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> Posted by Elisabeth Rhyne, Managing Director, CFI
The following post was originally published on The WorldPost blog of The Huffington Post.
In a recent retrospective, Rich Rosenberg called Pancho Otero, the founding leader of Bolivia’s Prodem and BancoSol, a genius. With Pancho’s sudden death last month, I find myself surprised to speak with many people who work in microfinance or financial inclusion today but do not know about Pancho’s genius. And so, I would like to take this moment to tell the story of who Pancho was and what he accomplished.
Genius can be applied in many spheres, from art to action. But all notions of genius share the idea that a genius sees beyond the things ordinary people see and works in some extraordinary way to bring that vision into being, disregarding conventional boundaries. I think Pancho would have enjoyed this thought about genius, by seventeenth century English author Jonathan Swift, “When a great genius appears in the world you may know him by this sign; that the dunces are all in confederacy against him.” But that is the end of the story, not the beginning.
In 1986 Pancho was hired by Accion to start a microenterprise lending organization in Bolivia. His signal accomplishment was to create an organization that was so good at what it did that it gave rise to the idea – and then the reality – that a microfinance operation lending exclusively to the poor could become a full fledged commercial bank. And when Prodem launched BancoSol, Pancho became President of the first private commercial bank in Latin America dedicated to the microenterprises of the poor. BancoSol, in turn gave impulse to the transformation of microfinance NGOs into financial institutions all over the world and set the ball rolling for the widespread commercialization of microfinance.
> Posted by Joseph Smolen, Summer Associate, CFI
At this week’s U.S.-Africa Leaders Summit it was noted that even as sub-Saharan Africa (SSA) enjoys a period of unprecedented economic growth (GDP in developing SSA has increased from $43 trillion to $75 trillion since 2004), lack of financial inclusion remains an issue of paramount concern. In some ways this has been driven by a lack of foreign direct investment (FDI) in financial inclusion vehicles in SSA (primarily MFIs) – less than 10 percent of FDI in MFIs worldwide is earmarked for Africa-focused institutions. Historically, the disproportionately low amount of FDI in sub-Saharan African MFIs has been driven by a combination of the following factors:
> Posted by Debashis Sarker, Senior Manager, BRAC Microfinance Program, Bangladesh
Microfinance institutions in Bangladesh have more than 30 years of glorious experience of serving poor people with the twofold objectives of women’s empowerment and poverty alleviation. The proven microfinance lending model has been replicated in many developing countries, and more people in Bangladesh have become financially included over time. But what about financial inclusion of a most vulnerable group, persons with disabilities (PWD)?
People with disabilities simply did not get access to the leading lending sources in Bangladesh because of discrimination and accessibility barriers. Regular discrimination, taking the forms of negative attitudes, social exclusion, lack of economic opportunities, and unpaid or underpaid work, has long been an integral part of the lives of PWD. Extremely poor disabled people in rural Bangladesh mostly work in the informal sector with minimum wage rates, reflecting severe discrimination in the workplace. Family members often see them as burden. They may be turned down when trying to rent houses in urban areas. People with disabilities, especially women, are disadvantaged when it comes to education, employment, and even marriage. They may be left out of decision-making and participation in social occasions. In fact, many Bangladeshi people see disability as a curse and cause of shame to the family, and at the national level, Bangladesh has not yet passed an anti-discrimination law.
> Posted by Anne Gachoka, Research Supervisor, Digital Divide Data
Thanks to mobile and agent channels, formal financial services in Kenya now reach millions of previously unbanked customers with new and innovative products. Just look at M-Shwari, the new banking product offered to M-Pesa customers enabling them to move beyond money transfer and epay to small, short-term loans with eligibility based on data about their savings, mobile usage, and debt repayment history. Globally, this is all very exciting and represents an important breakthrough in providing financial services to the poor.
But, after studying the interactions between the poor and the financial sector through the Kenya Financial Diaries, a joint-research initiative between Digital Divide Data and Bankable Frontier Associates, I have come to the conclusion that banking will fail to deliver on the promise of improving the lives of the poor unless providers do more to improve pricing transparency and communication on terms and conditions. The Diaries study tracked the cash flows of 300 Kenyan households over the period of one year.
> Posted by Somen Saha, Indian Institute of Public Health Gandhinagar, with inputs from Marcia Metcalfe, Freedom from Hunger and Sabina Rogers, Microcredit Summit Campaign
Microfinance institutions (MFIs) and self-help groups (SHGs) in India are increasingly recognizing the potential of offering both health and financial services. In a query of 25 MFIs across the country providing integrated services, the number of borrowers totaled nearly 18 million. A new report, Integrated Health and Microfinance in India, Volume II: The Way Forward, highlights best practices in integrating health and microfinance programs, particularly in light of India’s aim for universal health care, showcases potential interventions that can be adopted by microfinance institutions and NGOs that serve SHGs, and outlines the role of India’s existing livelihood promotion SHG initiatives in addressing access barriers to health services.
For the 1.3 billion people around the world who live on less than $1.25 a day, poverty means vulnerability. The poor face a disproportionate risk of disease and a heightened financial burden that includes both the direct costs of medical care and the indirect costs of work time lost. This financial impact also limits the ability of the poor to fully participate in financial services, as poor health is one of the most frequently cited reasons for loan default and drop-out. Because the poor are one illness away from losing everything, there is an increasing realization that countries need a pro-poor pathway towards universal healthcare.
> Posted by Eric Zuehlke, Web and Communications Director, CFI
It’s a big couple of weeks for Africa here in Washington, D.C. On Monday, President Obama hosted a town hall meeting to welcome this year’s class of the Young African Leaders Initiative (YALI). Launched in 2010 by Obama, YALI supports young African leaders as they spur economic growth and prosperity, strengthen democratic governance, and enhance peace and security across Africa. These Fellows spend six weeks at one of 20 U.S. universities and colleges undergoing leadership training and mentoring in business and entrepreneurship, civic engagement, and public administration. Next week, the State Department will host the U.S.-Africa Leaders Summit with heads of state from 50 African countries to advance the U.S. Administration’s focus on trade and investment in Africa and discuss security and democratic development.
Nearly one-third of all Africans are between the ages of 10 and 24, and approximately 60 percent are below 35. YALI is tapping into the drive and energy of Africa’s youth to effect change. Many Fellows in the YALI network are focused on improving access to financial services, whether it’s encouraging a savings culture in Zimbabwe, establishing microfinance programs for women and youth in Kenya, or creating a microfinance program to help start medical supply stores in Kinshasa, Democratic Republic of Congo.
With under 40 days to go, the 17th Microcredit Summit is rapidly approaching. CFI’s Josh Goldstein will be speaking during a plenary session focused on new innovations for microfinance and other financial inclusion interventions to more effectively reach the excluded. With the theme “Generation Next: Innovations in Microfinance,” this should be a great opportunity to explore what is on the horizon to achieve full financial inclusion. In this post, Josh discusses industry context surrounding the Summit, and what he hopes he and those in attendance will be able to take away from the event.
I am a sometime skeptic about the proliferation of microfinance conferences, but the upcoming Microcredit Summit in Merida, Mexico seems particularly important and timely. Personally, I am very excited about it. (In the spirit of full disclosure, I should add that I will be a speaker, and of course piqued vanity can certainly lead to bias, but I don’t suspect this is the case here.)