Making Microfinance More Effective

Harvard Business Review

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. The Grameen model of microfinance gained a great deal of attention in the international development field after early data showed that it was associated with high repayment and low default.

Innovating The Brick-and-Mortar Injustice Infrastructure

Mills Scofield

This week''s post is by Andy Posner , Co-Founder & Executive Director of Capital Good Fund ( CGF ), a non-profit microfinance organization targeting the root causes of poverty through innovative micro-loans and personal financial coaching.

Trending Sources

Under Fire, Microfinance Faces Falling Out of Favor

Harvard Business Review

Microfinance has come under fire in the past 18 months, triggered in part by SKS Microfinance's IPO. Critics complain that the institutions supporting microfinance have become too greedy, and many are using this as an argument to deeply regulate or, even more, cut support to microfinance operations. Dr. Muhammad Yunus introduced the concept of microfinance in 1983; in 2006, he won the Nobel Prize for his pioneering efforts. Such is the power of microfinance.

Guest Post: An Entrepreneur's Thoughts on Market Incentives & Foreign Aid

Mills Scofield

There is much in common between this and Dan Pollata’s arguments, which state that nonprofit leaders should be allowed to earn large salaries if it draws in productivity (or funds) that were otherwise unavailable to the social sector.

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. Especially when a majority of your clients are women, it makes sense for women's voices to contribute to the next generation of products you will offer. Diversity Gender microfinance WWB

The Innovation Mindset in Action: Shantha Ragunathan

Harvard Business Review

Sasikala, a Block Development Officer (BDO), talked to the Kodapattinam villagers about microfinance , only Shantha, of all the villagers, saw the opportunity and took action. To participate in a microfinance campaign, the village had to form a Self Help Group (SHG) of about 20 people, with each member contributing a certain amount of money every month. Undeterred, Shantha persisted until she persuaded the required number of people to sign up for the microfinance project.

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

Harvard Business Review

Our flagship products are wood-burning stoves that generate electricity from fire while reducing toxic smoke emissions by 90%. For our outdoor recreationalists, the model has been created for us, and we enjoy the benefits of a well-established retail structure: We sell both online and in established, well-known retail stores, where knowledgeable staff can explain our products to new customers. Handi shop customers had never seen a product like ours.

3 Things Driving Entrepreneurial Growth in Africa

Harvard Business Review

Here are three things that Western investors should want from African entrepreneurs: a focus on the top of the pyramid, control over factors of production, and innovation in distribution rather than in products. Factors of Production. Where supply of basic inputs is thin, controlling land and other factors of production is a pathway to success. Today his Nice Rice Mill processes 70% of the region’s rice production.

The 3 Preconditions for an Entrepreneurial Society

Harvard Business Review

Marx’s goal was for workers to take ownership of the means of production, by which he meant factories and machinery. And if you need access to money, crowdfunding platforms and microfinance options make that easier than ever.

Scaling Up Without Losing Your Edge

Harvard Business Review

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. Forty years ago, British economist E.F.

Give Impact Investing Time and Space to Develop

Harvard Business Review

Under the broad umbrella of impact investments lie myriad sectors, asset types, and investment products, most of which still need to be developed and understood. We allowed microfinance and the venture capital industry the time and space to develop over a few decades.

Banking on Women and Girls: Key to Global Poverty Alleviation

Harvard Business Review

On this 100th International Women's Day , it is right to reflect on how women have become the heart of the microfinance industry. It is easy to forget that the initial motivation for microfinance roughly 30 years ago was, to a great extent, gender neutral. The pioneering microfinance institutions sought to provide credit to poor entrepreneurs who had no assets to pledge as collateral and, consequently, were denied access to capital by the formal banking sector.

Transforming Rural India Through Agricultural Innovation

Harvard Business Review

Since its inception in 2000, NAF has been involved in a range of interventions—infusion of technology, soil enrichment, efficient farm and water management, improved cattle development, functional literacy, rural sanitation and public health, human resource development, establishment of self-help groups particularly among women, self-employment opportunities and facilitating institutional credit—to address the problem of farm productivity in India.

Servant Leadership Observer ? November 2010

Modern Servant Leader

Peer-to-Peer Microfinance: A Sustainable Solution to Poverty. Leadership as a Product Purhcased by Followers. Productivity. Twitter. LINKEDIN. The Modern Servant Leader Servant Leadership & Technology. Leadership. Technology. Resources. Other. Archives.

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.

It's Not All About Growth for Social Enterprises

Harvard Business Review

Sure, size can often be correlated to maturity, but we want to know that the service, curriculum, or product the organization is offering has a significant impact on the problem it aims to solve. Successful examples of this approach are still rare; most people point to microfinance.

Entrepreneurs: You're More Important Than Your Business Plan

Harvard Business Review

And we are often happy to review these start-up plans — which include the typical elements such as a product description, competitive analysis, estimate of market size, and projected financials. "Would you take a look at my business plan?".

Businesses Serving the Poor Need to Get Over Their Unease About Profit

Harvard Business Review

Precious few of the ventures that failed to generate such profit levels have survived, leaving low-income consumers without access to products and services that could have improved their lives and stimulated economic activity in poor areas. The microfinance industry is a rare D and E success story. Microfinance banks, which provide desperately needed loans to low-income consumers, draw mainstream investors because of their attractive returns.

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. It called for leveraging the profits of the global microfinance institution, and coupling them with private investments from the Allmans and their donor network. We know that microfinance alone will not break the poverty cycle.

The Smart Way to Make Profits While Serving the Poor

Harvard Business Review

Most companies trying to do business with the 4 billion people who make up the world's poor follow a formula long touted by bottom-of-the-pyramid experts: Offer products at extremely low prices and margins, and hope to generate decent profits by selling enormous quantities of them. Generating a high contribution from every sales transaction requires a three-pronged margin-boosting approach: localized base products sold as a bundle, an enabling service, and customer peer groups.

Global Entrepreneurs Need New Funding Models

Harvard Business Review

This is particularly true for women entrepreneurs, who rarely hold land in their own names and often have a shorter history in business than men, both of which make them even greater risks in the eyes of most banks, despite the fact that there is no notable gap between men's and women's productivity when all other factors are equal. The goal is "to develop sustainable banking products which are more accessible for qualified candidates and women in general."

Using Games to Get a Handle on Bank Risk

Harvard Business Review

The pharmaceutical industry also creates products with complex interactions and potentially dangerous side effects. Games can be used to understand consumer tastes and aspirations, as well as to tweak existing products and services. They may also create a comfort level and familiarity and help consumers understand new products. Understanding these patterns will help both banks and consumers tailor or even co-create appropriate products.

It Takes a Village to Raise an Entrepreneur

Harvard Business Review

Commercial microfinance organizations are perhaps the best-known hybrid organizations, but social entrepreneurs now use hybrid models to address a diverse set of social issues that includes hunger, healthcare, economic development, environment, education, housing, culture, law, and politics. Often there is a mismatch between the people who would most benefit from the product or service and those who are able to pay.