In 1976, Muhammad Yunus phD, Nobel Peace Prize winner, during his visits to the poorest neighborhoods in the city of Jobra near Chittagong University, Pakistan, noticed that the village women who made bamboo furniture had to accept loan usurious loans to buy bamboo and pay with almost all your profits to the lender. Yunus lent $ 27 dollars of her money to 42 village women who made a profit of 0.50 Takas (US $ 0.02) on each loan, with this she discovered that small loans could make a considerable difference for people.

In the last decade, the microfinance industry has had a positive impact on millions of people. However, this movement is evolving towards a model of decentralized platforms P2P (peer to peer), without intermediaries.

Microfinance at disruption risk

The global small loan market (P2P) is expected to reach around US $ 900 billion by 2024, with a compound annual growth rate of more than 48.2% CAGR, 9 times the size of the global microfinance sector, which implies a potential risk of disruption on this industry, including large firms that had historically been financing the microfinance sector, now focus on financing these P2P fintech platforms, leaving aside the traditional industry.

Microfinance, potential role in sustainable development

During this year there have been more displaced people than at any other time in history. Migrants are looking for opportunities and in their desperation, they are taking risk of everything to escape hunger, persecution and violence, many have found death on the road, discrimination and even greater despair.

  • Conflicts, crises and lack of opportunities affect millions of people throughout the world.

Climate change, environmental degradation, pollution and depletion of resources continue throughout the planet. Countless people die every day from diseases for which there is a cure, they go hungry, they see their children die for lack of basic medical attention and suffer in many other ways at unacceptable and avoidable levels of deprivation, fear and despair.

The microfinance industry can impulse the necessary change, expanding services scope taking advantage of disruptive technologies to be competitive and consecrate their mission.

The UN Sustainable Development Goals

The SDGs are a set of 17 global objectives focused on sustainable development issues ranging from poverty, equality, education, climate change, innovation, infrastructure, land and water, and production / consumption, with an objective date of 2030.

  • These United Nations Objectives are gaining momentum as an organizational framework for many global asset owners, particularly those seeking a thematic investment approach. Among asset owners in a survey conducted by investment banking Morgan Stanley, 78% of the institutions that integrate or consider sustainable investments are also considering at least one alignment with the SDGs as part of their investment strategy, the SDGs are a framework to think and pursue the impact.

According to the United Nations, these objectives, to be realized, must be accompanied by an equally ambitious agreement on financing for development, facilitation of technology and capacity-building. New ways must be found to mobilize and allocate more effectively financial resources and other means of implementation, such as information and communication technologies. Only by advancing together in this way we can achieve a better future for humanity.

Microfinance in the present

- +4,000 institutions

- US$ 100,000 million in microloans

- 90 million people served

- 100 countries

The challenge:

- Include disruptive technologies to the microfinance business model.

- Expand microfinance products & services scope.

- Incorporate microfinance into the SUstainability CREation revolution.

Solution

The Sucre.IO platform will contribute to achieving SDG, including in its business model microfinance entities, grouping it in a Blockchain ecosystem and with the availability of a cryptocurrency, as differentiating elements that allow the traditional microfinance industry to modernize, compete and remain valid over time.

Microfinance's role in the Sucre.IO

In the Sucre.IO ecosystem, microfinance entities are considering the sell-side and offering high-quality sustainability proposals, acting as sustainability creators.

Sucre.IO Platform

Sucre.IO platform comes to solve the problem of connectivity between sustainable impact ventures and their financing, broadening the scope of these mechanisms, where fund managers, corporations and investors from around the world can to align with the SDG framework, being able to generate competitive financial returns, positive social impact and stakeholders engagement.

Risk Disclosure

Cryptocurrency trading is not suitable for all investors and involves the risk of loss. The risk of loss in cryptos can be substantial. You should, therefore, carefully consider whether such trading is suitable for your financial condition. No statement within this webpage should be construed as a recommendation to buy or sell cryptocurrencies or as investment advice.

Sources: 

How to close the US$2.5 trillion SDG investment gap

Morgan Stanley: Sustainable Signals, Asset Owners Embrace Sustainability (.pdf)

Questions with the Co-Heads of KKR Global Impact

Sustainable Development Goals – how will they impact your business?

Germán Malavé
Written By
Germán Malavé
Alternative Finance | Sustainable & Impact Investment | Fintech World | UN SDGs | Sucre.IO Co-Founder & CEO