Nepal

In April this year I was fortunate enough to visit Kathmandu in Nepal for a training course run by CGAP on developing inclusive financial systems: how funders can support microfinance effectively.

The course was very informative – covering the history, trends and fundamentals of how donors and investors such as DFIs, social investors, agencies and governments can effectively fund microfinance from how to initially select and assess an MFI to invest in, to indicators to track financial and social performance.  Key topics and questions were addressed over the five days such as:

  • What is a financial systems approach?
  • Why is access to financial services important?
  • Understanding the financial market at micro, meso, and macro levels
  • Financial system gap analysis framework
  • What constitutes appropriate roles of funders and factors for effective involvement?
  • Comparative advantage, instruments, collaboration
  • How to structure monitoring and reporting

The final two days were focussed on a case study, putting into practice what we had learnt earlier in the course by assessing an MFI from various angles and concluding whether we would ultimately provide funding.

Although not specifically focused on the Nepalese microfinance sector, it did include a one day field visit to DEPROSC – a non-profit organisation (registered as an NGO) running policy research and various social development and livelihood improvement initiatives such as skills based training programmes and microfinance services in rural Nepal.  I met with management and staff in the Head Office in Thapathali, as well as further afield with clients in a rural village. The microfinance programme, active since 1996, is implemented through both direct lending and promotion of saving and credit organisations.

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The DEPROSC direct lending model is presently located in 11 districts of Central and Eastern Nepal, reaching the financially underserved segment of society. According to MIX, they have a gross loan portfolio of $11m (sixth largest in Nepal) across almost 40,000 borrowers. The programme follows the group lending model, similar to Grameen, whereby women form groups and receive loans without collateral to fund an income-generating activity. These are focused on the poor, disadvantaged, schedule castes, landless tenants and rural women.  Each new group goes through compulsory training over a week to learn the basic concepts of the savings and credit program, as well as a group recognition test to understand the program methodology. After this they can receive loans (three of the members in the first phase then the following two).

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I was intrigued to attend a centre meeting in the village which brought back memories of my visits to the centre meetings in Bangladesh! The women sat in their groups of five (often with a number of little children wriggling on their laps or chasing each other around the nearby field) as the loan manager conducted the meeting and collected the monthly payments (note not weekly as per Grameen). One of the younger women spoke English and I asked her experience of microfinance and she replied she was happier and had used the loan to expand her family grocery business and thus support her children’s welfare. Critically she also knew the effective interest rate charged (20% reducing balance) when I questioned her and showed me where it was stated on her loan passbook!

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By way of background, microfinance programs were introduced in Nepal in the early 1970s via agricultural development programmes. Since then a number of government initiatives have been introduced such as the Production Credit for Rural Women, the Micro Credit Project for Women, and various poverty alleviation programmes. However these reach less than 10% of the targeted poor. The development of various MFIs and microfinance NGOs gained momentum in the past decade, following the restoration of democracy in Nepal in 1990, the largest being Nirdhan Utthan Bank, Chhimek Laghubitta Bikas Bank, and Swabalamban Laghubitta Bikas Bank. Most of which also follow the Grameen model. However, according to the World Bank, only 25% of people currently have access to formal finance in Nepal and the majority of the poor in rural areas have no access to formal credit whatsoever.

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I had a couple of free days afterwards so took the opportunity to explore Kathmandu whilst I was in town. On the first day there was a national vehicle strike so I wandered round by foot, taking in the sights and smells of the city. It wasn’t the fresh-aired mountain village I expected – as crowded as most Indian cities, with a brown, rubbish-infested river running through lined with shanty houses on its banks. However the people were as vibrant as friendly as I’d encountered in most Asian cities and the huge Durber squares were beautiful.

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These squares (Kathmandu Durbar Square, Patan Durbar Square, and Bhaktapur Durbar Square) consist of temples, idols, water foundations and other buildings with spectacular architecture. Before the unification of Nepal, it consisted of small kingdoms and these squares were the plazas of the old royal palaces. I saw a number of sadhu (‘holy men’) wandering around in their long saffron coloured robes, symbolising their sanyasa (renunciation of society) and flowing grey beards.

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In a place in one square lives the Royal Kumari Devi, a young girl revered as a ‘living goddess’ believed to be a reincarnation of the Hindu Goddess Durga. The Kumari is worshiped by some of the country’s Hindus as well as the Nepali Buddhists. The selection process for her is very rigorous – she is chosen from a caste of silver and goldsmiths.  High priests choose the girl based on several physical characteristics such as ‘neck like a conch shell’, ‘eyes like a cow’, and having a body like a banyan tree and golden, tender skin which has never been scratched or shed a drop of blood. Then the girl must pass a series of tests. In one test she is placed in a darkened room with severed animal heads while masked men dance around the room and attempt to frighten her. In another the girl must correctly identify items worn by her predecessor. Once selected, the girl moves into the Kumari Bahal with her family and remains the Kumari Devi until she enters puberty. Then another girl will be chosen in her place. I waited patiently in the square of the Kumari Bahal house and finally a little girl aged around six in red robes appeared at one of the intricate wooden windows. She smiled shyly and lifted her hand to us, then the face disappeared again. I wondered what her life must be like – to have such a privileged but sheltered life in the temple, emerging only for ceremonial occasions, worshipped and revered as a child, then as you become a young woman to be labelled ‘unclean’ and cast back into the real world with what must be a huge bump. Rashmila Shakya is one of the best known ex-Kumaris, with her autobiography ‘From Goddess to Mortal’.

ImageLater on, after walking up a long flight of stairs in the midday sun, I finally reached the Swayambhunath temple. Its also known as the monkey temple, which isn’t surprising given the number of the cheeky little critters roaming around the temple complex. In the centre is a large stupa with Buddha’s eyes painted on, overlooking the valley below. Around it lay variety of shrines and temples, not to mention stalls of peddlers selling colourful beads, statues of Buddha, and other trinkets with cries of “no same, no same”!

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Early one morning I went up the Buddhist stupa of Boudhanath with a couple of friends from the course. The huge stupa with its magnificent white dome dominates the skyline and makes it one of the largest stupas in Nepal. Its also one of the holiest Buddhist sites and as we sat in a coffee house by its edge watching the sun rise above the dome, the prayer flags fluttering in the morning breeze, the scene took my breath away.

ImageI very much enjoyed my time in Nepal, and especially loved the blend of the Buddhist and Hindu temples and cultures in Kathmandu. The course taught me a lot technically regarding how to assess an MFI using ratios and financial statement analysis, while also getting an understanding of the broader policy and market infrastructure opportunities and challenges facing institutions. It was also a great opportunity to meet fellow investors and donors in the sector from across the globe to share best practice and learnings – from afar as Vietnam, Kenya, Myanmar, and Afghanistan. Next time though I need to make it up into the mountains!

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Exploring Africa

In the whirl of new job, travelling, and adventures this year I’d forgotten all about this blog! Only to be reminded by none other than Hugh Sinclair when he emailed me last week and thanked me for my book review. So in an attempt to catch up on nine months of experiences of microfinance around the world I’ll be posting some blogs over the next few days…!

