Micro Finance

By on September 4, 2009

Today’s show is about Micro Finance, defined in Wikipedia as…

Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steadyemployment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part ofmicrofinance, which is the provision of a wider range of financial services to the very poor. Dr. Akhtar Hameed Khan, a world-renowned social scientist from Pakistan, initiated the Comilla cooperative program, and proved to the world that it was indeed possible to provide credit to the poor – with great success no less – Dr. Akhter Hameed Khan – The Pioneer of Microcredit

Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh.[1] In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty. Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable; thus, microcredit is increasingly gaining credibility in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun. The United Nations declared 2005 the International Year of Microcredit.

Talking Points

Video Replay

Chat History

13:13 ccmehil: Today in 2mins Micro Finance
13:13 jspath55: Hi all – can only join for a short time – meeting deadline looming
13:14 GretchenL0703: Hello all- Happy Friday!
13:14 jspath55: No pose: http://chinposin.com/i/8341
13:14 corycc: tgif
13:15 cminion: ive not got any sound
13:15 jspath55: Craig’s lips are moving – no sound here yet.
13:15 GretchenL0703: me neither
13:15 Karin: I can’t hear either
13:16 dgraversen: Then it is not my sound card with problems.
13:16 jspath55: “Can you here me now?”
13:16 dgraversen: much better
13:16 corycc: there you are
13:16 Karin: yes, I can hear you now
13:16 jspath55: Step closer to the mic?
13:16 GretchenL0703: Yes, now
13:19 se38_uwe: >> pump up the volume << ;)
13:19 marilynpratt: Please give us more of your voice
13:19 marilynpratt: perfect
13:19 corycc: better!
13:19 jspath55: Betta!
13:19 GretchenL0703: MUCH!
13:19 se38_uwe: much better, thx
13:19 Mrinal: aaaaa
13:19 cminion: can hear now
13:20 Karin: ouch – had to turn my volume way down :-)
13:20 marilynpratt: heard people complaining
13:20 sig: I did!
13:21 dahowlett: weird – can’t see chat on other page
13:21 jspath55: No Mac. NetBSD.
13:22 dahowlett: ah-ha – this works…
13:23 marilynpratt: cool
13:23 Karin: impersonating “The Thinker”
13:23 dahowlett: Early adopter dopeyness?
13:24 dahowlett: @marilynpratt: check out my DN site re: IFRS stuff (sorry @craig – MP has been asking me and she’s here so…stealing your chat)
13:24 dahowlett: ZDN…
13:24 marilynpratt: back to Micro Finance : https://weblogs.sdn.sap.com/pub/wlg/14684
13:25 jspath55: See – http://us.planetfinancegroup.org/index.php
13:25 corycc: has everyone read Banker to the Poor?
13:25 marilynpratt: @dahowlett and thanks dh
13:25 GretchenL0703: Dennis- I have to have 2 windows open, too
13:25 jspath55: … for those in the US, eh?
13:25 dahowlett: Kiva.org rox
13:25 jspath55: and: http://twitter.com/PlanetFinance
13:25 Karin: @ccmehil sure has gone to a lot of conferences
13:25 monkchips: musnt hang out for long busy busy busy
13:25 monkchips: but hello all
13:26 RichHeilman: what up…
13:26 marilynpratt: MicroFinance and SAP Community https://www.sdn.sap.com/irj/bpx/microfinance
13:27 GretchenL0703: Usury laws?
13:27 jspath55: High risk zones/
13:27 dahowlett: Failure rates on many are very low so why high rates?
13:28 cminion: modern day exploitation? it helps people out but primarily for profit
13:28 GretchenL0703: @dahowlett +1
13:28 jspath55: Always keep a sharp eye out for “charities” that are just skimmers though.
13:28 monkchips: fwiw dennis howlett did a really nice video with me, mark charmer and yellowpark. microfinance is a biggie
13:28 sig: Low volume = high OH
