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> Posted by Martin Burt, Executive Director, Fundación Paraguaya & Teach A Man To Fish

The following post was originally published on the World Economic Forum blog. 

If we’re aiming to not simply alleviate poverty but eliminate it altogether, we need to understand its causes. But we also need to know what non-poverty looks like.

Until recently, this has not been easy. Now, technological innovation is helping us achieve things that were once impossible, and the effects are far-reaching.

At Fundación Paraguaya, we have developed a methodology called Poverty Stoplight. To assess levels of poverty, we show people a series of three photographs and ask them to choose the one that best describes their situation. We do this in each of 50 “critical indicators,” such as access to water, levels of nutrition, dental care, and so on. These pictures are color-coded to represent degrees of poverty: red is critical, yellow is poor, and green is non-poor.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

New World Bank analysis indicates that along with the already devastating loss of life, the Ebola outbreak could cause “potentially catastrophic” economic effects on West African countries, especially in the three hardest hit. According to the analysis, Liberia’s GDP could fall by 12 percent, Sierra Leone’s by 9 percent, and Guinea’s by 2 percent.

Efforts to contain the epidemic are fueling much of the economic slowdown, like the closings of businesses, transportation infrastructure, and critical air and sea links with other nations. As mentioned in a post on this site a few weeks ago, microfinance institutions are being affected, too.

Between 80 and 90 percent of the economic losses suffered from Ebola are related to containment behavior, a dynamic consistent with recent SARS and H1N1 outbreaks. A lower supply of available workers – due to employee illness, death, and caregiving – is a smaller factor. At the same time, health systems are collapsing under the onslaught of the epidemic, leaving those with other serious illnesses unable to receive treatment. These conditions cause shortages, panicked buying, and speculation, which lead to rises in food prices and inflation. Economic life in the affected areas was already extremely tough to begin with. In Liberia, Sierra Leone, and Guinea, more than 50 percent of the population lives below the poverty line.

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> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI

Shakespeare asked, “What’s in a name? That which we call a rose by any other name would smell as sweet.” Having recently married and changed my last name, I can attest that there is a refreshing feeling that comes with a new name and clean slate. It is an opportunity to leave the past in the past and start anew.

Starting fresh with a new name must be especially freeing if the past was not a sweet smelling rose. According to a recent report, the Bank of Ghana (BoG) is cracking down on MFIs that repeatedly change their names to cover their tracks after they have duped members of the public. Raymond Amanfu, the Head of Other Financial Institutions Department of the Bank of Ghana reports, “Every day, I get at least five applications from companies wanting to change their names….Quite a number of them are actually messed up and want to clean up by changing their name.”

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> Posted by Sonja E. Kelly, Fellow, CFI

In most places around the world the subject of pensions is a sore one. In 2012, for example, in looking at arguably the crème of private employers, Fortune 100 companies, only 30 offered their U.S. new hires pension plans, down from 47 in 2008. For public sector employees in the U.S. in the same year, the pension plans of 26 states were less than 70 percent funded. In lower and middle-income countries where financial security is weaker, the situation is even worse. In India, the pension system only covers roughly 12 percent of the population.

The severity of these figures is amplified when we look at demographic trends. Between 2010 and 2020, the population of older adults will almost double in middle-income countries. Worldwide over the decade, it will increase by 40 percent. By 2050, there will be roughly 1.5 billion older adults, 315 million of whom will be in India.

Aging presents unique challenges and opportunities to the financial inclusion industry. During a session at the Microcredit Summit in Merida, Mexico a few weeks ago, five panelists met to discuss this topic. John Hatch (FINCA), Pilar Contreras (HelpAge), Caroline van Dullemen (World Granny), Reynold Walter (REDCAMIF), and myself all acknowledged the demographic reality—as populations age, if countries have not helped their societies and economies to prepare, they will face a global train wreck in the form of older people without adequate means of support and support systems that are overwhelmed. Financial inclusion can and should play a unique role in helping both individuals and whole countries mitigate risks.

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> Posted by Lisa Kienzle, Director, Mobile Financial Services, Grameen Foundation

The following post was originally published on the ImpactX blog of the Huffington Post.

Women participating in paper prototyping for new mobile app in Uganda

Women are the backbone of the household in Africa — they manage the home, care for the children, are responsible for education and healthcare, and contribute to the household’s livelihood. Helping women helps the entire family. However, women continue to lag men in participating in the formal economy, including accessing financial services.

The Problem: The Poor — Especially Women — Are Excluded From Financial Services.

For the rural poor — especially women — accessing formal financial services is nearly impossible. Few have formal identification needed to open an account; others lack a stable job or collateral needed for a loan. Often bank branches are far from a rural village, making the trip to deposit or borrow funds too expensive and time-consuming.

