Microfinance Banks for the Poor
Families and individuals in developed nations use financial services to build and protect the economic foundation for their families and communities. Many take loans to finance their businesses to create steady streams of income and in doing so create jobs in their communities. They open savings accounts to save for education for their children and to build assets that can help them through tough economic times. They purchase health insurance to insure their families have access to critical drugs and medical care and life insurance to provide for their families if death comes prematurely. They take out mortgages to secure safe and decent housing for their families and use their equity for household improvements. Access to these fundamental financial services has been a bedrock for the economic development of families, communities and countries in the developed world, and it will also serve as a bedrock for the economic development of countries in the developing world.
During the last thirty years, innovators within the economic development community have discovered that very poor families in developing countries have the skills, creativity and drive to use these same financial services to better their families and communities. Not only that, but they utilize a wide range of financial services (not just loans) to improve and expand their businesses and provide for their families.
Traditionally, if the poor are fortunate enough to have access to some type of financial service, the providers have been unregulated NGOs which are only capable of offering micro-loans and whose capital for onlending is limited, meaning their capacity for growth and outreach is stifled.
Recognizing the complex financial needs of the poor in developing countries, Opportunity International is committed to building microfinance banks to enable the poor to access the wide range of financial services which will help them work their way out of poverty. Opportunity has built microfinance banks in Africa, Asia, Eastern Europe and Latin America and plans to continue to expand at a rate of one to two microfinance banks per year.
Opportunity’s focus for building microfinance banks is sub-Saharan Africa, where our vision is to create a full-service bank for the poor in every country. We are working toward the day when all poor Africans who need a loan to grow their business, or a safe place to deposit their savings, or an insurance policy to protect their family's health and assets, can find this service readily available in their own community - provided by an institution dedicated to their needs and well-being.
Each bank will provide a full suite of financial products tailored to the varying needs of the poor within the country and will seek to rapidly develop a nationwide network of "points of sale" access through the use of low-cost structures and technologies that will include a mix of bricks and mortar, mobile branches, ATMs, point-of-sale devices and cell phones. Opportunity will also forge distribution partnerships with large organizations such as farmers associations, unions and major businesses to provide their workers and members with needed financial services.
Opportunity employs three core methodologies when entering a new country: Start-up; conversion; and consolidation/partnership.
Microfinance bank start-up – Opportunity builds a microfinance bank from the ground up, including: developing a business plan; recruiting a local and international management team; raising grant, equity and debt financing; obtaining a banking license from the central bank; installing information-management systems; developing the appropriate mix of products and services; and overseeing operations. Opportunity has created five start-up microfinance banks worldwide.
Conversion – Opportunity transforms NGO microcredit providers into formal financial institutions. Opportunity has transformed microfinance institutions in seven countries into formal financial institutions.
Partnership/Merger – Opportunity merges with existing microfinance providers and consolidates their portfolio into a formal banking structure. Typically, these institutions were previously unable to provide clients with a full range of services due to their unregulated status and lack of capital.
Opportunity has consolidated three NGO microfinance institutions into its new start-up bank in Mozambique.
