HISTORY

The modern concept of microfinance began in the 1950s as a way to bring financial services to poor communities across the world.  These projects were highly subsidized and were also highly unsuccessful.  The first successful forays into the microfinance field were initiated in the 1970s; mainly in Brazil, India, and Bangladesh.  These three all went about the process with the idea of lending to small groups of women to support income generating activities in an effort to raise the standard of living of the poor. In this time, the focus was on microcredit as opposed the new term of microfinance; microcredit was simply a credit financial intermediary, whereas microfinance provides a variety of services to the poor including savings, loans, insurance, and other specialized products.

ACCION
In Latin America, a bank known as Accíon was created to serve the poor in the area. It was started by Joseph Blatchford, and a group of volunteering students who were funded through the private sector.  They have since expanded internationally and are recognized as an industry leader.

SEWA

In India, a group of women got together to form Self Employed Women’s Association (SEWA) to address a need for networking and a forum to openly discuss issues.  After finding out that a major issue was a lack of access to capital they decided to form a bank of their own as a cooperative; which now serves as a model for other cooperatives around the world.

GRAMEEN

In Bangladesh, Professor Muhammed Yunnus from Chittagong University piloted a program that was later named the Grameen Bank. It began with the professor and his student as part of an active research project and quickly spread. Many in mainstream banking circles still thought it was a highly speculative project with a short time frame.  Professor Yunnus continued with the project and eventually founded the Grameen Bank in 1983. This famous project started the standardization of group solidarity lending and still serves as a benchmark to others in the industry.

These three examples stood out and showed that microfinance could be successful; others then tried to follow the lead of these organizations with poor results. The new organizations showed that administrative expenses were still running high and repayments were poor. Microfinance continues to now expand with mixed results across the world. 

The United Nations and the Nobel Prize have brought recent publicity to the field of work and promoted further research into microfinance. The UN named 2005 the year of microfinance in accordance with their Millennium Development Goal to halve, between 1990 and 2015, the proportion of people whose income is less than US$1 a day.  The Nobel Foundation awarded its Nobel Prize to Professor Yunnus and his Grameen Bank in 2006.  These two groups have turned a lot of international donor agencies and NGOs into the field of Microfinance. As more research is done, other factors such as processing time, level of bureaucratic requirements, collateral requirements, and other non-financial issues are seen to be inherent in microfinance and contribute to the success of the programs.

ABOUT MICROFINANCE WEST - Overview

Microfinance West is a program of the Fijian Government created under the National Microfinance Unit (NMFU).  NMFU is the largest of seven departments of the National Centre for Small and Micro Enterprise Development (NCSMED). The Centre was created in 2002,  “to foster the emergence and the development of a strong and sustained national socio-economic movement based on small and micro-enterprises.” The Centre is governed by a board of directors and reports to The National Ministry of Commerce.  Also see the tab "FAQs - Frequently Asked Questons" section on this page for more information O R Contact Us.

Microfinance West
Microfinance West (MFW) was launched on 29 April, 2000 through government funding.  Initially, the organization was administered through a partnership between Aglow and Government and was called Aglow Microfinance West.  The partnership was terminated in December 2005 and since then the institution has been operating under the direct supervision of the Microfinance Unit within the National Centre for Small and Micro Enterprise Development (NCSMED).

MFW was created and is now running to address a need for greater financial inclusion in the local marketplace.  Currently, it is costly, cumbersome, and sometimes impossible to borrow money among the target market of low income earners.  These people and their families have needs for capital in personal and family consumption, religious and village fundraisers, and for their businesses’  working capital.  A need for savings deposits had initially augmented the loans, but now dominates the marketplace. To service the members, MFW operates a facility that can receive savings and distribute loans. The savings are held in a separate trust and the Government of Fiji  grants provide the loan capital; there is no on-lending of savings deposits.  It operates out of the urban centers and services urban, semi-urban, and rural based members. Currently there are offices servicing the western region of Viti Levu in the towns of Nadi (Namaka), Sigatoka, Ba, Rakiraki and the city of Lautoka, whose office serves as the regional hub.  The Lautoka office contains the Administration staff covering the areas of Management, Accounts, and Information Systems.  The satellite offices house the Field Credit Officers (FCO’s) and Assistant Field Credit Officers (AFCO’s); senior and junior level positions respectively.

