise of access to future loans and services. The two key principles that the industry generally focuses on are outreach (the scale of activity in terms of numbers of clients) and sustainability (the degree to which the MFI covers its costs). To become sustainable, MFIs charge rates higher than those of formal sector institutions (as their costs are also relatively higher), but well below those informal moneylenders, the main alternative source of credit for poor households. While empirical evidence has not been able to illustrate a significant impact on poverty alleviation, it does show that access to the right financial services helps poor people to build more secure lives by allowing them to more regularly spend resources to cover basic needs and protect themselves from risks. Microfinance has also had an effect on women's empowerment in terms of increased ownership of assets and an enhancement of their status in the household and at the community level, although this has been partially offset by the new set of challenges women face by bearing the responsibility repaying loans they have taken. In Myanmar the microfinance sector has developed rapidly since the government enacted a Microfinance Law in November 2011, but MFIs still play a very minor role in the provision of financial services in the country. The overall level of financial inclusion remains very low, with only 30% of adults using regulated financial services. The rural usage of financial services (53%) exceeds the urban usage (45%), which is a reversal of the normal global pattern. The reason for this is that development assistance to the micro-finance sector was focused on rural areas. The Microfinance Law has provided an enabling framework for the sector, but certain areas of the regulation may inhibit expansion of credit to priority areas, such as rural and agricultural (interest rate caps, loan size caps and access to capital). In order to strengthen the sector, it is recommended focus on the areas of policy, capacity development, capital incentives and research and data, with some suggested actions within each of these. Together with some complementary measures in other sectors, the promotion of a higher level of financial inclusion can offer the chance for poverty alleviation on a large scale in Myanmar."
Author/creator: Heinz Willems, Paul Luchtenburg
Language: English
Source/publisher: United Nations Development Programme (UNDP)
Format/size: pdf (1.4MB-reduced version; 2.6MB-original)
Alternate URLs: http://www.mm.undp.org/content/dam/myanmar/docs/Publications/PovRedu/UNDP_MM_Financial_Inclusion_En...
Date of entry/update: 03 July 2014


Title: Microfinance in Myanmar Sector Assessment
Date of publication: January 2013
Description/subject: "...The financial sector in Myanmar is small and underdeveloped. It is dominated by four state- owned banks and 19 private banks. Foreign banks currently are not allowed to operate in Myanmar, though 17 foreign banks have already established local representative offices in-country. Overall, the banking sector is severely constrained in its outreach to the unbanked, with some industry estimates and recent research suggesting that less than 20 percent of the population has access to formal financial services. The demand for microfinance 1 is high. However, few institutions provide microcredit, and unmet demand is estimated by industry experts at close to US$ 1 billion (UNCDF 2012). Demand for formal savings is difficult to estimate and may depend on regions. Past crises in the banking and cooperative sectors have eroded public trust in formal savings products. Use of informal providers of credit and transfer services in both urban and rural areas is widespread despite the additional risks and expense (10–20 percent per month) (LIFT 2012). 2 Two clear priority markets are rural finance, with 54 percent of the population involved in agriculture, and international remittances, with over three million people from Myanmar working abroad (Ministry of Labour 2012)..."
Author/creator: Eric Duflos, Paul Luchtenburg, Li Ren, and Li Yan Che
Language: English
Source/publisher: CGAP (Consultative Group to Assist the Poorest), International Finance Corporation (World Bank)
Format/size: pdf (145K)
Date of entry/update: 03 July 2014


Title: Microfinance Supervisory Committee Notification - Government of Myanmar Notification No. 1/2011 (English)
Date of publication: 23 December 2011
Language: English
Source/publisher: Government of Myanmar
Format/size: pdf (7K)
Date of entry/update: 05 June 2014


Title: Microfinance Law - Pyidaungsu Hluttaw Law No.13/2011 (English)
Date of publication: 30 November 2011
Language: English
Source/publisher: Pyidaungsu Hluttaw
Format/size: pdf (299K)
Date of entry/update: 03 July 2014


Title: Microfinance Law - Pyidaungsu Hluttaw Law No.13/2011 - အေသးစားေငြေရးေၾကးေရးလုပ္ငန္းဥပေဒ
Date of publication: 30 November 2011
Language: Burmese (ျမန္မာဘာသာ)
Source/publisher: "Myanmar Alin" ျမန္မာ့အလင္း 2 December 2011
Format/size: pdf (64K, 392K)
Alternate URLs: http://www.burmalibrary.org/KN/13-2011_Micro_finance_Industries_Law_2-12-2011_MA.pdf
Date of entry/update: 03 May 2012


