On May 7th 2010, the University of Chicago and Northwestern University hosted the sixth annual Chicago Microfinance Conference. I represented IFMR Capital at the event to discuss the evolution of microfinance as an asset class in the Indian context. Below are some of the highlights from the many panels and speakers, but here is the 30 second summary of what I found most interesting:
- A greater amount of intellectual honesty around the discussion of microfinance’s impact on poverty. Nearly everyone now agrees control groups are necessary to study the impacts of micro-credit properly. Consumption smoothing is recognized as important.
- Interest rates are coming down and will continue to fall at a faster pace.
- There’s a danger of short-term money in some microfinance equity markets. Longer term investors are needed, but the pension fund/large institutional funding channel needs better vehicles to invest in.
- Microfinance bubbles in Morocco, Pakistan, and Bosnia could have been prevented with more discerning investment (on the part of multilaterals mainly) and credit bureaus.
- Reaching more remote populations is the next frontier. BRI is one of the few success stories.
- M-Pesa (the mobile payment platform) now has over 9 million clients in Kenya. Wow.
Impact Debate
The “impact of microfinance debate” has been a popular one over the past year, especially after the publication of the first few randomized evaluations in microfinance (e.g. CMF and MIT’s Spandana study) have shed light on how limited our knowledge of microcredit’s impact really is. During a panel entitled, “Impact Monitoring and Reporting,” the panelists (each from high-profile microfinance funders and networks) admitted that we do not know whether microfinance alleviates poverty. Even though some of the panelists’ websites and marketing materials do not yet reflect this admission, it is refreshing to hear in public a greater agreement upon the limitations of most previous impact evaluations, primarily due to the lack of control groups in past evaluations. Speakers also noted that even if it does not lift people out of poverty, microfinance’s ability to help smooth consumption is a praiseworthy accomplishment – an insight that many credit to Morduch, et al’s Portfolios of the Poor.
David Roodman from the Center for Global Development hosted a session discussing his Open Book Blog, in which he “shares the writing of a book about the history and impact of microfinance.” Some of the main points Roodman made in his presentation can be seen in this post he made last month. (I think the “OK Go” video really drives home his point on selection bias!)
Investment and Interest rates
Panel discussion; Peter, second from right at the panel.
On the “Microfinance and Wall St” panel, we discussed the evolution of MFI funding in recent years (e.g. more commercially driven, a bifurcation between top-tier and smaller MFIs) and how IFMR Capital is having early success working with small and medium sized MFIs to access domestic debt markets. Some panelists characterized the current global funding environment as, “too much money going after too few opportunities,” but I only see this as true if one limits the focus to the world’s 50 largest MFIs. In reality there are many underfunded but strong MFIs.
What is needed are: 1) More technical assistance providers to work with high-potential small MFIs, and 2) More conduits such as IFMR Capital to create structures linking smaller high-quality MFIs with the investment appetite of larger investors, who cannot individually go after relatively small-ticket deals.
Carlos Castello from ACCION International, and a Board Member of Banco Compartamos, was on the panel so there was a question from the audience on whether interest rates charged to customers are too high and MFIs too profitable. Mr. Castello pointed out that Compartamos has lowered their rates by about 10% the past year and reiterated their belief that high-returns will invite more competition, and that competition will be the driver for lower rates. I am still seeking to better understand why the flood of new MFI competition that markets such as India have seen is not occurring in Mexico, where Compartamos and others have proven microfinance can be a very profitable business (Compartamos’ ROE is approximately 40%).
I was pleased to highlight Bandhan’s recent interest rate slashing and drew a comparison to the Indian telecom sector as a more mature market that microfinance can continue to look to for a number of comparisons. As the Indian mobile market has shown, it is certainly exciting to see the pro-customer innovations that come once businesses realize their market will be require a low-margin, high-volume business model. This of course requires a different kind of equity investor – one with a long-term horizon vs. short-term – and will likely rattle some of the current private equity money investing in the Indian market.
