The Marketplace Magazine November/December 2023

November-December 2023

Where Christian faith gets down to business

MEDA at 70:

A look back at the past 20 years MiCrédito eyes Central American expansion Sarona has ambitious growth targets Telling the MicroVest story MEDA by the numbers

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The Marketplace November December 2023

Roadside stand

Looking back on significant investments MEDA made in recent decades As MEDA begins to celebrate 70 years of investing in entrepreneurs, this issue looks at a few of the significant relationships of the past several decades. There are far too many stories to be told in these pages, even in an issue that is two-thirds larger than normal. For people interested in reading about MEDA’s earliest years, J. Winfeld Fretz’s “The MEDA Experiment” does a good job of chronicling the organization’s first quarter century. You can read “The MEDA experiment” at this web link: https://www.meda.org/document/ the-meda-experiment/ In 2003, Wally Kroeker provided a comprehensive look at MEDA’s first 50 years with a quadruple issue of The Marketplace magazine. “MEDA at 50: When Faith got down to business” is also available through our website, and can be read here: https://www.meda. org/marketplace/issue/novemberdecember-2003-50th-anniversary/ This issue tells the stories of some of MEDA’s most significant investments over the past 20 years, as well as a couple of earlier stories that had not yet been recounted. There’s the tale of MiCrédito, (page 19), the Nicaraguan microfinance institution that was started at the insistence of staff of a previous MEDA initiative in Nicaragua. MiCrédito is now active in Costa Rica, possibly soon in Honduras and other parts of Central America, if CEO Veronica Herrara has her way.

Other fascinating MEDA relationships, with MicroVest (page 26), ImpactAssets (page 29), and Sarona (page 12), a private equity firm spun out of MEDA in 2010, have borne considerable fruit within their spheres of influence. Most of MEDA’s board chairs over the past two decades weigh in with their thoughts on significant happenings during their tenure (page 7). Former MEDA president Neil Janzen writes about how he convinced MEDA to get into consulting, in an excerpt from his memoir: “Memories of a Journey with MEDA.” (page 17). Not all initiatives that MEDA invested in were successful. Retired designer Glenn Fretz was kind enough to let us excerpt from his memoir to learn about ProWater,

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which aimed to provide potable water and create much-needed jobs for Haitian men (page 32). A great idea that did not succeed as a business.

UN effort falling short Recent reports make it clear that now more than ever, the world needs the business solutions to poverty approach that MEDA offers. MEDA is a strong supporter of the United Nations’ Sustainable Development Goals (see page 31), an effort to end poverty by 2030. However, UN experts estimate that only 15 percent of the work required to achieve these goals has been achieved. By the UN’s own estimates, it is likely that in 2030, there will be 575 million people living in extreme poverty, subsisting on less than $2.15 a day.

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Features

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A plan to reach “escape velocity”

Sarona Asset Management, a private equity firm spun out of MEDA in 2010, wants to more than double its size to $1 billion in assets under management by 2026.

Asrat Gebre photo by Russ Eanes

In this issue

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A regional vision

Twenty years after helping start MiCrédito as a Nicaraguan microfinance institution, Veronica Herrara wants to see it serving 1 million clients throughout every country in Central America.

Veronica Herrara is MICrédito's CEO

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A pollinator of good banking practices MicroVest provided over $1.6 billion in loans to 200 financial institutions in 60 countries during Gil Crawford’s two decades as CEO. But he thinks that may not have been the most significant contribution of the microfinance firm, in which MEDA was a founding investor.

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MEDA changed his life

In the mid-1970s, Asrat Gebre was MEDA’s first employee in Ethiopia. Now in his 80s and living in Virginia, he looks back on his time with MEDA and the influence Mennonites had on his life. By Russ Eanes

Shorter good reads 22 Roadside stand 15 Soundbites 38 Books in brief

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Message from the President and Chief Executive Officer Dr. Dorothy Nyambi Readers of The Marketplace Foundation Africa Growth magazine: I am pleased to Fund. The latter Fund is a kick off this special issue $200 million USD impact celebrating MEDA’s 70th investing initiative. It anniversary. You are in for works through African a fantastic look at some of investment vehicles to our great achievements of support early-stage, past and present. growth-oriented enterprises In 1953, there was so with the goal of enabling much inspiring promise in dignified and fulfilling MEDA staff, board members and supporters at the Sarona gate science, medicine, human work for young people, in Paraguay. endeavor, and peaceparticularly young building. Dr. Jonas Salk developed women, and helping to close a key agriculture and light manufacturing the polio vaccine, revolutionizing financing gap for entrepreneurs. in South America, our founders public health. Today, after 70 years, we learned key lessons for creating Scientists Francis Crick and have worked in more than 70 successful market systems and James Watson discovered the countries and continue to bring a program-linked impact investing. DNA double helix transforming unique market systems approach These led to the expansion of genomics and biology. Sir Edmund to our project design. That design similar projects in Africa and Hillary and Tenzig Norgay integrates technical assistance Asia, where the combination of an summited Mount Everest. and access to capital, focusing integrated program and access to Queen Elizabeth II was our expertise in agri-food market finance approach has continued to crowned and eventually became systems. Our success is measured grow. From these early beginnings the longest-serving British monarch by the creation of more jobs. to today, what has stayed constant and female head of state. When businesses do well, incomes and will stay into the future is our The Korean Armistice ended increase, and more jobs are mission to tackle poverty using the Korean War, accelerating the created. business solutions. post-war economic prosperity. We have progressed on Over its history, MEDA has A small group of Mennonite our journey to a North-South been and is still a leader in the business leaders joined in Chicago, equilibrium. We have continued not-for-profit charitable sector. It and MEDA was established. to develop partnerships for has invested in building platforms Setting out to partner with system-level impact, including a such as MicroVest and Sarona farmers in Paraguay, and later on catalytic partnership that positions Asset Management. MEDA also around the world, to commercialize MEDA as a leader in impact served as anchor investor at Calvert their agrifood operations, MEDA investment for women-led small Impact https://calvertimpact.org/, believed that collaboration in and medium enterprises. Our a global nonprofit investment firm international development, through work continues to pursue the UN that helps all types of investors technical support combined with Sustainable Development Goals and financial professionals invest access to repayable capital. This and contributes directly to SDG #8, in solutions that people and our offered agency to earn sustainable promoting decent work for all. planet need. livelihoods, through job creation So sit back and take a moment Today, this is reaffirmed via our that would allow families and to enjoy our stories that celebrate MEDA Risk Capital Fund (MRCF) communities to build systems that our platinum achievement. with key global investments that would last beyond any intervention. As always, thank you for your prioritize access to finance for With the early successes of the contributions to efforts to realize a women and youth with a focus on Sarona Dairy in Paraguay and other more equal world. returns, and now the Mastercard

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A Reflection by Rudolf Käthler, son of the founder of SARONA dairy MEDA was formally organized on July 26, 1954. For the “SARONA Dairy” (Lecheria Sarona) venture, all contracts are dated July 28, 1954. A few days later, my father, Peter Kaethler, invited me to join him on a trip to the future Sarona Dairy site. The first paths were to be opened to mark the boundaries of the land. From that point on, I have been involved in this venture. During all vacations and weekends, I had a place to go and participate in the work. After completing local high school, my formal workplace was SARONA Dairy, as an assistant to the foreman. My father’s plans were to send me to the United States in a few years to learn more about modern dairy farming. However, an opportunity arose to study veterinary medicine with a scholarship from the Showalter Fund, which I accepted. In 1973, the partners at SARONA offered me shares, and I purchased 10% of the capital. As a junior partner, I was given very little consideration in important decisions. In April or May of 1977, the majority partner called me asking for my consent to sell SARONA to a Canadian investor. I was very surprised; I knew there were management difficulties, but I didn’t know it had come to the point of wanting to liquidate the dairy. I asked for two weeks to see if I could buy it. Cooperativa Fernheim provided me with a loan to buy the majority of the shares and continue the dairy business. The three cooperatives in the Chaco had

prepared a large milk production development package between 1976 and 1978 for presentation to the Inter-American Development Bank (IDB) worth over $6 million. SARONA’s data were crucial for the project’s preparation, in which I was actively involved. In 1978, my family and I moved to the SARONA location. I had resigned from my job and was fully dedicated to increasing productivity and updating production technology. Among the producers, there was an idea that technical advisors, of which I was considered one, knew everything but couldn’t translate it into field reality. I wanted to demonstrate that, yes, a technician can also efficiently produce using recommended techniques. I had to secure additional loans to finance the improvements. The cash flow was just right under current conditions. But conditions changed: the milk price dropped from 30 (Paraguayan Guaranis) per liter to 20 Gs/lt. (Editor’s note: in 1978, the Guarani traded at 135.6 per US dollar.) And this happened in a year of extreme drought, 1981, with many extra expenses for forage. I had overindebted myself. The consequence: technical bankruptcy. Some friends helped me with interest-free financing. In 2 years, I was able to settle everything, thanks to a radical change in milk prices and more careful spending and investments. My idea was to test production technology in all segments and then invite producers for exchange and demonstration days. I did 5

it several times. The genetics produced through artificial insemination were spread across the three Chaco Colonies through surplus bulls and heifers. I was a dairy farmer with all my heart and all my strength. However, I had returned to the profession and some administrative roles in my community. (continued on pg. 6) Volume 53, Issue 6 November December 2023 The Marketplace (ISSN 0199-7130) is published bi-monthly by Mennonite Economic Development Associates at 532 North Oliver Road, Newton, KS 67114. Periodicals postage paid at Newton, KS 67114. Lithographed in U.S.A. Copyright 2023 by MEDA. Editor: Mike Strathdee Design: Ray Dirks

