THE CHANGING ROLE OF INSTITUTIONS IN THE 21ST CENTURY

University Honors in International Business

MGMT-458-006

Professor Richard Linowes

NAGEEN QASIM Spring 2013

Abstract

Traditionally, microfinance institutions concerned themselves with providing to low-income borrowers primarily for the purpose of funding small enterprises or agricultural activities. However, in recent years, a new trend has emerged. Instead of focusing entirely on the provision of microcredit, several microfinance organizations have entered other commercial sectors such as health insurance, energy, and telecommunications. This Capstone analyzes the reasons why premier microfinance institutions such as the and Accion International have expanded the portfolio of goods and services they offer their clients. Furthermore, this paper analyzes if the extension of services has had an impact on local healthcare and education systems in countries such as Bangladesh and . For example, a 2009 study conducted by the Bangladeshi Agricultural University reported significant linkages between rural women receiving microcredit and an improved standard of living. The findings of the report indicated that 62% of the respondents agreed they had experienced moderate changes in their livelihood whereas 13% said their livelihood has changed dramatically across three dimensions: positive change in annual income, change of housing, health and sanitation and change of farm and household materials. Other studies have also been cited to demonstrate the positive correlation between access to extended microcredit services and health and education standards.

In addition, external resources such as and Microcredit Summit reports have been used to examine the impact and need to cater to the changing needs of the poorest of the poor.

1

Introduction

Microfinance institutions are often cited as valuable poverty alleviation t through the provision of without collateral to the “bottom of the pyramid”. Though originally most microfinance institutions focused only on providing small-scale loans to low-income borrowers, there are some organizations that have expanded the portfolio of products and services they offer to include affordable healthcare, financial literacy, access to renewable energy and cellular services.This shift in organizational objectives is not surprising considering each microfinance institution has its own goals and business model which dictates the extent to which they invest in certain economic sectors.

For example, Grameen Kalyan, an extension of the Grameen Bank, seeks to provide affordable healthcare for its borrowers by encouraging them to visit diagnostic clinics as well as to invest in household sanitation by building latrines inside their homes to improve their standard of living.1

This approach is in line with Grameen Bank’s commitment to eradicating poverty in Bangladesh.

However, organizations such as Accion International that have a different approach towards poverty reduction tend to emphasize financial literacy and inclusion through the Center for

Financial Inclusion.2

This research paper will profile three microcredit institutions - such as Grameen Bank, Accion

International, and the Acumen Fund – to explore why they are expanding the portfolio of goods and services they offer their borrowers. In addition, this paper will examine what, if any, impact

1Rahman, Rafiqur, and Qiang Nie. "The Synthesis of Grameen Bank Microfinance Approaches in Bangladesh." International Journal of Economics and Finance 3.6 (2011): 207-18. ProQuest Central; ProQuest Social Science Journals. Web. 2 Apr. 2013.

2Accion International. Center for Financial Inclusion. Retrieved Apr. 2013 from http://www.centerforfinancialinclusion.org/about

2 this extension of services has on local healthcare and education systems in countries such as

Bangladesh and India.

Grameen Bank

Established in 1983, the Grameen Bank offers loans to the poorest of the poor at an interest rate ranging from 0-20% based on the type of , such as income generating loans (20%) or student loans (5%).3 However, the bank diverges from other commercial banks in its approach because it does not require any collateral from its borrowers nor does it take legal action against defaulters.

The bank has taken steps to diversify its portfolio of services by entering the energy, health insurance, and telecommunications, manufacturing sectors to support and create institutions that enable their borrowers to escape the vicious cycle of poverty. 4

Lending Model

The Grameen Bank has formulated a unique system of lending that places borrowers in homogenized groups of five based on their economic condition and geographical proximity. For example, residents of a village engaged in similar entrepreneurial activities are placed in the same group.5 Borrowers are eligible to borrow funds if they demonstrate need according to the following criteria:6

• ability to send children to school

• access to clean water

3 Grameen Bank. Methodology.Retrieved March 2013 from www.grameen.com 4 Grameen Bank. About Us. Retrieved March 2013 from http://www.grameen- info.org/index.php?option=com_content&task=view&id=792&Itemid=759 5 Ibid. 6 Ibid. 5

3

• access to a sanitary latrine, and

• access to three meals a day.

Borrowers are not required to present any collateral and are eligible to borrow increasingly large sums of money as they demonstrate financial discipline and make their interest payments on time.

In addition, members can choose from a menu of loans all of which are offered at interest rates below those specified for microfinance institutions in by the Government of Bangladesh.

