[IMPACT]
More about Microfinance
The microfinance asset class was the first impact investing segment with a track record (since early 2000)
- Market size for the asset class of nearly USD 40bn (2021)
- Total of >500 funds for >260 investment managers
- Switzerland is the largest deal sourcing countries (>35% of total), followed by the Netherlands (17%).
Description of microfinance investment value chain
- Investor: Can be an High Net Worth Individual (HNWI) or institutional asset owner willing to lend capital, mostly debt, to a microfinance asset class, typically between USD250k-to 1m for an HNWI and USD1-20m for an institutional asset owner
- Investment Vehicle: Can be a specialized microfinance fund or a foundation pooling capital from investors typically sizes of >USD50m
- Microfinance Bank: Can be a specialized microfinance institution or bank located in emerging markets, ideally one in Latam, one in Africa and one in Asia typically local and regulated bank with >100k clients
- Micro entrepreneur: Can be local micro or SME enterprises, ideally a dozen per project typically self-employed or small companies with less than 10 staff borrowing loans from $100 to USD5k
The attached ppt presents the MicroFinance key players:
Today the value chain includes many intermediates which leads to a lack of transparency and lack of traceability - the investors do not have traceability about how the money is distributed and what is the actual impact on the entrepreneur. From discussions with senior people in the industry this is a growing issue for impact investors demanding more transparency and a huge opportunity to use blockchain technology as a key part of the solution.
Attachments more reference reading:
https://symbioticsgroup.com/wp-content/uploads/2017/10/SPM_web.pdf
https://symbioticsgroup.com/wp-content/uploads/2015/08/Microfinance_Investment_Book_web.pdf
<https://www.adb.org/projects/documents/loan-agreement-special-operations-microfinance-development-program-subprogram-1>
The Proposal focus
This proposal will conduct a feasibility study of how the microfinance industry could adopt blockchain technology and Cardano in particular.
Bringing together a group of Microfinance experts with Cardano community members (research and technology) to analyse the current supply chain and suggest the key infrastructure required to transform the Microfinance industry to be more transparent and to be able to trace funds and impact on the ground.
Out of this process we expect to both suggest transformation of the traditional MF industry as well as come up with ideas for new opportunities.
Key activities
The following are key activities for the team of this proposal to succeed:
- Analyse the microfinance current supply chain - this phase is already in progress and led by Fabio
- Understand the role and incentives of each stakeholder in the supply chain
- 3 brainstorming sessions - 2 hours each
- Suggest a framework going forward and present potential models of how to build MF 3.0
- Include IOG and Cardano Foundation teams supporting with tech solutions and roadmap and co design the platform
The Expert Group
The expert group will be assigned by Fabio Sofia the lead proposer. Fabio is based in Geneva, Switzerland which is a significant player in the microfinance industry, and has over 20 years experience dealing with financial inclusion. Fabio has a strong network and will bring onboard key experts from the industry and the expert group will include at least:
- A microfinance investment fund
- A microfinance investment vehicle
- A microfinance institution in developing countries MFI
- An research impact expertise
Potential solutions
Some key technology models that will be evaluated includes:
- Atala Prism DID for entrepreneurs
- Smart contracts
- Money transfer infrastructure - traceability and transparency of fund and use of funds
- Impact reporting
- New business models (tokens, NFT, investor platform)
<u>Challenge question: How can Cardano-based solutions help meet real business needs and what would be their impact? </u>
The Microfinance industry is an impact driven industry,transferring funds across borders too developing countries. Using Cardano infrastructure and technology solutions could support more transparency, traceability and higher efficiency of fund transfers for lower interest rates imposed on the entrepreneurs. This leads to more funds for on the ground impact, avoiding excessive fees charged by legacy middlemen of necessity.
<u>Why is it important? Companies are finally discovering the power of blockchain technologies and Cardano is ready to onboard exciting B2B and B2C solutions.</u>
The microfinance industry is an important one, highly aligned with Cardano values and work in developing countries. However, this is unventured terrain for players to use Cardano’s tech and apply it in this industry and solve real problems.
<u>What does success look like? Innovative products and services that increase efficiency, transparency, and stakeholder engagement as well as expand business to new areas.</u>
Well, this is exactly what this proposal is all about as described before.
-
The Microfinance industry is managed by many players of the traditional finance industry - which could be challenging for transformation of old habits. This is why in this proposal the process will include a group of experts from the industry to think and design together new solutions.