Postmaster: Send address changes to The Marketplace 33 N Market St., Suite 400, Lancaster, PA 17603-3805 Change of address should be sent to Mennonite Economic Development Associates, 33 N Market St., Suite 400, Lancaster, PA 17603-3805. To e-mail an address change, subscription request or anything else relating to delivery of the magazine, please contact subscription@meda.org For story ideas, comments or other editorial matters, email mstrathdee@meda.org or call (800) 665-7026, ext. 705. Subscriptions: $35/year; $55/two years. Published by Mennonite Economic Development Associates (MEDA). MEDA’s economic development work in the Global South creates business solutions to poverty. MEDA also facilitates the connection of faith and work through discussions, publications and conventions for participants. For more information about MEDA call 1-800-665-7026. Web site www.meda.org Want to see back issues or reread older articles? Visit https://www.meda.org/download-issues/ The Marketplace is printed on Rolland Enviro® Satin and is made with 100% post-consumer sustainable fiber content, FSC® Certified to help meet client sustainability requirements, Acid Free, Elemental Chlorine Free

Photo illustration of Theresia A. Massao, aka Mama Tejo, by Dalilah Jesus

The Marketplace November December 2023

Rudolf Käthler

I loved this piece of land called SARONA. One day, while on the tractor, preparing the land for planting, I realized that SARONA was becoming my GOD. I stopped the tractor, knelt down, and said to the LORD: Forgive me, you can take this land and this project from me, but give me peace in you. In 2000, I was called to take the position of general administrator of my community. There, I had no choice but to sell my animals, equipment, and facilities. SARONA as a model dairy, demonstrative, had come to an end. The Marketplace November December 2023

Ten years later, we started selling fractions of the original SARONA property, including land titles. My wife and I had committed to each other to distribute a large part of our assets while alive. My family was surprised, and many friends too, seeing how easily I let go of the land that held such sentimental value. But until that moment, they did not know about my commitment to God. However, from every sale, a significant portion belongs to HIM, and the family supports it wholeheartedly. Now, the question for MEDA: 6

Was the SARONA DAIRY project worth it, and the effort? I personally am calm and satisfied for having taken the torch that my father and Robert Unruh took at the beginning to demonstrate that dairy farming is a profitable business in the Chaco (region of Paraguay). But one thing is for sure, in my dreams, I continue milking cows and managing the dairy, and lately, almost without any disruptions.

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Rudolf Käthler gave this reflection to members of MEDA’s management and board in Filadelphia, Paraguay on September 6, 2023.

Board chairs share their memories of serving with MEDA As MEDA celebrates 70 years of investing in entrepreneurs, The Marketplace magazine asked people who have chaired the organization’s board over the past 20 years to reflect on key moments and inflection points. Here are some of their comments about their time chairing the MEDA board. Greg Gaeddert, the board’s most recent chair, spoke of “recent efforts to establish MEDA International and evolve our corporate and governance structure, and the… grant from the MasterCard Foundation, which has culminated in the establishment of the Mastercard Foundation African Growth Fund.” MEDA president and CEO Dorothy Nyambi, “with her personal profile, vision, and leadership style, has led us to new heights in MEDA’s already rich history,” he said. For Gaeddert, the $205 million MasterCard Foundation Africa Growth Fund “is a transformational event for this organization.” “It bolsters our presence in each of seven key

Greg Gaeddert

organization with us, was a major inflection point for MEDA.” “There were several significant senior leadership changes during my tenure, the most tragic being the loss of our CFO, Orvie Bowman, to a cycling accident.”

countries in Africa where MEDA has been involved for many years and has been doing good work. “My view today is that MEDA is positioned to attract additional capital and more fully impact markets across the globe where MEDA already has a solid history and footprint,” he said. “We are only in our infancy at the 70-year mark as we seek new ways to provide impact at scale.” Jenny Shantz, Gaeddert’s predecessor, recalls the challenges of much of the world being in lockdown during her time as chair. “It was disruptive Jenny Shantz and difficult. There Negotiations with the were no board trips, MasterCard Foundation that began in-person meetings, or during her tenure had a positive conventions. It changed outcome, resulting in MEDA’s the way we work.” largest ever contract. “Dorothy was in That award, plus major goverher second year as CEO nance work to sort out MEDA’s many when I became chair. The legal entities and overall structure implementation and un“position us well for growth and proderstanding of the strategic vide more economic opportunities direction, along with her for entrepreneurs around the new leadership, was not world,” she said. easily accepted. Tim Penner’s major memory “A board decision in of his time as chair was the September 2020 to trust and transition from long-time President move forward, along with the Allan Sauder to Dorothy Nyambi, willingness of Dorothy to and the ensuing “first steps continue to grow the 7

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towards a new MEDA.” At the end of his term, growth “was tracking really well,” he said. Similarly, Bert Friesen recalls steady growth in donations and new contracts during his term as chair.

Bert Friesen

That trend encouraged the board and management to support MEDA in launching its first major capital campaign, the $50 million Building Enduring Livelihoods initiative, which met its goal. Debbie Sauder David recalls “wonderful memories” of interactions with talented staff and Board members. She enjoyed many engaging conventions and meetings, international trips to Tanzania, Ukraine and Ethiopia, “and especially witnessing the impact of MEDA’s work.” “It was an honor and privilege for me to serve the organization that my grandfather, Erie J. Sauder, was involved with from the beginning,” she said. During my time as Chair, 2012-2014, I had the opportunity to help facilitate the 2013 MEDA Convention in Wichita, KS, when we celebrated MEDA’s 60th anniversary.” She also recalls chairing a board meeting in Gondar, Ethiopia The Marketplace November December 2023

in February of 2013. “As with each of our international Board trips, the impact of MEDA was clearly evident! We sat in the rice fields with the farmers and heard their excitement as they showed us the results of their improved seeds, technologies and crop storage. We observed the creative and skilled weavers using hand looms to fashion flight attendant uniforms for Ethiopian Airlines, thanks to MEDA’s market linkages. We also met with at risk youth and their employers to learn about the safe and much improved workplace conditions they experienced thanks to MEDA’s involvement.” MEDA had good success with fundraising, budget surpluses and successful programs during those years, she said. Allon Lefever, chair in 2010 and 2011, recalls a variety of new programs and initiatives, including MEDA setting up a presence in Germany, holding a board meeting in Ukraine, and touring projects there.

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“Programs such as our Agro Capital Program in Ukraine, with well over 300 grape projects, and our huge mosquito net voucher program in Tanzania, were advancing well.” MEDA’s board and management “debated long and carefully” the idea of spinning out Sarona Asset Management as a separate entity, he said. That decision to let staff buy out most of MEDA’s stake in the organization and become an independent firm enabled “a broader reach into the private and public capital markets.” Sauder David, who was vicechair during those discussions, says that with the formation of Sarona, “we had come full circle back to the original investments of the founders, including my grandpa.” Mel Stjernholm, chair from 2007 to 2009, recalls visits to MEDA projects in Nicaragua, Tanzania, and Ukraine, as well as manioc plants in Paraguay. Those visits were crucial for board engagement with MEDA’s work and each other, he said. He also recalls efforts to draft new guidelines for MEDA chapters (now known as hubs) during his tenure. Focusing on hubs is important for MEDA, he said. “There has to be some (ongoing) way to keep the hub members engaged.” John Yoder, chair from 2004 to 2006, recalls the early days of Allan Sauder’s time as MEDA president. “Allan had proven himself in his prior responsibilities at MEDA, shown his deep regard, and passion, for the organization, and his servant leadership ability that made his selection an easy choice for ongoing MEDA leadership, he said.

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#MEDAField2Fork2023 photo contest attracts entries from 19 countries The #MEDAField2Fork2023 photo contest asked readers to submit photos highlighting the agrifood sector, depicting the production, processing, distribution, or sale of food. Interest in this year’s contest was strong. This was the first time the contest had been held globally. It attracted submissions from 19 countries on five continents. The winning entries featured on the next three pages provide a glimpse into agriculture in Bangladesh and India. The accompanying text was taken from information provided by the photographers.

First prize: Women sorting and drying red chilies, by Md Shafiul Islam (Bangladesh)

Red chili is an essential spice in any kind of cooking in Bangladesh which is widely cultivated in the northern region here. This pepper has a huge demand in the outside world, including the local market. Traders buy chilies from farmers and have women workers pick and dry them.

