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> Posted by Center Staff
Do you want to know about the coolest financial inclusion startups in the world and how they work? Or the entrepreneurs behind these startups and how they got off the ground? VentureKast, or VKast, is a new podcast series from Accion’s Venture Lab that takes you directly to the entrepreneurs, offering a window into the converging worlds of impact investing, startups, fintech, and financial inclusion.
As you’re probably familiar, Venture Lab, or VLab, is an Accion investment initiative that provides patient seed capital and support to pioneering financial inclusion startups. What you may not know are all the innovations in business and technology that Venture Lab investees harness to provide customers with better, cheaper, and more appropriate financial services. VKast spotlights how these startups break new ground in the financial inclusion landscape, from the unique perspectives of the entrepreneurs that lead them.
The VLab team writes, “We want to celebrate our entrepreneurs’ journeys and let their voices be heard to inspire other aspiring entrepreneurs, to draw in investors and potential clients to their businesses, and to let the world know how cool financial inclusion entrepreneurship really is.”
The inaugural episode of VentureKast features Ranjit Punja, CEO and Co-Founder of CreditMantri, a Venture Lab portfolio company based in Chennai, India that offers financial advisory services to consumers that are underbanked, credit negative, or new to formal financial services. CreditMantri uses an automated web platform and call center to help consumers access their credit reports, understand their credit scores, improve their creditworthiness, restructure outstanding debt, and get access to relevant financial services. Check out the first VKast episode to hear Ranjit discuss, among other things, how he came up with the idea for CreditMantri, how he assembled his team of co-founders, and his vision for the company.
> Posted by Saran Sidime, Operations Assistant, the Smart Campaign
West Africa is the second-fastest growing regional economy in Africa. Its GDP is more than double that of East Africa. However, its impact investing landscape doesn’t reflect this.
There are currently 45 impact investors active in the region, including 14 development finance institutions (DFIs) and 31 non-DFIs. Direct impact investments deployed in the region totaled $6.8 billion between 2005 and 2015. This is small relative to East Africa, which has over 150 investors and $9.3 billion in deployments on the books for roughly that same time period. Nevertheless, the investing trends in West Africa are encouraging, according to The Landscape for Impact Investing in West Africa, the third in a series of regional market landscaping studies published by the Global Impact Investing Network (GIIN).
The main barriers to impact investment in the region, according to the GIIN, include a lack of investment readiness among entrepreneurs and investees (in part due to difficulty obtaining bank financing), unpredictable policy environments, difficulty raising capital locally (among fund managers) compared to global standards, few exit examples, and macroeconomic and political instability. That is a truly daunting array of challenges. While in recent years there has been strong growth and investment in ecosystem actors such as incubators, accelerators, associations, and technical assistance providers, the ecosystem is not at sufficient scale to service the needs of the region.
> Posted by Center Staff
2015 was a year full of great reads (and listens). As we enter 2016, we wanted to take a look back at last year and what we were most excited to explore. Through our work writing the FI2020 Progress Report, which assesses global progress in five key areas of financial inclusion, we benefited from important research from many in the financial inclusion field. As part of this effort, we were eager to update our FI2020 Resource Library with the most informative reports and research outputs. We encourage you to check it out – and in the meantime to review the highlights listed below. The organizations responsible for these reports cover a wide array of stakeholder types, from support organizations, to telecommunication companies, to financial service providers – proof that progress in financial inclusion is being driven by many.
What Happens to Microfinance Clients Who Default? (January)
The Smart Campaign
Author: Jami Solli
This report looks in-depth at the enabling environment, the practices of providers, and customer experiences in Peru, India, and Uganda, to understand what happens when microfinance clients default on their loans. We were especially interested in the paper’s findings that demonstrate that effective credit bureaus give financial service providers the confidence to treat customers who default more humanely.
Money Resolutions: A Sketchbook (January)
Author: Ignacio Mas
This working paper explores the underlying logic for how people make money resolutions, including how people organize their money and make decisions about financial goals and spending. The paper focuses on peoples’ approaches to making financial decisions – rather than evaluating the decisions themselves – identifying the inner conflicts they face in the process.
Grameen Foundation Study, Measuring the Impact of Microfinance: Looking to the Future
> Posted by Kathleen Odell, Associate Professor of Economics at Dominican University’s Brennan School of Business
The following post was originally published on NextBillion.
Today we’re pleased to announce the release of Measuring the Impact of Microfinance: Looking to the Future, the third in a series of papers commissioned by Grameen Foundation. This series was initiated in 2005 to survey and contextualize the available evidence on the impact of microfinance. I got involved in the project in 2009, when I met Alex Counts, Grameen Foundation’s founder and then-CEO, at a conference in Chicago. We discussed the first Measuring the Impact paper, and the evidence on the impact of microfinance that had emerged in the intervening years. By the end of that conversation, I’d volunteered to write a second paper in the Measuring the Impact series, which was published in 2010. In early 2015, I was delighted to be asked to author the third paper in the series, Looking to the Future, as well. (For the record, my relationship with Grameen Foundation is limited to writing these two papers, which I do as a volunteer through the Bankers without Borders initiative, as part of my research agenda at Dominican University. I have complete editorial control over the content.)
When I returned to the microfinance literature last year, there were two key questions to sort out. First, what had happened in microfinance impact research since 2010? And second, what was going on with microfinance practice?
