> Posted by Allyse McGrath, Senior Associate, CFI

The Facebook page of JPay, a Florida-based company that provides a range of services to inmates in the U.S. prison system, is calling for visitation pictures – photos of families and their incarcerated loved ones. Happy images seem to echo the company’s statement that JPay is “the most trusted source for connecting incarcerated individuals with family and friends”. Money transfers are one primary element of the connection that JPay and others like it provide. JPay is one of the largest providers in the burgeoning field of financial services for the 2 million-plus inmates in the U.S. prison system. These providers are changing the way that families send money to their incarcerated loved ones and also the way in which inmates receive money upon their release. But has this change been good?

For those that might not know, money sent to inmates can be used in prison for things like making phone calls, sending emails, and buying food, toiletries, and winter clothes. To give you a sense, at the Clallam Bay Corrections Center in Washington State, phone calls begin at $3.13, and emails are 33 cents. When prisoners are released, money accumulated from work in prison or sent from family and friends can be transferred onto stores of value like debit cards.

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> Posted by Sonja Kelly, Fellow, CFI

Thanks to a little coordination and a lot of creativity, you can now contribute to your pension in Mexico when you buy potato chips or top-up your mobile phone. Last year, to increase voluntary savings in Mexico’s pension system, the pension regulator teamed up with 7/11 retail stores and Telecomm to create channels for people to contribute to pensions, whether they receive an income within the formal labor market or not. The system added about 3,600 new contribution locations for the 53 million people in Mexico who have a public pension.

Imagine walking into your local convenience store to buy a pack of gum (or chips, or beer, or a newspaper) and deciding to contribute as little as $3 to your pension, just like you would top-up your mobile phone or buy a lottery ticket. You would give the cashier your citizen ID number (twice, just to make sure), and the cashier would give you a receipt for the transaction. The funds would travel to a centralized switch which holds the national database called Procesar and then be directed to one of 11 pension fund administrators. The funds would enjoy a 10 percent return over three years—a higher rate than savings accounts in Mexico offer—enabling them to double within 20 years.

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> Posted by Debashis Sarker, Centre for European Research in Microfinance (CERMi) and University of Mons, Belgium

With estimates indicating that less than 1 percent of microfinance clients around the world are persons with disabilities (PwDs), it’s clear that sizable barriers exist to the financial inclusion of this largely unbanked population segment. One such barrier is discrimination on the part of microfinance institutions. Two features of microfinance lending make it especially hard to reach definitive statistical estimates of discrimination. One is the complex stages of the microfinance lending process. The second is the self-reinforcing cycle of exclusion that results from the legacies of discriminating microcredit organizations.

A pilot project conducted in Uganda in partnership with the Association of Microfinance Institutions in Uganda (AMFIU) and the National Union of Disabled Persons of Uganda (NUDIPU) demonstrates the discrimination that often occurs in microfinance practices. The project worked with AMFIU microfinance institutions, applying interventions to combat practices discriminatory to PwDs. Along with addressing PwD exclusion by microfinance staff, the initiatives targeted exclusion by other microfinance clients, low self-esteem, product design, and informational and physical barriers. In two years, since the sensitization and accessibility efforts began, attitudes of MFI staff towards PwDs improved and, across eight queried MFI branches, there was an average 96 percent per MFI increase in clients with disabilities. Another study, also based in Uganda with AMFIU and NUDIPU, examined biases against PwDs across different MFI staff. Surveying eight MFIs between 2008 and 2009, staff were asked questions on aspects including risk of loan default among PwD clients. The responses of credit officers indicated they were more biased against PwDs than other MFI staff.

Given these findings, what measures can be taken to combat this?

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> Posted by Center Staff

A new paper from MasterCard corroborates recent findings on persistent gaps in the financial inclusion of women, indicating that in India 58 percent of women report difficulty accessing credit, savings, or jobs because of their gender. The paper is part of MasterCard’s Connectors Project, which examines the migration of excluded populations into progressive economic inclusion. The recently-released Global Findex data found that between 2011 and 2014, the gender gap in access to financial services remained steady at 9 percent in developing countries.

The reported difficulty faced by women in India was higher than that of the paper’s other surveyed countries: Indonesia, Egypt, and Mexico. Across all four countries, 33 percent of women expressed these challenges. Across all genders, in India, 67 percent of respondents reported worrying about money they owe to others and 82 percent worry about their future prospects. Along with women, ethnic and religious minorities in India reported additional challenges in economic participation. Fifty-eight percent said it was difficult to get jobs or credit because of their ethnicity or religion – compared with 28 percent across the surveyed countries. Whether or not these women and ethnic/religious minorities do in fact face discriminatory treatment, awareness of their perception is critical. In accessing banking services for the first time, or pursuing economic opportunities, trust and confidence can be a make-or-break.

