Social Consulting/Microfinance

Social Consulting aims to remove barriers to affordable financial and business advice, coupled with micro-financing, to accelerate microenterprises amongst local communities.

LOCATION

Fiji & Malawi

DATES
PRICE

SOCIAL OPPORTUNITY

Sustainable Development Goal Targeted: Decent work and economic growth  

Economic empowerment

Small scale entrepreneurship in developing economies can be hampered by lack of access to capital, appropriate advice and a supportive ecosystem.

Limited education opportunities

Fundamental business education and financial education for entrepreneurs and consumers can improve economic outcomes. By simply understanding the difference between ‘good debt’ and ‘bad debt’, consumers can be guided to purchase assets, which will help increase their wealth while reducing repayment risk

Loan costs

Microfinance institutions charge 40+% interest on their loans, which limit the potential social impact that these loans can have. The reason for this is that many institutions have high overhead costs such as the employment of loan officers who are commonly deployed to assess applicants’ risks, which is timely and costly in a developing world context.

Compounding debt

With limited educational opportunities and cultural factors at play microfinance can create greater problems by compounding debt problems. For example, a borrower may engage secondary or tertiary loans to pay back an original debt at far worse terms or interest rates. Compounding the problem.

BACKGROUND

In realising the eighth sustainable development goal, Project Everest has engaged in grassroots businesses in a number of developing countries with the intention to improve profitability, scale, and sustainability. Beyond advice Project Everest seeks to increase access to capital for both businesses and consumers which is intended to be offered through microlending.

In providing financial services beyond advice services, Project Everest seeks to understand the relationship between risk and return in a developing world context. Simply, risk drives returns – that is, the riskier the project, the higher the expected returns are. Therefore, to understand the level of interest we should charge for each project or individual, we need to understand the risk involved in the investment.

Teams have been employed across Fiji and Malawi to understand the issues facing proposed beneficiaries and determine meaningful experiments to test education and lending methods. In this way we can validate learning and build upon it to develop an effective business model in accordance with our methodology. 

This approach will lower Project Everest’s risk in its involvement, improve the financial sustainability of its involvement, help tailor the services offered to proposed beneficiaries and to boost the social impact of its efforts in micro enterprise incubation and acceleration.

HOW IT WORKS

We’re trying to figure out a way to sustainably offer consulting services to entrepreneurs in developing economies.

Finance is about connecting people who have money with people who need money. Currently, people across Africa and Asia do not have adequate access to financial capital, which limits the opportunities and potential for them to enable a higher standard of living. By moving digital, we can pass on cost savings to our consumers, and amplify the social impact that access to lending can have.

By identifying and securing access to data sources that accurately reflect consumer behaviour and risk, we can model credit risk more accurately than loan officers. With reduced individual risk (alpha risk) and digital methods of collecting and analysing that risk further cost savings can be passed onto consumers.

Academic Credit

We’re trying to figure out a way to sustainably offer consulting services to entrepreneurs in developing economies.

Finance is about connecting people who have money with people who need money. Currently, people across Africa and Asia do not have adequate access to financial capital, which limits the opportunities and potential for them to enable a higher standard of living. By moving digital, we can pass on cost savings to our consumers, and amplify the social impact that access to lending can have.

By identifying and securing access to data sources that accurately reflect consumer behaviour and risk, we can model credit risk more accurately than loan officers. With reduced individual risk (alpha risk) and digital methods of collecting and analysing that risk further cost savings can be passed onto consumers.

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