News & Announcements
UNDP transfers microfinance funds, assets to PactJune 4, 2014
In 1997 the United Nations Development Programme (UNDP) began the “Sustainable Microfinance to Improve the Livelihoods of the Poor” – the pioneer microfinance project in Myanmar. After 17 years of successful implementation, today UNDP marked the end of the first chapter of this nationwide grassroots microfinance campaign that improved the lives of some 630,000 households in Myanmar over a 17-year period, and a new beginning in the provision of financial services by an independent microfinance operator. The important milestone in the development of the national microfinance sector was sealed with signing of the memorandum of understanding between UNDP and the Union Ministry of Cooperatives of Myanmar, as well as a transfer agreement for the project funds and assets with Pact, a non-government organization (NGO), which has been the main implementation partner for this project. The agreements ensures that all the funds and assets of the project will remain in the country and continue to be used to provide services to present and future beneficiaries across Myanmar, while also contributing to the expansion of the microfinance sector.
For many years the project was the only initiative in Myanmar formally allowed to provide micro-lending and savings services to people in rural areas who otherwise had no access to banking services. Its contributions to microfinance sector development were in the form of technical assistance, training and equipment and, most crucially, comprised a pool of money from which borrowers would take and repay loans at interest rates much lower than those they would pay in the informal sector. The enactment of the Microfinance Law in November 2011 established a regulatory framework for the microfinance sector, creating space for licensed microfinance service providers and allowing UNDP to exit retail microfinance operations and to leave behind a long lasting institutionalized legacy. Consequently, under its 2013-2015 country programme UNDP committed to focus its support to the sustainable development of the microfinance sector at the policy level to deepen financial inclusion in Myanmar while at the same time handing over retail microfinance work to an independent operator.
The “Sustainable Microfinance to Improve the Livelihoods of the Poor” project started under the second phase of UNDP’s Human Development Initiative project. The microfinance project was implemented in communities by organizations such as GRET (France), Grameen Trust (Bangladesh), EDA Rural Systems (India), Save the Children (USA) as well as Pact (USA), which was the principal implementing partner since 2006. In recognition of Pact’s excellent performance in this role, the project assets have now been transferred to Pact and will be managed by Pact Global Microfinance Fund (PGMF), the not-for-profit subsidiary of Pact specialized in microfinance. In addition to UNDP, the project benefited from financial support from governments of the United States, United Kingdom, Denmark as well as from Livelihoods and Food Security Trust Fund (LIFT).
Speaking at the signing of the MoU, the Union Minister of Co-Operatives U Kyaw Hsan praised UNDP for its ground breaking work.
“UNDP has done an excellent job in helping rural Myanmar people alleviate poverty. I am confident that based on the foundation that UNDP has built, the microfinance sector will continue to expand and meet the needs of the poor as well as contribute to Myanmar development goal of reducing poverty by half from 2005 to 2015. The project implemented by UNDP with its partners shows that microfinance following international best practices can operate in Myanmar and in a sustainable way serve clients and generate sufficient revenues to grow and expand,” he said.
UNDP Country Director Toily Kurbanov said that ending microfinance retail operations by UNDP marked an important milestone for the organization and confirmed that it had built capacities and helped open up space for the sector’s expansion.
“UNDP is proud that through our Microfinance project, 630,000 households in Myanmar were able to improve their lives. Through the loans provided under the project, women, who make up 98% of our clients, started businesses, built better houses, improved their family’s health, expanded their farms and sent their children to school. UNDP launched microfinance services in the country at a time when such services were non-existent. Now with the necessary legislative changes and local capacities developed through our project, other service providers can carry on with the work we started,” said Mr. Kurbanov.
“The Ministry of Cooperatives, as host Ministry, has played a very important role in supporting this initiative to pilot microfinance in Myanmar at a time when there was no law or clear understanding of microfinance. UNDP’s funding, support, and umbrella for protecting microfinance operations and small Scale Industry Department of Cooperative Ministry’s endless efforts for introducing the concept of microfinance at different administrative levels have made the UNDP Microfinance Program implemented by Pact a viable and practical tool to contribute to rural poverty alleviation. This work will be continued in support of President U Thein Sein’s landmark rural development program,” said Fahmid Bhuiya, the Chief Operating Officer of Pact Global Microfinance Fund in Myanmar.
The signing of the memorandum of understanding took place in Myanmar’s capital Nay Pyi Taw today.
For further information contact:
U Swe Tint, Director, Small Scale Industries Department, Ministry of Co-Operatives, firstname.lastname@example.org
Shobhna Decloitre, UNDP Communications Specialist on Shobhna.email@example.com
U Maung Maung, General Manager, PGMF, firstname.lastname@example.org
Link to UNDP Issue Brief – Microfinance for Poverty Alleviation in Myanmar: http://www.mm.undp.org/content/myanmar/en/home/library/poverty/financial-inclusion-issue-brief/