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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.
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.
> 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.
> Posted by Nadia van de Walle, Senior Africa Specialist, the Smart Campaign
The Smart Campaign secretariat does a lot of things – manage a Certification program, provide technical assistance, develop and promote industry standards, and conduct research. Our small team is always putting on different hats, and we joke about trying to explain our jobs to friends. At the end of the day, the one thing many of our friends can understand is that we are an industry-facing organization offering a “public good.” The Smart Campaign’s public good is not a road or a lighthouse. It just happens to be standards and guidance on protecting clients. These standards are a public good because they belong to everyone, and one individual or institution’s use does not reduce the availability of the resources for others.
Some of our ever-thoughtful friends then ask if this means that we contend with other classic public goods challenges.
The answer is yes, absolutely. One of the biggest issues we struggle with is the lack of a market feedback mechanism. Industry stakeholders can use Smart Campaign tools and resources without paying and thus without providing feedback on their experience. Without a price signal, it can be difficult for the staff to assess demand and user experience. This makes it hard to know how to tailor, expand, or improve offerings. We are curious to hear examples from readers about how other similar organizations consistently improve their offerings without market feedback.
> Posted by Guy Stuart, Ph.D., Executive Director, Microfinance Opportunities
The past few decades have seen an impressive expansion of financial services to the world’s under- and unbanked populations. This expansion has not been without its challenges, including low-income customers of many financial service providers (FSPs) falling into considerable over-indebtedness¹ or signing up for services they do not use.² MFO’s own research³ and the research of others suggest that the limited financial capability of FSP customers is one of the factors behind these challenges. Hundreds of millions of people are gaining access to formal financial services with no education in basic money management principles and ways to maximize the usefulness of the new services to which they have access.4
Extending financial education (FE) to consumers is vital in empowering them to make informed decisions about the financial services they use and how they use them, including avoiding over-indebtedness and signing up for accounts they never use. But reaching the massive number of clients in need of FE in a way that is accessible and practical is a tall order. The Monitor Group report suggests it could cost from $7 billion to $10 billion using traditional, classroom-based approaches to provide education just to those who already have access now —a sum that is 10 to 15 percent of the total current asset base of microfinance institutions worldwide. If access to finance were extended to include the world’s 2.7 billion unbanked, the cost of building financial capability would rise further by a factor of at least three.
Read the rest of this entry »
> Posted by Center Staff
This week, The Guardian Global Development Professionals Network launched its Financial Inclusion hub, featuring stories, infographics, videos, and other resources on financial inclusion issues worldwide. The hub will be updated regularly over the coming months with original content. The first collection of posts includes:
- Using mobile money to buy water and solar power in East Africa
- Funeral insurance in South Africa: counting the cost of life and death
- Zimbabwe’s Econet Wireless and the making of Africa’s first cashless society
- An interactive map on ATMs worldwide
Guardian Professional Network hubs are community-focused sites, where The Guardian brings together advice, best practice, and insight from a range of professional communities. With this week’s launch, financial inclusion is sharing the stage among global development issues such as climate change, global health and nutrition, and urbanization, with the goal of promoting understanding, dialogue, and debate among those working in global development. CFI is a knowledge partner with The Guardian for the Financial Inclusion hub, sharing story and topic ideas and facilitating connections with editors.
Visit the hub at www.theguardian.com/global-development-professionals-network/financial-inclusion. You can join the conversation on Twitter using #NOunbanked
Have some ideas for issues and stories that should be investigated as part of the hub? Let us know in the comments.
> Posted by Kim Wilson, Fellow, Center for Emerging Market Enterprises and the Feinstein International Center, Tufts University
“Everything should be as simple as it can be, but not simpler.” This aphorism credited to Albert Einstein inspires our call to Lean Research.
Two Fridays ago at MIT a group of 50 of us met to hash out some principles that, if followed, might generate better research in development and social science contexts. NGOs, universities, foundations, corporations, government, and multi-lateral agencies were represented in our group.
Our analogy of choice was Toyota. If “the Toyota way,” or lean manufacturing as it has come to be called, could cause profound and beneficial disruptions in production processes, might lean research cause equally profound and beneficial disruptions in research processes?
> 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.
> 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.
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:
- Learn which areas related to disability inclusion should be emphasized during the planned trainings and accessibility audits.
- 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.
> 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.
> 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.