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Microfinance in USA and Norway

Microfinance in USA and Norway. Some reflections around findings from fieldwork in USA 2-10 April 2012 By Unni Beate Sekkesæter, PhD Fellow, CSE, RUC. Case studies with fieldwork in 2001/2002 and 2012.

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Microfinance in USA and Norway

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  1. Microfinance in USA and Norway Some reflections around findings from fieldwork in USA 2-10 April 2012 By Unni Beate Sekkesæter, PhD Fellow, CSE, RUC

  2. Case studies with fieldwork in 2001/2002 and 2012 • Participation in microfinance programmes in the context of United states, United Kingdom and norway • A Stakeholder case study analysis of the effectiveness of Peer Group Lending Strategies based on the Grameen Bank model • Four levels of analysis: • Individualmicroentrepreneur: survey and focusgroup • Peer group: Levelofparticipation, buildingofsocialcapital • Management/organisation: Focusgrous, interviews • Society/context: Politicalstanding, welfarecontext, regulations (CRA, tax regime)

  3. Research questions • How have various programme stakeholders participated in the formation of programme strategies of peer lending programmes over time? Does their participation have any consequences for adaptation of the model to the local context and the outcome of the programme? • To what extent have the programme outcomes enabled changes in level of social capital and socio-economic changes in the businesses and lives of the programme customers? • What is the motivation and rationality behind indirect and direct investment in micro-lending from the perspective of donors/financing partners, and how do they see their role and rationale for being involved? • How do the various stakeholders judge peer group lending, compared with individual lending and bank lending to micro-businesses? • What kind of strategic choices has led to more or less success with peer lending in industrialises economies?

  4. Access: Securedbecauseofbeing a practitioner: using a worm’seye. • Access throughcolleagues • Interest from thesector • Followresearchthrough my work • Conciousof my role in theresearch: biased? Reflections/method: Usesecondary data onlyrelated to my own program

  5. Connie Evans, CEO of Association for Enterprise Opportunity • Her driving force: • “I have to admit that to a great degree it is the influence of my mother – I am the product of a self employed mother, I am the youngest of four, and we ran a catering business from home. She was a widow and she put us through school and through college, running a business. She had a high school education, so it was apparent to me that you take care of your livelihood from using your own talent to operate a business. So I think for me that’s been the driving force and knowing that everybody should have the opportunity to do that. All people need is opportunity and a few tools, and they can create amazing opportunities for themselves and their families and the community.”

  6. More statements by Connie Evans • CLINTON: • Both President Clinton and Mrs. Clinton talked about microenterprise in the US. And so as they were also instrumental starting one of the first programs in Arkansas, they had a real understanding and affinity for microenterprise development, not just in the international context but in the US context. It was really great, and we saw funding flourish, we saw a lot of activity that was really, really great. • BUSH: • So then you move forward to the Bush era, and in the 8 years of George W. Bush it was a constant fight for funding for microenterprise development. I think the whole approach during the Bush days was a difficult one that was challenging and it was just trying to make sure programs stayd funded.

  7. InfluenceofObamaadministration • OBAMA: • Now in the first term of the Obama administration it has been kind of a mixed bag. • It increased the definition of a micro loan from $ 35 000 to 50 000 • it created some other new programming, and so it was more supportive. • It puts more money – it keeps the Micro loan Fund pretty much at the same level. • But what we have not been able to do is to get the attention of the President and the White House to really talk about and embrace micro business. • They talk about micro enterprise in the international context and they focus on things like Start Up America which is focused on high growth high tech businesses

  8. Peer Group Lending • Project Enterprise, New York: Catherine Barnett comment: • We did a series of focus groups with our membership to find out what they like and did not like with the program and to see what new products and services they wanted. • Decided to begin offering access to market components in addition to the peer lending and business training • decided to introduce a program where we are able to assist our members to better market themselves, identify new central customers for their businesses. • Actually we won an award from the Association for Enterprise Opportunity, AEO for that work. • Changed our loan program: • two new lending programs in addition to the Grameen Style peer program • introduced two other tracks: FAST TRACK, more along the old Working Capital model for businesses that are already generating some income • also an individual loan program. • We continue the Peer Classic, but marketing it more for the startup and informal businesses.

  9. Loan Situation 2001 - 2012 • First State CommunityLoan Fund, Delaware (YWCA Captital Works): • Mission drift in Delaware – caused by financialcrisis • Muchbiggerloansnow: • 2001: 64 loans - averageloan $ 1 335 • 2011: 8 loans - averageloan $ 18 188 • Less accesst to funding from banks pushedus to make bigger more safe loans to fewer persons: mission drift. • Closeddownthe Capital Works program in 2002, but still have partnershipwith YWCA: Delaware Center for Women’sEntrepreneurship. 1 loan last year. • Project Enterprise, Harlem and Brooklyn, New York: • No mission drift: same focus/targetgroup as always • Financial crisis: huge increase in lending as almostnootherskeptonlending. • 2001: 18 loans – average: $ 1442 • 2008-10: 80-90 loans per year. Averageloan: $ 2674 • Later: repayment problems up to 40% as businesseshadlow turnover. • Now: veryclosefollow up makes repaymentbetter, a bit more funding and bettersituation, but still a struggle to survive.

  10. Model used measuring group influence

  11. Case: Hordaland Network CreditSimilar to cases in UK: Weetu Full Circle Fund and US • A Local .Women’s Microfinance Programme in Hordaland County,Norway –was part of the Equal Credit EU project • Case study looked into these issues: • The member/business profile • The programme outcome and access to business finance • Stakeholder relations • Survey questionnaire (29 responses) = 50% of programme participants • 5 focus groups • 7 in depth interviews with employees • Cost per client: € 9000

  12. Mikrofinans Norge Type of business Hordaland

  13. MFN Clientperceptionsof services

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