Microfinance Group
International Microfinance Regulation and
Supervision Meeting
Salvador
June 1st 2005
Bob Annibale
Global Director
Citigroup Microfinance Group
1
How we define Microfinance?
Microfinance Group
Microfinance is the provision of a broad range of financial services to poor and
low-income people who do not have access to formal financial services such as:
-
deposits
loans
payment services
money transfers
insurance
Microfinance services are provided by three types of sources:
1. Regulated financial institutions, such as banks, credit unions, consumer
finance companies, postal savings banks and cooperatives
2. Nongovernmental organizations (NGOs)
3. Informal sources such as money lenders, shopkeepers, and “traditional”
savings groups
2
Poverty and Microfinance
Microfinance Group
“Poor people borrow some of the time but save all of the time”
credit
Entrepreneurial
Poor
Entrepreneurial Poor
People who are slightly below the
poverty line.
insurance
Self Employed Poor
savings
Laboring Poor
Very Poor
Self-Employed Poor
Poor people who are meeting their
basic needs by running
microbusinesses
Laboring Poor
Farm laborers, domestics and
unemployed workers
Very Poor
People who have few (if any) assets –
very limited chances to earn money
The Poverty Pyramid
*Source: FINCA’s Poverty Pyramid
3
Citigroup Microfinance Group –Expanding
Access to Financial Services
Microfinance Group
The Citigroup Microfinance Group works with MFIs as
clients and partners to expand access to financial
services and products to the “unbanked” who are not
currently reached by the formal financial sector.
Credit
Remittances
Savings
Insurance
• The Citigroup Microfinance Group reports to the CEOs of Citigroup’s Global Consumer Group
and its Corporate and Investment Bank
• Multi-Product/Multi-business and geographic coverage.
4
Strategic Partners and Products
Funding the Sector

Lending products

Bond Issues

SBLC backed finances/Funds

Securitizations
Multilaterals/Bilaterals
Regulators
Partnering with the sector
and Individuals

Loan partnerships
Microfinance Group
Banking the sector

Cash Management

Remittances

Treasury

Savings

Investment Services

Insurance

Agencies
Working with Networks
Rating Agencies

International Finance Corp (IFC)

Women’s World Banking


Overseas Private Investment
Corporation (OPIC)
Inter-American Development Bank

Opportunity International

Fitch

Accion

Microrate

FINCA

M-CRIL

The Microfinance Network

Moody’s




(IDB)
Asian Development Bank (ADB)
(CGAP
Central Banks/Min. of Finance
Standard & Poor’s
 Grameen
5
Market Profile – Mexico
Microfinance Group

14 Consumer Sofoles (Consumer Finance companies) such as Credito Familiar
and Compartamos

71 MFIs: Include Sociedades Financieras populares, Asociaciones Civiles and
one Sofol. Approved by the Ministry of Economy

680 cajas and cooperatives: Organized in Federations and Confederations
A
B
C+
15 MM
BANKS
C
10 MM
C5MM
D,E
40 MM
SOFOLES
MFI’S
CAJAS AND
COOPERATIVES
Working Age Population
6
Compartamos – Banamex (Citigroup) Partnership
Microfinance Group
Compartamos is Mexico’s leading MFI with over 330,000 clients, mostly rural self-employed
women, and a balance sheet of over $110MM
•
•
Cash Management:
–
Over 45,000 women in rural communities cash loan checks in Banamex every 16
weeks
–
Compartamos customers make over 33,000 deposits per month at Banamex
branches to service debt. For most of them, it is the first experience in a bank.
Savings:
–
•
42,000 microsavers (Compartamos clients) are already saving in Banamex
Financing
–
Banamex arranged:
• Two private placement bonds issued in 2002 and 2003
• The first investment grade bond for an MFI in 2004
• Banamex clean credit line enhanced by OPIC
•
Insurance
–
Microinsurance product with Seguros Banamex to be launched
7
Working Women’s Forum – Citibank India
Microfinance Group
WWF is a cooperative bank with 700,00 women members in 15 branches in three
states in India.
Entered into a loan agency partnership:
•
WWF originates and services microloans to entrepreneurs
•
Citi India funds and assumes all credit risk on loans
•
Citi India reimburses WWF for agreed servicing expenses
Results to date:
•
Disbursed over 10,000 loans with an average size of under $75 and tenure of 10
months
•
Low NCLs to date and only arrears relate to tsunami-impacted clients
•
All loan data is held within Citibank India’s credit MIS
•
Program will be increased in number of loans and branches reached
•
WWF program will be replicated with other partners
Working Women’s Forum
8
Scalable, Replicable…Partnerships
Microfinance Group
Leverage Citigroup relationships and existing Corporate knowledge of the sector – long
history of working philanthropically in microfinance

Citigroup to work with leading microfinance institutions and networks to pilot, partner
and to gain experience – collaboration

Initiatives to be scalable and replicable

Initiatives to be cost-effective and commercially sustainable

Initiatives to have measurable results – “double bottom line”

Microfinance initiatives and activities in Mexico, India, Peru, Ecuador, Kenya, Uganda,
Bangladesh, etc….Brazil
9
Brazil – Observations on expanding access to microfinance
Microfinance Group
•
Brazil’s microfinance institutions are relatively small NGOs operating in a large market
and country
•
The banking sector in Brazil has been consolidating--well capitalized and liquid,
excellent technology, and with extensive branch networks
•
Banco do Brasil and Caixa Economica networks - Banco do Nordeste experience
•
Commercial banks have launched programs – Unibanco, Bradesco (postal banking)
•
Extensive consumer credit from banks, consumer finance companies, credit unions,
stores, credit cards, ‘post-dated checks’----formal and informal installment financing
•
Emergence of some niche players in microfinance and SME sectors, Lemon Bank
•
Incentives to date to use reserves for micro-enterprise lending has resulted in modest
expansion of access to financial services to micro-entrepreneurs and the ‘unbanked’
•
Recent regulatory (reserves) incentives for banks to lend to micro-entrepreneurs
•
Significant growth opportunities in Brazil for expanding access to financial services
leveraging the banking sector (commercial, public and credit unions)
•
Collaboration with the MFI and NGOs with specialized skills and community access and
trust will broaden the scope and range of communities reached
10