In 2009 and 2010, Accion helped to start microfinance institutions in underserved areas of Inner Mongolia, Cameroon, and Brazil.
In December 2009, Accion inaugurated Accion Microfinance China (AMC) in Chifeng Prefecture, Inner Mongolia; this microfinance institution represented the first wholly owned foreign microcredit company (MCC), and only the second wholly foreign-owned MCC in the country. Since then, Accion transitioned ownership of AMC to Grassland Finance Ltd., a Hong Kong holding company incorporated in 2011 with a focus on founding or investing in financial services institutions in China that provide loans and other financial services to China's vast number of medium, small, and micro enterprises (MSMEs). Today, Grassland has grown to more than 15 branches across six provinces.[4]
In April 2012, Accion launched its seed-stage investment initiative, Accion Venture Lab. Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching, Accion Venture Lab has deployed over $12 million across more than 30 start-ups that work in over 20 countries worldwide.[5][6]
Accion expanded its work to yet another country in April 2015 when it partnered with Myanmar's DAWN, a microfinance institution originally launched in 2002 as a program of Save the Children. After decades of isolation beginning in the 1960s, Myanmar rejoined the world economy with a need for affordable services. Accion has helped DAWN integrate new technologies, triple its loan portfolio, and expand to more branches.[7]
In November 2016, Accion announced an updated organizational strategy reflecting Accion's increasing focus on the potential for financial technology, or "fintech," to reach the world's three billion financially underserved people. See details on Accion's strategy below.[8]
In March 2017, Accion announced the launch of a global fintech fund for the underserved: the Accion Frontier Inclusion Fund, managed by Quona Capital.[9] The fund aims to help the world's three billion financially underserved people by catalyzing fintech innovations that can radically improve the quality and availability of financial services for the underserved. At its launch, the fund represented over $141 million in commitments from an array of institutional investors. Accion is the fund's sponsor and anchor investor; the fund's manager, Quona Capital, is an early growth-stage venture firm focused on financial technology for underserved consumers and businesses in emerging markets.[10] Investments include NeoGrowth,[11] Yoco,[12] Konfio,[13] and First Circle.[14]
2000s
In October 2000, Accion began working in partnership with microlending organizations in sub-Saharan Africa, marking its first initiative outside the Americas. Recognizing the need for microcredit throughout Africa, Accion worked to increase financial inclusion for poor, self-employed Africans throughout the continent. In 2006, Accion launched a partnership with Ecobank, the leading regional bank in West Africa. Pan-African Savings and Loans (then called EB-Accion Savings and Loans) launched operations in Ghana in 2007 and is expanding to neighboring countries.[15]
In 2005, Accion started on a new venture to reach another underserved group: urban small business owners in India. Since establishing an office in the country, Accion has partnered with local financial institutions in Patna and Mumbai, assisting them in applying individual and group lending and tailored credit scoring, among other microfinance methodologies.
In 2007, Compartamos Banco, a Mexican microfinance institution and Accion investee, became the first Latin American MFI to offer equity through an initial public offering (IPO). The IPO sparked an industry-wide debate, with some "questioning the ethics of profit[ing] from the poor," and others arguing that "the profit motive can help lift many more people out of poverty than charity alone could ever do."[16] Álvaro Rodríguez Arregui, chairman of Accion at the time, was among the latter, and argued that the IPO was needed to attract much more capital to the microfinance industry, and Accion used the funds to advance its mission. Today, Compartamos stands out as one of the largest MFIs, in terms of number of clients, in Latin America.[17]
The proceeds from the IPO allowed Accion to create new MFIs in Brazil, Cameroon, China, Ghana and India, and strengthen, through investment or reinvestment, other partners in India, Africa, and Latin America. Accion also used the proceeds to establish and fund its Washington, D.C.-based think tank, the Center for Financial Inclusion (CFI) at Accion.
Center for Financial Inclusion at Accion
CFI's work is grouped into three broad categories:
Client Advocacy
Examples of CFI's industry-wide initiatives include, the Smart Campaign – the world's first global consumer protection campaign, – and Financial Inclusion 2020 – a movement that mobilized stakeholders around the globe to achieve full financial inclusion, using the year 2020 as a focal point for action.[18]
1990s
In 1991 Accion brought its microlending model to the United States by piloting a program in Brooklyn, New York. Accion aimed to help those who didn't meet requirements for traditional financing (such as bank loans) because their requested amount was too small or because they had limited or damaged credit.
Accion has since worked to further adapt its lending model to the social and economic needs of communities across the United States. Accion now serves small businesses nationwide through four independent community development financial institutions (CDFIs) and a national office that invests in shared knowledge, innovation, and impact to benefit the entire network.[19]
Since 1991, the members of Accion in the U.S. have provided more than 60,000 loans to small business owners and disbursed more than $500 million in capital. Additionally, Accion provides business advising and training services – both in person and through online educational resources – to tens of thousands of entrepreneurs each year.[20][21]
In 1995, Accion created an equity investment vehicle for microfinance, the Accion Gateway Fund to provide new microfinance institutions with the resources they needed to expand.[22][23]
1980s
Over the next decade, Accion helped start microfinance programs in 14 countries in Latin America. Accion and its partners developed a lending method that met the needs of microenterprises.
