This document provides an overview of a practical microfinance course. The course consists of 7 sessions covering topics like microfinance concepts, sustainable finances, teams, community impact and organizations. Session 1 reviews key learnings and selecting a microenterprise to study. Participants are asked to consider how people reaching their full potential creates value. The timeline shows the session dates from February to April 2013. Facilitators are listed for each session. Guidance is provided on making the most of the course by attending sessions, completing homework, and applying lessons. The purpose of microfinance and definitions of poverty are discussed. The evolution of microfinance from receiving loans to participating through savings, insurance, payments and collaborating is outlined.

1. Practical Microfinance Course
Session 1 Review Questions
Dr. Phyllis SantaMaria
Gabriel Flores

2. After tonight‟s session, you will be able to...
• Speak to the high-level concepts of Microfinance and
its evolution
• Articulate the overall benefits and key limitations of
Microfinance
• Select a Microenterprise to study and prepare an
interview with its owner
• Share what inspires you to be on this course and what
you plan to accomplish

3. Consider in pairs...
• What is the value of people reaching their full
potential?
• Some questions you can engage as you explore:
– Is it even important? Why/why not?
– What does it mean for people to reach their full potential?
What does that entail?
– Who is included in “people”?
– What‟s the impact on the person/people‟s community?
What, if any, are the external drivers?
– How is value identified and measured?

4. Microfinance in Action Course: Timeline
1: Microfinance Overview
18/02/13 5: Sustainable Community
18/03/13
3: Sustainable Solutions
Microenterprise Presentation
04/03/13 6: Sustainable Organisations
25/03/13
2: Sustainable Finances 4: Sustainable Teams
25/02/13 11/03/13 7: Sharing Sustainability
08/04/13
UKMF Club: 5 Talents
Savings in Kenya 27/02/13 UKMF Club : MF & poverty alleviation
18/04/13
Feb Mar-Apr
2013 2013
KEY ACTIVITY Today
Interviewing A Microenterprise 25/02/13
Talent Profiling &Debriefing 25/02/13
Presenting a Microenterprise 04/03/13
25/02/13
Five Talents Case Study Project 11/03/13 25/03/13
Prepare Final Presentation 25/03/13 08/04/13

5. Microfinance in Action Course: Structure
2013 1. Microfinance 2. Sustainable Savings Groups in 3. Sustainable
Overview Finances Kenya Solutions
Mon 18 Feb Mon 25 Feb Wed , 27 Feb Mon 4 Mar
UK MF Club, Allen &
Overy
Key Topics Microfinance Balance Sheet Microenterprise presentations
Overview Profit & Loss Statements UK MF Club featuring Key Lessons of Microenterprise for
Basics of Insightful Ratios in Lillian Mwikali, Microfinance (and Social Enterprise)
Microenterprise Microfinance Thika Community Identifying sustainable solutions
Template for ME Development Trust, Kenya
presentation
Practical Selecting a Five Talents Kenya, Five Talents Projects
Activity Microenterprise Interview with Lillian Mwikali,
Overview of Five Microfinance Practitioner
Talents
Course Projects
Home play Micro-enterprise Project Selection Meet your Project Team
interview Microenterprise interviews Identify Challenges, Issues and
Talent Dynamics Prepare presentation potential solutions
profile & debrief
sessions
Facilitators Dr Phyllis PS Lillian Mwikali and Five PS
SantaMaria (PS) GF Talents UK GF
Gabriel Flores (GF)

6. Microfinance in Action Course: Structure
4. Sustainable 5. Sustainable 6. Sustainable 7. Sharing
Teams Community Organisations Sustainability
Mon 11 Mar Mon 18 Mar Mon 25 Mar Mon 8 Apr
Key Topics Microinsurance Key Performance Indicators The role & impact of governance and Project Presentations
Team Dynamics Social Impact Measurement regulation
Magnifying Your MIX Market Making it happen in “real life” – East UK Microfinance Club
Solutions Tajikistan case study members, friends and
colleagues are warmly
invited
Practical Masterminding Activity Evaluating an MFI for Review progress on projects, get Presenting your solutions
Activity Leveraging talents sustainability support to Five Talents’ challenges
Is your project sustainable?
Home play Plan your project Identify the impact of your Complete core actions Your plan for your
Take Action on your project Prepare presentation for last session ‘Microfinance in Action’
project Take Action
Facilitators PS PS PS Panel of Experts
GF GF GF UK Microfinance Club
Your invited guests

