CNBC was taking a survey this morning to see if viewers felt the world was plunging into a global Depression. Since 2008 we have heard about a Recession, the “Great” Recession, a “Double-Dip” recession and now the word “Depression” is being thrown around the airwaves. The History Channel has been giving an awful lot of airtime to “The Nostradamus Effect” and other titles of shows using the word “Armageddon.” Ok, we get it. End of the world, global economic meltdown… the sky is falling… we get it.
Banks in Europe are on the verge of collapse, banks in America are taking it on the chin and our own Treasury debt has been downgraded from its historic and never-been-changed AAA rating. Greek default, Spain, Italy… the developed world is not looking so hot right about now. So with credit card defaults approaching 10%, the price of gold skyrocketing and then plunging and skyrocketing again, home foreclosures through the roof… is there anywhere safe to put your money? How about the mattress? Nope… what if your house catches fire? Okay, that’s enough sour grapes for this commentary. Now on to the good news.
The best way to analyze any kind of investment is to view its success rate over a long period of time. The US has never defaulted on its debt i.e. it must be the safest investment in the world, right? At this moment, take a look at this investment idea: Over 35 years, this debt asset class has a default rate of less than 2% with better than average fixed income returns. Its corresponding equity asset class is seeing its average annual returns exceed 20%. What is this iron-clad solid investment? The global poor. Microfinance business loans to the world’s working poor is skyrocketing as lenders and even major investment banks like JP Morgan, Deutsche Bank and Citi want to stabilize their lending portfolios by lending via microloans to people who traditionally pay these loans back like clockwork… the world’s poorest of the poor.
Half of the world’s population lives on less than $2 a day. About 150 million people around the world are current microfinance clients while about 1.1 billion want a loan AND HAVE THE ABILITY TO PAY THE LOAN BACK. Demand for loans is 10x the current supply. But the idea of lending to the poor still seems strange and therefore risky. The clients repay their loans because they want another loan and they work harder than anyone I have ever seen- bar none. They have families to feed, kids to put through school and don’t understand the concept of “default” or “going bankrupt.” They pay their loans back… period.
As global banking continues it’s metamorphosis to stay afloat, the winners will be the ones who see the world’s poor not as a risky and pitiful place to assign capital but as the safest bet of all. Change the world and help the poor… and have a better bank and organization for doing it. This is no longer charity… Microfinance may very well be a powerful cog to help get the global economy moving again.
If you have money on the sidelines and are cynical about the current financial markets or simply want to diversify your portfolio, give us a call. And if you want to help the poor while realizing investment returns... contact us right away!
Mark Robeson
President
Global Microfinance Partners, LLC
Tel +1 704 332-9390
mark@globalmicrofinancepartners.com
www.globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”
Friday, September 23, 2011
Friday, April 15, 2011
Microfinance Commentary 2Q 2011 | Helping the Poor: Just Charity?
Throughout the Christian Bible and most world religions, caring for the poor is a central theme and more importantly, a command. In the Bible, we are instructed over 2000 times to care for the poor… that is more references toward any one area in life than anything else in the sacred text. So should we give to the poor? Yes. But is there more we can do?
I say the answer is a resounding YES… and so do a growing number of other people around the world. Christians and Muslims, Americans and Europeans, Republicans and Democrats, Conservatives and Liberals. Giving to the poor makes us feel like we are doing something good… and for those of Faith, helping the poor fulfills our marching orders. But what if we actually want to roll back poverty instead of just alleviating its symptoms, like taking some aspirin in the face of a raging cancer? Let’s see what some pioneers in philanthropy and the microfinance movement have to say.
"When we want to help the poor, we usually offer them charity. Most often we use charity to avoid recognizing the problem and finding the solution for it. Charity becomes a way to shrug off our responsibility. But charity is no solution to poverty. Charity only perpetuates poverty by taking the initiative away from the poor. Charity allows us to go ahead with our own lives without worrying about the lives of the poor. Charity appeases our consciences."
-Muhammad Yunus “Banker to the Poor: Micro lending and the Battle Against World Poverty”
Giving a “hand-up” rather than a “hand-out” has become part of the philanthropic lexicon… and thank goodness for that! “If you give a man a fish, he will eat for a day. If you teach a man to fish, he will eat for the rest of his life” is an ancient Chinese proverb that is beginning to sink in with more and more people. Perhaps most importantly, with investors.
“A new study estimates the potential market for investments that seek financial as well as social or environmental returns at $120 Billion. The good news for charities is that most study participants who said they would put money into such investments said they would draw the funds from their investment portfolios rather than the money they set aside for philanthropy.”
-The Chronicle for Philanthropy October 4, 2010
We in the developed world are at a crossroads in philanthropy and investing. Should we keep investing our money in the old stocks, bonds and mutual funds routine? After all, we can use the dividends or income derived from these investments to give to charity, right? Or is it time to turn this traditional investment model on its head by investing our money in poverty alleviation and other socially conscious causes, in some cases realizing greater investment returns on these endeavors than the aforementioned traditional stocks, bonds and mutual funds?
