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A 1 2-1. keynote address mr. ben
This document summarizes a speech given by Ben Simmes on social investment trends. It discusses: 1) What social investment is, including providing both financial and social returns at modest levels. 2) Trends in social investing, such as growing interest but limited opportunities. Examples show social and environmental impact can be achieved at scale. 3) Oikocredit as an example social investor, providing loans to cooperatives and businesses in developing countries like dairy farmers in Kenya and female vendors in Cote d'Ivoire. It emphasizes both financial sustainability and social impact.
A 1 2-1. keynote address mr. ben
- 1. Creating our futurethrough Social Investment Ben Simmes, Managing Director Oikocredit Tokyo, October 6th, 2012
- 2. Three key issues - What is social investment? - Trends - Oikocredit as example of social investor
- 3. Investment perspectives Financial return Social return Commercial investing +++ Socially responsible ++ +/- Impact investing ++ + Program related investing + + Social investing + ++ Grants +++
- 4. What is socialinvestment? Social return ++ modest financial return +
- 5. What is impactinvestment Financial return ++ Social return +
- 6. Trends in socialinvesting • Growing interest in “social” investing Different levels: - Negative screens - Positive screens - Shareholder engagement • Investment opportunities are limited
- 7. Growing interest •Negative experiences through financial crisis • Existing resources insufficient to address issues as poverty, environmental destruction, inequality • Positive examples of scalable business models that create social and environmental value
- 8. Development stages • Uncoordinatedinnovation • Marketplace building (starting infrastructure) • Capturing the value of the market place (mainstreaming) • Maturity (steady, consolidation)
- 9. Oikocredit: development financecooperative For profit, not profit maximization
- 10. 100% private investmentcapital
- 11.
- 12. Dual return Investments in shares € 200 / US$ 200 Other currencies Objectives: - modest dividend: 2% - social impact
- 13. Support Associations providingcapital North America: Europe: Canada Germany USA France Spain Netherlands Belgium Switzerland Austria Denmark Sweden Italy United Kingdom Latin Asia: America Philippines Mexico Japan Uruguay Korea
- 14. Capital Flow 45,000 595 42 896 26 million
- 15. Funding by region At 30 June 2012 € 522 million outstanding
- 16. Regional & countryoffices Africa Asia Latin America Eastern Europe and Central Asia East Africa Southeast Asia Mexico, Central Eastern Europe and Kenya1, Tanzania, Cambodia, Philippines1 America and the Central Asia1 Uganda Caribbean Bulgaria, Kyrgyzstan, Costa Rica1, Dominican Moldova, Romania, Republic, El Salvador, Russia, Slovak Guatemala, Honduras, Republic, Ukraine Mexico, Nicaragua West Africa India South America – Benin, Côte d’Ivoire1, India1 northern region Ghana, Mali, Senegal Colombia, Ecuador, Peru1 Oikocredit South America – International southern region Nigeria2, Mozambique2 Argentina, Bolivia, Brazil, Paraguay, Uruguay1 1 Country with regional office/RDC. Oikocredit International and the RDC for Eastern Europe and Central Asia are located in the Netherlands. 2 The country offices in Nigeria and Mozambique report to Oikocredit International.
- 17. Countries with highestcapital outstanding At 30 June 2012
- 18. 1/3 of our890 partners are cooperatives At 31 December 2011
- 19. Githunguri Dairy FarmersCooperative Small scale dairy farmer Average 3 acres, 5 cows
- 20. Reason for Oikocreditfunding • Not able to get funding from commercial banks • Own commitment – together the farmers had already constructed buildings • Social relevance – 15,000 farmers – Job creation – Target market – Access to affordable pasteurized milk
- 21. Githunguri is bankable •Rapid growth – 3rd in market share in Nairobi • Better service to farmers • New products • Currently over 15,000 members • Annual turnover € 46 million • Over 200 direct jobs created
- 22. Cocovico, Côte d’Ivoire- the old market - COCOVICO: Coopérative de Commerçantes du Vivrier de Cocody - Created in 1993 - co-operative of female vendors based in Abidjan, Côte d'Ivoire - € 80,000 in 2004
- 23. Cocovico - thenew market • Partner since 2004 • Oikocredit financing used to build the new market during civil war • Benefiting over 5,000 traders, giving people in Abidjan access to food
- 24. Chajul - Guatemala • Guatemalan non-profit organization of coffee producers • Markets Fair Trade, organic coffee since 1989 • Around 1500 members • Primary focus: processing and exporting coffee, which are certified as both organic and Fair Trade • Environmentally focused • 4 loans: € 243,000 1991; 1.2 million credit line in 2002; 66,000 in 2009 500,000 in 2012
- 25. Kuapa Kokoo • Ghanaian cooperative of 62,000 cocoa farmers • In 2011 Kuapa Kokoo received an Oikocredit loan of GHS 5.7 million • (€ 2.55 million) • Kuapa Kokoo will use this loan to build its working capital to increase the purchase of cocoa beans from its member farmers.
