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Role of MFIs in building

sustainable livelihoods of the poor

It’s all about financial servicesUnbundling Microfinance Products and Services

Marcus Fedder

Managing Partner

Agora Microfinance Partners LLP


MFIs serve their clients best when concentrating on providing the fullest range of appropriate financial services to help the poor build their livelihoods

A combination of MFI-provided financial services and NGO-provided multi-pronged interventions can lead to a greater success in alleviating poverty for the poor and the very poor


Agora works in close partnership with Concern Worldwide on the Board of AMK (Cambodia's largest MFI in terms of number of clients) and in the creation of greenfield MFIs

Agora and Concern select countries and areas to build greenfield MFIs on the basis of detailed market research

Concern’s presence in the countries in Africa chosen for greenfields is a key criterion as

Operating in the field, Concern has in-depth knowledge of the population and of micro business potential


Agora and Concern expertise and focus complement each other

Microfinance is one building block in Concern’s holistic approach

Agora focuses on providing full range financial services:

- Loans

- Savings

- Remittances

- Insurance


Focusing on "microfinance only" is a conscious decision not to provide "microfinance plus" as an MFI

The important task of capacity building is left to Concern – a specialist in this field

So, are the poor really potential clients for MFIs?


Relative Poverty Of New VB Clients-Quartile

28%

35%

22%

16%

26%

33%

27%

14%

25% 25%

33%

18%

28%

23%27%

22%20%

27%

38%

16%

Poorest Poor Middle Better-off

2006 2007 2008 2009 2011

Data source: AMK Cambodia


0%10%20%30%40%50%60%70%80%90%

100%

Poor Medium Better-Off

Consumptions

Asset Buildings

NonFarm

Farm



Loan Use by Poverty Group-2011 Poor Medium Better- off

Agriculture 37% 33% 30%

Animals 14% 13% 18%

Fishing CPR 4% 3% 2%

Manufacture 2% 2% 2%

Petty Trade 4% 5% 7%

Services 1% 5% 11%

Cost Migration 1% 1% 2%

Land 0% 1% 2%

Assets 4% 12% 10%

Gold 0% 0% 0%

Debt 5% 3% 2%

Give Loan 2% 6% 2%

Food 12% 7% 0%

Health 8% 2% 1%

Celebrations 1% 1% 2%

Emergency needs 7% 5% 5%



Loan Repayment Status by Poverty Group

14% 20%11%

28% 22% 21%11%

21% 24% 24%36% 41%

14% 19% 19%

75%80%

89%64% 74% 76%

54%

63%72%

40%

52%55%

76%79% 78%

6%0% 0%

4%4% 2%

26%

14%3%

25%

8%3%

6%3% 3%6% 0% 0% 4% 0% 2% 8% 2% 1%

11%3% 1% 4% 0% 0%

Poor Medium Bett er-Off





2006 2007 2008 2009 2011Multiple Loans-No Diffi cult Repayment Only AMK loan-No Diffi cult Repayment

Multiple Loans-Diffi cult Repayment Only AMK loan-Diffi cult Repayment



Specialists provide the best services:

Concern Worldwide as a specialist NGO is best positioned to provide a holistic approach

Agora's MFIs are best positioned to provide financial services at fair and sustainable costs to the client


As a result, clients have the choice to obtain the most suitable products from the MFI without having to pay for bundled services they may not require

Bundling services and off-loading the costs onto clients contravenes (in Agora's view) the principle of client protection

By letting each institution concentrate on its core expertise and strength, clients are served better and

MFIs are better positioned to maximise their social return whilst realising an attractive and fair financial return for their investors


DISCLAIMER:

This document is approved and issued by Agora Microfinance Partners LLP (“Agora”), which is authorised and regulated by the Financial Services Authority (the "FSA"). This information contained in this document is strictly confidential. The information contained herein does not constitute an offer to sell or the solicitation of any offer to buy or sell securities and or any derivatives and may not be reproduced, further distributed or published by any recipient without prior permission from Agora. The information contained in this document is for background purposes only and does not purport to be full or complete. Nor does this document constitute investment advice. No representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this document by any of Agora its partners or employees and no liability is accepted by such persons for the accuracy or completeness of any information or opinions. As such, no reliance may be placed on the information and opinions contained in this document. The information contained in this document is subject to updating and verification and may be subject to amendment. No representation or warranty expressed or implied as to the accuracy of the information contained in this document is given by Agora and no liability is accepted for any such information.

[email protected] role of mfis in building sustainable livelihoods of the poor it’s all about...

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