Enter the developing world miracle that has been microfinance for the last 35 years. But now the old tried and true “sustainable” non-profit model of microfinance is evolving too. Now an entire industry has been born, an industry that is committed to growing larger by the day to reach more and more of the poor to help them escape poverty by helping them help themselves. Microfinance banks around the globe are seeking more borrowers, competing with each other for clients and driving interest rates down. All the while increasing the number of life-changing financial products for the poor. Some call this “philanthro-capitalism.” I just call it just good business sense. Let’s help the poor with a new industry that will grow and grow and grow, not just be “sustainable.”
"So if you want to put your money in microfinance just to feel good, by all means direct it to the non-profit organization that most pulls your heartstrings. But if your objective is to roll back poverty and change the world, don't believe those that have been telling you that returns on your investment are the icing on the cake. It is the cake itself."
-Michael Chu- Professor, Harvard Business School and former CEO of the microfinance organization ACCION
Let’s get to WORK!
Mark Robeson
President
Global Microfinance Partners, LLC
Tel +1 704 332-9390
skype | mark.robeson
www.globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”
I say the answer is a resounding YES… and so do a growing number of other people around the world. Christians and Muslims, Americans and Europeans, Republicans and Democrats, Conservatives and Liberals. Giving to the poor makes us feel like we are doing something good… and for those of Faith, helping the poor fulfills our marching orders. But what if we actually want to roll back poverty instead of just alleviating its symptoms, like taking some aspirin in the face of a raging cancer? Let’s see what some pioneers in philanthropy and the microfinance movement have to say.
"When we want to help the poor, we usually offer them charity. Most often we use charity to avoid recognizing the problem and finding the solution for it. Charity becomes a way to shrug off our responsibility. But charity is no solution to poverty. Charity only perpetuates poverty by taking the initiative away from the poor. Charity allows us to go ahead with our own lives without worrying about the lives of the poor. Charity appeases our consciences."
-Muhammad Yunus “Banker to the Poor: Micro lending and the Battle Against World Poverty”
Giving a “hand-up” rather than a “hand-out” has become part of the philanthropic lexicon… and thank goodness for that! “If you give a man a fish, he will eat for a day. If you teach a man to fish, he will eat for the rest of his life” is an ancient Chinese proverb that is beginning to sink in with more and more people. Perhaps most importantly, with investors.
“A new study estimates the potential market for investments that seek financial as well as social or environmental returns at $120 Billion. The good news for charities is that most study participants who said they would put money into such investments said they would draw the funds from their investment portfolios rather than the money they set aside for philanthropy.”
-The Chronicle for Philanthropy October 4, 2010
We in the developed world are at a crossroads in philanthropy and investing. Should we keep investing our money in the old stocks, bonds and mutual funds routine? After all, we can use the dividends or income derived from these investments to give to charity, right? Or is it time to turn this traditional investment model on its head by investing our money in poverty alleviation and other socially conscious causes, in some cases realizing greater investment returns on these endeavors than the aforementioned traditional stocks, bonds and mutual funds?
Enter the developing world miracle that has been microfinance for the last 35 years. But now the old tried and true “sustainable” non-profit model of microfinance is evolving too. Now an entire industry has been born, an industry that is committed to growing larger by the day to reach more and more of the poor to help them escape poverty by helping them help themselves. Microfinance banks around the globe are seeking more borrowers, competing with each other for clients and driving interest rates down. All the while increasing the number of life-changing financial products for the poor. Some call this “philanthro-capitalism.” I just call it just good business sense. Let’s help the poor with a new industry that will grow and grow and grow, not just be “sustainable.”
"So if you want to put your money in microfinance just to feel good, by all means direct it to the non-profit organization that most pulls your heartstrings. But if your objective is to roll back poverty and change the world, don't believe those that have been telling you that returns on your investment are the icing on the cake. It is the cake itself."
-Michael Chu- Professor, Harvard Business School and former CEO of the microfinance organization ACCION
Let’s get to WORK!
Mark Robeson
President
Global Microfinance Partners, LLC
Tel +1 704 332-9390
skype | mark.robeson
www.globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”
Wednesday, January 12, 2011
MICROFINANCE: MORE EFFECTIVE AS NON-PROFIT OR FOR-PROFIT? | JAN 2011
A lot of discussion has circulated recently as to whether microfinance should be done in the traditional donor-driven, non-profit model -or- through the investor-driven, for-profit model. If our goal is to extend credit and banking services to the poor around the world by giving them a hand-up rather than a hand-out, who would do it best?
