In this issue

• Expansion in China
• Growing investment in Indian microfinance
• Client story: Andrea of Chiapas Mexico

Grameen Foundation grows new support to bring microfinance to China's poor

Volunteers in Shanghai organize an auspicious beginning to expand our work in China

With the profits from her produce business, Zhu is saving for her son to go to college.

Despite China's economic boom over the last decade, today, 220 million Chinese still live on less than $1 per day -- most of them in rural provinces, away from the booming coastal areas such as Shanghai. Grameen Foundation has studied poverty in China and accelerated its efforts to build a network of both key local supporters and rural microfinance institutions (MFIs) to tackle the problem head-on.

To harness the energy of people in China who want to contribute their time and expertise to fighting poverty there, on April 18, Grameen Foundation president Alex Counts spoke about microfinance and our goals in China to a packed luncheon. More than 130 members of Shanghai's international community attended -- including leaders in commerce, banking, and venture capital -- and then another 130 came for an encore presentation at dinner!

Our China volunteers have been invaluable in helping to expand our work in China. Alan and Mae-Ling Tien, donors since 2004, worked tirelessly along with fellow volunteer Susan Place Everhart to manage the events in Shanghai and bring us new visibility. The offers of help that stemmed from these events are sure to open new doors, and we thank all who are helping us build a bright future in China.

Through our partnerships with Chinese MFIs FPC, Chifeng Zhaowuda, and ARDPAS, we aim to reach more than 35,000 microfinance clients by 2008 -- including women like Zhu Bao Hua (pictured), who over her three years as a client of FPC has grown a produce business featuring a greenhouse full of tomatoes and other vegetables.

Learn more about Grameen Foundation's work in China and how volunteers can help >

Grameen Foundation Partners Helping to Shape the Future of India's Microfinance Sector

GF supports $44 million SKS deal

India continues to be a pacesetter for the growing interest in microfinance among investors. In the past month, two Grameen Foundation partners -- SKS and SHARE -- have secured innovative financing deals that will likely set the stage for even greater commercial involvement in the expansion of microfinance in India and internationally. SKS' partnership with Citibank introduced a new level of risk-sharing between microfinance institutions and commercial banks. Through this deal, which GF helped to facilitate with a $2 million guarantee, Citibank will purchase up to $44 million of SKS' microloans and therefore share the credit risk in those transactions. The SKS-Citi program will reach more than 200,000 of India's poorest people spread across 7000 villages in 11 Indian states. That will enable SKS to rapidly expand its outreach in India's rural communities. SKS plans to reach five million people by 2010.

Meanwhile, SHARE's landmark $25 million equity transaction with Legatum Global Development, a Dubai-based investment firm, is one of the largest such investments worldwide. Simultaneously, SHARE sealed a $2 million investment deal with Aavishkaar Goodwell India Microfinance Development Company. The equity will be used to leverage commercial loans to support SHARE's goal of increasing its outreach from one million to six million clients by 2012. It also plans to issue bonds in India next year. SHARE is currently the largest MFI in India and sixth largest in the world.

Andrea Hernandez Diaz's Story - Chiapas, Mexico

Andrea has been making textile handicrafts for the last 12 years. At 36, she is married and has six children. Before she became a client of Grameen Foundation partner AlSol, she had a very small business embroidering fabric. Many times she could not meet the demand for her crafts because she did not have enough resources to invest in needed inventory.

When Andrea began as a client of AlSol, she received an initial loan of 500 Pesos (about US$50.) With the first loan, Andrea was able to purchase fabric so that she could increase her supply of embroidery products. With the subsequent loans she purchased additional raw materials to further expand her business.

Learn more about Andrea >

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Newsbriefs

GF Secures $1 Million in Funding for LAPO: GF partner LAPO of Nigeria has become the first MFI in Sub-Saharan Africa to benefit from GF's Growth Guarantee Program. A US$500,000 guarantee from GF was leveraged 2-to-1, enabling LAPO to secure US$1 million in local currency funding from Nigeria International Bank (NIB), the local Citibank subsidiary. This is the first transaction between a Nigerian MFI and NIB/Citibank, and it is also LAPO's first leveraged commercial bank transaction. Previously, commercial banks were only willing to loan the exact amount of the guarantee. LAPO intends to reach more than 225,000 clients by 2008.

New GF White Paper Examines Broader Role for Microfinance: On May 23, GF hosted a conversation on challenging global poverty featuring Microfinance: A Platform for Social Change, a new white paper written by Marge Magner, a founding member and general partner at Brysam Global Partners, and the former chairman and CEO of Citigroup's Global Consumer Group. The paper examines how microfinance is helping to create lasting change by supporting broad-based socio-economic development in places such as Bangladesh, Bolivia and Haiti. In particular, the paper highlights the work of Grameen Bank as well as GF partners Fonkoze (Haiti) and Pro Mujer Bolivia. The event was held at the historic home of GF board member Vikram Ghandi and his wife, Meera.

GF to Launch Village Phone Direct Assistance Center: On June 4, Grameen Foundation will unveil the Village Phone Direct Assistance Center, a new website to help microfinance institutions (MFIs) extend the benefits of telecommunications to poor communities around the world. Village Phone Direct builds on the success of the traditional Village Phone program which helps microentrepreneurs to establish telecommunications businesses. With Village Phone Direct, the MFI will have greater control over the program. The online center will feature a step-by-step manual, a discussion board, and templates that MFIs can customize. GF partner NWTF has already adopted Village Phone Direct and will be creating 500 new Village Phone Businesses.

Pakistan state bank governor speaks on microfinance: At an April 17 event co-sponsored by GF, SAIS, the Microenterprise Coalition, and the Microcredit Summit Campaign, Pakistan State Bank Governor Dr. Shamshad Akhtar shared her vision and strategy to advance microfinance in Pakistan. Her plans include engaging the private sector, fostering competition, and creating frameworks for new technologies such as mobile banking. Dr. Akhtar hopes to help the Pakistan microfinance sector grow to reach 3 million clients by 2010. Groups like GF partners UPAP and Kashf Foundation will play a key role, expanding from a combined total of over 200,000 clients today to more than half a million by 2010.

GF contributes to CGAP virtual conference on microfinance: GF staff added their expertise to CGAP's Vision 2015 Virtual Conference week of daily discussions on the impact of technology, governments, and international financial flows on the future of microfinance. In the technology discussion, Ken Liffiton pointed out how important it is for MFIs to have strong "back-end" computer systems running their day-to-day operations before they attempt to implement popular "front-end" systems such as smart phones and PDAs; he emphasized GF's commitment to helping MFIs build their technology on strong foundations. Meanwhile, on governance, Kate Druschel pointed out the importance of local MFI associations in helping to influence the direction of countries' microfinance policies.