Whole Planet Foundation was created to support communities worldwide where Whole Foods Market sources products. Flowers for Whole Foods Market stores across the US, Canada, and the UK, along with many other products, are sourced in large quantities from Colombia — so while it’s perhaps a bit of a happy coincidence, it seems quite fitting that Whole Planet Foundation’s newest microfinance partner in Colombia is called Aflore, the name of which comes from the Spanish word flor, for ‘flower.’
Aflore comes from the infinitive aflorar, which means “to surface, to appear,” as in flowers surfacing or appearing, and Aflore is certainly doing that – helping thousands of microentrepreneurs to ‘blossom’ with their own businesses. Not only is Aflore providing microloans to people with little or no access to conventional banks in Colombia, but through a very innovative business model and smartphone technology, they are also empowering thousands of “Informal Advisors” (IAs, and in Spanish, consejeras) to reach out to their own social networks and offer loans that catalyze borrowers’ small businesses, thus helping the economic stability of their families and surrounding communities.
Informal Advisors Create Networks for Success
Via its consejeras, Aflore identifies the trust and relationships which already exist within communities, and formalizes them to enable loan agreements. Aflore leans on the direct sales model and finds leaders in the community (for example, residents who have already been engaging their neighbors in home-sales of merchandise) who are then trained in Aflore’s processes, procedures, and tools to bring financial products to the underbanked.
I visited Aflore at their head office in Bogotá this summer, and then flew over to Medellín, where they opened a new branch office less than a year ago. After a favorable review of the organization’s structure, strategy, systems, and in-field operations, we decided to support the Medellín project to allow Aflore to scale significantly in this new region of Colombia, and to further prove their lending concept which is already successful in Bogotá. With Whole Planet’s funding, Aflore aims to reach over 1500 new microentrepreneurs in Medellín over the next three years.
To me, Aflore’s model stands out as being quite unique compared to many of Whole Planet Foundation’s traditional microfinance partners, whose loan officers’ many responsibilities include identifying new loan recipients, conducting borrower meetings periodically (often weekly or biweekly), ensuring timely repayments, and even transporting cash to and from borrowers. In contrast, Aflore’s outreach strategy is similar to that of a direct-sales company – IAs are recruited, trained and incentivized to leverage their community networks, focusing mainly on identifying new clients (loan origination). Aflore then manages the network, the loans, and related analysis and risk-mitigation. This model is enabled with innovative, user-friendly technology such as the Mi Aflore phone app that is used to collect borrower information, submit loan applications, manage loan portfolios, communicate with peers and financial and tech support, etc.
While ultimately the loan agreements are directly between the borrower-entrepreneur and Aflore, the IA has an incentive to find good prospective clients since she receives a commission upon securing a loan, gains points (called Florines) that she can exchange for cash or prizes such as home appliances, becomes part of a supportive peer community (also via the Mi Aflore app), and gains the satisfaction of introducing a very valuable service in her own neighborhood. Further, a consejera can also apply for and obtain a loan from Aflore herself. Consejeras also help Aflore maintain a high, on-time repayment rate, being reminded by the app a few days in advance of when her clients’ loan installments are due.
As our global communities evolve and as the world’s poor face new challenges but also new opportunities to lift themselves out of poverty, it is very encouraging to see microfinance evolving as well, through fresh, dynamic ideas which organizations such as Aflore in Colombia bring to market.
J.P. Kloninger is the Regional Director for Latin/North America for Whole Planet Foundation.
Interesting project. Any government licensing or regulations for micro-finance partners?
Hi CB, Thanks for asking about how we select our microfinance partners. Here’s what our programs team had to share:
Microfinance licensing and regulation varies dramatically from country to country. In general, if an MFI wants to provide savings accounts in addition to microloans, additional licensing is often required. Regulation comes in many different forms and may include:
Reporting to the Central Bank
Minimum capital requirement
Board member composition requirements
Central Bank can inspect books/compliance
Credit Bureau participation
Loan ceilings, max number of borrowers served by any 1 institution, interest rate ceiling
Whole Planet Foundation has developed our own quality standards for our microfinance partners which are based on industry best practices. We proactively search for like-minded MFIs that are able to grow and serve more people. Our Programs Team first conducts desk due diligence to identify potential partners. After reviewing relevant information, a short list of potential partners is visited in person by our Regional Directors. The field team reviews the nuances of how the program works to assure a potential partner aligns with our view on pro-poor microfinance. We are looking for organizations that have as few barriers to entry as possible while operating on a financially self-sufficient basis.