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Second prize: Harvesting Water Lilies, by Muhammad

Amdad Hossain (Bangladesh)

Aerial view of farmers collecting the water lilies while crossing the river on a boat in Satla Union. Satla is a village in Uzirpur Upazila of Barisal city in Bangladesh. It is known as the capital of water lilies. Water lilies are cultivated in about 10,000 acres of wetlands in this village called Uttar Satla. Eighty percent of the village people are involved in water lilies cultivation and supply water lilies to different parts of the country. This river is more than 40 square kilometers, covered by lily pads and pink lilies. Every bright pink bloom is handpicked and collected carefully by farmers to distribute in the local markets during an annual period. The flowers bloom during the seasonal flood, starting from August to November, in Barisal, Bangladesh.

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Third prize: Rice Farming at West Bengal, by Arindam

Chowdhury (India)

In spite of insufficient monsoon in 2023, paddy has been grown in large quantities in West Bengal. Our farmers have been able to grow golden crops by using alternative irrigation systems.

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Taking Sarona Asset Management to the next level Private equity firm birthed within MEDA has ambitious growth plans When MEDA spun off Sarona Asset Chiasson started has grown to shareholders in the dairy, which Management (SAM) as a private assets under management of greatly improved the genetics of the equity firm in 2010, it was a “lonely almost $400 million, with staff on country’s bovine breeding stock, voice” in the investment industry, three continents. repaid the investment to MEDA company founder Gerhard and acquired complete Pries says. ownership of their Thirteen years later, company. the company’s values The Sarona name have become more derives from a plain in widely accepted. Palestine, extending from “Since Sarona spun the Mediterranean to the out (of MEDA), one of hill country in the west of the big developments Jerusalem. This area was has been the acceptance celebrated in the Bible’s of investment in people Old Testament books of 1 and their businesses, Chronicles and Isaiah for investment in developing its beauty and fertility. country economies as a In 1999, wanting to legitimate, and in some rekindle MEDA’s sincecases, the preferred form abandoned investment of economic development, program, Pries founded indeed of poverty MEDA Investments alleviation,” Pries said. Inc. and Sarona Global Pries stepped away Investment Fund as from active management subsidiaries of MEDA. at Sarona in July of Eleven years later, MEDA’s board agreed that 2022. He now chairs the to allow its investing-incompany’s board and development mission to helps out with business flourish, it needed to free development. Company Sarona into the private co-founder Serge LeVertinvestment world. Sarona’s Chiasson is now the managing partner. Gerhard Pries was MEDA’s chief financial officer prior to founding managers purchased 90% of MEDA’s ownership. Three other staff — Sarona Asset Management. That year, SAM Ralitsa Rizvanolli, head Sarona Asset Management (SAM) completed the first $12 million of investments; Patrick Hergt, head was founded in December 2009. round of investor commitments to of business development; and It took its name from the its Sarona Frontier Markets Fund Mat LeRoux, head of finance and Sarona Dairy, MEDA’s first 1 LP. operations, were promoted to partners investment in Paraguay in 1954. The MEDA board and Sarona as part of the management transition. Eighteen years later, in 1972, partners considered several factors The company Pries and LeVertThe Marketplace November December 2023

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MEDA remained crucial to Sarona’s developing nations as MEDA in their decision to establish Sarona early growth. members were running in North as a separate entity. “Many of the first investors in America, he said. They realized that the Sarona’s funds were MEDA memMany people encouraged Pries growth of their mission would be bers,” Pries said. “MEDA members to seek only larger, institutional hamstrung by a non-profit parent. got it. They understood. When we investors for its funds. But he “No private investor wants their explained what we were doing, it wanted to keep the door open for investment capital managed by made complete sense to them.” North American entrepreneurs an NGO,” Pries said. “It’s just not to make investments in going to happen.” companies in the Global Secondly, they South. “It’s an equitable, wanted some separation balanced relationship.” from the MEDA name, Building a business fearing investors’ that was committed to perceptions that investing enfranchising employees with Sarona would result and staying close to in their money being MEDA members and managed by a church, he entrepreneurial families said. have been important Sarona also couldn’t values for Pries. be constrained by a non“Those things may profit salary system. have limited our growth, “To do the best job but it’s not something of achieving MEDA’s that I regret at all.” mission of creating Pries is thrilled that business solutions to because he stepped out poverty, we had to free of day-to-day operations, Sarona to pursue that Sarona was able to mission as successfully as promote three other possible. We had to hire people into partnership. the best people we could “Every organization find, reward them based needs new eyes, new on success, and require leadership, new blood. them to invest in the Serge is the right person funds they are managing for Sarona at this time. for other people.” I’m thrilled with where “When we were part Sarona is at.” of MEDA, we were not Serge LeVert-Chiasson, a co-founder of Sarona Asset Pries does have allowed to do that.” Management, now leads the organization as managing partner some regrets about Finally, the MEDA and chief compliance officer. the disappointing board members were “But it did not make sense to performance of SAM’s first fund. not eager to face the paperwork institutional investors. It did not He is happy that two subsequent of reporting all of their business make sense to governments.” funds are doing well. dealings to the US Securities and Sarona was investing in It is a difficult time for Exchange Commission each quarter. the same sorts of businesses in the private equity industry, However, the relationship with 13

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particularly for companies with less than $5 billion in assets. The McKinsey consulting firm’s Global Markets Review 2023 report is subtitled “Private Markets turn down the volume.” The report cites plummeting deal volumes, declining performance, and falling valuations since the second half of 2022. “A lot of funds are not coming to market in 2023; they may come back in 2024,” LeVert-Chiasson said. “You’re not seeing the growth you’ve had historically, particularly in emerging markets.” But Sarona has ambitious growth plans for the next few years. One of its most significant institutional partners, the Australian government, has announced plans to ramp up its investment in Australian Development Investments (ADI, previously called the Emerging Markets Impact Investment Fund or EMIIF). Sarona manages ADI in a consortium with Sagana (a Swiss advisory firm) as a technical assistance provider. Under the plan, investment in ADI will increase from $40 million Australian dollars (about $25.8 million US) to $250 million Australian dollars ($161 million US) within the next three years. Over the years, Sarona has worked to build its brand, knocking on many doors to introduce the organization. The Australian initiative has helped Sarona “gain global recognition for the work we’ve been doing for 14 years, and we’re seeing a lot more inbound inquiries,” LeVert-Chiasson said. “Now people are calling us to see if we can work together. We’re getting a lot of interesting business opportunities.” Sarona’s three-year strategic plan includes increasing its assets under management 2.5 times, from $400 The Marketplace November December 2023

million to $1 billion by mid-2026. It also wants to use its history as trailblazers to work towards “democratizing impact investment.” This work will include gender and climate considerations as investment criteria. The $1 billion target for assets under management could help Sarona get more attention from large institutions. Firms that fall below the size that the industry calls “escape velocity” often cannot get bigger players to talk to them, Pries said. Increased revenue and profitability are important to allow Sarona to invest in new products and services, LeVert-Chiasson said. “None of this can be accomplished without dedicated, motivated, well-trained, wellresourced teams.” The company currently has 20 full-time staff, whose compensation includes profit sharing, investment performance bonuses, and a share ownership plan. The firm is launching a new product. Sarona’s Shared Services will provide back and middle office services, including financial, legal,

“Now people are calling us to see if we can work together. We’re getting a lot of interesting business development opportunities.” — Serge LeVert-Chiasson, Sarona Asset Management’s managing partner and chief compliance officer

structuring, and impact reporting for emerging managers in the impact investment ecosystem. “We expect those new services to account for half of our $1 billion in assets under management in 2026.” Sarona has built its business on a fund-of-funds private equity approach. LeVert-Chiasson says it is not likely that the company will move to direct investment in companies in emerging markets. Firms that will succeed in that space need to be “100 percent devoted to that strategy, and have the resources to accomplish that, locally. We can’t do that from Canada,” he said. “We’re figuring out what works and what doesn’t in the markets we invest in. After 14 years in this business, you kind of start to see some interesting trends and who you want to work with in the market.” In the longer term, Sarona has “a really big audacious goal.” In 10 years, it wants to be involved in every asset class in emerging markets. (That means having a product or co-branded product in public equity, public bonds, real assets private equity, private debt, and venture capital.) By 2033, Sarona aspires to be “a one-stop shop if you want to do impact investments in emerging markets as part of a diversified, multi-asset class fund.” It can currently only do business with governments, institutions, and high-net-worth, accredited individuals. Twenty years down the road, Sarona wants to be able to offer products for retail investors as well. “It’s the hardest nut to crack. In 20 years, we hope that we’ll be able to have impact investment products for emerging markets available to retail, institutional, and government investors.”

