Best wishes for 2014 and a massive “Thank you” for your support to lendwithcare

2013 was a busy and at times a challenging year for lendwithcare. It was also a hugely successful one thanks to your continuing support. 

2013 Highlights

• Our lender community almost doubled and we reached the 15,000 lender mark just before the close of the year
• We made 60,000 loans, lending just over £2m to poor entrepreneurs across the world
• We started working in Pakistan, Zambia and Malawi
• We funded our first social enterprise loans in an effort to reduce air pollution in Metro Manila

Lendwithcare was also covered extensively in the media, including pieces in the Guardian, The Independent, The Evening Standard, The Times and the Daily Express. Click here to see them. 

However, as the situation in the Philippines reminds us, our work is by no means done. It is more important than ever to help individuals and communities rebuild their lives, especially after natural calamities such as Typhoon Haiyan.

Just before the Christmas Holidays we received news that 38 lendwithcare entrepreneurs have been adversely affected by the typhoon and so, their repayments have been paused until an appropriate rehabilitation plan has been developed.  Tracey Horner, Head of Lendwithcare, will be travelling to the Philippines in a few days to meet with our partner there and with the entrepreneurs who have been affected to help devise the plan to help them.  We will keep you informed.  

In 2014 we expect, with your ongoing support, to help more and more micro entrepreneurs to improve their lives and those of their families. 

Lendwithcare.org supports important green initiative in the Philippines!

We have added our first sustainable social enterprise loan to the lendwithcare.org website to help tricycle taxi drives to acquire cleaner engines for their tricycles.  We are supporting an initiative launched by our partner in the Philippines, SEEDFINANCE and a local company called “Clean Engines Incorporated” (CEI) to help reduce air pollution in Metropolitan Manila.  This initiative aims to encourage local tricycle taxi drivers to switch over from two-stroke petrol and diesel powered engines (highly pollutant) to environmentally-friendly liquefied petroleum gas (LPG) engines.

In the Philippines 84% of the country’s population depends on tricycles (similar to rickshaws) for transport. At present, 70% of these tricycles have polluting two-stroke engines. This has a devastating impact on the environment as well as on the health of urban residents.

The local council of Mandaluyong City in Manila has  recently enacted legislation requiring all tricycles to switch over to cleaner liquefied petroleum gas (LPG),  which is undoubtedly beneficial in the long-term, but in the short-term is expensive  (sometimes unaffordable) for tricycle taxi drivers.
This is where lendwithcare and you specifically come in! We are going to help to make this happen.   For the first time, our microfinance partner (and not an individual entrepreneur) is requesting a large loan of $25,000 US Dlls to provide smaller loans of $500 to 50 motorized tricycle taxi so that they can pay for their vehicles to be switched over to LPG without crippling their livelihoods.

The loans are to be provided through a local financial co-operative called “The Rizal Technological University Employees Multi-Purpose Cooperative” (RTU-KMPC). The loans will be repaid over 18 months.  The RTU-KMPC will require tricycle drivers to become members before providing them with a loan to purchase the LPG toolkit that enables the change. Once the kit is installed, air pollution is significantly reduced but also tricycle drivers spend less money on fuel. As members they will also be entitled to access other financial and non-financial services of the co-operative and also share in its profits.
 

The various parties involved, SEEDFINANCE, CEI and the RTU-KMPC are liaising with the Mandaluyong City local government not only to stress the environmental and fuel efficiency aspects of the switch from diesel to LPG, but also to assist local tricycle drivers to pay for the change. CEI will provide training to LPG toolkit users, provide warranties and establish several maintenance shops throughout the city. The aim is to eventually extend the project and provide loans to more tricycle drivers and make Mandaluyong City a cleaner, less polluted and more pleasant place to live and work, and hopefully a role model to other areas in Manila and other cities in the Philippines.

