UNITE US FOR A BETTER WORLD September 2005 UNITE US FOR A BETTER WORLD Triple Bottom Line Investing Conference October 2005

Introduction to Microfinance 1970s: Microfinance Institutions (MFIs) are born in places like Bolivia and Bangladesh 3,000+ MFIs offer small $50-$150 loans at reasonable interest rates. Borrowers use to improve businesses Borrowers often sign up in groups, securing each other’s loans Borrowers repay principle and interest with extremely low delinquency – repayment rates exceed 95% Proven results/development tool: Businesses grow; increase family income, access to health care, medicine Children attend school, improved housing, nutrition Increased borrower self-esteem Industry expanding to provide savings, insurance, remittance, and other financial products

1970s: Microfinance Institutions (MFIs) are born in places like Bolivia and Bangladesh

3,000+ MFIs offer small $50-$150 loans at reasonable interest rates. Borrowers use to improve businesses

Borrowers often sign up in groups, securing each other’s loans

Borrowers repay principle and interest with extremely low delinquency – repayment rates exceed 95%

Proven results/development tool:

Businesses grow; increase family income, access to health care, medicine

Children attend school, improved housing, nutrition

Increased borrower self-esteem

Industry expanding to provide savings, insurance, remittance, and other financial products

Huge Unmet Demand Source: Unitus estimates, based on research from The World Bank

Most Microfinance Institutions (MFIs) are Small Source: Unitus estimates, based on research from the Microcredit Summit The MFI industry has failed to develop a systematic growth model

Why Don’t MFIs Grow? Lack of Capital Negatively perceived as unprofitable and undisciplined Most are unregulated nonprofit organizations, prevents Building equity base Optimizing use of commercial debt for leverage Capturing savings deposits Limited access and familiarity with local capital markets, except for the few top-tier MFIs Lack of Capacity Weak corporate governance Lack of management depth Absence of management and strategic planning systems Insufficient business infrastructure MIS/Accounting Technology HR

Lack of Capital

Negatively perceived as unprofitable and undisciplined

Most are unregulated nonprofit organizations, prevents

Building equity base

Optimizing use of commercial debt for leverage

Capturing savings deposits

Limited access and familiarity with local capital markets, except for the few top-tier MFIs

Lack of Capacity

Weak corporate governance

Lack of management depth

Absence of management and strategic planning systems

Insufficient business infrastructure

MIS/Accounting

Technology

HR

How Unitus Accelerates MFI Growth Capital Assist with transformation to regulated financial institution Invest equity to Meet minimum regulatory capital requirements Bolster balance sheet to support leverage through debt Facilitate access to local capital markets through Catalytic debt Relationship building Strengthen MFI operating capacity with initial grants Capacity Improve corporate governance Expand depth of management Strengthen reporting and strategic planning processes Facilitate capacity-building consulting projects to improve MIS/Accounting Technology HR

Capital

Assist with transformation to regulated financial institution

Invest equity to

Meet minimum regulatory capital requirements

Bolster balance sheet to support leverage through debt

Facilitate access to local capital markets through

Catalytic debt

Relationship building

Strengthen MFI operating capacity with initial grants

Capacity

Improve corporate governance

Expand depth of management

Strengthen reporting and strategic planning processes

Facilitate capacity-building consulting projects to improve

MIS/Accounting

Technology

HR

Unitus Acceleration Model

Unitus Acceleration Model: Select Employ proprietary tools to Identify favorable markets for microfinance Regulatory / legal environment Economic and political stability Accessible capital markets Competition Poverty density Select highest-potential MFIs Potential for rapid, large-scale, profitable growth Strong, socially-minded management Focus on serving poor clientele

Employ proprietary tools to

Identify favorable markets for microfinance

Regulatory / legal environment

Economic and political stability

Accessible capital markets

Competition

Poverty density

Select highest-potential MFIs

Potential for rapid, large-scale, profitable growth

Strong, socially-minded management

Focus on serving poor clientele

Unitus Acceleration Model: Consult Capacity-building to prepare MFIs for rapid, long-term, profitable growth Improve corporate governance Ensure local board oversight; Unitus board participation Expand depth of senior management Evaluate organization structure Assist with establishment of hiring and training systems Strengthen reporting and strategic planning processes Implement Monthly Management Reporting and Balanced Scorecard Support adoption of industry best practices (e.g. CGAP reporting standards) Facilitate capacity-building consulting projects Improve MIS/Accounting systems and technology Implement performance and human resource management systems Expand product offering for target customer base

Capacity-building to prepare MFIs for rapid, long-term, profitable growth

Improve corporate governance

Ensure local board oversight; Unitus board participation

Expand depth of senior management

Evaluate organization structure

Assist with establishment of hiring and training systems

Strengthen reporting and strategic planning processes

Implement Monthly Management Reporting and Balanced Scorecard

Support adoption of industry best practices (e.g. CGAP reporting standards)

Facilitate capacity-building consulting projects

Improve MIS/Accounting systems and technology

Implement performance and human resource management systems

Expand product offering for target customer base

Unitus Acceleration Model: Invest

Results from MFI Partner SKS India Increased five-year borrower growth goals from 100k to 300k Current projections at >600k Assisted transformation to regulated for-profit institution in 2005 Spurred access to local capital markets through catalytic debt Assisted with CEO and CFO hiring processes Guided implementation of monthly management reporting package SKS awarded 2004 CGAP Financial Transparency Award 400%+ growth in less than 2 years

Increased five-year borrower growth goals from 100k to 300k

Current projections at >600k

Assisted transformation to regulated for-profit institution in 2005

Spurred access to local capital markets through catalytic debt

Assisted with CEO and CFO hiring processes

Guided implementation of monthly management reporting package

SKS awarded 2004 CGAP Financial Transparency Award

Results from Unitus MFI Partners

Announcing New Strategic Partnership

Think of Unitus as… Microfinance Experts Extensively studied microfinance and analyzed 30+ year history of successes and failures Determined when, where and how to have the greatest impact Continues researching and implementing best ways to alleviate poverty via microfinance Microfinance Venture Investors Selecting only the highest-potential MFIs Focusing on accelerated, profitable growth Providing consulting expertise and oversight Not tied or limited to any MFI brand or network Hear from our MFI Partner, SKS Founder Vikram Akula: http:// www.unitus.com/resource_mediaresources.asp#videos

Microfinance Experts

Extensively studied microfinance and analyzed 30+ year history of successes and failures

Determined when, where and how to have the greatest impact

Continues researching and implementing best ways to alleviate poverty via microfinance

Microfinance Venture Investors

Selecting only the highest-potential MFIs

Focusing on accelerated, profitable growth

Providing consulting expertise and oversight

Not tied or limited to any MFI brand or network

Hear from our MFI Partner, SKS Founder Vikram Akula:

http:// www.unitus.com/resource_mediaresources.asp#videos

UNITE US FOR A BETTER WORLD September 2005 UNITE US FOR A BETTER WORLD Triple Bottom Line Investing Conference October 2005