To the first question, Freedom from Hunger does not itself have investors; as I said, we're a classical charity. However, we did spin off or help create a sister organization called MicroCredit Enterprises, which is one of these microfinance investment vehicles—to make a clear distinction between an MFI, a microfinance institution, and an MIV, which is a microfinance investment vehicle.
I'll use the example of MicroCredit Enterprises because I'm on the loan committee of that organization, so am fairly familiar with its loans—it doesn't make equity investments. The loans that it is making to microfinance institutions in these various countries are earning for MicroCredit Enterprises about 8% per annum, when it's a U.S. dollar loan. When it's a local currency loan, the actual percentage rate may vary. Usually it's higher, because there's a higher risk in lending in a local currency; there are currency risk issues.
Regarding the kind of income that an MIV makes, this is a very competitive market now; there's a lot more capital chasing after good microfinance institutions to loan to or invest in than there are of such in existence right now. Even though there are many of them—thousands of them—only a few hundred are really suitable for these kinds of international lending and investment.
Most of these institutions either started as charities in their own right and built up a corpus of lending capital or their loan portfolio was built from donations and then from retained earnings from the interest they charge to the clients. So they are basically gaining their capital from charitable or subsidized sources as well as from earnings they make on the loans to the poor themselves.
We like to work, in West Africa in particular, with credit unions. That's a very different capital mobilization model, in that they are mobilizing capital primarily from the towns and the cities, from the middle class, and we've shown them how to invest that capital as loans to groups of women in more rural villages. In essence, it's capital being moved from towns into the rural areas of the same country.
Turning to your second point, I'm very familiar with the shasta shabika model. It's very much one of the health protection options, as I call them, that microfinance institutions can adopt. BRAC, in Bangladesh, is probably the worldwide model for this kind of integrated service, and much of the work we do with microfinance institutions and similar institutions elsewhere is modelled to some extent on the BRAC model.
Keep in mind, though, speaking to your point about the trickle-down, that we're trying to work very much with institutions that are making their loans to the poorest people they can possibly reach, so there shouldn't be trickle-down in terms of the direct impact of the loans. Only a certain proportion of the community may take these loans.
You wonder what happens to the other members of the community who don't find the loans attractive or otherwise don't join one of these programs. We do see a ripple effect out into the rest of the community, but the effects are modest.
In terms of new business formation, the shasta shabika is an example of new business being fostered by the microfinance institution itself, helping them become a seller of local health products locally. In order to do so, they can take a loan from BRAC or from one of our partners to buy their inventory and then sell it with a markup.