1)     March 2013: AFRICA

Despite this title, I actually hate it when people label something ‘Africa’ given the complexities of each country throughout the continent. I took a trip back in March to Ghana, Nigeria, and South Africa to look at some of the microfinance initiatives and institutions in these countries. Despite what many people associate with Africa – corruption, disease, famine – there is such good and it’s a continent on a turnaround with many great microfinance initiatives, success stories, and opportunities for investment. There’s actually an inspiring Ted talk by Euvin Naidoo about investing in Africa, which is well worth a view:

However due to the inherent country risks and nascent form of the microfinance sector (with often limited or no regulation) in Africa, there has been a lack of funding from investors to date compared to Asia and Latin America. This has severely hampered growth as timely funds required to finance MFI loans and to strengthen the infrastructure have not been made available. Funding through the government and donors, which are currently the primary sources, often come with conditions attached or are subsidized – leading to market imperfections. Or worse, and often illegally, funding is mobilized from client deposits.

Ghana

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Ghana, with its long history of informal savings and credit, has one of the more mature microfinance markets in Africa (with Kenya, Tanzania, and Uganda arguably being the most developed). There are over 80 institutions listed on MIX with a gross loan portfolio of $0.3bn. However according to the World Bank over 70% of people still do not have access to formal financial services and there remains a huge potential demand for microfinance. At present, Ghana is home to 24 million people and 100 different ethnic groups, with 79% living on below $2 a day.

The microfinance sector has been relatively slow to take hold in West Africa in comparison with East Africa, Latin America or Asia, however is rapidly catching up. The combination of recently found political stability, market capacity, entrance of international microfinance networks and innovation in products and services has started to attract the interest of commercial investors and grow the market.

The government has played an instrumental role in reforming policy framework, and the Operating Rules and Guidelines for MFIs issued in July 2011 by the Bank of Ghana laid out the regulatory framework for MFI tiers. Tier 1 being Rural and Community Banks, Finance Houses and Savings and Loans Companies (regulated under the Banking Act), Tier 2 being susu companies, credit unions and deposit taking NGOs, and Tier 3-4 being the more informal money lenders, susu collectors and non deposit taking NGOs. Therefore while formal financial institutions have a strong regulatory framework, it is less developed for the microfinance sub-sector. Additionally, these do not incorporate specific provisions for consumer protection and responsible finance, however the Bank of Ghana also houses the Investigation and Consumer Protection Office in this role both in terms promoting consumer protection and educating clients on their rights and responsibilities.

I visited a couple of microfinance institutions whilst in the country, both of which were performing well, were profitable and had effective consumer protection mechanisms in place. One of the borrowers I spoke to was on his third loan cycle and had used it to build and expand his vehicle parts business (below) which was now able to successfully support him and his family and enable his children to go to a good school. The only issue I had was that interest rates were high compared to MFIs I’d visited in other countries. There are no caps on lending rates and typically these vary between 40-60% APR in the sector depending on the formality of the institution, and can be over 400% in some cases (see MFTransparency).

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Overall I feel the Ghanaian microfinance sector has shown strong signs of growth over the past few years, although a lot remains to be accomplished in terms of financial sustainability and outreach as well as improved regulation and guidelines for the less formal institutions. As the market matures, an emphasis on social returns and value-add services (such as financial literacy to clients), and a more holistic product approach (e.g. micro-pensions, micro-insurance and micro-housing) should hopefully develop.

Nigeria

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Nigeria is Africa’s most populous country, with 169m people. However 85% of these live below $2 a day and over 70% of people do not have access to formal financial services according to the World Bank. Compared to many other countries in Sub-Saharan Africa, Nigeria’s financial services sector is more developed and diversified, offering a good variety of products and services for corporate and high net worth clients. However even though Nigeria was one of the pioneer countries in microfinance in the early nineties, the sector is still nascent with few operators of significant scale. Similar to many countries in Africa, this slow development has mainly been due to a lack of funding, capacity building and technical skill.

The Central Bank of Nigeria launched a regulatory framework in 2005, which included the transformation of all community banks into microfinance banks (MFBs). The number has now ballooned to over 900 institutions registered as MFBs. However reporting from clients indicates that many customers are uncertain and suspicious of these banks, and the sheer number of institutions has created a regulatory burden. Furthermore, a number of them lack the structure, capacity and capability to do the business for which they were licensed. The regulator examined the MFBs across the country in 2010, out of which 27% per cent were found to be ‘terminally distressed’ or ‘technically insolvent’. Some of the problems identified include lack of good corporate governance, unhealthy risk management strategy, and weak internal control systems, leading to the withdrawal of licenses of over 200 operators. In June, 2011 the CBN released a new set of guidelines for microfinance banks operating in the country whereby MFBs would operate under three categories, which include unit, state and national microfinance banks – with required paid up capital ranging from N20m to N2billion.

Although the regulator appears to be taking an active role in the sector, criticisms have continued to trail the operation of the MFBs, many of which are accused of failing to grow the lower level of the economy and benefit the poorest. Despite there being over 900 MFBs there is a lack of understanding of the concept and methodology of delivery of microfinance by the operators. There is a high concentration of MfBs in the major cities and urban areas (predominately in Lagos) rather than the rural areas where they are really needed, with associated high running costs. On MIX market the gross loan portfolio stands at $1.3bn across 1.8m borrowers with a number of large MFBs contributing to this amount e.g. LAPO, Babura MFB, and Fortis. This suggests an average loan size of almost $1000 (compared to an average of around $100 in Asia). The CBN guidelines were updated earlier this year to further improve operations, including promoting the establishment of more MFBs to reduce poverty at a grassroots level and encourage financial inclusion.

Mohammed Yunus himself has spoken out about the Nigerian microfinance sector – saying that it is not microfinance banking but rather micro commercial banks – aimed at traders, suppliers and importers rather than the poor, in urban areas. In contrast to his Grameen model, the consumer provides collateral, loans are typically used for expansion of business rather than starting new businesses and, most tellingly, are provided to men (see a review of his speech here).

I’d had some apprehension before travelling to Nigeria. The gov.uk website was advising against all but essential travel, and against all travel in the North East where there was ongoing unrest and subsequent military operations. Friends had also reminded me about recent terrorist kidnappings (a month before seven foreigners were kidnapped and killed by militants in Bauchi state in the North), however I figured I’d be fine being based in Victoria Island, an affluent town in Lagos situated in the South West of Nigeria. And when I arrived, I was pleasantly surprised – the streets were clean, people were friendly and I felt perfectly safe walking around – although the traffic was something else and took soooo long getting anywhere by car!

I again met with a couple of microfinance institutions whilst I was in Lagos. They were performing well operationally but two issues came to light. Both expressed a desire to get a National licence however under capitalisation and the lack of funding was a problem – a jump from N100m ($0.6m) for a state-wide licence to N2bn ($12m) for a National licence. I also noticed that interest rates are high (there are no regulatory cap or margins) at around 50-60% APR. There has been recent criticism of Nigerian MFIs charging interest rates of well over 100% when other costs such as fees and compulsory savings are taken into account. As an example, the 2011 Planet Rating report listed 144% as the highest APR that LAPO charges, taking into account mandatory savings by the third year (originally calculated by MFTransparency and also critiqued by Hugh Sinclair in his book). Note this has apparently decreased since, although I have not seen any data to prove this.