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> Posted by Alison Slack, Associate, CFI

As CEO of the South Sudan Microfinance Development Facility, Elijah Chol is tasked with helping develop the financial inclusion sector in his fledgling country. Elijah is a member of the inaugural class of the Africa Board Fellowship (ABF) program, who begin their six-month fellowship in June in Cape Town, South Africa. We recently sat down with Elijah to learn more about his work in microfinance, and the governance challenges he faces.

South Sudan is a country striving to emerge from decades of crises on many fronts. “Post-conflict countries like ours have unique problems,” says Elijah. “One of the most pressing issues for us is that of education, especially in the villages and rural areas.” Because the education situation is so desperate, it is difficult to find board members with the skills necessary to effectively guide institutions.

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> Posted by Center Staff

In two weeks the first class of the Africa Board Fellowship (ABF) program will kick-off the fellowship in Cape Town, South Africa. The convening seminar marks the start of the inaugural fellowship, a six-month program aimed at strengthening the governance expertise of microfinance leaders in sub-Saharan Africa. The first class is composed of 31 board members and CEOs, coming from 13 institutions throughout 12 countries in Africa. Given the diversity of backgrounds and experience these fellows bring, in addition to our seasoned faculty, advisors, and subject expert staff, we are confident that the opportunities for peer learning and exchange will be plentiful in Cape Town, and throughout the fellowship. The profiles of our inaugural class of fellows are now available on the ABF website. Please join us in welcoming these fellows to the program!

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> Posted by Julia Arnold, Research Consultant

After two weeks of speaking with bank and microfinance institution staff, entrepreneurs, social investors, policymakers, and tech companies in India, my once clear understanding of how to build financial capability has now been completely scrambled. Building financial capability – that is, helping clients change (knowledge, skills, and ultimately behaviors) to make good financial choices – has taken on many layers of complexity and challenges in the context of, and in the face of, the realities of India’s poorest people.

But that is, of course, the fun of travel.

To briefly put India’s banking services in context – many villages in rural India still do not have a bank. According to the latest World Bank Findex data, half of rural Indians and nearly half of all Indians remain completely unbanked. Even if a bank exists in a village, social constraints often prohibit women from using it due to both limited mobility and lack of knowledge about and decision-making power over household finances. Basic access and usage of mobile phones remains limited. From my own earlier research with Cashpor Microcredit, I know that numeracy and literacy, as well as access, remain barriers for women to save with mobile technology.

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> Posted by Center Staff

This edition of top picks features posts highlighting India’s financial inclusion progress and persisting gaps, how the deployment of digital financial systems requires strategic human capital management, and the state of the mobile money industry in Latin America and the Caribbean.

The proportion of adults in India with a bank account increased from 35 to 53 percent between 2011 and 2014, according to the recently-released Global Findex data. A new post on the IFMR LEAD blog shares the Findex findings for India, and outlines the ways in which financial inclusion in the country is still far from achieved. The post affirms that account ownership is just the first step towards inclusion, discussing account usage, gender disparity, and uptake of mobile services, among other topics.

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> Posted by Jeffrey Riecke, Senior Communications Associate, CFI

In most countries, you don’t hear much buzz about business-to-business (B2B) eCommerce. In the United States, for example, our eCommerce goliaths of the moment are Amazon and eBay, which focus on the business-to-consumer (B2C) segment. But this isn’t the case in China, where the B2B eCommerce industry is ballooning and drawing the rest of the world in. It grew by 32 percent to US$ 3.76 billion in revenue in 2014, and in the coming years the revenue growth rate is expected to stay over 20 percent. China’s B2B break-out market leader is Alibaba, which brought in about US$1 billion in B2B eCommerce revenue in 2014, comprising roughly 34 percent of the country market. Alibaba has been busy with B2B this spring, partnering with alternative lending startups in the United Kingdom to facilitate B2B trade between the two countries, hosting a B2B eCommerce competition in Hong Kong to support Chinese SMEs, and, as of this coming Monday, launching a new cross-border service on its 1668.com platform to facilitate foreign imports for Chinese SMEs.  

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> Posted by Center Staff

The scale of the unmet financing needs of older adults around the world – and especially in lower and middle-income countries – is so significant that if unaddressed, it won’t just be each generation as it enters the later years that pays the price. It’ll be their families, healthcare systems, governments, and societies writ large, too. In India, for example, only 12 percent of the population has any sort of pension. A rapidly growing demographic, within 25 years, the percent of the world’s population over 60 will nearly double.

Recent progress does deserve mention. Just a few days ago, on the heels of last year’s launch of the Jan Dhan Yojana national financial inclusion strategy, India’s central government unveiled three new contributory social security schemes for pensions, life insurance, and disability insurance. Our hope is that these new programs are hugely successful and prove demonstrative for other countries to follow.

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