Ethical Finance Forum
Country: Ireland
Organization: Ethical Finance Forum
2) Sector of activity: Financial Services
3) Description of your products or services: The idea is to provide access to financial services to the people of the developing world, using the resources of 'people on the street' in the developed world in co-ordination with the public and civil society sectors of developing and developed nations. People on the street in the developed world will have the chance to invest relatively small amounts of money which will be pooled and invested in sustainable microfinance institutions (MFIs). This private investment is to be complemented by public sector involvement/invevstment(targeted ODA from developed nations and enabling, complmentary regulatory environments in the developing nations)and civil society investment (building up capacity, helping with start-up costs, technical assistance etc.). The provision of financial services to the poor would allow them the opportunity to plan their lives better, to be able to have a place to save, borrow, get insurance, a pension, a mortgage, etc. the things that we in the developed world take for granted, but without which we would not be able to live our lives the way we have come to expect. Imagine not being able to have a safe place to store your savings, what about not being able to get insurance for your home or yourself in case of sickness, or not being able to get a loan to buy your home in the first place. This idea is about motivating, mobilising, and energising people that we can and should play a more active role to help people help themselves.
4) Description of the operational model: When in production the project would operate along the lines of a Global Public Good (as outlinied in the UNDPs, 'Providing Global Public goods, Managing Globalization')of access to financial services. Ideally a financial institution in developed nations (for practical purposes the credit union movement is being targeted in Ireland)would collect and pool all investments. These would then be invested in various microfinance investment funds, depending on investment criteria. The money would be invested in MFIs and then repaid with interest. The investors then collect their investment and return from their local financial institution. With the credit union ethos being helping people to help themselves, it is perfectly suited to the idea, and indeed the head of the credit union movement has expressed great interest in the project. Ideally the government would recognise and promote the project. As with the Dutch and Canadian governments there could be preferential tax treatment for such a fund, due to its unique target market (perhaps tax-deductible investment, with a limit and a tax-free return). This could then be complemented by targeted ODA and by the government encouraging NGOs to also become involved, again specifically targeting the provision of financial services in developing nations. Marketing in the developed world would involve promoting the idea of investing in the worlds poor, offering them the chance to help themselves, while also making money yourself
5) Description of the financial model: Poor people will pay for the services provided. The more efficient and competitive the microfinance market is then the better service and lower prices for these services. Many of the worlds' poor would gladly pay for safe storage of their money, so getting people to pay is not hard, they are getting a service which they did not have before, which they desperately need , and therefore would be happy to pay for. The entire idea is inherently sustainable and indeed could be very profitable, however the idea I have envisaged is that the agency running the investment would only take enough to cover expenses and promote and expand the idea. It is not about accumulating money for the middlemen, but rather about reducing the level of agency and the amount of agents. As with similar models a small fee could be charged to the investor and there would also be many possibilites created by this unique global-local link, such as various ICT ideas, travel, complementary trade etc. Always also, the idea is to keep reaching down into the market to attempt to find ways and means of providing financial services to the poorest of the poor, forever looking at ways to provide services to these people
Client fees represent this approximate percentage of operational budget: 50%
6) Key operational partnership: I have bought a sahre in www.blueorchard.ch and am in the process of giving it away to the people of the town where I live through the local credit union. I have made a presentaion to many credit unions and they are supportive at this stage. Also I have spoken to the head of the national credit union movement and he is supportive. I am also talking to various investment funds and they have expressed interest in trying to get the idea going. Regularly I deal with the various official agencies here in Ireland from the department of finance, to the revenue commissioners, and the financial regulator about the idea and how to get it going considering the various regulations etc. Various interantional NGOs have also expressed an interest, as have a few economic think tanks. Various international banks involved in SRI and microfinance have also expressed an interest and I am working with some on designing a product that would fulfil various legal criteria. Also the umbrella group for Irish NGOs has expressed an interest. While working abroad I got the UN to make a short clip about the project and various media outlets in Ireland have been aproached and are showing an interest.
7) Current outreach:
We are at the Start Up stage. At this stage I have set up a not-for-profit company in Ireland to use as the legal vehicle. I am in the process of legally giving the share away. The next phase is to design a product or service that meets the requirements laid down by the various laws and regulations. Obviously various professionals need to become invovled and I am working with various groups about getting them to do some basic background work and research. I have been invited to various conferences and seminars and would like to have more progress to report. Many people in the industry I have known for a few years and many have been supportive througout this time, always with the invitation to ask for help should I need it. Scaling up is something of a catch-22 at present. I need resources to scale up and wont attract resources without a more formal pilot project, the legal minefield alone is quite formidable.
