Upsides : development returns - fi nancial returns - issue 14 - march 2011

deveelo opm men nt retu urns - financia al retturrnss - isssue 14 - marcch 20 011

SPECIAL

SME finance

- issue 14 - march 2011

Mobile money transfer services in Kenya Economic growth through entrepreneurship Supporting Armenian SMEs Award-winning Grassroots Business Fund

‘Financial inclusion must be pursued responsibly’ HRH Princess Máxima of the Netherlands and UN Secretary-General’s Special Advocate for Inclusive Finance for Development

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contents

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04 Upfront Global news

08 Interview Iqbal Quadir, professor at the Massachusetts Institute of Technology, explains how developing countries can grow through entrepreneurship

14 Vision Small-scale organic farming is our only option to achieve a healthy and wealthy future

15 SPECIAL SME finance Speech given by Her Royal Highness Princess Máxima of the Netherlands, an active global voice on the importance of inclusive finance for reducing poverty; case; infographic

‘IF THE LOANS ARE BAD, BUSINESS WILL BE BAD AS WELL’

26 Photo feature In Kenya, where millions have limited or no access to financial services, mobile money transfer services have become a huge success

32 Case The award-winning Grassroots Business Fund tries to improve the economic lot of the poor at the base of the pyramid

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foreword

Responsible finance ‘SMEs as engine for growth’

Before you lies the 14th issue of Upsides, the magazine about finance and sustainable development.

This issue pays special attention to SME companies and SME finance. A number of renowned contributors express their views on the impact of SMEs on development and the importance of creating access to financial systems for these companies. That’s for a good reason. SMEs are a vital engine for growth in developing countries.

We are very proud to present a contribution of HRH Princess Máxima of the Netherlands, the UN Secretary-General’s Special Advocate for Inclusive Finance for Development. HRH Princess Máxima discusses the concept of inclusive finance and the importance of responsible finance. And like many things that are relatively new, the sector still requires fostering. The Principles for Investors in Inclusive Finance were signed recently by a number of financial institutions and will be of great importance. I am convinced that this is another important step for the financial sector.

‘Competitive commerce generates products, services, jobs, entrepreneurial opportunities, innovations, more efficient means of production and, most importantly, choices for people. It unleashes

COLOPHON Upsides is a magazine about finance and sustainable development. It focuses on visions, perspectives and achievements but also dilemma’s which can be encountered. The stories are not just about investments but also about the entrepreneurs who are inspired by building sustainable business.

The stories show the

impact that development banking and these entrepreneurs have on creating sustainable growth and alleviating poverty in the world.

Upsides is published three times a year and is sent to entrepreneurs and stakeholders in developing and emerging markets. The initiative for Upsides was taken

by FMO (Netherlands Development Finance

Company) and is supported by Triodos Bank, Shorebank International, Plantersbank.

Disclaimer No part of this publication may be reproduced in any form without permission of the publisher.

Contact For address changes and to subscribe please

people’s creativity,’ says Mr Iqbal Quadir, professor of the Practice of Development and Entrepreneurship at the Massachusetts Institute of Technology and founder of Grameenphone in Bangladesh, in a very inspiring interview. Further, you will find an interesting contribution on biodiversity by Dr Vandana Shiva, director of The Research Foundation for Science, Technology and Natural Resource Policy in India. Dr Shiva states that small-scale organic farming is the only option to achieve a healthy and wealthy future for this planet and its inhabitants.

In 2010, we conducted a survey amongst the readers of Upsides. We are very grateful for your contribution to the survey and the high scores you gave the magazine. It provided us with valuable information for future issues. One of the most interesting results is an increasing demand from our readers for online information. This perfectly fits with our ambition to share your contributions with a large audience and convince them of the importance of sustainable development.

Enjoy reading this Upsides, Nanno Kleiterp CEO of FMO

visit www.upsides.nl.

For questions, comments or information about partnership or advertising in Upsides please contact us at info@upsides.nl Website www.upsides .nl Chief editor René de Sévaux Editorial Board Nanno Kleiterp, Marilou

van Golstein Brouwers, Laurie J. Spengler Editorial Committee Erik van Dijk, Henk Nijland, Paul Wolff, Yvonne Bakkum, Gera van Wijk, Nicholas Molodyko Concept & design Scripta Media (Peter Hofland, Jacqueline Konermann, Kasper Marinus, Peter van Vuuren) Art direction Marjolein Rams

Contributing authors Elbrich Fennema, Gary Rudland, Nicoline van Slingelandt-Asselbergs Contributing photographers and illustrators Tsar Fedorsky/Getty Global Asignments (02, 08, 12), Dominic Nahr (02, 26-21), Shoot Media (24), ANP Photo (16), Hollandse Hoogte (04, 07, 18), Photolibrary (05)

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400 MILLION (US$)

The amount of money transferred each month

by M-Pesa, Kenya’s first mobile money transfer service.

4,300 E-Power facility in Haiti THE E-POWER FACILITY HAS BEEN OPENED IN HAITI. THE FINANCE AGREEMENT FOR THIS US$56.7M WAS SIGNED IN 2009. THE PROJECT IS CRUCIAL FOR THE REBUILDING OF THE COUNTRY. After the devastating earthquake of 12 January 2010, the need for power supply was even bigger than before. Haiti has an installed capacity of 200 Mw of which only 85% is operational due to earthquake. The E-Power plant will provide an additional 30MW, which is crucial in restoring the electricity supply and access to electricity. The financing for this US$56.7m project was signed in 2009. FMO’s US$20.5m finance package included mezzanine and standby debt facilities.

Mr. Jurgen Rigterink, Chief Investment Of-

ficer of FMO: ‘FMO strongly supports this project since it unites two of our main objectives: providing support for a country that lacks commercial finance to rebuild the infrastructure and enabling the population to improve their conditions. The impact of this investment on the local energy sector and economy are expected to be very positive, especially for the small and medium-sized enterprises. Once operational, the facility will also contribute funds for local community development; it is an entrepreneurial and developmental example.’

The number of households provided with electricity each year by the two hydropower plants financed with the FMO/DEG renewable energy loan in Armenia.

5.3 MILLION

Since 2008, the Grassroots Business Fund (GBF) has reached more than 5.3 million people at the base of the economic pyramid.

