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> Posted by Kelley Mesa
Paul Hudnut – Center Faculty Council member and co-director of Global Innovation Center for Energy, Environment and Health at Colorado State University – reflects on Elisabeth Rhyne’s January 27 New York Times op-ed on microfinance’s immitation-worthy sustainable banking practices in his post “Scaling back (or forward)?“
> Posted by Sergio Guzmán
Nearly 2,000 participants converged at the International Symposium on Microfinance as a Tool for Peacebuilding last week in Cali, Colombia, to discuss how microcredit could be used to rebuild the social and economic fabric in post conflict areas of the country. When it comes to financial services many of the rural municipalities in Colombia are either completely lacking (67 municipalities) or have only the most rudimentary services. The country’s ongoing political, social and economic conflict, which has lasted over 45 years, has severely damaged the country’s social tissue and broken trust between people. This makes it hard for any endeavor, microfinance included, to be successful.
Sponsored by the Alvaralice Foundation, the symposium highlighted various state projects, public-private partnerships, and private projects working on many of these issues, funded by domestic and foreign sources. A myriad of NGOs and regulated financial institutions like WWB Colombia, Finamérica, Banco Caja Social, and Bancamía provide financial services to the poor. From the director of a small NGO in conflict ridden Barrancabermeja to the Miami-based NGO Give to Colombia, that channel’s funding for projects in Colombia from US-based companies investing there, participants analyzed Read the rest of this entry »
> Posted by Kelley Mesa
Elisabeth Rhyne’s op-ed ran in today’s New York Times “Dealbook.” A permanent link to the article may be found below.
Another View: A Local Fix for a Global Mess
Many of the participants at the World Economic Forum will be thinking about big, global solutions to the current financial mess. But should they also be thinking small?
With the conference set to begin, Elisabeth Rhyne, managing director of the Center for Financial Inclusion at Acción International, argues that the seeds of a more sustainable global finance industry might be found in microfinance, in which local lenders provide very small business loans and other financial services. Acción is a Boston-based nongovernmental organization that helps build microcredit institutions and gives them technical assistance.
Her view adds to what is bound to be a vigorous debate here in Davos about how to mend the world’s tattered financial system — and at what level the fix should be applied.
In many cases, Ms. Rhyne suggests, the creation of global financial behemoths eclipsed the kind of “relationship banking” that leads to prudent lending. Microlending, by contrast, is a highly personal business, and microlenders do not offload their loans to others after they have been made, she says, leading to a portfolio quality “that might make many mainstream bankers envious.”
We present her opinion piece, below the jump, as more grist for the mill as Davos gets under way.
Toward a “Distributed” Global Banking Grid
by Elisabeth Rhyne
by Elisabeth Rhyne
Elisabeth Rhyne
In a rather remarkable collective mea culpa, the G-20 leaders, following their emergency summit in November, issued a joint diagnosis of “the roots of the current crisis” in world financial markets:
“Market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system.”
Now that the ‘vulnerable system’ has imploded, it’s natural to seek out any seeds of sustainable reconstruction. One of the seeds is microfinance, the provision of very small business loans and other financial services to the self-employed poor worldwide. Microfinance offers Read the rest of this entry »
> Posted by Paul Rippey
Senior Fellow Paul Rippey and Program Manager David Levai are currently in Mali identifying the results of an initial test of the Energy Links firefly LED lamp. Here Paul describes his initial observations from Mali. To learn more about Energy Links and the earlier pilot project in Uganda, click here >
Just as in Uganda, the ladies in Mali loved the lamps. But I think they were even more transformative here than in Uganda. In Uganda, we found that people were changing their lighting source from terrible to better. Here, the lantern often makes the difference between being in the dark, and having some light. Almost in every case, the principal users of the lights in the evening were children, studying. But the light would be passed around: first the family eats with it, then the kids study with it, then the adults take it to their room, then in the morning, Mom uses it to get up and make breakfast. Sometimes there was business use included – someone selling or making something in the evening.
There were several cases of shared lighting that we didn’t see in Uganda: in one case (in the picture) three families keep their lights together and light up an area where all the kids can study at night, essentially centralizing something that we had decentralized. In another, they had a wake for someone who had died and used the lights in a relay, turning one on when another had gone dim. I salute the collective intelligence of rural people!
> Posted by Kelley Mesa
The January 15th deadline for the joint Harvard Business School-ACCION Program on Strategic Leadership for Microfinance is quickly approaching!
For the fourth year, this course marries the best in strategic business thinking with the most important advances in microfinance through:
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An intensive immersion into the microfinance industry and the operations of leading microfinance institutions.
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Addressing key challenges of doing business at the base of the financial sector, including succeeding in highly competitive financial sectors, maintaining a social focus in a commercial setting, and evolving products and delivery channels.
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Engaging participants in discussing the experience of leading institutions through the case method approach, pioneered by HBS.
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Reviewing some of the most recent developments in microfinance, such as the Compartamos IPO and a video on the operations at ACCION partner, Mibanco, in Peru.
Executives from microfinance institutions, private sector commercial banks, service providers interested in expanding finance to underserved clients around the world are invited to apply now. Click here to learn more about the program details and admission requirements.
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