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I also got the opportunity to meet with the founders of Pagatech, who launched Paga in 2011, a direct to consumer mobile banking service. Like many of the entrepreneurs in Nigeria, Pagatech was founded by two young Nigerians who studied and worked in the USA in Silicon Valley before returning home to help build the Nigerian economy and I found them very enthusiastic and impressive! Paga is an innovative, open, secure, and interoperable mobile payments platform that allows any person who has a mobile phone to transact electronically – turning the phone into an electronic wallet to send cash, save, remit funds, purchase airtime credit, and pay bills via a network of retail agents. Through this ‘branchless banking’ model it provides financial services with a focus on the underserved segments of society. Like many developing countries, although 80% of Nigerians do not have a bank account, an estimated 38% (60m) have mobile phones. There is therefore a huge potential for mobile banking. Pagatech’s number of clients and its agent network have shown substantial growth, with 190,000 users and over 800 agents by August 2012. Its goal is to have 30,000 agents across Nigeria in five years and 15 million customers.

South Africa

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Travelling to South Africa, I was somewhat dubious about whether microfinance was a need here, especially in Cape Town where I would be staying. Spending the first evening in the Victoria and Alfred Waterfront with the dramatic backdrop of Table Mountain behind me, the expensive restaurants, impressive yachts, and gleaming shopping malls seemed to reconfirm this. Let alone a stroll the next day along Camps Bay – with sophisticated South Africans relaxing in the many bars and cafés along the beachfront. Who here would need microcredit?!

Of course this initial impression is a far cry from the South African market as a whole. With a population of 49 million people, according to the World Bank, almost 46% of people do not have access to formal financial services and over 50% live below the poverty line. Three quarters of this group lack access to electricity and running water. The rural poor live in villages that are crowded between commercial farmland and game reserves, or in the sprawling townships on the outskirts of the cities.

There are just 18 MFIs listed on Mix Market, which are mainly NGOs and non-profits. More telling, the list includes Capitec Bank – a retail bank listed on the Johannesberg Stock Exchange and is one of the most prolific formal microcredit providers in South Africa. A number of the other large banks have also jumped on the microloan bandwagon as a way to make high profits by lending out expensive funds to the very poorest. In a country where trust and confidence in financial institutions is poor, the largest and most established banks dominate the market.

South Africa has a long history of informal credit, from the mashonisas (local moneylenders) to rotating savings and credit associations (ROSCAs). However with the growth of more sophisticated microfinance institutions and banks taking over the market, with easy access to pay-day loans and other forms of credit, there is a worrying potential for over-indebtedness. Nearly half of the 19 million credit active consumers in South Africa are described as having ‘impaired’ credit records, while a further 15% are described as ‘debt-stressed’ (one or two months in arrears). This translates to more than 11 million (more than 60%) of all credit active consumers in South Africa now being defined as over-indebted (see a commentary on this topic here).

So what about regulation? To counter these pitfalls of microfinance and protect consumers, the National Credit Act (NCA) was launched in June 2006, which covers loans and other credit from banks, including micro-loans. The National Credit Regulator (NCR) was also formed under this act for the regulation and promotion of an accessible credit market, with a focus on historically disadvantaged, low income and/or rural communities. It also promotes pricing transparency for MFIs though the publication of effective interest rates. However, although the Act limits interest rates to 60%, it still allows lenders to still charge huge prices through the application of fees, in some cases up to 400% APR. There is a credit bureau in place to monitor credit history, although no limit on the number of loans that can be taken (such as the case in India).

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Housing finance is also a growing sector in South Africa. One of the institutions I visited on my trip was Kusyasa Fund, a social development organization that uses microfinance as a tool for improving the housing conditions of South Africa’s poor communities. The fund caters for pensioners, those who earn under R3 500 a month or are informally employed. These people are then eligible for loans of up to R10 000 (c.$1000) for use in improving their homes. Clients are encouraged to use the funds for renewable energy products such as solar water heaters, stoves, and lamps along with general renovations: tiling, tubing, electricfication, plastering, painting, fencing, flooring, and structural extensions.

The Kuyasa Fund was initially established by a Cape Town-based community development NGO, which saw a need for additional financing for South Africans who qualified for the state housing subsidy. The Fund now works in townships across Cape Town, all characterised by informal housing, low and erratic incomes, and a high percentage of female-headed households. I went out into one township for the day to see the local offices (innovatively made from used shipping containers) and met with a number of the borrowers who welcomed me into their homes and delighted in telling me about the improvements they had made with their loans. One elderly woman had expanded her house to create a small grocery shop in the front of her house, one had improved her house and started a sewing business in the back to support her sister’s children (who had sadly died and she had taken them in), whilst another man had used the loan to build a bathroom and improve sanitation for his family. The latter made me laugh so much – when I asked if he would take further loans he told me “oh yes, one day my house will be THIS big (arms outstretched)… I will get a new gate around the house for security, an extension… and one day a yacht…!!!”. The loans were obviously having a big impact on the overall well-being of the people in the townships and I was pleased to see the difference they could make.

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Seeing the townships first hand and walking around, talking to the local people, really opened my eyes to the other side of Cape Town. The dual economy of extreme inequality resulting from the apartheid era still remains a huge issue. In India the slums are right next to (sometimes inbetween!) the high-rise blocks and wealthy areas so can’t be ignored, but here the townships are further out and I felt as if most tourists would probably be oblivious to such poverty.

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Conclusion

Overall I learnt a lot on this trip about the microfinance sector in Ghana, Nigeria, and South Africa and saw what was working well in these countries and where the gaps still lay. The difference across Africa in terms of regulation, and also the role of the regulator varies enormously. There is great potential for the market but also key issues to be resolved in terms of lack of funding, capacity building, mission drift, and employing local people with the right skill sets.

However what struck me most from talking to people across these three countries was the lack of access to basic services such as infrastructure, transport, healthcare, education, and sanitation – which not only affects the poorest but also the majority of the population. Poverty is not due to a lack of income alone and until there is still a lot of work to be done in building these structural social and welfare blocks before microfinance can truly be effective.

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Confessions of a Microfinance Heretic

“Some microfinance is extremely beneficial to the poor, but it is not the miracle cure that its publicists would have you believe. Microfinance has been hijacked by profiteers, and we need to reclaim it for the poor. The problem is not with a few rogue operators, alas, but with systemic flaws that permeate the sector.” H Sinclair

Just finished reading the explosive and insightful Confessions of a Microfinance Heretic, by Hugh Sinclair. Sinclair is ten-year veteran of the microfinance industry, having worked with dozens of microfinance institutions around the world and in several microfinance funds, concluding that the sector on the whole isn’t helping the poor but has been “hijacked by profiteers”, entwined in financial greed and exploitation. His attempts at exposing wrongdoing would result in death threats, aggressive and personal retaliations, and legal action. Part expose, part memoir, the book accounts how the industry turned him from believer to heretic. Bono once said “Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children and her extended family will eat for a lifetime.” Sinclair says the quote should be rephrased to “Give a woman a microcredit loan to buy a fishing boat and the CEOs of the MFI and the microfinance funds will eat for a lifetime.”

In the book, Sinclair focuses most of his attention on one large MFI, the Lift Above Poverty Organisation (LAPO), operating in Nigeria. Sinclair was working for a Amsterdam-based microfinance investor called Triple Jump at the time and was dispatched to Nigeria to sort out a problem with LAPO’s IT systems. He describes how, during his time there, he discovered high interest charges, unusual lending operations and vast profits. Sinclair alleges that LAPO claimed to be charging interest of 3% per month for eight months but after fees, taxes, commissions, forced deposit etc this translated to over 144% per annum. In addition, LAPO used clients’ deposits to lend money to other clients – a practice only allowed with a banking license. He subsequently raised the alarm with some of LAPO’s large institutional investors, expecting them to put pressure on the MFI or withdraw their funding altogether. However, he claims he was ignored and eventually fired from his job at Triple Jump. Godwin Ehigiamusoe, Managing Director of LAPO has recently told The Sunday Telegraph that interest rates at the MFI are 2.5% a month with a 1% management fee – or a total of 42% a year – and that Sinclair failed to appreciated the high costs of operating in Nigeria.

Godwin also added “we have not put our finger on his motive” but concluded Sinclair was angry over losing his job. However, rather than being a bitter address on his former employees (although there is inevitably some element of this), Sinclair’s claims are detailed and comprehensive, with a vast amount of data collected from various sources and personal experience.

There is actually surprisingly little solid evidence supporting microfinance as a practical tool of poverty reductionthe poor repay loans and this is all the proof the sector requires.” However Sinclair admits the real “debate is not whether microfinance works, but how the inherent conflicts of interest can be managed.” As such, I have drawn out the five main systematic flaws addressed in the book:

1. High interest rates on loans

The interest rates charged on some microloans are prohibitively high. Hugh alleges that in some cases institutions are charging up to 200% interest and profiteering from the subsequent returns. Often the loan often comes with hidden charges on top of the hefty rates such as fees, taxes, and compulsory deposits. Rates vary widely across the globe, but are particularly high in Nigeria and Mexico where the demand for small loans from a large population cannot be met by existing lenders. Although there are genuinely high operating costs in microfinance, this excuse is often abused and used as a catch-all.

Damian von Stauffenberg, founder of Microrate, said that local conditions had to be taken into account, but that any firm charging 20 to 30% above the market was “unconscionable” and that profit rates above 30% should be considered high. Yunus himself has said interest rates should be 10 to 15% above the cost of raising the money, with anything beyond a “red zone” of loan sharking. “We need to draw a line between genuine and abuse,” he said. “You will never see the situation of poor people if you look at it through the glasses of profit-making.”

2. Lack of regulation and client protection

In countries where local laws and a lack of regulation or government oversight give free rein to the MFIs, competition has run wild and sometimes led to credit crises. In India’s Andhra Pradesh, “There were more microloans than poor people.” And in Nicaragua “total lending by MFIs was estimated at $420 million in 2008, in a country of about 5.5 million, not all of whom were poor (and MFIs generally don’t lend to children)…One particularly ambitious client in Jalapa had managed to rack up $600,000 in micro-loans.”

3. Majority of loans are for current consumption

There is little effort to check what the loans are for – a majority goes not to help poor people launch or sustain micro-businesses to supplement family income but rather for current consumption, which are difficult to then repay. Cash is sometimes taken and spent on a TV or repaying other loans. Estimates for consumption loans range from 50% – 90% of all microfinance loans depending on the study. As Sinclair points out, the proportion of entrepreneurs among the poor is no bigger than it is among the rich. It’s naive of us to expect that every poor person is an entrepreneur waiting to be discovered.

4. Intermediaries and investors fuelling the crises

Investors such as banks and MIVs are blamed by Sinclair for fuelling the crisis and turning a blind eye to the problems of dubious lending practices, such as high interest charges, of MFIs on the ground. Partly this has been due to a lack of proper due diligence, however even worse, there is evidence that they have not stopped funding projects even after dubious practices have come to light. As Sinclair writes, “Which is worse – to invest in such an MFI with full knowledge or to admit investing without bothering to obtain full knowledge? Best left unanswered”. Microfinance funds, often acting as private equity funds, have been perceived to be merely profit driven in cases where their longstanding investments are in some of the most egregiously exploitive MFIs. Like the subprime lending crisis, Hugh believes that predatory practices are unavoidable where the motivations of the lenders aren’t aligned with the motivations of the borrowers.

5. Lack of business growth

The amounts of money loaned by MFIs are often far too small to permit businesses to grow to scale. Even when many reach the size to employ other family members, Sinclair reveals in an exchange with one Mongolian woman: “we asked her about her future plans for the business, and whether she thought it could be built up further and be a useful business for her children to take over. ‘You misunderstand me. I don’t do this job because I like it or want to grow it into a big business. I do it so my children will never have to do work like this.’”

Yunus himself has recognized the downfall in the sector in recent years – criticising at a gathering of financial officials at the UN, “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks… Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people.”

This all sounds rather depressing! However, Sinclair is careful not to condemn the whole industry and insists there are funds that are faithful to the original ideals. Sinclair himself still works in microfinance in South America and movingly describes his past experiences with ethical and effective organisations throughout the book. Rather than be a critic of the principles behind microfinance, he hopes this will be a “call to action”, even laying out the conditions necessary for its success and suggesting fundamental reforms to be actioned.

And the situation has been improving. In recent months, the Indian parliament has introduced The Microfinance Institutions (Development and Regulation) Bill following anger about the Andhra Pradesh crisis and the collapse of the country’s only listed fund, SKS Microfinance. MIX market has done much to improve the availability of data on the industry as has Microfinance Transparency to promote transparent pricing of MFIs. Furthermore, the introduction of client protection principles such as the SMART campaign and the UN PRI Principles for Inclusive Investment will also go a long way to strengthen the sector.

I therefore believe Confessions of a Microfinance Heretic is an important book to read for anyone not only involved in microfinance but also for all who seek an end to global poverty and injustice. Sinclair has a strong sense of justice and is quick to ‘whistle blow’ on the industry without always giving a bigger picture, but on the whole provides valuable insight. The book brought up many personal questions for me regarding my foray into microfinance – yes, there are aspects of it which both disappoint and discourage and even anger me, but on the other hand it’s made me even more determined to ensure those MFIs working in a responsible way succeed, to invest in the ‘right’ way, and do my best to ensure the industry develops in a more transparent and accountable manner. Sometimes it’s about understanding the bad, recognising the flaws, in order to build a better future.

Further reading:

The books website with additional data and reviews here

Dave Roodmans review here

TEDxEuston – Challenging Conventional Wisdom

“The darkest thing about Africa has always been our ignorance of it.” George Kimble (Geographer, b.1912)

Last Saturday I attended TEDx Euston. For those who haven’t heard of TED – it’s a nonprofit devoted to Ideas Worth Spreading through live speakers combining to spark deep discussions and connections (see some of the fantastic talks from science, to politics, to business here). TED has also created a program called TEDx throughout the globe, which are local, independently organized events. TEDxEuston in particular aims to reflect ideas of a new generation of African thinkers and leaders under the theme “Challenging Conventional Wisdom”.

It was one of the most inspiring Saturdays I’ve ever had.

The first speaker was Albie Sachs. On turning six, during World War II, he received a card from his father expressing the wish that he would grow up to be a soldier in the fight for liberation. As an advocate at the Cape Bar his work involved defending people charged under racist statutes and repressive security laws. He himself was raided by the security police, subjected to banning orders restricting his movement and eventually placed in solitary confinement without trial for two prolonged spells of detention. In 1966 he went into exile and studied and taught law in England and Mozambique. 22 years later, Albie was blown up by a bomb placed in his car in Maputo by South African security agents. In his talk he described waking up in hospital and the nurse asked if he was making the sign of the cross for being alive – no he was checking the damage – 1) testicles, most importantly, fine 2) face, ok 3) heart, good then 4) ah my arm… Losing an arm and the sight of an eye he thanked God he was still alive. But later on, in the dark of night, he suddenly felt alone and started singing “It’s me, it’s me, it’s me, oh Lord, standing in the need of prayer…” As he sang, the words rippled around the conference hall and tears sprung to my eyes.

After recovering from the bomb he returned to South Africa in 1990 to take an active part in the negotiations which led to it becoming a constitutional democracy. After the first democratic election he was appointed by President Nelson Mandela to serve on the newly established Constitutional Court. During these next fifteen years he and his colleagues produced a number of pioneering decisions on advancing human rights in contemporary Africa. He also talked of finding ‘LLL’ – late life love, and teaching his little boy about what happened to him, but not wanting to have him hear from his Daddy that once black and white people like him and his wife couldn’t have even been friends. He talked also of having soft vengeance to a time when we don’t need vengeance at all. A very inspiring man. At the end he begun to sing again “It’s me, it’s me, it’s me, oh Lord…” – and this time I stood up, with the rest of the audience, and sang along…

Ndidi Nwuneli is a director of Sahel Capital Partners, a leading advisory firm focused on the agribusiness and manufacturing sectors, and the co-founder of AACE Foods, an agro-processing company in Nigeria. She also established LEAP Africa and NIA in 2002 and 2003 respectively. NIA empowers female university students to achieve their highest potential in life, while LEAP Africa provides leadership, ethics and management training and coaching for youth, business owners, social entrepreneurs and the public sector. Her talk was around ‘rage for change’ – beginning with ‘what makes you angry about your country… and what are you doing about it?’. She made us think about how we can channel this anger into positive change. How did we, the middle class, get so apathetic? So deadened? Every one of us can make a difference in our communities. But remember, “if you want to go fast, go alone. If you want to go far, go with others.”

I also heard from Queen Sylvia Nagginda Luswata, the wife of the King of Buganda (the largest Kingdom in Uganda of 7m people). After leaving Uganda she went to study in New York, eventually working for the UN, returning only to her country 18 years later for the Kings coronation (and no, that wasn’t when she met him!). She married the King in 1999, becoming the first queen of Buganda in fifty years. Her main focus areas include early childhood care and development; education for girls; empowerment of women, and health issues particularly regarding maternal health and HIV/AIDS. Through her Foundation, she has played a major role in sensitising and mobilising the population on issues of education, health, poverty eradication, culture preservation, and supported marginalised groups of youth, women and persons with disabilities. A very hands on, intelligent, humbling and inspiring royal – Kate Middleton could certainly learn a thing or two from her!

The person I’d been looking forward to hearing speak most though was Jacqueline Novogratz, the founder and CEO of Acumen Fund. Reading her memoir “The Blue Sweater” last year gave me the final impetus to leave my banking job and rethink how I can engage with the world. Acumen is a non-profit global venture fund that invests ‘patient capital’ in social enterprises, emerging leaders, and breakthrough ideas to solve the problems of poverty. To date, Acumen Fund has invested more than $72m in 65 companies in South Asia and Africa, creating and supporting more than 55,000 jobs. Not only is she a wonderful and enigmatic public speaker, but hearing her describe some of the companies that Acumen has invested in, delivering sustainable and affordable healthcare, water, housing and energy to millions of poor people, re-confirmed belief in my new career path.

I also enjoyed hearing Dr Frank Njenga remind us to make a future not just for us but for our grandchildren and generations to come, and Jason Njoku, a Nigerian internet entrepreneur, encouraging the audience to start innovative business in their home countries. But it wasn’t only the speakers that were inspiring – over lunch I spoke to a number of other attendees, all committed to engaging in an active and meaningful manner with the continent, who each had their own stories to share.

I’ve posted a couple of previous TED talks below to provide some food for thought – Leymah Gbowee on the importance of the individual girl and Euvin Naidoo on Africa as an investment. Take the time to watch them if you can.

Looking forward to next years already!

Back to the UK: the journey continues (part 2)

“Why do some people stop growing at age 30, just going from work to the couch and television, when others stay vibrant, curious, almost childlike into their nineties?” J. Novogratz

Come June 2012 my life was at yet another crossroads. Out of the blue, I had been offered a role as a microfinance analyst in a UK fund (all three criteria checked!). Did I give up my job in impact investment after only a few months? Part of me felt I was letting people down by leaving so soon, but I also knew this new role was exactly what I wanted to do. Furthermore, I’d be covering the microfinance markets of South Asia and Africa whilst still being based in the London office. It seemed like a dream come true.

A month later I was in my new job at the development fund. It locks completely into my belief that the most sustainable route out of poverty is through economic growth – empowering people through training, employment, and the creation of local infrastructure.

The microfinance team invests both directly and indirectly in microfinance institutions in these target geographies. My role entails monitoring and managing our current portfolio of investments as well as financial analysis and evaluation of new opportunities, due diligence, through to transaction execution support. What does this mean? Day to day I could be screening new proposals, mapping out the regulatory environment, meeting with other key players in the sector, or attending Board meetings. Overall I’m learning a huge amount about the sector as well as getting some amazing first hand experience out in the field – from issues faced by MFIs to new product innovations. This should ensure the right capital is deployed to the right places. The team aims to be market making, value adding and catalytic in our target regions.

The team itself is dynamic and international, all with a breadth of rigorous financial experience coupled with experience in the development sector. It’s a stimulating and open environment to work in. I’ve also had the opportunity to meet a number of interesting people working in microfinance  – in DFIs to MFIs to ratings agencies and NGOs, and even Muhammad Yunus himself at the last conference I was at. Absolutely inspiring!

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I recently returned from a trip to India, where I met with a number of fund managers and some underlying investment organisations. After the Andhra Pradesh crisis in 2010, it seems optimism has returned. Those MFIs that survived appear to have emerged stronger and, with the new regulations being proposed, we are likely to see consolidation in the sector as weaker or smaller MFIs struggle and fall out. At least the restrictive suggestion of a cap on interest rates has been removed, to be replaced with a margin cap (10% for large MFIs with portfolios over 100 Cr, and 12% for small MFIs). I expect operating costs will consequently need to be managed more efficiently and new, innovative methods of achieving this will emerge.

