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> Posted by Jeffrey Riecke, Communications Associate, CFI

Rwanda has a lot to celebrate in terms of financial inclusion these days. Last week in Kigali the National Bank of Rwanda (NBR) hosted a conference in partnership with the World Bank, the African Development Bank, and the Alliance for Financial Inclusion (AFI) commemorating their 50-year anniversary. At the event, titled Financial Inclusion for Inclusive Growth and Sustainable Development, NBR Governor John Rwangombwa highlighted the country’s recent rise in access levels, from 48 to 72 percent between 2008 and 2012 across formal and informal providers. Rwanda now has the laudable goal of increasing this figure to 90 percent by 2020. To help it get there, on Friday the World Bank launched a $2.25 million program supporting key financial inclusion areas for the country.

Along with overall exclusion rates dropping from 52 to 28 percent over 2008 to 2012, formal services access increased from 21 to 42 percent during the same period, according to the 2012 FinScope Rwanda Survey. The new government goal of 90 percent access by 2020 is an extension of the country’s Maya Declaration Commitment of 80 percent access by 2017. Rwanda’s growth in formal access can be attributed to products offered by both banks and non-bank providers, like the country’s community savings and credit cooperatives known as Umurenge SACCOs. Over the past three years, Umurenge SACCOs have attracted over 1.6 million customers. Ninety percent of Rwandans live within a 5 km radius of one of the cooperatives. Countrywide, the number of MFIs, including Umurenge SACCOs, increased from 125 to 491 between 2008 and December 2013. Elsewhere in the sector, over the last three years, the number of banks increased from 10 to 14, the number of insurance companies increased from 9 to 13, and the number of pension providers increased from 41 to 56.

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> Posted by Siddhartha Chowdri, Program Manager, Disability Inclusion, India, CFI

How does the microfinance community view persons with disabilities (PWD)? This economically disenfranchised population makes up less than one percent of microfinance clients around the world, leaving the vast majority of PWD excluded. Many PWD would benefit from financial services. Yet even the most intense Google, Bing, or Yahoo search will yield almost no in-depth research into how persons with disabilities are perceived among the leaders and staff of microfinance institutions (MFIs). For my focus country of India, no research at all is related to this topic. We hope that a new CFI paper authored by Vipin Gupta of Credit Suisse, Making Microfinance Accessible to Persons with Disabilities: Awareness and Attitudes Among Indian Microfinance Institutions, will be the starting point for more research and action in this area.

Annapurna Staff Members and v-shesh Researcher with Focus Group Discussion Participants, Odisha

Over the last two years CFI has been working with three leading Indian MFIs – Equitas, ESAF, and Annapurna – to refine and develop tools that institutions across the world can use to make themselves more accessible to PWD. CFI also partnered with v-shesh, an India-based social enterprise with expertise in disability inclusion. At the start of this work, CFI and v-shesh decided to conduct research on the existing environments at these MFIs. The purpose of this research was two-fold:

  1. Learn which areas related to disability inclusion should be emphasized during the planned trainings and accessibility audits.
  2. Establish a baseline understanding of the existing views of disability inclusion at the MFIs for subsequent monitoring of changes.

Last November, the v-shesh team surveyed hundreds of MFI staff at all levels as well as MFI clients – both with disabilities and without. They also conducted intensive focus group discussions to gather additional qualitative information to prepare for the trainings.

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> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”

If you are new to the financial inclusion industry, or just looking to uncover more about some of its key action areas, there’s a new online portal sharing resources that we at the Financial Inclusion 2020 project believe are essential: the FI2020 Resource Library.

The FI2020 team compiled some of its favorite resources on financial inclusion, including publications, blog posts, white papers, websites, data, and policy sources. The resources are organized around FI2020’s five focus areas – Financial Capability, Technology-Enabled Business Models, Client Protection, Credit Reporting, and Addressing Customer Needs – as well as the areas of policy, data, and general financial inclusion discussion.

We invite you to explore our suggestions, each featuring its own annotation, and contribute your own. In line with the consultative approach of the FI2020 movement, we are eager to hear what your recommended resources are and continue to build the library. You can submit them to us at the library webpage.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

Financial capability is cornerstone to financial inclusion. After all, without the knowledge, skills, and attitudes to make good financial decisions, the utility of accessible financial services is greatly compromised. However, financial capability levels need addressing, even in countries that have relatively high services penetration such as the United States. Thankfully, the urgency is increasingly recognized, for example, through efforts such as Financial Literacy Month in the U.S. About a decade ago, April was designated as a month to call attention to financial literacy, and in 2012 the shift was made to include attitude and behavior change: President Obama proclaimed Financial Capability Month. To celebrate, here’s a rundown of where the United States stands with financial capability, and a few public and private efforts aimed at improving this financial inclusion area.