- 26. Divine Chocolate •Fair tradechocolate company Kuapa Kokoo member Adwoa Asianaa based in UK & US. •Buys cocoa from the Ghanaian cooperative Kuapa Kokoo and manufactures the chocolate products under the Divine Chocolate label. •Kuapa Kokoo owns 45% of Divine Chocolate •Divine Chocolate and Kuapa Kokoo are Oikocredit partners
- 27. Divine Chocolate /Kuapa Kokoo
- 28. Barefoot Power • Develops and distributes solar- powered lamps to households in developing countries • Employs 50 people in Australia, China, Uganda, Kenya • Empowers 2,000 entrepreneurs in Uganda, Kenya, India and the Pacific region • Equity investment € 246,000 2007 • Credit line USD 1,000,000
- 29. Barefoot Power 400,000 households in more than 40 countries light their homes with Barefoot Power lamps
- 30. Social investment: creatingyour future!
- 31. Disclaimer This document wasproduced by Oikocredit, Ecumenical Development co-operative Society U.A. (Oikocredit International) with the greatest of care and to the best of its knowledge and belief at the time of writing. The opinions expressed in this document are those of Oikocredit International at the time of writing and are subject to change at any time without notice. Oikocredit International provides no guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information. This document is provided for information purposes only and is for the exclusive use of the recipient. It does not constitute an offer or a recommendation to buy or sell financial instruments or banking services and does not release the recipient from exercising his/her own judgment. The recipient is in particular recommended to check that the information provided is in line with his /her own circumstances with regard to any legal, regulator, tax or other consequences, if necessary with the help of a professional advisor. This document may not be reproduced either in part or in full without the written permission of Oikocredit International. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Every investment involves risk, especially with regard to fluctuations in value and return. It should be noted that historical returns and financial market scenarios are no guarantee of future performance. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor‘s reference currency. Oikocredit International is a co-operative society with limited liability (coöperatieve vereniging met uitgesloten aansprakelijkheid) under the laws of the Kingdom of the Netherlands.
Editor's Notes
- #2 www.oikocredit.org
- #3 www.oikocredit.org
- #4 www.oikocredit.org
- #5 www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk. We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
- #6 www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk. We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
- #7 www.oikocredit.org We have a flexible interest rate on both our hard and local currency loans, taking into consideration: market rate, project and country risks, development relevance and cost coverage. Contrary to popular belief, our project partners don't come to us because our interest rates are lower than local banks. On average, our rates are about 95% of commercial rates. The reason they come to us is because they have a hard time getting loans from regular banks. They can't offer the full 100% security required. We can also offer a longer term (five-ten years) than those banks would normally offer. Banks in developing countries typically offer loans of six months or one year to minimize risk. We do not charge extra fees or commissions. Our loan appraisal and disbursement procedures are transparent and relatively non-bureaucratic. Finally, our regional and country offices, which are staffed by local professionals rather than expatriates, contribute to the quality of our services through their capacity to understand the environment and realities of our clients.
- #8 www.oikocredit.org
- #9 www.oikocredit.org
- #10 www.oikocredit.org Oikocredit offers the opportunity to finance and support microfinance, cooperatives, fair trade and small and medium enterprises around the world. Our goal is to contribute to poverty alleviation through credit for development. Oikocredit is not geared to achieve profit for profit maximization. Our members invest in Oikocredit to achieve a modest financial return, and a high social return.