Products like the educational loan (5%), housing loan (8%) and the income generating loan (20%) all bear interest rates below the maximum defined limit of 27%. 7

The bank has been able to sustain an inordinately high recovery rate of 98% because loans are only offered to two members in the beginning who are observed for six weeks to see they are complying with the bank’s rules and making their weekly payments on time. If the first two members fulfill their obligations, two more people are lent funds and finally the fifth person is allowed to borrow funds. The reason Grameen Bank is able to sustain a high repayment rate is because the aforementioned groups comprise of people living within the same village who are all well aware of each other’s economic situation. They understand that their fellow residents need the funds to survive and a mixture of peer pressure and personal incentive to improve their lives results in borrowers making their payments on time.8 Borrowers are also required to save 5% of their borrowed amount each week with half of the money going to a personal savings account and the other half going to a ‘special savings account’ which is non-withdrawable for the first 3

7 Grameen Bank. Grameen Bank at a Glance 2011. Retrieved from grameen.com

8 Yunus, M., Moingeon, B., & Lehmann-Ortega, L. (2010). Building social business models: Lessons from the grameen experience. Long Range Planning, 43, 308-325.

4 years so they have a reserve of funds to rely on in case of emergencies. Seasoned borrowers borrowing over $138 must deposit at least $1 each month in a pension fund for retirement.9

Portfolio of goods and services

In addition to providing microcredit for entrepreneurial and educational pursuits, Grameen Bank has expanded into other sectors. Grameen Shakti is a micro-generation renewable energy companythat works with solar home systems (SHS), biogas systems and improved cooking stoves (ICS).10 It focuses on providing electricity and gas to about 96 million Bangladeshis living in rural communities. Since its inception in 1996, the number of solar home systems has jumped from 228 in 1997 to 520,000 in 2010 (See Appendix A, Fig.1). 11In 2006, Grameen Shakti added the concept of improved cooking stoves to its portfolio in attempts to reach a wider market and improve the lives of its existing client base. Improved cooking stoves use one-third less fuel to operate and are more cost efficient as well through a reduction in maintenance costs.12

In order to bridge the digital divide between urban and rural areas and provide an important entrepreneurial tool to underserved communities Grameen Bank launched Grameen Phone in

1997 and . itsuccess lies in its easy to use and replicate model - clients borrow money from

Grameen Bank and purchase a cellphone for personal use and as a business tool. Borrowers allow people in their community without access to a cellular device to make phone calls and then charge them at a flat rate of 0.99Tk/ min. As a result, borrowers make a profit that enables them to make their loan payments on time as well as save their additional earnings. Currently, there

9 Grameen Bank.Methodology. Retrieved March 2013 from grameen.com 10 Grameen Shakti. Retrieved Apr. 2013 from http://www.gshakti.org/ 11 Grameen Shakti.Programs at a glance. Retrieved Mar. 2013 from http://www.gshakti.org/index.php?option=com_content&view=category&layout=blog&id=54&Itemid=78 12 Ibid.

5 are 1086,936 village phone operators in Bangladesh covering more than 81,000 villages all over the country (See Appendix A, Figure 2 for future growth prospects).13

In addition to providing commercial services to its borrowers, Grameen Bank’s health initiative,

Grameen Kalyan provides micro health insurance to low-income borrowers at cheap premiums.

For example, the premium for an existing Grameen Bank client is BDT 200 and BDT 300 for a non-borrower. Moreover, borrowers have the option of choosing a flexible installment plan in order to pay their premiums in full. Borrowers and non-borrowers have access to a range of basic health services such as regular medical examinations, discounts on medications, among others.

Currently, Grameen Kalyan is serving 200,000 patients through its 53 Grameen Health Centers located all over Bangladesh. In addition, about 1 million people benefit from free health services annually through the Community Health Assistants program.14

The aforementioned diverse portfolio of goods and services demonstrates Grameen Bank’s commitment to financially empowering its clientele and also towards addressing their associated socio-economic needs. Rather than focusing on a narrow range of financial products and services,

Grameen Bank has allowed its business model to evolve over time by listening to its customers and offering them the services they need in the manner most suitable for their economic situation.

