[TC-I Call to Action]: Total Immersion Programme in Finance and Development Summer Internships

The Centre for Development Finance (CDF) announces some very exciting internship opportunities for this summer.  If you’re looking for something more long term, word has it that CDF will likely be releasing postings for BoP related full time positions in the coming weeks… check back for more information!

Total Immersion Programme in Finance and Development (TIP/FD) – Summer 2009

CDF invites internship applications for the Summer 2009 IFMR “Total Immersion Program in Finance and Development (TIP/FD).”

Description of the program follows and application requirements follow below and in this CDF TIP document, and to apply please use the following link.

The TIP F/D provides undergraduate and graduate students interested in microfinance, development finance, and economic development an opportunity to gain hands-on experience in working on issues relating to access to financial services for urban and rural poor in a developing country. Interns will participate in a structured, two-week course directed by leading researchers, IFMR Centre Research Associates, and practitioners from the Indian government, microfinance institutions (MFIs), and NGOs. The course will be followed by eight weeks of work on a CDF projects which will consist of either field-based research, policy/sector wide studies or data analysis.  Past interns have completed stand-alone projects or worked to initiate, implement, and scale-up existing projects or pilots at the Centre.

The list of summer internship projects can be found online here and in this CDF Project Descriptions document. Interns may also be placed on another of CDF’s ongoing projects.

Internships are unpaid, although CDF will assist with housing and food or provide a small stipend of up to Rs 10,000/month toward living expenses. All interns are encouraged to obtain funding to cover international travel and personal expenses during the internship period.

This year, the TIP/FD will take place between June 8 and August 14, 2009. Applications will be accepted until April 15, 2009, although we encourage interested applicants to apply as soon as possible to ensure the best matching of interests and skills.

Positions of Particular Interest to the TCI Readership: Continue reading

[TC-I Call to Action]: Programme Head, Centre for Micro Finance

Lakshmi Krishnan of the Centre for Micro Finance, IFMR writes to us about a new opening in the organization.   This is particularly exciting for anyone interested in microfinance, research, and traveling throughout India.  Several classmates in graduate school had worked with IFMR and came away with good experiences after participating in breakthrough research.

IFMR CMF is now hiring a Programme Head in Chennai to manage a portfolio of 4-6 projects with a variety of partners. Read about the IFMR CMF Programme Head position for further information and contact information.

Evaluating social returns on microfinance

Whether you are an individual investor, an institutional fund, or a microfinance organization, the issue of returns on social investment is always a concern.  The difference is usually in the approach that each stakeholder may take in measuring these returns.  The Grameen Foundation made a major stride in the effort to create an evaluation framework by releasing guidelines to evaluate social returns to investments.

As of 2006, socially-focused investors in the U.S. had channeled more than $663 million into microfinance. Most of these investors choose microfinance because they expect financial as well as social returns related to reducing poverty. Until recently, however, there were few tools to help them track how well their investments were achieving their goal of improving the lives of microfinance clients and how those “returns” compared to industry-wide performance benchmarks.

When I read about a new set of guidelines, I imagined some complex framework, or a laundry list of things to look for.  Instead, the guidelines are quite short and simple.  Maybe even the measurement of social returns follows Occam’s razor!

The guidelines are just a first step – some of the questions may need a little more teasing out.  For example,  a question listed for institutional investors to ask: How effective are the MFIs at alleviating poverty?  Investors may want a more elaborated approach in terms of what “effective” means.  At the same time, the strength of these guidelines is that they are flexible and realize that social investments, even in a field like microfinance, can vary.  Along with GF’s previous initiative, the Progress out of Poverty Index, which tracks microfinance institutions’ track records with poverty alleviation, the evaluation guidelines are a welcome development in the world of performance indices.

Round 2 with CGAP’s Gautam Ivatury

The ThinkChange India staff is committed to providing our readers with interviews with people we believe are at the brink of something special but have for the most part been overlooked by the mainstream media. Readers will be able to see other conversations under our TC-I Changemakers tag.

This week, Vinay sat down (over the phone) with Gautam Ivatury of the global microfinance center CGAP, which works to expand poor people’s access to financial services. Such services include but are not limited to microcredit and branchless banking. This interview is a follow up to one conducted on May 4, 2008, which you can read here.

