World Vision microfinance arm refocuses on Africa and Asia
Governance | Tania Mason | 14 Jun 2012
The microfinance arm of World Vision is to refocus its efforts away from
Eastern Europe and the Middle East in favour of Asia and Africa, as it
has identified that it can help up to 30 times more children in those
areas for the same money.
David Knights, VisionFund's global director of marketing and
fundraising, said Africa and Asia are "where the need is greatest and
where we can have the greatest impact in improving the lives of children
trapped in poverty".
While the organisation currently impacts on the lives of just over two
million children globally each year, by the end of 2014 it aims to
increase this figure to 3.5 million.
Of VisionFund's worldwide portfolio of over $380m, the Middle East
currently holds almost two-thirds, with $218.4m of finance. Asia is the
next largest financed region with $104.8m, while Africa trails behind
with just $41m. Latin America has a portfolio worth $87.6m.
Knights told civilsociety.co.uk that by the end of VisionFund's new
three-year strategy – it is currently in year one – it will have moved
its focus entirely away from Eastern Europe and the Middle East, by
finding outside investors to take over its work there.
"We did some analysis to assess what the need was, to establish how many
children we could help for every $1,000 that we put in. It's a bit of a
crude measure, but it works," he said.
"We realised that for that $1,000 we could help 31 children in Africa,
whereas in the Middle East and Eastern Europe we could only help one child."
Knights said that the microfinance institutions (MFIs) that VisionFund
channels money through in Europe and the Middle East had grown to be
robust organisations of a significant size capable of being sustained by
outside investors.
"Others will buy out our shares in those organisations and we can use
that money to reinvest in Africa and Asia," he said.
VisionFund conducts its own fundraising and also receives funds raised
for microfinance projects by World Vision. For each dollar raised
VisionFund is able to borrow debt against it equivalent to $4.
Knights acknowledged that the microfinance sector has come in for some
bad publicity in recent years, with critics claiming that some MFIs are
simply making a quick buck out of giving loans to poor families. But he
defended VisionFund's work as highly effective, saying: "What makes us
different is that we are able to work alongside World Vision which
provides healthcare, clean water and sanitation, while we provide the
wherewithal to create economic growth. When you have those two together
it's a much stronger proposition."
The new strategy will also see the organisation "taking a lead" on
social impact and transparency reporting but Knights denied that the new
geographical focus was driven by the increasing imperative to
demonstrate evidence of impact to funders.
"If anything, reporting out of the Middle East and Eastern Europe is
much easier than out of Africa," Knights said. "We are making it harder
for ourselves."
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