Rosanna Ramos-Velita is the epitome of a new breed of financial supremo who knows value goes far beyond the P&L, writes Michael Chavez
What was once a rare species is flourishing. In my global travels I encounter ever more financial services chiefs who have not only recognized the life-changing effect their decisions can have, they are actively targeting those positive changes as a guiding principle.
Rosanna Ramos-Velita is a leading light in microfinance. Her institution, Caja Rural Los Andes, provides working capital loans to rural Andean communities in Peru. The bank is highly profitable – the typical internal rate of return on its products is 30% – but the dividends go far beyond the commercial. This is a bank that not only delivers social good, it is driven by it.
Ramos-Velita is clear that the purpose of her bank is to eradicate poverty. That might seem too grand an ambition for a bank. Yet to Ramos-Velita it is perfectly natural. When still with Citibank, as a senior chief financial officer, she became interested in Citi’s consumer finance business, which was a highly profitable operation. The client base comprised relatively poor people taking out small loans, yet repayment rates were better than other market segments. Ramos-Velita went to Mexico to investigate, ending up in a shantytown where Citi operated some branches under a different name. The branch manager told her that most of their clients were women. “This was a good thing,” Ramos-Velita told me, “because they didn’t use the loans for consumption; rather, they used it to fund small businesses.”
Outside the branch was a small taco kiosk run by a woman busily catering to the lunchtime rush. Ramos-Velita struck up a conversation with the taco vendor and told her that she worked for the bank just behind her. The taco seller stopped what she was doing and gave Ramos-Velita a big hug. It transpired that the vendor had gained a loan from the bank for $800 that allowed her to grow her business and provide for her family. “Before the loan, she was selling tacos out of a basket,” Ramos-Velita told me. “In business terms, we’d say she had a scale problem. With the loan, she worked out in her head that she could repay the loan in a year because she could sell a lot more.” The woman got a second loan and now operates two kiosks, one run by her husband, a former cab driver. Ramos-Velita recalled: “The woman said that with this business she was able – literally – to put a roof over her head, eat better and pay to send her kids to school.”
Following her ‘hug moment’, Ramos-Velita left Citibank, put together a business plan, did some serious fundraising and got investors to help her buy an existing microfinance bank in Peru that was underperforming, both in terms of profitability and its impact on society.
Ramos-Velita’s overriding purpose to eradicate poverty became the ultimate motivator for her new employees – what more inspiring mission could a company have? Her staff now celebrate with clients when their loans help make a step-change in their lives. “We had a team that was demotivated and de-energized and we turned that around with purpose,” says Ramos-Velita. “Not only that, but we are turning around families and whole communities.”
What I took from Ramos-Velita was that a simple, clear, human-centred mission – in this case eradicating poverty – can be used to motivate employees and, thus, foster business success. She is a great mind with a winning idea.