1. Unni Beate Sekkes æ ter Mikrofinans Norge/soon PhD student at RUC 1 Presentation of the Norwegian and US model of microfinance

2. Organisation Bank Programme Loan Fund Centre / Network Loans Centre / Network Peergroups Peergroups Micro entrepreneurs Lender 1 2 3 4 The lender may be: 1) The programme with an integrated loan fund 2) An external loan fund 3) A bank 4) The network group (Norway)

3. Unni Beate Sekkesæter 22/11-2011  First groups were formed in 1997 in Oslo for mainly immigrant entrepreneurs – still 90% immigrants  Based on the peer group lending methodology  Average loan € 4000 Interest: 6% ◦ 200 persons have been part of network groups and started saving ◦ 3 loan products 1.Peer group loans for start up and businesses with less than 6 months experience + Group loans for existing businesses 2.Individual loans for existing businesses 3.Linkage loans from banks – with or without partial guarantee from the project

4. Unni Beate Sekkesæter 22/11-2011  Peer groups are self managed and responsible for ◦ Reviewing loan proposals ◦ Giving loans from the group ’ s loan fund ◦ Keep up the saving scheme ◦ Ensuring that members repay on time ◦ Function as bank and collection agency  Share experience of running business  Mutual support & training ◦ Select topics for training ◦ Join courses financed by the project/interest earnings of the group Network Credit: Self managed groups

5. Unni Beate Sekkesæter 22/11-2011  Persons who want to start their own business  Persons who have already started their own business – but need more financial capital  Persons with minority background who came to Norway with a lot of resources and knowledge ◦ Often highly educated, but without possibilities of getting their education recognised ◦ Often employed in temporary positions or part time jobs ◦ Often overqualified for the jobs they are doing  Persons who have been dependent on some sort of public assistance for a while ◦ Those who have a willingness to get out of dependency on public assistance and make their own livelihood

6. Unni Beate Sekkesæter 22/11-2011 A Local.Women ’ s Microfinance Programme in Hordaland County,Norway – was part of the Equal Credit EU project Evaluation looked into these issues: The member/business profile The programme outcome and access to business finance Stakeholder relations Survey questionnaire (29 responses) = 50% of programme participants 5 focus groups 7 in depth interviews with employees 6 months process – cost: £ 8000 External consultant (student – less expensive)

7. Unni Beate Sekkesæter 22/11-2011 Evaluated by Student Pauline Chancellee, France Evaluation looked into these issues: The MFN member/business profile/characteristics measures the economics and social effects of the microfinance programme services on its customers. The programme outcome and access to business finance Survey questionnaire (17 responses) 2 focus groups in depth interviews with management/others External consultant (student)

8. Unni Beate Sekkesæter 22/11-2011  Non-business sources of credit were used: ◦ home equity loans: HNC -21% MFN – 18% ◦ personal loans HNC -7% MFN - 59% ◦ loans from friends and family HNC - 21% MFN 18% ◦ In HNC 18% are now using bank credit for their businesses whereas 29% did before ◦ In MFN 18% are now using bank credit for their businesses whereas 12% did before  24% of HNCs and 6% of MFNs customers received loans from other business development programs (Innovation Norway)

9. Unni Beate Sekkesæter 22/11-2011  50% of HNC and 41% of MFN businesses are home-based  44% have income from a job in addition to their business  37% for HNC and 70% for MFN are single head of households  The HNC entrepreneurs with established businesses worked 32 hours per week on average  Legally registered businesses increased from 52% to 65% for HNC reflecting the increasing “ formalization ” of their enterprises  MFN members now prefer to keep their businesses as separate as possible from their private economy. 82.4% are now using a separate bank account for their businesses whereas 30% did before,  46% reported substantially improved ” record keeping  A total of 78% of the respondents had started their business at the time of the survey, an increase from 52% at the time of joining Last three months Before Completed a course/training module provide by MFN 1[1][1]13 Received help from a NC sponsored advisor412 Referred a customer to a NC member610 Provided business advice/other help to a NC member 1114 Spoke with NC staff1516 Sold my product together with a NC member 55