History of the Organisation - 2001
2001 saw the need for improved operational sustainability and growth of microfinance into new areas in the west.  In October 2001, the unit expanded operations to include a new donated Nadi office building that accommodated two officers.  Incidentally, this building is still in use today with a staff of 6 now housed there. In addition, Lautoka expanded their staff, purchased a vehicle and attended a United Nations Development Program (UNDP) sponsored training for marketing and expanding their operations.  This is a contributing factor to the way the unit currently operates in terms of finding members that are involved in existing micro and small businesses, and wage earners in the town areas.  These members are seen as having a steadier income source and therefore deemed more able to repay their loans. In November the entire unit received another Government of Fiji  grant in the amount of $167,000 for operations and for funds in the revolving loan pool. The year ended with 5 staff in Lautoka and 2 in Nadi.

2002
2002 saw further expansion to the more industrial town of Ba, north of Lautoka.  The unit deduced that Ba, compared with Lautoka and Nadi, had a smaller target for micro business opportunities, fewer potential members and a trend towards smaller loans.  Ba is known for housing a number of large local firms especially those owned by Indo-Fijians. 

Organizational restructuring in June decentralized the power from Lautoka to three sub-unit mangers in each of the branches. 2002 also saw the shifting of members away from the group method into individual accounts, due to groups falling apart or members who were not happy with their other members.  A “Come Save” initiative was trialed in 2002 and expanded 2003 and coupled with the shift to individualism created a change in the marketing of services, shifting focus from lending into saving.  This project was especially successful in the Nadi area where 35% of the members held 55% of the savings.

2003-PRESENT Ba , Sigatoka , Nadi , Lautoka , Rakiraki

FAQs - FREQUENTLY ASKED QUESTIONS BY MEMBERS

What is Microfinance? Microfinance is the supply of Financial Services to the poor. It can include savings loans, insurance, and varies based on the needs of the customers. For more on the history of Microfinance, click tab "History of Microfinance" on this page; for more on MFW, click tab "About Microfinance West" on this page. How do I start with Microfinance? The first step is an awarenes training that will be performed for any interested members. It is available to low income earning residents of the Fiji Islands. To start a savings account at least $ 14.50 is required, $4 is needed to purchase the passbook, $10 is the deposit ($50 for a group account), and $0.50 is the service fee. Two passport sized photos and a birth certificate (used for identification) are needed along with the proper forms. Visit or contact one of the offices, Contact Us. What is the savings programme? The savings programme is the first service offered by Microfinance West. For more information on savings. Does MFW offer any training for its members? Training is available in the areas of awareness about the programmes, Financial Literacy (FLET) and now Business Skills training. What is the loan programme? Loans are available for members who show a consistent savings for at least 3 months. For more information on loans. What is the savings fee? The savings fee is $0.05 for every dollar deposited. For example the fee for a $2 deposit would be $0.10, for a $10 deposit the fee would be $0.50. While on loan there is no savings fee charged to the member, so it is the best time to increase savings. How can a member keep track of their account? Each member is issued their own passbook at the beginning of the programme. The passbook is the member's record of how much money is in the account. With each deposit and loan repayment a receipt is issued in triplicate, one copy for the member, one for the MIS department, and one for the office. When can a member take a loan? After saving consistently for 3 months they are able to apply for a loan. When assessing the application Microfinance West will look at the consistency and level of savings achieved up until this point. How much money can be loaned? The first loan should be used to fund an income generating activity. Any subsequent loans will be based on the member's ability to repay, their previous loans, their savings levels, and the information contained in the forms. The minimum loan is $100, the maximum is $5,000, most loans are under $1,000. What is the interest charge for a loan? What is the term? Each loan has a one-off, or simple interest, charge of 25%. For example a $300 loan will incur an interest charge of $75; a $100 loan will be $25 worth of interest. This is the only fee associated with a loan unless the member cannot repay the loan and a transfer must be done from their savings. All loans have 26 week terms, unless a special request is approved by the manager. What is the facilitate letter? This is the binding agreement between the member and microfinance. It states all of the terms of the loan. It is an official document that allows Microfinance West to transfer savings to pay off the loan, if it is not paid in full within the term. What happens if the loan is not paid? If the loan is not paid the member will be visited by a staff member to talk and find out the problem. The FCO together with the Team Leader will then decide on the next course of action. The possibilities would be to double the next payment, or to transfer part of the savings to meet the payments for the loan. If the term has expired, the officer will transfer any savings and/or work out a refinancing plan to help the member repay the loan. If it cannot be repaid the details of the member and the account are registered with the Data Bureau and Legal action may be taken. How are withdrawals handled? Withdrawals are processed each week for pickup on Thursdays; applications must be submitted before Thursday. One free withdrawal is given per year after which the fee is $3, withdrawals are discouraged as the savings is meant to be long term. What happens if the member wants to close an account? Accounts can closed with MFW for a fee of $4. The remaining balance will be returned to the member and the passbook will be closed and filed. Should the member wish to start again they must open a new account. What is a Coordinator? A Coordinator is person that serves as a point of contact for MFW. They are picked from the rest of the members in that area as someone that can be trusted. Often their house is the meeting point and they can help Microfinance with contacting other members in the area. What is a Field Credit Officer (FCO)? An AFCO or FCO is the MFW staff member that is responsible for visiting and serving the members. They collect the deposits and loan repayments and assist with the filling of forms for withdrawals, new members, and loans. What happens if a member dies? If a member dies their loan will be cleared from any remaining savings balance. The remaining savings, or the savings balance if the member did not have an outstanding loan, will be disbursed to the beneficiaries.   Copyright © 2010 web curator writer dianagiesbrecht.com. All Rights Reserved

