Friday, July 23, 2010

Mongolian Permaculture: Day 24 – Microfinance


Two years ago I read a book called: Banker To The Poor: Micro-Lending and the Battle Against World Poverty, by Muhammad Yunus.

I had recently closed my business, and was desperately looking for something to jump right back into so that I could make back all the money I had lost.

In six short months I had gone from flying around the islands teaching finance classes 2-3 times per week, supported by a small, super-efficient team that allowed me a 4 ½ day work week, and making more money each month than many people earned in ½ year …to working for a former Investment Banker 16–20 hours/day, 6-7 days per week.

Reading the book sparked a transition in thinking which changed my entire perspective on money, finance, and financial literacy.

There I was, worrying about all the the income, the material items, and the socioeconomic status I had lost …when in a blinding flash of the obvious, the realization struck that over half the world is living on less than 1 dollar per day.

Yunusbook told the story of how he, a college professor with no entrepreneurial background, had an epiphany one day while walking to the high-finance class he was teaching.

As he walked through the poverty of the neighbouring village reviewing his lesson plan in his head, something dawned upon him...

If he applied this knowledge towards helping the people surrounding him, he could make a far greater impact upon improving their quality of life than if he spent his life teaching privileged students, who would then go on to leave their communities in search of better lifestyles elsewhere for their families.

Thus was born the concept of microfinance: lending tiny amounts of money to those whom were deemed unimportant and unprofitable by lending institutions, in communities where severely limited opportunities exist.

Yunus designed a system to educate, equip, and empower some of the poorest people on earth to create new opportunities through these small loans which allowed them to create micro-enterprises which could generate incomes for their families.

Grameen Bank was founded, and went on to create a billion-dollar institution which helped hundreds of thousands of people in Bangledesh to finance and create small businesses of their own to break the cycle of poverty in their communities. Traditional banks in developed countries are still amazed at the low default rate and high profit margins of a Grameen Bank, which makes its loans $25 at a time.

This got me thinking – perhaps I could use all the lessons I have learned in business and finance over the last 10 years to do something bigger than finance my [formerly] affluent lifestyle. There is far more to life than $300 dinner tabs, driving a fancy car and living in a wealthy neighborhood.

Problem was, I had no idea how to make the transition from flat-broke former businessman to social entrepreneur working on projects to contribute to the betterment of humanity.

Two years later, somehow I find myself in Outer Mongolia preparing a lesson plan to teach nomadic herders the basics of business and finance.

My lesson plan was simple:

  1. Introduce myself and explain why Rick has asked the course photographer to teach a class on finance.

  2. Break the class up into four groups - i) Co-Operative Members
    ii) Co-Operative Leaders
    iii) Field Officers
    iv) Project Managers
    [Demonstrate how different perspectives, at all levels, are crucial to gain a deeper perspective of your organization to support future planning].

  3. Brainstorm for 20 minutes on Strengths, Weaknesses, Opportunities and Threats to their existing enterprises/projects.
    [Demonstrate how SWOT analysis tool can be used to lay foundation for future planning.]

  4. Facilitate discussion amongst class to examine what is working, what is not working, and how they can improve.
    [Identify areas of most urgent need, and demonstrate how valuable a resource the support network they have created here with each other can be.]

  5. Highlight and examine wins and problem areas to explore and create possible strategies to overcome challenges. [Open the door to this kind of continuing conversation to learn from each other’s successes and failures, add input where appropriate if group is unable to come up with solutions. Bek has identified sales and marketing as one of their weakest areas, so cover 3 Fundamental Principles of Marketing here.]

  6. Introduce and explore 3 Fundamentals Principles of Business through class discussion. [Provide framework to work from in designing their organizational structures and business plans going forward.]

Class highlight: as I began the transition from my twenty-now-fourty minute SWOT brainstorm, a policeman appears at the back entrance to the tent. Bek and I keep a nervous eye on the officer and continue in hopes that he will disappear, but he moves quietly towards Gumbataar, and I groan inwardly with visions of him being carted off in handcuffs…

…then it is Bek’s turn to flinch as the officer asks to speak with The Boss… turns out that the police have shown up to commandeer our metal tent pegs for their own tent, and have generously brought wooden replacement stakes for us.

We take an unplanned morning tea break to switch out all the tent pegs, grab a quick cup of tea, and then resume the lesson with a big sigh of relief.

The 3 Fundamentals of Business that I shared with the nomadic herders?

  1. Business is a Team Sport.
    None of us is smarter than all of us.

    Problems and challenges shrink relative to the number of like minds working towards a solution.

    The SWOT brainstorming group session was analyzed and discussed to highlight why and how to use this tool effectively.

  2. Assets feed you. Liabilities eat you. Focus on buying assets.
    The class was asked to classify a petrol water pump as an asset or liability.

    Concensus was that it is an asset because it represents a large investment and was necessary to irrigate their crop fields. However, if co-operatives’ income were interrupted, the petrol pump would begin to ‘eat’ them because of the high and rising costs of petrol to keep it running.

    In contrast, a pump running on wind, solar, water power would begin to ‘feed’ co-operatives almost immediately after the initial purchase because low operating and maintenance costs will create a far quicker return on investment.

  3. Use profits to strengthen your community. The example of Cuba and their transition from a high-energy to low-energy society was given.

    Community leaders recognized the need to change pro-actively with changing times, and those with growing knowledge and ability became the new wealthy.

    The shift to natural, organic, low-energy food production systems led to better health and money earnt from food production cycled into the local economy to help create stronger communities.

As I type, I realize how ambitious it was to cover all of this in just 1 hour …no surprise that my class went for 1 hour, 40 minutes! Unfortunately we were unable to cover any of the marketing lesson I had planned, though Bek tells me later that the class was highly engaged and interested with what we were able to get through.

Biggest lessons learned with input from Rick and Kat on how to improve my teaching:

  • Include a review mechanism in the lesson plan to check and see what the class has learnt.
  • When using a story to illustrate a point, be sure that the connection between story and point is very clear.
  • Plan mechanisms to compress your lesson should one area begin to run overtime.

Today I made my first small steps towards becoming that social entrepreneur whom I envisioned two short years ago.

I love this work.


  1. Wonderful post! I didn't realize people in Mongolia were fluent in English. If they aren't then did you have an interpreter? Looking forward to following your progress as a social entrepreneur!

  2. English is starting to be taught in Mongolia and is not widely spoken yet ...we had an interpreter with us for most of the trip in order to get around.
    Thanks for reading Susana ...stay tuned! ;)