Dear Chuck, Daniel
This sale and the the business model adopted by the buyer company seem worrisome. I am reminded of the Compartamos public issue of equity and the discussion that followed. Chuck's observations are very relevant and need answers. Such happenings once every few years undoes the good work done by several other institutions across the world.
The questions that arise in this case are
1. At the time of sale whether the existing business model of Mybucks was not examined by Opportunity?
2. How many businesses that deal with poor have ROA in excess of 12% and can an international NGO view such businesses with favour?
3. Are interest rates not an issue when vulnerable livelihoods are being supported (the mybucks website talks about empowering poor and building up small enterprises!!). At 200%+ APR, only very short duration loans to meet emergencies, totally inappropriate for livelihood activities can be extended - the borrowings will be out of desperation.
4. Whether opportunity international did not have a duty to ensure that the legacy institution emerging from the sale also had adequate concern for the customers?
5. In its Microfinance engagement, Opportunity has always been a very sensitive and responsible investor. Having closely seen its operations in India, I wonder as to what went wrong in Africa and what were the motivations to handover over a million savers and 0.15 million borrowers to a company that seemed to specialise in payday lending and profiteering.
Best regards
Srinivasan
On 23-Jun-2016, at 9:48 PM, danrozas@yahoo.com [MicrofinancePractice] wrote:
I wholeheartedly second Chuck's call for a wider discussion.
The article authored by Gabriela Erice and myself takes quite a different perspective from Chuck, but it is also packed with data -- so that you can make up your own mind. We may draw different conclusions, but one area where we agree is in recognizing that this deal could well prove to be a major milestone in the sector.The joint publication of the two articles by Next Billion is a coincidence, but it's also a meeting of the minds. We were both surprised at how little this issue has been discussed, and believed that what was missing was more information. It was through Next Billion that we learned that we were working on this independently, but we agreed not to share information until publication, so as to come to wholly independent conclusions. You can see the results for yourself.Our goal is not debate for its own sake, but we also don't have the luxury of ignoring the potential impact that will come from fintech, as it makes inroads into the sector. How we as a sector react to these changes will affect what kind of sector we're likely to have in the years to come.What do you think? What is YOUR vision for the fintech? Make your voice heard -- on the blog, on linked in, on twitter.Daniel Rozas
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Posted by: Narasimhan srinivasan <shrin54@yahoo.co.in>
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