Vinay Ganti: Could you please review yourself on the following topics, which we discussed in our last conversation?

  • Reaching beyond MFIs:

Gautam Ivatury: This still continues to be a major focus of CGAP’s mission. Across all of CGAP’s work we continue to look for ways to partner with a range of institutions and providers, including but not limited to MFIs, to be able to massively expand financial services for poor people.

GI: With regard to branchless banking, we set out to accomplish a number of goals. Overall we have been happy with the results of CGAP’s work in this area over the last six months, despite the fact that it has taken longer than expected for our project partners (in countries like Pakistan, Kenya, Mongolia, South Africa and elsewhere) to roll-out the branchless banking channels we helped design and finance.

Since our last talk, CGAP has expanded its policy and regulatory diagnostic work in branchless banking. New markets analyzed have included Colombia, Argentina and Indonesia, and we’ve continued to maintain close dialogue with the Reserve Bank of India and regulators elsewhere.

Also, the actual awareness of mobile banking in the field, i.e. what is and how it can work, has increased dramatically in the past. Last May we co-organized the first major annual event on “Mobile Money” for the unbanked in Cairo with the GSM Association (the industry body for the world’s 700+ mobile operators), IFC and DFID. That event got more than 500 paid attendees, most from private industry. And this week at the GSM World Congress in Barcelona, GSMA and other private sector players will announce additional activities in the space. DFID announced its new FAST program to encourage branchless banking this week. Initiatives like these are critical to get widespread adoption of the concept and to achieve scale. Moreover, major consulting and research outfits like Aite, Monitor and McKinsey have started research and published reports on the topic.

At the same time, our seven branchless banking projects have been slower to launch than we all expected two years ago. There have been some notable achievements — our Philippines partner has entered three new rural provinces and signed up about 80,000 new mobile banking clients, and Telenor bought 51 percent of Tameer Bank (our partner in Pakistan) to jumpstart its mobile banking initiatives. But in general the implementation of mobile / branchless banking has been slower than anticipated.

VG: Why do you think this is? Continue reading

Transfer money after the beep

Here is an interesting approach to the technological hurdles of mobile banking. Called Cashnxt, this venture in Kerala, uses high-pitched sounds via mobile phones to encrypt and decrypt the secure data needed to perform a financial transaction. An article on ReadWriteWeb, explains it as such:

As a customer, if you and a vendor are a member of the Cashnxt network, you can conduct transactions using your mobile phones. The merchant dials CashNxt’s IVR number, enters their PIN and transaction amount, and then hears a high pitch sound on their mobile phone. The customer does the same – calls the IVR number, enters their PIN and hears a high pitch sound. The two phones are then brought together, held close enough for CashNxt to encrypt and decrypt the sounds. 

Go after the jump to see a youtube video of the process:

Continue reading

Upcoming Conference: “Microfinance from Below,” Tufts Fletcher

This upcoming March 26th – 28th, 2009, the Tufts Fletcher School will be holding a conference entitled, “Microfinance from Below: The Power of Savings and Savings Groups in Frontier Economies.” Registration is free. More details follow below:

The Center for Emerging Market Enterprises (CEME) at The Fletcher School, Tufts University—with support from Oxfam America and the Bill and Melinda Gates Foundation—will host a conference in March 2009 that explores the dual nature of savings groups. As a subject of debate within the microfinance sector, groups constitute both a target of and shield against exploitation, a market for and competitor to commercial alternatives, and a means of both communal unity and division. The “Microfinance from Below: The Power of Savings and Savings Groups in Frontier Economies” conference will examine the potential and limits of financial self-service, the social nature of savings groups, and the best ways for institutions to form, strengthen, and serve them—and then let them go.

TC-I Fundwatch: Omidyar Network and Unitus invest Rs. 60 Crore in Comat Technologies

The market for double bottom-line investments in India is becoming hotter and hotter. Interestingly, its not just the microfinance institutions who are attracting the capital. We reported earlier in TC-I about MokshaYug Access, securing $2 million in funding from Unitus and the ISB based SME fund set-up by Google.org in partnership with Omidyar Network and Soros Economic Development Fund. 