-
Risk of currency exchange between ADA to local currencies. Part of the learning in the MVP stage will be how to mitigate this risk. The Empowa solution is one good example, www.youtube.com/watch?v=xE5WBUA35kY, and we will try to identify more
-
Reglementary and legal framework will be a key factor as well that needs to be considered
[FEASIBILITY]
Roadmap
-
0-4 weeks
-
Finalise microfinance expert group
-
Finalise tech supporting team from AIM, IOG, CF
-
Analyse the microfinance current supply chain
-
2 sessions IOG and CF teams
-
First session with expert groups
-
Understand the role and incentives of each stakeholder in the supply chain
-
5-8 weeks
-
Suggest a framework going forward and present potential models of how to build Microfinance 3.0 for
-
2 sessions IOG and CF teams
-
Second session with expert groups
-
9-12 weeks
-
Refinement of the feasibility study
-
Third session with expert groups
-
2 sessions IOG and CF teams
-
Summary of finding and final report including
-
Synergies opportunities
-
Marketing, business and product strategy for Catalyst and Cardano
Deliverables
- Summary of meetings with expert group
- Summary of findings and final report
- Participation and/or partnerships with other international organizations
Feasibility study budget:
Analysis phase 4 weeks with various team members dedicating time for research and report USD 4000
3 sessions expert group USD 1500 per session = USD 4500
3 sessions with IOG and CF USD500 per session = USD 1500 (CG & IOG will be also included in the expert sessions)
Final analysis and report production USD 4000
Logistics/misc (in person meetings) 2000
Total Budget 16000
Fabio Sofia, has dedicated most of his career to finance, which intends to contribute to positive impact. Co-created Symbiotics in 2005, which has become a world-leader in microfinance investments in emerging markets, going on to join WeCan Group, a fintech specializing in digital financing solutions and blockchain. Following with Asteria Investment Managers, an asset manager aimed at providing impact investing solutions across all asset classes. In parallel, I am also President of Sustainable Finance Geneva, an association promoting sustainable finance.
<https://www.linkedin.com/in/fabio-sofia-6572408/>
Yoram has 20+ years of business experience working with technology companies (strategy, partnerships, investors). In the last years, Yoram is focused on combining impact and business. 4 years ago he left his comfort zone and worked for 2 years for an NGO Earthworm.org focusing on sustainable business models across agriculture supply chains. Yoram also constantly works with startups as an advisor and mentor i.e. GivingWay.com. <https://www.linkedin.com/in/yoram-ben-zvi-446836>
Within Catalyst, Yoram is an active community member, CA, proposer, and very active with Cardano4Climate
Razali Samsudin, Research lead <https://www.linkedin.com/in/razali-samsudin>
Educator, Editor, Digital Economy, Blockchain & Sustainability Researcher, Social Entrepreneur, Catalyst Proposal Mentor, Wada UN SDG and Education Coordinator, Co-Founder of Sustainable ADA, Contributor for Positive Blockchain & Catalyst School Core Member.
Cole Bartlett, Youth lead, <https://www.linkedin.com/in/cole-bartlett>
UNITE 2030 Youth Delegate, a recent graduate in Economics & Sustainability, Founder of Sustainable ADA, Blockchain & Sustainability Researcher, & Social Entrepreneur, Ecoquest Education Foundation - Sustainability Research, B Impact Clinic part of UNH's Changemaker Collaborative - Kikori, Sustainability Splash Program Organizer, Bronze UNH Sustainability Award Winner
Trishala Adwaine Suresh https://www.linkedin.com/in/trishalasuresh/
Impact Lead at SmartChain, Impact Assessment Lead Cardashift, Active Cardano Community Member, Project Catalyst Proposer since Fund 7, Co-founder of YouthBlock and Debug Lab, a podcast series.
* AIM:
Raz and Yoram are part of Cardano AIM (Assembly Inspiring Masses) which brings together active Catalyst Community members to design and build tools that support the community. Some examples: include the popular voter-tool (https://cardanocataly.st/voter-tool/#/), the Community Advisor Tools (CA and vCA-tools) (https://cardanocataly.st/ca-tool/#/ & <https://cardanocataly.st/vca-tool/#>), the SDG Proposer Tool (<https://cardanocataly.st/proposer-tool-sdg/#/>), the SDG Search Tool (https://cardanocataly.st/sdg-search-tool/#/), as well as the Community Landing Page (https://cardanocataly.st/). AIM continues to focus on developing the best services and tools for the benefit of the Cardano community.
[AUDITABILITY]
Sessions/meetings will be carried out with sessions being recorded (with consent of all parties) and shared in a publicly viewable Google folder.
Deliverables (summary report and findings) will be shared on relevant sites for open access benefit. Including the new international partnerships, and collaborations with organizations.
A feasibility study completed, and summary report findings published, enabling a framework and strategy to be fine tuned to determine the next steps in developing a MVP.
The MVP built upon the learnings and blueprint resulting from the feasibility study and expert working group sessions.
The blueprint can be used to benefit the Microfinance industry and other relevant sectors, helping stakeholders make the theoretical and applied transition away from a legacy traditional finance system, towards a system that incorporates solutions available today.
This is a new proposal
SDG Rating
SDG goals:
Goal 1. End poverty in all its forms everywhere
Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
SDG subgoals:
1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance
8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services
8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
9.3 Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets
17.16 Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries
17.3 Mobilize additional financial resources for developing countries from multiple sources
#proposertoolsdg
