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MicroStart’s Microfinance Week begins soon!

Emeline Latt — Fri, 17 May 2013 12:46:29 +0000

The second microStart Microfinance Week will take place in Brussels from 27 to 31 May.

The event is organized by microStart, whose focus is on the creation of micro-enterprises—small companies financed by microfinance loans.

The Microfinance Week is an opportunity for future micro-entrepreneurs to take their first steps towards creating their own companies.

How? Through informational meetings, open days at microStart branches, panel discussions, job days and microStarter competitions. Click here for more details about the daily agenda.

Key players in the fields of employment and the creation of new businesses will be participating in the 5-day event.

Individuals who would like to create a micro-enterprise will be offered the opportunity to do so, through monitored microfinance loans.

MicroStart is a group of social enterprises created in 2010 with the aim of assisting people who are excluded from the banking system, by helping them to create or expand an independent professional activity. MicroStart is the result of a collaboration between Adie and BNP Paribas Fortis.

Ekovivo: Microfinance in a nutshell

Olivier Endelin — Fri, 29 Mar 2013 08:34:46 +0000

Many people are talking about microfinance. Is it different from microcredit? How many people benefit from it? How does it help them improve their living conditions?

Microfinance is the provision of financial services to the poor. It is more than just microcredit! It also includes savings, insurance, fund transfers, etc.

Microfinance is nothing new; informal microfinance has been around for hundreds of years. In almost every corner of the world, people have long been forming groups to pool their savings and give loans to their group members. For example, they were named the ‘tontine’ in Africa, the ‘chit’ funds in India, the ‘hui’ in China, or the ‘paluwagan’ in the Philippines, to name but a few.

Pawning is another form of microfinance, which has been in use for centuries.

The birth of microfinance in Europe dates back to the 16th and 17th century with the so-called Irish loan funds emerged in the 1720s. But it is the professor Yunus, founder of the Grameen Bank in Bangladesh and Nobel Price in 2006 who popularized microcredit and micro finance at the end of the 70’s on an international level.

As a result, many microfinance institutions (MFI)* were created in developing countries. And nowadays, microfinance also exists in many developed countries, such as in France, where the ADIE is one of the key players.

*A Microfinance Institution (MFI) is a licensed organization that is involved in the provision of financial services to the poor and has at least 80% of its total portfolio in loans of amounts less than the country’s GDP per capita.

Two main mechanisms

The financial services are delivered to the poor according to two main mechanisms: relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

A few figures on Microfinance (source: Babyloan and Mix Market)

In 2011, the microfinance total outstanding reached USD 86.7 billion—excluding Europe and USA—with 94 million active borrowers (a borrower getting different micro-credits is only counted once).

Latin America, the Caribbean, East Asia and the Pacific regions account for two thirds of the outstanding, while South Asia counts more than 50% of the borrowers in the world.

Around 10 000 MFI are operating in the world – but only 2% of them are estimated financially sustainable.

Weaknesses and strengths

With a 30% growth annual growth rate, the microfinance sector expanded quickly, leading to some excessive focus on profit, unbalanced growth and a lack of proper regulation. While indebtedness, excessive high interest rates, fraudulent practices of micro credit players indeed took place, this was mainly localized in India, Bosnia and Morocco.

Microfinance is recognized as a tool to enhance financial inclusion and, to a certain extent, to lift people out of poverty. However, due to the broad range of microfinance services, it is difficult to assess impact, and very few studies have tried to assess its full impact.

It usually appears that micro-finance reaches the poor (but not the poorest of the poor), and that it facilitates the creation or the growth of businesses. It has often generated self-employment, but not necessarily increased income after interest payment. In some cases, it has helped microcredit borrowers to improve their nutrition, living conditions, health and education.

International trends

Interesting innovations have been developed in the microfinance industry – one of the most promising being mobile phone banking. In Kenya, the mobile phone payment service M-PESA was launched in March 2003. As of November 2011, M-PESA has over 14 million subscribers and well over 28,000 agents across the country. Other forms of branchless banking are also currently tested, either through new technologies or new partnerships.

There is also a trend in microfinance to develop new financial products such as micro-insurance, micro-leasing or specialized loan products. For instance, micro-lending can improve poor people’s access to modern energy services (biogas, micro hydropower, wind, solar, or liquefied petroleum gas). The market potential for energy lending by MFIs is huge, since the electrification rate among poor and rural consumers is still low in most developing countries. Other specialized loan products with similar characteristics are facility loans – for example, loans to improve household sanitation and water supply.

