Sorry this is not technically "live," as our internet connection in Delhi was glacially slow. A few more thoughts from the conference...
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An interesting topic raised in several of the sessions was the need to expand microcredit beyond the scope of its current form. Speakers such as Vijay Mahajan and Nachiket Mor commented on the rigidity of microcredit today, in that most loans dispersed follow a rigid structure and are small and short-term. If building wealth at the base of the pyramid is truly the goal of microfinance, the speakers argued, it must expand to livelihood financing, community-based financing and other larger endeavors. Mr. Mahajan described such financing as, "long-term, lumpy and collective." An example such a project would be a new latrine for a village, or a better road for a rural area. Of course livelihoods financing ushers in a host of new dynamics such as collective repayment, larger risk (to the MFI).....but the potential benefits are enormous.
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Microfinance customers need financing products that are more tailored to the cashflows of the underlying business that is being financed. This will enhance the risk profile as well as reduce dependence on high interest informal sources of credit to smooth out income and payments under the loan.
Rural and semi-urban projects however, have a longer term flavour and require financing structures more akin to project finance. Some of the key questions are:
- how feasible are user fees?
- how can central and state government resources be leveraged to provide comfort to the debt investor?
-can a portfolio of rural infrastructure projects be combined to form a diversified pool that can be financed in the capital markets ?
Examples of such financing have been seen in the Water and Sanitation Pooled Fund in TNUDF. What does it take to kick start such projects?
This is what politicians should really be focusing on in their election campaigns!
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