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On the second day of the recent Davos World Economic Forum Bill Gates called on corporate executives to pair two seemingly incompatible forces. A company’s need to earn revenue with an individual’s interest in the welfare of others. He acknowledged this idea would likely be received with skepticism at first but would eventually be accepted as people become more aware of successful projects with these two aims. Prior to his complete departure from the Microsoft giant that has earned him billions he announced a new venture with Dell computers to join Bono’s Product Red campaign. Certain Dell computers with Window’s Vista pre-installed will result in $60-80 being donated to help fight AIDS in Africa and has resulted in over 2 million people receiving AIDS drugs.

Many times he referenced how important it was to extend low-cost wireless networks into developing countries. He sees these efforts as being capable of being the impetus to vast economic and social changes. “There are billions of people who need the great inventions of the computer age,” he asserted. “Breakthroughs change lives only where people can afford to buy them.” Despite these assertions, Microsoft currently has no announced plans for any type of fee-reduced versions of its software and remains a target of many advocating for changes in software pricing structures. High prices result in the 3rd world being priced out of the market for software and leads to rampant piracy in many countries.
His assertion that “Once you get a country bootstrapped, it’s amazing what happens” can be seen in microcosm through the effects of microlending’s proliferation. Through the expansion of low-cost high speed internet connections and the booming internet cafe business in once remote villages has brought millions of new users into interaction with each other. Technology’s ability to easily and cheaply connect people from such great distances has contributed to the growing social venture movement across the world. It has enabled computer users to learn about people they would otherwise never be able to meet, empathize with their disparate situation, and motivated them to take action to reach out.

Although Bill Gates is not presenting a new bold idea that was previously unknown, his endorsement brings with it welcome recognition to the many who have been laboring with the same visions. Nicholas Negroponte’s attempt at provide one laptop per child, the Muhammed Yunas venture into cell phones for poor rural villagers, and the Tata Group’s new $2500 USD car are all success stories that Bill Gates is calling on CEO’s to wake up and take notice of. They show that a company earning money need not preclude its ability to radically change peoples’ lives for the better.

Do you know of examples of companies doing this in China, if so please write a comment

N.B. It doesn’t matter which country the company HQ is in.
More on Davos 2008 here

International Finance Corporation (IFC) of the World Bank Group Uses USD 2.5m to Promote Microfinance in China

Microfinance in China continues to gain international recognition as the IFC signed an agreement to loan Zhong An Credit USD 2.5 million to bolster their range of services in China. Zhong An Credit is a Caymen Islands holding Company with microlending operations in China that provides small unsecured loans to entrepreneurs and small businesses. This cash infusion will enable Zhong An credit to extend their lending services while also providing needed capital for their overhead operations. The IFC provides capital and consulting services to quality microfinance institutions around the world in an attempt to grow them quickly to expand their impact on the local communities.

This sizable loan signals the IFC’s approval of Zhong An Credit’s current work and Mamta Shah, IFC Director for Global Financial Markets, Asia, Europe, Middle East and North Africa, has said, “This agreement with Zhong An Credit is a first step in what we expect to be a long-term relationship. It is also a first step in IFC’s efforts to build a presence in the country’s microfinance sector.”

Currently Zhong An Credit has 21 branches in Shenzhen and a branch in Hebei Province. With increased funding and support from the IFC they are seeking to open more branches in Shenzhen and other parts of the country. Discussions with the relevant authorities are ongoing and they hope to expand their impact shortly. The IFC is also aware of the impact their support of Zhong An Credit will have on the credibility of Microcredit’s ability to be sustainable in China. Richard Ranken, IFC Director for East Asia and Pacific, said, “We are very pleased to partner with Zhong An Credit in our efforts to provide more funding opportunities to local small businesses that are underserved by the traditional banking sector. Building viable microfinance institutions is a vital part of IFC’s strategy in China, especially in poor and rural areas. This project will have a strong demonstration effect and show that microfinance lending is commercially viable.”

IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment. Through their in-country advisory group, Private Enterprise Partnership for China (PEP-China), located in Chengdu, Sichuan province they identify organizations with technically sound businss models that have good prospects of being profitable. The recipients must also support activities that benefit the local economy and satisfy social and environmental regulations of the IFC and the host country. The IFC’s mission is to help poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed USD 8.2 billion and mobilized an additional USD 3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries.

Original press release available here.

Summary Copyright of 51Give Limited

First loan facility by an international bank to a microfinance institution in China. What impact will this have on the overall industry maturity?

Original Press Release

Standard Chartered and China Foundation for Poverty Alleviation Sign Loan and Co-operation Agreements

First loan facility by an international bank to a Microfinance institution in China; initial facility of RMB 20 million

18 Jan 2008, Beijing: Standard Chartered Bank (China) Limited (Standard Chartered) today signed loan and co-operation agreements with China Foundation for Poverty Alleviation (CFPA) in the Great Hall of the People, witnessed by Premier Wen Jiabao of the People’s Republic of China and British Prime Minister Gordon Brown. This is the first time an international bank will provide credit loan facilities to an organisation dedicated to Microfinance projects in China.

