BlueNews - BlueOrchard's corporate newsletter
BlueNews is issued twice a year. If you wish to receive the BlueNews on a regular basis, please subscribe to our mailing list >
BlueNews n.2/2009 - Special Edition on Risk Management
Growth with quality – balancing risks and opportunities in microfinance
Growth always brings about change and change entails opportunities as well as risks. At BlueOrchard, we are well-placed to know that to be successful, a strong expansion in size and scope must be accompanied by the capacity to evolve with the environment while maintaining professional excellence. But not only have we grown and continue to do so, the microfinance industry as a whole is advancing, albeit at a somewhat slower pace than in previous years. Its progress can be measured in volume but also in the range and nature of services on offer, its geographic scope and the number and diversity of the actors that are involved.
Some fear that this impressive growth comes at a price, and that the brunt will be borne by those at the far end of the chain, the clients of microfinance. They argue that driven by excesses, the sector may lose sight of its primary
aim, i.e. the socio-economic inclusion and consequent progress of those formerly marginalised. Investors worry about a rise in risky credits. Thereis talk of a “bubble” in the media.
We believe the present environment is one that raises the right reactions at an appropriate time: in many places, the microfinance industry’s weight is now such that regulators, business partners and other influential players insist on rules and good practices that facilitate a healthy development of the microfinance industry. Furthermore, the financial crisis may prove to offer just the breather that was needed to consolidate the successes, to refocus on the priorities and to strengthen the basis for the future. All these adjustments will require a lot of serious efforts, clarity of purpose and a strong commitment for the long-term development. Only so will microfinance be able to reach even deeper into the areas of exclusion at one end of the spectrum, and achieve integration into the formal economy at the other end.
As one of the most important microfinance investment managers world-wide, we know that we need to have an in-depth understanding of the risks in the current market environments and in our own portfolios to make our own
contribution to the positive progress of the sector.
In this edition of the BlueNews, we have invited our director of risk management, David MacDougall, to explain how BlueOrchard goes about balancing risks and threats against the opportunities. We have also asked Fitch Ratings as a trusted observer of the industry to provide a comment on the assets that microfinance institutions can put towards the challenges that they are facing.
We wish you an interesting read.
Jean-Philippe de Schrevel, CEO
BlueOrchard Investments Sarl
Jean-Pierre Klumpp , CEO
BlueOrchard Finance S.A.
Read the whole BlueNews n.2/2009 in English >
Lisez le BlueNews n.2/2009 en français >
Lea el BlueNews n.2/2009 en español >
