Introduction to Financing
MICROFINANCE 101: WEEK ONE
Robert Gailey, Point Loma Nazarene University
WELCOME!
2
Brief Outline for Tonight
Introduction of Mr. Ali – learning about his business
Introduction of participants
Exploring how household financing works – group activity
What are some different approaches to financing and how
does microfinance fit in?
Inspiration from Grameen Bank and Dr. Yunus
Outline of remaining weeks of class
Question Time
3
Introductions
State your name
Your institutional affiliation if you have
one
Your first exposure to microfinance
What you hope to get out of the course
4
Opening Questions
1. Why do people need
financing?
2. What things/events do people
finance?
3. What mechanisms exist for
people to access financing?
5
Rutherford (2000 + Summer 2009)The Poor and Their Money
6
Old Chinese Proverb: A Fishing Analogy
Give a man a fish(Traditional relief)
or
Teach a man to fish?(more progressive development)
but
He still needs the TOOLS to fish and ACCESS to the water
Difference between MED and MFWhat is the economic objective of an
MED/MF Intervention?To build a business/enterprise: For start-up,
expansion, or transformation.To provide lump sums of money: For people to
use for a variety of needs/wantsWhich tools are available to meet the
economic objective of the MED/MF interventionFinancial Tools: Involve some form of cash
transactionNon-financial Tools: Do not primarily involve a
cash transaction 7
8
MF and MED Tool Matrix
Economic Objective Non-Financial Tools Financial Tools
Helping a Business/Enterprise start, expand, or be transformed (from micro to small-scale or small-scale to medium-scale).
Helping an individual or family meet their needs/wants for Lump Sums of Money for use in emergencies, life-cycle needs, opportunities, and cultural obligations.
Emergency, cultural, and life-cycle ROSCAs and ASCAs, Post Office Savings accounts, Deposit Collectors, Money Lenders
Health education, literacy education, and other non-financial forms of information dissemination.
Microfinance Institutions (MFIs), Business ROSCAs and ASCAs, Business Insurance, Pre-Entrepreneurial Business Grants (such as Trickle Up Program), moneylenders.
Business Development Services (BDS), Livelihood and Vocational Training, Networking/Mentoring.
Typology of Financial Services
Group Lending
Village Banking(e.g FINCA)
ASCAsROSCAs
Loan fund provided from outside source
Loan fund generated within group
Grameen Model
Non-time-bound ASCA
Time-bound ASCA
Latin America Model
Solidarity Group Lending
Individual Lending
Financial ServicesMethodologies
Grouping
Source of funding
Size of groups
Accumulation
Time
Ownership
Major Distinction
9
Primary Goals of Microfinance Institutions (MFI)
Breadth of Outreach (how many people served)
Depth of Outreach (how poor are people served)
Length of Outreach (serving people for many years)
Positive Impact (long-lasting and substantive)
10
11
Vision of many MFIs
Providing many poor families with access to affordable financial services.
Creating indigenous sustainable institutions that can meet the long-term financial needs of their communities.
Improving social conditions—better health, sanitation, nutrition, education.
12
Outline for Rest of Course
Week 2: Focus will be on Microfinance Institutions, interest rates, key debates,
Week 3: Focus on local microfinance institutions – International Rescue Committee, Accion, CDC Finance – introduction and information
Week 4: Hearing from the clients, clubs, and investors – meet staff and clients from La Maestra, college clubs, and San Diego Microfinance Alliance, and local individuals who are invested in microfinance
13
Concluding Remarks
Questions/Remarks
Please turn in your tags
Come hungry next week – Client of Accion
– Happy Joe Luck Kape
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