By expanding into various sectors beyond the financial, Grameen Bank has been able to build a sustainable client base and launch new initiatives targeted at serving its borrowers. Moreover, it

13Grameen Telecom. Currently offered tarrif & VAS. Retrieved Mar.2013 from http://www.grameentelecom.net.bd/vp9.html 14 Grameen Kalyan. Services. Retrieved Mar. 2013 from http://www.grameenkalyan- info.org/index.php?option=com_content&view=category&layout=blog&id=63&Itemid=144

6 has given Grameen Bank the opportunity to develop its expertise in new and unfamiliar sectors by partnering with multinationals such as Telenor in the telecommunications market.15

Finally, Grameen Bank undertook different social business ventures because they coincide with its overarching aim to reduce poverty in Bangladesh. The world renowned organization believes that the best way to do so is to provide a well- rounded portfolio of services to its borrowers and to focus on their physical and mental health as well as their need for financial security and independence. These factors influenced Grameen Bank’s decisions to expand the portfolio of services it offers and has resulted in tremendous financial and social success. Borrowers who invest in their financial security, health and education are also more likely to make their loan payments on time. It comes as no surprise that a family that feels it is well taken care of and has enough money to afford three meals a day is in a better position to deal with its financial commitments than one who does not have the resources to do so.

Grameen’s Impact on health and education systems in Bangladesh

Though it is difficult to measure the entire economic and social impact of microcredit in general and Grameen Bank’s activities in particular, there are several studies and reports that strongly suggest the positive influence of Grameen’s microcredit services. A study comparing the difference in village wages before and after the introduction of Grameen’s services shows that out of the 87 villages surveyed, men’s mean wages were about 4% higher ( 29.8TK per day) than those in non-Grameen Bank villages ( 24.2 TK per day). The differential in wages translates

15 Ibid. 13

7 into improved medical care and diet as well as an investment into the borrower’s children in terms of school enrollment.16

Another study conducted in 2009 by the Bangladeshi Agricultural University reported significant linkages between rural women receiving microcredit and an improved standard of living. The project sampled 100 rural women who were Grameen Bank borrowers and evaluated the change in their livelihood status along three dimensions: change in annual income, change of housing, health and sanitation and change of farm and household materials. The findings of the report indicated a significant improvement in health and sanitation as well as an increase in annual income. Also, about 62% of the respondents agreed they had experienced moderate changes in their livelihood whereas 13% said their livelihood has changed dramatically (See Appendix A,

Fig.3).17

Additional surveys reveal that 68% of Grameen borrowers have managed to rise above the poverty line i.e. they now earn enough to eat three meals a day and send their children to school.18 Moreover, Grameen Bank estimates that borrowers experience a 1.6% reduction in poverty each year.19

16 Khandker, Shahidur, Zahed Khan, et al. Grameen Bank Performance and Sustainability. Washington, D.C: World Bank, 1995. 78-82. eBook.

17 Kuhinar, S, and M Rokunazzaman. "Impact of Grameen Bank micro credit on change in livelihood status of women beneficiaries." J. Bangladesh Agril. Univ.. 7.2 (2009): 381-386. Web. 3 May. 2013.

18 Bornstein, D. (2011, March 24). Grameen bank and the public good. New York Times. Retrieved from http://opinionator.blogs.nytimes.com/2011/03/24/grameen-bank-and-the-public-good/

19 United Nations General Assembly 2010 Report on Role of microcredit and microfinance in the eradication

8

Accion International

Founded in 1961 as a grassroots movement meant to aid community development in ,

Accion International is now one of the largest microfinance institutions in the world, providing its clients a range of services, from microloans to technical management services and financial training.20To date, Accion International has helped establish 63 microfinance institutions in Latin

America, and . The organization supports 5.1 million active borrowers and has lent approximately $9.9 billion.21

Portfolio of goods and services

Accion International aims to provide small-scale microfinance institutions and other developmental organizations with the tools necessary to expand the scale of their operations. In addition, the organization helps small non-profit microfinance organizations transition into formally regulated, commercial microfinance banks.22

The organization provides specialized services to new microfinance institutions in the form of seed capital, access to financial markets, technical management services such as experienced staff members (including managers and CEOs). In addition, new ventures receive valuable strategic insight from Accion International’s board that offers guiand to partner organizations in matters of financial oversight and corporate governance.23

of poverty. Retrieved March 2013 from http://www.iom.int/jahia/webdav/shared/shared/mainsite/policy_and_research/un/65/A_65_267.pdf

20 Accion International.Key Statistics. Retrieved Mar. 2013 from https://www.accion.org/ourimpact/keystatistics 21 Ibid. 22 Accion International. Microfinance Services. Retrieved Mar.2013 from https://www.accion.org/what-we- do/microfinance-services 23 Ibid.