We hope this gives you more insight on microfinance!

Want to contribute? Check out Kiva or Babyloan, two peer to peer micro-credit platforms.

Ekovivo: Microsaving & Tree planting

Florence Valle — Wed, 27 Mar 2013 10:42:32 +0000

On our travels, we have come across a double-solution involving both micro-saving and tree planting for the poor, by the poor.

How does it work?

Take a community with some available manpower and create a savings company that owns or leases a plot of land, suitable for a forest plantation or a tree-based commercial harvest.

The savings company organizes the tree planting and insures the crop against major disasters.

Each time a community member works one day in the plantation, he receives a wage, paid for some part in local currency, and also in “tree shares”. A “tree share” represents a small part of the plantation. The closer is gets to the harvest period, the more the value of the share increases.

The owner of the share may keep it as savings or use it to pay for goods. When the saving company sells the crop, it reimburses the owners of the “tree share”. In the case of trees with a life expectancy of 20 years, the saving company will pay dividends every year until the twentieth year.

As such, this product offers an inflation-proof and robust savings instrument for the rural working poor in the developing countries, where the national money is subject to high inflation. It encourages sustainable resource management and makes available a local complementary currency that would marginally increase the liquidity available in the poorest communities.

For more information, please refer to the paper “natural savings: a new microsavings product for inflationary environments – How to save forests with savings for and by the poor?” by Marek Hudon – Centre Emile Bernheim – Université Libre de Bruxelles and Bernard Lietaer – University of California at Berkeley.

Social Entrepreneurs: In the words of Hervé Baulme

Thibault Couturier — Wed, 13 Feb 2013 17:16:26 +0000

Thanks to the efforts of social entrepreneur Hervé Baulme, 150 disabled individuals have been reintegrated into society, and 12,000 computers are recycled each year and sold at affordable prices to people in underprivileged circumstances.

This interview with Hervé Baulme is the second in our “Social Entrepreneurs” series. The interview is part of a sequence of meetings with company directors who are supported by PhiTrust Partenaires and BNP Paribas Wealth Management.

Several years ago, Hervé Baulme had just sold his IT company and decided to buy Ecodair, a not-for-profit organization that helps those suffering from psychosocial disorders to reintegrate into society by way of employment. Hervé transformed the association into a commercial business, increasing the number of employees by 7, and at the same time re-establishing its economic and financial viability.

The main activity of this SME is to recycle PCs, giving them a second life. At the same time, Ecodair is developing an IT maintenance service for some of its clients. All this a workforce made up of many disabled—and capable—individuals.

Hervé Baulme doesn’t plan to stop there. He has a number of other development projects planned for Ecodair in France, and is also considering projects located abroad.

His vision: to facilitate the social integration, through work, of people who suffer from mental disabilities, while preserving the environment by recycling computers.

His social impact: each year, approximately 12,000 computers are recycled (that’s the equivalent in CO2 of driving 14 million kilometres by car) and sold at affordable prices to people in underprivileged circumstances; and 150 disabled individuals have been reintegrated into society through work.

Why Ecodair? What was Ecodair like before?

Ecodair was a not-for-profit association that, 7 years ago, when I first came across it, was mainly vocational. There were more salaried workers than people receiving assistance: 6 employees versus 5 people receiving assistance, and it was racking up staggering operating losses. I tried to take the same approach as I would with a normal business. Many things had to be changed: I had to increase production, set objectives and motivate the team.

Then of course you have to manage this new pressure, and more attention is required in dealing with mental health disabilities, but I believe that this is interesting work and the new vision of the company means a lot to our employees. They benefit from our company’s new high-tech image, which raises their status in the eyes of their families and friends. This helps them to gain self-confidence and find their place in society.

What are the differences between a company such as the one you previously managed and Ecodair? How is a company managed when you are employing people with disabilities?

We obviously pay more attention to the needs of each individual; we have a social worker and a psychologist on our team. There are people who are severely disabled, and they’re a long way from being employable in the regular sense. And then there are others who are less severely disabled, who are much closer to being able to hold down a ‘real’ job…

We select our employees, put them through some introductory training and follow their progress. We have weekly meetings with the monitors, the psychologist and the social workers. We share our impressions of each person: how they’re getting on, whether they’re still following their treatment, what we can do to help, and how to contact their doctor, because there must be a doctor involved too.

