Microfinance, Microloans and Microcredit Discussions

Which 10 African MFI banks would you invest $3.5mn in

A friend of mine represents one of the 3 main Bangladeshi designers of microfinance. her job as US fundraiser involves finding 3.5 million dollar funds to be invested in 10 African microcredit operations that are currently small but could sustain 10 times growth if they had both the best advices as well as more resource

Last comment added: Tue, 25 Nov 2008 16:10:26 PST

Micro Venture Finance

Exploring what micro venture finance might look like based on Lars hearing Anil Gupta speak and originally discussed in this thread.

Ned Micro venture finance looking at innovation and technology seed investment in emerging markets.

Micro venture finance something that looks along the lines of a mash-up of endeavor.org, ycombinator.com, the-hub.net, kiva.org and focused on innovative, grassroots, localized, sustainable business models. Targeting technology, software, mobile, web business aimed at the millennium development goals by providing ultra low seed capital in a startup like incubator environment that is also part of a network of similar other locations.

That being at "the bottom of the economic pyramid" doesn't mean that a person is at the bottom of the innovation pyramid. The poor have an active role to play.
There is a three-part strategy (or "golden triangle") Innovation --> Investment --> Entrepreneurship which forms a three-legged stool supporting development
There is a huge need for micro venture finance, small amounts of resources that can be packaged for innovation and prototyping, not the delivery of goods and services to market as so much of microfinance is presently concerned with.

we should enagage students every where to look for creative people and outstanding traditional knowledge (tk) holders in every university and college during their summer or winter vacations. I mentioned this to the senior faculty and students of udla, unversity of americas at santiagao yesterday where i was for last two days. Thats how Honey Bee network started twenty years ago.
we need to screen these ideas and innovations and also tk and buidl class assignment around these ideas for value addition, product design, business planning and market reserach, product development grants and micro venture finance etc.
the idea of product design at IDDS , a course taught by amy smith and her colleagues has been develoepd quite a great deal. Neil gershenfield, at mit has advanced the idea of fab labs which can be used by common peopel to generate new generation products using their traditional knowledge and skills. Eric vn hippel at MIt has deepend the ideas of user driven innovations. For instance in a workshop in november, 2008 at iim ahemdabad where i teach, Eric will meet dr Janardan Reddy, a cardiac surgeon who has developed two sided screen of lap top with another fabricator, mt Narayanan so that doctor and patient can shre same screen sitting opposite side of tables and understand the complexisties of surgery that doctor intends to pursue. there will be many many other implications of such a laptop. No engineer conceoptualised it , no dell, ibm or compaq designed this lap top needed by med representatives, scholars/managers wanting to have meetings across the table. Similarly, mehtar hussain and mushtaq hussain from Assam will also be there to share theior 125 usd wind mill design. issue is, how do we buidl a community of product designers, fab lab networkers to help such individual innovators in informal but also formal sectors.
after taking the prior informed consent of grassroots innovators, we need to optimise these technologies through blending between informal and formal science. ho wdo we buodl a network of public spirited scientist interested in sustainable technologies. Bill clark at Harvard university and Dr R A Mashelkar in India have been tryng to do so. Bill is very keen to take the idea of sustainability science which he champions worldwide to next level where high quality science addresses the concerns of common people and grassroots innovators and tk holders with most sophisticated scientific rigour. Dr Mashelkar as DG csir ( council of scientific and industrial research) signed an agreement with NIF ( National Innovation Foundation nifindia.org ) which also he chairs. In energy, mechancial, food and nutraceuticals and herbal technologies, today top labs of india work on grassroots science. Similarly, a mou was signed with Indian council of medical research ( ICMR) and NIF to aid herbal traditional medicine.
we will be more than happy to explore the ways in which public spirited designers, fab lab experts, engineers and product developers, variosu other scientists world wide engage with Honey Bee network and add value to people's creativity and innovations and expand the public domain.
we have developed a concept of Technology Commons ( TCs) building upon gpl and creative commons but a shade different, emerging out of PhD work of my senior colleague Riya Sinha. Idea is that IPrs should not be used to hinder people to people learning, imitation and improvisiation, etc. The core or anchior technology and all th eimprovisatiosn coudl be pooled in aTC and then made avaialble for free use by common self employed poeple but licensable to corporations/ medium size companies of evens small scale companies for consideration.
we hear so much about micro finance and for all the good reasons. But when did we hear about micro venture finance? We have established a small one million dollar fund at NIF with the help of SIDBI in india. But without a product development fund, MVIF will only go some distance and not all that far. We need to ask ourselves that if angel funds and vc are useful for high tech revolution, then should not it be even more crucial for small innovations. how to mobilsie small contributions from millions of peopel for small investments in ideas, innovations and tk( some of whcih will beocme viable businesses ). how to also create support system fo rsocial businesses, that is business which will not recover their entire or soem time any cost from consumers. do we not see the necessasity of such investments. shoudl people unable to pay the cost of certain essential services be excluded ( and then allowed to join the ranks of social disrupters??).

there are many other ideas, see sristi.org and nifindia.org and also read my papers at sristi.org/anilg

I am sure that with emimnet colleagues putting their faith in Honey bee network, we can herald a new way of developing solutions for the problems that will not be solved merely by throwing money at them. A new ethics, a new social contract and new social engagements with angry and dissatisfied youth and others in rural and urban areas is needed.

