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Posted by Shannon Mudd, Coordinator, Microfinance and Impact Investing Initiative, Haverford College

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

What factors determine where microfinance institutions (MFI’s) locate their branches – and where they do not? A group of students at Haverford College set out to explore this question, initially focusing their efforts on Uganda.

The project grew out of a conversation with Susy Cheston of CFI about who is excluded from financial services and whether maps might help us understand more about who these excluded are and the challenges in reaching them.  As coordinator of Haverford’s new Microfinance and Impact Investing Initiative (MI3) I was seeking ways to engage students in research that bridged theory and practice.  Recalling that our new Librarian had previously been involved in a mapping project, I returned to Haverford to see what resources we might bring to bear.  I discovered that we had the right software, a skilled and supportive library and, best of all, some terrific students in the Microfinance Consulting Club who were willing to roll up their sleeves and get to work (properly fueled by pizza, carrots and seltzer water).

Why Uganda? Not surprisingly, such an effort is largely driven by data availability. We became aware of a directory of MFI branches in Uganda published by the Association of Microfinance Institutions of Uganda (special thanks to Scott Gaul of TheMIX.org!). The directory provided us with district level locations across Uganda’s 100 districts). Additional research helped us to further refine locations for a majority of the branches. We then looked for sub-national socio-economic data that we could turn into map layers to conduct our analysis. The product of our initial efforts has been posted here.

Read the rest of this entry »

Posted by Vishnu Sridharan, Program Associate, New America Foundation

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

Since the launch of Mexico’s first conditional cash transfer program in 1997, governments from Nicaragua to Nigeria have adopted similar approaches to mitigate the worst effects of poverty. In fact, the New America Foundation’s Global Savings and Social Protection Database–which currently focuses on Latin America, Africa, and Asia–has identified over 90 cash transfer programs in 45 countries in the developing world, with over half a billion beneficiaries. In the past 3 years alone, as the map below shows, 15 cash transfer programs have been started, expanded or redefined, which gives us some indication of these programs effectiveness and feasibility. Read the rest of this entry »

> Posted by Dan Wang, China Association of Microfinance

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

Bringing microfinance products to Northeast China’s rural communities requires innovative loan products. One of the China Association of Microfinance‘s members, Ewenke Baoshang Village & Township Bank (EBVTB), strives to reach two very underserved groups in China—rural farmers and nomads. They do this using what they call “the Lucky Three”—three loan products tailored to the needs of the rural poor. EBVTB’s success with these products lies in a deep understanding of what these groups need and want from financial services.

However, it is no small feat to figure out what these prospective clients do need and want. EBVT’s target clients live in China’s grasslands, far from urban centers and formal financial institutions. To get the relevant information, the bank interviews clients and conducts focus groups, supplemented with local statistics to understand the unique business activities of these rural farmers and nomads. We know that they are primarily involved in animal husbandry, as the conditions are often too harsh for growing crops. A client demand survey revealed that this group has difficulty with most lenders’ collateral requirements, short loan terms, inflexible repayment schedules, small loan sizes, and lengthy wait times.
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Posted by Susy Cheston

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

The television comedy survived only a few months in the sixties, but it had a catchy theme song: “It’s about time, it’s about space, about two men in the strangest place.” In the show, a couple of astronauts travelled at the speed of light and accidentally went back in time instead of space. Talk about disruptive technology! The two men ended up in prehistoric times trying to make sense of life with a cave community, with predictably inane results.

The theme song came to me as I was thinking about the ways both technology and new approaches to product design are blurring the lines between time and space. It’s a neat concept to say that financial services move resources across time (credit and savings) or across space (payments). But just as those astronauts thought they were traveling in space and ended up traveling in time, technology is disrupting financial services, stripping financial services down to their basic elements and allowing those elements to be re-combined in new ways. The quartet of products we can rattle off in our sleep—credit, savings, insurance, payments—no longer have sharp boundaries as technology gives us new ways to store value and as financial services enter new markets. Susan Johnson’s recent research in Kenya showed that we sometimes don’t even know what we’re talking about when we use the words savings and payments. In Kenya, a so-called savings account turned out to serve as merely a payment device for payroll transfers.  And she points out the ways experts are grappling with language as financial services encounter mobile phones, e.g. “savings” defined as “keeping money in the phone for at least 24 hours.” (Hey, I can save lots of money by that definition!) Read the rest of this entry »

> Posted by Susy Cheston

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

Are we “rushing inclusion perhaps to its early death,” as a recent post from the Kenya Financial Education Centre asks?  In the post, John Gitau’s concern is that in our rush to access, we are getting ahead of clients’ capacity to use services wisely and well.  It’s a good concern to raise, and it is especially legitimate when posed by someone who sees the fall-out up close and personal.