9

Acción has a different approach from Grameen Bank whereby it places great emphasis on training and equipping the incoming generation of microfinance professionals with the tools and skills necessary to strengthen the microfinance industry. To this end, Accion International has already trained 10,000 professionals and runs the Signature Program and Capacity Building

Program in order to provide theoretical and hands-on experience to participants in the microfinance industry.24

Also, in order to ensure that borrowers manage their funds carefully, Accion has created a financial literacy program that helps clients manage their personal and household finances by gaining information about .25 These programs are especially important for low- income clients because it helps them utilize their credit more effectively and allows them to understand the benefits associated with accumulating savings and buying insurance.26 Clients also learn valuable skills such as how to use financial services and avoid over-indebtedness. In

India, Accion has trained more than 38,000 individuals in basic financial planning through its financial literacy program.27 In addition, Accion teaches business training courses for micro- entrepreneurs so they can put the skills they have learnt during the financial literacy program to use in the real world and invest their loan money cautiously.28

The aforementioned programs stem directly from Accion’s overarching objective of making global financial inclusion a reality by 2020. To this end, the Center for Financial Inclusion is

24 Accion International. Industry Training. Retrieved Apr. 2013 from http://www.accion.org/what-we-do/industry- training 25 Accion International. Client Education. Retrieved Apr. 2013 from https://www.accion.org/what-we-do/client- education 26 Ibid. 27 Ibid. 25 28 Ibid.

10 working to connect various social and business groups together in an attempt to include more low-income people within the formal financial markets.29

In addition to investing in micro-lending and financial literacy, Accion has a presence in the impact investment sector where it invests in social enterprises that provide non-financial goods and services to its borrowers. This is accomplished through two programs: Venture Lab and

Frontiers Investment Group where the former provides seed money and technical assistance to businesses offering ‘new and creative solutions’ for the bottom of the pyramid and the latter is for moderately large businesses that are catering to the needs of the low-income classes using innovative products.30

According to Elizabeth Rhyne, Managing Director of the Center for Financial Inclusion, Accion has been able to tailor its financial and non-financial services to the needs of its customers mainly because of the noticeable difference in attitudes towards savings and investments.31

Moreover, she highlighted that though Grameen Bank was largely focused on social welfare,

Accion had more of an active stake in commercial pursuits such as the creation of BancoSol.32

BancoSol is a commercial microfinance institution that currently has169, 251 active borrowers and an active portfolio of $585,550,000 (See Appendix A, Figure 4). 33 Since the borrowers are mainly women who work as market vendors or seamstresses, first loans can be as low as $50.34

Since 1992, BancoSol has disbursed $1 billion in microloans. In addition, it was able to sell certificates of deposit in the US because of its large client base and secure financial structure.35

29 Center for financial inclusion.About. Retrieved Mar. 2013 from http://www.centerforfinancialinclusion.org/about 30 Accion International. Investing. Retrieved Apr. 2013 from https://www.accion.org/whatwedo/investing 31 Rhyne,Elizabeth. Personal Interview. 29 Mar. 2013 32 Ibid. 33 Accion International. Where we work. Retrieved Mar. 2013 from http://www.accion.org/page.aspx?pid=666 34 Ibid. 35 Ibid. 33

11

Accion International has been successful in supporting BancoSol in its efforts to expand its portfolio of goods and services such as a new underwriting process and the introduction of

Customer Retention Management software which allows staff members to assess clients directly from their field offices. These projects will result in increased operational effectiveness and provide better services for clients.36

Impact on health and education

Currently, Accion has 20% equity in two Indian microfinance institutions: Swadhaar and Saija, both of which lend to the rural and lower-urban class.37 These microfinance institutions have established themselves within the urban landscape and are helping their clients in a multitude of ways. Firstly, by providing credit to low-income families, these organizations provide their clients with the unique option of using their savings or retained earnings during emergencies such as famines.38 In addition, the loans taken by most clients are directed towards improving their family’s quality of life. This may include but is not limited to paying for their children’s education, obtaining health insurance or building a latrine inside their home.39 Most importantly, the provision of credit allows the poorest of the poor an effective shield against future uncertainty and vulnerability which means that even if a family loses their household income, they have the opportunity to cope with the setback due to the sustainable nature of their credit transactions. 40This has a significant impact on familial stability and ensures the consistent enrollment of children in school among other aspects.