Title: MICROFINANCE INDUSTRY REPORT Myanmar
Date of publication: 2010
Description/subject: "...The development of microfinance in Myanmar requires a concerted effort between the government, donors and the other microfinance stakeholders. Throughout Asia microfinance has proved to be an indispensable tool in poverty alleviation strategies. Depending on each country, the dominant model varies from NGO-MFIs type (Bangladesh) to government sponsored programs (Sri Lanka, Indonesia), to a mix of both (India). A handful of microfinance actors already exist in Myanmar and could pave the way to a NGO-MFIs structured model benefiting from the support of donors and government. This report makes two sets of recommendations. >> The first is aimed at donor countries, which in the short- to medium-term will play a key role for the development of microfinance. Given the lack of other sources of financing, donors should increase their support towards Myanmar’s microfinance sector as part of their effort to alleviate poverty and promote growth by improving and expanding access to affordable rural finance. Donors should also be willing to support any initiative aimed at introducing a specific microfinance regulatory framework. >> The second recommendation is aimed at the Myanmar authorities and other microfinance stakeholders. It is recommended that a specific microfinance regulatory and legal framework is introduced, enabling the development of a sustainable and effective microfinance sector. However, such framework should be introduced gradually and in a phased manner, after a process of consultation with and capacity building of relevant stakeholders..."
Author/creator: Sophie Vincent
Language: English
Source/publisher: Foundation for Development Cooperation, Banking With the Poor Network and Agence d’Aide à la Coopération Technique Et au Développement (ACTED)
Format/size: pdf (2.25MB)
Alternate URLs: http://www.bwtp.org/files/Resources/Industry_Assesment/BWTP%20Network-ACTED%20Myanmar%20Microfinanc...
Date of entry/update: 10 May 2012


Title: Microcrédit et changement social au Myanmar (Birmanie)
Date of publication: 2007
Description/subject: Une étude anthropologique et économique dans l’État Chin..."La recherche qui est restituée ici a pour objectif de comprendre l’influence d’une structure de microfinance dans une région enclavée du nord-est du Myanmar, l’État Chin. Depuis quinze ans, la microfinance a conquis ses lettres de noblesse. Fondée sur des crédits de petits montants et un principe de caution mutuelle au sein de groupes d’emprunteurs, elle permet de donner accès au crédit à des populations qui étaient exclues de l’accès à un crédit formel. C’est une des actions emblématiques de la lutte contre la pauvreté et un ensemble très riche d’expériences et de savoir-faire s’est constitué au travers des réussites et des échecs. Pourtant, si de nombreuses études d’impact ont été menées, rares sont celles qui replacent l’offre de crédit et la façon dont les clients l’utilisent dans le contexte plus large des évolutions sociales et économiques de la zone concernée. La plupart d’entre elles relèvent des « suivis de clientèle », des études de satisfaction. Les études d’impact, y compris celles qui ont été réalisées au Gret jusqu’à présent, se centrent sur les usages du crédit pour les différents types de clients avec une approche semi-quantitative : en fonction des objectifs, il s’agit de préciser la clientèle touchée et les éventuels exclus, de savoir quelles sont les principales utilisations (audelà des objectifs annoncés lors de l’emprunt), de mesurer quels sont les effets perçus par les clients, de mieux comprendre qui sont les non-clients et pourquoi certains anciens clients quittent le dispositif. Parfois, l’objectif est aussi de préciser les stratégies de recours au microcrédit dans les stratégies de gestion de la trésorerie familiale, par rapport à une « offre » préexistante (usuriers, commerçants faisant de l’avance sur récolte, entraide familiale ou de voisinage, etc.). Globalement, on se centre sur le crédit, ses usages, ses effets, avec le fait que la fongibilité du crédit (l’argent emprunté se fond dans la trésorerie familiale) rend difficile d’imputer tel effet au crédit lui-même. Les dynamiques économiques locales, les trajectoires des ménages emprunteurs même, restent souvent dans l’ombre. On lit des effets incontestables (une régulation des problèmes de trésorerie, des petites logiques d’accumulation, parfois des “success stories” construites au fil de la succession des crédits, parfois une baisse de la demande après quelques années) sans que les ressorts de ces effets soient véritablement mis en lumière. L’étude d’impact restituée ici part d’un tout autre point de vue. Confiée à un anthropologue du CNRS, spécialiste du Myanmar (François Robinne) et un agroéconomiste spécialiste de la microfinance (Grégoire Danel-Fédou), elle vise à comprendre si, dans quel sens et par quels processus, l’accès à la microfinance a eu des impacts sur les dynamiques sociales et économiques en cours dans la région. Si les nombreux entretiens approfondis portent bien sur le crédit et ses usages, il s’agit avant tout de le replacer dans ces dynamiques, de comprendre les stratégies économiques familiales dans un contexte en profonde évolution, et le rôle qu’a eu l’accès au crédit dans les trajectoires familiales, dans la capacité différenciée des acteurs à saisir les opportunités. Il s’agit aussi de s’intéresser à la façon dont l’offre de crédit et l’organisation qu’elle suscite (les groupes de caution, les comités villageois de crédit) s’inscrivent dans des rapports sociaux en évolution et contribuent à cette évolution. Il s’agit finalement de prendre au sérieux l’épaisseur du « contexte » et de se centrer sur la compréhension des dynamiques de changement en pays Chin dans sa diversité, pour resituer le crédit et le rôle qu’il joue. Cela ne signifie pas se désintéresser des usages du crédit, du fonctionnement des groupes ou des perceptions par les usagers, mais se donner les moyens de leur donner sens parce qu’on les replace dans les dynamiques d’ensemble..."
Author/creator: Grégoire Danel-Fédou et François Robinne
Language: Francais, French
Source/publisher: Éditions du Gret
Format/size: pdf (900K)
Date of entry/update: 16 November 2010