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global news

Funding for Ghanaian SMEs

ALTHOUGH THE BANKING SECTOR IN GHANA IS GENERALLY LIQUID, LONG-TERM US$ FUNDING FOR COMPANIES IS VERY SCARCE. FIDELITY BANK LTD IS GOING TO CHANGE THAT. Fidelity Bank Ltd is a bank based in Ghana that provides services to individuals, private enterprises and institutional clients. The bank grants credit to a broad array of productive business segments in the Ghanaian economy, including manufacturing, construction, electricity, gas and water, commerce and finance, transport, storage, communication and services. Fidelity recently signed a US$15 million senior long-term loan agreement with FMO, which enables the Ghanaian bank to strengthen its position in the local market by making available long-term US$ funding to Ghanaian companies to grow their businesses and the economy.

According to Ruurd Brouwer, Director Financial Institutions at FMO, Fidelity and FMO share a clear vision on sustainable development. ‘Focusing on doing business responsibly has many benefits. For clients, it means a competitive advantage and improved performance. For local communities, it means better working conditions, improved quality of life, a healthier environment and increased prosperity.’

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upfront

Read

New funding mechanisms BECAUSE OF PLANNED CUTBACKS, THE DUTCH DEVELOPMENT AID SECTOR IS UNDER PRESSURE. THE NEED TO TAP NEW FUNDING POSSIBILITIES LEADS TO INNOVATIVE SOLUTIONS. Development aid organisation NOTS Foundation is one of the charitable foundations that have started preparations for the issuance of a bond to private investors for financing microfinance activities. FMO supports this bond issue by providing EUR12 million subordinated capital, of which EUR7 million on its own account and EUR5 millon from the MASSIF fund which FMO manages on behalf of the Dutch Ministry of Foreign Affairs, Directorate General International Cooperation. The FMO investment enables NOTS to attract EUR28 million from private investors. The total amount of EUR40

million will be invested in Tier 3 microfinance institutions in developing countries.

Whereas charitable organisations traditionally finance their activities with government subsidies and donations from citizens and companies, this bond issue illustrates a new positive trend. Firstly, the amount globally available in commercial funding is much larger than the amount of subsidies and donations together. Secondly, investors are far more critical than donors, which will positively affect the efficiency of the charitable foundations’ activities.

Quote

‘DEVELOPMENT BANKS COULD BE MOST EFFECTIVE IN FOSTERING PEOPLE’S EMPOWERMENT IN POOR COUNTRIES IF THEY WERE TO FUND ENTREPRENEURS THERE.’ Iqbal Quadir, professor of the Practice of Development and Entrepreneurship at the Massachusetts Institute of Technology

Iqbal Quadir is the founding co-editor of Innovations: Technology, Governance, Globalisation, a journal published by MIT Press about entrepreneurial solutions to global challenges.

You Can Hear Me Now: How Microloans and Cell Phones are Connecting the Worlds Poor To the Global Economy by Nicholas P. Sullivan showcases Iqbal Quadir’s innovative work in Bangladesh.

Entrepreneurship, Small and Medium-Sized Enterprises and the Macroeconomy, edited

by Zoltan J. Acs, Bo Carlsson and Charlie Karlsson, explains why countries that encourage entrepreneurship and free entry will have better macroeconomic performance than those that retard it.

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global news

Successful lending The study Success Drivers of Small Business Banks in Developing Economies: Four Case Studies compared to the IFC’s SME Banking Value Chain by CapitalPlus Exchange and Shorebank International focused on small business banks. The study team conducted four case studies of leading SBBs in developing economies in order to evaluate the common success factors among profitable, scalable small business banking models.

The SME banking value chain implies that all links in the chain are equally important to success. The case studies suggest that certain attributes in the value chain are key success drivers for banking small businesses and should be prioritised in developing economies: management commitment; customer outreach and underwriting skills of loan officers; and creating operating efficiencies. These attributes were essential to small business banking, and the stronger the SBB performed in these areas the more successful it proved to be. The study urges the industry broadly to examine other SBBs to see if the banking value chain should prioritise these characteristics.

In addition, the case studies established that certain activities were less important and not mission-critical to their success: bundling and cross-selling non-lending products; separating customer service from loan monitoring; and fully exploiting MIS capabilities or responding to profitability data at the unit level.

New global forum across emerging economies

THE SMALL BUSINESS BANKING NETWORK (SBBN) IS THE FIRST NETWORK-BASED, INDUSTRY-BUILDING INITIATIVE ACROSS EMERGING ECONOMIES DEDICATED TO HELPING BANKS SIGNIFICANTLY EXPAND THEIR SERVICE REACH TO SMALL BUSINESSES. Recently, CapitalPlus Exchange Corp. (formerly ShoreCap Exchange) launched its Small Business Banking Network. Understanding and meeting the financial needs of the average small business in an emerging economy is fundamentally different from traditional commercial banking and microfinance. Banks that are succeeding in serving this fast-growing sector have crafted a business strategy that considers the attendant challenges and responds with tools and methodologies that drive growth and profitability. The Small Business Banking Network is partnering with those banks that are successful at serving the small business segment to share solutions across the industry. SBBN members will benefit by learning from the foremost recognised and respected innovators from around the globe, in addition to building networks with peers and learning about ways to improve their own performance and scale.

Urmi Sengupta, Director SBBN: ‘The SBBN

offers a unique community platform to bring together all players interested in growing the small business banking space to share lessons, be they banks, governments, donors, investors or regulators. We are confident that this offers potential to be a focal point for industry developments and perspectives. The SBBN is thus a place of interest for both banks themselves, as well as industry stakeholders looking to follow developments and apply industry intelligence in their own initiatives. From best-in-class online tools and resources for financial institutions serving this space to benchmarking analyses and industry roundtables, the SBBN aims to provide a range of services and expertise, becoming the key global convener in the small business banking space. Any bank committed to understanding and serving small businesses should belong to the SBBN. Membership is designed to provide solutions that meet the needs of the range of financial institutions working with small entrepreneurial companies.’ march 2011 | 07

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interview

‘WE NEED TO CAPITALISE ON PEOPLE’S ENTREPRENEURIAL DRIVE’ Photography by Tsar Fedorsky

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Iqbal Quadir

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interview

According to Iqbal Quadir, professor of the Practice of Development and Entrepreneurship at the Massachusetts Institute of Technology, developing countries can grow through entrepreneurship, which also leads to dispersion of power. ‘The entrepreneurial drive on the ground is an important resource that is being wasted right now.’

