Welcome to Hyderabad

They didn't mention Saturday is a work day. I got to Hyderabad last Sunday after five fast paced days in Delhi that were spent catching up with a few old friends, gathering as much knowledge as I could on the state of Indian Microfinance from my very patient Lok colleagues; and at a couple of social events getting a chance to meet many expats who are here to work in this exciting country.

As many of you know I interned with Grameen Bank two years ago and had a spectacular time. Since then I have not quite been able to put to rest my keen interest in microfinance and South Asia; so I turned in my notice at TransUnion, said goodbye to San Luis Obispo (and my incredible friends there) and boarded a plane for India.

For the next six months I will be working on the ground, through Lok Capital, with one of their investees, an Microfinance Institution (MFI) called Spandana. I am incredibly excited. They are a top- notch organization comprised of bright, talented people- entirely devoted to helping raise living standards through the extension of financial services. They are as a Lok colleague put it "always trying to build a better mousetrap." When asked, people top to bottom will explain their pride at the organizations ability to cheaply offer highly customized credit to disadvantaged people, and especially Spandana’s operating expense ratio (defined as: Operating Expense/ Average Total Assets.) They are proud for good reason, as operating expense ratio is a rough proxy for the rate of interest they need to charge poor people in order to stay in business.

As of March ’07, Spandana had an operating expense ratio of 5.52%; this is nearly unheard of in the industry. For comparison, a few other well know MFI’s (Share, Basix, SKS and Spandana all operate primarily in Andhra Pradesh, India. By a significant margin they are the four largest MFI’s in India):

Share: 9.61%
Basix: 14.71%
SKS: 10.88%
Grameen Bank(Bangladesh): 6.90%
Compartamos (Mexico): 29.60%

This can be accredited to the ruthless (though sweet) eye for efficiency of the founder, Padmaja Reddy. An entirely tireless women, she has nurtured Spandana from a small NGO to now the largest MFI in India, by working 80hr weeks and overseeing nearly every aspect of the business.

And so, in a nod to increased efficiency I have learned that for the next half year or so I can look forward to one day off per week. During the course of introductions one of the senior guys quipped [half] jokingly “Tyler, we purposely didn’t tell you about the work schedule until you got here.” Haha, though on a serious note, I think it will work out- the people here are motivated, engaging and generally a joy to work with.

They have some big plans for the next five years, we are going to see if we cant help to put some of the process’s in place so that can happen (introducing a two day weekend is first priority.)

Overall, the process of outsourcing my life has gone rather smoothly. After two very long flights, immigration passed smoothly (I just knew there was going to be some problem with my visa), a taxi was waiting to pick me up at the airport and I was whisked away to a guest house (basically a bed & breakfast) provided by one of the founders of Lok. Lok and Spandana have been a huge help arranging accommodation, getting cell service, and generally finding the things I need. I am currently staying at a guest house that is attached to Spandana’s office, can’t beat the commute.

The food is tremendous. Hyderabad specializes in a dish called Biryani, a bit spicier then the food in the north, I really enjoy it. And when the day comes that I just cannot possible put down one more rice based meal, there is a subway in a mall across the street, haha. I am slowly getting re-acquainted with eating with my [right] hand and generally trying my best to avoid the taboo's of etiquette that I missed out on growing up in the US.

So, thanks for making it this far. In this column I hope to comment on some of the events that are shaping the fast evolving microfinance space and also share a bit of my experiences in this dynamic, thrilling country. I hope to post 2-3 times per week, so check back every couple of days or so.

On the agenda for this week, get out into the field a bit with Spandana, continue the apartment search, register with the Foreigners office (my first real experience with the dreaded Indian bureaucracy) and hopefully explore some more of bustling Hyderabad. Please keep your emails coming, it is great to hear from you.

Tyler

Incidentally, I just came across this very critical look at microfinance published Friday in Business Week, take a look and I will post some of my thoughts soon.