Acumen Fund

36 Ibid. 37 2010 and 2011 Annual Report. Retrieved Mar. 2013 from http://annualreport.accion.org/ 38 Accion International. Retrieved Apr. 2013 from http://www.accion.org/Document.Doc?id=794 39 Ibid. 40 Ibid. 38

12

Created in 2001 with grants and financial assistance from the , Cisco

Systems Foundation and three philanthropists, the Acumen Fund is a non-profit that has adopted a dramatically different model from that of the Grameen Bank and accion international.41 The

Acumen Fund raises funds through grants and outside investors which in turn are invested in social enterprises all over the world. Currently, the organization operates in eight countries and has invested more than $81 million in a variety of economic sectors from energy to health and education.42

Business Model

The Acumen Fund coined the term ‘patient capital’ to explain its approach towards .43 Instead of giving grants or handouts to international social businesses, the Acumen

Fund invests somewhere between $250,000 and $3,000,,000 in individual organizations as debt or equity and expects the principal amount to be returned within 7-10 years.44 The organization selects businesses that are seen as providing essential services to low-income consumers particularly those that provide the poorest of the poor access to education, health, housing etc.45

Before a social enterprise can be selected to receive the appropriate funds, the Acumen Funds conducts due diligence which includes assessing the social impact, financial viability, operations, management, accounting and legal aspects of the firm. After an initial review, an investment memo is prepared and a formal process of due diligence in initiated. Finally, an official

41 Acumen Fund. Our investments. Retrieved Mar. 2013 from http://acumen.org/our-investments/ 42 Ibid. 43 Acumen Fund. Investment model. Retrieved Mar. 2013 from http://acumen.org/investments/investment-model/ 44 Ibid. 45 Ibid. 44

13 recommendation is made to the investments committee which decides whether the social investment is worthwhile.46

Since there is an emphasis on achieving a higher social return rather than an economic return, the

Acumen Fund does not place too much importance on the rate of return. According to their 2011

Annual Report, the average rate of return was 1%, which is significantly lower than that of a market investment. However, the Acumen Fund is more concerned with facilitating the provision of social products and services rather than earning a return on their investments.47 However, it is important to note that the Acumen Fund does expect the social enterprises it invests in to be profitable and financially sustainable over a period of time.

Portfolio of goods and services

The Acumen Fund has the capability to fund individual organizations everywhere from between

$250,000 to $3000,000.48 The organization conducts investments in social organizations that fulfill prescribed criteria such as the ability to create social impact and maintain profitability and sustainability.49 Apart from investing in organizations, the Acumen Fund has established local offices in the regions where it operates such as Pakistan, India, East Africa and where each branch office is assisted by Acumen Fund fellows and an advisory board that reports to the organization’s global office in New York.50 As a result, the Acumen Fund has the opportunity to measure and monitor its investments accurately. Moreover, it has the opportunity

46 Accion International. Investment process. Retrieved Mar. 2013 from http://acumen.org/investments/investment- model/ 47 2011 Annual Report. Retrieved Mar. 2013 from http://warn.recursive.dns.com/?host=acumen.org 48 Acumen Fund. Investment model. Retrieved Mar. 2013 from http://acumen.org/investments/investment-model/

49 Acumen Fund. Our investments. Retrieved Mar. 2013 from http://acumen.org/our-investments/ 50 Ibid.

14 to work closely with its clientele and provide additional services. Currently, the Acumen Fund is invested in 72 enterprises that have created 55,000 jobs all over the world.51

From a strictly business point of view, the Acumen Fund is making a smart decision by using a market-oriented approach. A study by J.P. Morgan's Global Research division estimates that over the next10 years, the market scope for serving people earning less than $3,000 a year will amount to $1 trillion. Moreover, researchers predict that there is $667 billion in profits to be made from these untapped markets.52 Hence, the Acumen Fund’s decision to undertake investments in poor localities across the world falls within their business objectives one of which is to use to private equity or debt instruments for a social purpose.

Impact on health and education

Since the Acumen Fund does not focus on any one particular region, it is difficult to accurately measure the tangible impact of their investments on individuals. However, some of their projects have been tremendously successful in providing critical services to the low-income class. A pertinent example is that of Sproxil, a company that provides a mobile product authentication service for consumers in Sub-Saharan Africa (Nigeria,Kenya, and ) and India aimed at helping consumers identify counterfeit medications.53 Acumen Fund's $1.79 million investment has fueled Sproxil's expansion into India and the development of its technological capabilities.

As a result, Sproxil has been able to contribute to reduce costs for patients, insurers, and governments.54

51 Ibid. 49 52 "J.P. Morgan and the Global Impact Investing Network Release Survey." Entertainment Close - Up (2013)ProQuest. Web. 3 Mar. 2013. 53 Global Impact Investing Network. Impact investment profile. Retrieved Mar. 2013 from http://www.thegiin.org/cgi-bin/iowa/resources/profile/19.html 54 Ibid.

