Making it Work for the Bottom of the Pyramid July 1, 2019 Microfinance Making it Work for the Bottom of the Pyramid Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

MFI what is Microfinance? insurance savings & loans July 1, 2019 what is Microfinance? MFI savings & loans insurance remittances & payments low-income individuals & communities Provides low-income individuals access to financial services in an effort to support income-generation, build assets, stabilize consumption, and protect vulnerable communities from unnecessary risks. Typical financial products offered include: savings accounts, short-term loans, insurance, remittances and payments. The micro stems from the small lending caps, Industry average loan cap is $400-$500. Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

July 1, 2019 poverty To serve the underserved. Mission: poverty alleviation through enterprise development and job creation. Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

growth HiH Four Pillar Model SOCIAL MOBILIZATION BUSINESS EDUCATION July 1, 2019 growth HiH Four Pillar Model Sustainable growth for the member, not for HiH. HiH goal is not to increase profitability, but to lend a helping hand to the very bottom of the pyramid (the over four billion of the world’s poorest citizens, who live on less than $2/day) SOCIAL MOBILIZATION BUSINESS EDUCATION ACCESS TO CREDIT MARKET LINKAGE Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

direct lending training requirements credit assessment group accountability HiH Loan Process

enterprise incubation fund (EIF) July 1, 2019 enterprise incubation fund (EIF) RAISE THE LENDING CAP? HAPPY CLIENTS RETURN ON INVESTMENT INCREASED RISK INTEREST RATE HIKE MISSION MISALIGNMENT HiH EAST AFRICA JOB OPPORTUNITIES Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

EA MARKET RATE COMPARISON July 1, 2019 EA MARKET RATE COMPARISON 50% 15% APR + 0.09% month insurance + 1% processing fee HiH EAST AFRICA VS Which would you perfer? Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

does MICROFINANCE have a measurable impact on the July 1, 2019 Making a Difference does MICROFINANCE have a measurable impact on the social and economic situation of the poor in developing countries? ACADEMIC RESEARCH IMPACT IS DIFFICULT TO QUANTIFY OR MEASURE EMPIRICAL RESEARCH HAS MIXED CONCLUSIONS AGREEMENT ON THE ROLE OF WOMEN Difficult to measure impact. Empirical research has mixed conclusions. Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

can MFIs finance their own operations without compromising July 1, 2019 TRADEOFF can MFIs finance their own operations without compromising their mission to reach out to the poor? ACADEMIC RESEARCH MISSION DRIFT SOCIAL & ECONOMIC OUTREACH COST EFFICIENCY Social outreach and financial sustainability goals are conflicting. Financial systems approach emphasizes the importance of financially sustainable microfinance programs claiming that empirical evidence neither shows that the poor cannot afford higher interest rates, nor that there is a negative correlation between the financial sustainability of the institution and the poverty level of the clients. Argue that large-scale outreach to the poor on a long-term basis cannot be guaranteed in MFIs are not financially self sustainable. Most parties involved in this debate have settled in favor of the financial systems approach. There is hardly any solid data on the existence of a trade-off, but the results of the few academically reliable studies that have been conducted provide evidence for mission drift, outreach is negatively related to cost-efficiency of MFIs. Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

starting a MFI PERSONAL APPLICATION July 1, 2019 PERSONAL APPLICATION starting a MFI HiH partnership + downstream addition MISSION: provide continuous assistance to HiH members to help them sustain and further grow their businesses A for-profit attachment to an NGO, allows the NGO to maintain its mission direction while giving members the opportunity to growth even further without sending them to an institution that may try to take advantage. Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

3 level loan $267 $467 $767 $233 from HiH BREAKDOWN $500// $700// $1000

. . LOAN DETAILS remit 1% of profits receive 3% discount July 1, 2019 LOAN DETAILS risk reflecting rates 18% . 20% . 25% limited group liability $400 maximum group coverage $HIH’s $233 paid first remit 1% of profits receive 3% discount Once a group member becomes eligible for the top tier HiH loan ($233), he or she will have the opportunity to apply for an additional sum. The first level total loan cap of $500 (or an additional $267 on top of $233), second level total loan cap of $700 ( or an additional $463) , and third level total loan cap of $1000 (or an additional $763). If default occurs, the maximum amount of loan to be covered by the group is $400. $400 will include payment of HIH’s $233 first. (reducing HiH’s risk significantly) special considerations AAA Members Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani

SYMBIOTIC RELATIONSHIP July 1, 2019 MOTIVATION SYMBIOTIC RELATIONSHIP DUE DILIGENCE RISK ANALYSIS DECREASED DEFAULT INCREASED COST EFFICIENCY PROFITABILITY HiH provides the majority of due diligence required for lending (TRAINING + CREDIT BUILDING) Help us make risk analysis effectively (WE TAKE THE WORK REQUIRED FOR EXCEPTION CASES OFF OF HiH’S HANDS) In some part, it will decrease the default risk (MUTUALLY BENEFIT FROM LOWER RISK) INCREASED COST EFFICIENCY RELATES TO A DECREASE IN STAFFING REQUIREMENTS LEADING TO LESS OVERHEAD. (we won’t need to staff an entire department for group recruitment or business education and they wont have to staff excess loan officers or any loan officers if they just wont to outsource the loan enforcement to us) Presented by: Jenna Blanche, Hongru Yi, & Abdullah Alalyani