MICROCAPITAL STORY: Omidyar Network Grants $4.5m to Opportunity International to Scale Technology-Based Microfinance Services in Africa

Opportunity International announced it received a 4.5 million USD grant from Omidyar Network, a philanthropic investment firm. According to PR Newswire, the grant will be used to create and implement new electronic and mobile banking technologies that will reduce transaction costs and make microfinance services available to more people in Sub-Saharan Africa. Specifically, it will launch an “electronic wallet” strategy in Ghana, Kenya, Malawi, Mozambique, Rwanda, South Africa, Tanzania, and Uganda – countries where Opportunity has significant operations already, including banks and financial institutions. The strategy aims to develop the optimum mix of electronic banking technologies needed in each of these countries.

The initial effort is to establish new telecommunications solutions in each of the eight African countries previously mentioned. In some nations, Opportunity will implement satellite and broadband internet connectivity that enables faster and more reliable service connections to branch banks, and further provides banking infrastructure to lower the costs of servicing small loans and savings accounts for the poor. Meanwhile, in Ghana and Rwanda, Opportunity International will use existing technology already in extensive use in the Philippines to connect to each country’s developing national payment system. This effort will improve the availability of financial services, timeliness of transaction reporting, and security of client banking, as well as reduce the overall cost of banking transactions.

Cellular phone technology is an alternative method for performing banking transactions in countries that lack a national payment system. Opportunity International is developing mobile phone banking solutions to support the electronic transfer of deposits and withdrawals for its clients. Through its work, the organization expects to enable more than 250,000 clients across five countries to conduct 36 million transactions. Moreover, loan officers will be able to carry mobile phone devices to collect payments and provide receipts and other services to clients in rural Africa.

The grant will also enable Opportunity International to share best practices with the entire microfinance industry. The organization will host technology symposia with microfinance leaders, develop white papers, and conduct speaking engagements to document the lessons learned and provide demonstrations of its work.

According to the MIX Market, the microfinance information clearinghouse, Omidyar Network is a philanthropic investment entity established by Pierre Omidyar, the founder of eBay, and his wife Pam. Omidyar Network supports nonprofit and for profit efforts that enable people around the world to improve their lives and make contributions to their communities. Since 2004, Omidyar Network has funded a number of organizations in areas such as microfinance, social media, and government transparency, and has committed more than 90 million USD to microfinance programs specifically.

Meanwhile, the MIX Market describes Opportunity International as an organization committed to solving global poverty, serving approximately 1.1 million poor entrepreneurs in 27 developing countries. Founded in 1971, it is a pioneer in offering small business loans, savings, insurance, and training in basic business practices to women and men living in poverty. In so doing, it allows poor entrepreneurs to start or expand a business, develop a steady income stream, provide for their families, and create jobs for their neighbors.

On October 8^th, 2008, MicroCapital reported that Comat, a technology company providing services to rural India, raised 12.5 million USD from the Omidyar Network and the Unitus Equity Fund (UEF). In another story, MicroCaptial reported that Omidyar Network expands operations to Europe with appointment of Ian Callaghan as Senior Director of Investments. In December, 2008, MicroCapital published an article focused on the technology of mobile financing.

By Yanni Hao, Research Assistant

Additional Resources:

MicroCaptial Story: October 8^th, 2008: “MICROCAPITAL STORY: Indian Technology Company, Comat, Raises $12.5m from Omiydar Network and Unitus Equity Fund of the United States”

MicroCaptial Story: September 30^th, 2008: “PRESS RELEASE: Omidyar Network Expands Operations to Europe with Appointment of Ian Callaghan as Senior Director, Investments”

MicroCaptial Story: December 10^th, 2008: “TECHNOLOGY FOCUS: Mobile Finance – Indigenous, Ingenious or Both?”

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