Interview with IFC’s Microfinance Chief Investment Officer
The last session of the day was an interview with Martin Holtmann, who helps oversee IFC’s $1.4 billion portfolio of microfinance investments. Given how unique each country’s microfinance market is around the world, it was fascinating to hear the perspective of someone with investments in dozens of countries. When asked point blank whether multilateral organizations were responsible for the recent microfinance bubbles seen in countries like Pakistan, Bosnia, and Morocco (Nicaragua is a crisis but of a different kind), Mr. Holtmann provided an interesting response.
Given their mandate to work directly with private companies, he said the IFC had been as careful as possible to make investments where institutions had the capacity to absorb liquidity and grow, but funding from organizations like the World Bank (IFC’s parent) made subsidized loans directly to governments, such as a $100 million soft loan to Bosnia’s government, which then disbursed the funds as the government saw fit. In some cases this led to overheating the sector and damaging the market for all participants.
Turning to India, Mr. Holtmann expressed concern about the amount and kind of money chasing MFI equity ownership, and drew comparisons to the U.S. residential real estate market a few years ago, where investors looked for opportunities to “flip” investments within only a 12-24 months of investing.
I am not aware of many exits made in the Indian private equity market within two or three years of investing, with the exception of a few transactions such as Sequoia’s purchase of Kalpathi Suresh’s stake in Equitas in mid-2009. My sense is most of the PE money looking at MFIs today realize exits are at least 4+ years post-investment, but if quick exits are in fact expected by investors, then the aforementioned interest rate cut by Bandhan will hopefully spook some of this money out of the sector and allow long-term oriented investors better valuations at which to enter.
Here are my takeaways from the rest of Mr. Holtmann’s interview:
On Credit Bureaus: They make little sense in a pure group-lending environment, but in urban or individual/SME lending markets, they are crucial. In fact he thinks credit bureaus could have prevented much of the problems in Bosnia, Pakistan, and Morocco.
On Repayment Crises: In a stress situation, repayments only fall off a cliff if the growth of an MFI has been undisciplined. Contrary to prevalent opinions, if group lending is done properly then it is reasonable to believe delinquencies at an MFI could hit 10-15% and still recover. An MFI like FINCA Uganda would be almost impossible to destroy even if delinquencies were over 10% because of the overall strong culture.
What WON’T we be talking about in five years? Interest rates. They have come down globally by 150-200 bps the past two years (according to CGAP) and will continue to fall.
What WILL we be talking about in five years? We will still be talking about the difficult to reach populations/sectors (e.g. in Bosnia only 4% of MFI portfolio is in agriculture). Bank Rakyat Indonesia (BRI) is able to setup branches to serve areas with a population as small as 4,000 but for most MFIs the average population has to be much higher number in order to be profitable. Going to more remote, dispersed populations will be the next frontier.
If Mr. Holtmann is right, then kudos to KGFS and IFMR Rural Finance for taking on the next frontier (on many fronts) today.
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Peter Bremberg of IFMR Capital contributed to this post.
Just as Darwin discovered the law of evolution in organic nature and just as Marx discovered the law of evolution in human society, Sankalp 2010 discovered the law of evolution in social enterprises. Hosted by Intellecap in Mumbai on May 4-5, Sankalp displayed many Hybrid Value Chain (HVC) and Public Private Partnership (PPP) models that are systemically transforming the relationship between business and social / citizen sectors on the basis of mutual social and economic value creation.
In sum, Sankalp 2010 celebrated the successes of a rare tribe called social entrepreneurs, who are passionate about seeking ways to create value in the economic (jobs, income, etc.), social (health services, education, social inclusion and self-esteem), and cultural (reading, expression of creativity) spheres. As was profiled at Sankalp 2010, the work of this tribe, which addresses such basic human needs as water, housing, and health, also illustrate how various dimensions of value creation are interwoven and are necessary to enable broad-scale development and growth in underserved communities.