10. Unni Beate Sekkesæter 22/11-2011 HordalandMFN

11. Unni Beate Sekkesæter 22/11-2011  Mikrofinans Norge Hordaland

12. Unni Beate Sekkesæter 22/11-2011 Very important Somewhat important Little/Not important The Microinvest/MFN loan82%6%12% The MFN business education training59%23%17% The business training I received through participation in group meetings 65%35%0% The consultants/advisors MFN provides me74%17%6% The friendship and support from others members65%35%0% The customer referral from others members47%30%23% The business advice from others members65%23%12% The chance to make our own decisions100%0% Helping my business to grow/improve100%0% Increasing my self-confidence74%17%6% Helping improve my relations with family75%17%12% Increasing my involvment in the community94%0%6%

13. Unni Beate Sekkesæter 22/11-2011 Last three months Before Completed a course/training module provide by MFN 113 Received help from a MFN sponsored advisor 412 Referred a customer to a MFN member610 Provided business advice/other help to a MFN member 1114 Spoke with MFN staff1516 Sold my product together with a MFN member 55

14. Unni Beate Sekkesæter 22/11-2011  The typical Hordaland Network Credit business owner is 30-50 years and female.  Among informants answering the questionnaire in this study, 18% were immigrants  96% of those participating in the focus groups were born in Norway  37% are single heads of households.  50% were 30-39 years and 39% 40-49 years.  82,4% have improved their quality of life since joining the programme  The income of Hordaland Network Credit’s customers has so far not changed in any measurable way since they joined, it must be said that even those with considerable profit from their business, choose to reinvest this in the business rather than take it out as salary.  The entrepreneurs with established businesses worked 32 hours per week on average. In addition, 46% reported “substantially improved” record keeping, and the percentage of legally registered businesses increased from 52% to 65%, reflecting the increasing “formalization” of their enterprises.

15. Unni Beate Sekkesæter 22/11-2011  The “Hordaland Network Credit Survey 2001” (Sekkesæter, 2002) was filled out by a random sample of 50% of the 60 members in Hordaland County, Norway.  29 respondents participated in the questionnaire survey  24 of them also participated in focus group discussions with the author.  The informants were all members of peer groups of 4-5 people who are planning their start-up (15%) or are currently in business (77%) or had been in business (8%).  THE SURVEY WAS DESIGNED TO EXPLORE THESE THEMES:  The characteristics of Hordaland Network Credit’s members;  Their level of participation in the program;  The characteristics and evolution of their businesses;  The changes in the sources of business credit they use;  The member’s assessment of the quality of Hordaland Network Credit services and the usefulness of the services offered;  The level of joint marketing and joint venturing among members;  The changes in self-confidence, community involvement and family relations encouraged through the group process.

16. Unni Beate Sekkesæter 22/11-2011 48% say Hordaland Network Credit has been very important in helping the business grow;

17. Unni Beate Sekkesæter 22/11-2011

18.  From LA to New York and Boston to Miami, low- to moderate-income entrepreneurs are unable to access the credit needed to build sustainable businesses and attain economic self-sufficiency.  40 million households (106 million people) have limited access to mainstream financial institutions in the U.S. and 28 million people are completely unbanked.  Microenterprises (<5 employees) account for approximately 18 percent of employment in the U.S., and create 900,000 jobs a year.  Predatory lenders charge average annual interest rates over 300 percent— and accounted for over $42 billion in loan volume in 2008.  CDFIs Invested $3.5 billion in 2004 to create economic opportunity in the form of new high-quality jobs, affordable housing units, community facilities and financial services to low-income families and small businesses. 70% of customers are low income.  Grameen America started in 2008 and grow fast: 7000 loans Grameen America

19. Unni Beate Sekkesæter 22/11-2011  Accion who took over WC have served over 23 000 micro-businesses and distributed nearly 19 000 loans, making Accion who merged with WC one of the largest micro-enterprise initiatives in the country.  Article based on member survey(2000) describing characteristics of Working Capital’s customers, and measures the impact of the programme’s services on its customers in Massachusetts and Rhode Island with a sample of 110 respondents (ibid, 2000).  It must be noted that since then, Working Capital in Massachusetts (now ACCION) has downscaled its peer lending activities and merged with ACCION which now have only individual loans of up to $50 000  First State Community Loan Fund (partner with YWCA, my case study org):  The Micro Loan Fund (MLF) provides loans for individuals and microenterprises from $300 to $15,000. Loans are repaid over a four-month to three-year period. Most business purposes are eligible, including working capital, equipment and inventory.