7. How do I get the most out of MFIA?
• Each classroom starts promptly at 18:00 and the formal part
will complete by 21:00 – be here at 17:45
• Please let us know today which sessions you plan to miss
– Let us know which sessions you will attend via webinar
– For the sessions you miss, watch the replay and connect with your
teammates
• Use the Rural Finance on-line lessons
• Practice doing what you do best and enjoy most – and
collaborate to accomplish everything else
– Complete assigned “home play” activities between sessions
– Find a “workout partner” and workout with them
– Apply what you learn here to accomplish your personal goals
• Have fun and play full out!

8. What is the purpose of Microfinance?
• What do you think Microfinance is for?
• We believe Microfinance is an access for all people to
reach their full potential
...and this is the basis of our work.

9. What is poverty?
• How is poverty defined?
‘the poor’…people who, compared to their fellow
citizens, don’t have much money.
Stuart Rutherford, ‘The Poor and Their Money’, 2009
• How does somebody born into poverty rise out of it?
• What, if any, assistance is needed – and from whom?
Poverty is lack of capabilities.
Prof Amartya Sen, Nobel Prize for Economics, 1998

10. Economic Pyramid & Market
Purchasing power parity (USD) Population in millions
> $20,000 Tier 1 95 - 120
$1,500 - 20,000 Tiers 2 & 3 1,800 – 2,100
< $1,500 Tier 4* 5,000
*Tier 4 = ‘Bottom of the Pyramid’
“Nearly three billion poor people in Not-so-poor Poor Ultra Poor Marginalised
developing countries lack access to the >$2.30 >$1.15 < $1.15 <$1.00
basic financial services needed to help *PPP >$2.30
them manage their precarious lives.”
(World Bank, CGAP) 2.5B People
Source: UN World Development Report *PPP: Purchasing Power Parity per day

11. What other services are needed?
• How do you manage your money? What categories
are there?
• What financial services do you use? Are they
important? Why?
• What, if any, risks are there of using these services?

12. Muhammad Yunus had a vision...
Muhammad Yunus with MWB team of Enterprise Trainers from
Nairobi slums at Microcredit Summit for Africa and Middle East,
Nairobi, 8 Apr 2010

13. Microfinance 1.0: „I receive‟
Microcredit
Slow & expensive
‘Bangladesh’s Big ‘Push’
Three’
Investors & Solidarity Group
to
donors Lending groups,
Offer wholesale
credit, subsidies and ‘One size fits all’ mainly Photo, P SantaMaria at CASHPOR
advice Innovate
‘trial and error’
women Microfinance, Varanasi, India
Create jobs
Users = Consumers
of loans
PROBLEM: slow, inflexible group model, could not satisfy demand
Lloyd’s of London 13

14. Lessons from poor people in Dhaka:
saving for lump sums
• ‘Saving up’: savings first
then taking a lump sum
(savings)
• ‘Saving down’: lump sum
first then paying off in
regular savings (loans)
• ‘Saving through’: lump
sum when needed in
exchange for regular
instalments („merry go
rounds‟ or insurance)
‘Savings and credit
Stuart Rutherford w S Arora, ‘The Poor and Their
Money: Microfinance from a twenty-first century
consumer’s perspective‟ (2009)
are two sides of
the same coin’
14

15. Lessons from history
MicroCREDIT MicroSAVINGS
1720s in Dublin: Jonathon Swift 1798 London Benefit Club, first savings bank,
lent small sums, no collateral, two with children, later adults: Priscilla
co-signers, weekly payments, no Wakefield, philanthropist, Quaker, writer,
interest feminist and granddaughter of Barclay of
Barclays Bank
Lloyd’s of London 15