Much of the growth and innovation found in free market societies is credited to entrepreneurial activities and disposable income. Entrepreneurship, however, is sensitive to context and to the existence of economic reward systems, a point that was captured in the keynote address delivered by Mumbai Tiffin Box Suppliers Association (famously called “dabbawallas” that means “lunch-box guys” when translated in English), which is a Mumbai based six-sigma certified organization that delivers hundreds of thousands of lunch boxes to offices every day. In typical Drucker-speak, the dabbawalla highlighted the fact that their organization has for the last 120 years made “selling unnecessary” and rather “identified a need and filled it.” The result: error-rates of 1 in 16 million transactions; 400,000 transactions per day; 200,000 lunchboxes delivered to their clients by a 5000 member strong workforce (85% of who are illiterate) every single day, and without fail!
One necessary condition for growth is that innovation and entrepreneurial activities result in products and services that create value above input costs. Because many input costs – such as provision of infrastructure or legal institutions – are picked up by society in developed markets, the entrepreneur is able to capture a larger part of the value created. However, where markets are too inefficient to cater to specific social needs, the invisible hand of the government is expected to provide necessary services, as is the case with healthcare systems, education, etc.
In many underserved communities, however, neither the invisible hand of the government nor markets cater to even the most basic needs of their members, resulting in structural and behavioral barriers to the community’s growth and development. These barriers are addressed by products and services engineered by social entrepreneurs. While debating the role of the government in advancing this sector, the panelists at Sankalp 2010 were divided in their opinion: one side believed that government’s involvement was a “kiss of death” for this sector, while another side championed the idea of government acting as venture capitalist. In sum, panelists concluded that the role of government is to create an enabling legal, regulatory, and policy environments, which include the removal of market distortions stemming from preferential government policies or excessive regulations.
Plenary session
The last plenary panel of the first day of Sankalp discussed the financial infrastructure required to accelerate social enterprises, and it summed up the most recurring thought that persisted through the two day event: To increase market penetration for social enterprises, business models and technologies that have the potential for success in low-income markets need to replicate and scale-up, incorporating continuous innovation in technology development and deployment. However, one of the critical elements that ensure replication and scaling of social enterprises is their access to consumer and institutional financing, including some government investments in capacity building.
Because the social venture idea is relatively new and at proof of concept stage, panelists concluded that patient capital and funding flexibility is required, including innovations such as gap financing, bridge loans, receivables financing and quasi equity.
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Tilak Mishra of IFMR Ventures contributed to this post. The post earlier appeared in the NextBillion blog.
It’s been an exciting month for the Centre for Development Finance’s (CDF) Infrastructure and Governance groups, with staff spreading CDF work both far and near.
On February 9th, Rich Woodbridge (Researcher, Rural Infrastructure and Governance) presented interim findings from the Rural Market Insight team’s work on domestic energy consumption at the Rural Technology and Business Incubator’s (RTBI) 2-day workshop on “Redefining the Development Paradigm in the Post Industrial Revolution Era” at IIT Madras.
Rich’s presentation, entitled ‘Energy Consumption and Expenditure: A Fresh Perspective’ discussed India’s domestic energy market from the national level down to the rural household level and the implications for social entrepreneurs and policy makers. At this workshop, Snehashis Sarkar from ESF presented findings from their new Environmental Sustainability Index for Indian States, and Dave Wallack from IFMR Trust gave a presentation entitled ‘Rural Energy: Challenges and Issues in Creating Access’.
On 11-13 February, David Fuente (Program head, Infrastructure and Governance) presented a paper entitled “Pro-poor Renewable Technologies and their Impact on Society” at the Asian Security Conference 2010: Asian Strategic Futures 2030 – Trends, Scenarios, and Alternatives. The conference drew a wide range of invited speakers from the US, UK, and across Asia. IDSA is currently compiling a volume from the conference proceedings, in which David’s paper will be profiled.
On 19-22 February, Chandrakant Pradhan (Researcher, Rural Infrastructure and Governance) presented a paper entitled “What Determines Adoption of a Clean Technology: Cost of the Technology or Cost of Production?” at the International Conference on Climate Change and Developing Countries organized by the Centre for Environment, Education, and Technology in Kottayam, Kerala.
