Niamh goggin

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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.
  • Niamh goggin

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

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