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Private sector development : Experiences from Asia

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Frame of Image mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.” —NICCOLÒ MACHIAVELLI, The Prince
March 8, 2013
BRAC IGS MAGD
4
The Investment Triangle
Note: The investment cycle becomes more nebulous in measuring The efficacy of government services
Capital
Return to Sponsor From Economic Activity
Cash for Economic Activity
Asset Purchase Profit/Cash Flow
Value Creation From Economic Activity
March 8, 2013 BRAC IGS MAGD
5
Business and Financial Models:
An understanding of the business and financially how it works is required for understanding the efficacy of a given program. You understand this by understanding the underlying cash flow. A hypothetical example of micro-credit is given below.
Villager Cash Profit: Revenue: $360 Feed Cost 20 Interest 12 CF Profit: $328
Capital
$200 loan @ 36% interest
Cash Returned $200 + $12 in interest.
Asset Villager buys Chicks at $.50/chick, resulting 400 chicks.
March 8, 2013
(2 Months) Feed Cost: $10/ month Interest Cost: $6/month Attrition of Chicks: 10%
Cash Flow
Chickens converted To cash at $2 chicken. Total USD 360
Red = Business Risks
BRAC IGS MAGD 6
How Does Growth and Wealth Creation Occur? 2nd Round
Villager Cash Profit Revenue: $1310 Feed Cost 40 Interest 24 Cash Profit: $1246 Loan Repay: $400 Villager Equity: $846 Chickens converted to cash at $1 chicken; Price Drops
Villager takes $328 in CF Profit + $400 Loan = $728 in Capital
Capital
Asset
Invest in 1456 chicks
Feed Cost $40 Interest: $24 10% attrition


Full Text
Title Private sector development
Similar Titles
Sub Title

Experiences from Asia

Material Type Proceedings
Author(English)

Sakai, Stanley Paul

Publisher

[Seoul]:BRAC Institute

Date 2013-03
Pages 20
Subject Country Asia & Pacific(Asia and Pacific)
South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Industry and Technology
Holding KDI School