To read more about this fantastic initiative and to support tricycle taxi drivers click here  

Lendwithcare in the Philippines | Providing more than just microcredit

Lendwithcare on location in the Philippines

Carlito Curacha, a farmer who received a microloan through lendwithcare

© CARE/Jo Broughton

Jo Broughton, CARE International UK's PR & Communications Executive, visited lendwithcare's microfinance partner in the Philippines, SEEDFINANCE, and tells us how microfinance institutions (MFIs) can (and do) provide more than just microfinance ...

I've come to the end of an incredible visit to Cebu island, Philippines. In the past 3 days I have visited 20 lendwithcare entrepreneurs and have been blown away by what they have done with their loans, the opportunities they have created and embraced.

Like every lendwithcare visit, it has been characteristically heartening to see how these businesses are thriving because of access to vital capital. A typical story is to see that within a year or so of investment, coupled with financial and business advice from our partner MFIs, entrepreneurs have managed to double or triple their income, often more. The impact this has on a family is, obviously, always positive and often life-changing.

But this trip has highlighted to me the importance of the services offered by our partners above and beyond the provision of loans. These services are impressive in both range and quality. Lendwithcare, on principle, will partner only with MFIs that offer more than just loans. We want to ensure that our entrepreneurs are in good hands; that they are being given the right advice, are being encouraged to save as well as or, in nearly half of cases, instead of borrowing. That they have access to healthcare and insurance.

Here in Cebu, lendwithcare partners with SEEDFINANCE, a socially responsible microfinance institution initially set up by CARE, now independent. In turn, SEEDFINANCEpartner with regional co-operative associations, whose activities benefit their members and annual dividends are reinvested to provide for their community. I was lucky enough to meet and be shown around by the proud and dedicated staff of one of these co-operatives.

LMPC staff © CARE/Jo Broughton

Lamac Multipurpose Co-operative Association serves the people of a remote valley in the coastal mountains of Cebu. This cooperative was formed in 1973 when 70 local farmers invested an initial capital of around $1 each. Their goal was simple yet vast: to work together to meet the needs of the people living in a valley with no electricity, no running water, no schools, no healthcare and no access roads. 

Today, LMPC is 25,000 people strong. Ninety per cent of the valley’s 5,000 households are members of the cooperative and its total assets amount to 634 million pesos (approximately £10m). Together, and in just one generation, the members have built 21 kilometres of road along the mountainsides, providing access to roads to the two nearest towns. They have provided electricity to all homes and water to 600 homes, and access to clean water for the others. They have built a school. Their consumer division meets the people's retail needs; the production division encompasses the agriculture that feeds them as well as production of essentials like soap and candles.

LMPC now run an eco-tourism centre, which includes community resources like a covered sports hall, large catering venue for celebrations, ponds for fishing and a 1-hectare intensive farm for small-scale production and education. 

 A generation ago, the people of Lamac had no access to healthcare and relied on faith healers to treat the sick. Now, for an affordable monthly sum, the cooperative provides families with access to good quality healthcare in an accessible health centre. They are insured against loss and bereavement. And children no longer have to walk 14km each way to get to school, so school attendance is now 80% where two decades ago it was close to zero.  All achieved, according to LMPC, through ‘active volunteerism’: early members contributed whatever talents and resources they had for the benefit of the community.

Now, through Lendwithcare’s partnership with SEEDFINANCE, we are able to provide loans to the entrepreneurs of LAMAC, helping their small scale businesses go from strength to strength. But as LAMAC demonstrates, loans are just a small but vital part of the picture. By partnering only with organisations who offer these services, lendwithcare can ensure that we are supporting whole communities.

I have visited lendwithcare entrepreneurs in three continents and I always come away feeling heartened by the stories they tell me about the ways they have invested their loans and how this has improved lives for them and their families. This isn’t charity, it is investment- and these people invest wisely and conscientiously. It is wonderful to see, through partnering with organisations such as SEEDFINANCE, lendwithcare is supporting such life-changing investment on a community-wide scale. 

By Jo Broughton, PR & Communications Executive at CARE International UK
You can follow Jo on Twitter @Jo_CARE_Intnl

For more information about lendwithcare, please visit www.lendwithcare.org 

Can Microfinance Create Sustainable Businesses?