Do you have fairly low staff turnover?

There are people who’ve been here for 8 years – longer than me. Most of our employees suffer from cyclical illnesses, so there can be times when people suffer from relapses or breakdowns. Other people are less ill and want to do something else. So they either transfer to another specialised company or they go on a training course to start a new career. For example, one of our employees recently took a course to become a carpenter, although he had very good IT skills. And there were also two disabled people who were hired by the IT department of one of our clients.

These are all positive outcomes and a great success for these people, who have been able to reintegrate into society through work.

Does Ecodair offer other services in addition to computer recycling?

Yes, our strategy is to develop an IT maintenance service for large not-for-profit associations, businesses and schools who don’t have the resources to employ an in-house IT director or to work with an IT services company. For them, this would be a solution that would offer value for money. We can deliver a professional and well-managed service with employees who are being reintegrated into society.

This meeting with Hervé Baulme is part of a series of interviews with company directors who are supported by PhiTrust Partenaires and BNP Paribas Wealth Management.

ASKI mission in the Philippines : A journey in the heart of rural micro-finance

Florence Valle — Wed, 13 Feb 2013 15:38:47 +0000

Thanks to MicroFinance Sans Frontières (MFSF), my husband and I performed a three-week mission with ASKI, a micro-finance institution (MFI) in the Philippines.

ASKI counts 39 branches, more than 100,000 clients and a gross loan portfolio of PHP 1,387,994 (US$ 34 187K) – which makes ASKI part of the 10 biggest MFI in the Philippines (source: Mix Market). 46% of its clients live with less than $4.32 per day and 54% do not have access to banking services.*

The objective of our mission? Help ASKI in finding new partners to bring funds and technical assistance in order to contribute to ASKI‘s growth objectives.

In order to better understand the activity of ASKI, we interviewed ASKI responsible of the different business units. Then we went on the field to meet with ASKI clients.

This is how Shirly Panisigan was introduced to us. She has created a group named « Kasama Mu » to obtain a collective rural loan.

This loan is the sum of all individual loans that have been granted to each member of the group. And each member has to reimburse its own loan as well as being responsible for the total amount of the loan. No other credit will be granted as long as there is a default payment from one of the member.

This group of rice farmers uses the loan to buy farm products such as fertilizers, seeds or small equipment. Thanks to ASKI and to one of its partner Opportunity International, an American NGO, they also benefit from the grant of water pump to irrigate their fields during the dry season and do an additional harvest. For example, thanks to its first loan for an amount of PhP 10,000 (US$ 246), William, Shirly’s brother-in-law , harvested 105 sacks of rice (instead of the 65 he used to) that he sold for a total amount of PhP 78,750 (US$ 1 940). He was then able to reimburse his loan (the agricultural loans are indeed paid after the crop) and build his own house.

On her side, Shirly bought piglets to start farming and lead the group, which counts now 125 clients for a total collective loan of PhP 120,000 (US$ 2 956). Her dream? That her daughter Isabelle finishes her studies and that she can help more the member of her group.

This immersion let us realize that ASKI action was going far beyond providing financial services to its clients. It includes also a number of programs to improve access to education, health services and to help them finding market outlets for their production. ASKI indeed negotiated in the name of its clients a deal to supply onions to Jollibee (the counterpart of McDonald’s) or with San Miguel Corporation to supply the cassava root crops produced by its clients.

The following two weeks were focused on searching new partners and establishing first promising contacts.

ASKI clients shared spontaneously their stories, their difficulties, their dreams and we witnessed how a small sum of money has enable them to build or increase their activity in order to find a roof, to gain in self-esteem and to save money for the education of their children… Ready for action? Contact MFSF or type Kiva on google and you will find some more stories about ASKI clients!

* Figures As of end December 2012.

Social Business: Turning fish scales into jewels

Olivier Endelin — Wed, 13 Feb 2013 11:03:03 +0000

Vola’s main motivation for creating the fish scales jewels company is to help women have a better life. Getting a proper job is often the first step to gaining respect.

We met G.a. Vola Harindah at the SMEs market, organized around the ASEF, held in Manado, in October, 2012. The name of the small company Vola has created is “The voice of the women.” It mostly operates with the women community of the Mantehage Island, north of Manado, on Sulawesi, Indonesia. Vola’s 2 main dreams at the moment are:

> To stop the traffic of women for prostitution;

> To stop violence against women.

