Fellow Presentations: Day 3 (Margarita Quihuis)

Margarita Quihuis described 5 themes that have captured her interest and have each found a way into her proposal:

1. Access to capital (especially for the entrepreneur, and not just the microentrepreneur)
   
2. Why the poor pay more for goods and services (see, for example, pages 5 and 6 of C.K. Prahalad's "Serving the Poor Profitably")
   
3. The undocumented community
   
4. Diaspora as an economic force and agents for change in their home countries by spreading knowledge
   
5. Silicon valley and venture capital at an inflection point, needing to serve world markets (not just enterprise software)
   

Margarita identified the market of remittances (money sent by expatriots to family in their home countries) as a capital flow that is currently inefficient (a recent report suggested that the poor pay $3-4 Billion/year in excess fees on remittances).
Her proposal, called INDIGO, is to use a portion of this capital to create a private microequity fund.

The benefits of such a program are that it:

1. Offers capital in a structure that encourages growth, since that benefits the investors, rather than merely repaying principal and interest as in a loan
   
2. Offers a path into the formal financial markets for groups that have historically had a hard time breaking in
   
3. Provides a valuable service at a better rate than the community can currently charge
   
4. Can be run as a service provided by the community for the community (with associated advantages in cultural marketing and brand development)
   

Margarita has done some research on her target market, finding that

• Annual remittances to Mexico are $16B, the second largest source of funds (after oil) for the Mexican economy
  
• The average user of a remittance service
  
  
  
  • Does not have a bank account (56%)
    
  • Earns less than $30,000 (65%)
    
  • Sends, an average, a total of $3,000 in 7 transactions
    
  
  

Margarita has started to evangelize the program, already receiving interest from some local foundations and credit unions. Indeed, the fellows joined in a lively discussion, with Carlos saying that bank fees for cashing a foreign check were so high in the Dominican Republic that it was cheaper to buy a plane ticket and fly to Miami to cash a check than use a bank in the Dominican Republic. The discussion evolved into a more theoretical discussion of the nature of money and some of the innovation in stored value cards and the separation of payment from recipient/beneficiary. Margarita mentioned the Cemex program that allows people worldwide to order cement for delivery to Mexico. Mans pointed out that InterFlora has served as an international exchange among florists for many years.