In answer to the first question, there was a lot of new research. The best-known papers were certainly the recent batch of microcredit randomized control trials that were published in the American Economic Journal: Applied Economics, in early 2015. The results from these studies have been widely discussed and summarized (on NextBillion and in numerous other places), and I’ve included detailed summaries of each in Looking to the Future as well. The research has shown (repeatedly) that while loans do not lead a typical family directly out of poverty, access to a broad range of reliable financial services, including loans, has an array of positive impacts on clients. Although these are, admittedly, selected examples, recent research presents strong evidence that access to credit yields increases in business creation, investment and expansion. There also is good evidence that access to credit leads to increases in occupational choice and consumption choice, including reduced impulse spending on goods like cigarettes. (See the table below from the paper.) Read the rest of this entry »
> Posted by Center Staff
The latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked, is now available. Among the stories in this week’s edition are: Omidyar Network investing in eCurrency Mint, a company that has developed a new technology that enables central banks to issue digital fiat currency; FMO, the Dutch development bank, providing a five-year US$10 million loan to benefit VisionFund International’s MFIs in rural Africa; Tyler Wry, a professor of management at Wharton, discussing his research on how patriarchal power manifests itself in microfinance. Here are a few more details:
- Omidyar’s investment in eCurrency Mint was made through the firm’s Financial Inclusion Initiative. The digital fiat currency, called eCurrency, is issued by a central bank and has the same legal and monetary status as notes and coins – differentiating it from the various forms of private sector digital value available today.
- FMO’s investment in VisionFund International’s African MFI network will help support the growth of these institutions via debt capital. Additionally, FMO provided a US$275,000 capacity development grant to support VisionFund in creating an innovative approach to disaster resilient microfinance.
- In a video interview with Knowledge@Wharton, Wry discusses findings on gender and microfinance from his recent paper “Bringing Societal Institutions Back In: How Patriarchy Affects Social Outreach”. The baseline finding from the research is that when you have a high level of patriarchy in the state, in religion, in the professions, and in the family, it makes it harder for microfinance organizations to lend to them for a number of different reasons.
For more information on these and other stories, read the latest issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.
Have you come across a story or initiative you think we should cover? Email your ideas to Jeffrey Riecke at email@example.com.
> Posted by Sonja E. Kelly, Fellow, CFI
I want to let you in on a secret: the best part of the Global Microscope 2015 is a hidden gem. It’s called the Microscope Benchmarking Model (admittedly it might benefit from a better name), and it provides a user-friendly deep-dive into each country and indicator. With this tool, you can go beyond the report, with insights on questions that we may have neglected to cover in the narrative. And you can slice and dice the data to your heart’s content.
For example, where is the best place to be an insurance provider if you want to work with low-income populations? It’s India, actually, with Mexico, Peru, Colombia, Brazil, and the Philippines following. With two quick steps, the tool produced this map for me (click to enlarge):
The countries colored in red—including the Democratic Republic of Congo, Madagascar, Paraguay, and Tajikistan—are the worst places to be an insurance provider working with low-income populations.
So why is India the best?
> Posted by Sonja E. Kelly, Fellow, CFI
Today, on the release of the Global Microscope 2015, we are celebrating some good news: the environment for financial inclusion is improving worldwide. Most of the 55 countries surveyed by the publication increased their scores, which measure the enabling environment for financial inclusion. In addition to an overall increase, we noticed a few particular exciting success stories as certain countries have made significant improvements to their policy and regulatory environments. It’s clear that 2015 was a year of progress, and we expect that the benefits of improved policy, regulation, and infrastructure will have an impact on the lives of clients for years to come.
For the second year in a row, the Global Microscope features an expanded scope that focuses on the overall environment for financial inclusion. The Center for Financial Inclusion has played a critical role in this shift, improving on the methodology and expanding the number of countries that the publication assesses.
Three countries—Peru, Colombia, and the Philippines—continue to set the standard for the environment for financial inclusion, topping the list for the second year in a row. There were some surprises in the top 10, however. India’s score increased by 10 points between 2014 and 2015, thanks to some very dramatic changes in the past year which pulled it into the fourth position, such as the new licenses for payment banks and small finance banks. Other countries in the top 10 that improved their scores include Pakistan, Tanzania, and Ghana. Ghana saw the most dramatic rise among this group, with a seven-point jump. Four distinct regions—Latin America and the Caribbean, East Asia and the Pacific, South Asia, and Sub-Saharan Africa—are represented in the top 10 countries.
> Posted by Center Staff
International Day of Persons with Disabilities is a global occasion to promote awareness and mobilize support for critical issues relating to the inclusion of persons with disabilities (PWD). To mark the day, we wanted to share with you a new Accion video spotlighting the story of Reshma Babu. At five months old, Reshma contracted polio and lost the use of her legs, yet today, she lives independently. That’s partly due to her job at Accion partner Vindhya, where four out of five workers have some kind of disability. Vindhya is a business process outsourcing company that widely employs PWD to deliver high-quality and competitive services to companies spanning multiple sectors, including microfinance. Vindhya exemplifies how inclusion for PWD is a sustainable model for social enterprise at the base of the pyramid.
Along with partnering with Vindhya, here are some of the ways that Accion and CFI are working to achieve disability inclusion:
Read the rest of this entry »