Lendwithcare.org's Microfinance Advisor, Dr Ajaz Ahmed Khan, answers one lenders very pertinent question

Banking on Change in Uganda

© CARE/Tine Frank

A business owner and lendwithcare lender raised a very important question in an email to the lendwithcare team recently. Attracted to the lendwithcare model due to its emphasis on sustainable development and providing the working poor with a hand up instead of a hand out, he asked how, with loans alone, micro-entrepreneurs were able to create truly sustainable businesses that could benefit whole communities. We thought we would share Ajaz's answer with you all ...


In our experience low income people face many obstacles, lack of capital is just one. Thus, lack of appropriate skills, lack of markets, lack of mobility (particularly important for women in certain contexts), lack of rural infrastructure, etc. all impact upon their ability to develop their businesses - poverty is multi-faceted. As an organisation, CARE International works in addressing many of the aforementioned obstacles and many others (such as health and education), not just providing microfinance.

There are a wide range of institutions that provide microfinance, some tend to be very commercially minded providing nothing but loans, while others have a strong social development mission and provide a range of other services including savings (so that low income people do not always need to seek loans), insurance and training. We are very careful in selecting our microfinance partners and work with the latter rather than the former. Some of our partners provide extensive training to borrowers. For example, our microfinance partner in Bosnia & Herzegovina, Zene za Zene International has a sister organisation that focuses exclusively on providing women with training in basic bookkeeping and financial planning, new skills, marketing and presentation and even helps them to export products overseas. Once women complete the training courses (that can last several months) they then qualify for a loan providing they present a viable business plan from the microcredit foundation. However, in practice funding training programmes is a challenge and it is one of the reasons why they are not more widespread.

Our microfinance partners also lend to small and medium enterprises (SMEs) who typically require larger loans than those featured on lendwithcare. For example, around 10% of the loans given by our partner in the Philippines, SEEDFINANCE, are to SMEs. These are enterprises who typically employ several staff. We have not generally featured these loans on lendwithcare though as yet because they might take too long for us to fund, although as lendwithcare grows and we have more lenders we will support more SMEs.

Our partners are all experienced microfinance providers, often with a close understanding of the communities where they work and take the view that providing one loan to a microentrepreneur may not generate a cycle of sustainable development, rather that they require access to loans (supported by a range of other services and training) over an extended period of time to develop their businesses. However, since they also need to ensure their own organisational sustainability (despite sometimes being non-profit or member owned organisations) our microfinance partners tend to slowly increase the size of loans over several years as they see a business develop - certainly there are many instances of borrowers beginning with very small enterprises that have developed into much larger businesses that employ several staff. However, there are certain limitations also as I have explained in a recent blog http://lendwithcare.blogspot.co.uk/2012/09/ecuador-microfinance-and-women.html#more that are often more difficult to overcome.

By Lendwithcare.org Microfinance Advisor, Dr Ajaz Ahmed Khan

Why I Lend: To help out business owners from across the globe

Lendwithcare lender, Ffion Davies, founder of PR company Espressivo Creative, tells us why she lends …

Gilda Valerio, an entrepreneur from the Philippines supported by Espressivo Creative

© CARE

Being an entrepreneur can be extremely rewarding, but also, ridiculously lonely at times. When a fellow entrepreneur creates an alliance with another, there’s a new bond being created, an alliance, if you will, and it’s rather quite special.

What’s more special is that here at Espressivo Creative, we’re not only creating alliances with other entrepreneur’s on nearly an every day basis, but we’re proud to be helping out business owners from across the globe who don’t get the privilege to receive as much help as we do over here in the UK. We’ve got a tonne of information at our disposal to aid us with business related queries and issues we may come across, especially when it comes to funds. However, not everyone in this world is as lucky as we are.