15

In the education sector, the Acumen Fund has invested $1 million resulting in the creation of 500 jobs and indirectly impacted the lives of 5000 people who are receiving important vocational training and experience. Moreover, it has partnered with 2 companies in India in order to support their hiring practices and facilitate the provision of more job opportunities for women.55

The aforementioned investments are reflective of the Acumen Fund’s passion for creating a poverty- free world through the use of market- based financial instruments. Even though the organization does not emphasize the economic return of its investments, it measures the social and financial performance of its portfolio according to a system of metrics named Impact

Reporting and Investment Standards (IRIS) which include measuring the product development, social impact and financial performance of a specific investment. 56Since this is a relatively new initiative, future years will be indicative of a more standardized approach to monitoring impact investment.

Conclusion

Microfinance institutions have evolved tremendously over the past few decades and continue to do so in attempts to include more of the world’s poor within the formal economy and equip them to aspire to a higher standard of living. However, the ways in which microcredit organizations will change and the nature of the products and services they offer will most certainly depend on the region within which they are operating, client needs, and their own business objectives. As observed in this research paper, some microfinance institutions are concerned with the double bottom line, comprising of both economic and social returns, while others are more focused on providing services for rural communities because they believe the right to obtain credit is a

55 Acumen Fund. Education. Retrieved Mar. 2013 from http://acumen.org/sectors/education/ 56 Ibid. 53

16 fundamental human right. Though the business model of the aforementioned institutions may be different, they all have one common denominator: they all are adapting to the needs of their clientele. To this end, Grameen Bank launched Grameen Phone and Accion International established the Center for Financial Inclusion.57 Both institutions expanded their portfolio of goods and services because they recognized the potential for catering to their customers’ demands.

In conclusion, more and more microfinance institutions will be seen investing in diverse sectors and providing a host of services other than microcredit such as micro health insurance due to an overwhelming need to satisfy their client needs and because of the immense market potential of these untapped markets.

57 Grameen Telecom. Currently offered tarrif & VAS. Retrieved Mar.2013 from http://www.grameentelecom.net.bd/vp9.html

17

Works Cited

"J.P. Morgan and the Global Impact Investing Network Release Survey." Entertainment Close -

Up (2013)ProQuest. Web. 3 Mar. 2013.

2010 and 2011 Annual Report. Retrieved Mar. 2013 from http://annualreport.accion.org/

2011 Annual Report. Retrieved Mar. 2013 from http://warn.recursive.dns.com/?host=acumen.org

Accion International. Where we work. Retrieved Mar. 2013 from

http://www.accion.org/page.aspx?pid=666

Accion International. Center for Financial Inclusion. Retrieved Apr. 2013 from

http://www.centerforfinancialinclusion.org/about

Accion International. Client Education. Retrieved Apr. 2013 from https://www.accion.org/what-

we-do/client-education

Accion International. Industry Training. Retrieved Apr. 2013 from http://www.accion.org/what-

we-do/industry-training

Accion International. Investing. Retrieved Apr. 2013 from

https://www.accion.org/whatwedo/investing

Accion International. Investment process. Retrieved Mar. 2013 from

http://acumen.org/investments/investment-model/

Accion International. Microfinance Services. Retrieved Mar.2013 from

https://www.accion.org/what-we-do/microfinance-services

Accion International. Retrieved Apr. 2013 from http://www.accion.org/Document.Doc?id=794

Accion International.Key Statistics. Retrieved Mar. 2013 from

https://www.accion.org/ourimpact/keystatistics

Acumen Fund. Education. Retrieved Mar. 2013 from http://acumen.org/sectors/education/

18

Acumen Fund. Investment model. Retrieved Mar. 2013 from

http://acumen.org/investments/investment-model/

Acumen Fund. Our investments. Retrieved Mar. 2013 from http://acumen.org/our-investments/