And yet the Center for Financial Inclusion is spearheading a Financial Inclusion 2020 project that is breathtaking in its audacity:  building a movement to full financial inclusion for all, using the year 2020 as a focal point to clarify thinking and galvanize action.  The argument of the Center is that working backwards from 2020—near enough that we can track our progress, far enough away that change is possible—results in a different kind of thinking than incremental strategies to add a few million clients here and there.  To this end we are working with a wide range of partners to build a road map to full inclusion, pushing to accelerate what we believe to be critical access to financial services for those who are excluded.  We are casting our net wide—engaging any and all who want to be involved in this effort.*

So, we are building a road map to inclusion–or, as our friend from Kenya might ask, are we building a road to ruin? Read the rest of this entry »

Posted by John Gitau, CEO, Kenya Financial Education Centre

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

As I mentioned in a blog post yesterday, financial literacy is a recipe that does not come together automatically, even if you seem to have all the right ingredients. You may have funding, but the funding could come with unrealistic expectations. You may have students, but the students may not have a good reason to pay attention to the lessons financial literacy training offers.

While I am new to the Financial Inclusion 2020 campaign, I am certain that full financial inclusion, with fully financially capable clients, will not happen without a sound structure to support financial literacy efforts. Read the rest of this entry »

> Posted by John Gitau, CEO, Kenya Financial Education Centre

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

I have taught financial literacy in East Africa for the past eight years, and have managed my own firm for the past four.  And here is one thing I have noticed: the financial inclusion community as a whole does not have a common definition or goal for financial education. This lack of an agreed-upon definition makes difficult the process of creating financially capable populations.

Here is how I define key terms:

Financial education is the process of teaching the knowledge, skills and attitudes necessary in personal money management. The end result of financial education is financial literacy. Financial literacy is the ability to manage personal money well. But financial literacy is not an end in itself. It is a tool which when used well results in financial capability. Therefore, financial capability is the ability to apply financial literacy in personal money management to improve financial well-being. When a financially literate person takes action in a way that results in better money use, we say such a person is financially capable.

Not everyone maintains these definitions and goals, though. MFIs, corporations, NGOs, and SACCOs (savings and credit cooperatives) each come to me with different goals, some impossible to achieve. MFIs want me to teach their clients quickly so that they can improve on their loans repayments and increase saving. They are not keen on me teaching investment and some even warn me to be careful when handling the topic of the use of financial services. They want me not to dwell on costs but emphasize benefits. I sometimes find these requests quite amusing. Read the rest of this entry »

> Posted by Patrick Kelley, Director of Housing Finance and Market Development, Habitat for Humanity International

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

June 2012 has been on my calendar for a while. Three years ago this month, I was lured into my first home purchase with the federal homebuyer tax credit, and all my requirements as a purchaser will now soon be over.

Before committing to buying a home, I poured hours into research, comparison shopping, and badgering friends and family for advice. I was aware that prudent research and good decisions could be a springboard for the financial future of my family. A misstep could be treacherous and weigh on us for years.

Indeed, buying a home is usually the largest financial decision in our lives in the U.S. And, we are increasingly finding that housing and property play a similar role in the financial lives of the poor. Consider the following evidence: Read the rest of this entry »

Posted by Adrian Merryman, CEO, Small Enterprise Development Agency

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

We have made a lot of progress toward financial inclusion, especially when it comes to cities. Walk into most major cities in low-income countries, and you will probably find outlets of banks and microfinance institutions that lend to virtually all who qualify as economically active with a viable business model and of credible character.

But that is only 28 percent of the story. The urban focus ignores the 72 percent of people in low-income economies who live in rural areas.  Unfortunately, organizations striving to achieve financial viability are conflicted when it comes to serving rural clients.  The steps we take to pursue operational sustainability are not steps that will immediately benefit the 72 percent. Read the rest of this entry »

> Posted by Henry Jackelen, Jackelen Associates

This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at Accion.

We’ve always known that microcredit is not a panacea.

During the heady days of the microcredit revolution in the 1980s and 90s, I was part of a veritable village of practitioners. It was a remarkable group of driven, passionate, and often iconoclastic individuals. We lived in our own Utopia, defining and inventing the concept of social enterprise. But even then we knew that our microcredit efforts weren’t perfect.

When I first visited Bangladesh in 1983, my role was to review the Grameen and BRAC programs as part of developing a new World Bank program (which proposed what became known as the Palli Karma Shayak Foundation or PKSF, a successful Apex for MFIs). Read the rest of this entry »

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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.

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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.
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