How many clients have benefited from your product/service in total? Over the last year? The one share that I bought is invested in 49 institutions in 21 countries, so in theory and practice every member of each institution has benefitted, although in a small way. The idea is to attract money from the public and then the number of clients benefiting would be enormous, at present the 49 institutions would have over 150, 000 members and most of them with families. The idea is that the fund would keep lending out money and so the number would increase over time, with efficiency and competitiveness improving. Also the number of investors; if just my local credit union accepted the share, there would be over 8, 000 clinets in Ireland. There are over 2, 000, 000 credit union members in Ireland. The limit as to how many people this could help in the developing world is just about limitless, with over 2 billion people without access to financial services.
What percentage of your clients is below the poverty line ($2 per day)? 50% This can vary, as it is the number of sustainable MFIs is
small, but growing very quickly. The idea is to accelerate
this process with public, private, and civil society
investment and commitment. As previuosly mentioned the idea
is to drive down and constantly look for ways of providing
financial services to the poorest of the poor.
Much research is focused on this area and this would be
supported and promoted should the idea take off. It is
about combining the will and financial resources of the
people of the developed world to work together with the poor
to ensure that they get access to the services that they
require.
Ideally all my clients (borrowers) would earn under $2 per
day, with more traditional financial service providers also
reaching down to serve the not-so poor. It is about
financial services provision for all.
What is the order of magnitude of the potential demand for your products or services? Which
other low-income groups, countries or regions could benefit from it? Try to quantify (number
of clients, market size in currency):
There are literally billions of people without access to financial services who would use them if priced reasonably and working properly. I am trying to get this going in Ireland, which is only one relatively small country, if such a fund could be created internationally then enormous resources could be brought to bear. As mentioned the fund that I have been dealing with operates in 21 countries and is alway looking for other institutions to invest in, so the potential is limitless. Perversely poverty is a boom industry. Wherever there are people without access to financial services, they should be seen as unserved potential customers, an untapped market, rather than people looking for handouts. This after all, is about people helping themselves. It may debunk myths about the poor not beig able to handle money, and also that dealing with the poor and money is inherently exploitative.
8) Scale-up strategy:
How many low-income individuals do you plan to benefit in three years from now? How are you planning to scale up or replicate your solution? What are the major constraints to scale up?
The idea is to benefit all the clients of MFIs that have been invested in by microfinance investment funds, and then to reach out to those that have not and finding ways of getting to them. If the idea gets going in Ireland then perhaps other countries may look at the idea and ideally replicate it. Having designed the idea as a Global Public Good I have written out the academic theory behind it all and would ideally like to see the UN/World Bank take over the running of the overall fund as it scales up country by country. Eventually it may require some form of interantional treay that countries could sign up to, in order to commit themselves to the principles of the idea as it is now, to provide efficient, effective financial services to the poor, and offer them the chance to help themselves. If designed and implemented properly there is no reason why any interest group should object.
Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:
There is no real such thing as pro bono work in Ireland, as such in-kind help from corporations would be most benefical at this point. I need the help of accountants, investment bankers, promotional people, solicitors (lawyers) and a plethora of other professionals. Since I have been developing this idea, I have had to talk to public, private, and civil society actors, each of which has their own way of doing business and operate sometimes in very different environments. As has been one of the preceptual problems, 'the bankers think that I am a tree-huggin hippy and the hippies think that I am a banker', so they all have more than enough reson not to engage with me, also I am feeling a little schizophrenic having to don many different hats in any day, from public servant, to private banker to NGO worker, with each of their ideas, ethos, experience, innate biases and prejudices etc.
9) The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?
I have set up a not-for-profit company specifically for the purpose of promoting the idea. In this way should anyone wish to become involved they can, whether it means doing some pro bono work or donating money to the company in order to pursue its stated goal. The initiative started when I realised years ago that the credit union philosophy of helping people to help themselves could be expanded internationally. I have since then researched and studied the development and growth of the microfinance industry and have adapted my idea depending on realities and the evolution of the industry. Also microfinance investment funds are springing up regularly, but none have as yet targeted the general public for investment funds, which I think offers huge potential benefits for all invovled. The various investment funds wholeheartedly agree with this. 'End-game', my idea has been refered to as
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10) On the mosaic diagram, which of these factors is the primary focus of your work?
- Factor: High volume business based on small (even tiny) individual transactions
- Principle: Leverage the power of communities as both consumers and producers
- Other: As the overall idea could eventually evolve into a Global Public Good then the possibilites are limitless. the demonstration effect of it getting off the ground could have a dramatic effect. The aim regarding this is that ordinary people would become motivated to help, they would be by simply investing in the fund, they would also develop links with the developing world, rubbish the mis/preconceptions about the poor, realise that the poor are looking for partners in their development, rather than just handouts, that they are people who yearn respect and an opportunity to help themselves.
Contact Information:
Name: Garrett Wyse - Director
Organization: Ethical Finance Forum
Mailing address: ''Lima'', Turkey Road, Tramore , Co. Waterford
Country: Ireland
Email: garrettwyse@ireland.com
Tel: 00-353-87-653 6002
Website: www.garrettwyse.com
Organization's legal status: Not-for-profit company limited by guarantee
Number of Employees: 0
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