SOCAP 2010 took place in San Francisco on Oct 4-6. Over 1200 participants. Energetic, lively, sharing, innovative. Impact investments took center stage.Watch these amazing videos of Jacqueline Novogratz (Acumen Fund) Matt Flannery (Kiva) and many more http://video.socialcapitalmarkets.net/live-video-stream/ The first SOCAP Europe will take place in Amsterdam May 31-June 2, 2011.
This I believe will become a “classic” or the debate between “who should benefit from microfinance”. My humble opinion…I think that both have valid points and there is enough room for both ideals as there are so many people in need for basic services at the BOP or bottom of the pyramid.
This book introduces innovative social/business models that provide sustainable solutions to the problem of poverty and portrays the insipiring people behind them.You can find an update on microfinance, BOP (base of the pyramid) initiatives, and microfranchising all which are improving the lives of the 4 billion people living at the BOP. VisionSpring, an innovative social microfranchising enterprise with the mission to reduce poverty and generate opportunity through the sale of affordable reading glasses is featured as a model case. The aim of this book was to share my insights on 1) how the business and social worlds have been converging, setting the stage for these innovative models to emerge, 2) how these models, together with the advent of Web 2.0, are creating a strong and positive movement towards a more responsible, sustainable and kinder world and 3) how all of us could make a difference.
This book is the updated English version of the German book that was published last year. I used lulu.com to publish this and I can recommend it.
Today’s NY Times article on Kiva describes the recent online debate started a month ago by David Roodman’s blog titled “Kiva Is Not Quite What It Seems” which criticized Kiva’s misleading marketing on person-to-person microlending. Matt Flannery, Co-Founder of Kiva responded and reacted (by updating and improving on how Kiva explains itself to its user) to David’s blog and to the NY Times article in an admirable way. As a supporter, promoter and lender to Kiva I believe that these online debates are healthy as it promotes transparency and makes innovative enterprises like Kiva an even stronger organization. Kiva has been a poster child for social entrepreneurship and in only 4 years have been able to create a platform that facilitates individuals (over 580,000) of all ages to participate in alleviating poverty with USD 25 (just recently crossed the USD 100 million mark). The phenomenal growth and its success also attracts attention. Constructive criticism is healthy, bad PR is harmful. I believe and trust that Kiva will emerge stronger from these controversies.
On Oct 31st, Kiva lender loans surpassed the USD 100 million mark! Congratulations to the Kiva team especially Matt and Premal for achieving this milestone. That is a lot of 25 dollar bits. I went back to check my first entry on Kiva when I congratulated them on getting their 501(c) status which was in Sept 2006 . Kiva has achieved so much in 4 years inspiring more than half a miilion people in the world to get engaged to empower people in developing countries.
How is the financial crisis impacting microfinance institutions (MFIs) and their clients? What can the microfinance industry do? These were the questions addressed at the virtual conference hosted by CGAP between Nov 18-20. There were 600 MFI managers, central bankers, investors, and advisers from 34 countries and the150 entries submitted by these participants provided a vivid and powerful picture of what is going on. According to the summary sent out by Elizabeth Littlefield, Director and CEO of CGAP,
“The dominos of the crisis-credit crunch, inflation, currency dislocations and global recession- are hitting microfinance in very different ways, depending on location, funding structure, financial state and the economic health of their clients. While many places seem unaffected today, there is little doubt that there will be impact: integration of microfinance into the mainstream does have costs.”
Other salient points from the summary report were;
-deposit taking MFIs are well-insulated from the crisis
-immediate concern is how the global liquidity contraction will affect the cost & availabilty of funding to non-deposit taking MFIs
-institutional investors in microfinance are not seeing significant redemptions but they do expect fundraising to become more difficult in the coming months
-advice to MFIs included: increase reserves, cut back on growth and focus on portfolio quality, make sure loan officers are informed and attentive to client needs and communicate early and often with lenders and investors
-concerns about overreaction by policymakers
-amid the anxiety some optimism…as some markets had become overheated so slower growth, tighter credit more conservative policies, better products and even consolidation of weaker institutions may be beneficial in the long run
I logged in during the 3 day conference and one positive impression was how the industry of microfinance (the players) continue to be willing and passionate to share and give information for the improvement of the whole industry, an attitude that the mainstream should learn from microfinance.
