Transformational Business Network
National Conference
Economic change powered by
Microfinance and SMEs
Poverty – the facts
 Approximately 790 million people in the developing world are still
chronically undernourished, almost two-thirds of whom reside in Asia and
the Pacific
 2.6 billion people around the world do not have access to toilets or basic
sanitation, causing fatal illnesses that could easily be prevented
 1.1 billion people do not have access to clean drinking water. Instead,
they are forced to drink, cook with and wash in contaminated water
sources every day
 Every 3.6 seconds, someone in the world dies from starvation. The
majority are children under five years old
Poverty – the facts cont’d
 90% of starvation deaths happen where food is plentiful, but people
simply cannot afford to buy it. War, disaster and famine account for only
10% of all starvation deaths
 Nearly a billion people entered the 21st century unable to read a book or
sign their names
 800 million people go to bed hungry every night, 300 million are children
 1.6 billion people – a quarter of humanity – live without electricity
 A London parking meter makes more money in one hour than each of the
2.7 billion people living in poverty make in one day.
What Opportunity International Does
Opportunity International exists to give people living in
poverty opportunities to transform their lives. This is done through small
loans (microfinance) that help them start a business, earn an income and
provide for their families.
Where Opportunity works
28 Countries
40 Implementing Partners
(incl. 15 regulated banking institutions)
Opportunity Vital Statistics
As at March 31, 2010
 ~3 million clients (incl. > .6 million savings clients)
• > 1 million in India
• > •75 million in Philippines
• > •75 million in Sub-Saharan Africa
 > 3.0 million micro insurance clients
 84% of loans made to women
 US$285 average loan size
 US$138 average initial group loan
 US$122 average savings balance
Income Distribution Pyramid
Individual Lending/SME
Solidarity Groups (3-7)
Trust Groups (15-25)
Self-Help Groups (20-30)
Microfinance moving people up the poverty pyramid
Positioning of market participants
Profit
Maximizers
Percentage of World Poor
Average First Loan Size
Commercial
Banks
NGOs
Transformation Maximizers
Economic
Social
Transformational Impact
Spiritual
Transformational Microfinance
Holistic transformation
Microfinance / SME Initiatives
Community Centre And
Safe Drinking Water Supply
Waterhope Harnesses Entrepreneurs For
Sustainable Community Building
The Waterhope Project….
Leverages a strong network of OI NGO’s in Philippines
Is integrated with existing OI micro finance network
Each station provides clean water to over 12,000 people every week
Requires US$96,000 start-up investment per station
Waterhope builds sustainable local entrepreneurship….
Reinvests in local community building
Supports new water businesses for local community members
Is an ideal focus for local PepsiCo employee CSR efforts
Has a sustainable, scalable and proven business model
Each Water Station Provides Clean Water to over
12,000 People Weekly
Livelihood impacts for community
•
4 direct employees
•
60 dealers to date with water businesses
•
Access to micro finance loan funds
benefiting approximately 250 households
•
1,500 individuals community development
services
water source
Community Water
Station
5,400 water jugs (5 gallons) per week
•
90% of water sold to Dealers; 4,860 jugs/week
•
Average Dealer Route is 25 homes, 2 jugs/week
•
Supply 4,860 households = 12,150 people/week
•
10% water given free to schools and clinics (540
jugs per week)
Excellent Water Quality Meets All
Government Purity Standards
Pure water rinsed
Municipal water or spring water
Pilots use carbon filter with UV treatment
Water quality government tested monthly
Risk of water contamination limited by jug design and heat seal
Pilot equipment supplier: Waterhealth and Aqua Add on
Heat sealed for safety
The Water Station Becomes A Community
Focal Point
Community gathering place
Microfinance Centre
Pre-School and library
Community Services
“Give a man a fish, he’ll eat for a day. Give a woman
microcredit, she, her husband, her children and her extended
family will eat for a lifetime” – Bono, U2
Rubbish dump in Manila
Agriculture Microfinance- SME
Agriculture initiatives in Africa
 3/4 of population live in rural areas
 Agriculture is key sector in economies, but low
productivity
 Food shortages and insecurity remain high
 Smallholder has impaired access to technical assistance
and credit
Our Response
 Strong commitment to the sector
 An integrated rural finance and banking strategy:
 Agricultural finance
 Rural savings
 Banking Infrastructure
 Ancillary credit programs (e.g., health, education, etc.)
 A prudent approach – achieve sustainability
Development
 Agriculture’s impact on development is profound:
 labour
 goods (food, inputs)
 market for manufactures
 financial resources; and foreign exchange
 Binding constraint on industry; output growth crucially
dependent on agriculture
 Relative importance of sector declines in the course of economic
development
Interconnected Web of Essential
Relationships
Output Market
• Contract
• Auction
• Trader
Microfinance
• Savings
• Loans
• Insurance
Market Information
Systems
FARMER
Inputs
Infrastructure
• Seed
• Tools
• Fertilizer
• Chemicals
• Communications
• Power
• Roads
• Water
Support
• Extension
Services
• Technical Support
• R&D
CGAP’s View
CGAP conducted thorough review of agriculture microfinance
programs in 2002. Out of 80 ‘promising’ projects, less than 30
were considered to have potential for sustainability. NONE were
considered to be an unqualified ‘success.’
The difficulty in finding a large number of examples of successful providers
of agricultural microfinance shows how susceptible the field is to factors
beyond its control—and how necessary it is for agricultural lenders to
adopt the most important lessons of the microfinance industry to minimize
controllable lending risks. It also serves as a cautionary tale for microlenders moving into rural areas and lending to households that depend on
agriculture for their livelihoods.
- CGAP 2002
Education Microfinance - SME
School building in Malawi funded by Opportunity
Supported an additional 100 students paying
nominal fees of $15 each per Semester
Headmaster Explaining Model & Success
Students achieving results in top 10%
for grade in country after two years
School children during break
Microfinance WORKS – but...
 Microfinance improves health, increases
school enrolment, and helps the poor work
their way out of poverty
 It is highly effective in countries with high rates
of poverty and stable political and economic
environments
 The industry is currently serving over 133
million borrowers, Microfinance is rapidly
increasing to meet massive demand
 Recent recognitions of the power of
microfinance:
 2005: UN declares “Year of Microcredit”
 2006: Muhammad Yunus, Grameen Bank awarded
Nobel Peace Prize
Sources: Microcredit Summit
Campaign 2007, the Microfinance
Gateway, Deutsche Bank
Moving beyond loans
» Many of the problems facing
the poor can be solved with
small loans, but some cannot
» Poor need a wide range of
services to address their
various financial needs
» Savings
Income generation
– A safe place to keep money,
income protection
» Insurance
– Protection in times of crisis:
death, drought, disability
» Money transfers
– Sending and receiving money
to/from other
family members
Income protection
“You must be the change you wish to see in the
world” - Mahatma Gandhi
But for the Grace of God –
I could have been born here!!