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Princeton Microfinance Organization Presents:

Microfinance and Beyond: Forging New Paths in Economic Development

 

Event schedule:

1:00-2:00: Brad Swanson (Developing World Markets)
2:00-2:30: Shereef Zaki (Kiva)
2:30-3:00: Alexandra Kobishyn (Innovations for Poverty Action)
3:00-3:30: Break
3:30-4:30: Professor Jonathan Morduch (NYU Wagner Graduate School of Public Service)
4:30-5:00: Kara Tirimacco (Accion USA/Microfinance USA Conference)
5:00-5:30: Rachel Taber (Alta Gracia)

This microfinance summit is free, and no registration is necessary.  The event will take place in Peter B. Lewis Library on Princeton University’s campus, which is accessible via NJ Transit.

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At least that seems to be the trend. An enterprise incubator has just appeared in Abuja, Nigeria: Enspire Incubation Program, piloted in August of 2009 ‘to provide technology innovators with resources to develop and grow their ideas, products or services, and fulfil their creations in the local market.’ This is a part of the soon to be completed Abuja Technology Village, spearheaded by the Nigerian government. Taking a different approach, a smaller and slightly more hip venue is being designed right now in Kenya, the iHub: ‘Nairobi’s Innovation Hub for the technology community. . .an open space for the technologists, investors, tech companies and hackers in the area.’

And why not? Singapore’s epic climb from a third to first world country in the latter half of the 2oth century was, in part, spurred by the efforts of Singapore’s Economic Development Board (www.edb.gov.sg) to identify and build strategic industry sectors. An important piece of this was setting aside industrial parks and providing incentives for foreign investors to set up shop. Eventually, as they shifted their focus onto more knowledge-intensive activities (such as R&D, engineering design and computer software services), the government built research parks.

What about the role of local enterprise? In 1986 the EDB established the Small Enterprise Bureau. Ten years prior to this the Small Industry Finance Scheme  provided small loans (here we’re talking around $250,000) to local small to medium-scale enterprises.

The EDB was able to create an innovative and business-friendly environment that attracted foreign direct investment. They transitioned from a focus on manufacturing to a knowledge economy, where a highly educated population became their biggest asset – a market incentive for high quality education.

Today, Singapore’s economy is thriving and it’s ranked #1 in the world in ease of doing business in the World Bank’s 2010 Doing Business Report. We can learn a lot from the steps that Singapore took to achieve real and lasting economic growth. Of course, the picture is not all rosy. This was done under a largely autocratic government and one wonders if such progressive action could have been carried out within a democracy.

The question now is: results. Will Kenya and Nigeria be able to catapult themselves into the IT sector? Will these spaces attract the types of dynamic communities that create real growth?

Only time will tell, but they are certainly off to a promising start!

~Rebecca

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A Presentation by Drew McWay and James Beshara, founders of Dvelo.org
February 16, 2010
4:30pm

McCosh Hall 66

Come join us for a presentation of Dvelo.org (http://beta.dvelo.org/index.php), a recently-launched platform to connect investors with communities in the developing work. Dvelo.org motivates lenders with financial and social incentives to lend small quantities of investment to capital constrained microfinance institutions. Microfinance institutions can then use funds raised on Dvelo.org for portfolio expansion, capacity building, and other productive purposes before repaying the lenders with interest following the maturation of the loan. Since its public launch in December of 2009, Dvelo has raised resources from among its 200+ users for communities on three continents. The presentation will unpack the developers’ previous experiences in microfinance in Peru and South Africa and how it led to Dvelo.org’s formation and business model.

The presentation will be followed by an informal dinner discussion in the Rocky Private Dining Room. No sign-up required, come when you want, leave when you must!
More info on the facebook event page: http://www.facebook.com/event.php?eid=303902604420

Hope to see you there!