And, there’s more to come…
In March, Nithya Raman (Senior researcher, Urban Infrastructure and Governance) will be presenting a paper she co-authored with Dr. Karen Coelho from the MIDS entitled “The Poor and the Objectionable: Habitat Negotiations in and around Chennai” at the International Conference on Urban Ecologies in Asia, being held at the Hong Kong Institute for Humanities and Social Sciences. This paper is part of a larger project that Nithya and Dr. Coelho are working on together, in which they document the history of organizing and collective action among the urban poor in Chennai.
And, on March 1st Selvan Thandapani and Pooja Bhatia (both researchers, Rural Infrastructure and Governance) will be giving a half-day workshop on design for social impact at the DJ Academy of Design in Coimbatore. Leveraging insight from CDF’s Rural Market Insight team this workshop is in preparation for a day long workshop Selvan and Pooja will be leading with the design firm Deskala at the India HCI 2010 & Interaction Design for International Development Conference being hosted at IIT-Bombay on March 20-24, 2010.
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David Fuente, Program Head, Infrastructure and Governance, CDF, contributed this post.
Different stakeholders in livestock related supply chains face varied but interlinked challenges. The Government-Industry-Academia can all help to solve these challenges. In line with this CIRM (Centre for Insurance and Risk Management) is organizing a “Technical Round-Table on Livestock Risk Management” on 26th Feb 2010 to identify the challenges in livestock risk management and to gauge how those can be solved in a time-bound manner.
For the Flyer and Concept Note please click here.
For more information please contact: Anupama Sharma (anupama.sharma [at] ifmr.ac.in) {or} Alok Shukla (alok.shukla [at] ifmr.ac.in).
The success of an organization greatly depends on its Human Resource (HR), where HR plays a vital role in maintaining and enhancing its human capital. As with any organization, Micro Finance Institutions (MFIs) too need a solid HR base to scale up their activities and contribute towards the larger quest of achieving financial inclusion for all.
In tune with this, FICCI organized a HR conference on “Scaling MFI Activity by Strengthening Human Resource” on 21st & 22nd January 2010. The conference was focused on sharing the best HR practices across industries that MFIs can adapt to ramp up their activities.
The four broad areas that were addressed in the conference were:
- Recruitment & Training: Focused on hiring and training methodologies needed for Human Resource development in the microfinance sector.
- Compensation & Benefits: On structuring compensation and incentives in a manner, which would drive the right behavior
- Organizational Structure & Succession Planning: Creating leadership and grooming personnel to reach higher levels
- Culture & Ethics: Understanding the crucial nature of ethics and culture of the company.
The conference had a format of panel discussions followed by four workshops on the topics discussed by the panel. Bindu Ananth, President, IFMR Trust, moderated the panel discussion on ‘Recruitment and Training’.
Bindu moderating the panel discussion
The four workshops acted as a platform to brainstorm on how the corporate experiences can translate into ground realities for MFIs. Of the four workshops, one on Benchmarks and best practices in up-scaling recruitment was facilitated by Madhuri Menon and another workshop on Meeting future training demands and competencies/skills gaps of exploding organizations was facilitated by Udaya Kumar.
On the closing day, FICCI’s financial committee’s chairperson Ms. Naina Lal Kidwai moderated the session on ‘Culture and Ethics’.
The conference was extremely insightful and had participants from across the industry including key members from Fullerton India Credit company, Ujjivan, Unitus, Cocoon, Sequoia capital, Canara, HSBC, OBC, Life insurance company amongst others, who shared their experiences on different topics.
The HR and Training team from IFMR attended the conference.
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Poorna Chandrasekaran, IFMR Rural Finance, contributed to this post.
Last week a group of microfinance practitioners and investors gathered in New York City at the 2nd Microfinance Summit to discuss recent developments within the microfinance industry, as well as opportunities in providing healthcare, clean water, and renewable energy to low-income populations. Panelists discussed topics such as the prospect of MFI mergers in some regions and industry consolidation, the importance of foreign exchange hedging & risk management by MFIs and foreign investors, and the role that government & development finance institutions have played the past 18 months as many MFIs required timely refinancing.
