Our Model
MCE recognizes that talent and entrepreneurial passion exist outside of high-income countries and established investment networks. With a focus on investing in women and the environment, MCE strategically deploys this capital to two types of organizations:
Financial Service Providers (FSPs)
that create opportunities and improve the economic security of their micro- and small business clients by loans, savings, and insurance. These providers also offer ancillary services such as technical assistance and financial literacy programs to bolster their clients’ growth.
Small and Growing Businesses (SGBs)
in agriculture, water and sanitation, and clean energy that create sustainable jobs in rural economies, raise smallholder farmers’ income, and increase climate resilience.
MCE has two ways of unlocking capital for high-impact entrepreneurs:
The MCE Empowering Sustainable Agriculture (MESA) Fund is a pool of capital specifically aimed at enhancing the climate resilience of smallholder farmers and empowering women throughout the agricultural sector in emerging markets. You can learn more about the development and purpose of MESA in this blog post.
Philanthropic guarantees allow MCE to leverage the excellent credit of high-net-worth individuals and foundations—our Guarantors—to borrow capital from U.S. and European financial institutions and accredited investors.
How does it work?
Guarantors sign a philanthropic guarantee agreement that enables MCE to immediately draw capital from its lenders and disburse loans to FSPs and SGBs throughout emerging markets. Upon signing, Guarantors are not required to segregate, donate, or otherwise move their assets upfront. The capital that is mobilized by their guarantee is constantly recycled as the loans that MCE makes are repaid over time.
“If you are looking to create maximum impact with your finances, the model just makes sense.”
— Sayuri Sharper, Principal, KSF Impact Advisor and SGB Guarantor since 2018
In the event of a loan default in MCE’s portfolio, the relevant Guarantors share the cost of the default pro rata in the form of tax-deductible contributions to MCE. For further detail on this process, please visit our Become a Guarantor page.
Click below to learn more!
Why Financial Service Providers?
Nearly two billion people in the world, especially women and families in rural areas, lack access to formal financial services and consequently must contend with financial insecurity on a daily basis. Although the provision of microcredit alone will not alleviate poverty, it is a critical and powerful mechanism that helps people build assets, manage risks and unpredictable income, and gain the freedom to decide how to make and spend money.
The FSPs in our portfolio provide financial services—primarily in the form of microloans, savings accounts, and insurance—to people who are excluded from formal financial systems across the developing world. Microfinance borrowers are often self-employed, low-income entrepreneurs or smallholder farmers who lack collateral, steady employment, and a verifiable credit history. MFIs are well-positioned to provide these borrowers with the knowledge, resources, and capital to improve their lives and the lives of their families.
When combined with other non-financial services, microfinance can promote sustainable growth, improve livelihoods, strengthen institutions, advance gender equality, and provide economic opportunity and security in underserved communities.
MCE lends to FSPs that serve predominantly women and rural borrowers and provide important services such as business education, financial literacy training, and health services. In recent years, the microfinance market has continued to transform and adapt to the realities on the ground; MCE has accompanied this evolution by financing institutions that go beyond traditional microfinance by leasing agricultural equipment and other productive assets.
For more information about our financial service provider portfolio, please visit the Financial Service Providers section of our Portfolio page.
Why Small and Growing Businesses?
Small and growing businesses (SGBs) are the dominant form of entrepreneurial activity in emerging markets and hold the potential to transform communities and alleviate poverty through the jobs they create and the products and services they offer.
However, SGBs often lack access to sufficient, appropriately structured growth capital. When informal SGBs are taken into account, the total credit gap is estimated between $2.1 - $2.6 trillion. This gap is even more pronounced for women-owned SGBs, 70% of which are unserved or underserved, which represents an additional $285 billion credit gap according to the World Bank Group.
The purpose of our SGB portfolio is to address some of the critical market gaps that exist by providing catalytic loans to support SGBs in the “missing middle” (that are too big for microfinance, yet too small for commercial lending)—businesses that otherwise lack access to financing on affordable and appropriate terms.
The SGBs in our portfolio are often the only sources of formal employment in the areas in which they operate. By financing and supporting their growth, we are able to create economic opportunities and impact the lives of people living in particularly marginalized communities through the agriculture value chain, renewable energy, and water and sanitation sectors.
For more information about our small and growing business portfolio, please visit the Small and Growing Businesses section of our Portfolio page.
