Making Microfinance More Effective

Harvard Business

A major challenge for international development efforts is determining which financial tools provide durable buffers against such setbacks. Personal savings, insurance, credit, cash transfers from family and friends and other financing mechanisms offer promising opportunities to create security and steady employment but they require a nuanced understanding of product design and the local market conditions in order to be effective. For the 2.5

Can Impact Investing Avoid the Failures of Microfinance?

Harvard Business

Morgan projected up to $1T in investment would be deployed this decade — which would make impact investing twice the size of official development aid to the world’s less develop countries (as defined by the United Nations) , presuming historic levels of aid stayed constant since 2010. Fortunately, impact investors have the opportunity to think more creatively over the next decade, as long as they learn from past mistakes in microfinance. Lessons from Microfinance.

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The Microfinance Contagion Scenario

Harvard Business Review

So far, the Andhra Pradesh (AP) microfinance crisis has largely been viewed as a local issue, with relatively little impact beyond AP or India's borders. Other microfinance crises, in Bolivia, Nicaragua, Nigeria, and Bosnia, have not spread beyond the borders of a particular country. In a recent paper, Jonathan Morduch and Jonathan Conning explain the role of debt and equity financing in the microfinance industry.

Women as Microfinance Leaders, Not Just Clients

Harvard Business Review

We're a network of microfinance organizations; we exist to share practices and develop the leadership skills required by a sector that has grown up fast. And as you might be aware, microfinance is a phenomenon that, while it did not set out to be "for women," has mainly turned out to be. It's vital to reverse the trend and help microfinance institutions attract, train, and retain talented women. Diversity Gender microfinance WWB

How One Startup Developed a Sales Model That Works in Emerging Markets

Harvard Business

A lot had to take place for this all to happen: I had a problem but knew a solution existed; I had access to information on my options; I had a physical destination to see my options in person; a trained employee was available to provide advice and recommendations; and I had a means of financing to bring this appliance into my life almost immediately. Experiment #5: Microfinance Institutions. Customers show up regularly to take out loans, arrange payments, and track their finances.

How Large NGOs Are Using Data to Transform Themselves

Harvard Business

and globally, and Habitat for Humanity, which works in 70-plus nations to provide home construction, rehabilitation, and increased access to shelter and financing, gathered data from their sites to make the case for profound change. Army staffers now develop individual strategies to overcome these barriers, connecting families to community services to achieve self-sufficiency. A critical part was adapting a proven model in a related field: microfinance.

Global Entrepreneurs Need New Funding Models

Harvard Business Review

In low-income countries, according to World Bank data in a recent paper by the consultancy Dalberg, 43% of businesses with between 20 and 99 employees say that access to finance is a major constraint. The White House has called this gap between the demand and supply of finance for small and medium enterprises a "market failure.[and] For now, my business is much better, but it all boils down to finance.". Entrepreneurship Finance Global business SEIFF

Funders Can Give More than Money

Harvard Business Review

Six years ago, David and Donna Allman approached Opportunity with an idea that fell outside our traditional microfinance model: to build a Community Economic Development (CED) program in Nicaragua. A CED strategy starts with an asset assessment rather than a needs assessment of the poor, recognizing that even the poorest families have assets to contribute to their own development. We know that microfinance alone will not break the poverty cycle.

Using Games to Get a Handle on Bank Risk

Harvard Business Review

Yet unlike in finance, where distributing risk across institutions is the goal, in drug development the focus is on isolating risk. Although new drugs are developed for those with a particular disease, they are tested in a healthy population before they are distributed and assessed in a vulnerable one. Finance Research Risk managementBank marketing materials focus on the dreams, anxieties and goals of consumers. Risk management processes don't — but they should.

3 Things Driving Entrepreneurial Growth in Africa

Harvard Business

Or there’s Nairobi’s SuzieBeauty, which develops cosmetics catering to African tastes at quality matching Western levels. Firms are realizing what microfinance has known for a while: Local self-policing groups, or village headmen who police honor codes, can hedge cash flows in far-flung places. Fatigue may be setting in for some Western investors’ interest in African innovation, particularly those that have yet to reap rewards to brag about.

Scaling Up Without Losing Your Edge

Harvard Business Review

Without economies of scale, they argued, developing societies would never develop the efficiencies needed to modernize. Following Abed's twist on Schumacher — "small may be beautiful, but big is necessary" — it now touches the lives of an estimated 126 million people with healthcare, education, enterprise development, microfinance and a slew of other programs. Likewise, BRAC grew into a chaebol or conglomerate for social development.

President Obama Can Make Start-Up America Succeed

Harvard Business Review

Do we really want to beat India at developing clean tech, cheap medical devices, and affordable housing? Entrepreneurship in financial services has been given a bad rap as one contributor to the economic crisis, but we desperately need innovative financing models for start-ups. We don't innovate in entrepreneurial finance enough in the U.S.: Microfinance (Bangladesh), securitization of revenues (Saudi Arabia), and royalty-pay-back funding (Israel) were all invented overseas.

Making Sense of the Many Kinds of Impact Investing

Harvard Business Review

Currently, impact can mean anything from venture investments in new health technologies to microfinance loans in Peru; from affordable housing in the US to renewable energy in India; from social impact bonds to private equity funds that create jobs. Investors might have a geographic focus: they may care more about developed or developing economies, or a particular country or community. Ultimately, asset managers can develop a matrix with financial asset classes (e.g.,

Entrepreneurs: You're More Important Than Your Business Plan

Harvard Business Review

As Amar Bhide said in " Bootstrap Finance: The Art of Start-ups " (a 20-year-old HBR article that is an uncanny precursor to today's "lean startup" meme), traditional business planning processes are less relevant to bootstrappers — where resilience trumps planning and energy trumps experience. The kids develop discipline and focus, but also practical, marketable skills. "Would you take a look at my business plan?".