When discussing evolutionary steps within the industry, Michael Hokenson of Minlam Asset Management, a fund providing local currency debt to MFIs, referenced IFMR Capital’s recent multi-originator securitisation of micro-loans into tradable securities (Mosec I), as a promising advancement toward a secondary market for microfinance assets.
During a panel on the state of private equity (PE) in microfinance, panelists posited that when considering the microfinance landscape for equity investment, “there is India, and then there’s the rest of the world.” What the panelists alluded to is that India’s microfinance opportunity is relatively unique and makes it a highly attractive investment destination for a combination of reasons. The potential size of the Indian microfinance market (“demand for microfinance”), in addition to access to large pools of educated professionals, a robust public equity market, and a banking sector compelled to lend to MFIs via priority sector lending (“capacity” and “supply”), makes for a highly attractive opportunity. And it is largely these ingredients that have compelled investors to give Indian MFIs valuations that seem relatively high versus international peers.
Bhakti Mirchandani of Unitus Capital, the Bangalore-based financial advisor to MFIs, did point out that even though Indian MFIs continue to receive relatively high price-to-book value multiples, on a price-to-earnings basis Indian MFIs are being valued in-line with their international peers. (To read more about MFI equity valuation and pricing, see this in-depth analysis by Nitin Chaudhary of IFMR Rural Finance and Suyash Rai of IFMR Advocacy Unit.)
As with any discussion of India’s microfinance opportunities, the topic of multiple-borrowing and other risks came up in more than one panel. The self-regulatory steps taken by Indian MFIs, such as the establishment of a credit bureau serving the microfinance industry, named Alpha, is one sign of how MFIs are reacting to the risks of over-lending in select regions of the country. (More on the topic of “Microfinance Credit Bubbles and Self-Regulation” available over at Microfinance Focus.)
The presentation below was delivered during a panel entitled, “Innovative Solutions for New Financing,” in order to highlight some of the structured finance techniques IFMR Capital is utilising to allow MFIs to tap domestic debt markets in an orderly and efficient manner. Participants were also given an intro to ATMNE’s commodity trading and financing pilot program in Kadi, Gujarat.
Following the presentation, Nancy Barry, former President of Women’s World Banking, noted that the securitisation transactions described are particularly encouraging because they point to the development of local, domestic capital markets with the capacity to fund the growth of its own microfinance sector over the long term. (Likely a prerequisite if India’s 100+ million unbanked households are to be reached in a timely manner.) There are certainly benefits to having access to international funding sources as well, but the ability for Indian MFIs to fund their operations by tapping into a variety of domestic investors (mutual funds, treasury desks at banks, a guarantee company such as IFMR Capital), allows MFIs to avoid currency risks, capital flight in times of international crisis, and other risks derived from depending disproportionately upon international financing.
Emboldened by the lessons from the recent financial crisis and encouraged by its early successes, IFMR Capital is continuing to work to ensure that its partner MFIs will have efficient and reliable access to debt capital, while seeking to grow its model to reach more MFIs and eventually other high-quality asset originators serving low-income households.
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Peter Bremberg of IFMR Capital contributed to this post.
Last week I attended a conference titled “Microfinance: Translating Research into Practice”, hosted by the Centre for Microfinance in partnership with the College of Agricultural Banking (CAB) in Pune.
Among the varied things that were discussed in the conference, the underlying and oft repeated theme was microfinance sector’s need for effective research, which was well articulated by many participants. For example, Dr. Nachiket Mor felt that because the rapidly growing microfinance industry in India is quite different from the rest of the world in many ways (in terms of loan size, involvement of the banking industry etc), its challenges are also unique, and to address them effective research can play a crucial role.
Another important point was raised by Mr. Mathew Titus, who observed that to promote high quality research in the country there has been little or no funding to build a cadre of professionals who are capable of understanding the field realities and doing good research.
