May 2010
1 post
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Indian Microfinance is Big Business, Now What?
By Mark Straub
To Save the Industry, It’s Time for Policymakers to Embrace Savings
One of the most fascinating subjects of the last quarter century for students of economic development must be the peculiar rise of microfinance as a venture capital-backed asset class, now poised to see multi-hundred million dollar initial public equity offerings in the next 12-18 months on the Indian stock...
April 2010
6 posts
1 tag
IDE WatSan in the Field: Creating a Market for...
By Vanessa Green
International Development Enterprises (IDE) is a leader in market-based solutions for rural poverty. As a social entrepreneur in the water sector I looked forward to the opportunity to join eight of my finnovation peers on a field visit with the high-growth IDE Cambodia WatSan team. We arrived at the IDE office just in time to pile into a van and head out to a village meeting...
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IDE Social Marketing: Why Buy a Toilet?
By Vanessa Green
IDE WatSan (International Development Enterprises—Water and Sanitation) has developed a compelling social marketing approach that has driven rapid uptake, measured by total units sold. The IDE team uses picture-based materials and hands-on activities to help open a discussion about the sensitive topic of human waste.
The program starts with visits to each household...
Storytelling in Phnom Penh
By Francisco Mira
From a 1 to a 2-needle machine
It’s 35 degrees Celsius, but it feels like 45. We’re riding a Tuc Tuc heading west of Phnom Pehn following one of AMK’s client officers to meet with Emro Saro. Emro is an AMK client who received a R800,000 (USD 200) loan 8 months ago to buy a sewing machine. Sou Chantrea, the client officer, loves to have her as his client as she has never missed...
Savings Practices @ the BOP
By Irvin Sha As part of our course on Financial Innovation, our team worked in conjunction with Mercy Corps and Micra to look at what microfinance institutions (MFIs) around the world have been doing to stimulate savings amongst the poor. Practically speaking, savings and loans are opposite sides of the same financial coin. Both provide the poor with large lump-sums of money that they can put to...
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Ashoka Peace Features MIT Sloan Finnovation
“With an estimated 3200 NGOs in the country, I am told that Cambodia has the second highest saturated “NGO market” per population in the world after Rwanda. In a country that has suffered from genocide and is just beginning to experience a growing vibrant civil society, it is helpful to see how organizations are choosing to frame problems and solutions and the influence of conflict on...
March 2010
21 posts
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Report from the field: Promoting Savings in...
By Andrew McCarthy
The developing world wrestles with how to promote a savings culture and develop a system of widespread delivery, and Indonesia is no exception to this conundrum. With roughly 60% of Indonesians saving through informal channels or not saving at all, the question revolves around how to deliver a formalized savings product to an archipelago of over 17,000 islands in a...
The Role of the Press in Cambodia: Meeting with...
By Megan Wilbur
On March 17th a small crew from Finnovations visited The Cambodia Daily, an English language newspaper based in Phnon Penh. There we spoke with the editor-in-chief, Kevin Doyle, who gave us a candid account of media, business, and politics in Cambodia.
The Cambodia Daily was established in 1994 with the mission to provide Cambodians with unbiased local and international news. ...
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Venture Incubators + Social Entrepeneurship =...
By Karan Singh
The last few years (and particularly the last six months) have brought news of incubator-like groups starting across the US — Y-Combinator (SF Bay Area), TechStars (Colorado, Seattle), The Founder Institute (New York, DC), and Excelerate Labs (Chicago) to name a few. If you aren’t familiar with the model, check out this brief trailer from The Founders Institute.
In...
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Working in a Country with a History of Genocide
By Priya Parker and Karan Singh
Regardless of the lens through which one views Cambodia (in our case, “financial innovation”), it is impossible to not add at least an additional lens: the history of the Khmer Rouge. On Wednesday, a number of us went to S-21, the former headquarters of Khmer Rouge dictator Pol Pot. It has been turned into a Genocide Museum and consists of the building blocks...
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Finnovation in Action: Exploring "Quasi-Equity" in...
By Brian Jones
Finnovators met with Gordon Peters, a Senior Consultant for Emerging Markets Consulting (EMC), on Tuesday, March 16. A former consultant at Bain and Company, Gordon directs EMC’s business development and leads various consulting projects. In addition to traditional consulting engagements with multilateral financial institutions and the private sector, EMC launched a private...
“Given the financial crisis of the last two years, exploring “financial...”
– Beyond Profit magazine is featuring our finnovation course this week. Read our intro post here.
