The book, Microfinance for Bankers and Investors, provides case studies demonstrating how microfinance is attracting top companies and investors, allowing for both social responsibility and profit.  Its author, Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion at ACCION International, will be speaking on Engaging the Private Sector in Microfinance to the Silicon Valley Microfinance Network on September 16th.  Here’s a teaser:

Me:  Thanks for letting me interview you on a Sunday, Elisabeth!

Elisabeth:  Thank you!

Me:  What inspired you to write this book?

Elisabeth:  The book really came out of the United Nation’s Year of Microcredit in 2005.  As a result of that, the UN formed a high level group called the UN Advisors Group on Inclusive Financial Sectors, headed by HRH Princess Maxima of the Netherlands, who’s an expert in this topic area.  It also had experts from governments and major banks, and ACCION was represented.  A group of private sector representatives said, “The private sector has a role here, so what can we do to attract the private sector to be more of a contributor to financial inclusion?”  We decided we needed some good examples, a kind of road map, and some information on how big the market is, and that’s the book.  I should also mention that Visa provided financial support for the book because they were also part of the UN advisors group.

Me:  Your book mentions the entry of some big local firms, like Visa and Sequoia Capital, into microfinance.  Can you tell us about a case that you won’t be discussing in your presentation to the SVMN this week?

Elisabeth:  In the Silicon Valley, a lot of companies have been interested in supporting the development of MIS, the information technology that goes into running microfinance, and have gotten involved in a lot of different experiments on that score.  It may seem a little mundane, but systems for financial services are typically designed for big banks, not microfinance institutions.

Me:  I should explain I used to work in microfinance, in the field, and MIS was my bête noir!  Everything felt jerry-rigged.

Elisabeth:  Right.  MFIs don’t have a lot of spending power so big companies tend not to move into that market.

Additionally, a lot of companies have been involved behind the scenes in microfinance, Microsoft for example.  You see things like the head of the board of Grameen foundation is ex-Microsoft and another ex-Microsoft person – Mike Murray – co-founded Unitus.  So a lot of people have gotten involved individually as entrepreneurs in this space.  I think that’s true on the investment side too.

Me:  What question should I have asked you?

Elisabeth:  About the takeaways for private businesses that want to get involved.  One, let’s acknowledge you need a deep market understanding of low-income people; that their special characteristics don’t make them unviable customers.  You need to understand how low-income people work in order to have good products that work for them.  Financial services support people’s fundamental needs and that’s why they are viable customers: they’re willing to pay for services that meet those basic needs like housing, shelter, education, etc.  So when you see an unmet need what you see is an emerging market opportunity.

Another message would be about partnering with MFIs, because MFIs can introduce private businesses to their market segments.

My final message is to absolutely approach entry to this market with a strong consumer protection awareness and a commitment to make social goals part of the overall goal of the business.

Want to learn more?  There are still spaces available to attend Elisabeth’s presentation at the SVMN on September 16th in Santa Clara.  For more information, go here.

About Kirsten Weiss

Integrating marketing and strategy to develop profitable, demand-driven institutions.