You are currently browsing the category archive for the ‘Center for Financial Inclusion’ category.

> Posted by Center Staff

How has Latin America and the Caribbean’s (LAC) market at the base of the pyramid (BoP) changed during recent years? Tuesday, the Inter-American Development Bank (IDB) released a new report exploring this question. Among the findings, the research revealed that the BoP market (those living on less than $10 per day) has grown 22 percent in a decade, going from $623 billion in 2000 to $759 billion in 2010. This increase wasn’t the result of demographic changes, but of economic growth. The per capita income among the BoP in the region increased at 2 percent annually across the decade, while that of the overall population remained relatively constant. What does this mean? A lot of things, including that there is a growing opportunity for companies to offer products and services to this population segment that have long been unavailable to them.

The report presents information on the size of the BoP market, its social-economic characteristics, market segments, consumer preferences, spending patterns, and demand-related factors. The report also looks at the supply side of the BoP market and analyzes the types of business models, distribution channels, and input sources that have successfully engaged this population segment.

Here are some of the report’s main findings: Read the rest of this entry »

> Posted by Alvina Zafar, Deputy Manager, Financial Education and Client Protection, BRAC Microfinance

Financial Inclusion 2020 Blog Series banner imageFinancial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

“I am not sure if I can repay more loans, and I don’t want to be overburdened by debt.” That was how Noyon, a small grocery shop owner with a physical disability, replied when BRAC asked whether he would like to take a loan to expand his business. This is a common response we hear from clients with disabilities when they’re offered credit products. Many prefer to avoid taking loans unless absolutely necessary. They guard their reputations closely against a society that sees persons with disabilities as less capable, and defaulting on a loan is not a risk they are willing to take. This insight raises an important question with regard to the financial inclusion of persons with disabilities: Is access the biggest barrier?

In 2015, BRAC scaled up its Engaging People with Disabilities project with ADD International, an organization that focuses on campaigning for equal rights and ensuring social justice for people with disabilities. The objective of this partnership is to leverage the access and coverage that ADD International has with people with disabilities in Bangladesh and provide financial services (e.g. savings, loans, insurance, etc.) to interested beneficiaries. As of May of this year, the project has a client base of over 7,000 people with disabilities, with an average loan size of US$ 282 and a repayment rate of 100 percent. Clients are saving on a regular basis, with an average saving account balance of US$ 50. The majority of the clients are entrepreneurs—they own and operate grocery shops, tea stalls, small vending businesses, and the like. One objective of BRAC’s is to empower all clients by building their financial capabilities. A by-product we see in many of our clients from this pursuit is, on top of enhancing their knowledge about financial management, it raises their confidence and self-respect. Read the rest of this entry »

> Posted by Haset Solomon, Communications and Operations Associate, the Smart Campaign

The East African mobile revolution seems to be hitting every country in the region, including the state-less Somalia. However, the second-most populous country and growing economic powerhouse of the continent has been immune to it up until very recently. Over the past decade, Ethiopia has been lauded for its economic progress, with an average GDP growth rate of about 10 percent and its ambitious goal to reach middle-income status by 2025. Despite its growth, the country’s mobile penetration rate is among the lowest in the region and the world, at around 31 percent at the end of 2014, compared to the African average of 73 percent. Just in 2012, however, it was 22 percent, reflecting a changing tide in the country. Ethiopia is also an outlier in terms of mobile operators. Along with its continental cohorts Eritrea, Djibouti, and Sao Tome and Principe, Ethiopia is among the few African countries with a single mobile operator: the 100 percent government-owned Ethio Telecom.

Read the rest of this entry »

> Posted by Tyler Aveni, Positive Planet China

In an industry that is constantly evolving due to new technology and abundant knowledge-sharing opportunities, practitioners of socially-driven microfinance and inclusive financial services are also helping to drive new innovation. Accompanying research critically assists this process, especially in evaluating the impact of these new methods and initiatives. This presents a problem for countries like China where a dearth of credible (or existing) data resources makes a critical review of practices far harder to manage. As such, researchers interested in the world’s second-largest economy often must settle with statistics that may suffice but rarely meet higher standards found elsewhere.

The work of Li Gan, a Texas A&M professor who also heads the Survey and Research Center for Household Finance at Southwestern University of Finance & Economics (SWUFE) in Chengdu, China, is helping to address the problem. Professor Li has spent much of the last four years spearheading an effort to gather more data on the financial condition of Chinese households and businesses. Through generous funding by SWUFE and support from the PBOC, China’s central bank, Professor Li has set into motion two key multi-year surveys: The China Household Finance Survey (CHFS) and the “ChinaPnR-SWUFE SME Index” which looks at small enterprises.

