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Harvard Summer School 2010: International Business Team 8 Final Project: Micro-Lending By:

MICRO-LENDING. Harvard Summer School 2010: International Business Team 8 Final Project: Micro-Lending By: Austin Cunningham (Suwanee, USA) Johannes Georg Matthias (Berlin, Germany) Sohum Mehta (Gaborone, Botswana) Rahil Pujara (Rajkot, India) Xiaoya Li (China). Microfinance Botswana.

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Harvard Summer School 2010: International Business Team 8 Final Project: Micro-Lending By:

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  1. MICRO-LENDING Harvard Summer School 2010: International Business Team 8 Final Project: Micro-Lending By: Austin Cunningham (Suwanee, USA) Johannes Georg Matthias (Berlin, Germany) Sohum Mehta (Gaborone, Botswana) Rahil Pujara (Rajkot, India) Xiaoya Li (China) Microfinance Botswana

  2. Goal • Goal: provide micro-lending solutions to the working class of Botswana. • Loans vs. collateral • These loans will be secured against future salaries and the interest will first be deducted before being paid to the clients Microfinance Botswana

  3. Product loans of between USD $80 –USD $500 with a term between 1 to 3months. Microfinance Botswana

  4. Target Market • working class Botswana • citizen looking for a financial solution to maintain their lifestyle. • These people are employed in lower-management of manual labor positions with a monthly salary of $50-1,000. • The mining industry currently employees over 50,000 people providing a large base of potential clients as mines are labor intensive. • 614,000 potential clients nationally • 400,000 concentrated in 3 urban areas • Employed in Current Position Over 1 Year • Currently 10 B2B & +2,000 client introductions • Conversion growth rate = 2% of sales Microfinance Botswana

  5. Market Description • total population of Botswana is 1.9 million. • 614,000 are of working age between 15-64 years old. • unemployment rate of only 7.5%, placing most of the people in the working class. • Delta Financial operates from Gaborone, Botswana targeting most companies’ headquarters. As the b2b contracts can only be signed at a high management level. The geographic area of service includes the cities of: • Gaborone - 199,600 • Francistown - 89,100 • Molepolole (Semi Urban Village) - 58,600 • Selibe Phikwe (Town) - 53,500 • Maun (Semi Urban Village) - 47,000 Microfinance Botswana

  6. Target Customers • The business Delta Financial targets to provide employee-financing solutions will have the following characteristics: • Over 100 employees • Monthly Payroll over USD$ 10,000 • Accurate and Full Data on all employees • Compliant with local work authorization regulations • Willing to enter contractual agreement with Delta Financial Microfinance Botswana

  7. Target clients • The individual target clients at these companies will have these characteristics: • Monthly Salary between USD$50-USD$1,000 • Employed in current position for over 6 months • Literate and able to enter a legally binding contract Microfinance Botswana

  8. Risks • Adoption of a B2B model by Letshego, which would cannibalize our competitive position. • Bankruptcy of the B2B companies • The barriers to entry are increasing as the government begins to regulate the industry. Microfinance Botswana

  9. Marketing and Sales Strategy • work-sight presentations • Miss Botswana 2009 • The product is customized rather than standardized Microfinance Botswana

  10. The Competition • competitor in the Pay-Day Lending Industry • Letshego (90%) • Blue Financial Services (7%) • Other (3%; fragmented amongst 10+ companies) • commercial banking infrastructure is not available to the general public (our target market) • Traditional banks like UK based Barclays, have strict lending procedures. • There are a select few, who purchase vehicles, homes that can receive financing from the traditional institutions. Microfinance Botswana

  11. Letshego is positioned as the strongest competition with a loan book of $20million and a 90% domestic market share. Microfinance Botswana

  12. Advantages Over Competition • Lower Default Rate • Lower Interest Rate • B2B connections • Direct Client Introductions through the B2B connections • Advanced Internal Credit Rating System through our B2B connections • More Flexibility In Financing Instruments • Minimal Infrastructure expenditures • Open end funds, Investment Fund, stock corporation • On the spot – Instant Loans • We excel at establishing strong Microfinance Botswana

  13. Microfinance Botswana

  14. Company Structure Board of Advisors Microfinance Botswana

  15. Long Term Outlook • Implement e-Cash Solutions • Pre-paid Debit Cards • Minimal Cash Control • Roll – Up Micro-Loans into CDOs • Via Internal Credit Rating System • Provide Debt instruments to finance corporate acquisitions Microfinance Botswana

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