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Ontario credit union supports peacebuilding in Afghanistan
Money and war can go hand in hand, but as a community that has been richly blessed, we know that responsible stewardship involves using our economic resources to work for peace in a troubled world.
Mennonite Savings and Credit Union (MSCU), was looking for a practical way to support peacebuilding internationally as part of Stewardship in Action, which promotes peace, social justice and mutual aid (ranging from financial literacy for low-income and immigrant segments to green initiatives and no-interest loans in special cases). As a financial institution, lending and savings are what we know best, but our ability to do lending and savings is bound by provincial borders, so we needed an international partner to be able to make an impact.
It was natural for MSCU to turn to long time partner organization, Mennonite Economic Development Associates (MEDA). In particular, MEDA’s expertise in microfinance — small loans to small businesses — was attractive to MSCU, given the focus on lending and savings.
MEDA was excited to get MSCU involved in its work in Afghanistan. Women in the wartorn country face huge challenges in feeding and caring for their families, and MEDA partners with Women for Women International (WWI) to provide small loans for farming, retail, service and production businesses run by these women. As part of this work, MEDA has also recently become involved in the Afghanistan Challenge, a Canadian government dollar-for-dollar matching initiative.
Through these partnerships MSCU has donated $50,000 ($25,000 from MSCU, $25,000 in matched funds) to women like Butool, who says, “My husband always struggled to find work. I had been raising our two children and also trying to earn money to support us. But we had very little — every day was a struggle. The microfinance program has been essential for us. We can now cope with the hard times of life. We know we can find our way out.”
Through the MEDA Trust
Private investors launch global “fund of funds”
Sarona Asset Management Inc., a MEDA company, has completed the first closing of its Sarona Frontier Markets Fund I LP. With over $12 million in investor commitments raised during the three-month fundraising window, Sarona expects the fund to grow quickly in the next years.
The new fund, described as a global industry first, is a private equity “fund-of-funds” that offers investors an aggressive strategy of financial, social and environmental targets in developing country markets, says Sarona president Gerhard Pries.
He says the new fund opens up a whole world of opportunities for private investors. “Never before have investors been able to find global diversification and high value impact in one instrument. This fund captures the significant developing country upside, and marries it with the human and environmental values that investors crave.”
The fund is a response to investor calls for more creativity in “impact investment” offerings, Pries says. “All too often interested investors can’t find an opportunity in this space that meets their needs, but by solving the liquidity problem, this fund is a gamechanger for private investors.” Sarona’s unique evergreen offering, with annual closings, allows investors in and out each December, he adds.
“Our unique value proposition to investors is that, by creating a fund of funds, investors get diversification across countries, industries and the best managers in the sector,” says Serge LeVert-Chiasson, Sarona’s VP and Chief Investment Officer. “We also invite our investors to travel with us so they can see where their capital is invested.”
Sarona has become a leader in the international impact investment sector, says Pries. website (medatrust.org), MSCU staff have been able to allocate microfinance loans to real women in Afghanistan. Each branch and head office department set up its own “giving group” on the website to track and personalize the experience.
In the coming months, MSCU will work with MEDA to promote the initiative to the broader community and get others involved in practical peacebuilding. — Benjamin Janzen, MSCU Stewardship in Action advisor
“While MEDA has been at it since the early 1950s, many investors are just now catching a glimpse of the financial opportunity, and the social/ environmental impact that is available to them.”
Building on its 57-year history of representing investor interests in developing country markets, Sarona brought MEDA together with five private investors to launch this fund, each of them committing $1 million or more. Thirty other investors then joined the Founders Group, bringing total commitments to $12 million.
Sarona Asset Management Inc. is a MEDA company based in Waterloo, Ont., and is a (co) founder and/or manager of a number of impact investment funds, including the Sarona and MicroVest groups of funds. Together, these funds have over $200 million of assets under management in developing countries around the world. ◆
MEDA partner draws praise for speedy ‘quake response
Money might not be the first thing people think about when the world is literally crashing down around them. But it’s a sure thing that before very long those still on their feet will need cash, either their own or as remittances sent from abroad.
When the epic earthquake hit, Haiti’s leading microlender — a MEDA partner — was quick out of the blocks with its own form of disaster relief. Though suffering itself — five staff lives lost, buildings damaged, computers silent as electricity died — microlender Fonkoze moved speedily so its thousands of clients could get their hands on emergency cash.
It became a “ready-made lifeline,” said Newsweek magazine in praising Fonkoze’s agility.
With dust and debris not yet settled, Fonkoze arranged a quick shipment of cash by helicopter from New York so those of its branches still standing could dispense money to clients.
“While Port-au-Prince’s nine commercial banks were in a shambles and Western Union was paralyzed,” said Newsweek, “half of Fonkoze’s 42 agencies were up and running in four days, and all but two of the rest within a week. The amounts were trifling: no more than a few dollars per client. But for tens of thousands of desperate Haitians, the nimble infusion of cash amid the chaos and ruin literally meant survival....giving families access to cash for immediate needs as they waited for emergency rations of food, water, clothes, and medicine.”
The U.S. Secretary of State’s office noted that Fonkoze’s quick rebound may well have stabilized Haiti’s banking system for the country’s most vulnerable population.
Fonkoze is the largest microfinance provider in Haiti, reaching 46,000 women borrowers and 200,000 savers.
MEDA began its microficall their own. It has almost as many borrowers as the country’s entire formal banking system. It offers loans of various kinds, currency exchange and remittance services, as well as literacy, education and health services.
Today, MEDA remains an investor and active partner of Fonkoze, providing both governance support through its seat on one of the Fonkoze boards, as well as advisory services for microfinance operations.
Fonkoze’s dramatic rebound has sparked renewed discussion of the role of microfinance in national economies during monumental disasters. Newsweek quoted one authority as
The nimble microfinance rebound may have stabilized Haiti’s banking system for the country’s most vulnerable population.
nance work in Haiti in 1986, starting with an urban program that was spun off into a full-fledged credit union in 1994. At that time MEDA shifted its focus to rural areas and started a community banking program.
MEDA and Fonkoze have worked together ever since Fonkoze began in Haiti. MEDA helped Fonkoze get its early bearings, and when the new organization began to grow phenomenally, in 2004 turned over its operations and most of its employees. This enabled MEDA’s clients to access an array of expanded services such as savings, deposits and business development loans.
Fonkoze soon became the bank that Haiti’s poor could saying that “Devastation typically paralyzes the big banks. Microfinance institutions are used to dealing at grassroots levels in a way that large commercial lenders cannot.”
The magazine notes, “Because they tend to the poor, microlenders move in and out of dangerous areas, such as crime-ridden slums, where button-down lenders do not or will not go.”
Fonkoze executive director Anne Hastings adds that the huge client base of microfinance organizations “creates a network that can locate people as the population migrates out of the destroyed capital and help distribute food, water and tents.” ◆
