Introduction to Microfinance – Fall 2011
Course Syllabus
FACULTY: Sean Foote (sfoote@haas.berkeley.edu)
STUDENT ORGANIZERS:
Gordon Chan (Gordon_chan@mba.berkeley.edu)
Jamie Kong (Jamie_kong@mba.berkeley.edu)
MEETING ROOM: Cheit C325
MEETING DAY(S)/TIME: Wednesday, 4:00-6:00 PM
Class will be held in 6 sessions on the following dates:
10/26, 11/2, 11/9, 11/16, 11/23, and 12/7. There is no class the Wednesday before Thanksgiving,
11/29.
CLASS FORMAT:
Classroom activities will consist of faculty and student-led discussions concerning assigned
articles and readings. Each class will also feature a guest lecturer. Please see the last section for
a list of speakers and their bios.
The class will be simulcast to other business school campuses around the country (approximately
75 to 100).
REQUIRED READINGS:
A selection of brief articles focused on areas relevant to guest speakers will be assigned prior to
each class to facilitate group discussion. These readings are all available online.
BASIS FOR FINAL GRADE:
Class will be graded Satisfactory/Unsatisfactory. To pass the course and receive credit, students
seeking credit must attend at least 5 of the 6 sessions.
ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:
The course explores why and how microfinance operations have grown to provide financial
services to poor and low-income people on a sustainable basis. The course brings together
advice and best practices from successful practitioners and institutions around the world as well
as new technology startups targeting the industry. This course will provide students with an
introduction to microfinance as an important development effort in the war against poverty. It
will also serve as an excellent forum to learn about current challenges and debates in the world
of microfinance.
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Week 1: Introduction to Microfinance – 10/26
Lecture:
Introduction to class structure and faculty
Microfinance and the History of informal savings
The major components of Microfinance’s ecosystem
Speaker:
Sam Daley-Harris, Director, Microcredit Summit Campaign, Founder, RESULTS
Readings for class:
1) Article: “Millions for Millions”, Connie Bruck, The New Yorker, October 30,
2006. (14 pages) http://www.newyorker.com/archive/2006/10/30/061030fa_fact1
2) Article: “Perspectives on informal rural finance,” Jochem Zoetelief, SD
dimensions, Sept. 1999. (8 pages) http://www.fao.org/sd/ppdirect/ppan0015.htm
3) Sam’s Tedx talk, http://www.youtube.com/watch?v=t_LLCUQlB5E
Additional resources:
1) Website: CGAP FAQ, http://www.microfinancegateway.org/section/faq,
2) Website: Microcredit Summit Campaign, http://www.microcreditsummit.org,
If you’re really ambitious:
1) Book: Portfolios of the Poor. Collins, Morduch, Rutherford, and Ruthven. 2009
Week 2: Detailed design – group lending and variations, gender – 11/2
Lecture:
The reasons for microfinance’s unique structure - gender
Individual versus group lending
Speaker:
Eric Weaver, CEO and Founder, Opportunity Fund
Readings for class:
1) Article: “Variations in Micro-finance Design : Some Important Variables,” Par
Jens REINKE, ADA. http://www.gdrc.org/icm/govern/mfi-design.html
2) Article: “Can Microfinance Make It in America?” Time, 2009. (2 pages)
http://www.time.com/time/magazine/article/0,9171,1950949,00.html
3) Article: “India Microcredit Faces Collapse from Defaults”, The New York
Times, 2010. (2 pages)
http://www.nytimes.com/2010/11/18/world/asia/18micro.html
Additional resources:
1) Website: Opportunity Fund, http://www.opportunityfund.org
If you’re really ambitious:
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2) Book: Banker to the Poor. Muhammud Yunus. 1999.