Y

ou see commerce as part of the solution for developing countries. Can you elaborate on that? ‘Com-

petitive commerce gives rise to products, services, jobs, entrepreneurial opportunities, innovations, more efficient means of production and, most importantly, choices for people. It unleashes people’s creativity and allows them to take initiative, work hard, and provide financial security for themselves and their families. Time and again, competitive commerce has proven effective in creating prosperity. It has done so not only by lifting people out of poverty, but also by giving rise to greater government accountability.’

You say that concentration of power is a problem in many developing countries.

What is the solution to reduce this concentration of power? ‘What poor countries

need is dispersion of power. Introducing innovations that raise the productivity of individuals would be one approach to achieving this. When people increase their productivity, they make economic gains that enable them to pay for the very tools that make them more productive in the first place. At the same time, entrepreneurs are able to build businesses around furnishing these productivity tools.

I started working in 1993 to bring mobile phones, an example of a productivity tool, to Bangladesh. Making a phone

call from a rural area to the city instead of taking an expensive, time-consuming bus ride saves hours of productivity. By making a call for pennies, people gain a dollar and are therefore able to afford productivity-enhancing communication services. Collectively, individuals’ gains represent billions of dollars in gains for their country. At the same time, the pennies spent on phone calls add up to billions of dollars in revenue for operators who invest in infrastructure to provide the service. The result is a win-win-win situation: users make economic gains, providers make a profit, and countries make aggregate economic progress.

In addition, there are at least two things that rich countries could do to help disperse power in poor countries.

First, rich countries could rethink the aid that they offer to poor country governments, which has a centralising effect because the money literally goes to the centre. Without that money, governments in poor countries would seek taxes

‘BY MAKING A CALL FOR PENNIES, PEOPLE GAIN A DOLLAR’

from people and businesses and would therefore have an interest in facilitating people’s and businesses’ earnings. In other words, governments would have an incentive to facilitate economic growth, which would also contribute to dispersion of economic power. Second, rich countries could promote imports from poor countries. Not only could this make lower-priced goods available to rich-country consumers, but it could also encourage entrepreneurial efforts in poor countries, dispersing power.’

You see innovation as an important driver for growth in developing countries. Can you explain how innovation could help people? ‘The innovations that prolifer-

ate are those that add value to ordinary people’s lives. This added value enables them to pay for the innovation, allowing the innovator to make a living. With this success comes imitators or competition.

Competition brings checks and balances; among other things, businesses cannot abuse their power in a competitive environment. Competition also brings downward pressure on prices and an upward pressure on wages, both of which empower people. A virtuous cycle of progress is unleashed. Moreover, at the level of the business owners, every innovation has the potential to disperse power because the innovator, by the very act of innovating, separates himself from the incumbents.’

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Iqbal Quadir

How would innovation take place and lead to viable products or companies when there is limited access to financing? ‘Innovative ideas need financial

resources to get off the ground. This is why funds that back those entrepreneurs with sound ideas would be helpful. As I explained, people are willing to purchase innovations, such as mobile phones, precisely because the phones make them more productive. Once an innovation that adds value to people’s lives gets off the ground, it is likely to grow organically. Recognising this, entrepreneurs can build viable businesses knowing that people will be willing to pay for such products and services.’

Energy is an important condition for people to develop themselves. What are the biggest energy challenges in developing countries? ‘Lack of access to en-

ergy is a massive hindrance to people’s productivity. The absence of electricity, for instance, leads to wasted resources and missed opportunities to take initiative and advance. Children are unable to study in the evening to capitalise on their potential and adults are unable to work outside of daylight hours. The fact that billions of people do not have electricity in the rural areas of poor countries, despite decades of state-based effort to provide these services, is proof that we need decentralisation. We need to capitalise on people’s entrepreneurial drive.’

You feel that bottom-up solutions are the way to go? ‘Decentralised power produc-

tion would engage thousands of entrepreneurs. The entrepreneurial drive on the ground is an important resource that is being wasted right now. In collaboration with BRAC in Bangladesh, I have organised Emergence BioEnergy Inc. (EBI) which exemplifies my vision for bottomup energy production. EBI will help people in poor countries manage dairy farms more efficiently to use the farms’ waste productively. Manure from these farms can be used to produce fertiliser and methane, the latter of which can run sophisticated engines that generate elec-

tricity. This electricity can then be sold locally to villages near the micro-generating station. Furthermore, the exhaust heat from the engines can be used to chill milk to increase shelf life of the dairy farmers’ primary product. We expect the return on investment for these small dairy farms to triple while electricity becomes available, milk spoilage is minimised, organic fertiliser is produced, and jobs are created in the process. Because these benefits would be very relevant for rural populations, I believe they will embrace the model rapidly. In addition, this approach creates opportunities for entrepreneurs to own and operate the generating stations.’

Is it possible for developing countries to step into sustainable energy directly or will they have to start with fossil fuels first? ‘I believe developing countries can

go into sustainable energy directly. Their

Iqbal Quadir 2007 > Founded the Legatum Center for Development and Entrepreneurship at the Massachusetts Institute of Technology 2001-2005 > Lecturer at the John F. Kennedy School at Harvard University, fellow at Harvard’s Mossavar-Rahmani Center for Business and Government, and visiting scholar at the Center for Business Innovation at Cap Gemini Ernst & Young 1993-1999 > Founded Grameenphone in Bangladesh 1991-1993 > Vice-president at Atrium Capital Corporation 1989-1991 > Associate at Security Pacific Merchant Bank 1987-1989 > Associate at Coopers & Lybrand 1983-1985 > Consultant at the World Bank in Washington, D.C. march 2011 | 11

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interview

current need is small and can be met by renewables. Over time, as demand grows, renewable technologies will also get cheaper. However, because fossil fuels are cheap relative to personal income in rich countries, innovations in renewable energies are not pursued in rich countries as aggressively as many would like. Rich countries could lead the way in promoting sustainable energy solutions by shifting some portion of taxes away from personal income and toward taxes on fossil fuels.

This would lead to a host of renewable energy innovations that would later fall in price, thereby facilitating the economical spread of renewable energy in poor countries as well. For instance, microcombined-heat-and-power (micro-CHP) engines that EBI plans to use were originally made for rich countries. If they are adopted more widely in rich countries, projects like EBI become more viable in poor countries.’

Many people believe that climate change is the most important challenge facing the world. How can developing countries face this challenge, given the high costs?

‘To the extent that climate change is an issue, we often think that rich and poor countries have different sets of problems.