16. Lessons from history
MicroINSURANCE • 1799 Society of Assurance
for Widows and Orphans
ONE SIZE FITS ALL
AGES
• 1846 FIRST GROUP LIFE
POLICY
• Combined weekly
payments with premiums
based on death
1769 FIRE INSURANCE SIGN probabilities
16

17. Lessons from history
1850s: F W Raiffeisen‟s
Credit co-operatives co-operatives on self-
help principles to help
starving farmers in
Germany
• 1880s: 600 in Germany
and Austria
• Today Austria‟s most
powerful banking
group
17

18. Lessons from history
1. DESIRE: rich and
poor want good ways
to save, borrow and
insure
2. DEMANDS of the poor
met on a large scale with
limited and low-quality
services
Photo: P SantaMaria, CashPor MFI
meeting, Varanasi, India 2010 18

19. Lessons from history
3. DANGER OF
IDEOLOGY: caution
about storylines when
understanding how
people use services
4. DUPLICATE: Most
microfinance ideas have
been
duplicated, refined, borro
wed and publicised
19

20. Lessons from history
5. DILIGENCE: most 7. DIMINISHING:
microfinance is from
private initiatives, not financial services for the
from governments. poor diminish as
countries grow richer.
6.DEVELOPMENT: 8. DOUBTFUL:
Developing countries are delivering financial
copying the economic services to the poor on
history of today’s rich
nations, making the their own rarely reduces
financial revolution was poverty
inevitable.
20

21. MF 1.0: ‘I receive’
MF 1.0
MFIs Credit-led
• create what they product Managers use
think people want ‘Microcredit’ groups for economy
• give training for & outreach
accessing credit
• Find a ready
demand
‘PUSH’
Slow & expensive
Users = consumers
‘I RECEIVE’ 21

22. Your Web 1.0 to 2.0 Journey
‘I participate’’
Web 1.0:
Web 2.0: join LinkedIn
‘I receive’
JOIN! ‘Microfinance in Action’
Group
22

23. MF 2.0: „I participate‟
Sources of funds
Users Users Users ‘saving
generate generate through’
Wholesale savings & savings and Micro
funding borrow on-lend insurance
from donors ‘Saving up & ‘saving up & Credit life
& investors down’ down’ Savings life
Bangladeshi 3 Village Banks insurance
MFIs as Banks Self-Help Health
BRI Indonesia Groups Crop
Pro Credit VSLAs Disaster
Funeral
Microcredit
‘Saving down’
Danger:
‘I participate’
Users = Savers & Borrowers & Insured
overheating
PROBLEM: too much credit in some places, still many excluded, a lot
Lloyd’s of London 23
of untapped savings potential, client protection needed

24. MF 2.0: ‘I participate’
MFIs variety of
• Consumers
get mobiles
MF 2.0 products
• ‘Grameen II’
• Peer-to-Peer • Village Banks
Lending Platforms develop • SHGs-Bank links
platforms • VSLAs-bank
Need Savings, credit, i links
• Client • Individualised
nsurance, mone
protection microbanking
y transfers • Microinsurance
• MF & investor
standards • Mobile money
• Well-designed ‘SHARE’ Overheating of
regulation microcredit
Yes we
Users = savers, borrowers, lenders, can!
insured, mobile payment users
‘I PARTICIPATE’ 24

25. MF 3.0: We collaborate &
co-create M-PESA E. Africa
Masai in Tanzania using mobile phones for
funds transfer, Dec 2007 Photos Liz Hingley©
15 millions users in Kenya Dec 2012

26. MF 3.0: We collaborate, co-create & connect
Collaboration by organisations to create platforms for co-creation
User generated savings User generated business
Agents for finance, information,
and greater transparency e-commerce
Platforms Business platforms
Everyone can save, be Everyone can manage
insured & interact
Users = Entrepreneurs
MF 3.0 pioneers!
‘We CO-CREATE’
SOLUTION: One platform, one community, one team
Lloyd’s of London 26

27. MF 3.0: We collaborate, co-create &
connect (BASIX Sub-K: < 1k rupees & 1 km)
Vijay
Mahajan
http://blip.tv/cgap/episode-5544040 27