Week 3: Challenges in Microfinance – 11/9
Lecture:
management challenges of MFIs – scale, sustainability
Rates of return and cost of money
Gaining liquidity for investors
Country context and variations
Speaker:
Monica Brand, Director, Frontier Investment Group, ACCION
Case:
1) Case Study: “Controlling Growth at a Mexican Microfinance Start-Up,” Cases for
Management Education. (4 pages)
http://emdapcasebook.iie.org/pdfs/4.3%20Controlling%20Growth%20MFI%20St
artup-Mexico.pdf
Readings for class:
1) Article: “Designing Staff Incentive Schemes,” Martin Holtmann, MicroSave
Briefing Note #15. (2 pages)
http://www.microfinancegateway.org/p/site/m//template.rc/1.9.26843
2) Article: “A Failure to Communicate: Microcredit Confused”. Chris Dunford.
2011. (3 pages)
http://www.freedomfromhunger.org/pdfs/MicrofinanceConfusedMondayDevelop
mentsMay2011.pdf
3) Article: “Microloan Sharks,” Jonathan Lewis, Stanford Social Innovation Review,
Summer 2008. (4 pages)
http://www.ssireview.org/articles/entry/microloan_sharks (Available through
Campus Coordinators)
4) Article: “A Letter to Our Peers,” Carlos Danel & Carlos Labarthe, Compartamos
Banco Website (under “Papers” in the navigation menu), June 2008. (11 pages)
http://www.compartamos.com/wps/portal
5) Article: “Lenders to the Poor Adopt Guidelines,” Elisabeth Malkin, The New
York Times, September 26, 2008. (2 pages).
http://www.nytimes.com/2008/09/26/business/worldbusiness/26micro.html
Additional Resources:
1) Website: ACCION, http://www.accion.org
2) Video: “Who’s Making Money from Microcredit,” NOW: Enterprising Ideas
PBS, September 2007.
http://www.pbs.org/now/enterprisingideas/Compartamos.html
3) Article: “CGAP Reflections on the Compartamos Initial Public Offering,” CGAP,
June 2007. (15 pages)
http://www.microfinancegateway.org/content/article/detail/41181
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4) Video: “Profiting from the Poor?” Vikram Akula and Dr. Mohammed Yunus,
Clinton Global Initiative, 2010
http://www.clintonglobalinitiative.org/ourmeetings/2010/meeting_annual_multim
edia_player.asp?id=83&Section=OurMeetings&PageTitle=Multimedia
If you’re really ambitious:
1) Book: Devil Take the Hindmost. Edward Chancellor. 2000. Not a microfinance
book, but a great book on market bubbles.
Week 4: Investing in MFIs – 11/16
Lecture:
Measuring impact
Selecting an investment vehicle and process
Assessing sustainability
Speaker:
Invited: Gil Crawford, Founder and CEO, Microvest
Readings:
1) Article: “Beyond Good Intentions: Measuring the Social Performance of
Microfinance Institutions,” Hashemi, S., Foose, L. & Badawi, S., CGAP, May
2007. (12 pages)
http://www.microfinancegateway.org/p/site/m//template.rc/1.9.28040
2) Article: “Does Microfinance Really Help the Poor?” R. Rosenberg, CGAP Focus
Note, Jan, 2010 (8 pages)
3) Article: “The Good, the Bad, the Ugly: The Deceleration of Microfinance”.
2011. (1 page) http://www.justmeans.com/-Good-Bad-Ugly-Deceleration-ofMicrofinance/49415.html
4) Article: “A Fresh Look at Fighting Poverty”. The New York Times. 2011. (1
page) http://economix.blogs.nytimes.com/2011/04/26/a-fresh-look-at-fightingglobal-poverty/?ref=microfinance
Additional Resources:
1) Article: “Measuring the Impact of Microfinance,” Nathanael Goldberg, Grameen
Foundation USA Publication Series, December 2005. (52 pages)
www.microfinancegateway.org/gm/...1.9.../30153_file_30153.pdf
2) Website: CGAP Social Performance Resource Center,
http://www.microfinancegateway.com/resource_centers/socialperformance
3) Website: The Mix Market, www.mixmarket.org
4) Website: Microvest www.microvest.com
If you’re really ambitious:
1) Book: More than Good Intentions. Dean Karlan and Jacob Appel. 2011.