I have described some of the research works pertaining to microfinance that were discussed during the conference:
Professor Abhijeet Banerjee of MIT presented the results of a randomized evaluation of Spandana’s microfinance programme in Hyderabad. The main conclusions from the study were – microfinance has no clear impact on women empowerment, health or education; the accessibility to microfinance helps in setting up of new businesses; investing in durable goods by those who have existing businesses and more consumption by those who do not intend to start new business.
Results such as no impact on women empowerment, health and education might disappoint microfinance enthusiasts who think that microfinance is an antidote to many social and economic problems of the poor. However, one needs to understand that impact on health, education and women empowerment needs sustained interventions over a longer period.
Mr. B.B. Mohanty of NABARD took forward the Impact session by highlighting the enhanced financial access of the poor, especially of the women, due to the SHG-Bank linkage programme promoted by NABARD. He made an interesting point that SHG members should graduate after a certain time period and become clients of regular banking system. While I agree with him that low-income people should come into mainstream, I disagree that there should be an exit from the programme. SHG programme is not just meant for micro credit, rather it is a social movement providing poor women a platform for addressing the social and economic problems, and giving them solidarity and strength so that their voices can be heard.
- Microfinance, Social Capital and Empowerment
Professor Rohini Pandey of Harvard University shared her research done with VWS, Kolkata, which revolved around the question of whether social interactions facilitate cooperative behavior among group members.
The research, done in an urban setting, revealed that after group formation women develop trust among each other and participate in social events. Opportunity for such association was absent for women before microfinance group formation. The results surely strengthen our belief that microfinance groups are not just credit associations; rather their role clearly goes beyond the financial transactions.
- Microfinance and Government Programs
The findings of CMF research conducted on the impact of participation in MGREGA (Mahatma Gandhi Rural Employment Guarantee Act) in Andhra Pradesh were presented in this session.
Important findings of the study are – MGREGA helps participants cope with stress periods such as those caused by bad weather; no difference in wages based on caste and gender; and getting a job card to avail the scheme is not a hurdle for people.
I wished the study could be extended to some other states to give us a comparative analysis of the impact of MGREGA in other places, as we often hear about the mismanagement and misappropriation of the scheme in various states. But it was heartening to see many positive results of the scheme in Andhra Pradesh.
- Tailoring Financial Services to Meet the Needs of the Poor
Professor Rohini Pandey presented another interesting research addressing the question of ‘what are the results of using a flexible credit repayment product for clients’.
The experiments examined differences from moving weekly (frequent) to monthly (less frequent) repayment, and effect of introducing grace period of two months before the repayment starts. Bindu Ananth of IFMR trust provided practitioners’ perspective emphasizing that the structure of the loan is crucial, and getting the lenders and savers together is very important while designing the financial products.
Professor Jonathan Morduch gave insights on how poor survive on less than $2 a day from his very famous book Portfolios of the Poor.
He said poor face triple whammy of low income, irregular/unpredictable income and lack of inappropriate tool to deal with the ups and downs of life; however, the poor are active money managers and they can and do save. He mentioned about the SEED Savings Account in Philippines and some Grameen Bank II products as good example of suitable products to the poor, and urged to scale up/learn from these ideas.
Anil SG from IFMR Trust made an interesting presentation on similar lines. By taking an example of a typical low-income household, Anil showed the volatility in cash flow, and the dreams and fears of the household. He through the LIWE (Life Wealth Envelop) tool explained what different types of risks households face and what can be the financial strategies for managing various risks.
- Competition, Multiple Borrowing and Information Sharing among MFIs
As we all know that nearly Rs. 600 million MFIs loan was reportedly involved in defaults in Kolar (Karnataka); the Kolar case was one of the important points of discussion in the conference. From a study on the Kolar case done by Mr. N. Srinivasan, factors such as clients’ behavior and MFIs’ practices were found responsible for the crisis. It was also discussed that the Kolar crisis resulted out of a Fatwa issued by a religious group. This was a larger risk that is beyond a MFIs’ capability to deal with.
