MBA 294.6 – Introduction to Microfinance (1 credit)

Fall B (10/27 – 12/8) Monday, 4-6PM PST

Faculty Sponsor: Sean Foote (sfoote@labrador.com)

Overview of the Course

The course explores why and how microfinance operations have grown to provide financial services to poor and low-income people on a sustainable basis. The class brings together advice and best practices from successful practitioners and institutions around the world as well as new technology startups targeting the industry.  This course will provide students with an excellent introduction to microfinance as an important development effort in the war against poverty, and it will also serve as an excellent forum to learn about current challenges and debates in the world of microfinance.

Class Format

* Faculty and student-led case discussions

* Expert Guest Speakers from various microfinance fields

* Simulcast to over 10 business school campuses around the United States (including Michigan, Columbia, UCLA, Tuck, Yale, London School of Economics and Chicago)

Confirmed and Tentative Speakers

Monica Brand – Vice President, ACCION International

Chris Dunford – President, Freedom from Hunger

Eric Weaver – Founder, Lenders for Community Development

Elizabeth Funk,  Chairman of the Board, Unitus

Kendall Mau – CFO and COO, Prisma Microfinance

Jessica Jackie Flannery – Founder, Kiva

Tracey Pettingill Turner– Founder, Silicon Valley Microfinance Network and Microplace

Elizabeth Littlefield – World Bank, CGAP

$25,000 Microfinance Investment Project

Pending final funding approval, the course will culminate with a final project that will involve the placement of $25,000 in a portfolio of real world microfinance investment opportunities. Students will submit a 3-4 page investment plan detailing specific entities, amounts, and rationale. This investment will actually be made based on the plurality of student’s recommendations.

If you have any questions, please contact : ian_hepworth@mba.berkeley.edu

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Last year’s syllabus (subject to change)

Week 1:  Introduction to Microfinance – 10/27

Lecture:     Introduction to class structure and faculty

Microfinance and the History of informal savings

The major components of Microfinance’s ecosystem

An overview of issues in Microfinance:  gender, impact, alternatives

Speaker:    Elizabeth Funk, Chairman, Unitus

Readings:

1)      Article: “Millions for Millions”, Connie Bruck, The New Yorker, October 30, 2006.  (14 pages) http://www.newyorker.com/archive/2006/10/30/061030fa_fact1

2)      Article: “Perspectives on informal rural finance,” Jochem Zoetelief, SD dimensions, Sept. 1999. (8 pages) http://www.fao.org/sd/ppdirect/ppan0015.htm

3)      Website: CGAP FAQ, http://www.microfinancegateway.org/section/faq

Week 2: Detailed design – group lending and variations, gender – 11/3

Lecture: The reasons for microfinance’s unique structure

Rates of return and cost of money

Individual versus group lending

Speaker:    Kate Lauer, Policy Advisory Consultant, CGAP

Readings:

1)      Article: “Variations in Micro-finance Design : Some Important Variables,” Par Jens REINKE, ADA. http://www.globenet.org/archives/web/2006/www.globenet.org/horizon-local/ada/reinke.html

2)      Website: CGAP, http://www.cgap.org

Week 3:  Managing and working at an MFI – compensation, structure – 11/10

Lecture:     Management challenges of MFIs

What can go wrong within microfinance institutions?

Scale issues, strategy drift, and sustainability

Speaker:    Kendall Mau, CFO and COO, Prisma Microfinance

Readings:

1)      Case Study: “Controlling Growth at a Mexican Microfinance Start-Up,” Cases for Management Education. (4 pages) http://emdapcasebook.iie.org/pdfs/4.3%20Controlling%20Growth%20MFI%20Startup-Mexico.pdf

2)      Article: “Designing Staff Incentive Schemes,” Martin Holtmann, MicroSave Briefing Note #15. (2 pages) http://www.microfinancegateway.org/files/3530_03530.pdf

3)      Website: Prisma Microfinance, http://www.prismamicrofinance.com

Week 4:  Challenges in Microfinance – 11/17

Lecture:     Applicability of entrepreneurship
Gaining liquidity for investors

Country context and variations

Speaker:    Monica Brand, Vice President, ACCION International

Readings:

1)      Article: “Microloan Sharks,” Jonathan Lewis, Stanford Social Innovation Review, Summer 2008. (4 pages) http://www.ssireview.org/articles/entry/microloan_sharks

2)      Article: “A Letter to Our Peers,” Carlos Danel & Carlos Labarthe, Compartamos Banco Website, June 2008. (11 pages) http://microfinancegateway.org/content/article/detail/49967

3)      Article: “Lenders to the Poor Adopt Guidelines,” Elisabeth Malkin, The New York Times, September 26, 2008. (2 pages). http://www.nytimes.com/2008/09/26/business/worldbusiness/26micro.html

