Helping the Underserved get Micro-Credit

Doing good for those who deserve it the most can be a daunting task, but for some with dedication, it can bring wonders for others. Flannery, a BS in Symbolic Systems graduate, and a Master of Philosophy from Stanford University, has been the Ashoka Fellow, and a Skoll Awardee. In 2009, he was selected for the prestigious, Fortune magazine’s 40 Under 40 List, while in 2011, The Economist honored him with the “No Boundaries” Innovation Award.

When he visited Uganda, Tanzania, and Kenya a decade back, he saw hard working individuals, including women, who had no access to mobile payment system. He founded Branch International or and helped bring worldclass financial services to them in a mobile environment. In 2004, he co-founded, which after a decade of work, has been able to distribute over $800 million to students and low-income businesses in over 80 countries. His aim is now to help everyone come under the financial services net to easily manage transactions, especially those who are in underserved areas across the globe

His venture Branch, allows individuals to get credit by bypassing traditional credit checks at banks. Within 10 seconds, individuals can receive from $2.50 to $500 by being assessed by the application. This credit line is available for up to a year. Flannery has always been inspired by what the founder of Grameen Bank Dr. Muhammad Yunus did, with his vision to serve lowincome people in Bangladesh and abroad. Branch as per Flannery gives low-income entrepreneurs the first step to fulfilling their dreams and ambitions. His team in March 2016, secured $9.2 million in a Series A investment led by reputable VC firm Andreessen Horowitz (a16z). Seed investors Khosla Impact and Formation 8 also participated in the round. This sizeable investment has led Flannery to loan micro-credit to hundreds of thousands in Kenya, Uganda, and Tanzania.

Flannery says, “Raising grants is slow and the cost of capital is high, there’s no way we could have seized the enormous opportunity with donations (as a non-profit). People are flocking in droves to the cities in SSA (Sub-Saharan Africa), yet these cities don’t have the jobs to support such growth. You get huge slums. The options for banking services are pretty narrow. Banks are for the wealthy. Microfinance fills the gap but is quite slow to innovate.”

Zimbabwe to Implement Better Microfinance Act

In order to encourage investment in Zimbabwe and better support the economy, The Reserve Bank of Zimbabwe (RBZ), is hoping to bring better microfinance reforms, which can help the creation of credit and help consolidate financial resources amongst various Microfinance institutions across Zimbabwe.

First, there will be a new credit registry to mitigate credit risk and monitor nonperforming loans. Rachael Mushosho, deputy director for supervision division in RBZ bank said, “We have already done most of the work, we are now finishing the logistics because we really want to have it in place to manage risk in the sector.She also said RBZ will help MFIs to become bigger and merge into more prudent financial institutions, to enhance the process of credit creation across the country on urgent basis. The new credit reference system will help poor citizens who do not have assets to post as collateral to provide movable assets as collateral.

The central bank also reported that the current loan amount dispersed stands at US$187.49 million out of the total banking sector loans worth US$3.81 billion as at 31 March 2016. Moreover, the biggest 20 MFIs control more than 87 percent of the total microfinance credit market. Mushosho said the current draft for Amendment Act would soon be presented to the Cabinet. The current lending rates are to be reduced by major MFIs as per the January 2016 Monetary Policy Statement.

BLAKE MYCOSKIE, the Social Entrepreneur

Who doesn’t know Blake Mycoskie? After all, he has just stepped into social entrepreneurship and in just a small time has made a significant effort towards his mission to help shoeless children who suffer the effects of being barefooted.

Blake is the Founder and Chief Shoe Giver of TOMS (formerly ‘Shoes for A Better Tomorrow’). He initially started with the idea of selling products in exchange for helping someone in need and working toward this direction only he applied the concept of one on One on shoe sales. With every shoe purchase, one person will be given a new pair of shoes to continue his advocacy in helping poor shoeless people. Blake’s business got huge sympathy from people around the world and flourished. In the year 2016 itself, more than 1o million pair of shoes was donated.

With the grand success of this One on one model in shoes and helping the barefoot, he decided to go for other commodities as well like eye care so as to help people with their treatment of eye disabilities. This also received a great response from people and boosted Blake’s confidence to do something exponential for the society. With each passing success, his mission to serve the weaker section of the society all over the globe seems achievable.

After the exponential success of TOMS, Blake launched the TOMS Roasting Co. This company aims to sell bags of coffees and in exchange, the countries supplying coffee and that who badly need water resources will be donated water by the company. Blake has even written his own book entitled ‘Start Something That Matters’. The New York Times has termed it as the bestselling inspirational book about Social Entrepreneurship. Blake has received many awards for his excellent work, such as Secretary of State’s 2009 Award of Corporate Excellence and ISPA Humanitarian Award. He was also featured in various magazines like USA Today as Five Best Communicators in the World in 2013.

Microcredit Lenders going insolvent in China’s Southern Guangdong Province

The economy of China has seen a dramatic slowdown in recent years, and as government eases its policies in order to provide loans and credit to its citizens to generate growth, it has resulted in bad loans making its microcredit banks, and other retail financial institutions go insolvent.

Although the deputy director general at the Guangdong Financial Services Office, Kuang Renshaw said that the relaxation in capital requirements might have a positive effect on the economy, its effects are hard to see in the southern Guangdong province of China. Director of China Association of Microfinance, Du Xiaoshan in a recent meeting said there are around 378 microcredit lenders operating in Guangdong, excluding the Shenzhen metropolitan area. Around 100 are in “normal operations,” while less than 60 may demonstrate any business growth.

In comparison to the largescale stateowned microcredit lenders who have bigger balance sheets, sophisticated risk management platforms, and a big client base to generate profits from, small microcredit lenders fight for clients and provide ease in requirements to lure customers. Many do not return their loans due to severe losses they face because of shrinking profit margins and higher operating costs. As competition increases, the number of non-performing loans rises. President of the Guangdong Microcredit Association, Shao Jianming sad, “When the real economy is bad, the operating environment deteriorates. It is natural that loans cannot be collected. 2.8 percent of loans were termed as nonperforming in 201, up from 0.63 percent in 2014.