New Zealand Law Society - Empowerment through microfinance: The ADC story

Empowerment through microfinance: The ADC story

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How would you explain microfinance to someone hearing about it for the first time?

Microfinance is essentially about providing financial services to people who aren’t able to access them from mainstream banks and financial institutions. Most banks don’t want to lend to poorer people because they are seen as risky. They typically have low and volatile incomes, and don’t own assets that can be offered as security for borrowing so there is no guarantee the money will be paid back. Microfinance uses a number of methods to get around these risks so that affordable small loans can be viable. Microfinance can also include other services such as savings facilities and insurance.

How does ADC fit into the microfinance picture?

ADC partners with microfinance banks by providing capital for lending as well as technical support. The primary focus of the partner projects is lending for small business, and loans are typically NZ$100 to $200 in size. Our partners lend to entrepreneurs to start up economically sustainable businesses, and the loans are repaid over time with minimal interest. These businesses provide a means to grow and sustain household income. The aim is that, over several years of circulating loan capital and economic activity, the whole community is lifted out of poverty. The beauty of microfinance as a development tool is that the loans disbursed come back and the money is then able to be lent out again in a cycle.

So there is a development focus. There are microfinance banks out that aren’t necessarily development focused. For example, loans are given out to pay for events like weddings. Does ADC do that kind of lending?

There is a bit of a divide between those microfinance institutions operated for private profit on the one hand and those with a poverty focus on the other. Both provide valuable financial services in poor communities, however they differ significantly in the factors that determine the setting of interest rates and approaches to enforcement following default. ADC’s initiatives are poverty-focused and do not make a profit. A further divide is between lending for consumption items (clothes, TVs, medicine, etc) and lending for business inputs (weaving looms, tea shop furniture, rickshaws, etc). Again, both are important. However our current partners lend only for purposes that will allow the borrower to generate an income.

For ADC, this development focus is important because it is about empowerment. ADC doesn’t see poor people as helpless. We see them as entrepreneurs with the necessary skills, local knowledge and ambition to run a successful small business, providing for themselves and their families. All they need is access to capital and support from within their own community. It is ADC’s business to provide both of those things through our partner organisations.

ADC avoids providing exhaustive business training to clients. Our assumption is that many people, although poor, are financially literate and have far more knowledge about their local market than we ever would. Our partner projects, such as the ZMF Bank in Myanmar, employ local staff to evaluate business plans and consider loan applications from potential clients. It’s not ADC’s approach to tell people from another country and another culture what business ideas are going to succeed.

ADC seems to have a very clear vision. How would you describe ADC’s story of how it has come to be?

Some friends and I were backpacking through South East Asia in early 2007 and a couple of us in particular were studying economics and interested in development. We found ourselves in a small, out-of-the-way town in Myanmar wondering whether it might be a place with all the ingredients for successful, beneficial and sustainable microfinance.

An in-depth study that we carried out subsequently confirmed this. We developed a couple of key relationships with local people who were on board with the idea. They are now good friends and integral members of the staff running the ZMF Bank. Relationships are a hugely important part of ADC.

The ADC story is also about a group of young professionals bringing their skills together towards an infectiously exciting goal. We have a great team with backgrounds in law, accountancy, medicine, journalism, engineering, economics, psychology and business as well as some very talented and enthusiastic university students. Our motivation is the positive opportunity to partner with people taking control of their own economic destiny, rather than pity or guilt. It’s certainly a great environment to be part of.

You have a demanding full time job. What keeps you involved with ADC given those existing commitments?

The people. I’ve visited the Myanmar project five or six times now, and also our newer project in Malawi. Often you arrive and are there for less than a couple of weeks and it’s quite a busy time. There are a lot of important technical conversations that need to happen. It can be quite stressful, with problems to be solved and you try to work through issues like government reporting requirements and bugs in loan tracking software. But we always set aside a day or two just to wander around talk to the bank’s clients. It’s usually that experience – seeing first hand people’s ambition and enthusiasm for taking control of their own economic destiny – that makes it all worthwhile. It is a unique and truly humbling experience.

Relationships at the projects overseas seem to play a big part for ADC but ADC also has to be strong here to provide for the projects over there. How do you go about getting that support, that money in New Zealand – what are the initiatives ADC has here, back at home?

The ZMF Bank in Myanmar has been operating for more than six years and has provided over $180,000 in loans to more than 500 clients. Research has shown that the market for its services is enormous, and we are working with local staff to grow its lending capacity over the next four to five years to be able to serve 10,000 clients. Our more recent partnership with the Ekwendeni Savings and Credit Department in Malawi is still in a pilot phase, but things are looking positive and we anticipate that there will be significant demand for loan capital there in future too.

Our biggest constraint to growth at the moment is our ability to grow our support base and generate funds back in New Zealand. We have a number of events and appeals throughout the year, such as our popular annual quiz and movie nights. Our most important source of funds is people who contribute regularly through our automatic payment system – a small amount of money on a weekly or fortnightly basis.

Live Below the Line

This year ADC is part of Live Below the Line (LBL), a unique event in which participants show solidarity for the 1.2 billion people worldwide living in poverty while raising money for their chosen charity.

The challenge is to spend less than $2.25 per day on food for five days – from 6 to 10 October. This means very careful shopping choices, some fairly bland meals and definitely no flat whites! People can sign up to LBL as individuals or as a team. It’s a great event. I’m taking part and would encourage others to challenge themselves too. Those not game enough to take part can always sponsor somebody who is at

Lastly, there must be a whole plethora of challenges with a project like this. Any legal examples you could give?

One of the more interesting challenges was helping the ZMF staff put together an application to incorporate a non-profit company in Myanmar. This involved a fairly detailed review of the Companies Act of Burma 1914 (which was based on the Indian Companies Act 1882) as well as a translated version of new financial regulations. Definitely not your everyday statutory interpretation exercise!

To find out more about ADC, visit

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