13:29 cminion: If it is a buisness it possibly will have more drive because it has to produce cash to keep the public happy
13:29 marilynpratt: Ginger Gatling got me working with Kiva few years back
13:29 sig: Apply old-school banking methodology = huge OH per loan / lent euro
13:29 dahowlett: Kiva is revolving
13:29 monkchips: have you read grameen?
13:29 monkchips: that is – classical models said women were a bad credit risk
13:30 monkchips: turns out they are not. women invest in their familiers
13:30 dahowlett: @monkchiips – but women are a better bet as far as I can tell
13:30 monkchips: men on the other hand, take money and **** off to the pub…
13:30 GretchenL0703: Gee I wonder who came up with the “classical models”
13:30 monkchips: very important economic insights… definitely read grameen
13:30 corycc: Banker to the Poor by M. Yunus
13:31 monkchips: as corycc says http://www.muhammadyunus.org/
13:31 monkchips: is THE MAN
13:31 marilynpratt: got a report from PlanetFinance called: The New Moneylenders: Are the Poor Being Exploited by High Microcredit Interest Rates?
13:32 ccmehil: http://en.wikipedia.org/wiki/Micro_finance
13:32 sig: The system SAP build (that you mentioned), is that “using good old banking methods” business process wise?
13:32 marilynpratt: I’ll upload to MicroFinance site on BPX
13:33 jspath55: http://www.planetrating.com/ – “is a specialized microfinance rating agency”
13:33 monkchips: ahem- marilyn isn’t that copyrighted?
13:33 monkchips: hmmm i think i’ll steal me some SCN content…
13:33 sig: and some “banker” set the requirements?
13:34 monkchips: i gotta finish a post. i really can’t be engaged today
13:34 sig: c’mon dennis :)
13:34 jspath55: I donated to PlaNet Finance. Gotta go to next meeting. C ya.
13:35 dahowlett: Economists are men who couldn’t get a job – and when they do they mess it up – eg Greenspan
13:35 dahowlett: Economics is horseshit
13:35 sig: hear hear dennis
13:36 marilynpratt: quote from report: Because most microfinance markets are so young and because most are not yet competitive, it would be unrealistic to expect MFIs in those markets to be opera
13:36 marilynpratt: operating at the most efficient levels possible. Immature industries always have some level of correctable inefficiency.
13:37 monkchips: but look who got the good ratings?
13:37 DickHirsch: Hi FMR viewers
13:37 monkchips: the ratings agencies are RETARDED
13:37 monkchips: we all got ****** by those guys
13:37 marilynpratt: just sent you a report that shows indexes of rates to various programs
13:38 monkchips: seriously. they gave banks with CDOs tripe A ratings
13:38 dahowlett: Moodys are pants
13:38 marilynpratt: we like Kiva because it is community driven and we “meet” our borrowers
13:38 monkchips: craig hasn’t even noticed the SAP microfinance partnership, what its doin in ghana and so on
13:39 corycc: I saw Jessica Jackley of Kiva speak – very compelling
13:39 marilynpratt: @monkchips and look at who sponsors the reports :-(
13:39 monkchips: aha –
13:39 monkchips: missed that
13:39 monkchips: looks like a nice iced coffee
13:39 monkchips: a loan tracking program
13:40 monkchips: there is already is an open source one
13:40 monkchips: called really simple reporting
13:40 DickHirsch: look he has a milk foam mustache
13:40 monkchips: see @bjelkeman
13:40 dahowlett: @monkchaips – Mark Charmer explains that concept very well
13:40 DickHirsch: sap is too short
13:40 Karin: is it like a TPS report? ;-)
13:41 dahowlett: @craig – you’ve got a milky under moustache
13:41 marilynpratt: microfinance without education /support / local understanding = fail
13:41 dahowlett: me on Kiva
13:41 marilynpratt: prattmarilyn@gmail.com
13:41 marilynpratt: marilynpratt on Kiva
13:43 dahowlett: lob in $25