The conference raised some of the very important issues prevailing in the microfinance industry and gave a platform to various stakeholders such as academicians, practitioners and policy makers to learn from the various experiments and discuss the policy implications.
PS: For notes and presentations from the conference click here
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Anita Sharma, from IFMR Trust contributed to this post.
The annual forum on social entrepreneurship organized by Nand & Jeet Khemka Foundation and hosted by the Indian School of Business, Hyderabad was held on the 8th and 9th December 09. The event saw wide spread participation by organizations that are working in the social entrepreneurship space including IFMR Trust, which was one of the forum partners.
The forum proved to be a perfect platform for discussing issues pertaining to social entrepreneurship and brought together thought leaders, institutions, academicians, the government and social entrepreneurs under a single roof – paving way for an intense series of interactions across stakeholders to address issues and bring out solutions to carve out a roadmap for Social Entrepreneurship in India.
After the opening remarks on the first day, the forum kicked off with the theme “Working Scaling Issues ‘Fingers burnt, lessons learnt’”. The panelists for this theme were Mr. Manish Sabharwal (Co-Founder of Team Lease), Dr. Pawan Patil (CEO of the Global Partnership for Youth Investment) and Dr. Nachiket Mor (President of ICICI Foundation).
Mr. Sabharwal categorized start-up organizations into two types – ‘a baby’ or ‘a dwarf’ – both start small but the dwarf doesn’t attain growth due to inherent differences. Dr. Patil talked about creating jobs, especially for the growing youth population, while Dr. Mor talked about India type scale which may require replications in the midst of diversity rather than scaling up for a single large population of the country.
Next theme discussed was “SCALERS” which stands for Staffing, Communicating, Alliance-building, Lobbying, Earnings generation, Replicating, and Stimulating market forces. These factors have a critical role (each factor with varying levels depending on the case and context) in affecting social impact. Matthew Nash, Managing Director of the Center for the Advancement of Social Entrepreneurship at Duke University, discussed this new model.
Parag Gupta, Founder of Waste Bank, presented his analysis using the SCALERS model on SELCO, a social enterprise that provides sustainable energy solutions and services to under-served households and businesses and identified its accomplishments and challenges. Similarly, Prof. Madhukar Shukla of XLRI presented his analysis of the SCALERS model on Nidan, a not for profit enterprise which organizes the unorganized worker including migrant workers, street vendor, waste pickers and other informal sector workers.
The forum also saw a series of Tracks (Sessions) that addressed a variety of issues; Bindu Ananth, President, IFMR Trust, chaired and led one such track on “New Financial Instruments for Social Enterprises” which addressed the theme of new financial instruments available to social entrepreneurs. The track managed to get a very good response and was widely appreciated on how it was moderated and the deliberations that resulted, from the session. IFMR Trust played an instrumental role from identification of session’s topic to moderation of the session.
The discussants for IFMR Trust’s track on ‘New Financial Instruments for Social Enterprises’ included Ms. Subhasri Sriram (Shriramcity Union), Mr. Subir Nag (ICICI Ventures), and Dr. Reuben Abraham (Centre for Emerging Market Solutions at ISB).
Some of the other tracks were Intellectual & Human capital, Performance Metrics and Partnering with the Government.
Also ‘Consultancy Clinics’ were organized for social entrepreneurs to help them get answers to their questions related to funding, legal issues and knowledge creation. The consultancy clinic on law was particularly useful for enterprises that can take the benefit of hybrid structures for getting funds and tax rebates. It also highlighted the importance of good corporate governance for social enterprises.
Overall the forum provided insights into the challenges which social enterprises face in scaling up – both financial and non-financial – and ways to deal with it, through a series of discussions and work sessions focused on re-inventing and innovating solutions to such scaling up issues.
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Shikha Jindal from IFMR Ventures, contributed to this post.
The South Asian Economics Students Meet (SAESM) that concluded recently in Dhaka had Kshama Fernandes from IFMR Capital interacting with the students over a dinner talk on “Access to Finance for All”. Below are her opening remarks:
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As Edward Burke said, the only thing necessary for the triumph of evil is for good men to do nothing. Most of us are aware of the world that surrounds us. The poverty, the starvation, the lack of medical care and education – the fact that the food, clothing and shelter that most of us take for granted is beyond the reach of a majority of South Asia’s population.
