2013 RI CONVENTION

MICROFINANCE 101

THE BASICS

Jim LouttitPresident Elect, Rotarian Action Group for Microfinance and Community Development (RAGM)

2013 RI CONVENTION

• Who is Rotarian Group for Microfinance and Community Development (RAGM)

• What is Microfinance• Amparo Buendia Hernandez• Kim Lorenz• Candace Embling• Q & A

AGENDA

2013 RI CONVENTION

• Previously Rotarian Action Group for Microcredit

• Recent name change to Rotarian Action Group for Microfinance and Community Development

• Assist Clubs and Districts to participate in effective microfinance projects

WHO IS RAGM

2013 RI CONVENTION

• Operates in accordance with Rotary International policy

• Work with leaders in Rotary and MFIs to build stronger partnerships to support Economic and Community Development Projects

• RAGM Members live around the world representing Rotary Clubs and projects globally

WHO IS RAGM

2013 RI CONVENTION

• Umbrella providing financial services to low-income consumers

• Traditionally lack access to banking and related services:

- Loans - Savings - Insurance - Training

WHAT IS MICROFINANCE

2013 RI CONVENTION

• Individuals, small groups of five to six people or even a larger community group

• Africa, India, Central & South America

WHAT IS MICROFINANCE

2013 RI CONVENTION

MF COMMUNITY GROUP

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• 1500s: 1st pawn shop created by Catholic Church

• 1700s: Irish Loan Fund System started – by 1840’s, over 300 funds running within Ireland

• 1800s: Financial Cooperatives started to develop in UK & Europe

ORIGINS OF MICROFINANCE

2013 RI CONVENTION

• 1900s: Latin America adaptations

• 1950-1970: State-Owned Development Finance Institutions emerged

• 1970s: Experimental Microcredit Programs – ACCION in Venezuela, Grameen Bank in Bangladesh

• 1990s: Microcredit evolves to Microfinance

ORIGINS OF MICROFINANCE

2013 RI CONVENTION

• Traditionally, banks not providing financial services to clients with little or no income

• Costs of managing client accounts

• Clients have little or no assets for collateral

• Last resort is turning to local money lenders paying high interest rates

WHY MICROFINANCE

2013 RI CONVENTION

• Started by Muhammad Yunus, Bangladeshi economist and professor

• Nobel Peace Prize winners in 2006 for their efforts to create economic and social development

GRAMEEN BANK

2013 RI CONVENTION

PROFESSOR YUNUS

2013 RI CONVENTION

• First loan venture was US$27 to 42 women

• Purpose was to buy bamboo to make furniture

• After making and selling the furniture, each was able to repay their portion of the loan and make a little profit

GRAMEEN BANK

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• Today, one of many financial operations involved in microcredit lending

• Loan portfolio now over US$9 billion

• Borrowers number over 8 million

• 97% of their clients are women

GRAMEEN BANK

2013 RI CONVENTION

PROUD CLIENTS

2013 RI CONVENTION

• Rotarian Action Group for Microfinance and Community Development (RAGM)

• District Microfinance Committees / Task Forces

• Others – Club Projects, Conferences, Project Fairs, Microfinance Institutions

ROTARY`S INVOLVEMENT

2013 RI CONVENTION

QUESTIONS?