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Soundbites

A businessman to watch in Jordan Rami J. Saheb, whose food packaging company is a former MEDA lead firm client, has been named to Forbes Magazine’s Top 10 businesspersons to watch in the Middle East in 2023. Saheb is the founder and CEO of Jordan-base Alhadaf Intl. Co. He started the company with one employee in a 60-square-meter facility in 1998. The firm has grown to 280 employees and is now a leading food packaging firm, with a presence in 23 countries. MEDA’s Jordan Valley Links project provided Saheb’s firm with assistance to establish a biodegradable paper cup line to reduce plastic waste, during the pandemic. At that time, the company had around 100 employees.

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Retirement home enters self-storage biz Self-storage has been one of the fastest-growing industries in North America in recent years. Now, a Pennsylvania retirement community is getting into the act. Garden Spot Village, a non-profit, faith-based continuing care retirement community located in New Holland, plans to build close to 600 self-storage units for its residents and the general public. About 20 percent of Americans use self-storage services, with almost as many considering doing so in the future, a story in LancasterONLINE says. Shrinking living space as people downsize and just having too much stuff are cited as reasons for soaring demand for storage units, a survey by StorageCafe found. E-commerce firms also use the units for inventory.

Retirement organizations are increasingly looking for business opportunities to help them support their missions. Some have restaurants that are open to the public as well as residents.

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More funding for African farms The United States Agency for International Development and the Norwegian development agency are partnering on a project to get more money into the African agriculture sector, Semafor Africa reports. They recently announced a multi-donor fund to “unlock hundreds of millions of dollars in financing for small-and mediumsized agricultural businesses in Africa.

one-third of total USAID spending over that period. The Middle East and North Africa ranked second in the priority list, receiving $34.9 billion over the decade. Looking at allocations to individual countries, Afghanistan was by far the largest recipient, although that funding fell off sharply in 2021. Jordan, Ethiopia, Kenya, and Nigeria ranked second through fifth in aid received. The US allocated $55.3 billion to development assistance in 2022, more than a quarter of the total spent by 30 nations that make up Development Assistance Committee member countries.

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Continuing the pattern Sub-Saharan Africa has been the greatest priority region for USAID over the past decade, Devex’s “Where US spends its development aid” report shows. Between 2012 and 2021, the region received a total of $104.4 billion from the development agency, about 15

The Marketplace November December 2023

Introducing MEDA to consulting projects For several decades, consulting projects were a regular part of MEDA’s international development efforts. In this excerpt from former MEDA president Neil Janzen’s book “Memories of a Journey with MEDA,” Janzen explains how he introduced the consultancy idea to MEDA in the early 1980s. Each person beginning a new job brings to that position values, insights, experience, skills, and even prejudices that influence their performance. My life’s journey to this point had provided me with confidence that what I was bringing to my role in MEDA would be more than adequate. My experience as a teacher had been positive, though not exceptional. It had been a great opportunity to connect with people at various levels: colleagues, students, parents, and community. I left my job as a teacher to engage in the relief, development, and peace mission of MCC in India that followed an earlier assignment in Zambia. I had just completed the requirements for an MBA at Western University. Hovering over all of this was the plan, which included, presumptuously, “contributing to the resolution of human problems.” All of this provided me with an opportunity to contribute to moving MEDA beyond the very good intentions and achievements of its first 25. My management of this change, not at all very specific at this point, would be influenced by the mindset of baggage that I brought with me into this new The Marketplace November December 2023

position. Some of these factors come to mind as I reflect on my journey.

Selling MEDA on Consulting Services Having established that I (with Paul Derstine) would join MEDA as associate executive secretary and be located in Winnipeg, I did not feel ready to drop the consulting service idea. I had done several assignments of that nature through MCC Canada related to Ten Thousand Villages (then known as SELFHELP, or more specifically, SELFHELP Canada.) As well, friendship with Henry Fast from our overlapping time with MCC India left me with an interest of pursuing the idea of working together. But how? Would 16

MEDA hire a third person when it had already hired two while only recruiting for one? I discussed the matter with a friend, entrepreneur Art DeFehr, who had served with MCC in Bangladesh but had returned to Winnipeg to head the family’s furniture business. I proposed to him that I would suggest to the MEDA chair, and ultimately the board, that we employ Henry as a consultant serving clients outside of MEDA. To assure the board that we were not going too far out on a limb, DeFehr Furniture (which became Palliser Furniture) — or rather, Art DeFehr — would cover Henry’s salary for one year, if the anticipated consulting fees did not cover that expense. I was helped in this lowrisk option by a potential CIDA consulting contract, which was in our back pocket via MCC Canada. CIDA had requested that MCC Canada conduct a review of development project opportunities for CIDA in Bangladesh. MCC Canada’s John Wieler had enquired whether MEDA (Henry and I) would take on that contract, since MCC Canada administration was reluctant to accept the assignment. If we did get the contract, it would go a long way, if not all the way, toward covering Henry’s salary for the year. Fortunately, Milo Shantz, the entrepreneurial and visionary MEDA board chair, was supportive. Milo also had a unique ability to sell an idea to the board after some astute pre-meeting conversations with key board members.

This was not arm-twisting but ensuring that they fully understood the matter. The board granted approval to proceed. We were awarded the CIDA contract, and Henry and I spent six weeks in Bangladesh exploring development opportunities for CIDA. One of these — the marketing of rower pump technology for irrigation — later provided a foundational project for the newly established International Development Enterprises (IDE, now iDE) with project support from CIDA and the involvement of George Klassen, formerly of MCC Bangladesh, the inventor of the rower pump. The notion of a consulting work within MEDA ran into a concern expressed by Edgar Stoesz, MCC’s representative on the MEDA board. In a letter he stated that “It is not clear to me … whether

MEDA Consulting MEDA’s consulting work took a variety of forms. Many arose from contacts in CIDA, supported by a reputation of doing good work. Others were related to non-governmental organizations working in development, just as MEDA was. Some were connected to both. During his tenure with MEDA, Henry Fast was likely involved in more of these assignments than anyone else on MEDA’s staff. At times we engaged MEDA members in contracts — economist Henry Rempel and agronomist John Wiebe come to mind. In the second half of my MEDA journey, I also took on numerous assignments, which enabled me to continue my association with MEDA.

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we will provide this service to the organization to which we are otherwise related or if we are providing a second prong. The former I would support, the latter I have reservations about.” In fact, we intended the former, though the relation was loosely defined (see sidebar above). It was not our intention to establish a major second prong. In any case, Edgar kindly, perhaps after conversation with Milo,

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did not raise the same concern at the board meeting, and the recommendation to proceed with Henry’s appointment was approved.

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Neil Janzen served MEDA in a full-time staff position for 13 years, (including more than a decade as president) followed by another 14 years in a part-time consulting role until 2006. He lives in Winnipeg, Manitoba. . “Memories of a Journey with MEDA” is Copyright 2022, Cornelius Janzen. Excerpt reprinted with permission.

The Marketplace November December 2023

Funding pickups and taxis In the days before MEDA became a charity in Canada and a 501 c 3 non-profit organization in the US, some of its efforts included assistance to individuals that would now be considered private benevolence, things that charities are not allowed to do. The photo above shows a fundraising letter sent out by MEDA executive director Lloyd Fisher, likely in the late 1970s. (Editor's note)

The Marketplace November December 2023

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MiCrédito at 20 MEDA-backed microfinance institution dreams of serving all of Central America CHISPA Foundation, which MEDA country’s largest microfinance Veronica Herrara has a grand vision started in 1991. In 2002, CHISPA’s organization. for MiCrédito, the Nicaraguan microfinance operations were According to Fred Wall, MEDA microfinance institution that MEDA transferred to a new organization hesitated to become involved in helped launch 20 years ago. called CONFIA. another microfinance venture She wants to see the In 2003, MEDA sold its shares after that sale. Wall is a retired organization she leads serving at to Pro-credit Nicaragua, the Manitoba businessman and former least one million clients, mostly MEDA board women. Veronica Herrara photo courtesy MiCrédito member who was “I see instrumental in (MiCrédito) all getting MiCrédito around Central going. America, including He recalls Guatemala, that part of that El Salvador, reluctance came Honduras, Costa from a desire to Rica, Belize, and work on other Panama,” she said. things. But MEDA That may seem was also skittish an audacious goal after having a for a lender that bad experience in has touched the Tanzania. He said lives of 50,000 the management clients since it of a MEDA-owned began operations microfinance in Nicaragua in operation there 2004. It started defrauded them working in Costa out of a significant Rica in 2018. amount of money. But MiCrédito Some of expects that by the CHISPA’s original end of the year, it staff contacted will close a deal to MEDA’s chief acquire the assets financial officer, of a Honduran Gerhard Pries. microfinance They asked institution. That MEDA to return deal would double to Nicaragua its loan portfolio and start a new to more than $46 microfinance million US and company. add 100,000 new Wall clients. accompanied Pries MiCrédito’s on an exploratory roots go back to an trip to Nicaragua organization called CEO Veronica Herarra sold her car to help get MiCrédito going. 19