But in reality, their problems are often linked, as are potential solutions. In general, if rich countries adopted policies to reduce their carbon footprint, poor countries could become better positioned to meet climate change challenges. For example, if it became viable to produce high volumes of renewable energy innova-

‘RICH AND POOR COUNTRIES’ PROBLEMS ARE OFTEN LINKED, AS ARE SOLUTIONS’

tions, such as solar panels, for rich country consumers, prices would fall. People in poor countries would then be able to benefit from cheaper technologies. In this way, the volume of renewable energy innovations adopted in rich countries can affect the viability of their adoption in poor countries.

Again, take the example of micro-CHP generators that produce both usable heat and power, which boosts fuel utilisation from 20% to 80%. To put this into perspective, centralised power production utilises less than 20% of the energy from the fuel it burns. This is because the heat from a centralised plant is generally thrown away. In contrast, when power is produced in a decentralised model, the heat can be used at the point of production to heat someone’s house, for example. In the case of EBI, this heat is used to chill milk.

Micro-CHP generators make far better use of fuel and are an example of an innovation from rich countries that could benefit poor countries as well. If rich countries were to adopt this technology in a large scale, they would reduce their carbon footprint. In addition, demand for these engines and these systems of power production in the rich world would invite competitors to enter the market. Eventually, greater volume production would bring down the unit cost of the engines, making them more affordable in lowincome markets. The same phenomenon was at play when the widespread adoption of mobile phones in rich countries eventually made them affordable enough to proliferate widely in poor countries.’

But there is a big difference between mobile phones and energy. ‘Both mobile

communications tools and energy tools respond to basic needs. Both empower people economically at the individual or household level, which translates into people’s ability and willingness to pay for these tools. When empowered people can pay for a service, entrepreneurs can retail a service profitably. In this way, EBI will provide opportunities for local entrepreneurs just as the Grameenphone model

provided opportunities for village phone ladies. This local, shared access also makes the service more cost-effective for users.

Both mobile communications and energy technologies benefit from billions of dollars spent on R&D in rich countries. If local entrepreneurs develop practical and appropriate schemes to apply these technologies in poor countries, rich country investment in R&D becomes a kind of aid that is actually beneficial to poor countries.’

Can foreign investors play a role in this?

‘Investors, foreign or local, can play a role in supporting decentralised power generation in poor countries. Since the governments of these countries face other challenges, they could concentrate on governance, public safety, law enforcement, education, and public health while investments in entrepreneurs allow them to meet energy challenges.’

Do you also see a role for bilateral development banks? ‘Development banks

could be most effective in fostering people’s empowerment in poor countries if they were to fund entrepreneurs there.

Furthermore, while it might seem counterintuitive or outside the scope of their usual activities, development banks could finance retraining or rehabilitating rich country workers from industries that are no longer competitive globally. In this way, these rich country workers could move into innovative and more lucrative industries so that rich country governments would not find it necessary to discourage trade with poor countries. Poor country entrepreneurs would then be bolstered by having greater access to export markets.’ «

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Taking risks FMO is the international development bank of the Netherlands. With an investment portfolio of €4.2 billion, FMO is one of the largest bilateral development banks worldwide. We specialize in high-risk products and services, including equity, mezzanine and long-term credit in local currency.

FMO also offers environmental and social management support, as well as advice on corporate governance. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not – or not yet – prepared to take.

The entrepreneurial development bank

www.fmo.nl

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vision

SEEDS ARE THE VERY SOURCE OF LIFE Despite what the agricultural corporations tell us, small-scale organic farming is our only option to achieve a healthy and wealthy future for this planet and its inhabitants.

t is not true that modern agriculture produces more food. It only produces more of a very limited number of food commodities like soya beans, for instance. And it comes at a price: as a result of modern agriculture, we have soil that is devoid of life, we have a bee crisis, a climate crisis, a water crisis. On top of that, 70% of crops have disappeared in the past 25 years. We all know by now that we cannot control pests by using pesticides.

Weeds and pests develop resistance, so we will always need new pesticides. This may be good news for the producers of pesticides, but quite the opposite for our planet, our food and ourselves.

I Dr. Vandana Shiva, physicist, feminist, philosopher of science, writer and science policy advocate, is the Director of The Research Foundation for Science, Technology and Natural Resource Policy in India, an institution concerned with biodiversity conservation.

should do everything we can to make sure that seeds remain a common good. I have started seed banks in India where a wide variety of seeds are stored to keep them available for future generations. Not in a museum-like setting, but as our living heritage. We plant and harvest the seeds and eat their fruits. Every individual can and must be involved in protecting our agricultural heritage by starting what we call a garden of hope with seeds for freedom. We can be activists with every bite we take by making sure it is a GM-free bite. Or even better: organically grown food.

Creating communities

Seed banks

Nevertheless, the Monsantos of this world want us to believe their big lie that we need genetically-modified seeds, that is: seeds that are modified to survive pesticides. Since they sell farmers both the seeds and the pesticides, they profit twice over. On top of that, the seed corporations are busy patenting their modified seeds.

They think that the renewal of life can be owned! And their way of thinking is supported by the World Trade Organisation’s intellectual property right treaties.

In my view, seeds are the very source of life. They cannot be owned and we

To succeed, we have to overcome a major myth: that agriculture is a primitive, low, dirty activity. Farming is a joy, not a chore. It is more than producing food: it is about creating communities. In the US, the crisis has already led to an increase in small-scale farming. Organic agriculture connects us to our food, to our environment and to each other. We have to start using new terms as a measure of our yields: health per acre, wealth per acre, happiness per acre. This will not only lead to more health, wealth and happiness, but will also help solve the multiple global crises we presently face.’ 

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contents

SME

finance SPECIAL

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HRH Princess Máxima of the Netherlands at the Responsible Finance Forum

Ameriabank supports SMEs in Armenia

Access to finance for SMEs

Speech

Case

Infographic

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SPECIAL

SME finance

PRINCESS MÁXIMA OF THE NETHERLANDS Her Royal Highness Princess Máxima of the Netherlands is an active global voice on the importance of inclusive finance for reducing poverty. Designated in 2009 by UN Secretary-General Ban Ki-moon as his Special Advocate for Inclusive Finance for Development, Princess Máxima works with diverse government, private and civil society stakeholders to raise awareness and foster action.