13:43 marilynpratt: as your borrower gives back your loan you get update notifications
13:43 dahowlett: Noticing that Ustream isn’t irritating the **** out of me today with its dopey ads
13:44 marilynpratt: after you lob $25 it tracks the return and you can run with multiple loans
13:44 dgraversen: @dahowlett yes they are really target.
13:44 dahowlett: @marilyn – Kiva has a smart way of drawing you into lending more as it only works on $25 increments but pays back in tiny pieces
13:45 monkchips: the risk to you is quite low, craig
13:45 dahowlett: @craig – use it as a way of learning about agriculture
13:45 marilynpratt: affinity with a country.its population
13:45 monkchips: my dad always said: never loan anyone money that you expect to get backj
13:45 marilynpratt: I felt strongly about Cambodia after being there and it is my small continous connection
13:46 GretchenL0703: What do traditional bankers know about most of the borrowers’ enterprises? Not much. Speaking as a former banker. They see a balance sheeet.
13:46 marilynpratt: I want to support women and groups of women so I have a gender bias there
13:46 marilynpratt: Gretchen +++1
13:46 monkchips: do it craig
13:47 monkchips: you nkow you wanna!
13:47 monkchips: friday morning report now has a kiva project
13:47 marilynpratt: yeah craig and track it
13:47 DickHirsch: do it
13:47 dahowlett: stop yapping and just get on with it
13:48 dahowlett: @craig – DON’T GO THERE – I get into trouble for saying that sort of thing
13:48 monkchips: come on folks- shouldnt everyone on the show today make a 25 donation? and we can “compete” to see who gets paid first
13:49 dahowlett: $50…FTW
13:49 GretchenL0703: Marily what is your email address again pls?
13:49 monkchips: i will find a project to fund. will you? craig- build a tracker app?
13:49 dahowlett: @gretchen: it’s marilynp@totallyawesome.com
13:49 marilynpratt: marilynpratt@verizon.net or prattmarilyn@gmail.com
13:49 monkchips: and on that note i gotta work tjay post. have a great weekend one and all
13:50 marilynpratt: @dahowlett blushing
13:50 dahowlett: @monkchips – tootlepip
13:51 GretchenL0703: @marilynpratt Thanks!
13:51 marilynpratt: women
13:52 marilynpratt: check out lending organization’s crediblity
13:53 dahowlett: +1
13:53 marilynpratt: good
13:54 marilynpratt: lending field partner important parameter
13:54 dgraversen: I’m using myc4.com, a project that I’m helping has a transaction cost of 29%. How is Kiva
13:54 dahowlett: GFI
13:55 corycc: Kiva accepts donations for operating costs
13:55 marilynpratt: yep
13:56 marilynpratt: Important – Kiva’s microfinance partners distribute the loan funds to the selected entrepreneur. Often, our partners also provide training and other assistance to maximize
13:56 corycc: way to go Craig!
13:56 marilynpratt: go Craig
13:57 Karin: it is very cool!
13:57 GretchenL0703: Way cool!
13:58 dahowlett: My head’s str8 – but maybe not later on after I’ve had a few sherberts
13:58 corycc: great discussion Craig – thanks!
13:58 marilynpratt: great topic Craig thanks
13:58 Karin: thanks ccmehil
13:59 Karin: have a great weekend everyone!
13:59 GretchenL0703: Thanks Craig! Have a great weekend everyone!
13:59 cminion: and you man
13:59 dahowlett: CYA
13:59 corycc: bye all!
13:59 dahowlett: Not going to Phenix after all ;(
14:00 sig: ciaaoo!
14:00 cminion: bye
14:03 ccmehil: Thanks Everyone!

Posted in | Tagged , , , , , , , ,

LinkedIn Twitter
Technology and Developer Evangelist with SAP AG in Germany who is a person driven to interact and communicate, always looking to innovate over the years he's been through all spectrums of the development process for all platforms. He's built communities and helped define strategies to communicate and engage.