An introduction to OIBM
OIBM stands for Opportunity International Bank of Malawi and it is the reason that Claudia and I moved to Africa 6 months ago.
OIBM is just a bank.
OIBM is a revolution transforming one of the poorest countries in the world.
A bit of history first. About 30 years ago, the concept of microfinance
took hold in Bangladesh thanks to a professor names Mohammaed Yunus.
The idea is simple: provide small loans to the poorest people. They use
the money to start or grow small businesses and help themselves out of
poverty. It has been a huge success, and has been replicated all over
the world.
The trouble with microfinance is that it requires capital. Over the
past few decades this money has come from donor countries. But there is
a lot of overhead required: fundraising, finding clients, collecting
repayments, etc. Because of this microfinance has a hard time scaling.
Poverty on the other hand has no trouble scaling.
Loaning money out is not a new idea. Loans are how banks make money.
But where do banks get their capital from? Savings accounts of course!
Simply put banks take a deposit from one person and loan it to another,
taking the interest from the loan home as profit, minus the costs of
running the bank.
So OIBM is doing what banks do. They get capital by offering savings
accounts, and then they loan out that capital to people who would never
be able to get a loan from a normal bank. So the loan side of things is
classic microfinance and the savings side is just normal savings
accounts. Well not totally normal. The savings accounts are targetted
for people who wouldn't be able to open a bank account at any other
bank in the country. Banks usually require formal identification, a
minimum deposit, a letter from an employer, and unless you can read and
write you probably won't make it through the process. This is where
OIBM is different. You just need 500 kwacha, which is about 4 dollars.
This gets you a full featured bank account including access to an ATM
machine that identifies customers with a digital fingerprint reader.
With these savings accounts OIBM has the capital they need to
distribute loans, but it also gives people bank accounts, and the
importance of the latter cannot be overestimated. Before OIBM, money
was literally stuffed under the mattress or buried in a can, now that
same money is able to transform the community that needs it the most.
It is a scalable, positive feedback loop - a revolution indeed!
So that is the theory behind OIBM. In my next post we will get practical, and see how this is actually working.
Listen to OIBM advertisments as mp3s. A warning though, the OIBM songs will get stuck in your head: English and Chichewa
OIBM is just a bank.
OIBM is a revolution transforming one of the poorest countries in the world.
A bit of history first. About 30 years ago, the concept of microfinance
took hold in Bangladesh thanks to a professor names Mohammaed Yunus.
The idea is simple: provide small loans to the poorest people. They use
the money to start or grow small businesses and help themselves out of
poverty. It has been a huge success, and has been replicated all over
the world.
The trouble with microfinance is that it requires capital. Over the
past few decades this money has come from donor countries. But there is
a lot of overhead required: fundraising, finding clients, collecting
repayments, etc. Because of this microfinance has a hard time scaling.
Poverty on the other hand has no trouble scaling.
Loaning money out is not a new idea. Loans are how banks make money.
But where do banks get their capital from? Savings accounts of course!
Simply put banks take a deposit from one person and loan it to another,
taking the interest from the loan home as profit, minus the costs of
running the bank.
So OIBM is doing what banks do. They get capital by offering savings
accounts, and then they loan out that capital to people who would never
be able to get a loan from a normal bank. So the loan side of things is
classic microfinance and the savings side is just normal savings
accounts. Well not totally normal. The savings accounts are targetted
for people who wouldn't be able to open a bank account at any other
bank in the country. Banks usually require formal identification, a
minimum deposit, a letter from an employer, and unless you can read and
write you probably won't make it through the process. This is where
OIBM is different. You just need 500 kwacha, which is about 4 dollars.
This gets you a full featured bank account including access to an ATM
machine that identifies customers with a digital fingerprint reader.
With these savings accounts OIBM has the capital they need to
distribute loans, but it also gives people bank accounts, and the
importance of the latter cannot be overestimated. Before OIBM, money
was literally stuffed under the mattress or buried in a can, now that
same money is able to transform the community that needs it the most.
It is a scalable, positive feedback loop - a revolution indeed!
So that is the theory behind OIBM. In my next post we will get practical, and see how this is actually working.
Listen to OIBM advertisments as mp3s. A warning though, the OIBM songs will get stuck in your head: English and Chichewa