This time it is Comat Techonologies, a Bangalore based social enterprise dedicated to providing easy access to essential information and transformational services to Rural India. Comat just secured Rs. 60 crore in funding from Omidyar Network and Unitus Equity Fund (UEF)

Continue reading

To Profit or Not to Profit

According to Mr Chu, “to roll back poverty rather than to merely alleviate it”, any solution needs to be able to reach massive numbers, deliver permanent results that can help many generations, provide continuous effort so it gets better and better at what it does, and provide continuous efficiency so it also becomes cheaper and cheaper. Mr Chu believes the only state that can offer all these four requirements is business.

From a review of a debate between the father of microfinance Mohammad Yunus and Michael Chu, former President and CEO of ACCION. Given that today’s Blog Action Day is focused on poverty, it seemed fitting to highlight this issue. 

Can we truly reach microfinance’s potential without the efficiency and scalability gains that business and for-profit models provide? Is profiting off of the poor unethical, and as Yunus argues, should we only be looking to sustain the model at the lowest possible point of surplus?

You can read the rest of the recount by Amy Rennison here at Microcapital.org.

Access to Safe Drinking Water, the Sustainable Way

PepsiCo Foundation has awarded two grants, totaling $76 million, to sustainable water and sanitation efforts by WaterPartners and Safe Water Network. The PR release describes each program. WaterPartners will use the award to implement their WaterCredit program:

The WaterCredit program in India has two main components: first, to provide traditional grant funding directly to local non-government organizations to install pipes, faucets and storage cellars in impoverished communities, reaching some 60, 000 people. The second component is to establish a loan fund that will empower communities to expand access to safe water for an additional 60, 000 people over the course of the three-year project. This model produces a “multiplier effect” for impact based on a single source of funding and is the first time PepsiCo Foundation has applied micro finance as a strategic vehicle to advance water and sanitation improvements.

The idea of building community-based water supply projects through a combination of grants and loans is new to the water sector. Until now, nearly all water projects facilitated by other organizations have been funded entirely by grants, even when the individuals served by the project have the means to share costs.

Bridging microfinance and water is a topic that NextBillion.net covered earlier this year, so this is a connection that is working well in some regions and with the support of different organizations, such as ACCESS Development Services and Hindustan Unilever Limited. The vision behind this is that communities may not be able to afford methods that purify water and make it safe for drinking, but using microfinance models allows them to collectively take a loan and repay until they eventually purchase the system. Continue reading

Just in case you didn’t believe me

The global credit crunch has led to a significant drop in fund flow to the microfinance sector. Banks, which are required to provide 32-40 percent of their loans to the priority sector (which includes rural credit), are the largest providers of funds to MFIs.

They lend to microfinanciers, who then on lend to the poor at a higher rate. But with banks’ lending rates rising more than 200 basis points over the last quarter, microfinanciers are finding it tough to get enough funds to sustain business.

This is an excerpt from an article on Microcapital.org.

Job Opportunities with the Centre for Microfinance

The Centre for Microfinance, an organization that focuses on research, training, and strategy for MFIs, posted about exciting new job opportunities:

The Centre for Micro Finance (CMF) has recently posted several new job openings, and we thought that some of this blog’s readers may be interested. New positions include:
• Programme Head – Analytics Unit
• Regional Field Director – West Zone
• Visual Basic Programmer

To learn more, check out the job openings section of CMF’s website, linked here. If you have any questions, please reach out to us at cmfhr@ifmr.ac.in.

Job Opportunity with BRAC Development Institute

Please contact ajaita.shah[at]gmail.com if you are interested in applying for the following:

BRAC Development Institute, BRAC University, Bangladesh

Seeking Young Professionals

for a Challenging Career in International Development

BRAC Development Institute (BDI) is looking for bright, young professionals, interested in an exciting career in development and research.  Selected applicants will be part of a core team that will coordinate different research activities and help build up the Institute. The team will be based in Dhaka and have access to the different activities of BRAC and a wide range of other development organizations.  

The recently created BRAC Development Institute seeks to promote research and build knowledge on practical solutions to problems of the poor in the global South.  It is anchored in the basic ethos of BRAC – developing solutions to the challenges of poverty, inequity, exclusion and social injustice. BDI is a space for academics and practitioners in the South (or working in the South) to come together to raise critical questions on development. It will build knowledge around exciting initiatives in the South, focus on developing new ideas and new strategies, pilot test such ideas and provide important lessons on good practices for practitioners, policy makers and funders. Continue reading

Loans that can save Lives

Indians have a much higher pre-disposition for heart disease, and are genetically three times more vulnerable to a heart attack as compared to people living in many Western nations. While cardiovascular medicine has made great strides in the last few decades, heart surgery continues to be a costly affair for most of the poor in India.