‘THE RIGHT FINANCIAL PRODUCT AT THE RIGHT PRICE IN THE RIGHT PLACE’ 16 |

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speech

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SPECIAL

SME finance

‘INCLUSIVE FINANCE IMPLIES UNIVERSAL ACCESS, AT A REASONABLE COST’

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speech

of the Netherlands is an active global voice on the importance of inclusive finance for reducing poverty. This article is based on the speech given by her during the launch of the Principles for Investors in Inclusive Finance at the Responsible Finance Forum in The Hague, the Netherlands.

HER ROYAL HIGHNESS PRINCESS MÁXIMA

‘P

roviding the right financial product at the right price in the right place is at the very core of responsible finance. This is why I am so pleased that we are launching today the Principles for Investors in Inclusive Finance. These Principles provide practical guidance to help investors leverage resources, experience and collective voice to build institutions that are strong, sustainable and responsible’, says HRH Princess Máxima, UN Secretary General’s Special Advocate for Inclusive Finance and Development.

‘THE MICROFINANCE SECTOR has become so dynamic, that today we talk about ‘inclusive finance’, an evolution that builds on the successes of microfinance. Microfinance brought much-needed services to millions of poor people and enterprises around the world.

And it has changed the way we think about poverty.

It showed that poor people, when provided with the right product, can be good financial clients.’

‘IN LIBERIA LAST JUNE, I met a lady who started her business by borrowing less than US$ 100 from a microfinance institution. With that, she bought one container of palm oil, which she resold. Today, this lady exports to the United States and employs 13 people.

She now has an outstanding loan of US$ 12,000, a savings account with US$ 4,000, and a warehouse of palm oil. This is just but one example of how microfinance can change lives and communities. And how small and medium enterprise finance is equally needed.’

‘THE CONCEPT OF ‘INCLUSIVE FINANCE’ is broader than microfinance, and potentially even more powerful.

Inclusive finance implies universal access, at a reasonable cost, to a wide range of financial services, for everyone needing them, provided by a diversity of sound and sustainable institutions.

This ‘diversity of institutions’ includes today cooper-

atives, banks, mobile phone companies, village savings groups, and more. In recent years, we have witnessed some innovative public-private partnerships, including governments working with stores or mobile phone companies to deliver welfare payments.

Another aspect of the overall evolution is that inclusive finance is now attracting significant private capital, in addition to philanthropic and public capital.

Services have greatly expanded as a result. In 2009, for example, nearly 2,000 MFIs provided US$ 65 billion in loans to millions of people around the world, and had nearly US$ 27 billion in deposits.’

‘AT THE SAME TIME, this evolution and success has brought some challenges. We are seeing cases where returns on equity have remained high, sparking debate about reasonable costs, profits and fees. Some microfinance institutions have shown weak internal systems.

Sometimes the external infrastructure – such as regulation, supervision, credit bureaus and payment systems – was not effective. Overall, the focus has been too heavily on loans and some local markets were saturated. This leads to increased competition, vigorous marketing and multiple lending. Unfortunately, we are now seeing the cumulative impact that this can have on clients, institutions and markets.

All of this does not mean that microfinance does not work. It does work. But like any sector that has developed rapidly. It has come to a point where these and other issues need to be addressed. Doing so will help the industry grow properly. This, in turn, will mean that clients are better off.

I think it is very important to recognise that there remains a pressing need for quality financial services.

Portfolios of the Poor, a book of research, illustrates this clearly. One family in Dhaka, Bangladesh, used thirteen different informal and formal financial instruments in order to make sure they were able to put food on the table every day. This on an income march 2011 | 19

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SPECIAL

SME finance

of just US$ 840 per year. Their financial life is complicated not despite being poor, but because they are poor. And because they don’t have appropriate and reliable financial tools to count on.

They will borrow in order to have liquidity or due to a health emergency or because cash at home disappears. Needs like these would be better served by simple savings, payment or insurance schemes, rather than loans. This brings us back to inclusive finance, with its emphasis on a range of products to meet a range of needs so therefore away from the initial focus on loans. Savings accounts are especially important.

Yet providing a diversity of financial services is not only a question of meeting demand. We also know that institutions that provide a diversity of financial services including mobilising local deposits, usually have a stronger financial base and are healthier and more sustainable. They rely less on expensive debt funding and focus less on loan growth for their revenues.

This message no doubt comes as little surprise to those of you who have heard me talk before. Providing the right financial product at the right price in the right place is at the very core of responsible finance.

This is why I am so pleased that we are launching today the Principles for Investors in Inclusive Finance.

They carry forward momentum begun by the Smart Campaign, the first Responsible Finance Forum last year in Berlin and many other initiatives. They also reflect the continued evolution of the sector.

Responsible finance rests on three pillars that demand action by governments, consumers and industry. The first pillar is regulation. Countries including Peru and Malaysia have shown us how government can use policies, regulation and supervision to promote the sustainable growth of the financial sector, while also building robust consumer protection.

The second pillar is the ability of consumers to understand choices, products and rights – in other words, consumer capability. This includes financial literacy, which is in everyone's interest. This is best achieved when service providers and governments facilitate it, and clients actively pursue it.

‘SUSTAINABLE INSTITUTIONS WILL GROW VIBRANT AND STRONG CLIENTS’

THE PRINCIPLES FOR INVESTORS IN INCLUSIVE FINANCE The Principles for Investors in Inclusive Finance is the initiative of a core group of investors and HRH Princess Máxima, the UN Secretary-General’s Special Advocate for Inclusive Finance for Development.

The group, chaired by Triodos Investment Management, developed the Principles together with the United Nations-

backed Principles for Responsible Investments (PRI) and in consultation with CGAP (Consultative Group to Assist the Poor) and several key industry players.

With these Principles, investors help shape an inclusive financial services industry that keeps the interests of the ultimate clients in inclusive finance at its core: low-income households and small- and medium-

sized businesses.

The launch took place at the Responsible Finance Forum, hosted by the Dutch Ministry of Foreign Affairs in The Hague, The Netherlands, on 27 January 2011, where a first group of 41 global investors signed the Principles.

UNPRI will host and support implementation of these Principles as a separate workstream. www.unpri.org/piif

And this brings me to the third pillar, what we call self-regulation by industry. Self-regulation is often in the long-term interest of that specific industry. As a previous banker, I have realised that it is very difficult for companies to have a long-term vision unless their shareholders and investors actively pursue it.