According to the National Foundation for Credit Counseling, about 40 percent of American adults report keeping close track of their spending and about 35 percent have a budget. In terms of effective money management, consumer debt in the U.S. totals more than $2 trillion. In perhaps the most alarming statistic of all, half of Americans indicate that they have less in savings than they would need to live for one month in an emergency and a quarter have less than they need for two weeks. Roughly 65 percent of American adults have not ordered a copy of their credit report in the past year and about 30 percent don’t know their credit score. When asked to grade their level of financial proficiency, 40 percent of Americans give themselves either a C, D, or F.

But Americans do recognize the importance of financial capability. Eighty percent of adults indicate that they would benefit from advice and answers from professionals on basic finance questions. Many would like to speak with financial education service providers, such as credit counselors, followed by banks, and then financial planners.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

8439582304_65373d394f_zAs you’re here on the CFI Blog, you’re likely familiar with microfinance. But was this the case back when you were in school? It’s April, which means we’re amidst the Month of Microfinance (MoMF), a student-led movement spotlighting microfinance and bridging the gap between students and the sector. This year’s MoMF spans activities engaging students, MFIs, and key industry players, including Kiva, the SEEP Network, and Truelift, supporting access to quality financial services for all and engaging the next generation of microfinance professionals.

Microfinance is increasingly taught in schools, but not everyone has access to a course. The Month of Microfinance offers students a platform to learn about the industry and in turn easily spread the word through their networks. For students looking to organize activities on campus, the MoMF team provides the resources to screen a movie, set-up informative displays, organize fundraisers, and spearhead guest speaker events. A number of MoMF contests conducive to online media conversation are underway. Kiva U, Citi Microfinance, and AboutMicrofinance are hosting a student video competition and an essay competition prompting participants to explore the topics of poverty alleviation, profit management, technology innovation, and gender equality.

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> Posted by Laurence Dare and Stephanie Hanson, East Africa Policy Manager and Director of Policy and Outreach, One Acre Fund

Expanding access to finance isn’t enough. Clients need access to financial products that they will actually adopt. That’s why addressing customer needs, one of the pillars of the Financial Inclusion 2020 Roadmap to Inclusion, is so critical for making finance more inclusive. For smallholder farmers in rural Africa, where inclusion rates are 19 percent compared to the urban rate of 34 percent, the financial services provided don’t come close to meeting the demand. Asset-based financing and loan products with flexible repayment schedules can help close this gap.

Among other financial services, smallholders desperately need access to financing for basic inputs—improved seed and fertilizer—that could dramatically increase their agriculture productivity. Properly designed, this financing could make an important contribution to growth and poverty reduction in Africa.

Unfortunately, microfinance products created for Africa’s poor do not necessarily meet such needs. Most microfinance institutions are concentrated in urban and peri-urban areas and primarily offer cash loan products on strict repayment schedules. These products meet the needs of the urban and suburban poor, most of whom receive small but frequent income from businesses or jobs. Smallholder farmers have different challenges.

Unlike urban clients, smallholder farmers receive the majority of their income all at once after harvesting. As small jobs come in, such as day labor on a neighbor’s farm or a local construction project, farmers can earn some extra income, but this is incremental and unpredictable. A cash loan product on a strict repayment schedule does not meet these financing needs.

How should a loan product be structured to meet the needs of smallholder farmers? At One Acre Fund, we designed a product pairing asset-based financing and a flexible repayment schedule that is working for 180,000 smallholder farmers in Kenya, Rwanda, Burundi, and Tanzania.

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> Posted by Sonja E. Kelly and Veronica Trujillo, Fellow and Consultant, CFI and MIF/IDB

Where can you find up-to-date and comparable information on the state of microfinance and financial inclusion? Which are the most trusted sources? These issues were recently explored in a research effort designed to lay the groundwork for broadening the scope of the EIU Global Microscope on the Business Environment for Microfinance from an emphasis on microfinance to financial inclusion. As part of this process, Fusion Research conducted a detailed assessment on the relevance of the Microscope.

