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  • In Business Strategies we collate data to get a view of consumers, properties, automobiles and businesses across the whole of the UK at the household level.

Transcript

  • 1. Freiss Financial Exclusion Services Research: The Supply Side SMALL CHANGE PARTNERSHIP
  • 2. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 3. Niamh Goggin Director Freiss
  • 4. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 5. Why This Research
    • Responsible for the sustainable economic development and regeneration of the South East of England – the driving force of the UK’s economy
    • Central government transferred responsibility for CDFI’s to the Regions
    • Tied in with Sustainable Prosperity Objective
      • Stimulation of enterprise
      • Support for locally-focused community-based businesses
      • Importance of micro-business and home-based businesses..
  • 6. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 7. Demand Side Study
    • Demographic characteristics of those who are financially excluded within the South-East of England
    • Measured financial exclusion and constructed a financial exclusion index
    • Mapped financial exclusion in the South-East
  • 8. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 9. Terms of Reference
    • Availability of services for financially excluded in the region
    • Assessment of gaps in provisions; and
    • Sustainability of Community Development Finance Institutions, including microfinance organisations.
  • 10. Methodology
    • Compilation of primary and secondary sources
      • Access through CDFA to performance data from CDFI’s
      • Questionnaires on coverage and sustainability
    • Focus Groups
      • On coverage and sustainability
    • Analysis
  • 11. Services for Financially Excluded
    • Personal Financial Services
    • Microfinance
    • Small Business Lending
    • Lending to Social Enterprises
  • 12. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 13. Microfinance
    • Seven microfinance providers operating in SE
    • Two national, one regional and four sub-regional
    • Provided a total of 518 loans in previous year
    • Estimated demand from start-ups and existing micro-businesses 9,089 loans per year
    • Current providers meeting 5.7% of demand
    • No coverage for over-30’s in deprived areas including Slough, Dover, Milton Keynes and Oxford.
  • 14.  
  • 15. Micro / Small Business Lending
    • Average loan size £3,555
    • Ranges from £910 to £7,500
    • SE Community Loan Fund £15,000 - £50,000
    • Small market gap for borderline micro/small business loans averaging £15,000
    • Estimated demand for almost 300 loans/year
  • 16. Gap Analysis
    • Coverage gap – borderline micro/small business lending
    • Geographical gap – Slough, Dover, Milton Keynes and Oxford as well as in more prosperous areas.
    • Product gaps – larger loans
    • Group or community gaps – products / marketing targeting women, ethnic minorities, recent migrants and people with disabilities
  • 17. What is Sustainability?
    • Operational Sustainability: the extent to which the organisation can pay for its operating costs out of earned income (for example from interest income)
    • Mission-Driven Sustainability : the extent to which the organisation can raise money from government or other stakeholders by demonstrating social impact
    • Structural Sustainability : the extent to which the organisation can raise money to pay for the cost of operations because of its structure (e.g. through fund raising or cross subsidy from a more profitable venture)
  • 18. Operational Sustainability
    • No microfinance organisations came close to operational sustainability
    • Fredericks Foundation came closest – 58.3%, but most income earned through non-lending activities
    • Clear relationship between average loan size and term, portfolio outstanding and sustainability
    • Portfolio outstanding over £300k – operational sustainability 20 – 60%
    • Portfolio outstanding < £300k, op. sustain. < 20%
  • 19. Mission-Driven Sustainability
    • Indicator – Average loan size as % of Gross Value Added per head in the region
    • Ranges from 4.9% to 40.33%
    • Some work with the most financially excluded clients, with ratios of 5%
    • Few have adequate performance information to demonstrate impact to funders
  • 20. Structural Sustainability
    • MFI’s as part of larger organisations
    • Find a prince to head your fundraising efforts
    • Charity with commercial subsidiary
    • Innovative fundraising – Hannibal’s Challenge
    • Wider network of Enterprise Agencies
  • 21. Sustainability Model for MFI’s
  • 22. Sustainability Model for micro/small business lender
  • 23. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 24. Implications: Microfinance Institutions
    • Standalone MFI’s will not survive in the UK
    • Three models:
      • grassroots, local CDFI’s offering personal credit, microfinance, money advice etc;
      • larger, business lender offering loans from £5,000 up to £50,000
      • part of larger economic development agency, offering wide range of business support and financial service
    • Services focused at the financially excluded will struggle to survive
  • 25. Implications: MFI’s
    • Government attention already moving away
    • CDFI’s are not seen as having delivered
    • Outreach poor, low numbers, high write-offs
    • Need to focus on outreach and performance
    • Need to balance working with the poorest with need for sustainability
    • Shortage of trained, committed, experienced staff
    • Work on impact measurement a priority
  • 26. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 27. Implications: Government
    • Financial exclusion is a problem even in the most successful regional economies in Europe
    • Financial exclusion needs a holistic approach: access to credit, financial literacy, bank disclosure of its performance, Corporate Social Responsibility
    • We need to present a united front to government – NGO’s, CDFI’s, MFI’s, Credit Unions etc – and a simple, clear message
    • Government needs to take a long-term, strategic approach to the issue
  • 28. Agenda
    • Introduction
    • Why This Research
    • Demand Side Study
    • Supply Side Study: Methodology
    • Main Findings
    • Implications: Microcredit Providers
    • Implications: Government
    • What Happens Next
  • 29. Further Information
    • Financial Exclusion in the South-East of England: Summary, Conclusions and Recommendations.
    • Financial Inclusion Services Research: Supply Side
    • Financial Exclusion: Baseline and Mapping
    • Small Change Research Partnership Reports
    • www.seeda.co.uk/Publications/Social_Inclusion
    • Niamh Goggin: smallchange@hotmail.co.uk