According to the agreement, Standard Chartered will provide the initial amount of RMB20 million as credit loan facility to CFPA, who will finance the Microfinance projects aiming to provide financial support to farmers and owners of micro-enterprises in ten counties of seven provinces in China, most of which are nationally designated as “poor counties” by the Government.

Standard Chartered and CFPA will also establish a strategic partnership to cooperate on best practices sharing and technical issues. Under this agreement, Standard Chartered will bring to CFPA its global expertise in wholesale rural finance, while CFPA will share its domestic retail Microfinance execution experience to assist Standard Chartered in launching rural finance related business in China.

Katherine Tsang, CEO and Executive Director of Standard Chartered Bank (China) Limited, said,
“We are most delighted to work with CFPA. Standard Chartered supports the Chinese government’s policy of expediting the reform of rural financial system, and is committed to actively involve in Microfinance projects. We believe our joint efforts will help enhance productivity, increase income levels and improve living standards of farmers; while supporting the government in alleviating poverty in the rural areas at the same time.”

Duan Yingbi, Chairman of China Foundation for Poverty Alleviation, said,
“Our cooperation with Standard Chartered, on one hand, relieves CFPA’s loan fund shortage, expands our project scale, and helps more of the poor to increase their income. On the other hand, CFPA can learn from Standard Chartered about their international financial management knowledge, experience as well as best practices. In this way, CFPA can also improve on our microfinance management in terms of proficiency and efficiency, thus promoting a more sustainable development of our microfinance program and helping more of the poor in China.”

Peter Sands, Group Chief Executive of Standard Chartered PLC, said,
“This initiative is part of Standard Chartered’s commitment at the second Clinton Global Initiative to establish $500 million Microfinance facility across our markets by 2011, which is estimated to benefit 4 million people currently excluded from participation in the financial sector. Standard Chartered now provides Microfinance facilities to 13 countries in Asia and Africa, and by bringing our experience into China we endeavour to significantly contribute to the financial services industry in China’s rural areas.”

The official opening of MicroCred Nanchong was Dec 15th 2007.

Will the model to lend to small business owners be the way forward in China?

MicroCred serves micro and small entrepreneurs and rural households who meet the following criteria :

• 18 – 60 years-old
• Hold a national ID, a residential permit, or a passport
• Own and operate a business
• Have a minimum of one year of experience in the business sector.
• Work in the same area within the same industry for more than 6 months

BEIJING, Nov 5, 2007 (Xinhua via COMTEX) — MicroCred Nanchong, the first wholly foreign invested company in China offering microfinance services, has started trial operation in Nanchong City in the southwestern Sichuan Province.

The bank with an aggregate investment of 55 million yuan (about 7. 37 million U.S. dollars) from MicroCred SA of France, International Finance Corporation, FW Bankengruppe of Germany and American International Group, targets small firms, rural households and self- employed businessmen.

Its financial services range from credit loans to secured loans to mortgage loans. The loans vary between 5,000 yuan and 75,000 yuan ( 670 U.S. dollars to 10,054 U.S. dollars) at a monthly interest rate of 1.1 percent. The minimum loan period is three months while the maximum is 18 months.

MicroCred Nanchong sources said that its financial services were not available to individuals. More outlets and services were possible if the trial operation went smoothly.

As the unprecedented business model was still nascent, MicroCred Nanchong is not allowed to take deposits and has yet to acquire the license required for financial institutions. The Nanchong Bureau of the China Banking Regulatory Commission, however, is responsible to guide and supervise its operation.

MicroCred Nanchong has secured a business license from the Sichuan Provincial Bureau of Industry and Commerce to start the trial operation.

Amazing, when I started in the internet business in China, there were 3 million users, now 10 years later the number is 210 million!

This coupled with the increased mobile deployment to over 500 million mobile users means the future is bright for technology based solutions to help microfinance in China.

(Associated Press via NewsEdge) The Chinese government said its internet population has soared to 210 million people, putting it on track to surpass the US online community this year to become the world’s largest.

The official China internet Network Information Center, also known as CNNIC, said the online population grew 53%, from 137 million reported at the same time last year.
According to the government’s Xinhua News Agency, China is only 5 million behind the US, a figure consistent with some American estimates.

China still lags the US in many respects, however.

Xinhua placed China’s online penetration rate at 16%, the point Americans were at in the mid-1990s.

According to the Pew internet and American Life Project, 75% of American adults are now online; penetration is even higher when teens are included. (China’s stats cover Chinese 6 and older.)

“We’re two countries at very different points along the adoption curve,” said John Horrigan, Pew’s associate director. “China is approximately 15 years behind.”

Several other differences between the two markets mean internet penetration has different meaning in China and the US.

First, cybercafes serve as the main entry to the internet for many Chinese unable to afford a computer at home. One-third of Chinese internet users surf through cybercafes, according to Xinhua, while Pew found that 93% of US internet users have access at home.

© 2008 The Associated Press

Hi all,

We are off meeting investors and the roadshow is going well.

We have a few major contracts signed.

The site is getting loads of attention from people in 64 countries and 310 cities (70 cities in China).

Our facebook group has passed 100 members which is great.

Functions in development are ready this week.

We are looking for more people to join the technical team and to get translations out in more languages.

Contact us as info @ 51give.com

Happy New Year,

Dan, Hiu and 51give