20. Unni Beate Sekkesæter 22/11-2011 LEVEL OF INTERACTION WITH OTHER MEMBERS and POTENTIAL MEMBERS HORDALAND NETWORK CREDITWORKING CAPITAL Spoke to another WC member in the last two weeks. 89,7%80.7% Referred a customer to a WC member during the last three months. 70,4%65.9% Talked to another business owner about joining WC. 60,7%65.9% Provided business advice/help to a WC member in last three months. 55,6%60.0% Recruited someone who joined WC. 28,6%50.0% Sold products with another WC member. 42,9%44.0% Have a joint venture with another WC member. 44,8%44.0%

21. Unni Beate Sekkesæter 22/11-2011 IMPORTANCE OF THE HELP OF OTHER GROUP MEMBERS HORDALAND NETWORK CREDITWORKING CAPITAL Friendship and support from other members are very important. 76%79.0% Customer referrals from other members are very important. 41,7%57.4% Business advice from other members is very important. 44%66.8% IMPORTANCE OF THESE SERVICES FOR YOUR BUSINESS HORDALAND NETWORK CREDITWORKING CAPITAL The advisors the programme provides me are very important 29,2%74.4% The business training sessions at the association meetings are very important 30,4%69.7% The advice/help from a programme representative is very important 36%67.5% The programme business education curriculum is very important 30,4%65.1% The loan is very important50%60.1%

22. Unni Beate Sekkesæter 22/11-2011 OUTCOMES OF THE PROGRAMME AND THE GROUP PROCESS HORDALAND NETWORK CREDIT WORKING CAPITAL The chance to make our own decisions is very important. 60%84.2% Increasing my self- confidence is very important. 64%73.8% Increasing my involvement in the community is very important. 20,8%64.2% Helping improve my relations with my family is very important. 30%42.7%

23. Unni Beate Sekkesæter 22/11-2011 ◦ “The social capital of a society includes the institutions, the relationships, the attitudes and values that govern interactions among people and contribute to economic and social development. Social capital, however, is not simply the sum of the institutions that underpin society, it is also the glue that holds them together. It includes the shared values and rules for social conduct expressed in personal relationships, trust, and a common sense of “civic” responsibility that makes society more than a collection of individuals” (The World Bank 1998, p. 1) ◦ Social intermeditation is financial intermediation with a capacity-building component, aimed at those sectors of society that lack access to credit and savings facilities.” (Edgcomb and Barton, 1998, p vii). ◦ Social intermediation involves the building of social capital in the form of groups that can generate an “information asset” and social collateral for future borrowing.

24. Unni Beate Sekkesæter 22/11-2011 Programme characteristics: Strategy/policy: Peer lending/individual Target group Training/Technical Assistance Original model - e.g. Grameen/ACCION Duration: Age of programme Country: Norway, US and UK Shared values/vision of various stakeholders? Effectiveness & impact 1.Programme 2.Peer group 3.Clients(micro-entrepreneurs) · Economic · Social 4. Local community Local context (community) Level of financial exclusion Socio-economic indicators Minority/majority issues, culture Learning & Dissemination 1.Related to Programme Policy 2.Related to Peer Group Lending & social capital 3.Local /national micro- enterprise support/funding strategy 4.Further research needs Figure 1: Flowchart for research Contextual VariablesModerating Variables Outcome Variables Level of adaptation to local contextManagement qualitiesFunding strategy Level of adaptation to local contextManagement qualitiesFunding strategy Funding source:BanksLocal/national governmentSmall Business AdministrationFunding source:BanksLocal/national governmentSmall Business Administration Stakeholder rationalityStakeholder rationality -Level of participation in programme & group decision making process: -Degree of self-management Financial/social exclusionFinancial/social exclusion Group dynamics/activity/loan processGroup dynamics/activity/loan process Stakeholders:Donors: Govt./Banks/FoundationsBoard memberStaff/managementMembers (Focus groups and survey)Stakeholders:Donors: Govt./Banks/FoundationsBoard memberStaff/managementMembers (Focus groups and survey)