We’re currently working with not 1, not 2, but 3 different businesses from some of the poorest places in the world, where people are just trying to start their own ventures in order to stand on their own 2 feet, although I can’t stand that overused cliché, it’s exactly what they’re doing. And how are we doing that? Well, we’re a member of lendwithcare.org, who provide micro loans from people just like you and me who pledge to help other ambitious people to get their businesses started.

This isn’t a donation, but a loan, where we treat our fellow entrepreneur’s with respect, just like we’d like to be treated too. We’re not offering hand outs but a solution to get their brand new business started and giving their lives an extra dimension. I’m proud to say that we’re part of enabling business growth in some of the poorest areas in the world.

Thank you lendwithcare.org for allowing us to help!

By lendwithcare lender, Ffion Davies

Could Mobile Banking be the innovative answer to the microfinance conundrum?

  

VSLA © CARE/Josh Estey

What do mobile phones and lendwithcare have in common?

The numbers are not conclusive but general web-consensus puts worldwide mobile phone usage at the end of 2011 at 5.6 billion. A number driven up significantly by developing giants China (>1bn) and India (>900m) but numbers are also growing in smaller developing countries like the Philippines (86m), Ecuador (15.9m) and Benin (1.6m). In fact, a Guardian piece found that two thirds of the mobile phones in use in 2009 were being used by people from developing countries.

The mobile phone boom is perhaps not that surprising since it is so visually evident. However, what is less evident and more of a recent revolution in terms of mobile technology is that mobile phones are now being used, on a large scale, to extend financial services to the poor. As electronics companies battle it out in ‘developed’ countries to provide mobile phones that function more and more like mini computers; across Asia, Africa and Latin America, where there are approximately one billion people who do not have a bank account but do have a mobile phone (according to a CGAP/GSMA study (CNN)), mobile phones are being utilised to enable the ‘un-banked’ to perform basic financial transactions such as making payments, receiving credit and sending remittances.  

If mobile banking reaches a greater potential (i.e. reaching the approximate one billion who have a phone but not a bank account) it could completely transform microfinance. Which is why, as a curious mind working in microfinance, I wanted to take a closer look at what is mobile banking? Why and how is it being adopted? And how may it transform the way people access financial services?

What is mobile banking (M-Banking)?

Mobile banking is a way to perform banking transactions using a mobile device like a mobile phone. By downloading or registering a mobile banking account onto their phone, M-Banking customers can send money, make payments and receive loans via SMS. Although M-Banking is predominantly used by its customers to make payments (Mobile Payments); cash deposits and withdrawals are also provided by some operators who train and accredit local M-Banking ‘agents’ – a local shopkeeper or a local microfinance officer for instance – to offer these extended services (full Mobile Banking). Mobile operators are working in partnership with other sectors (be it the formal financial sector or NGO/non-profit sector) to effectively create cashless economies in rural and poor areas by giving the people who live there access to full-service banking using their mobile phones.

Why and how is M-Banking being adopted?

Just as access to financial services incorporates a variety of services and products for us, so it should for poor people. However, for many people who currently live outside the formal financial sector, one of the most basic services they are excluded from is somewhere safe to keep/save their money. Since the poor do not have access to bank accounts and a large number of microfinance institutions, who have NGO status, cannot accept deposits, billions of poor people do not have anywhere to safely deposit their money and are instead forced to carry all their money around with them or hide it under their pillows at night. Security is therefore one of the biggest advantages to mobile banking since it creates in effect a ‘mobile wallet’ that can only be accessed remotely with a secure PIN.

VSLA Tanzania © CARE/Nicky Lewin

Another reason why so many people are adopting M-Banking is because it is a convenient way to complete day-to-day financial transactions. Instead of having to make the often arduous and time-consuming journey to a money transfer facility, a local bank or microfinance branch, M-Banking customers can send remittances at any time of the day and in an instant as well as receive and repay microloans simply by sending a text. Once the payment has been dispatched, all the recipient needs to do, if they so wish, is to convert their mobile payment into cash at a local M-Banking store. 

