MICROCAPITAL BRIEF: Current and Former CEOs of ACCION International Discuss Role of Microfinance and Capital Markets in Fighting Poverty

In response to the upcoming IPO (initial public offering) of SKS Microfinance, an Indian microfinance institution (MFI) with more than 3.5 million borrowers, Mr Michael Schlein, President and CEO of ACCION International, and Mr Michael Chu, senior lecturer at Harvard Business School and former CEO of ACCION, discuss the role of microfinance and the capital markets in fighting poverty in a Forbes magazine article. “Successful new industries are created when a new activity is capable of generating superior–not average–returns. This is what motivates entrepreneurs to venture into new fields, allows them to reinvest and continue to grow rapidly, and encourages capital markets to assume the risks of an emerging opportunity,” the authors argue. They also point out that financial inclusion is one of many factors necessary to alleviate poverty, including health care, education, housing and clean water.

By Stefanie Rubin, Research Associate

About SKS Microfinance:

SKS Microfinance is a microfinance institution (MFI), launched in 1998, that caters to women clients in India. In 2005, it transformed into a for-profit non-banking financial company (NBFC). As of September 2009, SKS had 1,676 branches, compared with 771 branches in March of 2008. According to the MIX Market, the microfinance information clearinghouse, its total assets, as of March 31, 2009, were USD 596 million with 3.5 million active borrowers, and it reported a return on assets of 3.68 percent and return on equity of 18.72 percent. SKS Microfinance products include: income generating loans, mid-term loans, individual loans, loan cover insurance and health insurance.

About ACCION International:

ACCION International is a private, U.S.-based nonprofit organization with the mission of giving people the financial tools necessary for poverty alleviation, such as microenterprise loans, business training and other financial services. ACCION was founded in 1961 and issued its first microloan in 1973 in Brazil. ACCION’s partner microfinance institutions today are providing loans as low as USD 50 to poor men and women entrepreneurs in 23 countries in Latin America, Asia, Africa and the United States. In the last decade, ACCION partners have disbursed more than 28.5 million loans totaling USD 23.4 billion; 97 percent of the loans have been repaid.

Additional Resources:

Source Article: Forbes.com: Microfinance Goes Public

MicroCapital Universe: SKS Microfinance

MicroCapital Universe: ACCION International

MICROCAPITAL STORY: Michael Chu Promotes Commercial Microfinance in Forbes Article

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