Your Micro-Business Partners
November 2009
MIT Mobile Monday Presentation
Executive Summary
The Problem :
Microfinance loans are often misused, causing borrowers to
fall into a cycle of debt
The Solution :
Lending a franchise or a business in a box reduces this risk
while providing new skills to the franchisee
The Market :
With high poverty rate and high mobile penetration, Indonesia
is the ideal place for a mobile phone franchise
What we do:
We deploy business kits that enable franchisees to sell
electronic airtime / “minutes”
Our progress:
We have created over 600 profitable franchisees
What’s next:
We plan on leveraging our network to deploy other services
such as healthcare, education, retail, and agriculture
The Problem
Microfinance loans are often misused, causing borrowers
to fall into a cycle of debt
Traditional
businesses
What happens after
cash is disbursed?
Potential problems
Consumption
No new skills gained
Potential to fall into a
cycle of debt
Gambling,
theft, etc
?
Unnecessary interest
payments
The Solution
Lending a franchise or a business in a box reduces
loan misuse while providing new skills to the franchisee
4
Donors
• Donate money to
sustain livelihoods
Microfinance
• Lend money to start a
business
Microfranchise
• Lend a business to
generate money
The Market
With a high poverty incidence and high mobile penetration,
Indonesia is an ideal market for a mobile phone franchise
120 million out of 250 million
Indonesians live with under $2 per day
Incidence of Poverty in Indonesia
Source: World Bank, CIA database
140 million people are mobile phone
subscribers
Operator
Millions of Subscribers
What we do
Ruma deploys business kits that enable franchisees to sell
electronic airtime / “minutes”
“Business in a Box”
CDMA phone with ability to sell
electronic airtime for all 11
mobile operators in the market
Promotional Banners
and Flyers
Operating manual,
transaction log, price list,
other tools
*Materials provided by Bakrie Telecom
What we do
Ruma receives revenue from the sale of the kit and airtime
How it works
1
Benefits
5
Ruma sells
franchise kits
$
$
4
2 •MFI leases kits
Ruma trains borrower
Ruma obtains a
margin for each
airtime sales
Profits used to
repay loans
$
3
Borrower sells
prepaid airtime
•
Reduces the risk of
misuse of funds
•
Borrower gains new
skills
•
No unnecessary
interest
•
Franchised business
provides more stable
income
What we do
Franchisees believe that the biggest benefit is the steady cash
flow to supplement their existing business
8
Name: Ibu Yanti
Location: Remote Area in West Java, Indonesia
Primary Business: Small convenience stand (warung)
Her story:
•
Ibu Yanti & her husband Pak Tisman own & operate a
warung with ~20 products and vegetable stand
•
Ibu Yanti & Pak Tisman have a five year old daughter
•
The technology business delivers steadiest cash flow of
all lines of business, providing ~$1/day in extra income
on a consistent basis (50% overall increase)
•
Additional income is used to expand inventory
Estimated profit* (USD / week)
Week
$ 4.08
$5.70
$ 2.37
$ 3.71
1
2
3
4
How we’re doing
Ruma has created over 600 profitable franchisees
9

Achievements
 Secured funding from Grameen and Qualcomm
 Created more than 600 new micro-businesses
 100% profitability for micro-business owners
 97% of micro-business owners are women
 68% of micro-business owners were below the
World Bank poverty line datum of $2.50/day
when they adopted the business

Priorities Moving Forward
 Financial: empower 5,000 of the poor and
poorest by August 2011 to reach financial
sustainability as a social enterprise
 Social: reach target of 70% below poverty line
 Deploy new franchise product line by Q4 2010
What’s next
We plan to deploy new business kits in Q2 2010
Medical products &
services
Education and
training
Agriculture and
fisheries
• Build a franchised
village shop
• Connect farmers with
buyers and suppliers
• Build Teledoctor service
• Use the phone as
interactive training tool
• Create POS visibility
• Sell low availability
products
• Integrated medical alert
system
• Provide basic information
services
• Create a mobile
marketplace
• Deliver basic medical
products
• Sell writing utensils, books
Trade and
distribution
• Give weather
information
Take aways
1
Microfinance is a good proven tool to alleviate poverty, but it can be improved
2
The phone is the most feasible platform to enable affordable delivery of products
and services to low income households
3
Standardizing/Franchising increases the probability that a micro-business will be
profitable
If you have ideas, want to help, or have money, email me at : aldi@kiva.org