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Your Micro-Business Partners. MIT Mobile Monday Presentation. November 2009. Executive Summary. The Problem :Microfinance loans are often misused, causing borrowers to fall into a cycle of debt - PowerPoint PPT Presentation
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MIT Mobile Monday PresentationNovember 2009
Your Micro-Business Partners
Executive Summary
The Problem : Microfinance loans are often misused, causing borrowers to fall into a cycle of debt
The Solution : Lending a franchise or a business in a box reduces this risk while providing new skills to the franchisee
The Market : With high poverty rate and high mobile penetration, Indonesia is the ideal place for a mobile phone franchise
What we do: We deploy business kits that enable franchisees to sell electronic airtime / “minutes”
Our progress: We have created over 600 profitable franchisees
What’s next: We plan on leveraging our network to deploy other services such as healthcare, education, retail, and agriculture
Microfinance loans are often misused, causing borrowersto fall into a cycle of debt
?
What happens after cash is disbursed?
Traditional businesses
Consumption
Gambling, theft, etc
Potential problems
No new skills gained
Potential to fall into a cycle of debt
Unnecessary interest payments
The Problem
Lending a franchise or a business in a box reduces loan misuse while providing new skills to the franchisee
Donors
• Donate money to sustain livelihoods
Microfinance
• Lend money to start a business
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Microfranchise
The Solution
• Lend cash to start a business
• Lend a business to generate money
With a high poverty incidence and high mobile penetration, Indonesia is an ideal market for a mobile phone franchise
Source: World Bank, CIA database
120 million out of 250 million Indonesians live with under $2 per day
140 million people are mobile phone subscribers
Incidence of Poverty in Indonesia Operator Millions of Subscribers
The Market
“Business in a Box”
CDMA phone with ability to sell electronic airtime for all 11
mobile operators in the market
*Materials provided by Bakrie Telecom
Operating manual, transaction log, price list,
other tools
Promotional Banners and Flyers
Ruma deploys business kits that enable franchisees to sell electronic airtime / “minutes”
What we do
Ruma receives revenue from the sale of the kit and airtime
• Reduces the risk of misuse of funds
• Borrower gains new skills
• No unnecessary interest
• Franchised business provides more stable income
$
Borrower sells prepaid airtime
• MFI leases kitsRuma trains borrower
Ruma sells franchise kits
$Profits used to repay loans
Ruma obtains a margin for each airtime sales
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BenefitsHow it works
What we do
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Name: Ibu Yanti
Location: Remote Area in West Java, Indonesia
Primary Business: Small convenience stand (warung)
Her story:• Ibu Yanti & her husband Pak Tisman own & operate a
warung with ~20 products and vegetable stand• Ibu Yanti & Pak Tisman have a five year old daughter• The technology business delivers steadiest cash flow of
all lines of business, providing ~$1/day in extra income on a consistent basis (50% overall increase)
• Additional income is used to expand inventory
$ 2.37 $ 3.71 $ 4.08 $5.70
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Estimated profit* (USD / week)
Week
Franchisees believe that the biggest benefit is the steady cash flow to supplement their existing business
What we do
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Achievements Secured funding from Grameen and Qualcomm Created more than 600 new micro-businesses 100% profitability for micro-business owners 97% of micro-business owners are women 68% of micro-business owners were below the
World Bank poverty line datum of $2.50/day when they adopted the business
Priorities Moving Forward Financial: empower 5,000 of the poor and
poorest by August 2011 to reach financial sustainability as a social enterprise
Social: reach target of 70% below poverty line Deploy new franchise product line by Q4 2010
Ruma has created over 600 profitable franchisees
How we’re doing
Agriculture and fisheries
• Connect farmers with buyers and suppliers
• Sell low availability products
• Give weather information
Trade and distribution
• Build a franchised village shop
• Create POS visibility
• Create a mobile marketplace
Medical products & services
• Deliver basic medical products
• Build Teledoctor service
• Integrated medical alert system
Education and training
• Sell writing utensils, books
• Use the phone as interactive training tool
• Provide basic information services
We plan to deploy new business kits in Q2 2010
What’s next
Take aways
Microfinance is a good proven tool to alleviate poverty, but it can be improved
The phone is the most feasible platform to enable affordable delivery of products and services to low income households
Standardizing/Franchising increases the probability that a micro-business will be profitable
If you have ideas, want to help, or have money, email me at : [email protected]
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