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2013 RI CONVENTION
MICROFINANCE 101
THE BASICS
Jim LouttitPresident Elect, Rotarian Action Group for Microfinance and Community Development (RAGM)
2013 RI CONVENTION
• Who is Rotarian Group for Microfinance and Community Development (RAGM)
• What is Microfinance• Amparo Buendia Hernandez• Kim Lorenz• Candace Embling• Q & A
AGENDA
2013 RI CONVENTION
• Previously Rotarian Action Group for Microcredit
• Recent name change to Rotarian Action Group for Microfinance and Community Development
• Assist Clubs and Districts to participate in effective microfinance projects
WHO IS RAGM
2013 RI CONVENTION
• Operates in accordance with Rotary International policy
• Work with leaders in Rotary and MFIs to build stronger partnerships to support Economic and Community Development Projects
• RAGM Members live around the world representing Rotary Clubs and projects globally
WHO IS RAGM
2013 RI CONVENTION
• Umbrella providing financial services to low-income consumers
• Traditionally lack access to banking and related services:
- Loans - Savings - Insurance - Training
WHAT IS MICROFINANCE
2013 RI CONVENTION
• Individuals, small groups of five to six people or even a larger community group
• Africa, India, Central & South America
WHAT IS MICROFINANCE
2013 RI CONVENTION
MF COMMUNITY GROUP
2013 RI CONVENTION
• 1500s: 1st pawn shop created by Catholic Church
• 1700s: Irish Loan Fund System started – by 1840’s, over 300 funds running within Ireland
• 1800s: Financial Cooperatives started to develop in UK & Europe
ORIGINS OF MICROFINANCE
2013 RI CONVENTION
• 1900s: Latin America adaptations
• 1950-1970: State-Owned Development Finance Institutions emerged
• 1970s: Experimental Microcredit Programs – ACCION in Venezuela, Grameen Bank in Bangladesh
• 1990s: Microcredit evolves to Microfinance
ORIGINS OF MICROFINANCE
2013 RI CONVENTION
• Traditionally, banks not providing financial services to clients with little or no income
• Costs of managing client accounts
• Clients have little or no assets for collateral
• Last resort is turning to local money lenders paying high interest rates
WHY MICROFINANCE
2013 RI CONVENTION
• Started by Muhammad Yunus, Bangladeshi economist and professor
• Nobel Peace Prize winners in 2006 for their efforts to create economic and social development
GRAMEEN BANK
2013 RI CONVENTION
PROFESSOR YUNUS
2013 RI CONVENTION
• First loan venture was US$27 to 42 women
• Purpose was to buy bamboo to make furniture
• After making and selling the furniture, each was able to repay their portion of the loan and make a little profit
GRAMEEN BANK
2013 RI CONVENTION
• Today, one of many financial operations involved in microcredit lending
• Loan portfolio now over US$9 billion
• Borrowers number over 8 million
• 97% of their clients are women
GRAMEEN BANK
2013 RI CONVENTION
PROUD CLIENTS
2013 RI CONVENTION
• Rotarian Action Group for Microfinance and Community Development (RAGM)
• District Microfinance Committees / Task Forces
• Others – Club Projects, Conferences, Project Fairs, Microfinance Institutions
ROTARY`S INVOLVEMENT
2013 RI CONVENTION
QUESTIONS?