The power was out due to a storm in Curitiba, Brazil, where Barbara Schmidt-Rahmer (MBA ~93) was speaking on the phone, but that had not dimmed her enthusiasm for her work.
“I’m really happy with my decision,” she said, referring to her choice a few months back not to return to her Boston-based consulting job with Standard and Poor’s. Following a six-month leave of absence to reconnect with a grassroots development program in Brazil that she had helped start before coming to HBS, Schmidt-Rahmer accepted the Brazilian agency’s offer to remain and help improve the program.
While admitting it was “scary” to pass up the promotion S&P offered to entice her back, she followed her heart into the field she’d always intended to rejoin. Now, she is helping bring focus to a small-business program that began as an offshoot of a church-based initiative to reduce infant mortality rates.
“They realized the problem with getting food [to improve the babies’ nutrition] had to do with women just not having enough money,” said Schmidt-Rahmer. In response, she trained nuns and other volunteers to help local women create simple business plans. Upon returning to evaluate the program this year, she found that the enterprises were suffering from a lack of strategic thinking.
“They would get into these kinds of activities where there were low barriers to entry. When someone else set up a [similar business], they had no way to deal with that,” she said. “Sales tended to go down, and they were just kind of lingering and limping along.”
Schmidt-Rahmer now plans to allocate a $1M grant from the Brazilian Development Bank to fund 50-100 start-ups in each of twelve targeted regions of the program. She hopes that building local concentrations of businesses and using, yes, “Porter’s Five Forces” to help identify niches of opportunity for the fledgling enterprises will improve results.
While her story is inspiring, it is by no means unique–Schmidt-Rahmer is just one of many several HBS women applying their skills in international development. Ruth
Goodwin-Groen (MBA ’92) and Ipsita Dasgupta (MBA ’02) both spoke about their involvement in the area of microfinance, a rapidly-growing development approach which draws upon the financial expertise of MBAs. Microfinance delivers important financial services to low-income communities, primarily in the developing world.
” Microfinance includes access to credit, access to a safe place to save, access to insurance “any financial service that you and I need,” said Goodwin-Groen. “What makes it different is that it’s a very low-margin, high-volume business because there are lots of people and they don’t have much money.”
According to Dasgupta, loans, for example, tend to be small and short-term, with the object of helping someone attain a specific goal such as purchasing a cow for milking. Default rates are extremely low, pointing to the effectiveness of the approach.
“From an economic point of view, financial system development is a necessary precursor to economic development,” said Goodwin-Groen. “The greater the access to financial services, the better for the economy.”
Presently, Goodwin-Groen works as a consultant identifying best practices in microfinance and training practitioners around the world. Among her clients is the World Bank, with whom she is involved in an ongoing project in Bosnia helping local microfinance organizations learn to track and manage performance indicators, identify needs where outside consultants may help, and hire appropriate individuals in a way that keeps them accountable for improvements.
She previously worked four years with Women’s World Banking, a microfinance organization where both Schmidt-Rahmer and Dasgupta served summer internships. Dasgupta’s work focused on leveraging technology in microfinance organizations. One idea, she noted, is using smart cards to create mobile personal financial histories that may be shared among the institutions, which are typically small and local in scope.
“If you move from one place to another, now you have to start all over again [establishing credit],” she said. Dasgupta, who has also been involved in social initiatives including reforms in child labor and immunization, hopes to apply knowledge gained through her work as a consultant in IBM’s Strategy and Change Group to help countries build technology capabilities. She spent this past summer in India talking with engineering schools and key businesses about developing a program in skill-building among young adults.
“I want to create models that are self-sustaining,” she said. “First of all you’d train people, then you’d also work out relationships with companies to hire these people.” While people would be educated on scholarship, her hope is that schools would be paid back over time through the companies and individuals contributing a share of future earnings.
Teresa Clarke (JD/MBA ’88) has already applied another vision for training future leaders, organizing a foundation in South Africa which offers black high school children from the nation’s poorest townships scholarships to high-caliber private schools. She got the program started with a fellow HBS alum, Nyagaka Ongeri (MBA ’97), while they were both working in Johannesburg for U.S.-based employers.
“We both had real interest in trying to make an impact,” she said. “Also, both of us had participated in programs offering summer internships on Wall Street for minorities, so we had ideas for something like that.” An initial fund-raising appeal sent out with Clarke’s 1998 Christmas cards drew $15,000 in gifts which formed their seed capital, and they a also benefited from a booth at the HBS Global Alumni Conference in South Africa in 1999, getting checks from HBS Dean Kim Clark plus other faculty and alums.
The program already supports 175 students who are having remarkable success. According to Clarke, a recent evaluation showed them at or above the classroom performance of their peers in seven of the ten schools measured.
“The program has exceeded my own expectations,” said Clarke, and her words might well apply to the activities of each of these four women, who so far have touched at least four continents helping improve social and economic conditions. For readers inspired to imitate their efforts and get involved with international development, they offer a variety of suggestions. Both Clarke and Dasgupta stressed the importance of spending time living in another country, especially a developing one, to build credibility in the field.
“Demonstrating that you can survive internationally is an important piece of it,” said Clarke, noting that even her overseas assignments with traditional for-profit businesses provided valuable exposure. Trying out development work on a volunteer basis during sabbaticals or leaves of absence can also be a way to gain experience, suggested Dasgupta and Schmidt-Rahmer.
While not all development organizations seek MBAs, business capabilities are important in microfinance, making this area a good entry point. A sidebar lists some resources for getting acquainted with the field. Goodwin-Groen noted that the development of insurance products in microfinance is a current need for particular expertise.
“People with specific skills, such as insurance or managing large volumes of financial transactions, are definitely valuable,” she said. All of these women welcome other MBAs joining them in what has been a particularly rewarding endeavor.
“It makes you appreciate the tremendous human resources that exist internationally really smart, capable people,” said Clarke. “Sometimes the greatest way we can contribute is to reform structures so that they can realize their potential.”
This article was gathered by Rebecca Walden (OJ), VP External Relations for the WSA