Clifford Chance Quarterly Report March 2010

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Clifford Chance and Grameen Foundation, Pioneering for Asia’s Poorest Quarterly Report prepared for Clifford Chance Foundation March 2010 At Grameen Foundation our goal is simple – we want to see that people, especially the poorest1 and those living in harder to reach areas, have access to microfinance and technology so that they are able to move themselves out of poverty. In Asia, we are working in China, India, Indonesia, Pakistan, and the Philippines, where collectively more than 60% of the world’s poor and 70% of the world’s poorest live.

In September 2009, Clifford Chance Foundation and Grameen Foundation partnered to address two critical hurdles that prevent the poor and poorest from accessing microfinance services, a critical tool in moving out of poverty:

1. Lack of financing for local microfinance institutions working in some of the remotest regions of Asia and working with the poorest people, providing new and innovative services to them (addressed through our Pioneer Fund).

2. Lack of investment in developing the leadership capabilities of mid-level managers, the people, who guide and inspire those on the frontlines of microfinance – the field officers who spend every day with the poor, understanding and serving their needs (addressed by our Human Capital Center). These mid-level managers are the next generation of mission-aligned social entrepreneurs who will lead microfinance into the future.

Clifford Chance Foundation provided USD$100,000 to catalyze GF’s Pioneer Fund and Human Capital Center activities.

Progress Against Our Objectives

Pioneer Fund

In microfinance in Asia, there are three areas we focus on: the misalignment between where the poor live and where microfinance exists in large numbers; the need to reach down into poorest; and the need to catalyze new ideas to excel the move out of poverty. The Pioneer Fund represents an opportunity to use “capital with a purpose” to cultivate the next generation of leaders in poverty focused microfinance institutions – those using innovative products and services to expand outreach and scale in underserved areas reaching the poorest.

What has been achieved?

To date, Grameen Foundation’s Investment Committee has approved financing support for three “pioneering” microfinance institutions under the Pioneer Fund, totaling more than US$1 million in new, financing for the poor and poorest. While the number of transactions is within the target of 2 to 4

1 Grameen Foundation uses the internationally accepted definitions of poor as $2.50PPP/day and poorest as $1.25PPP/day.

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institutions set at the beginning of Clifford Chance’s 12 months of support, GF is poised to exceed our target of deploying US$400,000 - $800,000 during the 12-month period from September.

Clifford Chance’s support has allowed GF to unleash its unique expertise in the area of social investing as follows: 1) deep local knowledge of the poor and the institutions that serve them; 2) extensive experience in screening and identifying microfinance institutions that are not only financially and operationally sound, but socially sound; and 3) extensive knowledge of the financial markets in which the microfinance institutions operate. A summary of the entities with Investment Committee approved financing appears below:

IC Approval Description of financing opportunities

Q1 o Philippines: US$325K loan for a MFI serving the Southern Philippines and Palawan, both places that have lacked access to basic financial services in the past.

o India: Up to US$500K guarantee for an MFI that seeks to leverage that amount four times to secure financing from an in-country bank. Located in Assam, this MFI is providing innovative financial products to the poor including financial literacy services, marketing of the poor’s products and other livelihood services.

Q2 o India: US$250K guarantee to an MFI that seeks to leverage that amount by 1.5 to 2 times to secure financing from an in-country bank. The MFI is based in Orissa, working in the poorest, rural areas of the state, and in addition to providing financing for income-generating activities, is also providing support for sanitations products (such as clean water) and housing. They also offer remittance services to the poor.

What is planned for the next 6 months?

The primary focus over the next six months will be closing the three transactions listed above that have been approved by the Investment Committee. We will also continue to build our pipeline of future organizations to support, in the space of microfinance and beyond.

Human Capital Center

Over the next five to seven years, we expect leadership transitions at the top and mid-management levels of nearly all leading poverty-focused microfinance institutions across Asia. Taking over from dynamic and magnetic founders and walking the tight rope of sustainability on one side and social impact on the other are just two of the many challenges management will face. Proactively addressing these challenges will require unique investment in the next generation of leaders and GF is developing such a tool that can be used by microfinance institutions.

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What has been achieved?

Over the past 6 months, we undertook preliminary product development research and summarized the outcomes in a report titled No Footsteps to Follow. This report was made possible in its depth and level of research with Clifford Chance’s support. The report documents and analyzes the challenges of microfinance practitioners and the impact human capital issues can have on organizational growth. One interview noted, “I want my managers to be human. To appreciate the hardships that the loan officers go through every day”. See attached a story of a loan officer.

What is planned for the next 6 months?

From May 16 to 30, 2010, we will be talking with and observing mid-level managers at six microfinance institutions in India. We will also be talking to those who interact with them at various levels, ranging from field officers to CEOs to local government officials to clients (especially if the middle-manager started as a field officer and came up through the ranks). This will help us to construct a clearer picture of the challenges and opportunities they face and what type of leadership development solutions will best address those critical needs. A leadership development model will then be designed and tested with three microfinance institutions in the field.

