Paris Microfinance Network

Western Union Offers Mobile Phone Money Transfers

Western Union, hoping to boost its share of the money-transfer market, has teamed up with RadioShack, a consumer electronics retailer, and Trumpet Mobile, a small wireless company, to offer a service that lets people based in the US send money through their cellphones.

The service is aimed at immigrants to the U.S. who regularly send money to family members in their native countries. Many of these immigrants don't have bank accounts and send the money by taking cash to a transfer service such as Western Union or a host of other firms.

Western Union, which already has a big share of the US$300 billion global money-transfer market, hopes that the cellphone service will bring in new clients and encourage existing customers to use it for a broader range of money transfers including paying utility bills and sending money domestically. People without bank accounts can now pay these bills in a variety of ways, including at convenience stores.

To use the service, people need to buy a Trumpet prepaid phone at a RadioShack store. Customers can then load up to US$200 on their phones for cash transfer via Western Union's network either within the US or internationally.

Grameen-Veolia Water deal to help Bangladesh

Nobel laureate Muhammad Yunus unveiled a deal between his Grameen bank and French group Veolia Environment to provide clean water to poor rural communities in Bangladesh.

The Bangladeshi economist also sought support from President Nicolas Sarkozy for creating more microcredit schemes to fight poverty, particularly in Africa. Sarkozy told Yunus that France would continue and step up its efforts to provide access to loans to the poor and noted that more than a third of France's African aid funding was now directed toward microfinance.

After discussions with Sarkozy, Yunus sat down with top business leaders at the Elysee including billionaire Vincent Bollore and announced the creation of the new joint company with Veolia Environment. Called Grameen-Veolia Water, the company will operate several water treatment plants in Bangladeshi villages, with the goal of bringing clean water to 100,000 people.
The project represents investments worth 500,000 euros (790,000 dollars).
Full Story from AFP

IBM partners with Grameen Foundation

Mifos, Grameen Foundation's open-source technology solution for microfinance institutions, received a boost today with the announcement of IBM's commitment to develop and promote the solution. The collaborative
project will build additional functionality and robustness into the Mifos application and give MFIs around the world access to new software that streamlines the lending process and significantly reduces operational and technology costs. Five MFIs are currently deploying Mifos in India, Kenya, Tunisia, and Honduras.

Many MFIs lack their desired client reach due to inefficient and limiting technology infrastructure. Mifos, designed for the microfinance industry, provides key functionality required by MFIs, including client management, loan and savings portfolio management, loan repayment tracking, fee and savings transactions, and reporting. The core technology is a user-friendly Web application running on top of a MySQL database. Being Web based, Mifos enables a centralized database so that the head office and regional offices are looking at data in real time.

Today many MFIs, (those who have made IT purchases - many are still operating manually) struggle with their IT systems for various reasons. These include either having purchased software that is limited or difficult to customise to their institution, out of reach pricing for more advanced solutions, lack of technology expertise locally or weak management commitment to IT strategy, to name a few. Using an open-source system could provide further flexibility and avoid the upgrade trap, among other benefits.

The goals of the IBM-Grameen Foundation partnership are to develop a new Mifos platform that provides (1) access to world-class software for all microfinance institutions; (2) global standards in management and reporting; and (3) sharing and scaling of technology innovation. All of these benefits will contribute to the microfinance industry’s capacity to increase its outreach to those in need.

AMEX Members Vote Grameen Foundation Into Top 25

We previously posted about the interesting funding initiative American Express has launched. Today we are thrilled to hear that the Grameen Foundation has been selected as a Top25 project submission and moves closer to winning up to $5 Million in financial funding if selected on August 7. Among the various microfinance projects submitted, Grameen is the only one to make it through the quarter-final round of voting.

Grameen Foundation’s project, “262: Microcredit to businesses in developing countries,” builds on the organization’s ongoing efforts to empower the world’s poorest people, mostly women, to lift themselves out of poverty through microfinance.  The new round of voting to select the final five projects started July 17 and runs until July 22; the final round of voting will be held July 24 to August 5.  Cardholders must cast a new vote in each round.  American Express will donate $1 for every cardholder who registers, up to $5 million. 

