Workshop 2 New products and services to accompany your growth

1. Workshop 2 New products and services to accompany your growth Andrea Limone, PerMicro – 4 of June - Milan

2. Workshop Outline 0 – PerMicro description I - Introduction – New products and services Triangle of microfinance Microcredit and Microfinance New Product Development II – Presentation of our speakers · Riccardo Aguglia – Fair Finance · Pierre Matheus – Adie · Iulian Grigore Manol - Fair Credit House IFN III - Audience discussion IV - Recommendations and Conclusion

3. PerMicro - Why We were born to assist side by side, with competence and enthusiasm, who decided to start… …An enterprise …A training session …A private or family path

4. PerMicro – Who we are PerMicro is the first italian microcredit provider operating nationwide and putting together social goals with business management, technical skills and financial knowledge. PerMicro S.p.A. is a Non Banking Financial Intermediary (authorized ex. art. 106 T.U.B. by Banca d'Italia) created in Turin in 2007 and specialized in microfinance products. PerMicro would be: • A point of reference for Third Sector: cooperative society, associations, ONG • A partner with public and private institutions involved in microcredit projects for local development • PerMicro’s missionis to increase the financial inclusion of weaker social classes, especially migrants, by delivering microcredit tounbankable people, to start or develop small business and to improve life conditions.

5. PerMicro – Partners Oltre Venture It’s the first social venture capital society in Italy, born to develop new social business, sustainable and able to reply to increasing demand of services and social connections from social outcast people. www.oltreventure.com Fondazione Paideia Work to help disadvantaged children by promoting new initiatives and giving concrete support to those who are involved in this very difficult work on a daily basis. www.fondazionepaideia.it Ubi Banca is the fifth largest Italian banking Group in terms of branches with a market share of approximately 6% and a significant presence in the wealthiest areas of the country. UBI Banca is a cooperative Group, listed on the Milan Stock Exchange and included in the S&P/MIB index. www.ubibanca.it Fondazione Sviluppo e Crescita – CRT is a foundation established in July 2007 that, throughout venture philanthropy acts, contributes to the development and growth of Fondazione CRT reference area, matching traditional ways of working of Fondazione CRT with typical financial market instruments. www.fondazionecrt.it

6. PerMicro – Products Microcredit Business • Mission Start or develop micro enterprises of people without guarantees to accede to traditional banking credit • Who Italian and foreign people with: - A business idea - Entrepreneurial capacities - A Social network • How In addition to microcredit we provide support to create a business plan and to manage and develop the activity • Conditions - Amount: up to 15.000 euros - Length: up to 8 years - Rate and charge: 9-12%

7. PerMicro – Products Microcredit Family • Mission Serve pressing needs (home, health, learning). • Who - members, employees and voluntaries of cooperative societies - people left out of credit system but integrated in a social network • How Client support and quick answer to primary needs • Conditions - Amount: up to 15.000 euro - Length: up to 5 years - Rate and charge: 8,5-10,5%

8. PerMicro – New products In processing... Customer oriented ‏ - Mortgage • Microinsurances for specific needs • Legal advice for immigrants - Other services for immigrants (telephone cards)‏ Public oriented • Services for local administrations • Announcements for micro and small enterprises

9. PerMicro – Methodology PerMicro’s network is composed by associations, ethnic communities, development agencies, parishes and other social groups. The network connects PerMicro with clients, granting for their seriousness and mentoring them through their business. PerMicro Evaluation and selection Network Pre-screening Client Client Client Client Client

10. PerMicro – Methodology (2)‏ Net credit is an operating model based on the trust between PerMicro and local networks. Social network is involved: FIRST Contact and interest testing, sign of an agreement with PerMicro, information and reports to the associated, pre-screening and connection between PerMicro and applicants. IN PROGRESS Sign of the “moral guarantee”. AFTER Monitoring of business progress and refunding plan. Two good reasons make the debt refunfing the primary interest of the social network: 1_ if the associated waive his debt, will be increased the economical treatments of his network for the next opportunities; 2_ if not, all the next microcredit will be given to an associated of that network with more difficulties/costs.

11. PerMicro - Where

12. PerMicro - Results y. 2008

13. PerMicro - Results

14. PerMicro - Results

15. PerMicro - Results

16. Introduction Triangle of microfinance Outreach Sustainability Impact Zeller, M. & Meyer, R. - 2002 Simultaneously: · Outreach - reaching the poor · Financial sustainability - meeting operating and financial costs over the long term · Impact - having discernible effect upon clients' quality of life Argues that tradeoffs are sometimes inevitable, but even so, synergies among the three make the concept valuable because if clients perceive the MFI to be sustainable, more of them will seek its services.

17. Sustainability (Self sufficiency)‏ • Two different ways to consider sustainability: Operational revenues Operational costs Operational self sufficiency Measures the ability of the organisation to recover its operating expenses, explicit financial costs and the provision for loan losses. Is not considered the origin and costs of financial funds Operational revenues Adjusted operational costs Financial self sufficiency: Incorporates the opportunity cost of funds by accounting for inflation and market rate of interest for the total funding requirement.

18. Impact Impact evaluation in PerMicro: • Income • Employment • Banking • House • Health • Hobbies and Sports • Education • Transportation

19. Outreach Six aspects of outreach: • Worth • Cost • Depth poverty approach • Breadth • Length self-sustainability approach • Scope M.Schreiner 2002

20. Outreach (2)‏ Worth “...their willingness to pay” For loans, worth increase as the terms of the contracts are more closely matched to borrower demand. Cost Sum of price costs and transaction costs for clients. Depth The value that society attaches to net gain of a given client > poverty is a good proxy of depth, if society has preference for the poor (income). Indirect proxies: sex, location, education, ethnicity...

21. Outreach (3)‏ • Breadth Number of clients. Length Time frame of the supply of microfinance. • Scope Number of types of financial contracts (products) offered.

22. Introduction Microcredit and Microfinance Microfinance MicroInsurance MicroCredit MicroSaving MicroHousing Financial assistance

23. Introduction New Product Development • What • ...satisfies customer's need. • Core, actual and argumented product. • When • ...once the MFI has established itself as a stable and viable player in the market. • How • Four phases... see next pages. • Nhu-An Tran, 2000

24. Introduction New Product Development Phase 1: Identification and Preparation Phase 2: Design and Development Phase 3: Pilot Test Phase 4: Launch and Commercialization

25. Our speakers... • Riccardo Aguglia – Fair Finance • · Pierre Matheus – Adie • · Iulian Grigore Manol - Fair Credit House IFN • Questions: • ·Which are your current products/services? • ·Why did the organizations decide to start new services? • ·Why did they select those specific services? On which ground? • ·How did they introduce such services? • ·How have their clients been involved in the start of such services? • ·What are the main results so far? • ·What has been the impact of such services on their microcredit activities? • ·What are the lessons learnt? • ·What are the perspectives?