Bornstein, D. (2011, March 24). Grameen bank and the public good. New York Times. Retrieved

from http://opinionator.blogs.nytimes.com/2011/03/24/grameen-bank-and-the-public-

good/

Center for financial inclusion.About. Retrieved Mar. 2013 from

http://www.centerforfinancialinclusion.org/about

Global Impact Investing Network. Impact investment profile. Retrieved Mar. 2013 from

http://www.thegiin.org/cgi-bin/iowa/resources/profile/19.html

Grameen Bank. About Us. Retrieved March 2013 from http://www.grameen-

info.org/index.php?option=com_content&task=view&id=792&Itemid=759

Grameen Bank. Grameen Bank at a Glance 2011. Retrieved from grameen.com

Grameen Bank. Methodology.Retrieved March 2013 from www.grameen.com

Grameen Kalyan. Services. Retrieved Mar. 2013 from http://www.grameenkalyan-

info.org/index.php?option=com_content&view=category&layout=blog&id=63&Itemid=

144

Grameen Shakti. Retrieved Apr. 2013 from http://www.gshakti.org/

Grameen Shakti.Programs at a glance. Retrieved Mar. 2013 from

http://www.gshakti.org/index.php?option=com_content&view=category&layout=blog&i

d=54&Itemid=78

Grameen Telecom. Currently offered tarrif & VAS. Retrieved Mar.2013 from

http://www.grameentelecom.net.bd/vp9.html

19

Khandker, Shahidur, Zahed Khan, et al. Grameen Bank Performance and Sustainability.

Washington, D.C: World Bank, 1995. 78-82. eBook.

Kuhinar, S, and M Rokunazzaman. "Impact of Grameen Bank micro credit on change in

livelihood status of women beneficiaries." J. Bangladesh Agril. Univ.. 7.2 (2009): 381-

386. Web. 3 May. 2013.

Rahman, Rafiqur, and Qiang Nie. "The Synthesis of Grameen Bank Microfinance Approaches in

Bangladesh." International Journal of Economics and Finance 3.6 (2011): 207-

18. ProQuest Central; ProQuest Social Science Journals. Web. 2 Apr. 2013.

Rhyne,Elizabeth. Personal Interview. 29 Mar. 2013

United Nations General Assembly 2010 Report on Role of microcredit and microfinance in the

eradication of poverty. Retrieved Mar. 2013 from

http://www.iom.int/jahia/webdav/shared/shared/mainsite/policy_and_research/un/65/A_6

5_267.pdf

Yunus, M., Moingeon, B., & Lehmann-Ortega, L. (2010). Building social business models:

Lessons from the grameen experience. Long Range Planning, 43, 308-325.

20

Appendix A Fig.1

Grameen Shakti Graph Chart, April 2013

21

Source: http://www.gshakti.org/index.php?option=com_content&view=category&layout=blog&id=54&I temid=78

22

Fig.2 Growth Trend of Village Phones from December 1997- April 2013

Source: http://www.grameentelecom.net.bd/vp9.html

23

Fig.3 Different Categories of Change in livelihood status of female beneficiaries of Grameen Bank

Source: Kuhinar, S, and M Rokunazzaman. "Impact of Grameen Bank micro credit on change in livelihood status of women beneficiaries." J. Bangladesh Agril. Univ.. 7.2 (2009): 381-386. Web. 3 May. 2013.

Fig.4 BancoSol Statistics as of January 2012

Active Borrowers: 169,251

Amount Loaned: 503,159,000

Active Portfolio: $585,550,000

Average First Loan: $3,099

Active Savers: 484,973

Savings Balance: $559,187,00

Source: http://www.accion.org/page.aspx?pid=666

24

Fig.5

25

Appendix B

Grameen Bank’s 2011 Financial Statements

Comparative Consolidated Statement For The Years 2010 & 2011

Increase/Decrease Sl. Particulars 2010 2011 During 2011 1 Basic Loans Disbursed 437,815.48 542,557.85 104,742.37 Repaid 377,143.77 475,123.31 97,979.54 2 Flexible Loans Disbursed 14,355.07 17,502.33 3,147.26 Repaid 10,890.75 12,251.25 1,360.50 3 Housing Loans Disbursed 8,978.03 9,025.53 47.50 Repaid 8,851.33 8,954.40 103.07 4 Other Loans Disbursed 133,312.04 133,914.33 602.29 Repaid 131,140.32 131,345.63 205.31 5 Outstanding Loans 66,634.45 75,325.46 8,691.01 Interest 4365.00 5,035.27 670.27 Average Outstanding per Loanee (In BDT) 10,047 11,446 1,399 6 Overdue Loans 632.53 1,018.73 386.20 7 Overall Repayment percentage 97.37 96.75 (0.62) 8 Deposits Balance: GB Members 56,345.90 66,547.12 10,201.22 9 Number of Members Female 8,039,408 8,046,561 7,153 Male 301,215 324,437 23,222 Total 8,340,623 8,370,998 30,375 10 Number of Loanees 6,612,175 6,580,690 (31,485) 11 Number of Centres 144619 144,095 (524) 12 Number of Villages Covered 81,376 81,380 4 13 Number of Branches in Operation 2,565 2,565 - 14 Number of Areas 268 266 (2) 15 Number of Zones 40 40 - 16 Information Management Centres 268 266 (2) 17 Education Loans Disbursed 2,066.84 2,553.26 486.42 18 Number of Education Loanees 47,851 50,177 2,326 19 Number of GB Scholarships 114,466 135,679 21,213 20 Amount of GB Scholarships 173.59 216.95 43.36