Vola considers that for a woman, getting a job is often the first step towards gaining more respect from her husband in particular and from society in general.

15 minutes to turn fish scales waste into jewels

The process of turning fish scales into jewels is pretty simple. The fish scales first need to be cleaned, then dried under the sun during about 3 days. The fish scales often come from red fish, but any fish scale could be used. Vola usually gets them from local fishermen, from unsold fishes. Wax glue, from supermarkets, is burnt on candles, then put on fish scales. Larger scales make the base, with the smaller ones on top. The “flower” edges are then cut at the end of the process. It takes about 10 minutes to finish smaller jewels, 15 minutes for the larger ones.

Good ideas and strong motivation can change lives

There are about 23 workers in this company, on the mountain of the Mantehage Island; they work 4 days a week. Not all of them come every day: they each have their own schedule. The workers are from different ages: high school students, young adults or older people; only 2 are men. With this small business, the workers can earn enough to live. They get their salary once a month.

In Indonesia, as in many other developing countries, women are often taking the lead to improve others’ lives. Vola is definitely one of these leaders. She is convinced that better economic conditions can dramatically improve the living conditions of women. The company she has created is a very good example.

Joshua Vial, Enspiral – “It’s all about creating sustainable communities!”

Florence Valle — Mon, 11 Feb 2013 08:00:26 +0000

As a developer, and convinced that network effects generate value, Joshua decided to set up a community of people who, just like him, were able to earn money on their own as freelance consultants, and eager to participate in building a community to share ideas, competences and more. Attracted by the “walking distance community” of business, he decided to establish Enspiral in Wellington in March 2010.

Originally from Australia, Joshua spent 2 months walking on the paths of Saint-Jacques de Compostela, half in France, half in Spain. Enough time to think, and make plans for his future. On his way back, he spent a few days in Paris, where he saw the exhibition of Yann Arthus-Bertrand called “Alive”. He then decided to be proactive and to initiate changes.

Enspiral is a very organic community, which grows with no predefined rules, with members joining and free to leave, all bringing a lot to the community.

Joshua mentioned 3 main characteristics of the community, established as a limited liability company, which has a clause in the constitution that mandates 100% of the surplus to be spent on its social mission; first a capacity play, with highly skilled members, happy to share money and people; second a decentralized organization – in contrast with older models where money, information and control used to be centralized in the hands of a few; and then a community of business, where the main strategy consists of launching new ventures.

So far, 85 people within the community have created 12 companies. Every Monday morning, the « Enspiral village » meets: some of the mentors (3-5) meet to talk about how they can best help startups.

Some of the companies have an equity relationship – the others use a revenue share with Enspiral.
We had the opportunity to visit Enspiral offices. People don’t just share open space just like “the hub” in London or Melbourne, or “La cantine” or “La ruche” in Paris. Enspiral members went a step further, with an original governance model: members of the collective own a share in the Enspiral Foundation, each share representing 1 vote, but these shares cannot be sold.

Each member of the trust decides how and how much to contribute to the trust, either financially, and or through services. A usual contribution is 20% of the contracts value, generated by the freelance consulting fees, half being distributed to the trust, half of it allocated to specific projects.

The trust generated 500K NZD the first year, 1M the second, and should double again its turnover this year.
They plan to create an investment fund and to develop their concept abroad next year: Honk Kong, New York and Sidney have shown an interest. It would bring to the community the opportunity to more easily go and work abroad.
Twice yearly, they organize retreats, to protect their main assets: their business culture and high trust environment.
Joshua’s vision for the future: « all businesses should be a social business! » What about the contribution of Enspiral to this vision? « More hands on development, with a better measurement of social impact ». Convinced that what is easier and works better is more likely to be copied, he really wants to demonstrate through Enspiral that social businesses work better, so that this model inspires more people.

As we’ve seen, most of them do share the same enthusiastic optimism for the change their initiatives can bring to the society. Some organizations focus on sharing this vision with the next generation, some others work on growing the existing ventures, other just deliver the promise and fight for getting more sustainable. Like in the “classical” economy, it’s all about capability and capacity, people and finance. What’s specific about this Social Business Community is the level of expertise these people have, the degree of personal involvement into their activity, and the innovation they brings to the community, with a strong will to share. They are creating new rules for their community, for the whole society benefit.