Read the rest of this entry »

> Posted by Sonja E. Kelly, Fellow, CFI

Financial Inclusion 2020 Blog Series banner imageFinancial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

Tuesday marked a historic day for Peru: the country launched its National Financial Inclusion Strategy. While Peru has been lauded in the past for its environment for financial inclusion, its public-private sector partnerships, and its leadership in conversations on international banking standards, this national strategy elevates Peru’s commitment to financial inclusion to a new level. In particular, we want to celebrate the strategy’s commitments to consumer protection, financial literacy, and the inclusion of vulnerable people.

Analysis of the World Bank Global Findex this year revealed that countries that have a national strategy (not merely a commitment or stand-alone programs) for financial inclusion saw twice as much bank account access growth in the last three years compared to countries that did not have a national strategy. For Peru, this is great news, as according to the same data source, less than 30 percent of adults in the country had access to an account in 2014.

The path to financial inclusion articulated in the strategy, however, is not focused on access to accounts, making Peru an outlier among its peers that have implemented national strategies. Instead, Peru has oriented its strategy toward improving systems for accessing a range of products and promoting supportive consumer protection, financial education, and attention to the most vulnerable. The national strategy has seven different lines of action: Read the rest of this entry »

> Posted by Kettianne Cadet, Program Coordinator, CFI

It’s been a few weeks now since our return from Cape Town and the kick-off seminar of the inaugural Africa Board Fellowship, a six-month program launched this year to foster peer-to-peer learning and exchange on governance practices among board members and CEOs at financial institutions serving low-income clients in sub-Saharan Africa. The fellowship begins and ends with multi-day in-person seminars and between seminars fellows are connected through a virtual collaboration space that includes discussion forums and dialogues.

In early June, CFI’s Investing in Inclusive Finance (IIF) team and the fellowship’s seasoned faculty, advisors, subject experts, and inaugural class of fellows all came together in South Africa for the in-person kick-off seminar. This first seminar was very well received by both fellows and staff and here are some of the reasons I believe it went well.

Participant Diversity: The first cohort of fellows connects 30 board members and CEOs from 13 institutions throughout 11 countries, all with diverse backgrounds and experience. Each participating institution is required to send their CEO along with one or two board members. Having this mix of participants throughout the seminar led to numerous engaged, candid, and rich discussions about roles, board dynamics, and responsibilities. Had we only brought together one fellow from each institution, these conversations would have been far more one dimensional.

Structured Accountability: Having both CEOs and board members present supports accountability within each institution – to participate in each session and to take action afterwards. If only one member from each institution attended, would they be able to transfer their takeaways to their organization or actually implement any of the lessons learned? Additionally, given that the fellows either came from a different geographical location, offered differing products, or perhaps targeted a different niche market, it seemed that everyone got enormous value from their exchanges with one another.

Read the rest of this entry »

> Posted by Eric Zuehlke, Web and Communications Director, CFI

One theme we come across repeatedly at CFI is the discrepancy between financial services access and usage. A central tenet of our vision of financial inclusion is that access isn’t enough; financial services need to meet client needs and actually be used. One example is mobile banking. As is now well known, millions are now accessing financial services for the first time with mobile payment platforms through telcos. As our By the Numbers report found, however, the proportion of financial services accounts that are mobile is much smaller for the world in general – East Africa is the outlier.

I just returned from an exciting two-week assignment through Accion’s Ambassador program with Akiba Commercial Bank in Tanzania. I met with Akiba staff, visited branch offices, and talked with clients. (You can read about my experiences, including a trip to Zanzibar and terrifying/awesome motorcycle taxi trips on the Ambassador blog.) Since I was in the region with the world’s highest adoption of mobile banking, I wanted to take the opportunity to learn more about how Akiba’s mobile banking experience has worked out, both from staff and client perspectives. Has adoption and usage met expectations? What kind of feedback was Akiba hearing from clients? What challenges was Akiba facing with their mobile platform?

Read the rest of this entry »

> Posted by Kim Wilson, the Fletcher School, Tufts University

Today, I used my smartphone to pound tiny nails into a wall. The procedure worked well enough to hang a small picture, but it cracked my phone case.

I wasn’t trying to go digital by using a mobile device. I simply could not find the proper tool – a hammer. The episode made me think that going hammer-lite would be silly for a pounding task. I really needed a hammer. If I were trying to tighten a screw, a task I just had to do on a door handle, I suppose I could go screwdriver-lite. I could try to wedge a tag of the broken phone casing into the screw’s octagonal chamber, then give it a twist. It might work. But an Allen wrench might work better.

