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2012 Annual Conference and the 1st African SPM Conference
from 24/09/2012 to 29/09/2012
Kampala (Uganda)
The Africa Microfinance Network (AFMIN) will organize its 11th Annual Conference
and the 1st African SPM Conference in Kampala, Uganda, from September 24th to 29th, 2012
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Microfinance Regulation and Supervision
Regulating and supervising microfinance has become increasingly important as microfinance activities have grown throughout the world. In the past, microfinance was typically provided by a limited number of semi-formal and informal actors, including not-for-profit institutions, cooperatives, moneylenders, and other informal groups. Today, microfinance providers include multinational banks and other large deposit-taking financial institutions.
The telecommunications revolution is also opening the door to microfinance for other entities. Mobile network operators and payment service providers are starting to offer small-value electronic services to poor clients. Ordinary people are using online companies such as Kiva and Microplace to invest in microenterprises on the other side of the world.
Microfinance needs to integrate into the formal financial system to reach the hundreds of millions of people who still lack access to affordable financial services. However, the formalization of microfinance faces many challenges. Microfinance products have different costs and risk profiles from other financial products, so laws and regulations may need to be adjusted accordingly. Formal institutions must comply with many laws and regulations that are aimed at ensuring institutional and financial system strength and soundness, safeguarding customers’ deposits, preventing consumer fraud, money laundering and terrorist financing, and proper disclosure of product costs and terms.
Resources :
Expanding the Provision and Impact of Microfinance in Southern Sudan
31 Apr 2009, Atil, M. Outlining provisions and constraints to microfinance
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Does Regulatory Supervision Curtail Microfinance Profitability and Outreach?
Jun 2009, Cull, R., Demirguc-Kunt, A. & Morduch, J. Investigating impact of regulation on MFIs’ financial sustainability This paper investigates implications and trade-offs of regulation for MFIs, by examining impact on profitability and outreach to small-scale borrowers and women. The rapid growth of microfinance has brought increasing calls for regulation, but complying with prudential regulations and supervision can be especially costly for MFIs. Costs associated with regulation are likely to be higher for MFIs because of their small scale and the high share of skilled labor costs involved. The paper draws on a database that combines financial data on 245 of the world’s largest MFIs with newly-constructed data on their prudential supervision. Study results indicate that: Ordinary least squares regressions show that supervision is negatively associated with profitability; Supervision is associated with substantially larger average loan sizes and less lending to women. Study results are consistent with the notion that profit-oriented MFIs absorb the cost of supervision by curtailing outreach to market segments that tend to be more costly per dollar lent. In contrast, MFIs that rely on non-commercial sources of funding and are less profit-oriented do not adjust loan sizes or lend less to women when supervised, although their profitability is significantly reduced.
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The Regulatory Landscape of Microfinance in the CEMAC Region
Mamouda Mbemap,Specialist in Banking and Finance University of Buea, Cameroon, July 2009, 32p.
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The Business of Microfinance