The ability to cover costs, augmented by Accion's new loan guarantee fund, the Bridge Fund, enabled Accion's partners to connect with the local banking sector and dramatically increase the number of microentrepreneurs they reached.[24] Between 1989 and 1995, Accion's Latin American Networked loan disbursements multiplied more than 20 times.
Convinced that microfinance had the potential to transform the economic landscape of Latin America, Accion recognized that microfinance institutions (MFIs) would need access to a much larger pool of capital.
To help them achieve this, Accion helped create BancoSol, the first commercial bank in the world dedicated solely to microenterprise. Founded in Bolivia in 1992, its clients are typically market vendors, sandal makers, and seamstresses.
In 1994, Accion helped BancoSol sell certificates of deposit in the U.S. financial market.
1970s
By the early 1970s, Accion began to focus on addressing a major cause of poverty in Latin American cities: lack of economic opportunity.
In 1973, Accion staff in Recife, Brazil, began to focus their efforts on helping informal businesses. An Accion organization in Recife called UNO coined the term "microenterprise" and began issuing small loans, pioneering the field of microcredit.
Blatchford's founding of Accion was heavily influenced by the philosophical works of Alexis de Tocqueville, Aldous Huxley and Mohandas Gandhi as well as The Ugly American by UC Berkeley professor Eugene Burdick and the classic essay “The Moral Equivalent of War” by William James. Working from James’ main thesis, Blatchford believed that Americans needed to find new, non-militaristic ways to focus their involvement abroad while promoting self-determination and democracy. A volunteer corps dedicated to international cooperation and grassroots development was one such path.
Blatchford recruited two other standout UC Berkeley law students, Jerry Brady and Gary Glenn, to manage volunteer recruitment, publicity and stateside orientation of volunteers while he continued to cultivate contacts in Latin America.
In the summer of 1961, the first group of 30 Americans was ready to deploy to poor barrios in urban centers around Venezuela.
The nature of Accion's first projects reflected needs that the communities themselves identified as priorities. The Accion workers did everything from digging ditches to building schools to fundraising to managing sensitive negotiations between opposing community leaders. About the range of these early projects, Blatchford reflected, “The project depended on what the community was concerned about. Then the community did it, they created committees and were in charge of the project. They realized they could do it and it changed their lives.”[25]
By the mid-1960s, Accion was engaging fewer and fewer North Americans and Europeans and instead was hiring college-educated Venezuelans as organizers – a group called “Community Action Organizers.”
A few years after launching in Venezuela, Accion established itself in New York to provide technical support to funders and business leaders in Latin American countries who wanted to start community action programs like Accion did in Venezuela.[27]
Accion has been included ImpactAssets 50 (IA 50) for six consecutive years. IA 50 is the only free, public, searchable database of outstanding impact investing fund managers.
Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans. As of 2009 an estimated 74 million people held microloans that totaled US$38 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent.
Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. ID Ghana is an example of a microfinance institution.
Small Industries Development Bank of India (SIDBI) is the apex regulatory body for overall licensing and regulation of micro, small and medium enterprise finance companies in India. It is under the jurisdiction of Ministry of Finance, Government of India headquartered at Lucknow and having its offices all over the country.The SIDBI was established on April 2, 1990, by Government of India, as a wholly owned subsidiary of IDBI Bank. It was delinked from IDBI w.e.f. March 27, 2000. Its purpose is to provide refinance facilities to banks and financial institutions and engage in term lending and working capital finance to industries, and serves as the principal financial institution in the Micro, Small and Medium Enterprises (MSME) sector. SIDBI also coordinates the functions of institutions engaged in similar activities. It was established in 1989, through an Act of Parliament.
Kiva is a 501(c)(3) non-profit organization headquartered in San Francisco, California, that claims to allow people to lend money via the Internet to low-income entrepreneurs and students in 80 countries. Kiva's mission is "to expand financial access to help underserved communities thrive." They have been accused of deceptive business practices, misleading donors into believing their funds would be used for specific individuals and misrepresenting other aspects of their operations.
Bharat Financial Inclusion LimitedBFIL is a banking & finance company (NBFC), licensed by the Reserve Bank of India. It was founded in 1997 by Vikram Akula, who serve as its executive chair until working. The company's mission is to provide financial services to the poor under the premise that providing financial service to poor borrowers helps to alleviate poverty. In 2011, the company operated across 11 Indian state.
Financial inclusion is defined as the availability and equality of opportunities to access financial services. It refers to a process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. Financial inclusion efforts typically target those who are unbanked and underbanked, and directs sustainable financial services to them. Financial inclusion is understood to go beyond merely opening a bank account. It is possible for banked individuals to be excluded from financial services. Having more inclusive financial systems has been linked to stronger and more sustainable economic growth and development and thus achieving financial inclusion has become a priority for many countries across the globe.