Week 5: Other Microfinance products offering – Beyond Credit – 11/23
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Lecture:
Introduction to products in addition to loans, e.g., savings, insurance, and education
Speaker:
Steve Hollingworth, President, Freedom from Hunger, former COO, interim CEO,
CARE International
Readings:
1) Article: “Adding Value to Microfinance and to Public Health Education—At the
Same Time,” Christopher Dunford, Finance for the Poor. Volume 4, Number 4.
December 2003. (4 pages)
www.adb.org/documents/periodicals/microfinance/finance_200344.pdf
2) Article: “Micro-insurance: the next revolution?” Jonathan Morduch, What Have
We Learned About Poverty? Oxford University Press, Updated June 1, 2004. (16
pages). www.nyu.edu/projects/morduch/documents/insurance/Microinsurance_the_Next_Revolution.pdf
Additional Resources:
1) Article: “Reimagining Microfinance,” Alex Counts, Stanford Social Innovation
Review, Summer 2008.
2) Website: Freedom From Hunger, http://freedomfromhunger.org
3) Website: LeapFrog Investments, http://www.leapfroginvest.com/
If you’re really ambitious:
1) Book: Fortune at the Bottom of the Pyramid: Eradicating Poverty with Profits.
CK Prahalad. 2004
Week 6: Thanksgiving, no class (be thankful) – 11/30
Week 7: Innovation and entrepreneurship in MFI land – 12/6
Lecture:
New Innovations in Microfinance
Speaker:
Premal Shah, President, Kiva.org
Readings:
1) Article: “Kiva Case Study,” Joel Ramirez and Sarah Anderson, UC Berkeley,
December 2007. (10 pages) link will be updated or distributed through campus
coordinators
2) Article: “Microlending for Microbankers,” Jilian Mincer, The Wall Street Journal,
March 20, 2008 (2 pages).
http://online.wsj.com/article/SB120597508026550479.html?mod=googlenews_w
sj
3) Article: “Extra Helping,” Rob Walker, The New York Times, January 27, 2008.
(2 pages) http://www.nytimes.com/2008/01/27/magazine/27wwln-consumedt.html
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4) Article: “Confusion on Where Money Lent via Kiva Goes”, Stephanie Strom,
November 8, 2009. (1 page)
http://www.nytimes.com/2009/11/09/business/global/09kiva.html
Additional Resources:
1) Blog: “Kiva Chronicles,” Matt Flannery, Social Edge.
http://www.socialedge.org/blogs/kiva-chronicles
2) Article: “Uganda: A little goes a long way,” Frontline/World, October 2006.
http://www.pbs.org/frontlineworld/stories/uganda601/video_index.html
3) Video: “Changing the World, One Loan at a Time,” Jenn Brown, The Today
Show, August 21, 2007. http://www.msnbc.msn.com/id/20534002/
4) Website: Kiva, www.kiva.org
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Sean Foote’s Bio:
Sean Foote has been a venture capitalist investing in early stage companies since 1998.
He is Managing Director at Labrador Ventures, investors in more than 100 technology
companies including Hotmail and Pandora.
Before venture investing, Mr. Foote was a management consultant with Boston
Consulting Group, working in a wide range of industries such as telecom, computers,
healthcare, banking, and automotive on topics ranging from strategic alliances to Internet
strategies. Mr. Foote also worked as a systems engineer for AT&T Bell Laboratories,
developing artificial intelligence systems for testing the most complicated
telecommunications networks.
Philanthropically interested in education, social investment and microfinance, Sean is
founder of Community Promise, an educational focused nonprofit. He is on the boards of
directors of Freedom From Hunger and Silicon Valley Microfinance Network, and is the
co-founder of Toniic, an angel investor group for impact investors, and Village Capital, a
combination of YPO style entrepreneur support and business plan competition style
equity investment.
Sean is on the Professional Faculty of the University of California's Haas School of
Business where he teaches the Venture Capital and Private Equity classes as well as
Microfinance, which is simulcast to more than 75 business schools around the country.
He has also taught classes on entrepreneurship at the University of Michigan's Business
School, University of Virginia's Darden School of Business and University of
Pennsylvania's Wharton School of Business.