28. MF 3.0: collaborate, co-create & connect
(BASIX Sub-K: < 1k rupees & 1 km)
http://blip.tv/cgap/episode-5544040
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src="http://blip.tv/play/AYLSsUwC.x?p=1"
width="720" height="433" frameborder="0"
allowfullscreen></iframe><embed type="application/x-
shockwave-flash" Vijay
src="http://a.blip.tv/api.swf#AYLSsUwC"
style="display:none"></embed> Mahajan
28

29. MF 3.0: We collaborate,
co-create & connect
29

30. MF 3.0: We collaborate,
co-create & connect
Paper receipt
Record
sent via
mobile
30

31. MF 3.0: What opportunities!
Pakistan
• 110 million mobile phone
users
• 15 million bank account
users
• 400,000 telco agents
• 12,700 bank branches
Photo REUTERS, Aktar Soomro http://www.cgap.org/news/taking-pulse-branchless-banking
31

32. MF 3.0: We redirect investment
From outside
credit
To infrastructure
CARE-PLAN-BARCLAYS ‘Banking on Change’ to
reach 400k people in 11 countries through
VILLAGE SAVINGS & LOAN ASSOCIATIONS
32

33. MF 3.0: Savings mobilisation
CARE-PLAN-Barclays
• Do what you do best
CARE-PLAN-BARCLAYS ‘Banking on Change’ to
• Partnerships reach 400k people in 11 countries through
VILLAGE SAVINGS & LOAN ASSOCIATIONS
33

34. MF 3.0: MICROINSURANCE
• SEWA (Self Employed
Women‟s Association)
• Gujerat, 1972: Trade
Union for SEW
• SEWA Vimo insurance:
120,000 with package
of package of death,
sickness and loss of
assets
www.sewa.org/
34

35. Yumi‟s Story
ACTION: Took our Microfinance in Action Course 2009 Clinic
and micro-health insurance in Kibera 2009-13
Vostrum Clinic, Kibera – sustainable in 2012, Microinsurance research with Mosleh Ahmed, 2012-13
MWB developed
Yumi participated in our Practical Enterprise
Microfinance in Action course in Kibera
course, 2009 2008-2010
MWB Training of
Trainers
MWB’s & Yumi’s
fieldwork, Kibera, Nairobi
(featured in
‘The Constant Gardener’)
Focus Groups with MWB mentored
MWB Enterprise course Yumi in developing
graduates, Kibera her project
35

36. MF 3.0: collaborate, co-create & connect
Pro-Poor Seal of Excellence
J D Bergeron, Danielle Hawkins & Dr Phyllis SantaMaria, UK MF Club, 22 Jan 2013 36

37. What insights have you gained?
• What are the benefits of Microfinance?
• What are its limitations?
• What are the risks and who is exposed?

39. Background

41. 41

43. 43

44. Credit-led Microfinance: Savings-Led
Microfinance:
Indonesia
India Bolivia
Peru Kenya
Philippines Sudan & South Sudan
Tanzania Burundi
Uganda Myanmar

51. Headline figures
100% of clients Savings portfolio £404,476
received business
training 37,658 clients
8,124 new clients in 2011
Average loan
12
Countries
93%
£56 Loans in repayment
circulation
£1,461,208 rate

52. Current challenges
• Social impact measurement
• Mobile money
• Sustainable funding

53. Social impact measurement
Uganda
Challenge Results
• Recommendations
• 2 Months‟ internship
sponsored by Vodafone to
design programme (MWB
graduate)
• Funding to partially
implement social impact
measurement in Uganda

54. Mobile money Tanzania
Challenge Results

55. Current challenge: sustainable
funding
CARE-PLAN-BARCLAYS ‘Banking on Change’ to
reach 400k people in 11 countries through
VILLAGE SAVINGS & LOAN ASSOCIATIONS

56. This course‟s challenges
CARE-PLAN-BARCLAYS ‘Banking on Change’ to
reach 400k people in 11 countries through
VILLAGE SAVINGS & LOAN ASSOCIATIONS