On the other hand, the Bangalore based Narayana Hrudayalaya has been in the forefront of providing quality cardiovascular care for the poor – adopting a Aravind like model of charging the rich and subsidizing the poor. Now the hospital is experimenting with a new idea – collaborating with State Bank of India to offer loan product on a pilot basis for poor heart patients undergiong cardiac treatment [via Economic Times].

“The SBI Hrudaya Suraksha scheme is being launched as a pilot project to evaluate the concept of offering loan on easy interest terms for those below poverty line – earning less than $2 a day – who need urgent cardiac intervention,” SBI chairman and managing director OP Bhat said on the occasion.

Narayana Hrudayalaya founder Devi Shetty said the loan amount (Rs.50,000) would meet about 80 per cent of the total cost (Rs.65,000) for a heart surgery of poor cardiac patients to be identified and subsidised by the hospital. The average cost of a heart surgery at Shetty’s health cities is about Rs.100,000

Interestingly, the loan product was launched by Nobel Laureate Mohammad Yunus during his recent visit to Bangalore.

Microfinance and Food Rations

In the latest edition of Pragati, the Indian National Interest Review, Ankit Rawal proposes a new approach to the public distribution of food and the use of microfinance institutions. Since the Public Distribution System (PDS) in India has its share of flaws and is not always able to meet the needs of the poorer families, bringing in MFIs or NGOs may be a useful supplement to the solution.

One of the issues arising in the PDS pipeline is that poor households often have irregular cash flows. This irregularity is one of the reasons that microfinance works so well – loans help smooth consumption. With irregular cash flows, a household may or may not be able to purchase goods when a shop has them in stock.

This is where NGOs already engaged in microfinance can plug the gap. They can provide funds to the poor families to buy their allocated rations from the fair price shops.

Such a project would involve identifying poor households from their existing client list. They would then be required to identify the fair price shops in the area from which they procure their rations. Loans would be distributed to the selected list of families. One way of disbursing these funds is by introducing a “credit card”. Households could buy their rations from the fair price shop on credit while the NGO pays the amount directly to the shop using this card. This loan will then be returned by these poor households—in daily, weekly or monthly instalments—over the period of the month from their income. If the NGO charges interest to cover transaction costs, the households are likely to enjoy substantial savings.

The proposal is an interesting one, but the question arises as to whether this solution is just another stop gap and whether solutions should focus more on improving the leaks in the PDS pipeline rather than coming up with a whole other system. India has already tried to implement a better targeted PDS system, with few successes. Is the solution introducing MFIs and NGOs into the mix, or do we need to take a closer look at the implementation of the delivery networks?

Vikram Akula of SKS Microfinance Touts Mobile Banking as the Future of Microfinance

In a recent interview with IndiaKnowledge@Wharton, Vikram Akula of SKS Microfinance touted mobile banking (conventionally used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone) as the future of microfinance, but cited India’s regulatory environment as a significant limiting factor in expanding mobile banking networks (click here for a related article from our archives). According to Akula,

“It doesn’t make sense to try and build a retail brick-and-mortar infrastructure in rural India. From a cost perspective, it makes no sense at all. Mobile technology today is robust enough that you can actually very easily do banking. We actually have a very successful pilot that we’ve done.”

The prohibitive regulatory environment cited by Akula may soon change, as RBI “has begun to realise that the ‘rapid expansion of this mode of communication has thrown up a new delivery channel for banks.’” In order for the mobile banking market to fully realize its full potential, however, further incentives/mechanisms need to be put in place that stimulate, rather than stifle growth, especially since the mobile “banking” sector in India is currently “limited only to enquiries, alerts, and certain kinds of bill payments,” and has yet to become “transactional.”

To watch a video of the interview, which focuses on issues beyond mobile banking, including capacity building, capital infusion, cost defrayal, and the notion that microfinance institutions’ operational models should be akin to those of businesses, see below: