With public and private funding, research and develop new models that positively impact society and promote thriving economies.
Incubate and support projects that have high probable success rates and positive beneficial outcomes for the entrepreneur and society.
Workshop in Huancavelica, Peru for the baking industry
We partnered with DIGESA (health agency of Peru) to produce a workshop for the bakers of the Huancavelica zone to prevent and eliminate the use of bromates, a known carcinogen, in the production of bread. Specifically, the HACCP system (Hazard Analysis and Critical Control Points) was introduced. The event was well attended and received. This was an excellent first project for Khallma. It provided us with expertise in event organization, experience partnering with a government agency, and credentials as an NGO with a proven track record. The project was funded internally.
Communal Bank for Microfinance in Lima province
Communal banks (bancos comunales) are nothing new, numbering in the thousands. These banks typically loan small amounts (<$500) to women, who prove to be lower risk. Loan repayment rates are high also because there is pressure by other members in the bank to not default, known as solidarity.
The best known communal bank is Grameen Bank in Bangladesh, established in 1983. This bank has been profitable for almost all of its 36 years, which proves that there is a legitimate opportunity serving people living in poverty. In the USA, FINCA has been involved in microfinance since 1984. Both organizations are at the cutting edge of research and development in this area.
Interest rates need to be high, averaging over 30%, due to transaction costs. Some unscrupulous banks charge far higher rates, enriching themselves and creating great hardship for borrowers. The opportunity to exploit desperate people living in poverty is irresistible, and to not just fraudsters. A serious criticism of communal banks, including Grameen, is that they perpetuate poverty, don’t reduce or eliminate it.
So how would our bank be different? While the banks are communal, the businesses are not. I believe that businesses of size 1 are far less efficient and do not take advantage of the synergy of teams, of the whole greater than the sum of the parts. A small booth selling small quantities of repackaged goods, a typical microfinanced business, is horribly and tragically inefficient, especially in the face of huge Internet based enterprises. So our focus was on team based small businesses. Finobra S.A. would provide professional services to help make each business a success.