Rural poor get high-tech help for sustainable business

SAP AG and PlaNet Finance are joining forces and using a combination of microfinancing, new technology and improved value chains to help entrepreneurs on the lowest steps of the economic pyramid to create sustainable businesses.

The team effort will focus on three main areas: developing technology for field initiatives, developing software for microfinance institutions (MFIs) and deploying SAP technology for PlaNet Finance’s corporate initiatives. In addition, SAP will use its associations with its customers, partners and developers — known as the SAP ecosystem — to provide expert assistance. The companies announced the new collaboration today at a joint press conference in Paris.

Microfinancing provides financial services — especially credit, savings and insurance — to the disadvantaged. By offering small loans to budding entrepreneurs and business collectives, the lending organizations can have a positive impact on an individual level by giving people an opportunity to break out of extreme poverty. Such loans can also help to develop sustainable economic growth in emerging markets.

“Our mission is to further the development of microfinance through the creation of programs and tools that encourage best practices in the sector,” said Jacques Attali, president of PlaNet Finance. “More than eight million people in nearly 80 countries are currently beneficiaries of funds provided by PlaNet Finance’s network of MFIs. With new technologies, the network’s impact will be even greater. PlaNet Finance is actively involved in this field, which will enable hundreds of millions of low-income entrepreneurs, mainly in rural areas, to gain access to financial services at an affordable cost. By leveraging new technology, SAP and PlaNet Finance will improve the current microfinance offering through better access to education and skills training for more people in need worldwide.”

To start their first joint field initiative, SAP and PlaNet Finance have carefully studied the shea nut value chain in northern Ghana to identify how microfinance, education and technology can help improve the incomes and living conditions of women who pick and process the nuts into shea butter. Although the production of shea butter, used in food and cosmetics, is one of the most accessible income-generating activities for rural women in Ghana, their incomes are unstable due to a lack of market information, inadequate business knowledge and low negotiating power.

The joint initiative will develop groups of shea nut harvesters and provide them training on how to effectively work together to help drive maximum success. Women will also be trained in after-harvest nut treatments and improved techniques for shea butter production. Each group will be equipped with a mobile phone to manage orders and facilitate the microfinance institution’s follow-up on loans. Along with the technology from SAP and PlaNet Finance, this regrouping aims to increase yield, improve bargaining power, enhance product quality and offer better management of contractual relations with buyers.

“SAP and PlaNet Finance share a commitment to helping people find the best way to run their businesses,” said SAP CEO Léo Apotheker. “SAP believes that with the right partners the private sector can significantly contribute to the development of underserved markets worldwide. Our goal is to help organisations that face significant barriers to growth become profitable and sustainable businesses.  SAP and PlaNet Finance will work to bridge the digital divide and bring the benefits of technology to those without access to it. With the assistance of the SAP ecosystem, we will also improve the technology supporting PlaNet Finance’s own operations and those of its network, so that they can better serve entrepreneurs in emerging markets.

The collaboration will also focus on two other areas:

• PlaNet Finance’s Microfinance Institution Network. SAP will offer its expertise to improve MicroFit, microfinance software geared toward medium- and large-sized microfinance institutions. MicroFit was created by PlaNet Finance and helps manage loans at the lowest possible transaction cost. It is critical for MFIs to operate this way in order to be sustainable and maximise the number of clients they serve. The current software is based on a client/server architecture and will be re-developed to run over the Web to increase access from remote areas and decrease the cost of deployment;
• PlaNet Finance Corporate. SAP will provide PlaNet Finance with the appropriate software and implementation support to help the organisation optimise business operations and processes in the areas of financial management, human resources, project management, business intelligence and knowledge management.