The Marketplace November December 2023

to judge the group’s proposal. “They had pretty grandiose plans,” Wall said. “They wanted several million dollars invested by MEDA.” Told that their plan was not feasible, they were asked to prepare a new plan involving an investment of $300,000 to $400,000. MEDA was still skeptical, saying its priorities lay elsewhere. It would only invest if someone were found to provide oversight. Wall had done due diligence on other projects for MEDA. He was asked to consider a five-year commitment to the new venture, which the Nicaraguan group named MiCrédito (Spanish for my credit). Wall accepted that task and also served on the MiCrédito board until 2017, including a term as chair. Six people who were part of the original CHISPA team, most notably Octavio Cortez and Herrara, were the first staff. Cortez, who is now a MiCrédito board member, was its first CEO. Herrara initially served as chief financial officer. Both people made personal sacrifices to raise money to invest in MiCrédito. Herrara sold her car, and Cortez sold his bicycle. The institution got off to a strong start, inheriting a small core of agricultural loans from a Nicaraguan MEDA project. Word of mouth brought in new clients and new loan requests. MiCrédito opened new branches. But raising capital to fund those loans was not easy, said Wall, who was involved in efforts to bring international microfinance funds on board. “We were very small, and we The Marketplace November December 2023

were considered high-risk. It was difficult, so we didn’t get a lot.” However, funds raised allowed the organization to have steady growth through its first five years. In 2009, Herrara succeeded Cortez as CEO. Times were tough. The Nicaraguan government supported a nationwide no-pay strike that encouraged borrowers not to make payments on their loans. “It didn’t stop us,” Wall said. “It slowed us down for a while. … We survived it.” MiCrédito not only survived but thrived for a number of years after that.

As loan growth outpaced available capital again, the board had to restructure operations. It suggested asking MEDA members who had lent money to MiCrédito to convert those loans to company shares and equity. Several dozen people accepted the offer and have profited from doing so. That process also allowed

“Our DNA, our mission is to change the life of the people through finance.” — Veronica Herrara, CEO of MiCrédito

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MiCrédito to become a private company, making subsequent fundraising easier. Elmira entrepreneur Robert Shuh joined MiCrédito’s board in 2013 and has been its chair since then. He was amazed at the reception Herrara received at a microfinance industry conference he attended with her early in his time on the board. “Walking those halls with Veronica was like being with a rock star… They all knew how well MiCrédito was doing, both in terms of financial performance and social impact, and you have to have them both if you’re going to be successful in this industry.” Things changed when a political and economic crisis hit Nicaragua in 2018. The micro-finance industry faced economic challenges. “People’s businesses, in some cases, were dying,” Shuh said. One of the strategies Herrara designed to weather the storm was studying MiCrédito’s client list to see how they could do business with each other. For instance, she matched a leather manufacturer with a shoemaker so they could get together and help each other’s businesses. “That pattern was repeated over and over again,” Shuh said. “MiCrédito made sure, to the best of our ability, that our borrowers were having a market to sell to or to buy from.” While the portfolio at risk did rise, only one of MiCrédito’s major lenders called its loan. MiCrédito was able to negotiate a payout at a reduced rate. “They just wanted

out,” Shuh said. “They were scared.” Unlike its competitors, MiCrédito did not miss a single payment to its lenders during the crisis, “thanks to fantastic leadership by Veronica.” The lender that recalled its funding has since returned to MiCrédito. “We are a reliable borrower. We pay our bills on time.” Talk of international expansion has always been the vision since MiCrédito began. Discussions ramped up during the political crisis, as an exodus of Nicaraguans to Costa Rica mounted. MiCrédito saw a business opportunity in serving the more than 300,000 Nicaraguan emigres living in Costa Rica in 2018. The number has since grown to close to 1,000,000. There was an opportunity to lend to them. There was a secondary opportunity in providing remittance services for people wanting to send money back to families in Nicaragua. “They did not have the right documents in terms of residency to deal with a Costa Rican Bank,” Shuh said. That new market, where MiCrédito has two branches, has proved to be challenging. “It’s been a slow go. Starting from nothing in a different country. The Costa Rican government capped the interest rates microfinance firms could charge. “It really hurt us.” “When you’re making small loans, it’s expensive.” While MiCrédito’s average loan size is about $1,800 US, 70 percent of its portfolio is loans of under $300.” Shuh thinks the Costa Rican operation is “close to a tipping point,” with break-even expected by the end of the year, five years

after entering the market. In 2019, MiCrédito registered a holding company in Panama, a move that makes regional expansion easier. It now operates 15 branches (13 of them in Nicaragua) and has 128 employees. Almost 70 percent of its staff are women, including six of eight team managers. MiCrédito was honored at an industry conference in Guatemala this spring for its social impact. Inclusion [Social Ratings], the world’s first global social rating agency, gave MiCrédito the award in recognition of products it has introduced to change the lives of its clients. Those products include small agricultural loans, loans to help entrepreneurial women start a new initiative, loans for solar panels to provide electricity to rural homes, loans for migrants living in Costa Rica, and an alliance with Habitat for Humanity to improve sanitation and water in people’s homes. “Our DNA, our mission is to change the life of the people through finance,” Herrara said. MiCrédito also has a number of healthcare programs. One of these allows clients quarterly visits to a doctor who offers appointments through MiCrédito’s branches. It also offers subscriptionbased access to telephone medicine through a cell phone. This service has a doctor available around the clock, 365 days a year. It is a less expensive alternative to private clinics for micro-entrepreneurs who don’t have social security. MiCrédito is also working to convince the Nicaraguan government to allow microfinance institutions to take deposits. That is a logical step in broadening financial inclusion, Herrara said. She hopes that the law will pass in the coming months. The original MiCrédito logo 21

that Herrara suggested 20 years ago showed all of Central America. Board members encouraged her to start with a smaller vision and just a map of Nicaragua, Wall said. “My motto is: you walk before you run and run before you jump. She was a little bit ahead of that. She was a little bit impatient, to go faster.” Today, Wall is happy with MiCrédito’s regional aspirations. “It won’t be long, and (Herrara will) be in El Salvador, or somewhere else.” MEDA currently owns about 38 percent of MiCrédito. The Horsch Foundation (Germany) holds 16.4 percent, and American and Canadian investors own 37.2 percent. Herrara is pleased that MiCrédito has grown to become one of Nicaragua’s top three microfinance institutions, and the most profitable in Central America. But her thoughts these days are on longer-term goals. “To build leadership, for me, is really important.” Her efforts to build leadership over the past decade include work “to groom managers to continue the organization over the next 100 years.”

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Comments Would you like to comment on anything in this magazine, or on any other matters relating to business and faith? Send your thoughts to mstrathdee@meda.org

The Marketplace November December 2023

MEDA over the decades: a timeline Decade 1950s

1960s

1970s

1980s

MEDA expands microlending programs in Africa, Asia, and Latin America. The organization hires its first Executive Director, Lloyd Fisher, in 1969.

MEDA reevaluates its approach to program administration and delivery; hires first in-country staff and secures non-profit status.

MEDA formally adopts the Small Business Development Program model; combining credit, management training, and technical assistance across projects.

By 1968 there were 33 projects in operation across six different countries.

In 1973, Roger and Marsha Friesen developed MEDA’s first program to make small business loans available to entrepreneurs in Colombia.

In 1983, MEDA partnered with Hershey Foods to deliver cocoa beans from Haiti, providing much higher payments to cocoa farmers.

Highlights MEDA began with its first investments in Paraguay — the Sarona Dairy, the Sinfin Tannery, and the Fortuna Shoe Factory.

Did you know? MEDA founders temporarily called their fist investment “The Flying Mission.”

Photo courtesy of Mennonite Archives of Ontario (1960)

The Marketplace November December 2023

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Decade 1990s

2000s

2010s

2020-2023

MEDA helps establish pioneering investment companies, Sarona Asset Management and Microvest, and cements its expertise in inclusive market systems.

MEDA and Sarona pioneer the Impact Investing in Frontier Markets (INFRONT) program, an early blended finance model to support the growth of small and medium sized enterprises.

MEDA sharpens its focus on creating decent work in agri-food; strives for North/South equilibrium, partnerships for systems level change, and impact at scale.

In 2003, MEDA worked with Scotiabank to develop a micro-lending program in Jamaica.

By 2013, MEDA had projects in 25 countries across five continents.

The MasterCard Foundation Africa Growth Fund is MEDA’s largest-ever project.

Highlights MEDA defines its core purpose as economic development; pilots and launches a domestic economic development program, ASSETS, in Lancaster, PA.

Did you know? ASSETS was designed by a couple who did MEDA’s first micro-enterprise work in Haiti.

