Submitted by: CSRwire
Posted: Jul 08, 2009 – 12:00 AM EST
July 7, 2009 -
“So, Muhammad Yunus is walking down the street when he slips on a banana skin…” But seriously, playing the classic joke on the 2006 Nobel Peace Laureate highlights the fact that microfinance-- the practice Yunus pioneered to make small loans to poor women to leverage themselves out of poverty -- is not immune from the risks plaguing the rest of the global economy.
A year-and-a-half ago, when the Center for the Study of Financial Innovation (CSFI) first applied its trademark “Banana Skins” risk assessment methodology to microfinance, this assessment was furthest from the minds of the microfinanciers surveyed. Weaknesses in management and corporate governance topped the list of concerns of the 300-plus industry players from 74 countries whose comments informed the Microfinance Banana Skins 2008 report. While these problems have not fallen off the radar screen, they’ve been supplanted by a list of issues that mirrors those facing mainstream finance, according to the Microfinance Banana Skins 2009 report released today.
A surge in bad loans, shortages of liquidity and funding, and declining profitability -- all risks stemming from the global financial crisis -- headed up the concerns of the 400-plus practitioners, investors, regulators and analysts in 82 countries surveyed in the latest report, co-sponsored by Citi Foundation and the Consultative Group to Assist the Poor (CGAP) and supported by the Council of Microfinance Equity Funds (CMEF.)
“These findings turn the earlier survey on its head,” said David Lascelles, the CSFI senior fellow who authored the report -- and pioneered the Banana Skins methodology over a decade ago. “Last year’s result reflected the traditional view that microfinance operates in a world of its own with abundant funding and loyal customers. But the crisis has shown that it is also exposed to the shocks of the ‘real economy.’”
Indeed, the survey reveals the risk that some microfinance institutions (MFIs) may fail, like a slew of their mainstream counterparts. On the bright side of the road, the respondents also note that MFIs cut their teeth in stressful markets, and so may be more resilient at weathering the stormy economy.
Bill Baue's and Francesca Rheannon's commentary is but one integral part of our Weekly News Alert service. If you are interested in subscribing to this service please click here.
CSRwire can now be found on Linkedin, Facebook, and now Twitter.
About CSRwire's Weekly News Alert
CSRwire's free weekly News Alert is a summary of the latest and most important CSR news from the week, put into context with local and global news. The Alert highlights noteworthy initiatives and informs the CSR and Social Responsible Investing communities including professionals, analysts, academics activists, and consumers.
CSRwire is the leading source of corporate social responsibility and sustainability news, reports and information. CSRwire members are companies and NGOs, agencies and organizations interested in communicating their corporate citizenship, sustainability, and socially responsible initiatives to a global audience through CSRwire's syndication network and weekly News Alerts. CSRwire content covers issues of Diversity, Philanthropy, Socially Responsible Investing (SRI) Environment, Human Rights, Workplace Issues, Business Ethics, Community Development and Corporate Governance.
For more information, please contact:
For more from this organization:CSRwire