4)      Websites: Compartamos Banco, http://compartamos.com, Accion, www.accion.org

Additional Resources:

1)      Video: “Who’s Making Money from Microcredit,” NOW: Enterprising Ideas PBS, September 2007. http://www.pbs.org/now/enterprisingideas/Compartamos.html

2)      Article: “CGAP Reflections on the Compartamos Initial Public Offering,” CGAP, June 2007. (15 pages) http://www.microfinancegateway.org/content/article/detail/41181

Week 5:  Other Microfinance products offering – Beyond Credit  – 11/24

Lecture:     Introduction to products in addition to loans, e.g., savings, insurance, and education

Speaker:    Chris Dunford, President, Freedom from Hunger

Readings:

1)      Article: “Adding Value to Microfinance and to Public Health Education—At the Same Time,” Christopher Dunford, Finance for the Poor. Volume 4, Number 4. December 2003. (4 pages) www.adb.org/documents/periodicals/microfinance/finance_200344.pdf

2)      Article: “Micro-insurance: the next revolution?” Jonathan Morduch, What Have We Learned About Poverty? Oxford University Press, Updated June 1, 2004. www.nyu.edu/projects/morduch/documents/insurance/Micro-insurance_the_Next_Revolution.pdf

3)      Websites: Freedom From Hunger, http://freedomfromhunger.org LeapFrog Investments, http://www.leapfroginvest.com/

Additional Resources:

1)      Article: “Reimagining Microfinance,” Alex Counts, Stanford Social Innovation Review, Summer 2008.

Week 6:  Investing in MFIs –  12/1

Lecture:     Measuring impact

Selecting an investment vehicle and process

Assessing sustainability

Speaker:    Anne Miles, Director of USA office, BlueOrchard Finance USA

Steve Hardgrave, Partner, Gray Ghost Ventures

Readings:

1)      Article: “Evidence of Microfinance’s Contribution to Achieving the Millennium Development Goals,” Christopher Dunford, Global Microcredit Summit, November 12-15, 2006. (16 pages) www.microcreditsummit.org/papers/Workshops/17_Dunford.pdf

2)      Article: “Beyond Good Intentions: Measuring the Social Performance of Microfinance Institutions,” Hashemi, S., Foose, L. & Badawi, S., CGAP, May 2007.  (12 pages) http://microfinancegateway.org/content/article/detail/42300

3)      Website: The Mix Market, www.themixmarket.org, BlueOrchard http://www.blueorchard.org/jahia/Jahia/

Additional Resources:

1)      Article: “Measuring the Impact of Microfinance,” Nathanael Goldberg, Grameen Foundation USA Publication Series, December 2005. (52 pages) www.grameenfoundation.org/pubdownload/dcl/index.php?GFUSA-MicrofinanceImpactWhitepaper.pdf

4)      Article: “Good Practice for Funders of Microfinance,” CGAP, October 2006. (42 pages) http://www.cgap.org/docs/donorguidelines.pdf

5)      Website: CGAP Social Performance Resource Center, http://www.microfinancegateway.com/resource_centers/socialperformance

Week 7: Innovation and entrepreneurship in MFI land – 12/8

Lecture:     New Innovations in Microfinance

Speaker:    Jessica Jackley Flannery, Founder, Kiva or Premal Shah, CEO, Kiva

Readings:

1)      Article: “Kiva Case Study,” Joel Ramirez and Sarah Anderson, UC Berkeley, December 2007. (10 pages) link will be updated

2)      Article: “Microlending for Microbankers,” Jilian Mincer, The Wall Street Journal, March 20, 2008 (2 pages). http://online.wsj.com/article/SB120597508026550479.html?mod=googlenews_wsj

3)      Article: “Extra Helping,” Rob Walker, The New York Times, January 27, 2008. (2 pages) http://www.nytimes.com/2008/01/27/magazine/27wwln-consumed-t.html

4)      Websites: Kiva, www.kiva.org Microplace, www.microplace.com

Additional Resources:

1)      Blog: “Kiva Chronicles,” Matt Flannery, Social Edge. http://www.socialedge.org/blogs/kiva-chronicles

2)      Article: “Uganda: A little goes a long way,” Frontline/World, October 2006. http://www.pbs.org/frontlineworld/stories/uganda601/video_index.html

3)      Video: “Changing the World, One Loan at a Time,” Jenn Brown, The Today Show, August 21, 2007. http://www.msnbc.msn.com/id/20534002/

Final Paper – due 12/8

The final assignment is a 3 to 4 page paper due on 12/8.  Tentatively, the topic is to identify new and innovative investors and practitioners in the quickly growing microfinance industry.  Who is most innovative and why?