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The Marketplace November December 2023

MEDA in bygone times

This page, clockwise from top left: 1)MEDA staff Janet Landis and Lloyd Fisher in Akron PA, 1973 (Photo courtesy of Centre for Mennonite Brethren Studies, Winnipeg) 2)The MEDA team: Neil Janzen, Paul Derstine, Tina Youndt and Lloyd Fisher, 1979. Fisher, Janzen, and Derstine headed MEDA at different times. (Photo courtesy of Mennonite Heritage Archives) 3) An indigenous credit committee member and two members of an agricultural co-op at the Paraguayan Indian settlement of Campo Largo stand by a fence they built with a loan from MEDA. (Photo courtesy of Mennonite Heritage Archives, 1975) 4) Erie Sauder (then MEDA’s executive secretary), a furniture manufacturer from Archibald, Ohio (second from left), discusses a MEDA project with indigenous Christian leaders Peter Claassen, Ciriaco Perez, and Labaz Ramirez in Yalve Sanga, Paraguay (Photo courtesy of Mennonite Archives of Ontario, 1964.) The Marketplace MarketplaceNovember November December December 2023 2023

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Top: A worker in a small shoe factory in Filadelphia, Paraguay (Photo courtesy of Mennonite Archives of Ontario, 1965). The shoe factory was one of MEDA's earliest investments. Bottom: Harry Peacock of the United Church Committee in Bolivia and a local man work on a MEDA project. They are laying dry palm fronds on a frame to protect seedlings from the sun. (Photo courtesy of Mennonite Heritage Archives, 1978)

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The TheMarketplace MarketplaceNovember NovemberDecember December 2023

A legacy of helping build responsible financial institutions in the Global South MicroVest’s longtime CEO reflects on successes, challenges and lessons learned During two decades as CEO of MicroVest, Gil Crawford led the microfinance pioneer to provide over $1.6 billion in loans to 200 financial institutions in 60 countries. But that wasn’t the sole, or even most significant, outcome of the work of the organization in which MEDA was a founding investor. “We acted, perhaps inadvertently, as a pollinator of good financial practices,” he said. That was a breakthrough in an industry where some organizations operated in unethical ways. MicroVest proved that “you could run a solid business in a just and ethical way and build good returns for everyone.” Crawford is no longer active in the day-to-day management of MicroVest Capital Management. It was acquired by DAI, a global development company with corporate offices across five continents, in late 2021. He had considerable work in international development and the microfinance industry prior to cofounding MicroVest in 2002. Immediately after grad school, The Marketplace November December 2023

he saw a summer internship opportunity with the foreign service. As part of his application, he sent in a photo of himself holding a pitchfork, with pig manure and a pig under his arm.

The recipients laughed and decided to send Crawford to Guinea, where authoritarian rule was the norm in the 1980s. “It was sort of North Korea with palm trees,” he said of the posting. He was fascinated by the resilience of entrepreneurs who “weren’t supposed to exist” in that setting. Crawford then got a job offer from the Chase Manhattan Bank in New York, and a separate opportunity on the same day to run a delegation for the Red Cross in Chad. When a friend urged him to take the Red Cross job, he asked Chase Manhattan for a deferral on the banking job and went off to Chad. Two learnings from the Chad 26

posting stick in his memory. He recalls dropping off bags of rice and tins of oil, which never made it to their intended recipients. Instead, they ended up on sale in the market almost before the trucks returned to pick up supplies. He also recalls a well dug by foreign donors that had pristine water. “By the time I left, that was broken, and no one was empowered or incented to repair it.” In 1991, he created the Seed Capital Development Fund, a nonprofit that was an early player in the US microfinance movement. There, he was first introduced to Gerhard Pries, CFO and president of MEDA Investments Inc., Allan Sauder (a future MEDA president), and MEDA’s entrepreneurial development work. In 2000, he took a position with the International Finance Corporation (IFC) as a Latin American microfinance and banking senior loan officer. At the urging of CARE USA’s board member Bowman Cutter, Cal Miller, a former MEDA employee working as CARE’s director of economic development unit,

commissioned a market study percent. CARE and MEDA both and then a business plan from contributed 45 percent. At the time, Gerhard Pries and Gil Crawford. Pries and Crawford thought MV Crawford looks back fondly on his might eventually be able to raise relationship with Pries, who chairs $35M in assets under management. the board of directors of Sarona At its high-water mark, MicroVest Asset Management after heading had raised almost 10 times that private equity firm since it was that amount for investments in spun out of MEDA. responsible financial institutions in “I’ve worked a lot with emerging markets. Gerhard, and his early vision in Crawford said about the multiple new ventures started by financial return on the founders’ MEDA has been instrumental.” investments, “They did very well.” The two men contacted Damian von Stauffenberg, founder of MicroRate, a pioneering credit rating agency specializing in microfinance, and Joyce Bontrager Lehman, a US development practitioner who later served as a MEDA board member. Those four people worked on a market study and business plan for MicroVest. Pries got an invitation to meet with Bowman Cutter, managing director of Warburg Pincus, a New York-based private equity firm. The conversation involved what it would take to get MEDA on board. Gil Crawford led MicroVest for two decades. Pries requested enough money to run the organization He was pleased by the entrefor three years, the ability to hire preneurs MEDA chose to represent financial professionals at good it on MicroVest’s board. MEDA wages, an independent investment brought in men who had run large committee, and an autonomous businesses one step removed from board. the farm gate, he recalled. He expected to be rebuffed, “When the MEDA guys spoke, but Cutter responded, “We’ve been they spoke with such integrity that waiting to hear something like this the investment bankers listened.” for three years.” The earliest MEDA board When Crawford left IFC, Cutter members on MicroVest were Pries, and Pries asked Crawford to run Manitoba entrepreneur Fred Wall, MicroVest (MV). and Pennsylvania businessman R. Three organizations invested a Clair Sauder. Of Sauder, Crawford total of $1.3 million in MicroVest recalled that MEDA president Allan before the organization turned Sauder appointed R. Clair “to be the corner. Seed Capital put in 10 the goalkeeper.” 27

The Pennsylvania Sauder apparently liked what he saw and approached Crawford about investing in the company. With significant support from Pries and Allan Sauder, Wall took Crawford across Canada and introduced him to Mennonite businesspeople who were asked to consider investing in MicroVest. Crawford learned later that many of the early MEDA investors saw their impact investments as a sort of donation and were pleasantly surprised at the return of principal and dividends. CARE followed MEDA’s lead and helped out with fundraising, introducing Crawford to investors in California’s Silicon Valley tech hub. In 2004, MicroVest launched a $15 million fund. That launch opened doors with other investors, in Atlanta’s real estate world and people at Lehman Brothers’ emerging markets bond desk. As a result of the conversations with Lehman Brothers, MicroVest decided to do a collateralized loan application, putting together 12 loans and selling portions. One investment bank bought the entire $40 million deal. While Lehman Brothers did not survive the 2008 financial crisis, the MicroVest fund did and was successful. After calling on JP Morgan for seven years, conversations resulted in a $60 million private equity fund being launched. The fund was launched the day Lehman Brothers failed; the JP Morgan team got the fund sold. When capital markets froze up in 2008, investors wanted liquid investments. The Marketplace November December 2023

That led MicroVest to create a short-dated fund, which became the organization’s flagship fund. After the financial crisis, former MEDA board member Alex Hartzler helped bring the Cordes Foundation in as an important shareholder. That added strong fund marketing knowledge to the board in the person of Ron Cordes. Crawford hoped that the fund could grow to between $250 million and $1 billion. However, institutional investors did not materialize, seeing the fund as too small. Just prior to the pandemic, MicroVest sought out potential equity partners that could help with distribution. During the pandemic, emerging markets fell out of favor, and growth stalled. Crawford knew of DAI, an employee-owned consulting firm. He began the process of negotiation, and a deal for DAI to buy MicroVest was concluded in November 2021. The sale was necessary “for us to break out of this highly specialized investment niche,” Crawford said. The ownership structure also played a part in the decision. “Nonprofits are not inherently thinking like venture capitalists, that they’re going to put more money in (to help with expansion) when things are going well.” MicroVest sent dividends to CARE and MEDA over the years, a decision Crawford regrets. He wishes the partners had reinvested the dividends or brought in more minority partners. Another mistake was not allowing senior staff to own a large stake in MicroVest sooner. That could have helped with the retention of key personnel, he realizes. “Every evening at seven o’clock, the value of the company walks out the door.” The Marketplace November December 2023

At its peak, MicroVest had between 25 and 30 employees. DAI has 500 full-time employees and works with another 4,500 consultants at any given time. A new division, DAI Capital, was established to create a capital markets business leveraging 50 years of consulting experience in financial markets.

deep bench of clients and a rich trove of data to examine. He said it will soon begin to use increased digital connectivity to lower costs and make products easier to use. DAI, MicroVest’s parent firm, is partnering with Olympus Capital Asia on a new fund that will create new, lower-cost products. “India is on the verge of a digital revolution, and I think we’re going to see a lot of interesting things there.” Crawford said that small distributed (often rooftop) solar projects in Africa are another growth opportunity. Thirty years ago, microfinance was seen as a silver bullet to solve all poverty, he said. The industry has since realized that well-run microfinance institutions need to be able to provide large amounts of financing as clients grow their firms into small and medium-sized businesses.

