Kaspar Wansleben (Luxembourg Microfinance and Development Fund):
Local contact with global impact
Kaspar Wansleben, executive director of the Luxembourg Microfinance and Development Fund (LMDF), describes his organisation's role and distribution model and touches on the impact of new technology in microfinance.
Can you briefly present LMDF's business
and distribution model?
We have been operating for 8 years and the fund has lived up to its initial promise of bringing the private and public sectors together in a professional investment vehicle with a very strong social mission. We’ve carried out nearly 100 transactions with microfinance institutions (MFIs), reaching 42,000 microentrepreneurs in 20 countries. At LMDF, we are pretty clear about who we are: we are a niche fund. Our objective is not to become the biggest microfinance fund in Luxembourg - we want to remain small and agile on the investment side. LMDF has a Luxembourg-focused distribution model. We work with most of Luxembourg’s banks, family offices, the private banking world and individuals who reach out directly to us.
Interest in impact investing has increased tremen-dously over the last few years and is now leading to solid results. Microfinance is the most concrete sector because it has the most tangible models in term of impact investing. This factor has been driving our growth over the last few years and will continue to do so in the future.
What are LMDF's prospects for 2017?
The microfinance sector is changing very rapidly.
Markets that were newly accessible have now been reached and served. What’s the next step? To answer that, models will have to change and integrate alternative delivery channels through digital means, switching emphasis from credit to the product itself. This, in turn, will stimulate the penetration of less developed markets. Operational efficiency is now our goal and LMDF needs to tune into the shift in MFI activity over the coming years.
« Microfinance is the most concrete sector because it has the most tangible models in term of impact investing. »
How is innovation affecting microfinance?
There are two main areas of focus.
Firstly, the most important aspect for tech compa-nies to consider is this: what kind of financing products can they offer to microfinance institutions which are relevant to their business? What are the prospects of these products becoming more complex and evolving at a later stage? The second issue is the new technology that is emerging within the sector and the provision of alternative delivery channels for MFIs. Players which adapt to these two realities quicker than rivals are the ones we should focus on, since they are bound to substan-tially increase their efficiency. In turn, they’ll have the potential for business on a much bigger scale. These factors are very important when it comes to accessing markets which are not yet well-served.