Flexible finance for development: bridging research and practice

The growth of more productive and sustainable firms is at the heart of development finance and impact investing. However, traditional lending with short-term and inflexible payment schedules, is not always well-suited to financing the growth of these businesses. And when firm owners’ livelihoods are dependent on their business, the rewards of growth may not be enough to put the business at risk by taking on inflexible debts.

Economists increasingly recognise the need for the development of more flexible forms of finance, which can absorb some of the risks that entrepreneurs face. The financial industry has long supplied forms of risk-bearing capital, of which venture capital is perhaps the best-known example. But these products have historically only been available to larger firms in high-income countries and are rarely offered in lower income countries. That is now changing.

This conference brought together leading academics, with the investors and companies to explore flexible finance in Africa and Asia. The discussions focussed on understanding the positive impacts of flexible finance and how it can be delivered at scale in a commercially sustainable way.

Recordings

(Click on the title to access the recording)

Collateral-based lending 

• Presenter: Paul J. Gertler, Professor of Economics, University of California, Berkeley Haas
  • Research: Digital collateral and  The Welfare Benefits of PAYGO
• Discussant: Dan Murphy, Co-Founder and Director, PayGo Labs

Risk-bearing capital

• Presenter: Emanuele Colonnelli, Professor of Finance and Entrepreneurship, University of Chicago Booth School of Business
  • Research: Start-ups in Africa – paper in progress
• Presenter: Muhammad Meki, Associate Professor – International Development, University of Oxford
  • Research: Small firm investment – role of equity
• Discussant: Jim Chu, CEO, Untapped Global
• Discussant: Steve Beck, Managing Partner, Novastar Ventures

Flexible repayments

• Presenter: Giorgia Barboni, Assistant Professor of Finance, University of Warwick
  • Research: Innovations in repayment structures in MFI contracts.
• Presenter: Francesco Loiacono, Principal Research Economist, EBRD
  • Research: Ugandan flexible terms experiment. Paper in progress
• Discussant: Laurent Clauser, Head of Group Risk and Audit, Advans International

Policy panel – Flexible finance for larger firms: the challenges of scaling-up

• Moderator: Maria Smith, Chief Impact Officer, British International Investment
• Panelliest: Nikolay Angelov, Senior Banker, SME Finance and Development, EBRD
• Panelliest: Benedicta Wontumi, Head of Credit Risk, Growth Investment Partners – Ghana
• Panelliest: Barthout van Slingelandt, Managing Partner, XSML

Revenue Based Financing

• Dominic Russel, Business Economics, Harvard Business School
  • Research: Revenue Based Financing
• Practitioner discussants
  • Damilola Adekagun, Product Development, Moniepoint
  • Jonathan Field, Managing Director, Retail Capital

Psychometric testing for lending decisions

• Presenter: Rachel Cassidy, Economist, International Finance Corporation
  • Research: Evening the credit score.
• Presenter: Gharad Bryan, Associate Professor of Economics, London School of Economics
  • Research: Big loans to small businesses
• Discussant: Chris Woodruff, Non-executive Director, British International Investment, Professor of Development Economics, University of Oxford and Scientific Coordinator, PEDL

This event was delivered by British International Investment in partnership with the Private Enterprise Development in Low-Income Countries Initiative (PEDL).