Title: A Survey of Microfinance Institutions in Burma
Date of publication: September 2005
Description/subject: 1. INTRODUCTION" In recent years much excitement has accorded the emergence of microfinance as a device for poverty alleviation and economic development. Microfinance, according to its advocates, creates the means for greater employment and income-generation, allows the poor to smooth consumption and meet social, religious and other obligations, offers financial protection from crises and disasters, encourages schooling and empowers the marginalised – especially women. Inspired by the example of such famous microfinance institutions (MFIs) as the Grameen Bank of Bangladesh, MFIs of all types and sizes have appeared all over the world. A myriad of models and methodologies have been employed by these MFIs, but certain key principles stand out. These include a presumption that access to credit is more important to the poor than the price of that credit, the widespread use of group and progressive-lending as a substitute for collateral, the maintenance of low administration costs through simplified procedures, the mobilisation of savings through deposit products, and the use of intensive motivational techniques (McGuire and Conroy 2000:2-3). International donors spend around $US1 billion per year on microfinance, and by 2005 almost 100 million people had access to microfinance in over 70 countries (ADB 2005:17). One country greatly in need of the benefits promised by microfinance is Burma. Isolated for four decades, and for most of this time in possession of a financial system repressed in the familiar socialist pattern, in recent years the country has made certain faltering steps in the direction of financial reform. Notwithstanding these, access to credit and other financial services (especially in rural areas) remains greatly restricted. According to the UNDP (2003:9) the ‘lack of access to credit to purchase agricultural inputs’ is the most important constraint to the capacities and incomes of Burma’s rural poor. Against this obvious need, various nascent microfinance schemes have emerged in Burma in recent years. Some of these are quite large, even by global standards, but their operations are scarcely known outside the country and the handful of NGO workers directly involved with them. The purpose of this paper, accordingly, is to attempt to shine a light on microfinance in Burma. The paper begins (Part 2) by examining the three large microfinance schemes in Burma that operate under the auspices of the United Nations Development Program (UNDP). This is followed in Part 3 by an analysis of some lesser schemes, most of which have been established by Western NGOs. Part 4 takes up the significant challenges to microfinance in Burma, and the barriers and opportunities to it forming the basis of a sustainable financial system. Part 5 concludes.
Author/creator: Sean Turnell
Language: English
Source/publisher: "Burma Economic Watch" 1/2005 pp 26-50
Format/size: PDF (285K) 21 pages
Alternate URLs: http://www.econ.mq.edu.au/
Date of entry/update: 20 August 2010


Title: Micro-Credit Project
Description/subject: "...Sustainable Livelihoods through Micro-Credit for the Poorest is one of 10 projects under the United Nations Development Programme's multisectoral Human Development Initiative Extension (HDIE) programme in Myanmar. It provides credit and assistance in building small businesses to people in 11 of the poorest townships in Myanmar: three in the Delta (Ayeyarwady Division), five in Shan State, and three in the Dry Zone of central Myanmar. The Micro-Credit project targets especially those who would not normally qualify for credit through the banking system: women, the landless, and other marginalized groups. Experience elsewhere has shown that with the right types of support, these people are excellent credit risks; repayment rates often approach 100%. Overall, it is hoped to benefit about 30,000 of the poorest households (200,000 people) in the 11 townships..."
Language: English
Source/publisher: UNOPS
Format/size: pdf (122K)
Date of entry/update: 06 December 2010