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Teachings from a Loan Officer: Cambodian MFIs and...
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By Thanisorn Bhasipol
What does a morning glory represent to you? To me, it’s always been a delicious vegetable, but to Svoeun Sameoun, it’s life for his six Cambodian family members. He sells 500 bunches of morning glories a day getting 5 cents of profit per bunch. Last year, Svoeun heard about CREDIT microfinance institution (CREDIT) from a neighbor, and decided to take a $2,000 loan. With...
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Finnovation in Action - Field visit to Digital...
By David Auerbach
Finnovators paid a site visit to Digital Divide Data on Tuesday, March 16. DDD, and its founder Sloan alum Jeremy Hockenstein, was the 2011 MIT Sloan Orientation case for our entire class. Having heard from Jeremy during orientation, and then again reading the case for our Finnovation Seminar, we were excited to have a chance to see this social enterprise in action.
Digital...
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And we’re off! MIT Sloan team Heads to Cambodia &...
By Priya Parker
After five weeks of studying financial innovation in the social sector, hearing from speakers, and on conference calls with our host organizations, our 21-student and 2-faculty team is leaving tonight for our 2-week trip to Cambodia and Indonesia. Over the next 2 weeks our team will be spending time getting hands-on experience with organizations in Cambodia and Indonesia.
We...
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SIP Panel on Innovation & Development
By Priya Parker
As part of the MIT Sloan Study Tour program, the three study tours, the Financial Innovation in the Social Sector team, Access to Capital in East Africa and Agriculture and Innovation in Brazil and India, are meeting today for 7 hours to prepare, learn, share and launch.
We just had a thought-provoking panel featuring Paul Breloff, consultant to CGAP and formerly with SKS...
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The Missing Middle-- Part 2
By Mercedes Politi
Welcome back. As mentioned before, Root Capital faces a significant amount of challenges to achieve its goal of filling in the “missing middle” in the developing world. But they have a roadmap of where they are heading and are continually assessing innovative options to stay on that path. Let’s hear more.
Theory of Change
Root Capital’s hope is to succeed and demonstrate to...
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The implementation IS the innovation.
By Megan Thibos
A few days ago, I wrote about E+Co CEO Christine Eibs Singer’s observation that oftentimes, the implementation IS the innovation. I was struck by Christine’s comment, because that’s exactly what’s so fantastic about one of the more interesting financial innovations to come out of Doorways to Dreams (D2D), a nonprofit dedicated to improving savings products and opportunities for...
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The Missing Middle --Part 1
By Mercedes Politi
Root Capital is a rising star in the NGO world with quite a unique mission – to eventually disappear. Ok, I’m definitely being too simplistic here, but there is a point to be made. Please bear with me while I go over some of the main lessons learned that Brian Midler, the Director of Strategy and Innovation at Root Capital, brought to us at our last Finnovation class.
Root...
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Burgeoning microfinance in India potentially...
By Andrew McCarthy
The Wall Street Journal posted an article on Wednesday on the new linkage between MFIs and credit bureaus in India. A rapidly growing microfinance market has created multiple lenders in a market, giving consumers the potential to borrow from multiple sources and potentially get over their heads in debt. While creating transparency standards between MFIs and credit bureaus is a...
Catalyzing the Roots of development
By Andrew McCarthy
How do companies grow from seed to maturity in the developing world? The nascent capital markets in the developing economies make it difficult for small companies to fuel their growth without ready access to capital. Root Capital aims to bridge the gap of the “unbankable” companies who are established, ready to produce, have a willing buyer, but lack the upfront capital to...
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The Poor Pay More...Everywhere
A guest post by Megan Thibos
The development folks and the social policy folks need to hang out more. That may sound like a strange way to start a post on a blog about “finnovation,” but I’m convinced that many of the problems—and the finnovations—in developing countries and industrialized countries aren’t all that different at the end of the day. Sure, there’s all kinds of contextual factors...
Root Capital coming to next Sloan finnovation...
By David Auerbach
Smart capital makes a difference in the developing world. While we must work to open up capital markets and provide greater access to capital to the missing middle, there’s still a pressing need to develop the right capital structures for entrepreneurs running small and growing businesses. Debt…equity…quasi equity, it’s a confusing and complicated choice for everyone, especially...
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Ceramic Stoves, A Hot Investment
By Lisa Frist
Our world is changing quickly, and in ways I never imagined. JP Morgan has just picked $10 ceramic stoves in Ghana as its new hot investment, literally. So, is this just another PR stunt to boost the bank’s image, or has the bank made some exaggerated miscalculations on the market potential of rural cookware? Actually, it turns out it is neither. What JP Morgan cares about...
