Project Everest

[Cost Structure and Revenue] Microfinance Amisen - April 2019

The solution that we have developed is a service that provides a financial plan to people who currently cannot access a banking system. The financial plan sets out the customers current income and expenditure, looks at the disposable income and develops a plan, using mobile money infrastructure, to put this money away and make it safe.

 Upfront costs that Project Everest’s Microfinance team needs to be accountable for include the following:

  1. 20% of the loan amount that the team has been approved for by a bank.
  2. Approximately $80 per project month to cover transport in establishing customers and delivering financial plans.

 It should be noted that, while not an upfront cost that needs to be made, the cost of developing the financial plans needs to be addressed. At this point in time, the financial plans are being drawn up by the team members. However, when scaling the business, this will be something that needs to be considered.

In the interest of the projects scalability, the team has also enquired into what costs we will have to front for media promotion. The team met with the local media channel, Holcombe News, and established that a series of radio ads that would have a reach of up to 300 people would cost an average of $60. The engagement with this type of advertising is usually around 5-6%, however it should be considered that these ads will be circulated in areas where our validated customer segment are highly concentrated. Newspaper ads are also an avenue we investigated, which, for a reach of about 3000 people, would cost $150 for one day.

Our revenue stream will come from multiple areas. The smallest amount of revenue we will receive is a monthly charge for our customer segment to use our services. This is in the form of a subscription, pertaining to all customers, whether we recommend them for a loan or not. The financial plan is a way for our customer segment to access a savings service, and they are willing to pay for this. Currently this service is $7 per month.

Another revenue stream originates from the interest rate that the Project Everest Microfinance team will charge on the money that we have to provide upfront. It must be clear that this is only on the money that we supply, and not the full amount of the loan. This rate will be set at 5% with the chance of being assessed considered the customers financial situation. This rate will also be determined before the loan is applied for and will be a fixed rate. It should also be made aware that these bigger loans may be a conglomerate of a number of smaller loans to be handed out to multiple people, of whom will share that extra interest cost.

Our biggest source of revenue will come from our agreement from the Bank of Amisen. We have established a key relationship with the owners, Alfreda and Reinado, and have come to a solid agreement as to how this partnership works. We have agreed that because the Project Everest Microfinance Team are building access to a large majority of the community and putting in a lot of work to make our customer segment low risk, we will receive a 1.5% commission on the loans we are able to bring to the Bank of Amisen.

Another potential source of revenue is investment. We made it clear to the Bank of Amisen that the future of this project would be in digital form. They responded very enthusiastically and told the team that they would be keen to invest in the infrastructure to support this. We have also opened up a channel to negotiate with potential investors about grants we would be eligible for.

edited on 2nd May 2019, 22:05 by Charlotte Crofts
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