Educationally, Sean received his undergraduate degree in Electrical Engineering from the
University of Missouri Rolla (1988), and his MBA from the University of Virginia's
Darden Graduate School of Business (1993), where he received the Shermett Award
granted to the top 3% of students.
Speaker Bios:
10/26 – Sam Daley-Harris, Director, Microcredit Summit Campaign. Founder, RESULTS
Sam Daley-Harris is director of the Microcredit Summit Campaign. He is the founder of
RESULTS, a grassroots lobbying organization that seeks to create the political will to end
hunger and the worst aspects of poverty. He is also the founder of RESULTS Educational Fund,
a 501(c)(3) organization dedicated to mass educational strategies to generate the public will to
end world hunger and the worst aspects of poverty.
Sam is currently leading phase II of the campaign to help boost the UN’s Millennium
Development Goals for 2015 and includes two of its own new goals: 1) reaching 175 million of
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the world’s poorest and 2) ensuring that 100 million families rise out of $1 a day poverty, lifting
half a billion people out of extreme poverty.
Mr. Daley-Harris is the esteemed recipient of the first Susan M. Davis Lifetime Achievement
Award and is the author of the book Reclaiming Our Democracy: Healing the Break Between
People and Government, about which President Jimmy Carter said, “[Daley-Harris] provides a
road map for global involvement in planning a better future.” Mr. Daley-Harris has also edited
two cutting-edge publications on microfinance: Pathways Out of Poverty: Innovations in
Microfinance for the Poorest Families and More Pathways Out of Poverty.
11/2 – Eric Weaver, Founder and CEO, Opportunity Fund
Eric Weaver founded Opportunity Fund in 1993, based on the idea that small amounts of money
and financial advice could help people make permanent and lasting change to improve their own
lives. Since making its first microloan to a family-owned pet store, Opportunity Fund has grown
under Eric’s leadership to become one of the nation’s largest non-profit microlenders to small
businesses. In 1999, Eric and his team expanded Opportunity Fund to provide financial
education and microsavings accounts (IDAs), and Eric is now a leading advocate in the U.S. for
asset-building programs that help low-income Americans gain access to economic opportunity.
As CEO, Eric is responsible for forging partnerships, attracting new investments and ensuring
Opportunity Fund’s social and financial return on investments in low-income communities. With
a background as a community organizer and leveraging his degree from Stanford’s Graduate
School of Business, Eric runs a successful social enterprise with a $7M operating budget.
Blending together earned and contributed income sources, Opportunity Fund has invested over
$200M into the community through a strategy that combines microloans for small businesses,
IDA microsavings accounts, and community real estate financing.
Opportunity Fund has twice received the Skoll Foundation’s Skoll Award for Innovation. In
2006, the U.S. Small Business Administration (SBA) named Eric Weaver Financial Services
Advocate of the Year. That same year, Eric received the inaugural James Irvine Foundation
Leadership Award for his innovative approach to eliminating poverty in California. In his tenure
leading Opportunity Fund, Eric has testified before the California State Assembly on community
investment policies, met with Treasury Secretary Geithner to discuss effective small business
financing models, and been a featured speaker on microfinance nationwide. Eric and his wife
Sarah are raising their two children in San Francisco’s Bernal Heights neighborhood.
11/9– Monica Brand, Director, Frontier Investment Group, ACCION
Monica Brand has spent her career in the financial services and social enterprise sectors,
expanding and enhancing the value offered to the majority. Ms. Brand currently manages
Frontier Investments, whose mandate is to invest in early stage companies with disruptive
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business models that catalyze breakthrough innovation in financial inclusion. Prior to assuming
responsibility for managing this fund, Ms. Brand launched and ran ACCION’s Marketing &
Product Development Unit, where she oversaw the creation of new financial services to move
the industry beyond microcredit.
