YBI Global Forum, Monday: Strengthening our network - Resourcing
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Working Group D is developing a proposal for the G20 SME Finance Challenge to create a multi-country financing partnership for youth-led small and medium enterprises. The proposal involves an international public sector credit guarantee facility that provides collateral-free loans to youth businesses in multiple countries through partnerships between local banks, youth entrepreneurship organizations, and a multilateral development bank. The goal is to unlock financing for young entrepreneurs, create a sustainable funding platform for member organizations, and develop a global loan financing model that can be replicated. Developing the proposal required overcoming communication challenges between the diverse team members and aligning on objectives, support provided, and data collection.
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YBI Global Forum, Monday: Strengthening our network - Resourcing
- 1. Network Strategy â Working Group D Financial resourcing: âG20 SME Finance Challengeâ
- 2. Working Group D+ Team members Argentina Eleonora Nobile CEO, FundaciĂłn Impulsar Bolivia Ălvaro BazĂĄn Executive Director, Innova Emprendimentos Sociales Brazil Luciana Lopes Programme Manager, ConexĂŁo Mexico AndrĂ©s RodriguĂ©z Executive President, JEMAC Uruguay Wilder Folco Director, Emprecrea * Jorge Rodriguez YBI Advisor * Sarah McMillan YBI Operations Director
- 3. âą Forming our team âą Brainstorming âą Focusing âą Opportunity is the mother of good strategy! Our process
- 4. The âG20 SME Finance Challengeâ âą Global Ashoka sponsored competition âą âBest models worldwide that catalyze finance for small and medium enterprisesâ âą 15 winners present their solutions at G20 summit 2010 and receive G20 funding support to implement their proposal âą Criteria: â Innovation â Leverage â Social & economic impact â Sustainability & soundness
- 5. An international public sector credit guarantee facility that unlocks collateral free loan finance for youth-led start-up and early stage SMEs in multiple countries, through unique local level collaborations between private banks and youth entrepreneurship support organizations following a globally proven model Our proposal âMulti-Country Financing Partnerships for Youth-Led SMEsâ
- 6. Our proposal for the G20 SME finance challenge Government Guarantee Scheme Local Bank YBP (BYST) Young entrepreneurs financed
- 7. Our proposal for the G20 SME finance challenge International public sector guarantee Local Bank YBP Young entrepreneurs financed Local Bank YBP Young entrepreneurs financed Local Bank YBP Young entrepreneurs financed Local Bank YBP Young entrepreneurs financed
- 8. Provide a credit guarantee of up to 80% on loans to youth-led businesses Development bank/ World Bank/IFC Provides international accreditation and assistance for to enhance the quality of support to the young entrepreneurs Youth Business International Youth entrepreneurship support organisations Identify, and support young entrepreneurs with viable business ideas but without access bank finance Local partner banks & financial institutions Provide collateral-free loans to youth businesses at start-up or early growth stage youth focused locally sustainable global potential
- 9. Local benefits âą Creation of sustainable funding platform for members in Latin American regions Network benefits âą Raised profile âą Loan financing partnership model that can be implemented globally âą Learnings from the process of how we work together What we hope to get from our project
- 10. Working together on this project âą Working together was difficult â Working on what? To achieve what outcome? â Communication challenges â Space for collaboration? âą Collaboration requires alignment and consistency â What do we do? Who do we support? â What data do we need to have? âą We feel excited about what has been done and what could be done âą We will have to work hard at working together â but the prize will be worth it!
Hinweis der Redaktion
- Our team was.... Special thanks to Jorge and Sarah for his efforts to co-ordinate our work World Cup group of Dead
- What was our process i.e. How did we define the project we worked on? You could say through a mixture of âstruggleâ and good fortune. The struggle part came from the fact that working together to define a project we could work on to help us in the area of Financial Resourcing was more difficult than we probably more difficult than we thought it would be Despite fact that we know each other well in the LA region, it quickly became clear that we were not used to working with each other on this sort of question. We will discuss this more later The result was that many of our first brainstormed ideas we decided were not practical or specific enough. They tended to fall into the category of âsomeone should set up a large fundraising organisation in the USâ - i.e. They were not things that could be done unless we already had deep resources and were not things that WE would work on together We decided we needed to identify a specific fund-raising opportunity that we could meaningfully develop together This is where the âgood fortuneâ happened for our group...