A Holistic Relationship

The importance of our relationship with Clifford Chance extends beyond financing support. Clifford Chance, especially staff in the Hong Kong office, have been generous with their time and expertise, not only getting to know Grameen Foundation but also providing volunteer support for our work as follows:

• On January 21, 2010 GF’s Founder and President Alex Counts visited the Clifford Chance office in Hong Kong to present an overview of Grameen Foundation and to answer questions;

• On January 26, 2010 GF’s Asia Regional CEO Jennifer Meehan presented to the Clifford Chance office about our work

• Sally Grieg (Regional Marketing and Communications Manager) and her associate provided us with marketing advice and produced marketing materials for us to distribute at the 2009 FinanceAsia Achievement Awards Dinner, where Clifford Chance’s logo was recognized for their generous contribution; the total fundraised that evening was more than US$40K.

As discussed with professionals in both Singapore and Hong Kong, through our Bankers without Borders program we are exploring ways to provide pro bono legal support to Grameen Foundation. Areas of need identified in the past have been Vietnam (where support was provided) and Indonesia.

Clifford Chance Quarterly Report March

INDIVIDUAL IMPACT - An example of

INDIVIDUAL IMPACT - A day in

CONTACT INFORMATION FOR Jennifer Meehan, CEO Asia RegiSonia Wong, Development Offic Asia Regional Office: 3F, SPA CenPhone: +852-2529-6300/ Fax: +8

Clifford Chance Quarterly Report March 2010

An example of microfinance at work in the Philippines

A day in

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Chit has been selling fish since she was in grade school. She was made to quit school early because of poverty and consequently married in her teens. Early on, her husband’s propensity for gambling caused serious problems in the couple’s finances. able to access loans to grow her fish business. andgrade school. them to have what I was deprived of. Education will pull us all out of poverty,” said Chit.not. As Chit benefits from the serexperience she shares with her peers is invaluable poverty over time

Chit has been selling fish since she was in grade school. She was made to quit school early because of poverty and consequently married in her teens. Early on, her husband’s propensity for gambling caused serious problems in the couple’s finances. Through CARD, a microfinance institution (MFI) in the Philippines, she was able to access loans to grow her fish business. Chit had a good repayment record and she is also eyeing CARD’s scholarship program for her daughter, who is now in grade school. Chit uses much of her income to put her children to schoolthem to have what I was deprived of. Education will pull us all out of poverty,” said Chit. She motivates her co-members to pay on time and helps out those who could not. As Chit benefits from the services offered by CARD, the expertise and experience she shares with her peers is invaluable to move themselves out of poverty over time through the access of microfinance.

Chit has been selling fish since she was in grade school. She was made to quit school early because of poverty and consequently married in her teens. Early on, her husband’s propensity for gambling caused serious problems in the couple’s

CARD, a microfinance institution (MFI) in the Philippines, she was had a good repayment record

she is also eyeing CARD’s scholarship program for her daughter, who is now in to put her children to school. “I want

them to have what I was deprived of. Education will pull us all out of poverty,” said members to pay on time and helps out those who could

vices offered by CARD, the expertise and to move themselves out of

the life of a microfinance loan officer

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We their pooremployees, this is their firsthome. They are or 19 year old young man, who has never hadwith women outside of his family,a village he doesn’tmayAdd to this thecooking facilities is providedenough beds tosomeone7:00am, finishing their final paperworkprobation period, he must use his own bicycle to travelup to 27 kilometers away. You can imagine his excitement when he ispurchase a motorbike through Asomi’s staff loan program, though the fuel allowance What’s the average compensation ofor

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the life of a microfinance loan officer

OUR REGIONAL STAFF

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tre, 55 Lockhart Road, Wanchai, Hong Kong -2529-2311

We were especially struck by the dedication of Asomi’s field officers, who serve their poor clients as the face of microfinance. For the majority of these young employees, this is their first real job and the first time they’ve lived away from home. They are often children of microfinance clients themselves. Picture an 18 or 19 year old young man, who has never had the opportunity to learn to speakwith women outside of his family, never even dated a girl. Yet he isa village he doesn’t know, introduce the concept of microfinance to women who may have some small economic activities, and form client groups.Add to this the challenge of his living circumstances—a sleeping roomcooking facilities is provided at the branch office, but most likely there aren’t enough beds to go around so the new field officer will be sharing a bed with someone he doesn’t know. Field officers work long days, starting around 6:30 or 7:00am, finishing their final paperwork close to 8:00pm. And until probation period, he must use his own bicycle to travel to his clients, who can be up to 27 kilometers away. You can imagine his excitement when he ispurchase a motorbike through Asomi’s staff loan program, though the fuel allowance he receives does not always cover the actual expense.What’s the average compensation of a new field officer? About Rs.or US$75. That’s US$2.50/day, though his housing (such as it is) is provided.

were especially struck by the dedication of Asomi’s field officers, who serve clients as the face of microfinance. For the majority of these young

real job and the first time they’ve lived away from microfinance clients themselves. Picture an 18

the opportunity to learn to speak never even dated a girl. Yet he is asked to go to

microfinance to women who activities, and form client groups. Pretty amazing.

a sleeping room with likely there aren’t

will be sharing a bed with Field officers work long days, starting around 6:30 or

close to 8:00pm. And until he passes his to his clients, who can be

up to 27 kilometers away. You can imagine his excitement when he is able to purchase a motorbike through Asomi’s staff loan program, though the fuel

receives does not always cover the actual expense. a new field officer? About Rs.3400/month,

$2.50/day, though his housing (such as it is) is provided.