Before joining ACCION, Ms. Brand worked in Cape Town, South Africa, where she founded
Anthuri Catalysts to help prepare portfolio companies for investment from its sister venture
capital firm, Anthuri Ventures. Ms. Brand began her career in financial services in California
where she worked as a commercial loan officer and helped launch a $50 million statewide
lending intermediary to finance small business and community facilities. Ms. Brand’s
professional experience also includes training and teaching at all levels, including working with
female entrepreneurs at the Women’s Initiative for Self-Employment (WISE) as a trainer and
second-year MBAs at Harvard Business School as a case-writer. Ms. Brand currently serves as
an adjunct professor at the John Hopkins School of Advanced International Studies (SAIS) of a
masters-level course on impact investing.
Ms. Brand received both a M.B.A. and a master's of education from Stanford University and her
Bachelor of Arts degree in economics from Williams College, where she graduated with honors.
Ms. Brand serves on numerous boards including Compartamos Bank in Mexico, Paralife
Holdings (a Swiss micro-insurance company), MicroFinance Currency Risk (MFX) Solutions
(currency hedging and other risk management instruments for MFIs) and the D.C. Employment
Justice Center. Ms. Brand is half-Peruvian and lives with her husband and twin children in
Washington D.C.
11/16 – Invited: Gil Crawford, General Manager, MicroVest Fund –
Mr. Crawford has over 20 years experience with microfinance institutions and capital markets,
and has worked extensively in Latin America and Africa, as well as in Asia.
Previously, Mr. Crawford worked for the Latin American Financial Markets Division at the
International Finance Corporation (IFC), and focused on investments in microfinance
institutions. Prior to joining IFC, Mr. Crawford created and ran Seed Capital Development Fund,
a US based non-profit firm, involved in creating financial instruments and attracting funds to
capitalize microfinance institutions, primarily in Latin America, Asia and Africa. Specific
projects included: Latin American Challenge Investment Fund (LA-CIF), a US$ 20 million loan
fund for microfinance institutions in Latin America; DEVCAP, a "shared return mutual fund"
whose total assets reached over US$ 27 million dollars. Mr. Crawford has also been a Member of
ProFund's Investment Committee and alternate member to the Board of Directors for many
years.
Before founding SCDF, Mr. Crawford was the Assistant Project Director for Africa Venture
Capital Project, a $7.1 million USAID contract designed to create risk capital firms in Africa.
Mr. Crawford received his bank training at Chase Manhattan Bank in the mid-80's after working
in Africa for the Red Cross and State Department. He graduated from SAIS at Johns Hopkins
University in 1983 and Bates College in 1980.
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11/23 – Steve Hollingworth, President, Freedom From Hunger
Steve Hollingworth is the new President of Freedom From Hunger, the world’s largest provider
of integrated microfinance services.
Steve was most recently the interim CEO of CARE, and the COO of CARE since January 2007.
He is a native of Elgin, Illinois, and for the four years prior to his arrival at CARE headquarters
was Country Director for CARE India, one of the largest CARE country offices. Previously he
was the Country Director in Sri Lanka and acting Country Director in Bangladesh. He served as
Assistant Country Director in Bolivia and Lesotho. In addition, he worked at CARE UK in
London as the Asia and Latin America desk officer.
Steve holds a B.A. in Economics from Augustana College in Rock Island, Illinois, and an M.A.
in Economics from the Victoria University of Manchester in Manchester, England.
11/30 – Thanksgiving – no class session
12/6 -- Premal Shah, President, Kiva.org
As President, Premal leads Kiva's efforts to scale its partnerships and member base. Prior to
Kiva, Premal was a Principal Product Manager at PayPal, an eBay company. During his 6 year
career at PayPal, Premal drove a number of key initiatives including a year long project defining
eBay's role in economically empowering the global working poor. A number of corporate
initiatives have come out of this effort, including PayPal's support of Kiva.
Prior to PayPal, Premal was a strategy consultant at Mercer Management Consulting in New
York. Premal has had a long standing interest in microfinance. In 1997, he was awarded a grant
from Stanford University to research microfinance in Gujarat, India. More recently Premal cofounded the Silicon Valley Microfinance Network and spent 2 months in India working to refine
/ validate Kiva's model.
In 2006, Premal was a featured speaker at the Clinton Global Initiative and Global Microcredit
Summit. Premal graduated with a B.A. in Economics from Stanford University.
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