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GRAMEEN BANK Balance Sheet As at 31 December 2011

2011 2010 Notes Taka Taka

PROPERTY AND ASSETS Cash in hand 2,231,411 895,544 Balances with Bangladesh Bank-in local currency 1,036,511 2,574,932 Balances with other banks and financial institutions 4 1,706,290,207 1,308,117,165 Investments-at cost 5 52,612,942,436 47,757,186,897 Loans and advances-without collateral 6 77,639,276,539 68,417,977,923 Fixed assets (at cost less accumulated depreciation) 7 (Annexure-A) 1,385,864,651 1,379,656,418 Investment property (at cost less accumulated 8 depreciation) (Annexure-B) 104,236,476 108,540,014 Other assets 9 6,989,404,848 6,422,009,079 140,441,283,079 125,396,957,972

CAPITAL AND LIABILITIES Borrowings from banks and other institutions 10 1,526,969,669 1,589,027,602 Members deposit 66,823,469,187 56,644,001,002 Non-Members deposit 50,692,905,197 48,378,999,640 Other funds 4,708,974,615 4,183,727,068 Deposits and other funds 11 122,225,348,999 109,206,727,710 Other liabilities 12 8,816,718,694 7,238,222,597

Shareholders' fund Paid up capital 13 571,163,300 547,689,200 Capital and other reserves 14 7,056,082,417 6,585,290,863 Retained surplus 15 245,000,000 230,000,000 7,872,245,717 7,362,980,063 140,441,283,079 125,396,957,972

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GRAMEEN BANK Profit and Loss Account For the year ended 31 December 2011 2011 2010 Notes Taka Taka

OPERATING INCOME INTEREST INCOME 16 14,265,648,935 12,435,830,045 LESS: INTEREST/PROFIT PAID ON DEPOSITS & BORROWINGS ETC. 17 (10,637,532,698) (9,227,772,950) Net interest income 3,628,116,237 3,208,057,095 Income from investments in fixed deposits 5,926,694,671 3,946,135,748 Income from investments in Grameen Mutual Fund-One 27,275,000 89,312,500 Income from share investments 1,600,000 1,200,000 Other income 18 1,103,255,837 1,269,126,767 Total Operating Income 10,686,941,745 8,513,832,110

LESS: OPERATING EXPENSES Salaries and other related expenses 19 5,004,398,147 4,639,159,752 Rent, rates, taxes, vehicle insurance, utilities etc. 20 127,835,980 121,793,273 Legal and professional expenses 21 237,726,222 233,111,678 Auditors' fees 22 1,405,525 1,377,800 Stationery, printing, advertisement etc. 23 109,052,305 117,637,985 Managing Director's salary & allowances 24 313,272 815,280 Directors’ remuneration 174,000 42,000 Repairs & maintenance of fixed assets 25 41,781,689 47,007,495 Depreciation of fixed assets (Annexure-A) 67,587,695 70,798,924 Depreciation of investment property (Annexure-B) 2,371,872 2,405,278 Other expenses 26 1,532,484,981 1,569,968,329 Total Operating Expenses 7,125,131,688 6,804,117,794 Profit before provision 3,561,810,057 1,709,714,316 Provisions for loans and advances 27 Specific provision 2,812,556,891 1,008,783,786 General provision 65,689,364 (56,310,792) 2,878,246,255 952,472,994 NET PROFIT 683,563,802 757,241,322

APPROPRIATIONS

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NET PROFIT TRANSFERRED TO 683,563,802 757,241,322

Retained surplus brought forward from previous year 15 230,000,000 162,000,000 Dividend equalization fund 200,000,000 250,000,000 Cash dividend @ 30% 171,348,990 164,306,760 General reserve 280,000,000 260,000,000 Employees' welfare fund 17,214,812 14,934,562 668,563,802 689,241,322 Retained surplus 245,000,000 230,000,000

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Appendix C Grameenphone’s Female Users

Source: http://www.agefotostock.com/en/Stock-Images/Rights-Managed/MWO-MW018101

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A Bancosol Client

Source: http://www.gabv.org/events/vancouver-conference-2012/gabv-members

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