FAQs - FREQUENTLY ASKED QUESTIONS GENERAL

What is Microfinance? They are a Microfinance Institution (MFI) based in the western region of Viti Levu. They currently cover areas from Nadroga/Navosa to Ra. The headquarters are located in the Namoli house in Lautoka. In addition to the main office in Lautoka there are sub-unit offices in Nadi, Sigatoka, and Ba. Who is the National Microfinance Center? They are a Microfinance Institution (MFI) based in the western region of Viti Levu. They currently cover areas from Nadroga/Navosa to Ra. The headquarters are located in the Namoli house in Lautoka. In addition to the main office in Lautoka there are sub-unit offices in Nadi, Sigatoka, and Ba. Can I donate or help with Microfinance in Fiji? Yes, microfinance is based around helping others. MFW is willing to try and work with any organization or individual that is committed to help the disadvantaged people of Fiji. To help out Contact Us or to help nationally contact NFMU. Is MFW willing to partner with other service providers? Yes, if you are a service provider that would like to partner with microfinance to help members of the community we can meet with you to discuss how to implement microfinance in your area. We are always looking at ways to improve the lives of the people we are aiming to serve. How many people does microfinance serve? MFW, as of year end 2008 hand 682 loans outstanding at a balance of $207,285. We also had 5,998 savers only in the programme, for a total of 6,680 members. Of the total member base, roughly 94% are native Fijians. A majority of the total members are also women, roughly 69% What is the savings programme? The savings programme is the first service offered by Microfinance West. For more information on savings. What is the loan programme? Loans are available for members who show a consistent savings for at least 3 months. For more information on loans click here. Does MFW offer any training for its members? Training is available in the areas of awareness about the programmes, Financial Literacy (FLET) and now business skills training; for more information. How much money can be loaned? The first loan should be used to fund an income generating activity. Any subsequent loans will be based on the member's ability to repay, their previous loans, their savings levels, and the information contained in the forms. The minimum loan is $100, the maximum is $5,000, most loans are under $100. What is the interest charge for a loan? What is the term? Each loan has a one-off, or simple interest, charge of 25%. For example a $300 loan will incur an interest charge of $75; a $100 loan will be $25 worth of interest. This is the only fee associated with a loan unless the member cannot repay the loan and a transfer must be done from their savings. All loans have 26 week terms, unless a special request is approved by the manager. What is a Coordinator? A Coordinator is person that serves as a point of contact for MFW. They are picked from the rest of the members in that area as someone that can be trusted. Often their house is the meeting point and they can help Microfinance with contacting other members in the area. What is a Field Credit Officer (FCO)? An AFCO or FCO is the MFW staff member that is responsible for visiting and serving the members. They collect the deposits and loan repayments and assist with the filling of forms for withdrawals, new members, and loans.   Copyright © 2010 web curator writer Diana Giesbrecht. All Rights Reserved