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Beck lecture flyer
Princeton Microfinance Organization Presents:
Beyond Microfinance
The Importance of the Missing Middle

Tuesday, September 29
McCormick 106
5 pm
Come check out the kick-off event of the Princeton Microfinance Organization’s (PMO) Fall 2009 speaker series! Steve Beck, a leader and innovator in economic development and addressing the challenges of global poverty, will speak on the limits of microfinance and the importance of mid-cap finance. He is the Co-Founder and CEO of SpringHill Equity Management LCC, a private equity find manager providing growth capital and support to small and medium sized enterprises in Africa.

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A nice photo of the PMO from after our Spring Colloquium on Global Health and Microfinance.CIMG4472

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Check out this article in the New York Times today. It offers an interesting perspective, seeing as one of the major challenges to microfinance is investing in businesses and entrepreneurs that are likely to succeed.

See the article here: Lending Talent and Money on a Micro Scale

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A comment made by Mark Frazier, Co-founder President of Openworld Inc., has had me thinking. Frazier commented that top-down approaches to aid generally fail. For example, mosquito nets might be used to make dresses, and malaria may continue to spread. Often, the failure of the top-down approach is a failure of distribution of transfers in kind (corruption, misinformation, lack of knowledge and short-sighted preferences). The problem might be fixed by greater oversight but such oversight might be seen as paternalistic, or might simply be underfunded and inadequate. Such arguments against the top-down type approaches to international aid raise questions that challenge big-push theories. From a paper critiquing Jeffrey Sachs’ “The End of Poverty: Economic Possibilities for Our Times:”

Poverty traps occurs when agents fail to coordinate their actions to achieve the optimal allocation of resources. It is argued that this phenomenon makes economic convergence impossible and keeps agents in a poverty trap from which they cannot escape unless a massive and coordinated industrial policy is implemented. This analysis shows that the literature on coordination failures has overemphasized the significance of market failure. It argues that coordination is possible and profitable in a free market system. State intervention is responsible for the systematic misallocation of resources (discoordination), in general, and for poverty traps in particular (Coordination Failures, Poverty Traps, “Big Push” Policy and Entrepreneurship: A Critical View, Bogdan, 2007)

Of course, what this says is that not only is economic growth from top-down aid largely unsuccessful, it is often the inadequacy of the government of the people in question that keeps the people trapped in their current economic situations.

For an example of how some top-down approaches fail see this article:

MOZAMBIQUE: 1,001 things you can do with condoms

Honestly, the immature side of me wants to laugh; the youthful side of me is happy the kids are getting soccer balls, and humanitarian in me realizes that good intentions are failing to be enough. Just because condoms are being made available doesn’t mean they are being fully adapted into the local community. If we call the slight decrease in the rates of AIDS cases each year in this community a success, then we risk seeing what more we can do to a) decrease the presence of HIV/AIDS, and b) decrease the number of unwanted pregnancies per year. The fact is, while condoms are a nice touch in this battle, the community in question is clearly lacking the necessary infrastructure to battle the very things that are keeping it trapped in poverty. Throwing condoms in the mix is literally like throwing a glass of water onto a burning house–it will wet but not douse the conflagration.

This is the part where I would usually make a comment like, “Here, microfinance can help,” but I’ll refrain from the usual, and instead state the obvious: top-down approaches mitigate, but do not solve, the most pressing problems facing LDCs around the world. In the current recession, fewer are looking to give money to any cause and more are looking to save. The microfinance industry is still relatively strong but can only do so much. It’s times like these that we should explore other means–transcending the actual giving or investing of money and reexamine just how that money is distributed. Furthermore, we should look into shaping the way decisions are made by individuals, incentivizing good decision making that will help individuals in their given societies live better with the means and resources they CURRENTLY have (while foreign investment slowly and quietly injects more money into increasingly successful systems). This is the work of behavioral economics, as far as shaping decision making processes goes, but also the work of anthropologists to understand culture-based incentives and mechanisms, and sociologists to project how change will occur and restructure the society as a whole.

It seems that in the current state of the global economy no “Big Push” or heavy handed top-down approach will occur, most people with any means are looking out for themselves. This is the time we need to learn how to do more with less. Then, when there is more, we can accomplish more.

Just a thought.

A


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