Sent to Anil...

Still considering what a concrete proposal might look like. I think in addition to VC's speaking with philanthropists, foundations and MFI's could be worth including as well.

I'm seeing micro venture finance as something that looks along the lines of a mash-up of endeavor.org, ycombinator.com, the-hub.net, kiva.org and focused on innovative, grassroots, localized, sustainable business models

(technology, software, mobile, web business) aimed at the millennium development goals by providing ultra low seed capital in a startup like incubator environment.

and heard back from him...

Will come back later in the day with detailed response

Few quick points

the mvif is for ideas and technologies for which market does not yet exist, it has to created

it must have smvif branch or segment for technological innovations at grassroots for which cost of delivery be higher than unit price of the product or service, a kind of public good

the private goods and services based on local grassroots innovations or gri may need to be optimised for flexible social applications, product development cost have to be factored which could be higher than the business Delivery cost of that product after optimization

there could be a scope for technology commons as a category of innovations in which people to people copying, adaptation, improvisation etc ., are encouraged but use by corporations is governed by licensing of tc ipr

kiva and other such platforms are very good for simple businesses which may not involve any innovation. The orposed find ought to focus on innovations and or traditional knowledge of communities or individuals

mentoring, on line incubation, branding for vertical markets under grassroots to global. g2g and horizontal markets p2p of people to people will also need to developed

efforts have to be made to bring on board advertises. Designers, packaging expets, r commerce experts and courier agencies to pick innovative products from door step of small enterpeneurs

Ultimately peace and justice can not be forged by current model of globalization

We have to rethink the world in paraguay, where bishop was sworn as president and wher one percent people own 77 per cent land, Nepal where a Maoist pm has taken over yesterday and n e India and rest of the world

Innovation insurgents are needed

We will help change the choices of people who have suffered injustice for so long nd who are too proud to take doles

Anil

Last comment added: Mon, 29 Sep 2008 04:44:34 PDT

Micro Finance: What Are the Gaps?

I've been approached by a team doing some microfinance work in East Africa. They are looking to fund an IDEAS award oriented toward addressing key gaps or limits to microfinance as its currently practiced.

They've got their work cut out in trying to better define the range of problems students could potentially tackle, but I thought I'd ask the question here as well, since many of you are pretty knowledgeable in the field.

So, I guess my question is, what are some critical needs in the microfinance sector that teams of gifted students might be able to tackle, especially if paired with a microfinance institution to help them pilot and refine their solution?

Last comment added: Tue, 09 Sep 2008 19:43:46 PDT

peer to peer lending

a report http://www.rice.edu/nationalmedi a/multimedia/online

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Kiva Team Invitation (beta)

Kiva (http://www.kiva.org/) is starting beta testing on a new feature on their site called Kiva Teams. Lenders are now allowed to be on teams together, and their total loans, from here forward) can be applied toward a team total...though the loan is still managed and owned by each lender. Social microcredit lending teams, kinda.

I spent some time (pro bono) a couple weeks ago with a Kiva staffer going over UI, strategy and other ideas for Kiva after which she insisted I be a captain of a beta Kiva Team.

Well, Kiva Teams is less than a week old, so just starting to get the ideas of what some benefits might be. One positive benefit may well be group members seeing others loans and joining one another on those loans.

I noticed both Don and Bob in the Kiva Team Ned group loaned to three of the women I'd already loaned to. I hope the ned.com Kiva Team is the first to loan $1,000,000 ... but as the groups start to grow in numbers, the race to be one of the top groups will become more and more competitive, and competition for good is a good thing.

Other benefits will emerge too.

If you would like to join the Ned Kiva Team, please just send me a private message with your email, and I'll send you an invitation to the private beta.

Last comment added: Wed, 15 Oct 2008 14:07:55 PDT

What Is Microfinance Really About?

There is new data to suggest that the real reason people take out microloans is to take care of more urgent familial needs, such as health expenses (17%) and marriage (13%) more than business-related activity.

On the back-end, the lender side, people still just want to help. How much do they care if they are helping to "tip" a successful business into profitability and sustainability?

The research comes from Michael Chasnow on the use of credit in the slums of Hyderabad, and builds on a conversations happening at the India Development blog and the World Bank.

What is microfinance really about - expanding the entrepreneurial ranks or meeting basic needs?