So, in financial inclusion why are we trying to go “cash-lite?” Cash can be a sturdy pair of pliers that turn income into neat, countable paper stacks – one pushed into the desk drawer for buying groceries and another plopped into a tin for evenings out. Cash can also be a wrench, torqued just so, to help us make sure that we have enough coins to pay the parking attendant or enough paper to pay ourselves when we feel the need to devise a personal austerity plan.

As customers, we really don’t want to go wrench-lite, hammer-lite, or even cash-lite. We just want the best tools possible.

Though the financial inclusion industry trumpets customer-centricity – putting the customer at the center of our decisions about how to best serve them – how it goes about this endeavor is baffling. One might presume that a good method would be to ask the customer what task she wants to perform and then find or make the best tools to help her, as this video suggests. But, for the most part, that’s not our way. We constantly urge – “get an account, go cash-lite” – ignoring a lack in evidence that otherwise might prove: going digital increases income equality, growth, and customer happiness. In fact, the opposite has been documented.

Read the rest of this entry »

> Posted by Center Staff

In the first quarter (Q1) of 2015, smartphones comprised 47 percent of Africa’s market sales, while the market share of feature phones decreased by about 20 percent. Those are some of the big findings from the International Data Corporation’s “Q1 2015 Mobile Phone Tracker” released earlier this week. Examining both Africa and the Middle East, the report uncovered that between the two regions, compared to last year, smartphone sales increased by 66 percent during the first quarter of this year, totaling 36 million units. Nigeria and South Africa were the biggest smartphone markets on the continent, responsible for roughly 14 and 12 percent of sales respectively. By 2019, it’s projected that feature phone sales will dwindle to only 27 percent of the market in Africa and the Middle East.

The prevalence of inexpensive smartphones, aided in part through partnerships between mobile network operators and handset manufacturers, has helped fuel recent growth. Smartphones are being designed and introduced specifically for the African market. Harnessing supply chain efficiencies and accepting lower profit margins, handset makers are offering units in some cases as inexpensively as for US$30. According to market research firm GfK, globally, compared to the previous quarter, during Q1 of 2015 low-end smartphones saw a market share increase from 52 to 56 percent. Total smartphone sales increased by 8 percent to US$96 billion, while units sold increased by 7 percent to about 310 million. Most of this growth came from Africa, the Middle East, and emerging Asia-Pacific markets. Android is dominating in Africa. Eighty-nine percent of smartphones shipped in Africa during Q1 of 2015 were powered by Android – with about 45 percent of these priced below US$100.

Read the rest of this entry »

Financial Inclusion 2020 Blog Series banner imageFinancial Inclusion 2020 (FI2020) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action. This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.

PERC, a “think and do tank” advancing financial inclusion through information services, has been effective in addressing credit invisibility by advocating the use of alternative data in credit reporting, including in Australia, Brazil, China, Kenya, and the U.S. We invited Michael Turner, PERC’s CEO, to submit an opinion piece, and are publishing the results in a three-part series. Part one and two can be found here and here; the following is part three.

Misperceptions abound about how to impact credit information sharing in emerging markets. Let me weigh in on this debate and set the record straight.

  • Technology is not the problem. There are abundant and affordable platforms to enable robust information sharing in even the most extreme environments.
  • Scoring models are not the problem. FICO, SAS, Dunn and Bradstreet, and a host of multi-national credit bureaus and lenders have plenty of smart mathematicians, computer scientists, statisticians, and others with lots of letters behind their surnames to ensure innovation in this space. The breakthrough that will move markets won’t be found here.
  • End-user capacity and incentives are not the problem. Many pro-poor lenders are already using automated underwriting solutions and can quickly assimilate new data or new scoring models.

So if investing in the technology, risk modeling, and end-user trenches aren’t going to galvanize things, let alone revolutionize them, in which trenches will the revolution begin? The answer lies further upstream, in the consumer and commercial credit ecosystems.

The answer is data access.

This is a deceptively simple response and raises a number of related questions. Which data is both predictive of credit worthiness and covers broad segments of the unbanked and underserved populations? Who owns it? Can traditional credit bureaus access this data? Why haven’t they so far? Are other parties needed to provide lenders access to this data? How can data subjects (people) access and “port” their data from mobile payment systems the same way they can carry their credit report information?

Read the rest of this entry »

Enter your email

Join 1,435 other followers

Financial Inclusion 2020 News Feed

Each week the FI2020 team at CFI highlights compelling stories and content on all things financial inclusion from across the web. Click here to visit the news feed.

Visit the CFI Website

Twitter Updates

Archives

Founding Sponsor


Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

Note

The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.
Follow

Get every new post delivered to your Inbox.

Join 1,435 other followers