Founded in 1952, CHF International (CHF) has worked in over 100 countries and currently operates in more than 25 nations. CHF’s mission is to serve as a catalyst for long-lasting positive change in low- and moderate-income communities around the world, helping people improve their social, economic, and environmental conditions. One component of fulfilling that mission has been improving access to financial services. In the last five years, CHF International has disbursed over 200,000 loans totaling more than USD 482 million and has a particular niche in establishing microfinance programs in conflict, post-conflict, and post-disaster settings. CHF currently oversees lending operations in 11 countries across Africa, Asia, Europe, Latin America, and the Middle East. As of June 2009, CHF International had assets under management of over USD 200 million (microfinance portfolio outstanding of USD 107.6 million plus middle market portfolio outstanding of USD 93.5 million).
Elissa McCarter, Director of the Office of Development Finance that oversees Microfinance, SME and Housing Finance Initiatives at CHF International (CHF)
MC: In what capacity is CHF involved in microfinance activities around the world? What microfinance institutions are you currently working with?
Elissa McCarter: We have six non-bank financial institutions that we own and operate (ie are either wholly owned or majority owned by CHF) in Bosnia, Jordan, Lebanon, Mexico, Romania, and Liberia. We have two lending programs in Iraq and West Bank/Gaza that are still a branch of CHF and are in the process of transforming into for profit companies. Finally, we have affiliated companies or minority stakes (including middle market, guarantee funds, partnerships and second tier lending) in Colombia, Ghana, Afghanistan, Iraq, and West Bank.
MC: What are the advantages to specifically working with the microfinance institutions that you have just mentioned?
Elissa McCarter: It depends on how you look at that question. I think you can’t do development in the places where we work without addressing the lack of finance. Our lending activities are about providing access to finance for communities where we can complement other CHF programs or where we see a need in a country and no one else is providing it. So our work in development finance fits very much with CHF’s overall mission. The second advantage (competitive advantage) is that we have always been willing to pioneer new models and not look at just one approach. We tend to really build up from the ground and tailor things to what we feel is needed by that market. That has led to some risk taking, but has also led to innovations. We have pioneered some innovations in the industry before they were known. For example, CHF was doing housing microfinance in the 1970s when I don’t think it was a defined area of interest until the 1990s. Some of our early programs in Mexico were using agents in a supermarket chain to distribute and collect cash, like a 7 Eleven that was basically a distribution channel for our MFI. You didn’t hear much about the branchless banking model until recently. We haven’t been very good at marketing ourselves, but CHF has proven to be one of the few network NGOs willing to take an ownership role and commercialize, and willing to invite investors in and learn from them. Having worked with other NGOs in the past, it’s a really hard corporate decision to take and I am excited about leading CHF’s strategy in this area. By the end of the year, we expect to close our first minority investment in the CHF Finance Group, a for-profit LLC that will consolidate assets of our most commercially oriented MFIs under one roof. I think there is a realization that as an NGO owner, there are things that we can learn from having other investors on our board who share our vision and can help us make an even greater impact in these markets.
MC: How does CHFs Development Finance expertise differentiate themselves from other providers?
Elissa McCarter: That’s a hard question to answer because it depends on who are the “other providers.” Certainly in the affordable mortgage and home improvement lending space, there are very few MFIs and organizations that have the history of experience that CHF has and offer that product directly with their other products. Our latest initiatives in affordable mortgages and homebuyer education comes from our roots in finding solutions to low-income housing and builds on the skills we have honed as a direct lender. We are well positioned to grow in this area and it is still an urgent need in so many parts of the world. I would also say that our footprint in the Middle East distinguishes us from other networks. Particularly in a financial crisis, where the Middle East has fared much better than other places – our portfolio quality and returns prove it – we make a great investment opportunity! Lastly, we tend to attract really talented people from the private sector and have strong local managers, few expats, in the countries where we operate. This is important as everyone knows your business is only as good as the people who run it.
MC: What is the group’s most important achievement to date? What are you currently working on now?
Elissa McCarter: We have experienced huge growth over the last five years. When I joined CHF in 2004 the department had assets under management just under USD 40 million and two people (including myself) that “managed” it. Now we manage over USD 200 million in assets, have a much wider and diverse global footprint, and are a team of 14 technical professionals at headquarters supporting local management teams in 11 countries. Managing that kind of growth while maintaining portfolio quality of less than 2% portfolio at risk, especially in the conflict areas where we work, is impressive. Our Lebanese MFI “Ameen S.A.” was ranked this year as one of the top 100 MFIs in the world, and we now operate profitably the largest MFI in Iraq where we disbursed our 100 millionth dollar. It proves we have a great team, and it proves our low income borrowers do make good credit risks. I think our most important achievement during this year is finally closing the deal on our first minority investment in a commercial holding company — that we hope will pave the way for more exciting opportunities at CHF in the future to help us build a better world.
By Zoran Stanisljevic
Part one of the interview: https://www.microcapital.org/meet-the-boss-interview-with-elissa-mccarter-director-of-the-office-of-development-finance-for-ngo-chf-international-part-one-of-a-three-part-series/#more-3622
Part two of the interview: https://www.microcapital.org/meet-the-boss-interview-with-elissa-mccarter-director-of-the-office-of-development-finance-for-ngo-chf-international-part-two-of-a-three-part-series/#more-3623
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