The Microcredit Summit Campaign, an American non-profit organization, started as an effort to bring together microcredit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with microcredit around the goal of alleviating world poverty through microfinance.
Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business or chit-fund business, but does not include any institution whose principle business is that of agriculture, industrial activity, purchase or sale of any goods or providing any services and sale/purchase/construction of immovable property.
Microcredit Regulatory Authority (MRA) is the central body to monitor and supervise microfinance operations of non-governmental organizations of the Republic of Bangladesh. It was created by the Government of People's Republic of Bangladesh under the Microcredit Regulatory Authority Act. License from the Authority is mandatory to operate microfinance operation in Bangladesh as an NGO.
Microfinance Information Exchange, Inc. was a non-profit organization that provided market data and intelligence on financial service providers catering to low-income populations around the world. Founded by the Consultative Group to Assist the Poor (CGAP) and sponsored by the Citi Foundation, CGAP, the Mastercard Foundation, MetLife Foundation, Bill & Melinda Gates Foundation and others, MIX had offices in Washington DC, New York, Lima (Peru), Baku (Azerbaijan), Dakar (Senegal), and Hyderabad (India). MIX's mission was to provide data analytics to empower decision-makers - socially responsible investors, policy makers and financial services providers - to build an inclusive financial services ecosystem. Since its founding in 2002, MIX had built the digital information infrastructure needed to bring greater transparency to financial sectors serving low-income populations in emerging markets, including providing market data on over 3,000 financial services providers (FSPs). In 2016, MIX shifted its strategy to help improve the information flow in other segments of financial inclusion, like smallholder agricultural finance, fintech, digital financial services (DFS) and green energy finance. In May 2020, MIX became a unit of the Center for Financial Inclusion, a thinktank housed at Accion.
Women's World Banking is a nonprofit organization that provides strategic support, technical assistance and information to a global network of 55 independent microfinance institutions (MFIs) and banks that offer credit and other financial services to low-income entrepreneurs in the developing world, with a particular focus on women. The Women's World Banking network serves 24 million micro-entrepreneurs in 32 countries worldwide, of which 80 percent are women. It is the largest global network of microfinance institutions and banks in terms of number of clients, and the only one that explicitly designates poor women as the focus of its mission.
Hattha Kaksekar Limited or HKL is a microfinance institution and a deposit-taking institution in Cambodia. In terms of loan portfolio, HKL is ranked fourth and it has the third largest saving portfolio among Cambodia MFIs.
Lendwithcare is a microfinance lending website from the development charity CARE International UK. Launched in September 2010, it allows individuals and groups to make small loans to entrepreneurs in developing countries, and help them work their way out of poverty. It supports entrepreneurs in Cambodia, Togo, Benin, the Philippines, Bosnia and Herzegovina, Vietnam and Ecuador through partner microfinance institutions (MFIs). It does not charge any interest on the loans made to entrepreneurs by supporters - the MFIs do.
SFB are a type of niche banks in India. Banks with a small finance bank (SFB) license can provide basic banking service of acceptance of deposits and lending. The aim behind these is to provide financial inclusion to sections of the economy not being served by other banks, such as small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
Svatantra Microfin Svatantra, which means freedom in Hindi, is a mid-size Indian microfinance organisation based in Mumbai. Since receiving a license from the Reserve Bank of India in 2013, Svatantra has provided financial and non-financial solutions to encourage entrepreneurship in rural areas, primarily amongst women.
StreetShares, Inc. is a financial technology company and small business funding marketplace based outside of Washington, D.C.
Gray Matters Capital is an impact investing foundation founded by Bob Pattillo. Its mission is to achieve "An education leading to a purpose filled life for 100 Million Women by 2036." GMC is based in Atlanta, Georgia with global offices in Nairobi, Kenya and Bangalore, India. The scale and the use of business practices with social enterprises makes it one of the leaders in impact investing.
An interest rate ceiling is a regulatory measure that prevents banks or other financial institutions from charging more than a certain level of interest.
Kashf Foundation is a non-profit organization, founded by Roshaneh Zafar in 1996. Kashf is regarded as the first microfinance institution (MFI) of Pakistan that uses village banking methodology in microcredit to alleviate poverty by providing affordable financial and non-financial services to low income households - particularly for women, to build their capacity and enhance their economic role. With headquarters in Lahore, Punjab, Kashf has regional offices in five major cities and over 200 branches across the Pakistan.
Update: Village Financial Services Ltd is now renamed to VFS Capital Ltd.
↑ Fracassi, Cesare; Garmaise, Mark J.; Kogan, Shimon; Natividad, Gabriel (February 2016). "Business Microloans for U.S. Subprime Borrowers". Journal of Financial and Quantitative Analysis. 51 (1): 55–83. doi:10.1017/S0022109016000144. ISSN0022-1090.
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