Microfinance in Sweden?? Yup.

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The SOCAP conference in Malmö Sweden has gathered around 400 people interested and involved in investment with a social impact. One of the participants is Johan Sundholm from Mikrofinansinstitutet i Sverige (the Microfinance Institute Sweden) that is giving loans to the otherwise unbankable segment in society. The bank targets entrepreneurs and helps them to build their businesses in order to repay their loans. So far so good – we’ve heard it all before. But! What differentiates this  institute from other MFIs is that their clients live in Sweden. The microfinancing has since its commercial breakthrough a decade ago, adressed individuals in rural  areas in developing countries. Mikrofinans institutet is the first, and only, Swedish MFI for the domestic market.

Johan has a banking background. He was working for one of Sweden’s biggest banks for 15 years before he recognized and accepted the entrepreneurial side of him wanting to explore and make a positive change in society. He quit his job and after not so long, the MFI team found him and together they built the business model the bank is pursuing now.

The challenge – the unbanked in Sweden

Johan mentions that in one of the world’s most egalitarian country, 10 % of the Swedish population is unbankable and that this segment is costing the Swedish society many kronor every year. “The problem is”, he says, “that the clients we have are not familiar with the bank-lingo which makes it difficult for them to negotiate loans in a traditional bank. Likewise, the established banks are not used to seeing them as a profitable clients and therefore, there is  a lack of trust between the two parties”.  As in any country, Sweden has  a problem with social exclusion, something that is obvious when looking, for example, at the probability of an immigrant getting access to finance in relation to a native Swede.

The role of Mikrofinans Institutet

That is where the MFI comes in. Mikrofinans institutet granted their first loan in November to a Kenyan woman selling educational material on the web for Kenyan schools. At the moment, they have seven clients in total and the expectations for the future is to have 200 clients in one year. The market for these kind of banks will be growing. Johan believes that within five years, they will be facing hard competition. He believes there to be some players just waiting for the market to get ready.

As Johan returns to his mission on SOCAP, to look for investors, the next session starts. The multidisciplinary nature of the stakeholders gathered at Malmö Högskola today gives the visitor a good idea of all the activities on the field at the moment. For instance, impact investment is not only providing safe drinking water to African farmers, but also giving loans to senior immigrant women.

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