John de wit_point_loma_may_4_2011[1]

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John de wit_point_loma_may_4_2011[1]

  1. 1. The Small Enterprise Foundation<br />John de Wit<br />
  2. 2. Massive poverty and obscene inequality are such terrible scourges of our time—times in which the world boasts breathtaking advances in science, technology, industry and wealth accumulation—that they have to rank alongside slavery and apartheid as social evils.<br />Nelson Mandela, Former President South Africa<br />
  3. 3. South African – Two economies<br />GNI per capita (2007)<br />86th: Brazil $5,860<br />88th: South Africa $5,720<br />89th: Mauritius $5,580<br />Latin America & Caribbean $5,801 <br />East Asia & Pacific $2,182 <br />Sub-Saharan Africa $ 951<br />South Asia $ 880<br />
  4. 4. Poverty in South Africa<br />42% of population living in poverty<br />18% of African/Black households live below PPP-adjusted “$1.25 a day”<br />51% of African/Black households live below PPP-adjusted “$2.50 a day” <br />
  5. 5. The experience of poverty in rural South Africa?<br />
  6. 6. Unemployed and no regular income or grants, many dependants<br />No family to assist<br />Frequent begging, eat once a day<br />Chlidren often miss school or don’t go at all<br />Poor, mud houses, too small for number of inhabitants <br />No assets<br />
  7. 7. Rely on grants and piece jobs, many dependents<br />Poorly paid temporary jobs<br />Struggle to get food<br />Pensioners with many children (receive state grant)<br />Children in school, but not regular, children have one school uniform<br />1 room home, sometimes walls of mud<br />
  8. 8. Earn enough for daily needs – mainly self-employed or temporary work<br />Fewer children to care for<br />Pensioners with fewer dependents (receive state grant)<br />Enough food but not of good quality<br />Children in school – primary and secondary, can afford to buy uniforms but cannot afford tertiary<br />
  9. 9. The Small Enterprise Foundation<br />Aim of poverty alleviation through microcredit<br />A section 21 NGO, non-profit<br />Founded in 1991<br />Inspired by Grameen Bank<br />
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  15. 15. How SEF works …<br />Clients form groups of 5<br />Each receives their own loan for their own business<br />All group members guarantee each others loans<br />Groups meet fortnightly in Centres of about 8 groups meeting at a time<br />
  16. 16. Loans are only for business<br />For starting or growing a micro-business<br />Begin with a verbal business plan<br />Loan utilisation is checked<br />
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  21. 21. Current Performance<br />70,782 active clients<br />850,000 loans since inception<br />Loans since inception $183 million<br />Principal Outstanding $15 million<br />Client savings - $2.6 million<br />
  22. 22.
  23. 23. Current Performance …<br />Write-off policy: 85 days<br />Current Portfolio at risk 0.2%<br />Loan losses since inception 0.3%<br />
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  27. 27. Self-Sufficiency<br />
  28. 28. Operational Self-Sufficiency = <br /> Operational Income___<br /> Operational Expenses <br /> = Loan Interest Income + Investment Income_<br /> Operating Expenses + Borrowing costs<br />
  29. 29.
  30. 30. Challenge<br />Reaching the Very Poor<br />
  31. 31. Participatory Wealth Ranking (PWR)<br />
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  39. 39. PPI findings @ SEF<br />
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  42. 42. Social Performance<br />
  43. 43. Social Performance<br />
  44. 44. Social Performance<br />
  45. 45. Social Performance<br />
  46. 46. Social Performance<br />
  47. 47. IMAGE<br />- A cluster randomised control study<br />
  48. 48. Research Cohorts<br />
  49. 49. Analysis<br />Follow-up ratio:<br /> Intervention: 387/430 (90%) <br /> Control: 363/430 (84%)<br />Outcomes derived for each village<br />Analysis performed at cluster-level (village level)<br />Controlled for possible baseline imbalances by calculating adjusted measures of effect<br />
  50. 50. Results - Economic Well being<br />
  51. 51. Results – Violence and HIV/AIDS<br />55% reduction in inter-partner violence<br />Among 14 – 35 year olds:<br />60% increase in going for HIV testing<br />25% increase in condom use<br />46% better HIV-related communication<br />
  52. 52. A word of caution !!<br />
  53. 53. Some Implications of working with the very poor:<br />Lower average loan size<br />In SEF’s case 20% lower<br />
  54. 54. Some Implications of working with the very poor:<br />Improves density of clients<br />Motivation versus marketing<br />Loan utilisation checking becomes important<br />Loan supervision<br />Business skills development<br />
  55. 55. A word of caution - Vulnerability<br />MCP<br />Access to some non-enterprise resources<br />Able to smooth cash-flow<br />Some “safety-net” if business fails<br />TCP<br />Practically no other resources <br />Little ability to smooth cash-flow<br />Failure back to not knowing where next meal will come from<br />
  56. 56. Glass Ceilings<br />
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  58. 58. Thank you<br />
  59. 59. Social Performance Management<br />
  60. 60. SEF’s success shows that the distance, time & cost of operating in rural areas can be balanced by productivity<br />Population density <br />(persons / square km)<br />Note to self: <br />Double-check figures<br />SEF’s operations<br />Ranked 169th in the world<br />

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