Since Nobel Laureate Muhammed Yunus made that first loan to poor women in a village in Bangladesh in the mid-1970’s (which was the incubus for the now famous Grameen Bank or “Community” Bank), the donor driven model has ruled. Roughly USD $50BB of credit is now circulating throughout the developing world through about 10,000 Microfinance Institutions (MFI’s) that serve 100 million clients. These clients use this capital to start and expand their businesses and they pay their loans back.. on time.. with interest. This model not only helps the poor by extending working capital to them but gives them something far more valuable… dignity.
However, current demand for microfinance is roughly ten times supply. With a default rate in microfinance over the last 30+ years of LESS THAN 2%, the microfinance sector is getting the attention of some of the largest financial institutions and governments in the world. This includes investments from Deutsche Bank, TIAA-CREF, European pension plans and other institutions that see investing in microfinance as the “new philanthropy” and very good for their corporate bottom-line. Investment returns in the sector astonish even the most hardened Wall Street and Silicon Valley veterans. Debt investments averaging near 7-10% returns coupled with Equity investments targeting and making 20%+ annually make this astonishment a reality. Betting on the poor is most assuredly a good bet.
One year after starting Global Microfinance Partners, I am more convinced than ever that helping the poor help themselves through small loans is the most intelligent and effective way to eliminate global poverty. Grassroots capitalism is taking hold and MFI’s worldwide are switching to for-profit models very quickly. Unhappy to simply sustain themselves through donations, MFI’s now wish to grow larger and serve more and more clients around the world who would otherwise have no access to financial services and business capital. Microfinance investing (or Microfinance 2.0) is the next evolution in an industry that changes lives and give hope to hundreds of millions of the working poor living around the world.
Microfinance Investment Vehicles (MIVs) have been in existence for over 10 years and offer debt vehicles to MFIs as well as making equity investments into the MFIs themselves. While the assets in MIVs range somewhere in the USD $10 billion range, this number is expected to rise exponentially as high net worth individuals, institutions, foundations and endowments see this new asset class as a true “Impact Investment.” Receiving a financial return on money that is ACTIVELY helping the poor through this sector is becoming more and more appealing to investors in this jaded time in the financial markets.
What if your investment portfolio could do good in the world? Not just the dividend and yield they make that you give to charity? These are questions that now have an exciting answers!
Mark Robeson
President
Global Microfinance Partners
Tel +1 704 332-9390
skype | mark.robeson
www.globalmicrofinancepartners.com
mark@globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”
Since Nobel Laureate Muhammed Yunus made that first loan to poor women in a village in Bangladesh in the mid-1970’s (which was the incubus for the now famous Grameen Bank or “Community” Bank), the donor driven model has ruled. Roughly USD $50BB of credit is now circulating throughout the developing world through about 10,000 Microfinance Institutions (MFI’s) that serve 100 million clients. These clients use this capital to start and expand their businesses and they pay their loans back.. on time.. with interest. This model not only helps the poor by extending working capital to them but gives them something far more valuable… dignity.
However, current demand for microfinance is roughly ten times supply. With a default rate in microfinance over the last 30+ years of LESS THAN 2%, the microfinance sector is getting the attention of some of the largest financial institutions and governments in the world. This includes investments from Deutsche Bank, TIAA-CREF, European pension plans and other institutions that see investing in microfinance as the “new philanthropy” and very good for their corporate bottom-line. Investment returns in the sector astonish even the most hardened Wall Street and Silicon Valley veterans. Debt investments averaging near 7-10% returns coupled with Equity investments targeting and making 20%+ annually make this astonishment a reality. Betting on the poor is most assuredly a good bet.
One year after starting Global Microfinance Partners, I am more convinced than ever that helping the poor help themselves through small loans is the most intelligent and effective way to eliminate global poverty. Grassroots capitalism is taking hold and MFI’s worldwide are switching to for-profit models very quickly. Unhappy to simply sustain themselves through donations, MFI’s now wish to grow larger and serve more and more clients around the world who would otherwise have no access to financial services and business capital. Microfinance investing (or Microfinance 2.0) is the next evolution in an industry that changes lives and give hope to hundreds of millions of the working poor living around the world.
Microfinance Investment Vehicles (MIVs) have been in existence for over 10 years and offer debt vehicles to MFIs as well as making equity investments into the MFIs themselves. While the assets in MIVs range somewhere in the USD $10 billion range, this number is expected to rise exponentially as high net worth individuals, institutions, foundations and endowments see this new asset class as a true “Impact Investment.” Receiving a financial return on money that is ACTIVELY helping the poor through this sector is becoming more and more appealing to investors in this jaded time in the financial markets.
What if your investment portfolio could do good in the world? Not just the dividend and yield they make that you give to charity? These are questions that now have an exciting answers!
Mark Robeson
President
Global Microfinance Partners
Tel +1 704 332-9390
skype | mark.robeson
www.globalmicrofinancepartners.com
mark@globalmicrofinancepartners.com
“Connecting Capital Markets with Village Markets”
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