5 tags
reDebt Capital: The Transaction Cost Roadblock
By Scott Hartley
In the economically developing world, as in other parts of the planet, growth is driven by capital, labor, and multi-factor productivity, or technological improvement. In markets where excess capital and labor are relatively thin, innovation is the surest means to growth. In economically under-developed markets, however, there may be a surfeit of labor, and a deficiency of...
Nothing works in poor countries. Influence the...
By Ramiro Young
I’m convinced. I’m convinced with a simple idea. That the only possible real long-term development of poor countries will not come from having NGOs or having external, internal, humanitarian or financial aid. It will not come from direct investment, venture capitalists, or local or international entrepreneurs. I think that the “solution” will ultimately come from policy makers in...
February 2010
12 posts
1 tag
Social Entrepreneurship in Action
By Professor Virginia Healy-Tangney
Ann Graham’s article on India’s Tata affirms many of our speakers’ messages – most assuredly Dr. Dilip Ratha’s argument for private to private capital flows in developing countries. Tata’s strategy with their plantations in Munnar will remind you of The Cleveland Project David (Auerbach) shared with us. Perhaps what spoke to me most - here is a global...
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Helping Countries Gain Access to Capital – Dilip...
By Josh Templin
Developing countries need money, and lots of it. Although aid agencies and governments provide nominally large amounts of money to the developing world, Dr. Dilip Ratha (lead economist on the World Bank’s migration and remittances team and blogger; his personal story can be found in this New York Time article from 2008) points to private to private capital flows as a potential...
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Indian Government Eyeing Mobile Banking
By Priya Parker
The Hindu, one of India’s leading newspapers, published a piece today on the government’s efforts to develop a framework for mobile banking. It discusses the government’s interest in developing a “mobile platform to improve the access of a large section of the population, especially the poor, to basic financial and banking services.”
This piece is...
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Role of Financial Innovation in Greece's...
By Ani Vallabhaneni
The New York Times recently published: Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis
In this story, NYT explores in-depth on the role of the private-sector and innovative financial instruments in providing Greece with timely credit to address a short-term cash shortfall, but ultimately putting the country on the wrong path.
This topic is especially appropriate...
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Financing Global Initiatives
By Ani Vallabhaneni
Problems such as disease are transnational. Epidemics of cholera do not stop at the political boundaries between countries. Several multilateral organizations and NGOs are making significant strides in addressing these global issues. Consequently, financing of such initiatives has also shifted from the purview of individual governments to independent organizations.
The...
Microinsurance: Profitable, philanthropic... or...
By Brian Liu
As Ani mentioned in his post, our second class examined microinsurance as a mechanism of providing risk management to the impoverished. Very simply, microinsurance is an insurance product with low premiums, low coverage, and very simplified policies – in other words, insurance for the poor, the illiterate, and those who have no concept of idea of insurance.
To help us illustrate...
Mitigating Economic Impacts of Disaster by...
By Ani Vallabhaneni
Today, in our second class session, we will be discussing the issue of Risk Management. In particular, we will be focusing on a couple of topics that Lant Pritchett brought up at our last session: decreasing vulnerability and increasing resilience of individuals to economic shocks. His research indicates that these two factors play a crucial role in determining whether people...
More reflections (and questions) from our talk w/...
By Irvin Sha
In my (very limited) exploration of the problem of poverty, one of the recurring themes I’ve run into (as seen in our reading on “The base of the pyramid”) is that there are substantive ways to help the poor via market-oriented solutions. The conceit here is that markets are an extraordinarily efficient mechanism for effecting change, and by aligning the market with...
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What role can finance play in ending poverty?
By Lindsay Stradley
With no time to dawdle, we dove headfirst last week into provocative ideas about poverty and the role finance could play in its reduction. Before addressing solutions, Lant Pritchett demanded that we first recognize poverty not as an identity or even a personal characteristic, but as a condition. Moreover, it’s a condition in which much of the world’s population – including a...
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By Brian Jones
Check out a great discussion on...
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Our Journey Begins
By Karan Singh
Financial Innovation in the Social Sector: The Promise of Finance in Catalyzing Economic Development is part of a series of groundbreaking student-initiated courses at MIT Sloan for the spring 2010 semester.This 3.0 unit H1 course and 2.0 unit SIP course is a unique opportunity to combine MIT’s strengths in financial engineering, quantitative analysis, innovation and strong...