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MICROFINANCE & SOCIAL BUSINESS Low cost sustainable model

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Presentation on theme: "MICROFINANCE & SOCIAL BUSINESS Low cost sustainable model"— Presentation transcript:

1 MICROFINANCE & SOCIAL BUSINESS Low cost sustainable model
Lions Clubs International Foundation

2 Agenda Introduction of Microfinance & Social Business concepts by Neville Mehta, Intl. Secretary, ISAAME, LCI Remarks by AP Singh, Past Intl. Director Remarks & video from Mr. Binod Chaudhary, Chairman of Chaudhary Group (CG) & CG Foundation Questions + Answers

3 Speakers Lion Arvinder Pal Singh International Director ( ) District: 322-B1 Home Club: Calcutta Vikas (45734) Lion Since: March 1984 Lion A P Singh has been credited with 13 International President’s medals and the highest award ‘Ambassador of Goodwill’. He is a Progressive Melvin Jones Fellow and a Major Gift Donor for CSF II. He is also the First Lions Clubs International Foundation Heritage Club member of 322-B1. He has regularly served as a faculty on more than 25 LCI and Regional Leadership Institutes. His latest contribution in extending new initiatives is the establishment of Eastern India Lions Leadership Academy which includes video conferencing facility in all districts of MD 322. He has also been organizing webinars to reach out to clubs in furthest corners. The Lions of Kolkata (India) have accepted Microfinance under the leadership of Lion A P Singh and are moving ahead as this can have a radical impact on facing the menace of poverty and changing lives of people.

4 Speakers Mr. Binod Chaudhary born on April 14, 1955 is a
Nepalese businessman, industrialist and philanthropist. He is the current Chairman of Chaudhary Group (CG), a conglomerate that consists of nearly 80 companies. Mr. Chaudhary is also the first Nepal billionaire as listed by Forbes. Besides, business, Mr. Chaudhary has been involved in various other government and social sectors. He worked as a member on constituent assembly and parliament of Nepal from April 2008 to May His CG Foundation works for social welfare and he often contributes in the areas of art, music and literature as well. He is also a former Leo member.

5 What is Microfinance It is estimated that approximately 2.5 billion people around the world live in poverty, struggling to survive on less than US$2 a day. Yet for people living in poverty, it’s all they have to provide for the needs of their whole family. Families living in this kind of poverty struggle to afford even the most basic of items. They are unable to afford adequate meals, clean water or an education. They go without proper shelter, transport and even medicine when they are sick. The Solution: Microfinance… Microfinance refers to an array of financial services like loans made available to poor entrepreneurs and small business owners who have no collateral and wouldn’t otherwise qualify for a standard bank loan. Most often, microloans are given to those living in still-developing countries who are working in a variety of different trades, including carpentry, fishing and transportation. The goal of micro financing is to provide individuals with money to invest in themselves or their business to help get them out of poverty. When providing loans, micro financing institutions do not require collateral, but do insist that the loan is repaid within six months to a year.

Helps poor households meet basic needs Protects them against risks. Provides working capital for income generating activities. Provides additional capital for expanding business. Helps in asset creation Provides employment opportunities. Save poor from the trap of money lenders.

7 July 6th 2014 Toronto CANADA

8 Micro Finance & Social Business
A reflection on the topic by Mr. Binod Chaudhary

9 Microfinance "Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty„ Prof. Mohammed Yunus

10 Microfinance Financial source no collateral needed Focus on the poor
Grameen Bank Financial source no collateral needed Focus on the poor 2 main models Relationship based model Clear definition of poor Maximum 20 % (int. avg. 30) Lending groups Strong decentralized structure Real money (M1) Microfinance is a source of financial service for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group. Yunus’ grameen bank has put a very clear focus through decentralized structures on reaching out to the really needed.

11 History Nepali Micro Finance
1960: first appearance for flood victims 1970: first scale approaches: failed 1980: Social approach: group guarantees 1990: institutionalization: rural development banks 1995: commercialization started: NGO  MFI 1998: Regulations of MFI 2003: Banks and Finance Institution act

12 Variety of players Models Cooperative SFLC Grameen Wholesalers RSRF Commercial Banks RMDC SKBBL Key MFIs 35 MFDB 29 FINGO 16,854 SACCOS A variety of models can be found in Nepal. Besides Cooperatives, Small Farmer Cooperative Limited (SFLC) and the Grameen Bank model there are 2 more models: Self reliance Groups and the village Bank Models. Beside the fact that every commercial Bank has to provide between 3.5 and 4.5 % of their loans to the deprived sectors 3 wholesalers are established in the market, from which 2 have a rural focus and one a agricultural. Various players are providing the customer with Micro Credits: 36 Micro Finance Development Banks serve in 66 out of 78 districts. 29 FINGs are active in 54 districts and more than independent co-operatives are acting all over Nepal serving the biggest Market share of 2 Million clients.

13 Poverty Line 25 % below Poverty Line 33 % reached by MFI

14 Success-Stories in Nepal
2.5 Million families reached Maximum 1500 $ without guarantee Total loan disbursed USD 1.67 billion Loan recovered ratio 99 percent Which are the districts

15 Challenges Include Lack of Risk Management Inadequate Use of ICT
Delivery methodology not considering geography Poor financial literacy Lack of demand and supply in wholesale fund Limited penetration in hilly regions This incompetent manpower as well as the infrastructure is also reflected in a higher risk factors then usually in MFI. Especially small and medium scale MFIs are struggling to catch up with the adequate IT-Infrastructure to track their activities in an appropriate manner Many proven concepts like the Grameen Bank Model have been copy-pasted from the flat lands to the hilly regions, which does not work there due to the topography. Commercially driven MFI from the commercial banks have normally an oversupply and are stuck in outreach, whereas the traditional smaller MFIs normally can’t fill their gap between demand and the limited means they have access to.

16 Microfinance in context
SB Investment-Funds Social Business Seed-Capital Microfinance Please allow me now to depart slightly from headline of Micro-Finance and move on to what I would call the next step in economical development of the pros: Social Business. We could say, different development steps need different tools. Where Micro Finance can help the poor to make their first steps towards a small family business or towards industrial farming, it reaches it’s limits, when we talk about growing in stage. That’s where the Social Business and Social Business Funds enter it’s stage.

17 Social Business Next step after Microfinance Empowers leaders
‘scaleable’ organization Considers a bigger group of stakeholders

18 What is Social Business?

19 What is Social Business & NSB
Animated Video

20 Why is it different? Skills to grow Refined skills and scalability
Macroeconomic more sustainable


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