Are Greenfield Projects Too Risky?

Women from various developing countries often share a similar dilemma when it comes to microfinance accessibility. People living in remote areas are often excluded from access to financial services or have to walk several days to the nearest institution. Microfinance loans would not only support mothers in financing their livelihoods, but also ensure that they can feed their children and send them to school.  

At Green Shoots Foundation our objective is to start-up Greenfield microfinance projects in areas where no other institution has provided that before. This is a riskier focus because we tap into underserviced and challenging markets. However, the social impact can be substantial.

By definition, Greenfields are riskier. You have to be ready for unexpected obstacles and constraints leading to potential delays and, sometimes, even to failure. These constraints can include cultural barriers, logistical issues, staff issues and problems with channelling funds or simply not having a secure client-base. But these risks are worth taking when the ultimate goal is about reaching out to the marginalised and underprivileged populations.

The need for Greenfield projects has never been greater. They address economic and social polarisation in developing countries by venturing into regions that are largely under-serviced and inaccessible. Financial services are unavailable in these areas due to physical distances (rural areas, mountains) or due to the lack of presence of commercial banks or because these banks are not being financially inclusive.

Fortunately, in this day and age, some of the risks associated with Greenfields can be reduced by employing new technologies (e,g, mobile banking) or by implementing innovative products (e.g. products taylor made for a specific category of clients). Understanding what financial services and products the clients really need and tailoring them in accordance is greatly beneficial. Demand rather than supply-led services should be of priority.

Furthermore, risks associated with Greenfield projects can be prevented if proper support is  provided. This includes seed capital, market research, capacity building, technical assistance, developing reporting tools and regular funding.

Green Shoots Foundation is ready to take risks and implement microfinance services where it is most needed. Poor people deserve access to quality financial services. It is through innovation and efficiency that we aim to leverage our resources to reduce the risks of Greenfields and support individuals in achieving economic sustainability – and thereby fulfil our social mission.