I believe in institutions that have such a vision, not only on responsible grounds, but also for their longterm sustainability. It seems obvious to me, and I think to all of us here, that if the loans are bad, business will be bad as well. And I also think that investors hope that any profits today will be maintained in the long run, through the creation of strong institutions. And only with sustainable institutions will we grow a vibrant, strong financial sector but above all, vibrant and strong clients.’

‘THIS IS WHY I STARTED THINKING about some kind of investors principles two years ago. I believe these Principles provide practical guidance to help investors leverage resources, experience and collective voice to build institutions that are strong, sustainable and responsible. Only in this way will we get the right products at the right price to everyone who needs them today, and in years to come.

Financial inclusion shows tremendous promise in improving lives around the world. But like many things that are relatively new, the sector still requires some nurturing. This means proper regulation and supervision, financial literacy and self-regulation. It means continued development of more diverse products and underlying financial infrastructure. We also need to treat microfinance and SME finance as an inherent part of the financial system framework, not as separate add-ons. It means basically, that we need to do more, not less, to continue to develop and grow inclusive financial systems. With today's first signatures to the Investors Principles, we send a clear message that to live up to its promise, financial inclusion must be pursued responsibly.’ «

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SUPPORTING ARMENIAN ENTREPRENEURS (SMEs) in Armenia cannot thrive without external capital to make investments.

FMO and DEG provided the country’s first investment bank with a long-term US$30m loan. ‘It is our role as a development bank to show them the opportunities of SME financing.’

SMALL AND MEDIUM ENTERPRISES

I

In December 2009, FMO and Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG) provided Ameriabank with a longterm US$30m loan, equally shared between the two DFIs. Ameriabank is the first investment bank in Armenia and since 2007 has been offering an extensive range of innovative banking products.

For FMO this loan agreement represented its first-time presence in the country.

US$20m of the loan was destined for small and medium enterprise financing.

Supporting entrepreneurs

By Nicoline van Slingelandt-Asselbergs

About a half hour drive from Armenia’s capital Yerevan is fruit-packaging company Ararat Fruit. The owner of this medium-sized enterprise, which was financed with the SME tranche of the loan to Ameriabank, proudly serves his own grapes and grape juice as if it were a wine march 2011 | 21

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SPECIAL

SME finance

Fish farm financed by Ameriabank

tasting. Women in impeccable blue coats neatly package the grapes, tomatoes and other fruit and vegetables. The products will not be transported in the usual wooden crates and pallets, but in polystyrene foam instead, chosen by the company because it weighs less and is therefore much cheaper. With six shiny refrigerated trucks on the premises and plans to use the company’s residual heat for its own power supply, one might think that entrepreneurs like this can get along very well without the help of banks such as Ameriabank. According to Cornelis van Aerssen, Investment Officer at FMO, this is not the case. ‘These entrepreneurs have limited access to finance and they need external capital to make investments and keep their businesses healthy. Many banks in emerging markets tend to focus their activities mostly on the larger corporates, whereas they have an important part to play in supporting the entrepreneurship that is typical for SMEs. It is our role as a development bank to show them the opportunities of SME financing and provide them with the means to develop products for this specific target group.’

Homegrown fish

Further inland, in a fairly dry, uninhabited and rocky area, is a fish farm. This

REMITTANCES The Armenian economy relies heavily on investment and support from Armenians working abroad. Cash remittances sent home by Armenians abroad account for 15% to 30% of GDP. On the other hand, many entrepreneurs of Armenian origin (an estimated 8 million in total, which greatly exceeds the

company is headed by another exemplary entrepreneur who manages to run a business thanks to the SME tranche of the Ameriabank financing. Levon Arevshatyan, Ameriabank’s director for corporate customers: ‘It is hard to believe that it’s possible to run a decent business in this area, which is basically in the middle of nowhere. But it does provide employment for 27 people (8 of whom are parttime or seasonal) and it supplies the Armenians with homegrown crawfish and trout, which are also exported to the CIS and Europe. The company is planning to start a packaging production line and once the new packaging equipment is installed the number of employees will further increase by five.’

Renewable energy resources

The remaining US$10m of the FMO/DEG loan was destined for renewable energy financing. The vast majority of energy in Armenia is currently being produced with fuel imported from Russia, including gas and nuclear fuel (for its one nuclear power plant). With no fossil fuel resources of its own, Armenia is completely dependent on supplies from outside, which led to an energy collapse in the early 1990s, leaving the country with virtually no energy for three consecutive years. A nu-

3 million population of Armenia itself) are now returning and opening businesses in their country of origin. Because the investment climate is still quite rough, with risks such as corruption and lasting conflicts with neighbouring states lurking in the background, it is vital that Armenia’s economy is fed by its own private sector. The

Armenian economy is expected to grow by 4%-5% over the next years, which implies that banks are going to need fresh capital and liquidity.

WITH ITS MANY MOUNTAINS AND RIVERS ARMENIA HAS VAST HYDROPOWER POTENTIAL clear and a thermal power plant together generate 80% of Armenia’s energy and will close in 2014 and 2016 respectively.

At the same time, Armenia has considerable renewable energy resources such as hydro, solar, wind and geothermal, with hydro as the main domestic energy source. The search for alternative energy sources in view of global warming has become a pressing issue. Although Armenia’s renewable energy options cannot in the short term match the operating and planned nuclear plants in terms of efficiency and economy, in the long run the future of the energy industry belongs to solar and hydropower. With its many mountains and rivers the country has vast hydropower potential. The legal framework for the development of renewable

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Ararat Fruit transports fruit in polystyrene foam

resources is in place: Armenian law stipulates that the purchase of renewable energy is mandatory at fixed and transparent feed-in tariffs.

Women packaging fruit

AMERIABANK EXCEEDED ALL EXPECTATIONS

Hydropower plants

The FMO/DEG renewable energy loan is meant specifically for financing small and medium hydro- and wind power stations under construction. About half of the loan will be allocated to greenfield projects and the remainder to existing projects.

One of the projects is a small hydropower plant located in the Vayotz Dzor region of Armenia that will be fully operational in March 2011. The installed 2.875 Megawatt capacity of this Small Hydropower Promotion Project (SHPP) is calculated to generate sufficient electricity annually for approximately 1.300 households.

The other small hydropower project is located in the Lori region of Armenia and will be operational in February 2012. The installed capacity of this SHPP is 4.26 Megawatt, providing an annual electricity supply for approximately 3.000 households.