Cardholders can vote for Grameen Foundation at http://www.membersproject.com/Business_Finance/262.

American Express 'Members Project'

American Express has launched an interesting new initiative called 'The Members Project', giving American Express Cardmembers the chance to present an idea for funding that will have a positive impact in the world. American Express will fund one winning idea up to $5 million. Project ideas were submitted by cardmembers between May 15th and June 17th and the Top50 (amongst 7,000 submitted) projects were announced July 3rd. There were a wide range of project ideas submitted ranging from clean-water development and blindness prevention to tree-planting and alzheimer's reseach, to name a few. But most interesting, is that there are about 4-5 microfinance related projects which were submitted and have accumulated a good amount of votes.

Check out the variety of projects, the eclectic voting panel and vote if you are a cardmember. The Top 25 projects will be announced July 17th and then a new round of voting begins to narrow down the submissions.

The Members Project is unique in that the project ideas are not generated by American Express; they are generated by cardmembers. The Members Project runs for 12 weeks from May 15, 2007 to August 7, 2007. American Express will contribute $1 for each Cardmember that registers, up to $5 million. The donated amount will be determined by the number of Cardmembers who registered with The Members Project.

Water and Microfinance

In many developed countries, easily available items are often taken for granted, such as water. But in developing countries safe water is a rare commodity, over a billion people suffer from lack of access to safe water. Approximately 5-7 million people (primarily in Sub-Saharan Africa and countries like India & Bangladesh) are dying annually - mainly children - due to water-born diseases. Furthermore, the costs incurred for rural communities to access safe water can be 10-15 times higher than costs for urban dwellers connected to cleaner water systems. These issues affect the health & economic productivity of rural communities.

An interesting approach, applying microfinance principles, was launched by the organization 'Water Partners international' with an initiative called the WaterCredit Initiative that we believe provides a hopeful unique model. By making small loans to communities and individuals who do not have access to traditional credit markets, WaterCredit helps finance the upfront cost of water and sanitation systems. Giving people the credit tools they need and allowing them to repay the loans over time empowers them to solve their own water supply needs now instead of having to wait for years for a grant that might never come.

A working example: in India, WaterPartners provided $105K in loans for safe drinking water and household toilet facilities for urban slum residents. Loans were disbursed by WaterPartners’ local implementing partner in India, Gramalaya. Gramalaya teamed up with BASIX, a local micro-finance institution, in order to develop the infrastructure they needed to make the loan distributions. BASIX educated Gramalaya on the qualifications for loan eligibility and helped them to develop financial systems to process the loans. Check out this interesting & successful case & another in Kenya.

Another promising water initiative was announced yesterday; the U.S. Agency for International Development (USAID) & The Coca-Cola Company announced a $7 million joint investment in 9 new water projects in Africa. It's pleasing to hear this news because these much needed collaborations between private sector & NGO-development organizations, beneficially team private funding & business best practices with local developing country knowledge & expertise.

The projects will be located in Angola, Ethiopia, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Ghana/Ivory Coast. These new projects (Coca Cola & USAID have been working together since November 2005, with activities in Bolivia, Mali, Indonesia, Malawi, Egypt, Thailand, Uganda and South Africa.) provide locally-driven solutions to address the global water crisis, growing the global partnership’s investments from $3 million to $10 million.

Danone to launch Microfinance Fund

Danone's CEO Franck Riboud is advancing his passion and interest for the benefits of Microfinance. Danone and Crédit Agricole have just partnered to soon launch the previously announced Danone Communities Fund. Danone will invest about €20m in the new fund, which is attracting interest from investors ranging from big funds and socially committed individuals to trade unions. Similar to other French mutual funds, it will yield about 4% annually and will invest only part of its funds in new microfinance projects. Danone will also encourage shareholders to reinvest dividends into the new fund. The fund's Board of Directors will be presided by Franck Riboud, Chairman and CEO of Groupe DANONE, and Muhammad Yunus, founder of Grameen Bank, has agreed to be its Vice Chairman.