SKS Microfinance based in Hyderabad has raised 366 crore or $75 million from private investors. This is the fourth round of fund raising and was lead by Sandstone Capital. SKS has been one of the fastest growing MFIs in the world. According to its CEO Vikram Akula the funds will be used to leverage access to commercial finance and to scale their outreach in the next two years (doubling the current 1400 branches and 12,000 employees). SKS has raised funds in the past through Unitus Equity Fund, Vinod Khosla, Ravi Reddy, Sequoia Capital, Odyssey Capital, and Silicon Valley Bank. SKS currently has 3.3million clients across India and it plans to reach 8 million by 2011.
source: VC Circle
from the press release: BlueOrchard Finance SA
The 2007 BlueOrchard Loan for Development, BOLD 2, was elected “Sustainable Deal of the Year” on June 3, 2008, at the FT Sustainable Banking Awards Ceremony hosted by the Financial Times and the International Finance Corporation (IFC) of the World Bank Group. The BOLD 2 transaction is a landmark deal that has helped to broaden microfinance as an asset class for mainstream investors, while simultaneously providing credit to tens of thousands of individual borrowers at more favourable terms.
BlueOrchard Finance S.A. of Geneva, Switzerland, and Morgan Stanley launched BOLD 2 at the end of April 2007. BOLD 2 is a Collateralised Loan Obligation (CLO) of unsecured loans amounting to USD 110.2 million, of which the equivalent to USD 106.7 million were lent to 21 microfinance institutions based in 11 emerging countries (Azerbaijan, Bosnia and Herzegovina, Cambodia, Colombia, Georgia, Kenya, Mongolia, Montenegro, Nicaragua, Peru, Russia).
These funds were on-lent by the microfinance institutions (MFIs) to approximately 70,000 low-income people – over half of them women – for entrepreneurial activities.
Congratulations to both BlueOrchard and Morgan Stanley for mainstreaming microfinance and increasing the outreach of loans to the poor.
On October 24th, MicroPlace launched its web site that allows people to invest as little as $100 in microfinance. More precisely, people can purchase investment notes with returns ranging from 1.5 to 3.0% that are issued to a particular microfinance institution. This is great news as this provides another option for people to participate in supporting microentrepreneurs worldwide. So now in addition to Kiva which allows people to support microentrepreneurs with a loan (you get capital back but no interest) you have MicroPlace where you can make money from these loans “doing good, doing well”. This news has been covered by Businessweek, Reuters, Fortune etc but the best article out is by Rob Katz of nextbillion titled “Kiva vs. MicroPlace-What is the difference?” an excellent read. Kudos for Calvert Foundation, which is the first issuer for MicroPlace. Calvert has been offering for the past 10 years community investment notes including those that went to fund microfinance institutions and these notes were offered to the public at large. One of the very few choices that have existed but now their efforts can be inmensely scaled!
One request to MicroPlace/ebay and to the microfinance investment community. Kiva is a non-profit so everyone can participate but investments in MicroPlace is only available for US investors (US residents). I am aware of the constraints in the investment world but can we/someone make a platform or several platforms for investments so that everyone can invest?
CGAP has released a draft Focus Note written by Richard Rosenberg. CGAP Reflections on the Compartamos IPO: A Case Study on Microfinance Interest Rates and Profits. The successful IPO of Compartamos on April 20th and the enormous gains produced through the sales have provoked discussions concerning 1) the very high interest rates charged over the years 2)were the grants given to Compartamos used inappropriatelly to benefit private investors and 3)governance issues on balancing social and commercial objectives after the IPO. Thus this is a very well written and welcome report providing the base for discussions and brainstorming needed for the microfinance industry. As the author puts it;
“All of us who are involved in commercial transformation-that is, moving microfinance operations from not-for-profit to for-profit institutional forms-need to be clearer and more realistic in dealing with the inevitable consequences of those transformations.”