Microfinance for Bankers and Investors_9

268 • Microfinance for Bankers and Investors Turning Schools into Business Nodes Equity’s managers recognized that schools offer an excellent opportunity to build a market. Many people come together around schools: teachers, stu-dents, and parents—all potential customers. Equity developed products specif-ically to meet their needs, including teacher salary advances, parent saving accounts, and education loans. The bank has a wide network of 65 branches across the country, supported by 44 village mobile banks (banks-on-wheels that make weekly visits in rural areas). It uses its growing network to reach as many schools as possible, offering various products: • A teacher salary advance is geared toward meeting the unforeseen needs of teachers before payday, with loans up to four times the average monthly net salary (see Table 1). The majority of schools also channel their payrolls through the bank. • To help low-income parents with tuition fees and school expenses, Equity Bank offers education loans timed to the academic calendar. • Saving services include a contract savings account for education (the Jijenge account) and the Super Junior Investment Account, a child savings account. The bank’s staff has substantial knowledge about its client schools, students, and their households, and this knowledge is augmented by a large database, built in collaboration with Hewlett Packard, Infosys, and Oracle. The bank uses this information to adapt its services to meet the varied demand, while keeping them commercially priced. Applying Philanthropic Tools In 2006, the bank established Equity Foundation, a nonprofit organization, to raise and channel charitable funds. Among the foundation’s main activi-ties are programs that supplement the bank’s commercial services for private-budget schools and low-income students. The largest of these activities is the pre-university sponsorship program for low-income students, which doubles as an employee development program. Every year since 1997, the bank selects top students from districts where it has a branch, focusing on low-income students who otherwise could not attend university. The students are provided an opportunity for a one- to two-year Equity Bank Goes to Schools • 269 Product Purpose Features Scale School development loans To help schools improve • Interest rate of infrastructure,purchase 14 percent educational materials, • Loan term from and enhance quality 1 to 12 years • Over 3,000 schools • $15 million in loan portfolio • Average loan size: $18,136 Salary advance loans To support teachers to meet unexpected social and economic needs • Up to four times the average monthly net salary • Interest rate of 15 percent • Loan application fee of 3 percent • Available at most of the 3,000 client schools Jijenge savings accounts Super junior investment account To provide a means for parents to prepare for children’s future To introduce children to savings accounts and banking • Contract savings • 7,121 accounts • No withdrawal allowed • Total saving balance: within contract $748,798 • No opening balance; • Average account minimum balance amount: $105 of $7.50 • No ledger fees • Interest rate from 3 to 6 percent • Fast access to loans up to 90 percent of the Jijenge deposits • Opened and operated by • 7, 572 accounts the parent/guardian on behalf of the child • Three withdrawals • Total saving balance: allowed per year $812,595 • No opening balance; • Average account minimum balance amount: $107 of $3.00 • No ledger fees • Interest rate from 3 to 6 percent • Free bankers check for payment of school fees • Access to school fees loan Education loan To assist parents in financing school fees at all levels of education • Interest rate 15 percent • Loan application fee 3 percent • Available for terms up to 12 months • No guarantors • 1,655 (by the end of 2003) • Average loan size: $1,000 Table 1 Equity Bank Education Products Sources: Kibiru P.Irungu (Business Relationship Manager,Equity Bank), and Graham A. N.Wright and James Mwangi,“Equity Building Society’s Market-led Approach to Microfinance,” MicroSave, September 2004, and Equity Bank, www.equitybank.co.ke. 270 • Microfinance for Bankers and Investors internship with the bank, and successful interns can work with the bank after graduation. The program supports students financially during their stints at the bank and during their studies. Equity sponsored 102 students in 2007. Equity plans to launch matching grants through Jigenge contract savings accounts to increase incentives to save for education. Grants from the Equity Foundation will match or add to the savings account. Based on the financial situation of the family, the bank might add loans to the above package. Equity Bank professionals, working through the foundation, also provide capacity building services for schools. Financial literacy and business manage-ment training has proved popular with private-school owners and administrators. The foundation also organizes forums and networks for private schools to share information and discuss common issues. The bank staff works closely with schools to identify their critical needs in finance, marketing, and management, and to help them develop business plans and set priorities for capacity building. In administering all these activities, Equity must of course avoid inappro-priate mixing of charitable and business resources. For example, it cannot use grants to help clients repay loans. It is not always easy to see a bright line here, and vigilance is required. Measuring the Social Bottom Line Equity tracks the social impact of its education services to understand the intan-gible benefits in terms of youth empowerment and education. Its monitoring project identifies the social impact of school-based financial services at several of its client institutions, including a private primary school and two technical institutes. It tracks how much the bank has loaned, how many students graduated, how students performed in standardized tests, how many went on for further education, and whether school infrastructure, capacity, and education quality were improved by bank services. Success Factors and Results Equity Bank attributes success in providing financial products to private-budget schools to early entry into the market, large-scale commercial outreach, exten-sive information about clients, and products tailored to the needs of low-income clients. The linkage of commercial products and capacity-building services with charity funds increases the effectiveness of private-budget schools. Equity Bank Goes to Schools • 271 Equity’s education programs and services meet a strong demand and provide profitability to the bank, while making a significant contribution to Kenya’s schools and youth. They also pave the way for a loyal customer base for the future as those young people grow up. And Equity gains in stature as a bank that leads by contributing to an important national goal. TRIODOS BANK AND THE GLOBAL REPORTING INITIATIVE usinesses and investors that pursue inclusive finance may wish to find ways to measure and report on the social value they create. Triodos Investment Management, a Dutch fund management company with a portfolio of €140 million in microfinance funds, actively invests in inclusive financial institu-tions in developing countries. Through the Global Reporting Initiative (GRI) Triodos uses sustainability reporting to enhance social-performance manage-ment by its investee banks and finance companies. Triodos helps its equity investees in microfinance develop annual “sustainability reports” detailing their economic, environmental, and social performance (see Table 1). GRI:People,Planet,and Profit Sustainability refers to longevity, whether for the human race, the environment, or an organization. Global Reporting Initiative guidelines provide a mechanism for companies to disclose their annual activities in sustainability reports accord-ing to a triple bottom line, sometimes referred to as people, planet, and profit. The first version of the GRI was developed by the U.S. nongovernmental organization CERES in 1997 in response to calls from a range of voices for greater corporate accountability, particularly in the environmental arena. The United Nations Environmental Program joined as a partner in 1999, provid-ing funding and visibility for the initiative. A broad group of stakeholders— the business community, NGO representatives, and academics—developed guidelines. More than 30,000 stakeholders from 80 different countries have contributed to formulating GRI criteria. • 272 • ... - tailieumienphi.vn