Thursday, July 17, 2008

Small and Medium-sized Enterprise Finance

The speakers included Mildred Callear, the COO of the Small Enterprise Assistance Fund, Harold Rosen, Founder of the Grassroots Business Initiative, and John Simon, Senior Vice President of Overseas Private Investor Corporation.

As Washington DC popularizes foreign assistance through continued overseas micro-financing, these three speakers described the key changes that need to take place, and the initiatives their companies are implementing in order to be more effective. According to Mildred Callear, the key change that SEAF implemented is an increased level of management depth. Callear noted that in many cases, companies will lend money to entrepreneurs overseas without any continuous contact or management. SEAF, which split from Care in 1996, focuses on continuous levels of management with each of their accounts. This tactic, referred to as In House Business Assistance, walks borrowers through marketing strategies, operations assistance, additional financing, and finance collection. This creates a relationship where SEAF acts more as a parent organization, not just a lender.

Harold Rosen started the Grassroots Business Initiative because of his theories on proper lending strategies. Rosen stated that too often business will simply loan an entrepreneur a lump sum and expect them to pay it back in 6 months. However, in order to effectively empower the poor as producers, consumers, and entrepreneurs, lenders need to provide sustained monetary donations, and take the risk of investing more than just “dribbles of cash” (Rosen).

Overseas Private Investor Corporation, an offspring of USAID, has also made a shift towards development promotion. While struggling with its image during that 90s, John Simon claims that the company made a shift back to its original intent in 2003. OPIC is currently focusing on providing dept, loan guarantees and political risk insurance in order to encourage Small and Medium Enterprise Companies in the US to invest in development overseas. Currently, 87% of OPIC’s business is with American SME’s attempting to invest overseas (Simon).

While these three companies are on different levels of establishment, and success, all three stress the importance of maintained contact and assistance when lending money to entrepreneurs over seas. Additionally, all three see this as the solution to sustainable development because it benefits both the lenders as well as the borrowers. With the United Nations Development Program’s recent launch of the Growing Inclusive Market Report, and the presentations by Callear, Rosen and Simon, it has become clear that Small and Medium-sized Enterprise Financing has become the preferred method to help developing countries to reach financial stability during the emerging era of Globalization.

Sponsor: Society for International Development, DC
Date: 7/10/08
Time: 12pm
Representative: Daria Willis

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