Fabio Sofia and Daniel von Moltke, Symbiotics
I think access to capital is fundamental for any person and any business. But actually in certain countries today, especially in Africa, 80% of people don’t have access to formal finance.
If you now take on the value chain from the micro entrepreneur to the investor, naturally through microfinance funds, the investor suddenly has access to the growth of this person. You could say the growth of these people is quite sustainable because it’s natural.
You can imagine that when you have an investor here in Geneva investing $1 million, which is a lot for a private company but not necessarily for an institutional investor.
If you invest $1 million, that gets access to about 10,000 people in remote areas in developing countries, because we have an average $1,000 loan. These people get a sustainable access to capital which truly supports productivity at their level, so it’s very healthy.
Historically, microfinance was used as a development tool by agencies and the story was about how to help women improve their lives and independence. And by supporting women, it is proven that they are good repayers, in fact they typically pay much better than men.
Culturally, women tend to control and manage the family budget while the man brings back some money but also uses the money for his own consumption habits.
Microfinance is often considered as a way to empower women in emerging markets.
If you look at the Unctad World Investment Report 2014, for example, the total investment needed to achieve the UN Sustainable Development Goals (SDGs), which target 2030, is estimated at $3.9 trillion per annum.
In comparison, Overseas Development Assistance accounts for only approx. $140 billion per annum. This implies that the private sector has an immensely important role to play in overcoming this financing and investment gap to achieve the SDGs.