Even as we sympathize and emphasize with those less fortunate, we rarely translate our concerns into actions – Most of the times it is because we don’t know how to. While we all care and worry about it, somewhere at the back of our minds we think it’s a problem for somebody else to tackle – governments, politicians, NGOs, social workers. We often believe that it is easier for a doctor to help out because by profession he/she is trained to diagnose and treat an ailment in a patient.
But I’d like to bring to the notice of the young, talented and budding economists here who have gone through a rigorous short-listing process and made it to the meet, that as economists, you are no less equipped than a medical doctor is to make a difference. I would even go so far as to say that you probably have the ability and reach to have a lot more influence and impact, on a much bigger canvas than the limited reach of a doctor. As economists, you have the tools to look critically at the world around you, study, understand, analyze and find solutions to the problems that exist around you. While a lot of you may not get involved in the execution of the solutions, there is great value you can contribute to the world by simply trying to use your knowledge to understand the problems better and contemplate what the solutions could be.
Financial inclusion is not a choice we have. It is an absolute necessity. Because if we do not correct the ever growing imbalance in the world between those who have far more than necessary and those who have nothing at all, we are soon going to see discontentment and revolt coming from various affected quarters, and rightly so. It is a great responsibility that youngsters like you carry today, to make sure that you use your knowledge and skills in a manner that will make a difference to the world, where it matters and when it matters.
Specially in the underserved sectors, today more than ever, we need more and more young and dynamic professionals, who will not only study finance and economics for a living, but also look at the problems in these sectors with a scientific and analytical bent of mind. Effectively ensuring that their knowledge and expertise eventually provide a path and hope for millions of those who have not been fortunate enough to have access to a respectable life. If you are not part of the problem, you are part of the solution!
I wish you all the best in your endeavor to make a difference.
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Few other pictures:
Dinner Talk Panel
Students Meet
The India team
Get together a thousand HR professionals and you will have concepts, methods, leadership, innovation, people practices etc. flying thick and fast. Combine this with an unusual start of a drumming session, with eight hundred to a thousand drums playing in unison – certainly sets the tone for an unusual event.
The 13th National HRD Network’s annual conference held at the Nehru Centre, Worli, Mumbai from the 25th – 27th Nov 09, proved to be precisely this. The theme was very apt for the times – Lead from Uncertainty to Certainty.
Beginning with a thought-provoking inaugural address by Anand Mahindra, the scene shifted to various aspects of change, leadership, compensation and benefits, handling / working with generation-Y, developing young leaders, performance management, sustainable accountability, ambiguity and certainty etc. The sessions were created around five major themes – Profit Plus, The Craft of Organizational Design, The Rewards of Work, Organizational Culture, Learning & Development and HR for HR.
The conference had an array of interesting speakers, and some very insightful sessions, including a plenary on Day-1, which was emotion-filled. It had the heads of HR of the Taj and the Oberoi groups share some real and first-hand experiences of people during the terror attacks of November 26 (dubbed 26/11) last year that targeted the respective hotels. They related events and the unexpected, almost unimaginable, courage and tales of valour in times of crisis. The important question was – what does HR do to foster such courage and commitment.
Day 2 started with a moving multi-religious prayer service in memory of the victims of the terror attacks. This was followed by another series of plenary and concurrent sessions including a very balanced review of the meaning and impact of a changing demography, ‘corporate perspectives’,’ leading change’, ‘securing pour future’ in which Nachiket was a panelist.
The conference closed with a plenary session on ‘Building the Future’ by Kumar Mangalam Birla, and a grand finale by Shri. Omar Abdullah, Chief Minister of J&K.
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Madhuri Menon, from the Human Capital team contributed to this post to share her views on the NHRDN conference which she attended along with Amit Kumar of Human Capital team and Udayakumar of IFMR Rural Finance team.
