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Greg Casagrande

VIEWS: 9 PAGES: 41

									 Creating a Successful MFI in a
Small Remote Low Income Nation

    South Pacific Business Development
            Foundation (SPBD)
                   Samoa

             Greg Casagrande
             What is SPBD?
 SPBD is a Samoan based NGO dedicated to
  eliminating poverty in the South Pacific.
 SPBD provides micro credit to the poor for the
  purpose of starting a small business.
 SPBD follows the Grameen Bank methodology to
  micro finance.
 SPBD currently serves the island nation of Samoa.
 www.spbd.ws
           The South Pacific
 Total Population – about 7 million.
 Most people in the South Pacific live in
  rural villages on small islands. Most live on
  a GDP of less than US$2,000 per year.
 Major Countries
  – Papa New Guinea, Fiji, Samoa, Solomon
    Islands, Tonga, Vanuatu, Micronesia, Marshall
    Islands, Kiribati
The South Pacific
Samoa
                     Samoa
 Samoa has been an independent nation since 1962
  and is governed by an elected parliament.
 Samoa consists of two main islands, Upolu and
  Savaii, and covers 1,100 square miles.
 Samoa has a population of 204,000 people.
 Samoa is very rural. Apia, the capital, is the only
  town of any significance in Samoa.
 Samoa is considered the cultural heart of
  Polynesia.
              Samoan Economy
   Economy
    – 75% of Samoans are involved in subsistence
      agriculture.
    – There are few major employers providing traditional
      waged employment.
    – The economy is very dependant upon foreign aid.
    – There is mass migration of the brightest to New
      Zealand, Australia and the USA to pursue better
      opportunities.
    – GDP - US$930 per year - similar to Pakistan.
    – Poverty – In 1999, the UNDP estimated that 48% of all
      Samoans live beneath the poverty line.
    – WHO rates Samoa’s Health system as one of world’s
      worst – similar to Yemen.
         Typical Lives in
     Samoa and the South Pacific
   Poverty of Opportunity
    – No jobs (75% of families not in waged sector)
    – No Credit available for the poor
   Typical living condition
    –   Grass roof
    –   Pebble floor
    –   Poor sanitation
    –   Poor access to running piped water and electricity
 Childhood education is not free
 Unsophisticated, little experience with banks
Samoan living conditions
Samoan Living Conditions
Samoan Living Conditions
    History of Microfinance in the
               Pacific
 The Pacific is littered with failures
 Samoa has had several failures
    –   UNDP, SPC, MoWA
    –   Church run
    –   Government run
    –   Volunteer run
   Continuing Failures
    – Fiji
    – Samoa – WIB
         Bee keeping
         Handouts

         Forced solutions
                   Competition
 SPBD has no direct competition in Samoa.
 The three commercial banks and the Development
  Bank each require collateral or steady income for
  loans. They do not serve the poor.
 SPBD Advantage:
    – SPBD is the only financial institution in Samoa able to
      DELIVER credit throughout Samoa.
    – SPBD is the only financial institution in Samoa able to
      provide on a large scale completely unsecured credit to
      the poor.
        SPBD - Business Practices
   Target poor women.
   Provide unsecured credit for :
     – micro entrepreneurial purposes,
     – home improvements and
     – childhood education.
   Businesses are based on existing livelihood skills.
   Encourage and train self-formed groups of five.
   Organize groups into village based centers.
   Members guarantee one another within a group.
   Deliver credit directly to the villages.
   Charge market rates of interest.
   Collect small repayments at weekly center meetings in the villages.
   Strive to achieve financial self-sufficiency via strong financial
    planning and effective use of technology.
     SPBD Business Practices
 Very structured program with clear rules
 Helps counter:
  1. A very laid back culture
  2. Low levels of education
  3. No experience with financial institutions
 Train staff and motivate them
  – Huge task because skill levels are low
 Have   strong local government support
  SPBD in Action
Preliminary Meeting
    SPBD in Action
Payment at Center Meeting
 SPBD has a Business / Banking
          Mentality
 Privately and commercially funded
 Started and maintained on commercial
  enterprise principals
 Trustee, management and staff have
  business and banking backgrounds.
 Funders – we speak your language
            Cost Structure
 Very low
 Lean organization
 CM’s to reach 500-800 clients each
 Yet very competitive and comprehensive
  compensation and benefits structure
       SPBD Methodology &
           Innovation
 Created  a Culture of Continuous
  Improvement
 Client Identification
  – Formal invitation into the villages from local
    matai (chiefs)
  – Poverty assessment tool
              the poor
      Identify

      Measure impact
         SPBD Methodology &
             Innovation
 Product/Service   Design
  –   Variable loan sizes
  –   Variable repayments
  –   Flexible loans
  –   Housing improvement loans
  –   Childhood education loans
       SPBD Methodology &
           Innovation
 Delivery   Methodology
  – CM’s support >400 clients each
  – In-house training program
  – In house loan utilization forms
  – Individualized weekly center reports
  – Center secretaries have professional
    bookkeeping
  – Ongoing business education
            SPBD Methodology &
                Innovation
   In the pipeline
    – Process
         Move from weekly to fortnightly meetings
         Group sizes to become flexible 4-7 members

    – New Services
         Health Education series
         Improved Business Training Modules

         Savings

         Insurance

         Money Transfer
    SPBD - The Leadership Team
   The Trustees
    – Greg Casagrande – Founder and Managing Director
           Education:
              –   BA (Economics) - Colgate University
              –   MS (Accounting) - Stern Graduate School of Business, New York University
              –   MBA (Finance and Marketing) - JL Kellogg Graduate School of Management, Northwestern
                  University
           Work Experience
              – CPA with Coopers and Lybrand in New York.
              – Several financial and general management positions with Ford Motor Company in Detroit,
                Chicago and Japan.
              – Founder and Managing Director of SPBD.