As sponsors of the Microscope, what we found through the study was a pleasant surprise. Seventy-nine percent of people surveyed (more than 500 microfinance sector stakeholders from different countries around the world, with a high proportion of participants coming from Latin America and the Caribbean) were at least aware of the Microscope, and most of these people have used or consulted it. Closely trailing the Microscope, 76 percent of people surveyed were aware of the MIX Country and MFI Benchmark Reports.

Market Analysis of Microfinance Resources

In terms of actual use of the tools, the MIX leads the way, almost tied with the Microscope. When we look at use of the tools by stakeholder type, we see a greater diversity in which tools different kinds of people use.

Investors are most and equally likely to use the EIU Country Reports and the Microscope. Their need to know the country microfinance context and level of market development to make better decisions is likely to explain such preference. Those who work for financial services entities seem to like the detail and competition data that the MIX provides. Their second most used source is the Microscope, revealing the importance for them of country regulatory and operative environment. Foundations appear to use the Microscope and MIX data in tandem. The Global Findex (The World Bank Global Financial Inclusion Index) is most used by regulators/policymakers and DFIs/foundations, while academics, think tanks, and those working in business or consulting are most likely to use the Global Microscope.

Respondents to the survey, on average, reported using between three and four resources in their work. In terms of usefulness, MIX reports and the Global Microscope on Microfinance were rated as very useful for more than 55 percent of the people interviewed.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Nearly every industry requires infrastructure to thrive, and this goes for the microfinance industry too. But the infrastructure that the global microfinance industry has constructed over the past two decades is looking a bit shaky today. Infrastructure investments are urgently needed to keep the industry sound and prepare it for the future.

One could argue what exactly constitutes the microfinance industry’s infrastructure, and there are a range of organizations to choose from, but for this conversation, let’s look at several key organizations dedicated to setting standards and providing information for microfinance globally: the Microfinance Information Exchange (MIX), the four specialized microfinance rating agencies, the Social Performance Task Force (SPTF), Smart Campaign, and Microfinance Transparency (MFT). These organizations, which perform vital functions for the industry, arose during two different phases of microfinance industry development.

The first generation of organizations – MIX and the rating agencies – were created to provide financial transparency and standards, primarily so that investors could identify well-performing institutions, and also so microfinance institutions could evaluate their own performance against common standards. It took a lot of work to create these organizations. MIX had to find ways to incentivize MFIs to report and to devise a system for data quality assurance. The founders of the rating agencies – Microrate, Planet Rating, Microfinanza Ratings, and M-CRIL – took substantial personal risk in devoting their careers to promoting financial transparency in microfinance.  Together, these organizations have helped spread financial standards throughout the microfinance industry and contributed to improving the financial performance of MFIs, enabling the entry of private social investors who now contribute very importantly to the funding of microfinance. We sometimes now take financial transparency for granted, but if these organizations were to stop playing their role in upholding it, adherence to standards across the industry would undoubtedly drop, with consequences for investor interest, which up to now has remained strong.

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> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI

Tomorrow, people around the world will celebrate International Women’s Day. In honor of the day, and the tremendous impact that financial services can have for women, we’d like to highlight some of the top resources from the past year that focus on financial inclusion of women. Though there are many great resources out there, below are a few that have caught our attention.

1. Findex Notes: Women and Financial Inclusion

Drawing from the Global Findex Database, the World Bank and the Bill and Melinda Gates Foundation created a briefing on the state of women’s access to and use of financial services globally. It’s a concise snapshot of financial inclusion data on women. It highlights gaps that persist for women, as compared to men, globally and across regions. It looks at variations in account ownership for savings and credit, as well as barriers to usage identified by women. And if you’re looking for more, I suggest exploring the Findex database or the CFI Data Explorer and conducting your own analyses!

2. Promoting Women’s Financial Inclusion: A Toolkit

DFID and GIZ on behalf of the German Federal Ministry for Economic Cooperation and Development prepared a toolkit aimed at policymakers, donors, and NGOs who want to learn how to design and implement programs to enhance the financial inclusion of women. It provides insight into factors that contribute to financial exclusion of women and offers recommendations to address access barriers. In addition, the toolkit provides methods for client segmentation as well as several illustrative case studies. Rather than suggesting focusing on women exclusively, the toolkit also recommends understanding the distinct needs of men.

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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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