57. READY TO START?

58. Homeplay: Your Microenterprise Study
1. Why study a Microenterprise in the MFIA?
2. What is a Microenterprise?
– A small business with fewer than 5 employees
– Registered as a sole trader, partnership or limited company (by guarantee
or shares)
3. Who is involved in a Microenterprise?
– Who is the owner? Who are the employees/team?
– Who are the customers and other stakeholders?
4. Where are they found? When do they operate?
– Are they seasonal? Do they rely on repeat business?
– Do they work alone or collaborate with other businesses?
5. How do they sustain themselves?
– What are their challenges?
– How do they know they‟re profitable (or not)?

59. What resources should I check?
http://www.microfinancelessons.com/
Lessons 4, 5, (6 optional)

60. How to do your Microenterprise Study
• Choose a buddy
• Go through the online lessons in Rural Finance:
http://www.microfinancelessons.com/
– Lesson 4: Financial Reality of Business Enterprise
– Lesson 5: Collecting and Analysing Financial Information from Microenterprises
– For extra credit ;-) : Lesson 6: Can they afford to borrow? Rates of return and the cost of
money
• Interview a Microenterprise owner
• Interview top tips:
– Introduce yourselves and stress that you‟ve come to learn from the business – not to give
advice or teach anything. Convince them that you‟re not the „tax [wo]men‟.
– Praise the business and its products/services.
• Collect the following information:
– Brief description of the business and its owner
– Reason why they started it, its history, the number of jobs it is creating and the owners‟ opinion
about its main strengths/problems
– Financial information as discussed in Lessons 4 & 5 in Rural Finance
– Reference the five questions we just used to explore Microenterprise

61. Now… what are your goals?
• What most inspires you about this course?
• What would you like to accomplish over the next 6
weeks?
– In the course
– Personally
– Professionally
– In your projects
• How will you get connected with others here? (Get at
least one person‟s contact details)

62. ACTION: Register for the UK MF Club event
• What happens when Savings Groups grow?
• Featuring Lillian Mwikali,
Thika Community Development Trust, Kenya and Five
Talents (UK)
– At Allen & Overy, 1 Bishop‟s Gate
– Drinks and canapés provided!

63. Microfinance in Action Course Graduates
• Maria, a banker passionate about philanthropy, was helped to get a job as a fundraiser with a major MF umbrella organisation, worked with a MF fund and is now the
Microfinance Advisor for Commonwealth Development Corporation.
• Mary, a lawyer specialising in energy projects, set up a consultancy as an environmental lawyer to work with grassroots organisations in the UK.
• Melissa did field work with MWB in Tanzania and now leads a MF and Social Investing Interest Group at a major law firm plus being a lawyer and mother.
• Jessica, a financial lawyer, did MWB's first field work project in Kibera, worked in Moscow, did an MA in international development part-time and is now working
with the Grameen Foundation in the UK and Africa.
• Sam, did fieldwork for our Practical Enterprise Course, got introduced to a development project in Kenya, is now the DFID-Citi Fellow for Microfinance for 2012-13
and has authored three annual „Microfinance Banana Skins‟ reports.
• Nora, a credit manager with Charity Bank, went on fieldwork twice with MWB in Nairobi to help design and deliver our Practical Enterprise Course. Nora has since
done a social impact assessment with a MFI in rural India.
• Yumi used her banking skills and passion for providing low-cost, quality primary health care to people at the 'Bottom of the Pyramid' to set up a sustainable clinic in
Kibera, the largest slum in Africa. She is working with Mosleh Ahmed, an MWB Director
• Helen, a GP in Essex and Public Health Doctor with international experience, is setting up a primary health care facility in an Indian Ashram that has a MFI with 80k
members and doing research with Mosleh Ahmed for setting up a micro health insurance scheme. Helen and Mosleh have just done field work in Sri Lanka and India.
• Chris used his financial law and Microfinance in Action skills to do research for securitisation of funds for a fund and a large MFI
• Rosy, an Anglican priest and management consultant, added her „Microfinance in Action‟ skills to her expertise for working on a project on sustainable housing in
South Africa

64. Are you now able to...
• Speak to the high-level concepts of Microfinance?
• Articulate the overall benefits and key limitations of
Microfinance?
• Select a Microenterprise to study and prepare an
interview with its owner?
• Share what inspires you to be on this course and what
you plan to accomplish?
… not sure? Collaborate with others!