    – Jerry Casagrande – Trustee
           Education
              – BA (Political Science) – Dartmouth College
              – MBA, MA (Latin American Development) - Stanford University
           Work Experience
              –   UNHCR, World Bank, Ashoka – Various management positions
              –   3D Life Adventures – Founder and Executive Director
    SPBD – The Leadership Team
             (cont’d)
   Jim Young – Trustee
    – Education
             BA (Economics) – Princeton University
    – Work Experience
             Goldman Sachs – Vice President – Institutional Equity Sales


   Minh-Huy Lai – General Manager
    –   Educated with MBA from Thunderbird School.
    –   7 years of investment banking experience with JPMorgan in NY, Hong Kong and Singapore.
    –   MF experience in Kosovo.
    –   Lived in worked in many developing nations.
      SPBD – The Local Team
 All of our professional staff have strong prior
  work experiences (several with local commercial
  banks).
 All are proficient in both Samoan and English.
 All staff are proficient on the PC and have been
  trained in micro finance best practices.
 All staff are eligible for performance bonuses
  based on individual and team performance.
    SPBD - Achievements to Date
   Building an Organization
    – We have a team of 10 full-time, well trained and
      dedicated professionals.
   Infrastructure and Processes in Place.
    – Our loan officers have vehicles to access rural villages.
    – We have a strong set of documented operating and
      administrative processes and procedures.
   Villages Served
    – We serve over 60 villages throughout Upolu, Samoa.
   The Poor Trained and Funded
    – We have trained and funded over 2,100 businesses.
    – Distributed over US$800,000 of unsecured credit.
              Achievements
 SPBD   has demonstrated that:
  – Poor Samoans are creditworthy
  – They are receptive to financial products
  – Capable of starting and sustaining small
    businesses
 Leading academic opinion in the region said
 contrary.
        Measurements of Success.
   Successful businesses for all of our micro
    entrepreneurs.
    –   Food preparation
    –   Clothing production
    –   Copra (coconut oil) production
    –   Vegetable farms, Plantations
    –   Chicken and pig farms
    –   General Stores, Roadside stands, market place trading
    –   Weaving
    –   Traditional arts and crafts
    –   Tourist operators
Successful SPBD Micro-Businesswoman
            Bakery Business
SPBD Successful Micro-Businesswoman
           Village Store
         Measurements of Success
   Quality of life indicators
    –   High quality roof on the home
    –   Proper flooring
    –   Electricity in the home
    –   Easy access to clean water
    –   Easy access to good sanitation
    –   Children in school
   SPBD Ensures quality of life improvements by
    also providing:
    – Housing improvement loans
    – Childhood Education loans
        SPBD has staying power
 Where other regional MFI’s have failed, SPBD
  has persevered, learned, improved and grown.
 We’re still here after 3 years
 We have handled internal corruption and theft.
    – Cleaned out and strengthened controls and processes
 We have continually refined our process to reflect
  the local realities.
 Aggressively pursuing Institutional Financial
  Sustainability
                SPBD Complaints
   The South Pacific is not on the world’s radar
    screen
    –   Too small
    –   Too remote
    –   Obscure cultures
    –   Difficult to administer
   The voice of the poor is not heard
    – Region is misunderstood
   No Funds for MFI in regions
    – UNDP, USAID, IFC, SPPF, Major MFI corporate and
      other donors are not interested in MF in the region.
 Current State of Development in
        the South Pacific
 Most development agencies have abandoned the
  region. (e.g. USAID has left the region due to
  difficulties in serving a remote population).
 The need for economic development remains.
  Most of the population lives in rural poverty.
 South Pacific nations are small and remote. None
  are currently served by a world class micro
  finance organization.
 SPBD is now the largest micro finance
  organization in the region, despite the fact that it
  only serves Samoa.
                    Opportunities
   There is now an excellent opportunity to create a:
    –   well-managed,
    –   large
    –   efficient,
    –   region-wide micro finance organization in the South
        Pacific
   A region-wide, micro finance organization could
    leverage a larger base of talent and financial
    resources and could thus help more people than
    could several struggling small organizations.
            Major Constraints
 Ongoing violence and instability in Papua New
  Guinea and the Solomon Islands is a major
  constraint in those nations. SPBD will initiate
  efforts first in stable nations.
 Due to the small populations on each island, a
  successful organization must be exceptionally well
  managed and efficiently run. This is a key item
  for SPBD.
 Funding is also a major constraint since most
  international funding organizations do not operate
  in the region.
             Plans for the Future
   Growth in Samoa
    – Expand to the island of Savaii
   Growth in the region
    – Tonga
    – Vanuatu
    – Micronesia
   Outreach
    – Could grow to 50,000+ long term
   Capital is the key constraint
            Concerns of Funders
   SPBD is too small
    – We can breakeven with less than 5000 active clients
      and an average loan size <US$300
   Area is too small
    – Samoa is small but the region is big
    – Many LDC’s in the region, totally neglected by world
      class MFI’s
    – We have developed a replicable model that can be
      replicated throughout the region and reach out to over
      50,000 people
                     Wants
 Look for opportunity to affiliate with large
  networks
  –   Financial assistance
  –   Share procedures/ processes
  –   Share technology
  –   Staff development
 Looking for Capital
 Looking for Technical partners
                 Thank you
      Pacific Business Development
 South
 Foundation
  –   PO Box 1614
  –   Saleufi, Apia, Samoa
  –   Phone: 011-(685)-20189
  –   Email: greg@spbd.ws
  –   Web: www.spbd.ws

								
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