Many of the rural poor have taken up an approach to support saving and borrowing by forming Village Savings and Loan Associations (VSLAs). Under this approach, 25-30 members of a community form a group. This group meets weekly and saves a fixed amount — at times, as little as 20 cents a week. The savings are lent out to members as loans. All money not lent out is stored by the group treasurer in a metal box secured with three locks and three keys, which are held by three separate key holders. It is, as some group members call it, the “Village Bank.”

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> Posted by Jenn Beard, Global Learning Manager, Water.org

Nearly 800 million people lack access to safe water, and 2.5 billion people lack access to improved sanitation. As many NGOs and microfinance institutions are now discovering, the way forward will include lending to individuals for their water and sanitation (WASH) needs. WASH microfinance is making it possible for the poor to take control in instances where access is difficult. However, most providers in the position to meet this financing opportunity are not yet offering these services. One thing standing in the way is the tools to get institutions started.

The business case for financial institutions to add WASH financial products to their portfolios is significant. A study sponsored by the Bill and Melinda Gates Foundation estimated global demand for microfinance for water and sanitation at over US$12 billion between 2004 and 2015. After all, the poor are already spending money in these areas—both directly (purchasing water from vendors/kiosks or paying to use a community toilet) and indirectly (higher healthcare costs and/or lost time and wages while looking for or collecting water). Microfinance providers have highly relevant goals, experience, processes, and outreach activities to play a key role in increasing access to WASH facilities. As financial institutions broaden their services beyond business lending and develop products to more fully address their clients’ diverse financial service needs, WASH financing emerges as a clear opportunity.

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> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI

I have written in the past about some of the advantages of having women on boards, including research correlating women on boards with better bottom lines. I recently came across a fantastic piece published by the IFC, Women on Boards: A Conversation with (Male) Directors, which does a wonderful job of explaining more precisely how women add value to boards. Here are a few quotes from the male directors that contributed their thoughts to the publication.

  • “When women are at the table, there is less joking around and more objective discussion. I’ve also found that women tend to be more sensible and more thoughtful. I think they care much more about how decisions made in the boardroom will impact people.”
  • “Diversity brings more energy to the boardroom.”
  • “Women provide good balance. The dynamics change because women are more willing to give the other side a chance than men.”
  • “Women are more strategy oriented. They tend to look at where the company is heading, whether things are on the right track, and why the company might be diverging from its strategic goals.”
  • “Women are more likely to be conservative and more attuned to good risk management. I don’t think they are more risk adverse but they have more of a long-term and sustainable approach to issues and less short-termism.”

So, how do we get more women on boards? All hands on deck.

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> Posted by Guy Stuart and Eric Noggle, Executive Director and Research Officer, Microfinance Opportunities

In our first post in this series, we described the need for an approach to financial education that was both effective and scalable, and we offered embedded education as a potential solution. Our second and third posts described how the embedded education approach works and showed its potential effectiveness by describing the improved money management behavior displayed by clients in Zambia after participating in our program. We believe that these findings also revealed the potential for a business case for delivering financial education using the embedded approach.

For a business case to exist, two things have to be true: financial service providers (FSPs) need to see a positive, bottom-line impact from an embedded program and a financing mechanism needs to exist that can compete with the current grant-based model for funding financial education.

Bottom-Line Impact

Financial education can positively impact financial service providers in a number of ways (aside from knowing that they’re empowering individuals to take control of their financial lives). Offering training could improve client retention by strengthening loyalty. It could reduce customer service requests by increasing familiarity with a banking process. But our market research suggests that the biggest potential impact is lowering write-off ratios and increasing savings balances.

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> Posted by Center Staff

This edition of top picks features posts highlighting discussions at the 17th Microcredit Summit, how the Ebola crisis is affecting microfinance in West Africa, and new statistics on the continued growth of the mobile money industry worldwide.

The 17th Microcredit Summit, this year’s iteration of the Microcredit Summit Campaign’s annual conference, is underway this week in Merida, Mexico. For those of us not in attendance, the Campaign is live streaming the sessions online. NextBillion is also sharing the experience through blog posts, including one published yesterday providing a report-back on day one of the event. The post offers insights from the day, including notable quotes from keynote speeches and panel presentations, and themes that emerged across sessions.

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> Posted by Abhishek Agrawal, India Country Director, Accion

Over the past two years, CFI’s three MFI partners in India have included over 13,000 persons with disabilities (PWD) as clients in mainstream financial services, helping them become economically active. Almost all of these clients were first-time borrowers.

CFI and Accion, with our knowledge partner v-shesh and MFI implementation partners – Annapurna based in Odisha, Equitas based in Tamil Nadu, and ESAF from Kerala – have been working on the financial inclusion of persons with disabilities over the past two years. This working group created tools and an operating model for MFIs to incorporate PWD as staff and clients. The recommendations, which include policy changes in non-discrimination and other areas, are being piloted at the MFIs. Disability awareness trainings have been conducted for over 100 MFI staff across the country. Over the next several months these staff will train another 6,000 frontline MFI staff.

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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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