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“We trained a lot of people in how to do impact investing.” — Gil Crawford

He said that MicroVest alumni are doing interesting things at the VISA Foundation, at IFC, and elsewhere. “We trained a lot of people in how to do impact investing.” MicroVest investments were also instrumental in building banks in many countries. These included XacBank in Mongolia, Satin Bank in India, and others in Bolivia, Ecuador, and Peru, he said. For Crawford, microfinance was the “sharp tip of the spear for the impact investment world and MicroVest played a role.” The microfinance sector is beginning to realize they have a 28

Comments Would you like to comment on anything in this magazine, or on any other matters relating to business and faith? Send your thoughts to mstrathdee@meda.org

A “catalytic” MEDA investment photo courtesy ImpactAssets

More than two decades more commercial and less ago, investment fund expensive loan, enabling development was one of it to repay the loan in full MEDA’s three operating in January 2022. units. MEDA’s investment Those efforts were enjoyed a 1.44 times led by Gerhard Pries, return on capital over the who was MEDA’s chief decade and a 4.5 percent financial officer and then internal rate of return. the founder of Sarona ImpactAssets has gone Asset Management. on to achieve astonishing Investment fund growth since the time of development work the MEDA investment. resulted in founding Tim Freundlich, the investments by MEDA company’s founder and in the launch of three executive director of significant players in strategic development, impact investment: recognizes the importance MicroVest Capital of the MEDA investment in Management, Sarona (as helping his company grow. a separate entity), and “ImpactAssets ImpactAssets. had just spun out All of these of Calvert Impact investments were made Capital (a pioneering through the MEDA Risk global nonprofit Capital Fund, formerly investment firm) Tim Freundlich is the founder of ImpactAssets known as the Sarona Risk when MEDA provided us In late 2020, MEDA agreed Capital Fund. A report prepared with a 50-year equity-like, revenue to restructure the loan to reduce by Sarona Asset Management share loan,” he said. “It was an its cost for ImpactAssets, for MEDA this spring noted that innovative funding structure, to say which is a donor-advised fund the three firms manage over $2.5 the least — essentially unheard of manager in the impact investing billion in impact investments, more at the time. space. Thirteen months later, than $1 billion of which is invested “We had just five employees ImpactAssets was able to obtain a in emerging markets. and $35 million in assets under The ImpactAssets management in those investment, while the days, so the funding was shortest in duration of to act as catalytic capital MEDA’s loan “was an innovative funding these three, has had for ImpactAssets’ early structure, to say the least — essentially the greatest impact to execution,” Freundlich said. date if measured by “It surely did ignite big unheard of at the time.” — Tim Freundlich, organizational growth. things: Since our founding founder and executive director of strategic in 2010, ImpactAssets has In September 2011, MEDA’s investment matured into a 50-person, development, ImpactAssets committee approved a $2.3 billion enterprise, 50-year loan for up to invested for deep impact $500,000 US for ImpactAssets. in critical issue areas, including Under the terms of the loan, Pries climate solutions, racial equity, and was MEDA’s board nominee to the gender equality, across close to 900 organization. private companies and funds.”

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The Marketplace November December 2023

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The Marketplace November December 2023

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by Numbers: Numbers: 2003 - 2023 by Decent Work Created *

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16,799

16,799 58,339 Men

38,338 38,338 197,285 of which 9,289 are *youth 77% of MEDA's three-year target

Men

21,471

21,471 76,144 Women Women men Men Men

16,799

*9,289 were youth (age 35 ye of the business clients.

*26,499 youth (age of the were individual *26,499 were youthclients. (age 35 35 years years or or under) under)

Business Clients

21,471

Women

38,338

ower BI Desktop

Decent Work Created Business Clients

Business Clients

362,739

362,739 58,339

Ɵng Ɵng decent decent work work of of 257,197 257,197 people) people)

The SDGsdolo are aetur? call to Taturis end poverty, protect Ceaquid eratem hiliaes the planet, and ensure cipsam soluptatur that by 2030 allsum que samus nobis people enjoy peace ducipsantio and prosperity.

*26,499 were youth (age 35 years or under)

Individual Clients 76,144

Decent Work Created Wage and Self Individual Employment Clients

MEDA actively Actively supports six six supporting of the UN Sustainable Sustainable Development Development Goals(SDGS) (SDGs) Goals

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Not Gender Gender SpeciĮc Not SpeciĮc gender not

specified

*9,289 were youth (age 35 years or under) of the business clients. *26,499 were youth (age 35 years or under)

* 35 years of age or younger

Number of Interventions (Projects/consultancies) SUB-SAHARAN AFRICA ASIA LATIN AMERICA & CARIBBEAN MIDDLE EAST & NORTH AFRICA NORTH AMERICA Multi-Country Projects

74

8

54

10 29

13 31 3

The Marketplace November December 2023

The OLA water system, developed by Waterloo’s ProWater Group, promised

to address two problems in Haiti: access to affordable drinking water and Good ideas aren’t opportunities for local entrepreneurs. The prototype was set up in Port-au-Prince, MEDA held an equity share in the company. The Achilles heel was social always great businesses and stigma associated with pushing carts that could not be overcome.

The Marketplace November December 2023

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From lo.gos the work of glenn fretz 1970- 2000 Reproduced with permission.

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The Marketplace November December 2023

A life-changing international development posting One of MEDA’s first international employees reflects on careers in Ethiopia and Virginia By Russ Eanes “You Mennonites messed up my religion.” Said with a smile and a laugh, Asrat Gebre — now 82, and living in Harrisonburg, VA — described his long history with Mennonites, economic development, and MEDA. Hired by MEDA in the late 1970s, he was one of its first two employees outside of North America. Gebre was born and raised in Ethiopia, in the town of Nazareth, about 60 miles east of the capital of Addis Ababa, a place that was coincidentally also the location of a Mennonite medical mission led at the time by Dr. Rohrer Eshelman. He came from a comfortable background, educated in what he termed an “elitist” system that was influenced by the Americans and British. He started learning English in grade school and continued through university. In those years, Emperor Haile Selassie ruled a country rebuilding from the occupation of, and later expulsion of, Italian Fascists under Mussolini. Gebre went to work for a bank and said that had he not become a Mennonite, he would have been a very wealthy man, though he emphasized that he would not have been happy. Instead, he became involved in helping the very “poorest of the poor,” as he described them, as The Marketplace November December 2023

Photo by Russ Eanes

Meseret and Asrat Gebre

Ethiopia went through decades of incredible ecological, demographic, and political turmoil. Between 1967 — the year he graduated from university — and 1992, the country’s population doubled. At the same time, tree coverage — once 60% of the land — was reduced to only 10%, causing disruption of the agricultural system, further exacerbated by drought. A Marxist revolution overthrew the emperor in 1974 and initiated 18 years of political and cultural turbulence and oppression. In the 34

midst of all that were the twin disasters of famine (1984-85) and persecution of the Mennonite church — known already then as the Meserete Kristos Church (MKC). Gebre became a part of the church himself in 1959 or 1960 and credits its later survival as an underground church to the fact that the control and leadership of the Mennonite church in Ethiopia was given to local leaders. As he said, the missionaries, “let THEM be the church.” Gebre began working in a volunteer capacity for MEDA in

Photos this page courtesy Asrat Gebre

Asrat Gebre, centre, listens as former soldiers describe their beekeeping operation.

1969, two years after he graduated from university. Orie Miller — a Mennonite entrepreneur involved in the founding of several church institutions, including MEDA — visited Ethiopia. Gebre met Miller during one of those trips and got involved (like Miller) as a volunteer with MEDA. His task was to administer small loans and to supervise their use. He recalled being especially successful in funding pharmacy training, but also in loaning to small shops and farms. Around 1976, MEDA asked Gebre to work full-time. He accepted the offer, dividing his time between a MEDA office in Addis Ababa and time in the field, visiting and supervising projects. That same year, the Hesston Corporation, under Ray Schlichting,

Asrat and Meseret Gebre with members of an Ethiopian non-profit they founded. 35

The Marketplace November December 2023

paid for him to come to the US for additional training and study. Gebre’s bank had previously offered him foreign training, but he would have had to go alone. MEDA allowed his wife, Meseret, to come along with him, and they stayed for 10 months, from October 1976 to August 1977. He then tacked on a semester

at the University of Wisconsin in the fall of 1977 to study coops, inspired by models that he found coming out of Germany. He was interested in “humanized” socialism, as opposed to the “enforced” socialism of the Marxist government. Returning to Ethiopia, he went along on a delegation to the Soviet Union, to learn how a

