Chicago Microfinance Conference - Part 2 of 2

By: Carolyn (Carolina) Kloecker

During a “Lunch & Learn” session, we were able to choose from many different presentations. The one I chose was related to the Spanish-speaking population in the U.S. The presenters were MBA students from UCLA, and they mainly talked about the market potential of this group for microfinance and financial services. There are over 1.6 million Hispanic-owned microbusinesses in the U.S. Also, in the past year, only 7% of underserved microentrepreneurs were reached by microenterprise programs. In terms of unmet needs, 20.6 million Latinos are unbanked or underbanked, and 51% of Latinos cite “financial issues” as a reason for not having checking or savings accounts, based on a survey by ACCION USA. The conclusion by the panelists was that more outreach is needed, in order to inform people about their options.

Some of these financial service options include credit, business and consumer loans, insurance, and grants. I found this diagram very interesting, making clear what micro-enterprise development and microfinance consist of:

[Ann: I received an e-mail letting me know more information about this graphic, that was from a PowerPoint presentation given by a group of UCLA MBA students. Full citation: Source: Elaine Edgcomb, “Opening Opportunities, Building Ownership: Fulfilling the Promise of Microenterprise in the United States,” FIELD, the Aspen Institute, February 2005, http://www.fieldus.org/Publications/FulfillingthePromise.pdf, accessed January 15, 2010.]


For Business and Consumer loans, there are basically four different entities that would give out these loans. These are banks (8.4% avg. interest), credit unions (15% avg. interest), non-profit Microfinance Institutions (MFIs) (18% avg. interest), and for-profit MFIs (36% avg. interest).

The most logical marketing strategies according to the presenters were grassroots marketing, word-of-mouth, and speaking with people one-on-one. In general, among the Latino population there is a high awareness of these services, but a low usage.

Another session that I attended in the afternoon was called “Microfinance as an Asset Class?”. To be honest, a lot of this went over my head, because most of the panelists were Wall Street investment bankers, and I had never really studied those types of finances before. These panelists predicted that microfinance would definitely be “investable”, but not necessarily mainstream right away. What is necessary is strong local funding as well as international market support. Part of the problem is that, at the moment, the majority Wall Street does not understand microfinance, and how many opportunities and possibilities it presents to investors. Microfinance needs to be put in terms Wall Street can understand (earnings, return on investment). While Wall Street brokers will bring management expertise, microfinance companies bring the on-the-ground experience and great success rates. Although there is a little more risk in these investments, there is also the potential for the investor to hit a certain return.

So, those were the things that I saw and heard at the Chicago Microfinance Conference! If anyone has any questions please feel free to post them in the comments section. Thank you!