Lendwithcare’s microfinance partner in the Philippines, SEEDFINANCE, has begun incorporating M-Banking into some of their local operations and its success and popularity so far illustrates how M-Banking allows microfinance institutions and clients to process transations more efficiently. Through its  partnership with SMART Communications and ENCASH, one of SEEDFINANCE’s partner financial institutions (FCCT) has now been accredited to issue Smart Money Cards to its microfinance clients. In a recent report, SEEDFINANCE said about FCCT that: “It has successfully generated 4,103 Smart Money applications of members who are currently utilizing the cards to receive loans, transfer funds to their loved ones, reload prepaid credits and manage the financial aspects of their business.” Clavel Aves, Area Manager of FCCT said “clients no longer need to spend time and money to physically visit the MFI office … Mobile banking is secure, it eliminates the worries and anxieties of clients from robbery and hold-ups and provides services affordably and conveniently.”

In Africa, where CARE has been cultivating a savings-led microfinance movement based on Village and Savings Loans Associations (VSLAs) since 1991, M-Banking has been at the heart of a mobile revolution there. When M-Pesa (a mobile phone payment service) was launched by Safaricom in Kenya five years ago, its growth and popularity spread rapidly with over 20,000 people registering with the service in the first month alone. Today 15 million Kenyans use M-Pesa to access financial services[1] and in neighbouring Tanzania five million people were registered M-Pesa’s users in 2010. Predominantly used by individuals to make money transfers, most often between urban migrant workers and rural dependents, M-Banking, with help from CARE, is being transformed in some areas to specifically meet the needs of VSLAs by creating group mobile accounts. Since savings collected by VSLA members is stored in a metal cash box, usually in the home of one group member, security is one of the main benefits of using M-Banking for VSLAs. In March this year CARE, Equity Bank and Orange launched an innovative partnership that connects VSLA groups in Kenya to full-service banking through their mobile phones. Through this partnership, VSLA groups are able to open Equity bank accounts and access services such as interest-bearing savings accounts, withdrawal and payment facilities without visiting a physical branch. Helene Gayle, president and CEO of CARE called this “a pioneering partnership that has potential to conveniently and affordably offer high quality retail financial services to millions of previously un-served people across Africa.”

Will M-Banking transform microfinance?

Well it seems in certain countries and in certain regions it already has. For example lendwithcare, through its partnership with SEEDFINANCE, is now funding microentrepreneurs like Henry Bordoquillo and Lemuel Quinones who use Smart Money cards to receive/pay loans and send remittances instead of visiting their local FCCT office. By increasing financial security and the ease with which microfinance clients can access and use financial services, M-Banking is not only providing customers access to a variety of formal financial services but also extending them into more remote and isolated areas – two aims that those of us working in microfinance hope to achieve. M-Banking is also of benefit to the microfinance institutions since transaction costs are reduced and rural penetration rates are improved. Indeed, M-Banking could be the innovative answer to the microfinance conundrum: how can we affordably expand microfinance to those that most need it – the poor and the isolated?

However, like all things designed to help the most vulnerable in our societies, these things need to be set-up and adopted with care. There have already been a number of challenges identified with M-Banking, most notably that mobile money agents are experiencing cash flow difficulties and both agents and customers complain that there is often not enough cash to meet their needs/demands. Cash management challenges that are even harder to overcome in more remote areas. Although popular, M-Banking facilities have not succeeded in reaching those most at need. Gautam Ivatury, manager of CGAP’s Technology Program said after publishing a report on the early experiences of mobile banking in 2008 that: “Globally, we estimate that fewer than one in ten mobile phone banking customers are poor, new to banking, or doing more than payments and transfers.”

It seems to me that trust is an important barrier that needs to be overcome if mobile banking’s potential is to be truly realised. And trust is something, quite rightly, that takes a while to achieve, especially when working in poor and vulnerable communities. However, the potential of mobile banking to transform microfinance in terms of its cost and outreach is exciting and I for one will most definitely be watching this space …

By Nancy Thomas, assistant at lendwithcare.org  

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[1] http://www.thinkm-pesa.com/2012/03/how-m-pesa-is-transforming-kenyas.html