Unitus, an organization working to accelerate access to microfinance in developing countries, received a $9 million grant Apr. 23 from the Omidyar Network to expand into several new regions beyond India over the next three years.
This is the Omidyar Network's largest microfinance grant to date. Microfinance institutions offer loans to the poor in developing countries to help them start or sustain small businesses.
Unitus, based in Seattle and Bangalore, works extensively with microfinance institutions in India. The organization currently has 14 Indian partners on its roster, and a total of 21 worldwide. Unitus estimates it reaches more than three million families globally.
This is the second grant Unitus has received from the Omidyar Network. In 2005, the organization received $2.7 million to scale its MFI Accelerator program.
"Unitus has exceeded expectations on several dimensions, particularly on its own growth and ability to meet the needs of its MFI partners," Wendy Conway, director of communications for the Omidyar Network, told India-West.
"Unitus has ambitious goals for expanding the reach of microfinance to the world's poor, and we believe it has the talent and capacity to meet them," she said, adding, "We are supporting Unitus so that it can reach 15 million of the world's poor with microfinance services by the year 2010."
The Omidyar Network is a philanthropic investment firm established by eBay founder Pierre Omidyar and his wife Pam. eBay has its own microfinance project, Microplace, which allows small investors to make loans directly to microfinance institutions via its Web site.
Unitus does not directly provide microcredit loans, but instead offers consultancy services to its partners in the areas of technology, human resources and strategic planning. The organization also offers its partners access to capital through its network of banks and investors, and works with microfinance institutions in both start-up and late phases.
Ed Bland, chief operating officer for Unitus, told India-West the Omidyar Network's capacity-building grant would be used to expand into Indonesia, the Phillipines, China and Africa, while sustaining the organization's programs in India. "There's great work still to be done in India," he said.
Three Unitus partners made the 2008 Forbes list of the 50 best microfinance institutions. The Kolkata-based Bandhan ranked second; Grameen Koota, in Bangalore, ranked 19; and SKS, based in Hyderabad, ranked 44.
SKS currently provides loans to 1.3 million people; Bland dubbed the organization "an incredible success story."
Chief among its services to its partners is creating financial transparency. Unitus helps its partners develop financial reports and operating statistics with constituencies to report to.
"When MFIs consistently use these tools, they become ready to work with donor agencies and banks for access to capital," explained Bland. Unitus helps its partners gain access to both domestic and international sources of capital.
"We help our partners unlock the barriers to growth," said Bland. Approximately one-third of Unitus's 50-strong staff is based in Bangalore.
One of Unitus's success stories in India is Moksha Yug Access, founded by 36-year-old Harsha Moily. MYA is based in Bagalkot, a rural district outside Bangalore. The organization partnered with Unitus in 2007, its second year of operation.
"The consultancy service from Unitus brought more efficiency to our operations which translated into lower interest rates for our borrowers," Moily told India-West by telephone from Bagalkot. "I have access to the brightest minds at Unitus," he said.
Moily started MYA, a for-profit venture, with funds from his family. A year later, Unitus helped him identify banks which would provide him access to capital. "They've been a real value add to us," said Moily.
Unitus also creates new products for the poor, such as life and health insurance. Moily uses one of Unitus's innovations, goat insurance, to assist his borrowers.
"A goat is a poor man's cow," said Moily, adding "it is a good investment." Goat insurance protects the borrower against the death of her investment.
Moily told the story of Yellava, who took out a $120 loan to buy two goats. Within months, the rural woman had two more goats, which she sold, using the proceeds to send her daughter to school.
The Sunbird University MBA said India's much-touted prosperity overlooks the struggle of the 700 million people there who still live on $2 a day. "Until you involve the rural poor, there are going to be huge inequities in the distribution of wealth," Moily said.