Another theme I saw in India was a movement towards broader financial inclusion from traditional microcredit. A number of microfinance funds are now opening up to having a percentage of their portfolios in this area (typically 10-25%). Partly this was due to survival. With the crisis stagnating the microfinance market, funders turned instead to adjacent sectors such as housing finance, education finance, and microinsurance. At the same time, many of the traditional base-of-the-pyramid clients have matured over various loan cycles and starting to move up the value chain – buying a low cost house, sending their children to college, requiring a pension etc. It will be interesting to see how ‘microfinance’ redefines itself further in the next few years.

Back to the UK: the journey continues (part 1)

“I’m encouraging young people to become social business entrepreneurs and contribute to the world, rather than just making money. Making money is no fun. Contributing to and changing the world is a lot more fun.”  M.Yunus

It’s been a year since I returned from my work in India. So much has happened I barely know where to begin. Filled with hope and distant dreams of being able to improve the lives of those in need, I began another journey – this time to find out how I was actually going to achieve this. However, my three criteria were not going to make this road easy:

  • Firstly, I wanted to utilise my existing financial skills and experience to make the greatest social impact possible.
  • Secondly, I wanted that impact to be primarily appropriated in India.
  • And thirdly, after four months abroad and with the desire to be near friends and family for the short future, I wanted to be based in the UK.

I initially looked to the international charity sector. However soon discovered that although there are a number of fantastic development charities in the UK helping to alleviate poverty and injustice all over the world (Save the Children, Everychild, Water Aid, and Oxfam to name but a few), I didn’t feel I fitted in to any of the finance positions available. Could I really see myself doing audits or project accounting in an office, even if it was in Tanzania, Kenya, or India…? My real passion still lay with microfinance and social businesses to solve these problems.

The second issue I had was that most of the funds and organisations focussed on microfinance and SME business development aren’t based in the UK. There are a few in Europe (the Dutch especially are progressive in this sector) but most are unsurprisingly based in their country of focus – India, Indonesia, Cambodia etc. Even if I was ready to head back to Asia again, most of the opportunities I found there were either poorly paid (sometimes on a volunteer basis again) or on short term contracts. After being out of work for six months, neither seemed ideal!

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Ignoring criteria two, the first and third criteria were not entirely difficult to solve given my unrealised but opportune timing. With the launch of the Big Society Capital in April 2012 there were a number of social funds in the UK launching or expanding their teams, eager to ride the impact investment bandwagon. For those not aware, the £600m BSC fund is the first social investment institution of its kind anywhere in the world, with the aim to build a sustainable social investment market in the UK and help social sector organisations increase their impact via intermediaries such as other funds. Where has this £600m come from? Around £400m is estimated to be transferred into a trust from accounts dormant for over 15 years in the UK. The remaining equity in BSC is £50m each from Barclays, HSBC, Lloyds Banking Group and RBS, made in the context of wider discussions (known as the Merlin agreement) with the Government on economic recovery.

I ended up applying to five social funds operating in the market, and after a number of interviews, accepted a job with Nesta, an independent UK charity, to be an impact investment analyst and help launch their new impact investment fund. My role was to provide financial analysis and evaluation of new investment opportunities and proposals in the social impact market. However with the fund yet to be launched I was also involved in fundraising, mapping the market, and defining our investment criteria. In the end, the team decided to target social innovations that have a positive impact on:

  • the health and wellbeing of an ageing population;
  • the educational attainment and employability of children and young people;
  • the social and environmental sustainability of communities.

Another interesting concept was how the fund’s impact performance could be measured. Would it be via a theory of change? The monitoring of defined social KPIs? Or maybe through control tests? This is an ongoing issue with many impact funds and one in which I feel there is no defined answer. It really comes down to the individual investment and its social aims for the business. Nesta have recently published a report on their standards for evidence here.

I relished the opportunity to work with some fantastic people, all passionate about harnessing new and innovative business ideas to address social challenges facing the UK, whether this be through investments, grants, or mobilizing research, networks, and skills. I also met some really interesting and inspirational social organisations – a few of which I’ve listed here (do check out their sites!).

Social businesses really can be one of the most sustainable ways of creating positive impact. As Muhammad Yunus said, “The challenge I set before anyone who condemns private-sector business is this: If you are a socially conscious person, why don’t you run your business in a way that will help achieve social objectives?”

However as much as I knew the fund would make a positive impact in the UK, often my mind would wander back to the people I met in the villages in Pondi or the street children in Dhaka and knew international development was where my passion really lay.

As you may have guessed, I ended up leaving Nesta due to an exciting opportunity that came up in the development sector. I’ve since heard the fund launched in October 2012, they are on the way to making some innovative and impactful investments and I wish them the best of luck. I do feel very fortunate to have been part of such an interesting time in the UK social market and am looking forward to see how it progresses in the near future. As for my new role, all will be revealed in the next blog…

Last week in India

My last week in India – I can’t believe the time has gone so fast. Made an emotional farewell to everyone at Sharana on Friday afternoon. Felt sad to go and and still feel there was so much I could do, I just didn’t feel ready to leave yet. We all took lots of photos and promised to keep in touch so hopefully I’ll still be able to help now and again (whether it be advice or fundraising), albeit from the UK!

Flew to Trivandrum on the Southern tip of India in the afternoon. It was dark by the time I reached there so just took a taxi to my guesthouse and crashed out for the night. The next morning I was finally able to take in the beauty of my surroundings – a pretty wooden house with palm trees and hammocks in the garden leading out onto a white sandy beach. The best thing was that there was no one around apart from a few fishermen, who took little notice of me sunbathing or swimming in the sea. Ended up having a wonderfully relaxing afternoon, lazing around on the beach and watching the fishermen bring in the nets. Even saw dolphins swimming past! The guesthouse owners made me delicious fresh tiger prawns with noodles for dinner, al fresco. Bliss!

The next day I awoke early to catch the train to Kollam. As the taxi reached the station disaster struck as I realised the hotel still had my passport! One of the hotel staff drove over to meet us en route with my passport as we headed to the next station to catch the train, but when we arrived it was shut! Headed back into town to get another train, but it wasn’t for another 2 hours. Gave up and finally took the public bus. Not too bad a drive – just a couple of hours – and then a short autorickshaw ride to the hotel in the centre of town. Booked into a backwater trip in the afternoon, which turned out to be an absolutely stunning trip – lazily drifting in a canoe through luscious greenery and sleepy villages. My guide was great at pointing out banana trees, cashew trees, pineapple plants, and even an eagle and a kingfisher along the way. We also stopped off a couple of times, once to see coconut husks being wound into string and once for a cup of masala chai in a little village hut/café!

Monday morning I set of for Cochin. Unfortunately didn’t anticipate the crowd of people queuing for tickets at Kollam Junction station. Everyone waited patiently for 15minutes, then as the train arrived the crowd surged forward, transforming into a heaving mass of bodies against the ticket counter – waving rupees, prodding with elbows, and grabbing desperately for the ticketseller’s attention. I somehow pushed through and got one, then raced over the bridge and down the platform with my huge bag, sweating profusely, to make it to the train. However just as I was about to board the conductor wouldn’t let me on – I had the wrong ticket!! In the confusion the girl must have sold me one going in the opposite direction. Begged for 5 minutes then finally burst into tears… to no avail. Back to the office, exchanged my ticket for a new one and waited 30mins for the next train. As if things couldn’t get any worse, an hour into the journey the tour operator phoned to say the hotel had cancelled my reservation as they had overbooked, even though I’d paid a week in advance. Rage!! They offered me an alternative but it was on the mainland, 20k from my original location – so I (im)politely declined and demanded a refund.