This is Riboud's latest foray into microfinance. In 2006, Danone partnered with Grameen to launch a factory in Bangladesh producing locally affordable & nutritious yogurt products. The fund's first investment will be to support the development and deployment of the Grameen Danone project in Bangladesh. Looking ahead, the funds aims to be in a position to make a limited number of investments each year in highly innovative ventures in different parts of the world.

The Next 4 Billion publication

The Base of the Pyramid (BOP) is a market tier that holds great opportunity for corporations, NGOs and other organisations if they would organize efforts to understand & reach these consumers. Doing so would help increase productivity & income and empower entry of BOP consumers into the formal economy. Products and services currently offered to top Tier consumers are not appropriate for the BOP Tier, and accessing the BOP market requires companies to re-align their thinking & make efforts to learn about consumer needs in the BOP. BOP pioneers C.K. Prahalad and Stuart Hart stress this point in their publication, 'The Fortune at the Bottom of the Pyramid', published in 2002. Their work has been used by many major corporations and development agencies interested in putting these theories into practice.

Until now much of the discussion about base of the pyramid (BOP) markets (the four billion people worldwide earning less than $3K per year) has been based upon business case studies, academic theory and market size approximations. Hence, it is very welcoming news to hear that the World Resources Institute (WRI) and the NextBillion.net team, with support from the IFC & IADB, yesterday launched a new publication called 'The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid.' The publication is the first of it's kind to use household survey data to measure the empirical size and scope of BOP markets, and measure BOP consumer behavior & aggregate purchasing power.

Drawing on income data from 110 countries and expenditure data from 36 countries, The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid provides an analytic foundation for assessing business and development opportunities within BOP markets in a
manner that is comparable across countries. This publication provides a fascinating portrait of the unique spending patterns occurring within different income subgroups of the BOP while allowing for detailed comparisons within and between countries.

The data show that the BOP is a $5 trillion annual market–much bigger than previously thought, and largely unserved by business and enterprise.

For example, half of BOP health care spending is on pharmaceuticals, much higher than in more affluent countries. This is especially the case in rural areas, where access to clinics is often limited. Companies should see these data as evidence of demand (and willingness to pay) for quality, low-cost drugs and efficient distribution systems. They may also suggest that for-profit franchise models could provide efficient, sustainable healthcare delivery to the BOP.

Have a read of the Executive Summary, good stuff. We'll be ordering our copy of the publication & a review will be forthcoming on this site.

New Malaria Pill

Very promising medical news for Sub-Saharan africa (and other developing areas) which struggle daily against the economically & socially debilitating disease of malaria was recently announced. Doctors Without Borders / Médecins Sans Frontières (MSF)(informative video here) announced a new user-friendly & cheaper 2-in-1 pill to combat malaria. The treatment is the result of 2 years of research between teams from the non-profit Drugs for Neglected Diseases initiative (DNDi) & Sanofi-Aventis, the world’s fourth-largest drug company. The pill combines two drugs that are already in use into a single medication that can be taken once a day for three days by young children and twice a day for three days by adults to cure the infection. In Africa, malaria kills roughly 3,000 children each day, but combination drugs like this are not available for children under 11 pounds, and they require taking a larger number of pills each day, as many as 24 for some adult versions.

Large pharmaceutical companies are often justly criticized for concentrating R&D and marketing efforts on high-priced drugs that sell in developed countries while neglecting to produce life-saving medications for the poorest countries. Sanofi-Aventis will not make profits from sales of the new anti-malaria pill to public health agencies and international institutions that typically serve poor communities. But they do plan to manufacture a 2nd branded pill targeted to the private sector of developing countries at three or four times the public price. Additionally, Sanofi-Aventis will not seek a patent on the pill formulation thus allowing generic companies to produce the pills cheaply and hence increase the availability of medicine needed to treat the millions of malaria victims around the world.

Hopefully this corporate action will stimulate other big drug companies into making more humanitarian initiatives.