Environmental and Social Management System

With sustainability being at the core of the development bank’s strategy, FMO asked

Ameriabank to consider developing and implementing an Environmental and Social Management System (ESMS). FMO has seen proof that financial returns and E&S-ratings correlate in an almost linear way. That is why the development bank decided last year to develop the implementation of an ESMS into a business case. Ameriabank has set an example by implementing an Environmental and Social Management System (ESMS) within a record time of three months. As a result, FMO and DEG granted Ameriabank a reduction in the interest rate of the facility signed between the three institutions in December 2009. Implementation of an ESMS means committing to comply with local and international environmental and social regulations, and with worldwide best practices applicable to its operations and business services. With the assistance of a grant from FMO’s Capacity Development (CD) Program, which it manages on behalf of the Dutch government (Ministry

of Foreign Affairs, Directorate General International Cooperation), Ameriabank selected external consultant FI Konsult s.r.o (from the Czech Republic) to help build the ESMS. Van Aerssen comments: ‘This is the first time a “margin-reductionincentive” scheme has been implemented

by FMO. Ameriabank exceeded all expectations and implemented all requirements within a record three months. The appointed environmental and social consultant even called Ameriabank: “The best organisation I have ever worked with, with the most committed persons within any financial institution I have ever worked with.” In the meantime, FMO’s client Supervielle in Argentina has also received a margin reduction due to the implementation of an ESMS and we hope these examples will help spread this best practice throughout all regions.’

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SPECIAL

SME finance

ACCESS TO FINANCE FOR SMEs Africa, the Middle East and South Asia have the lowest volumes of SME lending.

The main obstacle seems to be lack of access to finance. This is unfortunate, because SMEs are critical for sustainable economic growth. With SME lending financial institutions could contribute substantially to the economies in developing countries.

USD 7 trillion

High-income OECD and non OECD*

Latin America & Caribbean

USD 133 billion

Volume of SME lending The global volume of SME lending was roughly USD10 trillion in 2009. 70% of the SME lending volume is concentrated in high-income countries. The second largest SME loans market is in East Asia and the Pacific, which accounts for 25%. But 90% of this amount is in China, where the SME definition is broad. Without China the total SME lending volume in East Asia is comparable to that in Eastern Europe and Central Asia, or about 3% of the total. Africa, the Middle East and South Asia together account for only 1.6% of the total SME volume.

The Organisation for Economic Co-operation and Development (OECD) provides a forum in which governments can work together to improve the economic and social well-being of people around the world.

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infographic

Economic growth SMEs are critical for sustainable economic growth. In high-income countries SMEs constitute 67% on average of the formal employment in the manufacturing sector. In developing countries, this number is lower at about 45%. Similarly, SMEs contribute a sizeable share to formal GDP: 49% on average in high-income countries and 29% on average in low-income countries. The median ratio of SME loans to GDP in high-income countries is 13%, compared with only 3% in developing countries.

high-income countries

developing countries

67%

45% formal employment

29%

49%

contribution to formal GDP

3%

13% loans to GDP

USD 256 billion

Europe & Central Asia

East Asia & Pacific

56% USD 43 billion Middle East & North Africa

USD 73 billion

USD 2.5 trillion 32%

South Asia

USD 45 billion Sub-Saharan Africa

SMEs

Large firms

Access to finance OECD Member States*

Lack of access to finance consistently ranks as one of the most important obstacles to doing business, according to World Bank surveys of firms in more than 100 economies.

Access to finance for SMEs remains low. In the survey of firms, only about 32% of SMEs had a loan with a financial institution, compared with 56% of large firms.

(Source: Financial Access 2010, The State of Financial Inclusion Through the Crisis by CGAP/The World Bank Group)

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People credit their transfer account with cash. The account can then be accessed by mobile phone any time, anywhere. In just a few years time, the ďŹ rst and largest player in the market M-Pesa has acquired 13.2 million clients, 30% of the total Kenyan population. M-Pesa transfers US$400m each month.

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photo feature

MONEY TRANSFER REVOLUTION

In Kenya, where millions have limited or no access to financial services, mobile money transfer services have become a huge success. Thousands of new registrations a day are testimony of the service’s relevance to the unbanked, mostly rural population.

Photography Dominic Nahr

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photo feature

John Omondi is a barber, shoe shiner and water supplier in the Kibera slums. In the sometimes dangerous area, mobile banking services have another important advantage. ‘I do not need to carry hard cash around anymore. My money is safe.’

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Sheila Muange runs an electronics shop. She started using a mobile money transfer service one year ago. Many of her customers use the service as well. They ďŹ nd it the most reliable method of sending and receiving money. It’s fast, easy to use and safe. march 2011 | 29

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photo feature

Anne Siata is a customer service assistant at PesaPoint, a company that offers ATM services to customers of partnering ďŹ nancial institutions. M-Pesa is one of these institutions, allowing clients access to their money 24 hours a day.

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Not only is the mobile banking service fast, but it saves people from outside the cities money as well. Fredrick Gor, a youth group leader for a Kibera slums based project that produces ornaments, says: ‘Now that I can do my banking from my work station, I do not have to take expensive trips to the bank in town anymore.’ march 2011 | 31

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AWARDWINNING APPROACH TO COMBATING POVERTY THE GRASSROOTS BUSINESS FUND (GBF)

was chosen as one of the winners of the G-20 SME Finance Challenge. A great honour for a great organisation. ‘GBF’s aim is to try and improve the economic lot of the poor at the base of the pyramid.’

By Gary Rudland

G

BF provides loans and investments to companies and SMEs in parts of the world where other financial institutions do not operate. In this way, it has improved the lives of literally millions of people. What makes GBF so special is that it is not a traditional microfinance institution, but goes out looking for relatively large-scale entrepreneurs. In addition to providing loans and investments, GBF also supplies technical assistance to farmers and other groups. It identifies candidates at the ground level, such as milk and grain producers who are

not yet commercially viable and do not qualify for bank loans, but are too large for microfinance. GBF brings these producers up to a commercial level, making them viable candidates for private investment.

‘GBF’s aim is to try to improve economic opportunities for the poor at the base of the pyramid,’ says executive director, Harold Rosen. ‘We do this by helping existing businesses to generate additional income and create greater social impact.

This in turn gives people access to the resources necessary to get out of poverty sustainably. We don’t do start-ups but we do get involved in the early stages of business expansion and pilot businesses.’

This unique approach has recently gained international recognition with GBF being named as one of only 14 winners of the G20 SME Finance Challenge.

