CALMEADOW HISTORY
History / Calmeadow at 20 / Organization / Contact
Calmeadow has happily found itself without the opportunity to continue pursuing the innovations it pioneered in the past. It’s estimated that several hundred microfinance institutions (MFIs) currently operate as commercial, regulated financial institutions and more pursue this model through transformation or commercial bank downscaling everyday1. CGAP recently published a Transformation Handbook which provides a detailed, almost step-by-step, manual for MFIs choosing a regulated, commercial model. Also, a recent survey counts over 50 investment companies or funds that target MFIs with a range of investment vehicles, each with different areas of focus and strategic interests2. Calmeadow has thus rigorously analyzed its strengths and found several areas where the organization can leverage its accumulated industry knowledge to continue to profoundly impact microfinance.
Calmeadow continues to promote commercial microfinance; specifically the idea of commercial banks adapting their products and processes to reach smaller, lower-income clients. Moving forward, Calmeadow has identified several areas of focus that allow the organization to pursuer this end: Research, Services, and Enabling Environment.
Research
Calmeadow funds and produces investigations that quantify the impact and costs of commercially serving low-income financial markets and document the dynamics of the rapidly changing industry. Rapid change can easily create bottlenecks that handcuff participants and ultimately keep the most efficient services possible out of the hands of potential borrowers. The dissemination of new models and industry-wide dos and don’ts are strategic priorities. Examples of our research include:
- Commercial Bank Downscaling feasibility study and the
resulting Downscaling Seminars [include attached photo] and proposed
“How-to” Handbook. Seminar locations include:
- May 2006 in San José, Costa Rica
- November 2006 in Siwa, Egypt
- September 2007 in Manila, Philippines
- Microfinance IPO paper produced with the Council of Microfinance Equity Funds, Fall 2007.
Services
Calmeadow seeks to support initiatives that improve the access of commercial microfinance players to underserved markets or that increase the efficiency and security of current industry participants. Particular interests include mitigating risks, improving governance, and reducing costs. Examples include:
- Addressing market failures with the FX Mitigation Facility, a joint-venture among several microfinance and currency experts designed to help reduce the currency risks that presently plague the hard currency funding that MFIs often need to maintain growth and expand outreach.
- Founding investment in the Emergency Liquidity Facility - ELF which provides emergency liquidity to MFIs during times of crisis when low-income borrowers are most affected. ELF also provides emergency risk management technical assistance to affiliated MFIs. ELF recently expanded its geographic focus to include the Caribbean and expanded its service offering to address financial risk management.
Enabling Environment
Calmeadow supports the dissemination of best practices and new models through seminars, publications, and industry associations. The institution will focus on appropriate regulatory frameworks, salutary government intervention, stable rules and regulations, and the elimination of common barriers such as interest rate ceiling and subsidized direct lending by governments. Examples in this area include:
- Reducing inefficiencies among funders with the February 2007 publication of “Role Reversal.”
- Microfinance in Africa, paper by Marguerite Robinson (in progress).
1Rhyne, Elisabeth and Brian Busch. “The Growth of Commercial Microfinance: 2004 – 2006.” The Council of Microfinance Equity Funds, September 2006. Available: www.cmef.com.
2Abrams, Julie and Damian von Stauffenberg. “Role Reversal. Are Public Development Institutions Crowding Out Private Investment in Microfinance?” MicroRate, February 2007. Available: www.microrate.com.
History / Calmeadow at 20 / Organization / Contact
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