Ethiopia’s Meserete Kristos Mennonite Church sees amazing growth Ethiopia is a land with a long and rich Christian history, dating back to at least the 5th century, though their own traditions say it is older by at least a century more — some even claiming it dates back to the story in the Book of Acts of Philip and the eunuch. In a nation of 124 million, over half of the population is Christian, the largest segment of which is Orthodox. It is also home to diverse cultures, with over 90 languages spoken. The country has long been known as an “island of Christianity in a sea of Islam.” Its relative isolation from the rest of Christendom meant that it developed its own peculiar beliefs and customs, combining ancient Oriental Orthodox practices with Jewish and ancient local religious traditions. Orthodox Christians in Ethiopia are the second largest population in the world, second only to Russia, according to the Pew Research Center. Ethiopia is also the place of a modern Anabaptist success story, The Meserete Kristos Church (MKC), which is the largest affiliated group in the Mennonite World Conference with close to 400,000 members. Mennonites first arrived in Ethiopia in 1945 with relief supplies, initiated by organizations such as the Mennonite Relief Committee (MRC), Mennonite Central Committee, and Eastern Mennonite Board of Missions and Charities (now Eastern Mennonite Missions or EMM). In the early years, organizational lines were fuzzy, and these groups worked in cooperation. Back then, Emperor Haile Selassie was eager for outside help, especially in education, but gave each foreign The Marketplace MarketplaceNovember November December December 2023 2023

denomination — Lutheran, Presbyterian, Baptists, for example — their own region to work in. The first Mennonite mission was located in Nazareth, east of Addis Ababa, where they eventually took over the hospital founded by MRC, the Haile Mariam Mamo Hospital. The first members of the Ethiopian Mennonite church were baptized in 1951. Within the decade, EMM was turning over leadership and organizing to Ethiopian leaders. This meant that from early on, the Ethiopians were instrumental in shaping their own style of worship and practice as Anabaptists. They eventually settled on the name Meserete Kristos Church, meaning “Christ is the foundation.” In 1974, when the Marxists overthrew the emperor and came to power, they were for a long time preoccupied with fighting wars and left the MKC largely alone. But in 1982, the Derg turned their attention to persecuting the church. MKC at that point was relatively small — maybe 5,000 members — but due to its decentralized tradition of organization, it thrived “underground” during that period, even as its leaders were imprisoned. It emerged a decade later (when the remnants of the Derg itself were overthrown) with over 50,000 members and has continued to grow, reminiscent of the original European Anabaptist movement of the 16th century. From the start with North American Mennonites to today, evangelism in Ethiopia has been holistic, meaning it went hand-in-hand with economic, medical, educational, agricultural development and vocational training, and operating under local leadership.

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believers’ church can survive under a Marxist system. The funding from MEDA ran out in 1981. At that point, MEDA Ethiopia became independent, eventually functioning more like the Mennonite Central Committee (MCC), meaning that they emphasized more “direct aid,” though they never stopped making small loans. As he said, “we were doing microfinance before we knew what it was called.” Their emphasis was local empowerment. He noted that loans that were from local sources were more likely to be repaid. He observed that if they originated in a wealthy country, such as the US or Canada, the attitude was, “why should I pay it back?” When active persecution of the Meserete Kristos church began in 1984, his work was shut down by the government. He said that this never stopped he or his wife — they would just begin something new, even if it was kept out of view of the authorities. Civil war and conflict with surrounding countries meant that there was always a stream of displaced people to work with; he referred to those as the “poorest of the poor,” who lacked a home and culture, as well as a means to live. Gebre and Meseret founded DAY, or Development Aid for Youth, which later employed 250 people, emphasizing education and vocational training. Gebre said that any of the work that he and his wife did would eventually get them in trouble with the authorities, no matter which government. In 1992, the Marxists (called “Derg”) were overthrown, and the Gebres began working with the former soldiers of the losing side. Some learned to raise bees; others received donated clothing from the Netherlands, which the soldiers mended and sold. This was

Photo by Russ Eanes

Meseret and Asrat Gebre live in Harrisonburg, Virginia.

not looked upon well by the new government. The Gebres’ development work naturally got them involved with the local human rights council; economic aid naturally leads from one to the other. Meseret Gebre got involved with women who were street vendors (primarily illiterate) who dared to stand up for their right to operate their businesses, eventually overwhelming local community meetings, dominated by men, as they demanded their rights. This all became too much for the new government: in 1995, the American embassy warned Gebre that his human rights work meant he was in danger; it was unsafe to stay. As he said, “[the new Ethiopian government] simply did

not wish us to exist.” With assistance from the US government, they were able to relocate to the US, landing in Harrisonburg, VA. Asrat Gebre was 55, the age that a man can retire in Ethiopia, but instead, he took a job at Walmart, which he said he enjoyed. His entrepreneurial spirit wouldn’t rest, and when he found out that a local non-profit that constructed affordable housing — Hope Community Builders — was going to close, he offered instead to run it, which he has done now for 25 years. He said that they started by constructing homes in the traditionally African American neighborhoods, in northeast Harrisonburg, but later took 37

over the development of a large tract owned by a local church that had the vision to create affordable housing. It now has over 140 homes that he has been instrumental in constructing. Even over age 80, he is still involved in the day-to-day operations. Over many decades, Gebre has studied and read about Anabaptism and now delights in teaching “white Mennonites” what their faith should be about. “I tell them that their heritage is not fundamentalism, not God and country.” It means to trust in God alone. Reflecting on his many long years in both the church and in economic development, he said that, ironically, “Being a Mennonite saved me from the government. [It] saved my life.”

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The Marketplace November December 2023

Books in brief

Reflections on Life and Calling for Christian Women Women, Work & Calling: Step into Your Place in God’s World by Joanna Meyer (IVP, 2023 128 pages. $15 US) Christian women throughout time have grappled with living up to the ideal in Proverbs 31: Balancing commerce and childcare, community engagements and family suppers, frugality, and generosity. Each woman will juggle these arenas differently, based on her nature, nurture, and the community and era to which she belongs, Meyer believes. “In spite of the example of a woman who integrated her work as a craftswoman, landowner, and mother, well-meaning Christians may miss the complete vision God has for women and their work,” she writes. “This often happens when we divide work into private (home-based) and public (marketplace or civic spheres).” Varied experiences remind us that to be biblical, “our vision for women’s roles must be accessible to any woman, in any stage of life or socioeconomic status, anywhere in the world, at any place. To imply that a single model represents a biblical ideal denies the diversity of the human experience — and the diverse roles we see women play in Scripture.” Readers will find gold in this book, no matter what their background. Meyer’s approach describes how women may heed God’s plan for their lives and honor their calling. The Marketplace November December 2023

She threads this theme through four sections: a biblical framework that integrates women’s roles and responsibilities; principles that help women gain the resilience they need to thrive in their calling; practical tools to navigate common challenges they face in their work and leadership; and a commitment to relational generosity and a sense of God’s pleasure and presence with them as they work. — Laurie Oswald Robinson

Biblical truths from a boss The Spiritual Art of Business: Connecting the Daily with the Divine by Barry L. Rowan (IVP, 2023 176 pages, $18 US) Rowan is a business veteran who built or turned around eight businesses, serving as CEO, president, division manager, or CFO of four public companies. During that career, he lived through the ecstasy of business success and the anguish of corporate failure. Six of those ventures were 38

successful, with one selling for $10 billion. Two were not. He did his work through a sense of calling firmly grounded in his Christian faith. While his book certainly contains much for any entrepreneur or executive to ponder, many of his reflections are broadly applicable to anyone seeking meaning and Christian discipleship. “What I learned about the question of meaning in work was that I had it backward,” he writes. “We don’t derive meaning from our work: we bring meaning to our work.” Relinquishment, surrendering his life to Jesus’ leading, has been the mantra of Rowan’s spiritual life. He is convinced that surrendering to Christ makes a manager a better boss. Quoting the New Testament book of Galatians’ admonition that we are to love our neighbors as ourselves, he wonders what a business would be like if people lived by this command. Issues that Rowan explores include whether we are driven by fear or love, the three keys to unhappiness, and the liberating potential of shifting from competing with others to being the best we can be. He challenges readers to consider which of God’s assets we have under our management and the freeing nature of viewing wealth as a gift to be shared. Well worth reading. — MS

Books in brief Peeking at Ohio’s Amish and Mennonite enterprises Amish Economics: An Inside Look into Thirty Amish and Mennonite Entrepreneurs in Northeastern Ohio by Peter Graham Dunn (Peter Dunn Publishing LLC, 2023 420 pages; $19.99 US) The Amish and Mennonites of Ohio have a large number of business owners. Peter Graham Dunn met with thirty of them. His book, “Amish Economics,” sheds light on their approach to work and life. Each of the stories is different. By the end of each chapter, you feel like you know the business owner yourself. The chapters are put in order by the first letter of the business name. This means that each story sits randomly against the next. Together, they begin to show

the richness of the world of plain folk’s business. Stories like that of an ex-Amish man who became a Mennonite pastor and then started many businesses.

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Or the story of growing a family business over three generations. Dunn looks into the lives and ideas of these business owners with striking depth. The book is more than a business book. It weaves together details about how items are made, the inner workings of families, and ideas about business ethics. It also shows the move from farm-based activities to more options for work because of technology. It tells the story of people changing while keeping their core values. Some chapters feel forced in their writing style. But on the whole, the storytelling shows the strength, adaptability, and faithdriven nature of these business owners. “Amish Economics” is worth your time if you enjoy a good story, especially about faith, business, and community in a changing world. — Nathan Good

The Marketplace November December 2023

The Marketplace November December 2023

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