1. 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

2. 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

3. 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

4. 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

5. direct lending training requirements credit assessment
group accountability
HiH Loan Process

6. 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

7. 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

8. 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

9. 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

10. 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

11. 3 level loan $267 $467 $767 $233 from HiH BREAKDOWN
$500// $700// $1000

12. . . 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

13. 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