At Cochin, got an auto rickshaw to the first hotel in the Lonely Planet, which was massively overpriced (with no hot water or wifi)… and three other venues later I finally found a lovely home stay in the fort area, a short walk from the Chinese fishing nets. The owner, Coral, was very kind and friendly and could have passed as my Mum’s sister with her Anglo-Indian background! Her little grandneice was dancing around the kitchen to Christmas songs – “Of course she loves dancing she’s Anglo-Indian too!” Coral said… Mum, Paula et al I’m sure you agree! Was so thankful to have a hot shower and collapse into the huge soft bed. Spent the evening walking along the promenade, watching the sunset over the Chinese fishing nets and had dinner in a stylish hotel nearby listening to a traditional Indian band. The next day lazily looked round the old fort city, including the parade ground and St Francis’ Church, with a traditional banana leaf fish supper in a local restaurant in the evening (yum!).

Next morning I flew to Mumbai for my last three days in India. Spent most of the time relaxing in the hotel (exhausted by now!) and doing some Christmas shopping. On my last day however I decided to visit Elephanta Island. I ventured down to the Victoria Terminus (Central Train Station) which was an adventure in itself on the public train system! I expected it to be like Delhi’s sleek tube system, but it couldn’t have been more different – almost impossible to figure out which train goes where (I initially went 5 stops on the wrong line…), rusty and dirty old metal carriages, and even in first class people were packed in and hanging out of the side doors. I was shocked to see that every time a train stopped at a signal a crowd of people would climb up or down and from the tracks!

Once at the terminus I took a cab to the Gateway of India and then an hour long public ferry to Elephanta Island. The island itself was a lush green forest, with a tiny toy train leading to a long row of steps up to the seven temple caves carved out of rock.  Quite breathtaking, with huge reliefs of Shiva and colossal figures of dvarapala (guardians whose task was to admit the faithful and keep out ill-intentioned visitors) flanking the doorways. Only low point was when one of the many monkeys scampering around the temples ran up to me and cheekily grabbed my sprite out my hand! Watched the sunset over Mumbai from the boat on the way back then had a delicious dinner and a few cosmopolitan cocktails on the top of the Intercontinental hotel on Marine Drive to celebrate my last night. Luckily made my flight and arrived back in the UK just in time for Christmas!

I’ve fallen in love with India during my time here, but it’s with a mix of affection and exasperation. A rising international power with a rapidly growing economy (exceeded only by China), India is also plagued by poverty and unemployment – of its 1.2bn population 750 million still live in underdeveloped rural villages and 35% of the country is illiterate. The paradox is everywhere. I’ve seen sleek offices in Mumbai, Delhi’s impressive tube network, TVs with over 150 channels, autorickshaw drivers with mobiles, glamorous posters in the street of the latest Bollywood films, and met intelligent and inquisitive girls studying at one of the prestigious engineering schools. Yet in contrast I’ve also seen families sleeping in a row in shop doorways, the sprawling city slums, men desperately picking through litter-lined streets, children pressed against car windows begging for food, and rural poverty in the villages, which have broken my heart.

Most of the growth results from the services industry (particularly ICT) and the well educated middle classes. This widening of inequality between the middle classes and the rural poor is partly down to a lack of agricultural reform and reluctance to modernise the villages, exacerbated by government corruption, the Indian culture of complacency and deference, and problems arising from the traditional caste system.

However, no matter how frustrated I’ve been at times here, it melts away when I see one of the huge grins and ubiquitous head waggles. I’ve had a fantastic three months and seen some amazing sights, but most of all their hope, generosity, kindness, and perseverance has been humbling. Economic growth isn’t everything – a country needs to also concentrate on the kind of society it is creating. India has terrific potential and it is striking country, mixing old traditions with modern Western influences, but it needs to find a solution to its lopsided economy and improve conditions for those at the bottom of the social pyramid. I hope microfinance will be just one tool in the future to enable this.

Seventh week in Pondicherry

This week I helped with preparations for the Christmas fete on Saturday – ensuring all the products had been made and labeled, and the leaflets/ fliers/ posters were all finalized and printed. Fingers crossed it all goes well.

Being the start of the new month I also went through November’s bills and receipts to analyse the revenue generating streams (or not revenue generating as the case may be). We’ve taken quite a hit on the sandwich project as a major retailer in Pondy has stopped stocking. They are refusing to stock unless we agree they can return any unsold, losing about 8,000 rupees revenue for Sharana a month as a result. Hopefully when Rajkala gets back we will be able to renegotiate with them. I’ve found in India that great emphasis is placed on age and gender in business, and I’m often overlooked or not taken seriously which can be very frustrating at times. It is likely her husband will end up negotiating with the male supermarket owner! We are also struggling with the paper unit sales and bistro sales, it being low season and few tourists in town. Hopefully following the increased marketing effort and flood of tourists in the new year that sales will increase and the bistro will become self-sufficient.

Took Friday off to travel to Jodhpur (taking a flight from Chennai to Delhi and then another to Jodhpur) for the British Polo Day India. British Polo Day (www.britishpoloday.com) is a fantastic concept co-founded by a friend of mine, Ed Olver, which celebrates the heritage of the game all over the world – with events through the year in Singapore, Dubai, UK, India, Thailand, South Africa, France… to name but a few! Arrived early evening and freshened up at my guesthouse then headed to the Umaid Bhawan Palace to meet some of the others for drinks and a buffet on the rooftop. Absolutely stunning location (I think its 40,000 rupees a night to stay there!) and had a lovely evening meeting everyone involved with the weekend. Surprisingly a number had flown in not only from other parts of India but also Dubai, Singapore, and the UK. After a few drinks felt pretty tired so headed home around midnight, excited by the prospect of the rest of the weekend.

Next morning I headed to the RAAS hotel next to my guesthouse (much nicer!) where I bumped into a number of people from the night before and we chilled out by the pool. Changed into a summer dress and took a tuk tuk to the polo ground to watch the matches in the afternoon. First off was the elephant polo which looked such fun (although went at a very slow pace compared to normal polo!), played with very long sticks and mahouts sat at the front to control the elephants. We were told if the elephants didn’t want to play they would stamp on the ball and burst it – luckily they were all in a good mood today! Managed to get onto one of them post match and have a ride in the sola topi.

Afterwards I sat in the sunshine with a glass of wine and chatted to the others whilst watching the second match (Eton College v Mayo College) – which certainly felt very civilised after my last few months here! Even the Maharaja and his family came to watch and do the prize giving. A good spread was laid on in a marquee for high tea on the grounds before we all jumped into taxis as sun was setting to head back to our hotels in town. Just when I thought the day couldn’t get any better, in the evening a party had been organised on the Mehrangarh Fort ramparts overlooking the town below. There was a bar, dinner, and even a disco which went on until the early hours. Absolutely fantastic! Especially loved the moves from the young Mayo College boys, JT style on the dancefloor! Only downside was that in the midst of the excitement I unfortunately lost my camera, although I’m sure there will be tons of photos that I can get copies from people.