65. Also Remember...
• Complete your Talent profiling, if not already done
• Schedule your profile debrief with Gabriel today so
that it takes place in the next two weeks

66. Contact Information
• Dr. Phyllis SantaMaria:
– Mobile: +44 7715 004 303
– Landline: +44 207 839 0844
– Email: phyllis@microfinancewithoutborders.com
• Gabriel Flores
– Mobile: +44 7834 528 966
– Email: gabriel@microfinancewithoutborders.com

67. APPENDICES

68. A lot of people are impacted
High Income
10% Ultra Poor
13%
Middle
Income Poor 24%
26%
Low
Income
26%
Global Poverty Profile
Source: Figures compiled by Sadrudin Akbarali

69. Poverty more prominent in developing countries
High Income
Middle 2% Ultra Poor
Income 18%
20%
Low
Income Poor 34%
26%
Developing Countries Poverty Profile
Source: Figures compiled by Sadrudin Akbarali

70. Africa is even more impacted
Middle High
Income Ultra
Income 3% Poor
Low 10%
32%
Income
20%
Poor
35%
Africa Poverty Profile
Source: Figures compiled by Sadrudin Akbarali

71. „Microfinance‟ starts with the end in mind...
1976: Funding 1983: Grameen
2006: Nobel
from Janata Bank (Village
Peace Prize
Bank Bank) Est.
1976: Lent $27 1982: 28,000 2012: Grameen
to 42 women Borrowers Scotland Est.
Fully repaid!
Each woman made a profit of $0.02!
Group Lending Methodology – 5 counter-guarantee
Sustainable: Poor people pay back their loans (2% default) more
so than clients of Commercial Banks (6% estimated repayment
rates in USA, UK)
Group paying
loans, CASHPOR, Varanasi, India, F
eb 2010

72. Grameen‟s huge impact
Key Accomplishments
• Cumulative amount disbursed since inception $12 billion
• Number of members 8.4 million
• Deposits $1.39 billion
Extra Programmes
• Beggar members 85,236
• Cumulative no. of village phones 471,423
• Cumulative no. of houses built with housing loans 692,247
• Group of profitable and non-profit ventures:
– Grameen TrustGrameen Fund, which runs equity projects like Grameen Software Ltd, Grameen
CyberNet Limited, Grameen Knitwear Ltd, Grameen Telecom,
– Grameenphone (GP), biggest private sector phone company in Bangladesh. The Village Phone project
of GP brought cell-phone ownership to 471,423 rural poor in over 50,000 villages since the beginning
of the project in March 1997.

73. We now know there are pitfalls to Microcredit...

74. Microfinance has diversified from loans...
Life cycle needs for „Bottom of the Pyramid‟
Household
Categories formation:
Credit (C) C,S
Savings (S)
Insurance (I) Death: C, I
ONGOING NEEDS Birth: C, S, I
Remittances (R)
Working Capital: C, S
Productive Assets: C, S
Investments: S, C
Asset protection: I
Health: C, S, I, R
Old Age: I, S Shocks: C, S, I, R Education: C, S
Marriage
Ceremony: C, S

75. Microfinance via multiple channels
Place a * by any channel you’ve used.

76. Register!
www.microfinancewithoutborders.com
for a FREE copy of ’Microfinance 3.0’
phyllis@microfinancewithoutborders.com
Join the ’Microinsurance Networking Group’
76

77. Your Web 1.0, 2.0 & 3.0 Journey
MF 1.0: ‘I Web 2.0:
receive join LinkedIn
MF 2.0: ‘I
PARTICIPATE’
Microfinance 3.0
SIGN UP FOR
‘We collaborate,
co-create and connect’
Microfinance in Action
Group
77