By: Tom Hyland

Tom Hyland — Mon, 21 May 2012 19:52:37 +0000

Thank you for the post. CEED appears to be offering a promising effort to address the dearth of available talent that has built, scaled, and exited businesses with more linear growth profiles (logistics, warehousing, transportation, etc.)
In the case of India, it is easy to find mentors whom can bring relationships and the wisdom of experience to promising entrepreneurs operating in high technology, tougher to do so in dairy farming and agri inputs. Programs like CEED that can help lend comfort and reduce monitoring costs to SME investors should further encourage the flow of capital to underfunded and traditionally difficult to exit sectors.

By: Emily Riemer

Emily Riemer — Mon, 16 Apr 2012 16:23:32 +0000

A very interesting and timely post, Mildred. You make an good point about the cost of inclusion in the formal sector and the risk of taxation. At Opportunity International, as you mention, our clients’ point-of-entry is the Trust Group, and then they “graduate” to a Solidarity Group, and with greater success they eventually become individual loan clients. And of course, all along the way, they have access to complementary business and financial literacy training. You write: “…the solidarity group model started out as a means to assure repayments, and, with some exceptions, has not realized its potential to serve as a learning community. In general, formal entrepreneurs are pretty independent actors and the group financing model is not part of their frame of reference.” I would disagree–financial training is a mandatory feature of every one of our Trust Group loans, integral to the success of our most impoverished clients, and we’ve found that most value it as such (in addition to it being an important social support system for people newly inaugurated into financial stability and sustainability). Also, most of our individual loan clients, as I say, began in the group model and so that structure is still a valued part of their frame of reference. Though we do agree that the lack of a strong group structure for those who’ve graduated to individual loans can be a negative, and we continue to explore ways to build that for those clients (group trainings offered a few times a year; client events at our branches; etc) By and large, though there may be the occasional outlier, we find that they would rather take on the expense–such as taxes–of participating in the formal system above the radar, than continue to struggle in the informal system, at the base of the economic pyramid. Thanks for the fascinating examination of the growing pains, risks and rewards of gaining access to formal banking in the developing world. Looking forward to your next post.

Comments on: Taxes–Necessary Evil or Blessing in Disguise?

By: Tom Hyland

By: Emily Riemer