MicroDreams: Unleashing Potential
Moving families out of poverty
Financially sustainable micro- enterprise organizations that provide poor aspiring entrepreneurs the training, credit and ongoing guidance they need to build their businesses.
How it works
- Engage and get buy-in at the community level
- Loans are restricted to enterprise creation
- Applicants are organized into groups
- Business plans are screened by staff and group
- Borrowers get business training and support
- Loans are supplemented with savings and insurance products
How it will go to scale
Via the market. MicroDreams is developing a sustainable business model that others can emulate. In this way, they will stimulate a high-impact microenterprise industry that can attract conventional capital.
Progress so far
MicroDreams launched operations in Samoa in 2000 and Tonga in 2009. To date they have loaned $13.3 million to 13,000 Samoan and
Tongan families. Samoa is fully financially sustainable and Tonga received below market debt from social investors to initiate operations. In 2011 MicroDreams initiated the model in Fiji.
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Microfinance isn’t enough; people need help turning
small loans into viable businesses
MicroDreams provides a suite of micro-enterprise development services and financial products, making the jump from simple microfinance to successful micro-enterprise creation. MicroDreams is the brainchild of Greg Casagrande, a former business executive, who in 2000 brought a Grameen-style model to Samoa and tweaked it to fit local needs and better deliver micro-enterprise. MicroDreams’ South Pacific Business Development Foundation (SPBD) embodies an “entrepreneur-as- customer” approach driven by the needs of those trying to create and grow small businesses. Today SPBD in Samoa is a financially self-sufficient organization that has worked successfully with over 12,000 of Samoa’s 30,000 families. In 2009 MicroDreams replicated the Samoa model in Tonga, where in less than 6 months, they have disbursed $357,000 in loans to 1000 clients. In 2010 they will again replicate the model in the much larger Fiji market. Using limited subsidized social capital, MicroDreams can drive financially self-sufficient organizations that leverage traditional microfinance and multiply the incomes of millions.
A compelling problem
Although microfinance has scaled-up to reach millions, it appears that access to capital alone is not enough to get them out of poverty. Borrowers need help to ensure that loans lead to prosperity.
A scalable solution
Mulago assesses scalability based on five characteristics common to efforts that have taken lasting impact to scale.
Real impact: Since inception, MicroDreams has tracked the more traditional measures of successful micro-lending, such as repayment rates and financial sustainability. Ad hoc data suggested that clients’ income doubled within a year or two. MicroDreams is now launching a formal impact monitoring system that will systematically track changes in their clients’ income and assets using random sampling methods.
Cost-effective: The organization in Samoa is now financially sustainable, which means that the ongoing donor cost per family lifted out of poverty is zero. All other locations are expected to be financially sustainable within 5 years of launch.
Lasting behavior: The MicroDreams suite of business training and financial products ensure that micro-entrepreneurs profit and so continue successful business practices.
Easy replication: Documented operating, financial and administrative processes are simple to implement and adaptable to a broad range of settings.
A viable route to scale: The demonstration of profitability in Samoa makes it very likely that other MFI’s will adopt their approach and more capital will flow toward it.
Capacity to deliver
Prior to founding MicroDreams, Greg Casagrande was a senior auto executive with Ford, assembling and leading teams in the U.S., Japan and Europe. Along with founding MicroDreams, Greg is also a director for the International Association of Microfinance Investors and an angel investor in tech start-ups. In each setting to date, Greg has quickly and effectively set up high-performance management teams.