- #11 www.oikocredit.org Oikocredit is a cooperative financial institution that offers loans or investment capital for microfinance institutions, cooperatives and small and medium sized enterprises in developing countries. Oikocredit is privately financed through the sale of shares. Direct members of the cooperative are churches, church affiliated organisations, project members and Oikocredit support associations; individuals invest through support associations. Oikocredit pays its shareholders a modest yearly dividend. With around 600 direct members, representing around 34,000 individual investors, Oikocredit’s cooperative model is unique in the community of foreign investors in microfinance. A large and diversified shareholder base of committed, private individual and institutional investors (that generally do not respond to profit–maximizing objectives or behaviour) acts as a sort of cornerstone guarantee against risks of organizational mission drift. This ensures the organization will always strive at maximizing the social returns of their investments given a fixed maximum financial return.
- #12 www.oikocredit.org
- #13 www.oikocredit.org In the world of fair financing, the investor looks for both a social and a financial return. A dual return means a double bottom line or balancing the financial return with the social return. In addition to earning modest financial returns, investors are secure in the knowledge that their money is being used to fight poverty, promote fair trade and respect our planet’s natural resources. For some, the social aspect holds more importance. When an investor chooses Oikocredit, they choose an investment with a strong social effect and a modest financial return. Empowerment of the poor, the alleviation of poverty and the creation of a more just society are at our core and for those reasons, it’s essential we measure how our work impacts lives. Does Oikocredit reach the poor and help bring about positive change in the lives of individuals, families and the community? Today, Oikocredit is exploring systematic social assessment tools and methodologies with predetermined performance indicators. We are committed to measure its social performance and support its partners in developing their Social Performance Management.
- #14 www.oikocredit.org 1) 2007 including one off result Banco del Desarollo of 12.7 2) 2009 affected by lower growth and higher provisions
- #15 Figures at 31 December 2011 45,000 investors (39,000 individuals and 6,000 institutions) 595 members, 896 partners, reached in 2011 over 26 million people (preliminary figure at 31 December 2011) www.oikocredit.org
- #16 Other regions includes Western Europe and North America www.oikocredit.org
- #18 www.oikocredit.org
- #19 Number of cooperatives at 31 September 2012: 272 www.oikocredit.org
- #20 0706a - Githunguri Loan: € 948,000 Disbursed in 2003 Repaid in 2008 0706b - Githunguri Loan: KES 60,000,000 (€ 687,000) Disbursed in 2006 Repaid in 2009 www.oikocredit.org
- #23 www.oikocredit.org 0811a Cocovico Loan: XOF 52,700 (€ 80,000) Disbursed: 2004 Repaid: 2010 (a-b-c loans converted into one new loan contract: 0811d) 0811d - Cocovico Converted loan: XOF 903,257,000 (€ 1,377,000) Disbursed: 2010 Repaid: XOF 53,970,000 Capital XOF 716,207,000
- #24 www.oikocredit.org
- #25 www.oikocredit.org 10152a - Chajul Loan: USD 280,000 (€ 243,000) Disbursed:1991 Repaid: 2000 0608a - Chajul Credit line: USD 1,200,000 (€ 1,308,500) Disbursed: 2002 Repaid: 2011 0608c - Chajul Loan: USD 100,000 (€ 66,000) Disbursed: 2009 To be repaid: 2014 0608d - Chajul Loan: USD 500,000 (€ 375,000) Disbursed: 2012 Repaid: 2012 (not closed yet in TOP)
- #26 1753a - Kuapa Kokoo Credit line: GHS 5,700,000 (€ 2,584,000) Disbursed: 2011- 2012 To be repaid: 2013 www.oikocredit.org
- #27 1103a - Divine USA Equity: USD 948,000 (€ 745,000) Since: 2006- 2009 1103b - Divine USA Credit line: US$ 1,000,000 (€ 635,000) Disbursed: 2008 Repaid: 2012 1104a - Divine UK Equity: £ 500,000 (€ 735,500) Since: 2006 www.oikocredit.org
- #28 www.oikocredit.org
- #29 1193b – Barefoot Power Equity: AUD 400,000 (€ 246,000) Since: 2007-2009 1193d – Barefoot Power Credit line: USD 1,000,000 (€ 745,500) Disbursed: 2010- 2012 Repaid: 2012 1193f – Barefoot Power Equity: AUD 827,397 (€ 616,000) Since: 2011-2012 www.oikocredit.org