This first competition ever launched by the G20 attracted more than 350 contenders from around the world. It aimed to find the best and most innovative models for public-private partnerships that catalyse finance for small and medium enterprises (SMEs).

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Kenyan women shelling cocoa

Broad scope

Rosen: ‘We stick to the poorer countries where poverty is most prevalent – such as sub-Saharan Africa (Kenya, Tanzania, Zambia, Ghana), Asia (Cambodia, India, Indonesia) and Latin America (Bolivia, Peru).

We bring investments to more challenging, but developmentally more important frontiers than other organisations, employing a combination of loans and investments on a case-by-case basis. Most are somewhere in between: subordinated loans with income features or redeemable preference shares with a percentage of the profits. GBF also provides grant funding for capacity building, as well as human resources to provide technical support, helping to build companies in terms of management and planning. We provide a full range of services and support to help improve businesses.’

Identifying potential candidates

‘We tend to go out looking for SMEs in which to invest, ferreting out those with potential or those that are already making a social impact,’ Rosen continues. ‘We now have staff on the ground in many of our target regions; Nairobi, Ghana, India, Bangkok and soon

GBF IN BRIEF GBF’s roots date back to 2000, when Harold Rosen founded the Small and Medium Enterprise (SME) department; a joint-initiative of the International Finance Corporation (IFC) and the World Bank. In 2004, this became the Grassroots Business Initiatives (GBI) department, which aimed to build sustainable, non-financial intermediaries that would empower large numbers of highimpact businesses, individual producers, consumers and entrepreneurs.

In 2008, GBI became independent as the Grassroots Business Fund (GBF) and has

since invested more than US$7m in 29 businesses across 12 developing countries, reaching more than 5.3 million people at the base of the economic pyramid. GBF targets investments between US$250k and US$1m and has an average investment horizon of 7-8 years. GBF can also provide short-term working capital loans (US$40k to US$150k) to export-orientated businesses through its SME Export Facility.

GBF’s capacitybuilding programmes are a combination of technical assistance, funded through grants, and hands-on management support from GBF staff and its partners.

Capacity-building programmes include improvements to governance, general management, reporting, Management Information Systems and business/financial planning. This blended approach is based on best practices from both the private and nonprofit sectors.

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in parts of the world that other organisations don’t want to go,’ adds Emile Groot, a financial sector specialist at FMO who has had close dealings with GBF over the past few years. ‘By providing financial and technical support to these wholesalers, GBF helps to improve their organisation which, in turn, improves the lives of people at the base of the pyramid. GBF improves existing organisations, not only financially, but with helpful business suggestions and advice. This approach is quite unique and innovative.’

Measuring success

LATCO is a purchaser, processor and exporter of sesame seeds

in Peru. Referrals also come from organisations with which we are affiliated, such as FMO and IFC, along with other interested partners. GBF is now in its third year of existence and we’re becoming better known as an organisation, so SMEs are starting to come to us directly.

In addition, we have a working capital facility – which is provided against orders on a short-term basis – and we use this as a foot in the door to develop a long-term investment plan, to which we would also contribute.’

Practical examples

LATCO, in Bolivia, is a purchaser, processor and exporter of sesame seeds. It purchases the seeds from around 1,500 farmers, and processes and exports them to nine countries in total, though mainly to Japan. GBF provided LATCO with around US$800k in investment capital, along with a US$150-200k grant. ‘The investment capital is being used to build an improved processing plant, while the grant is helping to develop LATCO’s growing supplier network into ten farmers’ cooperatives,’ Rosen explains. ‘This strengthens the supply chain and helps

‘THE AWARD IS A BIG BOOST, GIVING GBF CREDIBILITY AND PRESTIGE’ the farmers to get a better price for their crops. In addition, we provided LATCO with technical assistance to develop a governing environment and a board of directors.’

Another relatively recent investment

by GBF was in Kenyan company Pwani Feeds, which delivers animal feed to around 3,000 farmers in the Mombasa region, purchases eggs produced by the farmers and sells the eggs to retailers using a wholesale distribution system. ‘GBF is again providing around US$800k in investment capital, to fund the acquisition of an egg storage facility and a maize milling plant, as well as to employ a plant manager to run it,’ says Rosen. ‘We’re also providing technical assistance in the form of a multi-pronged management, education and expansion programme.’

‘GBF supports companies that deal with large numbers of small producers,

‘GBF carries out extensive monitoring of all its investments, from beginning to end,’ Rosen resumes. ‘This includes bestpractice reporting procedures, along with financial, operational and social metrics, as part of an overall Impact Planning, Assessment and Learning (iPAL) framework. We also help companies to track their own social impact, as well as providing assistance with facilitation and matchmaking within the international financial community. We help companies to find longer-term partners and other sources of financing.’

‘GBF has only been in existence for two and a half years and since the average term of our investments is seven to eight years, it’s too early to accurately assess returns. However, we’re currently looking at roughly a 6% cash yield on our portfolio, which could grow to around 10% in the long term.’

International recognition

‘It it is a huge honour for GBF’s work to be recognised by the G20 SME Finance Challenge committee,’ Rosen concludes.

‘It is very energising and comes at exactly the right time, since we are now ready to raise our public profile, secure the next stage of funding and grow. To be chosen at such a relatively early stage of GBF’s development is a big boost and gives us credibility and prestige. It also shows that the governments involved are serious about supporting us in providing real and sustainable assistance and opportunities to some of the world’s poorest people.’

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Financial sector development in Asia, Africa, Eastern Europe and Latin America

S

ince 1994 Triodos Bank has contributed its unique expertise as a socially responsible bank to the microfinance sector in Asia, Africa, Eastern Europe and Latin America.

Triodos manages four specialised funds that invest in financial institutions specialised in the provision of microfinance and sme finance. With the provision of loans and equity combined with our banking experience we aim to contribute to sustainable economic development in developing countries and Eastern Europe.

Triodos Sustainable Trade Fund provides trade finance to certified organic and Fair Trade producers.

Triodos Bank is a fully licensed independent Bank with branch offices in The Netherlands, Belgium, United Kingdom and Spain.

Recognition was given to the bank’s pioneering role in the world of sustainable and transparent banking when the Financial Times named Triodos Bank the Sustainable Bank of the Year in 2009. www.triodos.com Utrechtseweg 60, Zeist The Netherlands 0031 (0)30 693 65 00

TLB Where more than money counts