MICROFINANCE & SOCIAL BUSINESS

Low cost sustainable model

Lions Clubs International Foundation

Agenda

Introduction of Microfinance & Social Business concepts by Neville Mehta, Intl. Secretary, ISAAME, LCI

Remarks by AP Singh, Past Intl. DirectorRemarks & video from Mr. Binod Chaudhary,

Chairman of Chaudhary Group (CG) & CG Foundation

Questions + Answers

SpeakersLion Arvinder Pal SinghInternational Director (2004-2006)District: 322-B1Home Club: Calcutta Vikas (45734)Lion Since: March 1984

Lion A P Singh has been credited with 13 International President’s medals and the highest award ‘Ambassador of Goodwill’. He is a Progressive Melvin Jones Fellow and a Major Gift Donor for CSF II. He is also the First Lions Clubs International Foundation Heritage Club member of 322-B1.He has regularly served as a faculty on more than 25 LCI and Regional Leadership Institutes. His latest contribution in extending new initiatives is the establishment of Eastern India Lions Leadership Academy which includes video conferencing facility in all districts of MD 322. He has also been organizing webinars to reach out to clubs in furthest corners. The Lions of Kolkata (India) have accepted Microfinance under the leadership of Lion A P Singh and are moving ahead as this can have a radical impact on facing the menace of poverty and changing lives of people.

Speakers

Mr. Binod Chaudhary born on April 14, 1955 is a Nepalese businessman, industrialist and philanthropist. He is the current Chairman of Chaudhary Group (CG), a conglomerate that consists of nearly 80 companies. Mr. Chaudhary is also the first Nepal billionaire as listed by Forbes. Besides, business, Mr. Chaudhary has been involved in various other government and social sectors. He worked as a member on constituent assembly and parliament of Nepal from April 2008 to May 2012. His CG Foundation works for social welfare and he often contributes in the areas of art, music and literature as well. He is also a former Leo member.

What is MicrofinanceIt is estimated that approximately 2.5 billion people around the world live in poverty, struggling to survive on less than US$2 a day. Yet for people living in poverty, it’s all they have to provide for the needs of their whole family. Families living in this kind of poverty struggle to afford even the most basic of items. They are unable to afford adequate meals, clean water or an education. They go without proper shelter, transport and even medicine when they are sick.

The Solution: Microfinance…

Microfinance refers to an array of financial services like loans made available to poor entrepreneurs and small business owners who have no collateral and wouldn’t otherwise qualify for a standard bank loan. Most often, microloans are given to those living in still-developing countries who are working in a variety of different trades, including carpentry, fishing and transportation.

The goal of micro financing is to provide individuals with money to invest in themselves or their business to help get them out of poverty. When providing loans, micro financing institutions do not require collateral, but do insist that the loan is repaid within six months to a year.

MICROFINANCE AND ITS RELEVANCE IN POVERTY ALLEVIATION

Helps poor households meet basic needs

Protects them against risks.

Provides working capital for income generating activities.

Provides additional capital for expanding business.

Helps in asset creation

Provides employment opportunities.

Save poor from the trap of money lenders.

July 6th 2014

TorontoCANADA

Micro Finance & Social Business

A reflection on the topic byMr. Binod Chaudhary

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Microfinance

"Lasting peace cannot be

achieved unless large

population groups find ways in

which to break out of poverty„Prof. Mohammed Yunus

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Microfinance

Grameen Bank

Clear definition of poor

Maximum 20 % (int. avg. 30)

Lending groupsStrong decentralized

structureReal money (M1)

Micro Finance

Financial sourceno collateral

neededFocus on the poor2 main models

Relationship based model

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History Nepali Micro Finance1960: first appearance for flood victims1970: first scale approaches: failed1980: Social approach: group guarantees1990: institutionalization: rural development

banks1995: commercialization started: NGO MFI1998: Regulations of MFI2003: Banks and Finance Institution act

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Variety of players

Key MFIs

35 MFDB 29 FINGO 16,854 SACCOS

Wholesalers

RSRF

Commercial BanksRMDC SKBBL

ModelsCooperative SFLC Grameen

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Poverty Line25 % below

Poverty Line

33 % reached by MFI

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Success-Stories in Nepal

2.5 Million families reached

Maximum 1500 $ without guarantee

Total loan disbursed USD 1.67 billion

Loan recovered ratio 99 percent

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Challenges IncludeLack of Risk Management

Inadequate Use of ICT

Delivery methodology not considering

geography

Poor financial literacy

Lack of demand and supply in wholesale fund

Limited penetration in hilly regions

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Microfinance in context

SBInvestment-

Funds

Social Business Seed-Capital

Microfinance

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Social BusinessNext step after Microfinance

Empowers leaders

‘scaleable’ organization

Considers a bigger group of stakeholders

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What is Social Business?

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What is Social Business & NSBAnimated Videohttps://

www.youtube.com/watch?v=gi5biNDk1Mc

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Why is it different?

Skills to grow

Refined skills and scalability

Macroeconomic more sustainable