Alex Hannant, Hikurangi Foundation – solid roots allow to grow larger

Florence Valle — Mon, 04 Feb 2013 08:00:37 +0000

In a way, Alex Hannant’s role is to make sure that people, who got the inspiration, potentially through events like the ones Guy would have initiated, can turn their ideas into sustainable businesses.

Alex is indeed convinced that there is already a growing consciousness about climate change, scarce primary resources and increasing poverty, and also a growing number of people compelled to initiate changes towards a better world.

Alex has worked throughout Africa, Asia and Europe facilitating community learning and social innovation. As the Executive Director of the Hikurangi Foundation, a charitable trust that supports and grows social enterprise, he’s focused on New Zealand’s shift towards a prosperous, inclusive and sustainable economy that fosters entrepreneurship, collaboration and game-changing initiatives.

His main concern, at this time, is mobilizing capital and building capabilities for this transition – the talent and intention is there but the resource and support is lacking.

This is the gap that Hikurangi is seeking to fill – through seed funding, mentoring of social entrepreneurs and connecting social start-ups with professionals and large companies like, KPMG, Russell McVeagh, and Kiwi Bank. Now, the challenge is to grow a whole social enterprise sector and embed innovation in the wider community.
And Alex has plenty of ideas to boost great initiatives. With a lot of empathy, he also feels very concerned about the Pacific Islands economic perspectives. He is definitely very excited about the idea to leverage Hikurangi’s experience and expand the incubator model into the wider region.

That’s another lesson learned from our walking tour around Wellington Social Business community: with a great deal of empathy, knowledge and experience, the potential to turn smart ideas into great businesses with large social impact is huge, as long as you have enough capital and capabilities. Alex has been able to gather all these qualities. He is definitely one strong figure of Wellington Social Business community.

Portraits from Wellington, New Zealand: Nick Churchouse & Guy Ryan

Florence Valle — Mon, 28 Jan 2013 15:17:26 +0000

Creative HQ is an incubator, not especially specialized in Social Businesses. That’s what makes it interesting for us to meet with Nick Churchouse, Venture Manager at Creative HQ.

What do “traditional economy” actors actually think about Social Business?

Both the central and local governments have founded creative HQ. Its mission is to generate more business in Wellington, to attract more people and investments in the region. The objective is to scale up a selection of smaller businesses to help them reach at least 10 million NZD, within quite a short period of time. So, main targets are innovative companies, mostly using new technologies, with a great potential for quick growth.

Although Nick’s mission is not to give priority to social business, he personally believes that to provide helpful services to people while limiting if not reducing the impact on the environment should be a prerequisite for most start ups: not only because an increasing number of people use this criteria to select a product, a service or a company, but also because this is in the companies’ interest to develop their business on a sustainable basis, as most companies will have to review their strategy sooner or later.

Nick also believes that the main reason why New Zealand has been able to build a reputation on being natural and clean is because of its low number of inhabitants. In other words, with 40 million inhabitants, the situation would not be much different to most other western countries! So New Zealand has to work hard to preserve its green and clean reputation.

“But can a company grow fast and still be sustainable?”

There are interesting initiatives going on within Maori communities, who try to combine community owned activities and companies, with long-term sustainability objectives; but many face difficulties to get these models fit into our short term accounting systems…

That’s always interesting to get external people’s opinion – it definitely helps getting a broader perspective.

So, what’s the younger generation’s opinion about all this?

Guy Ryan, Inspiring Stories – A spark for the future

Guy Ryan is graduated in Film Production. His ambition is to raise youngsters’ appetite for social change, by using videos.

A sixth-generation New Zealander and proud West Coaster – Guy received a World of Difference scholarship from Vodafone in 2011 to help launch Inspiring Stories Trust. Since launching, Guy & the team have created and run over 80 events nationwide engaging thousands of people.
Their film–focused programs include a national film competition themed ‘young Kiwis making a difference’, storytelling & filmmaking workshops, and a community film screenings program. They’re also piloting a similar competition–workshops–event model in the social entrepreneurship space – one of these events is Festival for the Future. The Festival is about ideas, innovation and action. It’s a national event that has just happened for the second-year running, and brought more than 300 people together for a dynamic program of speakers, workshops and entertainment – reframing 21st century issues as opportunities, and celebrating action for a better world.