Last comment added: Fri, 03 Oct 2008 21:53:39 PDT

Beyond Angel Funding

Great information and ideas beyond traditional angel funding for new startup biz models.

http://www.socialedge.org/discus sions/funding/new-model-for-ange l-investment

Last comment added: Thu, 31 Jul 2008 01:48:14 PDT

Q&A arising from interviewing 9 of Grameen's core people

Five of us travelled to Dhaka this week- we got a rare chance to interview 7 of grameen's longest serving people and 2 of its newer folk recruited to expand social business and future capitalism worldwide

its not often these 9 are all in Dhaka at teh same time but they were preparing for the opeing of a new musuem of microcredit which the Nobel committee had asked them to build- Yunus himself was rushing back from the annual microsoft partners conference where he had keynoted and a basketball stadium had been needed to accomopdate the audience http://www.youtube.com/watch?v=A J1tfWtshDc

if you have a question such as we know a group who are seriously interested in starting microcredit n XYZ, how would we go about understanding how grameen could help, I will both try to answer it and externally email my 5 comrades to see if they have better ideas than mine

In a month or so I hope that I will also be able to publish the full transcripts of our interviews- Muhammad Yunus wanted to have a look at them first before we go public which is fair enough since back in january in new york we approached him to say that the world of youth would like to hear from the whole of his organisation, and he responded warmly whilst making it clear this would be a new activity for many people who are used to serving the grassroots memebership but not to the sorts of pressures of being examined as a candidate for the best 25000 person organisation humanity has ever been served by

Whilst I personally rate Dr Yunus as the most interesting entrepreneur in the world, I was quite unprepared for meeting

the 3 men who have teamworked together since the first loan in Jobra

the two ladies who have been the backbone of grameen culture since the early days

four others with amazing stories to tell too; the range of Grameen may be best described like this- every time Grameen is invited to a new region, it makes a passionate attempt to find the poorest of the poor and start the first branch there; conversely 31 years into this some grameen villages are now quite far above the poverty line and these are now taking on loans at an enterprise and not just an individual level of worth. Over time, its an amazing entrepreneurial celebration of what humanity can do-the poor people's bank has now inspired worldwide over 140 microcredit partners in knowhow exchanges, developed bangladesh's largest business -Grameen phone- probably the largest solar energy installation businwss in any nation .. is currently attempting to deliver clean water at 1000 times cheaper than any other pay-for water service, and so forth

Last comment added: Fri, 25 Jul 2008 00:41:25 PDT

Simplifying MIcrofinance

When I want to simplify something I go back to how to "teach" it to my 9 year old daughter. I dont necessarily mean teach , "experience" would be a more apt word if the english language permitted "experience" it.

So that even the most attention distracting heckler can have no substance for worries, I went and bought a book "One Hen" http://onehen.org/ from someone I have never met sponsored by an organsiation I dont particularly like : Opportunity International

Here seems to be a good enough start for 9 year olds to grab hold of MF.

Kojo and his mother live in a village in the Ashanti region of Ghana. None of the 20 families in the village have very much money, but they do have a good idea. Each family promises to save a bit of money so that one family can borrow all the savings to buy smething important

===

OK so that's 3rd grade microfinance ; a community invests in the most sustainable-productive working idea that's put in front of it. Every one is co-responsible for this- there are no lawyers, no henchmen if the investment goes wrong. But if it goes right the community gets its money back to invest over and over in communally productive stuff, and all the while more and more jobs and prosperity is flowing round the community. This is empowering. Nothing is being extracted by outsiders. Let me leave it there for 48 hours or so - please do add your own 3rd grade notes (stuff it would ne informative for my or any 9 year old to read) before we go up 2 grades

(Next we will see some good news when a 9 year old asked a question 1000 adult new yorkers dared not ask. Its worth the wait)

Last comment added: Sun, 24 Aug 2008 05:03:48 PDT

benchmark concept of microcredit

Search | all | news| west coast internet explorers extending social business model pioneered by microcredit

since there seems to be a lot of confusion, let's state the core model of microcredit; if anyone is sure that the original model had differences from the following please tell me and I will add in your signed comments

yes I have rounded a few numbers

microcredit offers $100 loan with 50 weekly payback installments interest rate is 20% flat

so each weekly installemt cost $2.43

the 3 cents comes from recommending that you buy 1 share in the microcredit bank whose price si $1.50

who is offered this loan:

poor women or poor community builders for the sole purpose of developing income generating activity (ie a small sustaianble business)

what else:

you get help from a peer circle of 5

in fact most villages are so local that you will see many peer circles helping each other; moreover the branch manager is 100% incentivised not to loan you unless you are ready; moreover parallel branch managers know roungly what number of franchises of each kind are sustainable in each village so you won't be encouraged to go into a business where there is too much supply

there is a very strict rule - no gifts to be given to banking staff; this is part of the culture of ensuring that the granting of loans is transparent, open , equitable

as well as borrowers, the local community is encouraged to take out savings accounts- a branch is only given a full cretification when it has achieved several goals: firstly self-sustainability of the local branch ie more communal savings coming in than going out; second since the purpose of the bank is to take both individuals out of poverty and to develop sustainability of the community they live in - members agree to a set of club rules- in grameen's case these included our branch is not certified as fully operational until every child of a member family goes to school

the microcredit bank is entirely owned by its borrowers, and since new borrowers must come from the poorest parts of the community valuetrue sustainability investment mapmaking professions can certify this is wholly assured as a social business - one where the organisational system -its compound future flows and value multipliers - are coordinated with shareholders who are 100% aligned with the long-term system purpose - to end poverty

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