Casey
Yesterday, Devin from Unitus came to our office here in Beijing to talk about the wrap up of their whirlwind two and a half week exploratory trip through China. Along with meeting with all of the Beijing based players in microfinance, like the China Association of Microfinance, UN Development Program, Planet Finance, and Hope International, they also trekked out to microfinance institutions in four different provinces around China, Inner Mongolia, Shaanxi, Sichuan, and Ningxia....quite a trip!
Photo from Ningxia
Photo From Sichuan
Photo from Inner Mongolia
It was fascinating to hear their take back from their MFI visits. Their initial conclusion of which MFI they think has the most potential to take off in China was the opposite of what our guesses have been based off of field trips to this group of MFIs. They liked the leader who was willing to break the envelope and do what has never been done before. This reaction fits with the Unitus model of investment in which the way that they have been able to achieve such incredible success, helping MFIs with a few thousand borrowers scale to between 100,000 and a million clients, is by investing in those visionary leaders.
To give those of you who are not familiar with Unitus a little background, Unitus is a microfinance accelerator that partners with small MFIs that have the potential to scale, and provides these MFIs with the technical assistance and capital (either in the form of debt or equity investments) that they need to achieve rapid expansion. Unitus' model has been incredibly successful around the world, especially in India.
Our reaction on the above mentioned MFI head and perspective on evaluating MFI leaders here more generally is that of course we want to see leaders that want to grow and expand, but along with that, we want to see proof of measurable results and a realistic vision. From my perspective, the regulatory situation in China is so vague, that microfinance institutions and investors cannot bank on the fact that regulations will change in a definite amount of time, or predict, when regulations do change, what form they will change into. I don't know if it's possible to speculate in the microfinance sector in China. For example, the idea of making a loan now based on the guess that regulations will change within the next three years and institutions will be able to freely lend to MFIs seems pretty scary in this environment.
The whole meeting with Unitus yesterday left me with a lot of questions. International microfinance practioners, Courtney and myself included when we first started up Wokai, come to China with wide eyes, innovative ideas, ready to take big risks and push the envelope. The longer they're here and learn about the subtleties and complexities of microfinance in China, they tend to tone down their vision and become more part of the status quo here. Playing by the traditional rules, not straying too far from what is currently being done and the traditional models. Then, you talk to the people who have been in the sector for say ten years, and they are even more toned down and pessimistic about the ability for mass scale change and innovations to occur in the microfinance sector here. They are grounded in reality. Not much can happen here until there is regulatory change that allows for mass scale microfinance development. However, many of them have lost the fire necessary to, once regulations change, get in there, get their hands dirty, and create growth and change in microfinance here.
So, I see a Unitus, see their energy, optimism and enthusiasm, and wonder, "Have we all gotten too soft and passive? Are they right that we just need to keep pushing the envelope, searching for a model that works?" or, "Is China a different can of beans? Do you have to play by it's rules and come up with a new model adapted to the complexities of China, maybe pushing change at a slower pace, to create that growth and development in microfinance?". I have no idea what the answers are to those questions. It will be interesting to see how things unfold.
Comments
You can follow this conversation by subscribing to the comment feed for this post.