14:30 - 16:15

Ronald Lubberts (The Netherlands)
Managing Director - Sustainalytics Netherlands

Mitchell Lench (United States of America)
Partner - Treetops Capital

The Financial Crises and Consolidation (M&A) in the Microfinance Industry: A framework for addressing current challenges

Peter F. Hinton (United Kingdom)
Chief Executive Officer - Summit Development Group

The Next Frontier of Impact Investing: Missing Middle Finance

Microfinance has demonstrated that an asset class exists for channelling capital to the bottom of the pyramid. Starting out as a philanthropic activity, today microfinance has gained the attention and support of return-oriented investors, and since 2004 private sector investors have more than doubled their investments to US$ 4.4bn in 2006.

But what comes next? Microfinance focuses on the poor and the smallest businesses to smooth income and reduce vulnerability. But once the businesses start growing, they become too large for microfinance institutions, but are still unable to approach commercial financial institutions. The consequence is there is a financing gap for these small and growing businesses – the ‘Missing Middle.’

Small and medium enterprises (SMES) play an important role in economic growth, employment creation and provision of goods and services to underserved communities. However, in developing countries SMEs face many obstacles including access to finance. The World Bank estimates that SMEs contribute an average of 50% of GDP in high-income countries, but only 16% in low-income countries. Thus there is a tremendous opportunity for investors to accelerate the development of this sector and gain both financial and social returns at the same time.

Missing Middle Finance is an important new asset class – potentially worth billions of dollars – and has the ability to contribute to sustainable economic growth in developing countries. This presentation will present examples of successful financial institutions operating in the Missing Middle market in Africa.

Paolo Sardi (Luxembourg)
Founding Member and Chief Executive Officer - ECPI

ECPI MICROS®: the sustainability rating of MFIs

Microfinance has proven to be a fast growing, socially responsible and financially sound sector. Some microfinance institutions (MFIs) reach millions of clients and have become an important part of the financial sector of their respective countries. However, it is estimated that one billion people still lack access to basic financial services.

Microfinance is still far from reaching its potential. This is largely due to a lack of both funding resources and adequately transparent investment vehicles.

In order to increase transparency of investment products that imply exposure to Debt and/or Equity of those entities (in the form of Private Equity Funds or Luxembourg SICARs) and consequently to attract more investors to this market, ECPI has developed MICROS®, a rating methodology of Microfinance players. MICROS® is focused on two critical success factors for MFIs: the governance and operating structures of MFIs and their social impact.