Microfinance Business Model

“Microfinance” is often defined as financial services for poor and low-income clients. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs). These institutions commonly tend to use new Business Models developed over the last 30 years to deliver very small loans to unsalaried borrowers, taking little or no collateral. These methods include group lending and liability, pre-loan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly.
Inception if MFIs

MFI came into existence when the lack of access to credit for the poor is attributable to practical difficulties arising from the discrepancy between the mode of operation followed by financial institutions and the economic characteristics and financing needs of low-income households. For example, commercial lending institutions require that borrowers have a stable source of income out of which principal and interest can be paid back according to the agreed terms. However, the income of many self employed households is not stable, regardless of its size. A large number of small loans are needed to serve the poor, but lenders prefer dealing with large loans in small numbers to minimize administration costs. They also look for collateral with a clear title – which many low-income households do not have. In addition bankers tend to consider low income households a bad risk imposing exceedingly high information monitoring costs on operation.

MicroCredit which is an integral part of Microfinance, is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit.
Business Model for getting financially viable Read the rest of this entry »

Business Strategies For Turbulent Times

Turbulent times require a firm anchor point from which to lead your organization. That anchor point must be an effective strategy that is properly communicated across the entire organization. A strategy is a broad statement of planned activities which, when effectively performed, will most effectively accomplish a given objective.

The Strategy of the Business (or other Enterprise)

The term “strategy” was adopted from the military. The “strategic plan” of an army is a broad plan to destroy the enemy’s ability to wage war. This may include the elimination of his factories, ports and transportation as well as his fighting forces. It is an all encompassing plan for accomplishing the mission of winning the war. The “strategic plans” of the divisions would support the broad plan of the army. Read the rest of this entry »

The Politics of Preventive Medicine

A recurring theme of mine is the maddening, confounding and fascinating complexity of human health and disease. Common sense, unifying principles, and single-explanation theories cannot encompass the diversity of the human organism. Easily understandable, common sense approaches to health care can often be ineffective or counterproductive. Lay people and their political representatives rarely grasp these intricacies, which leads to poor individual choices and public policy.

Obamacare panders to these tendencies by stressing “preventive care” as a core principle. What could be more sensible and cost-effective than preventing disease by finding it early? Two papers published last week seriously question these underlying assumptions and raise fundamental issues about the integrity of the medical foundations of Obamacare.

The first paper is about prostate screening. The conclusion is that finding tumors early has no impact on the life or health of the people screened. This counter-intuitive outcome is based upon the unusual behavior of some of the prostate cancers found. It appears than many cancers never progress far enough to cause any actual problems. Screening finds these harmless tumors, and treating them results in no benefit, and greatly increased cost. Waiting to treat those cancers which actually do cause problems is just as effective. Needless to say, this kind of result is difficult for many people, even some physicians, to accept. Read the rest of this entry »