Slow start to Sunday after the 4am finish the previous night! Met Olver by the RAAS pool (thanks for chucking me in…) and had a yummy club sandwich to stave off the hangover. We headed over to the polo grounds to watch the final of the Umaid Bhawan Trophy and then the main match of the weekend – the British Army v Jodhpur Eagles.

Had to head off just before the end back to the Umaid Bhawan Palace to get ready for the fashion show that evening which I had readily agreed to take part in. It was to showcase Beulah London’s designs (by the fabulous Nats and Lavinia!) – see www.beulahlondon.com. Not only are the dresses beautiful but the girls set up the company after visiting the slums in Delhi and meeting women who have been  involved in the sex trade. With every purchase of Beulah, a canvas bag is given which has been made by women victims of trafficking in India, with a percentage of all profits from the clothes going back into anti-trafficking charities in India and the UK. Really inspiring.

Seven Indian models had been flown in from Delhi/Mumbai along with myself and two other British girls who had come for the weekend. It was good fun having our hair and makeup done, before doing a few run throughs in the grounds, where it was to be held later. A couple of hours later everyone else arrived and we began! Luckily everything went without a hitch and we were told it all looked great – especially at the end when we all stood at the front of the sun temple with fireworks going off over the palace in the background. There was another buffet dinner in the grounds afterwards, and then drinks until the early hours in the Palace bar. Sooo much fun – vaguely remember twirling round the room in one of the Beulah dresses and dancing to Coldplay until 5am! Another brilliant day.

Flight home the next day at 1pm via Mumbai to Chennai, and back to reality. I certainly saw another side of India! Thanks so much to everyone who organised the event – I had an amazing weekend with memories I’ll never forget and met some great people who I’ll hopefully keep in touch with. Just figuring out now if I can make the next one in Thailand…

Fifth and sixth week in Pondicherry

Workwise I’ve been busy with office admin, filling in for some of the staff off sick/holidays and getting things ready for our stall at the local Christmas fete next weekend. Finally finished off the posters and marketing (am now great friends with the guys in the printing shop), made some cookie deliveries to the local orphanage, helped out in the bistro, and organized a delivery of 200 paper bags from the unit to France.

My Mother came to visit from London for 12 days, which was a great excuse to do some more sightseeing around the area! Met her in Chennai last weekend – which welcomed her by pouring down with rain for two days. Still had fun sloshing around the temples barefoot (although she didn’t find it so funny…) and seeing the old Fort St George and San Thome Cathedral. Actually managed to gatecrash a wedding, though no one seemed to mind! We stayed in the Residency Towers hotel, which felt like a great luxury after my little apartment in Pondi – I took great advantage of the power shower and all you can eat breakfast buffet!

Back in Pondi, Vetri kindly took us both to Matur on Wednesday to show Mum the village and tell her about Sharana’s operations there. She loved meeting the children in the crèche and school. I’m really pleased she got to see the ‘real’ India (rather than the usual AC hotels and tours!) and meet some of the people benefiting from the work Sharana does.

On Thursday we set off for Bangalore – a 3hr taxi and 2hr flight from Chennai later we arrived at the hotel only to be told they had a ‘leak’ and that our room was unavailable.  They offered us a room at their sister hotel which was ‘very close’ but turned out to be way out of town. The manager there was much more apologetic but let slip there was no leak but they had overbooked. Rage!! Was getting late so we just took the room and had dinner in a gorgeous 5* hotel nearby… after a few cocktails all was well again!

Next morning we took a 2hr train to Mysore. We’d booked into first class (another benefit of travelling with your Mother) so had big comfy chairs in an AC compartment with gorgeous countryside views.  Stayed in the Royal Orchid – HIGHLY recommended beautiful colonial building, a short tuk tuk ride from the centre of town. Spent a couple of hours looking round Mysore Palace, which was built in 1912 by the English architect Henry Irwin. The interior was full of stained glass, mirrors, carved wooden doors, mosaics and bright colours – so over the top but also so fantastic! Outside, the palace is covered by over 96,000 lightbulbs, which light up every Sunday evening (and briefly for the light and music display we went to in the evening). Breathtaking!

Afterwards we took a tuk tuk up to Chamundi Hill to the Sri Chamundeswari Temple. Pretty similar to the other hundred temples I’ve seen in India (!) but we got talking to a local who showed us where to make an offering and put red powder on our foreheads. I laughed with the boys sitting in the ‘coconut breaking’ area (to break up before the offering) who gleefully scavenged for leftover bits of coconut. Saw a 5m high statue of Nandi (Shiva’s bull) on the way back to town then had dinner in the hotel in the evening.

We booked a car the next day to drive 5hrs to Udhagamandalam (‘Ooty’), established by the British in the early 19th century as the summer headquarters of the Madras government (and nicknamed ‘Snooty Ooty’!). The drive actually turned out to be one of the highlights of the trip; as we left Mysore the chaos of India quickly subsided to be replaced with lush green countryside and towering hills. En route we drove through Mudumalai National Park, with sunlight peeping through tall spindly trees and deer and monkeys running alongside the road. There are tigers, wild boars, jackals and elephants in the reserve too but we didn’t spot them! I got the car to stop to take some photos of the monkeys and Mum screamed as I wound down the window, thinking at one point they were going to jump into the car!

We reached our accommodation in Ooty early afternoon – a gorgeous pine-clad colonial villa up on the hillside. Built in 1828 by Captain McPherson of the British Army, it later became the summer retreat of the Maharaja of Patna. Our room was gorgeous – a roaring fire and heavy dark wooden furniture gave it a toasty chalet-chic feel in the midst of India.

Later we visited St Stephens Church. Built in 1829, it its the oldest church in the Nilgiris, with some lovely stained glass windows and huge wooden beams (hauled by an elephant from the palace of Tipu Sultan 120km away). Afterwards we walked round the botanical gardens, which demonstrated the natural fauna of the Nilgiris. It was packed with Indian tourists who kept stopping me to take my photo – although slightly irritating after the hundredth photo, I felt like a bit of a movie star!

The next day we visited the huge lake in the centre of Ooty (with boat trips and fairground rides surrounding it) and a thread garden. The ‘garden’ had 150 species of plants from around the world recreated using hand-wound thread. Apparently it took 50 people 12 years to make, which I found a little tragic more than impressive!

We took the famous miniature hill train from Ooty to Mettupalayum. The train itself was a little steam train, with quaint wooden carriages, and it was a wonderful journey, chugging through the scenic Ketti Valley through stunning scenery – tea plantations, hills, quaint old stations, and little rail side villages. We waved to everyone we passed and got lots of excitable waves and head waggles back!

Upon reaching Mettupalayam it was a long taxi ride to the airport, flight back to Chennai, and finally another 3hr taxi ride to Pondi before we were home. Both exhausted but had a fantastic few days and I’m so glad we got to share some amazing experiences together in India. There are certainly some memories we’re never going to forget.

Mum left yesterday so it’s back to work at Sharana and Pondi life full time again. Although I miss my friends, I really feel like India is my home now and its gong to be strange going back to London – just thinking of the greyness (and coldness!) of the city compared the vibrancy here fills me with such apprehension. I really must try and make the most of my time here in the next three weeks…

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