Microfinance: The Basics  (Presentation 1 of 2)
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  • 1. 2013 RI CONVENTIONMICROFINANCE 101THE BASICSJim LouttitPresident Elect, Rotarian ActionGroup for Microfinance andCommunity Development(RAGM)
  • 2. 2013 RI CONVENTION• Who is Rotarian Group for Microfinanceand Community Development (RAGM)• What is Microfinance• Amparo Buendia Hernandez• Kim Lorenz• Candace Embling• Q & AAGENDA
  • 3. 2013 RI CONVENTION• Previously Rotarian Action Group forMicrocredit• Recent name change to Rotarian Action Groupfor Microfinance and CommunityDevelopment• Assist Clubs and Districts to participate ineffective microfinance projectsWHO IS RAGM
  • 4. 2013 RI CONVENTION• Operates in accordance with Rotary Internationalpolicy• Work with leaders in Rotary and MFIs to buildstronger partnerships to support Economic andCommunity Development Projects• RAGM Members live around the worldrepresenting Rotary Clubs and projects globallyWHO IS RAGM
  • 5. 2013 RI CONVENTION• Umbrella providing financial services to low-income consumers• Traditionally lack access to banking and relatedservices:- Loans- Savings- Insurance- TrainingWHAT IS MICROFINANCE
  • 6. 2013 RI CONVENTION• Individuals, small groups of five to six peopleor even a larger community group• Africa, India, Central & South AmericaWHAT IS MICROFINANCE
  • 7. 2013 RI CONVENTIONMF COMMUNITY GROUP
  • 8. 2013 RI CONVENTION• 1500s: 1st pawn shop created byCatholic Church• 1700s: Irish Loan Fund System started – by1840’s, over 300 funds running within Ireland• 1800s: Financial Cooperatives started todevelop in UK & EuropeORIGINS OF MICROFINANCE
  • 9. 2013 RI CONVENTION• 1900s: Latin America adaptations• 1950-1970: State-Owned Development FinanceInstitutions emerged• 1970s: Experimental Microcredit Programs –ACCION in Venezuela, Grameen Bank inBangladesh• 1990s: Microcredit evolves to MicrofinanceORIGINS OF MICROFINANCE
  • 10. 2013 RI CONVENTION• Traditionally, banks not providing financialservices 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 lenderspaying high interest ratesWHY MICROFINANCE
  • 11. 2013 RI CONVENTION• Started by Muhammad Yunus, Bangladeshieconomist and professor• Nobel Peace Prize winners in 2006 for theirefforts to create economic and socialdevelopmentGRAMEEN BANK
  • 12. 2013 RI CONVENTIONPROFESSOR YUNUS
  • 13. 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, eachwas able to repay their portion of the loan andmake a little profitGRAMEEN BANK
  • 14. 2013 RI CONVENTION• Today, one of many financial operationsinvolved in microcredit lending• Loan portfolio now over US$9 billion• Borrowers number over 8 million• 97% of their clients are womenGRAMEEN BANK
  • 15. 2013 RI CONVENTIONPROUD CLIENTS
  • 16. 2013 RI CONVENTION• Rotarian Action Group for Microfinance andCommunity Development (RAGM)• District Microfinance Committees / TaskForces• Others – Club Projects, Conferences, ProjectFairs, Microfinance InstitutionsROTARY`S INVOLVEMENT
  • 17. 2013 RI CONVENTIONQUESTIONS?