Emerging and Growth Markets | April 24, 2023

Jacob Haar: Helping emerging market lenders ‘leapfrog’ the US (podcast)

David Bank
ImpactAlpha Editor

David Bank

ImpactAlpha, April 24 – Jacob Haar’s work in microfinance in Azerbaijan inspired him to tackle obstacles to financial inclusion at home in the United States. For 10 years, Community Investment Management, an institutional impact investment fund has provided capital to technology-enabled, or “fintech” lenders to small businesses.

Now, Haar and CIM are bringing their financial access solutions back to emerging markets.

“Over the last 10 years that we’ve been funding fintech in the US, we’ve seen emerging markets—which were quite a bit behind with many of those innovations, digital infrastructure and other things—in some ways leapfrog where the U.S. is,” Haar tells ImpactAlpha on the latest Agents of Impact podcast.

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For example: embedded finance is driving access to small-business credit via non-traditional lenders like logistics, inventory and software services firms. The model exploded amid the pandemic, as millions of informal and brick and mortar businesses shifted online out of necessity. 

CIM is ramping up its global lending activities to ensure fintechs are able to continue innovating and promoting financial inclusion.

“In the current environment, there’s a great need and opportunity for folks like us who are lending,” he says.

Progress could be jeopardized by the current inflationary and high interest-rate environment, as well as the shrinking venture capital market.“

“There definitely is a lot more risk,” acknowledges Haar.

But many fintechs that raised significant funding rounds during the venture boom last year “have the ability now, in a challenging market, to build short-duration portfolios that will be solving many pain points for underlying customers.”

“The opportunity that exists today, because of some fundamental shifts in the way that underlying credit-worthy customers are being reached, understood, lent to without as much risk,” he says, “it’s very compelling.”