German micro lender enters Myanmar

Reading Time: 2 minutes
Current demand for micro finance in Myanmar is estimated at $650 million per year, mostly benefiting women

A German micro finance institution, Sparkassenstiftung für internationale Kooperation (Savings Bank Foundation for International Development, or SBFIC) will commence operations in Myanmar by the end of this year following an agreement the Germans signed with Myanmar micro lenders Myanmar Egress/Myanmar Development Partners and Mingalar Myanmar in June this year.

The SBFIC said in a release that it will establish micro finance operations in the country by supporting the two local organisations and address low-income households with the goal to combat poverty.

SBIFC expects to get a government license within a month from now, says the organisations spokesperson Nicole Brand.

Both partner institutions intend to introduce one savings and one loan product for the micro finance sector each in order to give the people access to financial services. In the long run, both organisations want to offer sustainable micro finance services without external help.

The project is set to end in December 2013. The initial funds will be $250,000.

Project activities in Myanmar are an integral part of SBFIC’s regional Southeast Asia project, covering the countries Cambodia, Laos, Vietnam and Myanmar. This regional project aims to craft a sustainable network of micro finance institutions, allowing individual partners to learn from and strengthen each other whilst benefiting from international experience, the organisation said.

The partner institutions in Myanmar receive consultancy support from experts of the German partner savings bank, Sparkasse Essen, as well as from the Philippines-based Center for Agriculture and Rural Development. The German government is providing the financial support for the project.

So far, micro lending in Myanmar has been the domain of UN organisations at a very small volume of just $50 million per year. After the Myanmar government issued a new micro lending law in 2011, the sector is expected to grow rapidly. The country’s demand for micro loans is thought to be about $650 million annually, according to the latest UN estimates, a figure that could reach $2 billion when loans for small companies are added.

The loan value is usually between $70 and $150, and mostly women apply for it. The new law caps interest rates at 2.5 per cent, while “informal” loan sharks in the country usually charge between 10 and 20 per cent annually for a private loan especially in rural areas where there is no other finance source available and for those without collateral.

Loan financing of private businesses is still a very underdeveloped business in Myanmar. Private loans were just five per cent of the country’s GDP in 2010, acording to International Monetary Fund figures. That compares with an estimated 30 per cent in Cambodia.

 

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 2 minutes

Current demand for micro finance in Myanmar is estimated at $650 million per year, mostly benefiting women

A German micro finance institution, Sparkassenstiftung für internationale Kooperation (Savings Bank Foundation for International Development, or SBFIC) will commence operations in Myanmar by the end of this year following an agreement the Germans signed with Myanmar micro lenders Myanmar Egress/Myanmar Development Partners and Mingalar Myanmar in June this year.

Reading Time: 2 minutes

Current demand for micro finance in Myanmar is estimated at $650 million per year, mostly benefiting women

A German micro finance institution, Sparkassenstiftung für internationale Kooperation (Savings Bank Foundation for International Development, or SBFIC) will commence operations in Myanmar by the end of this year following an agreement the Germans signed with Myanmar micro lenders Myanmar Egress/Myanmar Development Partners and Mingalar Myanmar in June this year.

The SBFIC said in a release that it will establish micro finance operations in the country by supporting the two local organisations and address low-income households with the goal to combat poverty.

SBIFC expects to get a government license within a month from now, says the organisations spokesperson Nicole Brand.

Both partner institutions intend to introduce one savings and one loan product for the micro finance sector each in order to give the people access to financial services. In the long run, both organisations want to offer sustainable micro finance services without external help.

The project is set to end in December 2013. The initial funds will be $250,000.

Project activities in Myanmar are an integral part of SBFIC’s regional Southeast Asia project, covering the countries Cambodia, Laos, Vietnam and Myanmar. This regional project aims to craft a sustainable network of micro finance institutions, allowing individual partners to learn from and strengthen each other whilst benefiting from international experience, the organisation said.

The partner institutions in Myanmar receive consultancy support from experts of the German partner savings bank, Sparkasse Essen, as well as from the Philippines-based Center for Agriculture and Rural Development. The German government is providing the financial support for the project.

So far, micro lending in Myanmar has been the domain of UN organisations at a very small volume of just $50 million per year. After the Myanmar government issued a new micro lending law in 2011, the sector is expected to grow rapidly. The country’s demand for micro loans is thought to be about $650 million annually, according to the latest UN estimates, a figure that could reach $2 billion when loans for small companies are added.

The loan value is usually between $70 and $150, and mostly women apply for it. The new law caps interest rates at 2.5 per cent, while “informal” loan sharks in the country usually charge between 10 and 20 per cent annually for a private loan especially in rural areas where there is no other finance source available and for those without collateral.

Loan financing of private businesses is still a very underdeveloped business in Myanmar. Private loans were just five per cent of the country’s GDP in 2010, acording to International Monetary Fund figures. That compares with an estimated 30 per cent in Cambodia.

 

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid