Jag medverkade nyligen i en diskussion rörande mikrofinans nytta i relation till de hundratals miljoner som Svenska Kyrkan och ett flertal församlingar satsat och som tyvärr gått upp i rök. Min kommentar hörs mot slutet av inlägget, de sista 4 minutrarna. Innan mitt inlägg kommenterar Mikael Färnbo rörande den granskning de gjort av kyrkans investeringar följt av ett försvar från Lars-Olof Hellgren rörande satsningarna som gjort. Min avslutande poäng är att nyttan av mikrofinans är begränsad, och varför ser man inte till hur t.ex. Sverige industrialiserades under 1800-talets slut och in på 1900-talet. Det var inte mikrofinans som skapade Sveriges storbolag utan det var medvetna satsningar på att skapa storföretag, som leddes av en kompetent ledning. Faktum är att basal utbildning, såsom att kunna läsa och skriva, var det första man satsade stort på i Sverige vid 1800-talets mitt. Frågan man bör ställa sig är alltså om inte man borde kopiera det framgångsrika receptet och pröva det istället på fler platser i världen. Tryck här för att höra inslaget från Ekots Studio 1.
Microfinance funds are more popular today than ever. They attract billions from Swedish institutions and savers – even though researchers have not been able to confirm the benefits of microfinance. Swedish investors receive a high return on these investments, but the result for the poor entrepreneur ultimately becomes rather lean. Growth often fails. There are therefore reasons for politicians and decision-makers to consider whether other efforts and priorities are needed to create a more just world, where more people are given reasonable conditions to succeed.
Muhammad Yunus, founder of Grameen Bank and recipient of the 2006 Nobel Peace Prize, once compared people in poverty to a bonsai trees. He said that if a bonsai tree does not grow, the seed is not to blame – it is the soil that is insufficient. In a study that I have published with Alex McKelvie in the International Small Business Journal, we show how the soil, exemplified by poor financial literacy and lack of formal education, greatly affects microfinance’s chances of success. The often low level of education becomes the Achilles heel of microfinance itself.
Economic welfare in more developed countries is also not based on microfinance, but on the fact that talented small business owners and entrepreneurs are given better basic conditions to grow and become both nationally and internationally successful. Despite the obvious insight, efforts are often lacking in this group of companies in developing countries, although government development financiers want to focus on small and medium-sized companies.
New methods and processes are needed to enable and support private investments in smaller companies in developing countries. Today, this segment is mainly achieved through lending or grants. Loans are expensive for the small business, with interest rates exceeding 20 percent. And a loan that is not repaid can risk the company’s future. Grants require a great deal of knowledge about how applications are written. They are time-consuming, burdensome to report, associated with obligations – and difficult to obtain.
Instead, private equity is needed here, but since it is almost as demanding and costly to finance a company with a turnover of $ 100,000-200,000 as a company that has a turnover of $ 3-4 million, the investment often fails. The minimum level can be $ 3-5 million for a maximum ownership of 20-30%, which is impossible for a smaller company.
Despite the realization that education and financing of small businesses is the key to combating poverty, efforts remain modest and disproportionately distributed. The bonsai tree simply does not get the nutrition it requires.
In 2019 alone, Swedish government aid organization Sida’s aid budget is SEK 51 billion (USD 5.3 billion) for efforts to improve people’s living conditions. Of these, 5 percent go to education. To finance entrepreneurship, the sister organization Swedfund has invested a total of SEK 5 billion (USD 510 million) over 40 years, which has created 167,000 jobs. It is recommended that our politicians consider redistributing the contributions from Sida to Swedfund, and in the regulatory letter increase the investments in educational efforts.
Pontus Engström is an affiliated researcher at the House of Innovation, Stockholm School of Economics. He defended his PhD in 2016 and researches the informal sector and entrepreneurship in developing countries. Pontus is the co-founder of MTI Investment AS, which invests in smaller companies in East Africa. He can be reached at firstname.lastname@example.org or email@example.com.
