Microfinance: Challenges and Opportunities

Microfinance: Challenges and Opportunities

Geoff DavisPresident and CEO

Unitus

Overview

1. Global Poverty: Problem or Opportunity?

2. Microfinance 101 & 201

3. Unitus

4. Microfinance 301

5. Conclusion

POVERTY“The Root”

HUNGER

POPULATIONPRESSURE

DISEASE

ENVIRONMENTALDESTRUCTION

TERRORISM

Social Problems

Three Billion in Poverty: Problem or Opportunity?

Opportunity Mindset• Untapped markets• Need for innovation• Investment potential• Human potential,

waiting to be unleashed

Problem Mindset• Scarcity• Need for Charity• Government

intervention• Helpless victims

100% NON-PROFIT 100% FOR-PROFIT

Social Enterprise

Socially Responsible Business

Cause-Related Marketing

Venture Philanthropy

A New World

A Paradigm Shift!

Microfinance 101 : Overview

5 Facts

• $100 - $500 “productive” loans

• Group liability

• 95% repayment globally

• Mostly women

• It works!

Microfinance 201 : Problem Statement

5 Problems/opportunities

1. 10,000 MFIs worldwide

2. 2% reach >100,000 clients 68% reach <2,500

3. Industry growing ~15% p.a.

4. 400,000 families lack access

5. It’s growing slowly and not reaching its potential

So We Created Unitus

• Unitus = Unite + Us

• Attacking two core structural problems:– Changing the historic MFI growth curve– Shifting from “Donor Based” model to

“Capital Markets” model

• Using Proven and Relevant Practices– Venture Capital– Banking– Strategic Consulting Services

Bringing Innovation to Microfinance

Unitus Equity Fund• One of the largest global equity funds in the

microfinance industry to be funded with private capital

Unitus Solutions• Technology• HR

Unitus Capital Markets• Identifying new ways of connecting

microfinance institutions to sources of capital

It Works! Results from Unitus MFI Partners

• December 2002

– 1 partner serving 2,566 clients

• June 2007

– 16 partners serving 1.9 million+ clients across 6 countries

– 1,400,000+ clients added over life of Unitus partnership

– In 2006, Unitus partners grew 8x faster than industry peers

SKS India

An Example…

SKS Results: 750,000 Clients in 4 years

Inputs:• Venture Capital

– Transformation to regulated for-profit institution in 2005

– 30% equity in new company

• Investment banking– $4m line of credit– Spurred access to local capital markets

through catalytic debt

• Strategy Consulting– Raised 5 yr growth targets 100k – 425k– Assisted with CEO and CFO hiring– Efficiency innovation project– Guided implementation of monthly

reporting tool

Microfinance 301 : Looking ahead

5 Trends

• For-profit MFIs

• Commercial investors

• Capital markets

• Ecosystem

• Other products and services

EconomicEmpowerment

“The Root”

EDUCATION

SUSTAINABILITY

HEALTH

ENVIRONMENTALPROTECTION

PEACE

Our World’s Potential

Thank you!