- At this point, Sarah M at YBI brought us the idea of working with her to craft an entry to the âG20 SME Finance Challengeâ competition [Explain the key points of the competition using slide as a prompt] We decided to use this as the focus of our project because: It was specific and real opportunity with some urgent deadline (creating some needed focus and momentum in our group) Winning the competition would have significant benefits It would require us to work together as the plan was to demonstrate that our proposed approach could have a regional impact
- The basis of the idea is to use a regional loan guarantee fund TOGETHER WITH the use of YBU Network-type entrepreneur support to encourage banks to support local youth business SMEs...
- Sarah to present (leave screen blank initially) The competition was launched by the G20 group and Ashokaâs Changemakers, with support from the Rockefeller Foundation. They have invited people to pitch innovative ideas for how the public sector could help unlock private sector finance for SMEs. Many of the major development banks have signed up to implementing the winning proposals including the World Bank, IFC, Asian Development Bank, Inter-American Development Bank, African Development Bank and European Bank for Reconstruction and Development. We took a public private partnership model which has worked in India where a government guarantee scheme which guarantees 80% of loans to high risk clients (bring up pictures) enabled BYST to propose and secure a partnership with the Indian Bank. The guarantee was the catalyst but it was the combination of that and the BYST support activities that convinced the bank to work with BYST.
- We proposed that this model could be replicated in multiple countries through creating an international public sector guarantee (either through a regional development bank or a global bank like IFC/World Bank) which would guarantee up to 80% of loans from private sector banks in-country to young entrepreneurs, in partnership with YBPs. We argued that this would be easier/faster than campaigning for individual governments to create their own in-country guarantee schemes like the Indian one, although possibly our initiative could drive them to do that, meaning the international guarantee could one day be removed. Our proposal was called Multi-country Financing Partnerships for Youth-led SMEs. You can read it online at www.changemakers.com/SME-Finance. Invite Alvaro to add anything in terms of his experience of being involved in this proposal and the value of this sort of mechanism for his environment
- How it works: [explain with reference to the above model] Within this, our model supports the overall sustainability and scalability of the approach because it provides a second level of risk mitigation for the banks (though reducing the failure rate of their loan customers). This means that the youth-SME market becomes attractive to banks economically as well as socially This also leverages AND grows the authority of the network N.B. This idea is based on a similar model that has been successfully developed by BYST. This is therefore a great example of how we can leverage the value in the network Sarah will be going through this idea in more detail in the âLendingâ session on Wednesday
- We will hear whether we have been successful in the competition by ______. Fingers crossed! What will we have got from this work...
- So what are our groupâs reflections on working together on this process? First is that it isnât straightforward.... We struggled at the start to really move forward because we simply arenât practiced in working with each other. It wasnât obvious to us how we go about identifying mutually important objectives and creating a process to address them â even though we were all very clear the Financial Resourcing is a big issue for each of us. It was only when we got focused on the G20 idea that we started to get going. I think that this shows that we have to be very clear what we are trying to achieve if we to create the momentum required to be successful Communications are a really challenge and we will have to find better ways to collaborate using phones and the internet Also critically, because we werenât used to working in this way, we failed at the start to create the space required to work together. Again I think finding a clearly valuable and specific objective helped us greatly to find the time and space required We also discovered that if we want to be able to work on exciting regional or global opportunities together we need to be very aligned around what we do and have a consistent set of data as evidence of our collective impact. We found, for example, that having to decide what average loan size our proposed scheme would support, first of all challenged us to provide a consistent set of data on this point and also led to an interesting debate in the team about who we felt our target group is