An exploration on the profitability of microfinance and other social finance schemes.

1. Can helping
someone make
you richer?

2. Can Philanthropy Be
Profitable?
An analysis of Microfinance & Social
Impact Bonds

3. Agenda
• Introduction
• Microfinance
– What is it?
– Application in Singapore
– Future directions
• Social Impact bonds
– What are they?
– Application in Singapore
– Future directions
• Conclusion

4. Philanthropy is
“
The provision of private resources for social
purposes, either in the form of grants or of
‘social’ or ‘impact’ investment - generating
financial as well as social return.
”

5. Microfinance
Social Impact
Bonds
Social
Entrepreneurship
BoP
Investment

6. Microfinance
Social Impact
Bonds

7. Microfinance

8. Microsavings
Microcredit
Microinsurance

9. Microcredit

11. $967 million
Outstanding Loans
in US Dollars

12. 8.37 million
The number of borrowers
in the year 2012

13. 96.67%
The recovery rate of
funds loaned out

14. 94%
The percentage of clients
who are women

15. Facilitates escape
from poverty cycle
Group lending &
monitoring
4 Key
Features
No collateral
required
Variety of
intermediate
interest rates

16. Facilitates escape
from poverty cycle
4 Key
Features

17. 4 Key
Features
No collateral
required

18. • Alternative
lending structure
• Social pressures
Group lending &
monitoring
4 Key
Features

19. 4 Key
Features
• Traditional
Banks<MFI<Loan
Sharks
• 20%, 8%, 5%, 0%
Variety of
intermediate
interest rates

21. Benefits
Outreach to the rural community
Increase in savings, members, loans and deposits
Number of houses built
Profits in 26/29 years in operation
No donations since 1995

22. Criticisms
Lack of Transparency
Loan Renewal and Debt Cycle
Threat of Government Takeover

23. In Summary
Financial Access to
“Un-bankables”
Long Term
Sustainability

24. Application in
Singapore

25. Lending
Developing
countries
Engaging
• The need is greater
• Economies of scales
Consulting
Singapore:
The Asian Headquarters
for MF initiatives…?

26. Lending
• Availability of funds
• Online lending
platforms
Singapore:
The Asian Headquarters
for MF initiatives…?

27. • Microfinance
Society of
Singapore, Banking
with the Poor
network
Engaging
• Microfinance
Information
Exchange
Singapore:
The Asian Headquarters
for MF initiatives…?

28. • Consulting
Services: Unitus
Capital, Caspian,
Philips Capital
• Retail Microfinance
by Milaap
Singapore
Consulting
Singapore:
The Asian Headquarters
for MF initiatives…?

29. The Marginalized
•
•
•
•
Single Parents
Ex-offenders
Youth-at-Risk
Elderly

30. The Marginalized

31. Give a man a fish, and
you feed him for a day.
Teach a man how to fish,
and you feed him for a
lifetime.

32. MicroEntrepreneurship

33. MicroEntrepreneurship
Micro Credit Business Scheme
Proposals in the Pipeline
Undocumented help by social
network

34. Pros
Cons
Availability of Funds
No economies of scale
Efficient supporting
regulation
Lack of strong social
support network
Lack of motivation
High risk of failure in
running a micro business
Feasibili
ty in
Singapor
e

35. Rich Country,
Poor People

36. $15,000,000,000,000

37. Intervention
Problem

38. Problem
Intervention

39. Effective Prevention
Programmes Have No
Resources

40. How to:
Scale Proven,
Preventive
Interventions
Improve Impact of
Government
Spending
?

41. Social "
Impact Bonds

42. Stakeholders
The Investor
The Operator
The Payer

43. RISKS
The Investor
RESULTS
FUNDING
The Payer
FUNDING
PROJECTS
The Operator
The Prospect

44. RISKS
RESULTS
FUNDING
The Payer
FUNDING
The Investor
RETURN
PROJECTS
The Operator
The Prospect

46. An estimated 60% of
short-term prisoners
reoffended within
one year of release

47. An estimated 60% of
short-term prisoners
reoffended within
one year of release
Target: 3,000 Short-Term Prisoners
Aim: To reduce reoffending to 7.5%
Estimated Savings: £10 for every £1

48. Stakeholders
The Investor
The Operator
The Payer
Philanthropic
Foundations
Social
Finance
UK
Government
HNW
Individuals
Other
Partners

50. Benefits
Challenges
Outcome-based incentives
drive efficiency
Measuring impact
Spur innovation
Displacing existing
solutions

51. Application in
Singapore

52. Obesity

53. 6.9%
2004
10.8%
Obesity Rates
2010

54. Aim
To reduce obesity rates
Partners
HPB, CDCs, MOE, MOM
Projects
Counseling & events

55. Youth-at-Risk

56. Aim
To reduce number of
youth-at-risk &
reoffending rate
Partners
MSF, investors
Projects
Vocational Training &
Workshops

57. Europe
United States
of America
Australia

58. Reduce reoffending
rates amongst youth
Early childhood
education
United States
of America

59. Benefits
Portfolio Diversification
Government funds channeled to other areas
Brings market discipline to the sector

60. Risks
Financial Risks
Execution Risks

61. Conclusion
Social investment CAN be profitable

62. Social
Financial

63. Q & A