Published in Faedrelandsvennen 12 july 2018
Strømme Foundation changes its strategy from a focus on microcredit to a focus on financing small and mediums sized companies, in line with what my own research and experience indicates to be a better path towards prosperous economic development. I concur with this move and look forward to seeing the results from this change, and encourage more organizations and investors to follow this path. This is not to say that microfinance is not helping poor people. Someone said to me: “These microloans do help a little especially when it comes to women who can send their kids to school. Put a metal roof with monies earned from the small businesses they setup.” I completely agree, but by focusing on small and medium sized companies, we can help create even more jobs through scaling businesses led by competent managers. It is simply difficult to scale a small microentrepreneur with very limited personal capacity to lead a larger business. I simply suggest that there are other means which we also need to explore. Financing of SME´s has until recently been a forgotten area of focus, and more and more investors are shifting towards this group as well for more impact.
For Norwegian version, see this link: 2018-07-12_Faedrelandsvennen
For English transaltion, see this link: Strømme Foundation puts microfinance on the shelf.
Do your kids love spagetti with a pasta sauce? Well, you may have thought you made a good pasta sauce, but my friends, here is a recipe that takes the art of making a pasta sauce to another level, and reveals the simple truth of perfecting a pasta sauce.
Over the years I have been experimenting with various ingredients in the pasta sauces, and tested on my kids. In all honesty, it is because the list of things I at the moment can cook well, is short. The cooking has come with various level of success, and some complete failures. As a researcher I of course ask my self, why, what and how is this possible.
I have now successfully identified the two ingredients that make the pasta sauce move to another level, a level where you will start getting positive reviews on your cooking from your kids. Used properly these two ingredients which I am about to reveal, will make any kid or adult literally down the pasta and sauce in a few minutes, and they will go for a second round.
The nr 1 key ingredient is Tabasco. Any other spices simply do not compare to the wonders made by a few drops of Louisiana Tabasco into the sauce. The other key ingredient, not to be taken lightly, is to make sure you mix in a butter or margarine with the pasta. Here, the trick is to use a lot of it. The Tabasco gives a warmth and yumminess to the pasta sauce that makes it hard to resist and really completes the pasta sauce. The butter or margarine makes the pasta itself delicious. Also make sure to boil the pasta exactly according to the instructions, too short or too long can result in a complete disaster. Believe me. Lastly, I have noticed that the type of pasta that taste the best together with my kids is the regular spagetti.
- Minced meat or meat substitute such as quorn
- Pepper and salt – modest amount
- Garlic – do not be a coward, use plenty
- One onion – the bigger the better
- Crushed or strained tomatoes – but not too much
- Red pepper (not the strong one) – it is more for the visual effect
- Grated carrot – use the smaller option such that you do not really see the carrot in the sauce
- A few drops of Tabasco
- Margarine or butter
Sure, if you have time to let it boil for a long time, that may make wonders, but I would say this can be completed in 20-30 minutes.
Other potential ingredients:
- Mushrooms – as replacement for the quorn or meat
- A little bit cream in the sauce – just a small amount
I senaste numret av entré skriver journalisten Maria Linde om min avhandling samt om vårt jobb med MTI Investment AS – det nordiska investmentbolaget som investerar i växande små och medelstora företag i Östra Afrika.
För att ladda ner delen som har med min forskning att göra klicka här:
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On June 20 2016 I defended successfully my thesis at the University of Agder in Norway. Since then I am affiliated with the Stockholm School of Economics, where I do research, supervise students and teach in courses related to entrepreneurship both in the Executive MBA program and also in the Master program. I also hold a position as an Associate Professor at Hauge School of Management at NLA Høgskole in Oslo, currently teaching a bachelor course in Entrepreneurship and Innovation. My focus area is on financing of entrepreneurship. Building on the learnings from my thesis, I founded MTI Investment AS together with my supervisor, Professor Trond Randøy, and two fellow PhDs from Tanzania, Dr. Neema Mori and Dr. Gibson Munisi. It is my firm belief, that while financing microentrepreneurs in the informal economy do help people make more money, and also stay away from criminal activity, informal societies and developing countries need more small and medium sized businesses. We seem to be fixated with this romanticized idea that all people are entrepreneurs, but if we were to go back 100 years in time and look at Norway and Sweden from a distance – would we have suggested microfinance as the solution to get people out of poverty. While it is helpful, why shy away from financing the real job creators in an economy, the small and medium-sized firms.