The Asia Microfinance Forum 2010 gathered more than 450 experts from over 50 countries in October in Colombo, Sri Lanka. ÊConvened by the Banking With the Poor Network (BWTP) and organised byÊthe Foundation for Development Cooperation (FDC), the three day forum brought together industry experts to brainstorm on the role of microfinance in achievingÊfinancial inclusion in Asia.
Over the three days period, experts discussed and debated over major issues facing the industry including financial inclusion, portfolio risk management, social performance, regulatory framework, financial literacy, human resource, client protection and investment landscape among others. A special Sri Lanka session also saw high attendance and attracted much interests.
The closing session of the Asia Microfinance Forum is traditionally an opportunity to encapsulate the discussions and emerging issues of the week from the perspective of participants and industry leaders.
Giving away his concluding remark, Mr. Craig Wilson, Executive Director FDC (The Foundation for Development Corporation) thanked all the participants saying, ÒOver the last three days many interesting ideas and views have emerged and it was a great learning experience for all of us. There was a high level of engagement during the sessions and I must say I havenÕt seen any of you near the swimming pool during the conference *audience laughter*. I hope that we have done justice to all the issues that we discussed and I am happy that today we have the opportunity to come together and set the agenda for achieving AsiaÕs financial inclusion potentialÓ.
Giving audience food for thought Mr. Rolando Victoria, Executive Director of ASKI, said, ÒAs we work on microfinance, some things are beyond our control, and now we are thinking of how we can support members during natural calamities and catastrophe. ÊWe have identified challenges in the governance of MFIs and we have to also think of how we select our management and board of trustees. ÊEven on the issue of human resource, there is a lot of discussions on how to prepare a second line. This morning we also had a very good discussion on the youth sector and people with disabilities. We have talked of all sorts of crisis but maybe we are facing a crisis of values. It is time for us to rethink how to balance profitability and sustainability. I believe the challenge is for all of us attending this conference to think of how we can support one another and the banking with the poor network. It is good that we are advocating for changes, and maybe BWTP is not only Banking With The Poor, perhaps we can say, BWTP is Bringing World Transformation to the Poor. Ó
Chandula Abeywickrema, Chairman, BWTP Network said, ÒIn the last few days of discussion we have discussed the importance of benchmarking and pragmatic governance and transparency to create accountability. Financial inclusion would also not be complete without financial literacy. We have identified that microfinance industry is an evolving industry and it is in need of evolving regulations and an enabling environment. We should learn from history, not repeat history, bring value and create our new Êhistory with benchmarks. ÊWe are representing 2 billion people who are at the bottom of the pyramid in Asia and I hope that the last three days of deliberation will leave each of us certain important things for us to do. I began the conferenceÕs opening address with 3 Es: Enhance, Empower and Enrich the poor. And would like to end with 3Ds: Our pro-active Decisions will Determine the Destiny of these 2 billion people.Ó
Suggesting the gathering that microfinance needs to slow down its growth to rethink about strategies and engage with regulators and policy makers, Mr. Sanjay Sinha, Managing Director of M-CRIL said, ÒWe are so busy chasing money in order to grow fast that we are not able to take care of policies and regulationsÓ
ÒSomehow microfinance has come to an age where it is over achieving and the growth is running beyond the level it ought to be. ÊGiving M-CRIL India Indices of microfinance he said, ÒIndia is experiencing exponential growth and doubling almost every year. Similarly the growth is more than 5 times the size it was 6 years ago for the entire Asian regionÓ he said.
However he pointed out that there is a significant upsurge in problems due to lack of internal controls and also because of huge monolithic organizations. As an analogy, Sanjay displayed a cartoon featured in The Economic Times in his opening slide. The cartoon depicts a huge amount of work going in and very little products coming out. He also questioned if the microfinance sector was designing the right products. In his opinion, MFIs are offering loans that are too small and that loan size could be a contributor to indebtedness. ÒWhen you give a loan which is not sufficient for meeting the need of poor, they take multiple loans and you start to have repayment problems and delinquency crisis such as the one in Andhra Pradesh today,Ó he said.
He emphasized on offering right products to the clients based on their needs and added, ÒVasu said one thing this morning, what is not natural to happen, wonÕt happen and what is natural to happen, will happen. You canÕt expect highly commercial investors to behave in a highly responsible way. Similarly, if there is money to be made, you cannot expect investors to not go for it. What has gone wrong in MF is that some MF promoters become impatient, and they have promoted the exponential growth, which I have shown, through the chase for capital. Instead of chasing commercial capital we should be chasing regulators to be allowed to accept deposits and serve the needs betterÓ.
ÒAll these lessons that we have discussed during the forum will not be learnt by any regulator until a few MFIs go bust. It is only a young industry and maybe a few MFIs will collapse and that will make us understand thingsÓ, he remarked.