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> Posted by Alison Slack, Associate, CFI

As CEO of the South Sudan Microfinance Development Facility, Elijah Chol is tasked with helping develop the financial inclusion sector in his fledgling country. Elijah is a member of the inaugural class of the Africa Board Fellowship (ABF) program, who begin their six-month fellowship in June in Cape Town, South Africa. We recently sat down with Elijah to learn more about his work in microfinance, and the governance challenges he faces.

South Sudan is a country striving to emerge from decades of crises on many fronts. “Post-conflict countries like ours have unique problems,” says Elijah. “One of the most pressing issues for us is that of education, especially in the villages and rural areas.” Because the education situation is so desperate, it is difficult to find board members with the skills necessary to effectively guide institutions.

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> Posted by Center Staff

In two weeks the first class of the Africa Board Fellowship (ABF) program will kick-off the fellowship in Cape Town, South Africa. The convening seminar marks the start of the inaugural fellowship, a six-month program aimed at strengthening the governance expertise of microfinance leaders in sub-Saharan Africa. The first class is composed of 31 board members and CEOs, coming from 13 institutions throughout 12 countries in Africa. Given the diversity of backgrounds and experience these fellows bring, in addition to our seasoned faculty, advisors, and subject expert staff, we are confident that the opportunities for peer learning and exchange will be plentiful in Cape Town, and throughout the fellowship. The profiles of our inaugural class of fellows are now available on the ABF website. Please join us in welcoming these fellows to the program!

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> Posted by Julia Arnold, Research Consultant

After two weeks of speaking with bank and microfinance institution staff, entrepreneurs, social investors, policymakers, and tech companies in India, my once clear understanding of how to build financial capability has now been completely scrambled. Building financial capability – that is, helping clients change (knowledge, skills, and ultimately behaviors) to make good financial choices – has taken on many layers of complexity and challenges in the context of, and in the face of, the realities of India’s poorest people.

But that is, of course, the fun of travel.

To briefly put India’s banking services in context – many villages in rural India still do not have a bank. According to the latest World Bank Findex data, half of rural Indians and nearly half of all Indians remain completely unbanked. Even if a bank exists in a village, social constraints often prohibit women from using it due to both limited mobility and lack of knowledge about and decision-making power over household finances. Basic access and usage of mobile phones remains limited. From my own earlier research with Cashpor Microcredit, I know that numeracy and literacy, as well as access, remain barriers for women to save with mobile technology.

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> Posted by Center Staff

What are the most important questions that need to be researched in the financial inclusion arena?

The Center for Financial Inclusion at Accion will soon launch a fellows program to support research and thought leadership in financial inclusion – and we are calling on you to help! The purpose of this program will be to encourage independent researchers and analysts to examine some of the most important challenges in the financial inclusion arena. We plan to select a few priority research topics for fellows to examine.

Here’s where you come in. Below is a list of research topics that members of our Financial Inclusion 2020 team believe need answering. We’re checking in with you – our blog audience – to find out which topics you think are the most important to investigate. Please consider this list a starting point. Give us thumbs up or down on the topics listed, and propose topics of your own. Once we select the top priority questions, we will issue a call for proposals. Meanwhile, we offer this list to provoke a broader conversation about research needed in the financial inclusion field.

You can respond either in the comment block below, or by email to erhyne@accion.org.

Technology-related topics

  1. Impact of ubiquitous internet access on the business models for financial inclusion. By 2020, the vast majority of the world’s people will have access to internet through smart phones and tablets. Internet access could transform the way financial service providers and customers interact and facilitate a richer interface with customers. What scenarios are possible and are providers ready to respond?
  1. Under what conditions do “on-ramps” lead to deeper inclusion? With the World Bank’s commitment to Universal Financial Access focused on connecting people to transaction accounts, the next question is how (and whether) such connections lead to active account usage or access to additional products. What are the cases of successful access expansion that have led to deeper inclusion and why did they succeed?

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> Posted by Center Staff

What’s the current state of impact investing? It’s expanding and diversifying across sectors and geographies, and recent years have yielded better impact measurement practices, quality of investment opportunities, and support stakeholder involvement. Need more specifics? This week GIIN and J.P. Morgan released the results of their fifth annual impact investing survey, Eyes on the Horizon, offering data and industry insights on these and other areas.

The survey serves as an annual pulse-taking for the growing industry, consulting with investors around the world on their performance, as well as their perceptions on progress and what’s ahead. The 2015 survey tapped 146 impact investors – fund managers, banks, development finance institutions, foundations, and pension funds. Together the cohort committed $10.6 billion in impact investments in 2014, with plans to increase this figure by 16 percent in 2015. The 82 organizations that participated in the survey last and this year reported a 7 percent increase in capital committed between 2013 and 2014.

Along with previous survey topics, like types of investors and number and size of investments, this year’s assessment also covered loss protection, technical assistance, impact management and measurement, and exits.

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> Posted by Elisabeth Rhyne, Managing Director, CFI

Since 1992, when Accion created BancoSol in Bolivia, the first private commercial bank dedicated to microfinance, Accion’s aim has been to create a financially inclusive world, primarily through building financial institutions that serve the base of the pyramid. Accion has contributed to the birth, growth, or strengthening of 66 microfinance institutions in 34 countries, which together serve millions of clients with a broad array of financial services.

Through the years, Accion has gradually evolved its own unique microfinance institution partnership model. I recently spoke with Michael Schlein, Accion’s president and CEO, Esteban Altschul, chief operating officer, and John Fischer, chief investment officer. I asked them how and why Accion’s model for working with microfinance partners has taken its current form, and what has been learned along the way.

Michael Schlein said that the starting premise for Accion’s model was, “the recognition that charity – though very important – is insufficient to the task of building a financially inclusive world. You have to tap the capital markets.” As a non-profit organization originating in the international development arena, this premise set Accion onto a path that was “disruptive” in the 1990s, though it is widely adapted today in the impact investing movement.

The model assembles private investors around the common purpose to build a healthy and profitable financial institution that can grow and provide services over time. To succeed for investors, it must produce adequate financial returns and an exit path so the returns can be realized. To succeed for Accion’s mission it must result in quality financial services for people who would otherwise be excluded. Accion also looks for a demonstration effect. When business success inspires others to enter the market and thus creates an industry, that’s how Accion’s broader vision advances.

What has now crystalized is a model of partnership in which a web of incentives meets the needs of each organization involved, aligns all the players behind the mission, and elicits strong performance from each partner – including Accion itself.

Here’s how it operates.

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> Posted by Joshua Goldstein aka Mr. Provocative

In The New York Times last week was a story of loss and despair titled “1.5 Million Missing Black Men”. It stated: “One out of every six black men, who today should be between 25 and 54 years old, have disappeared from daily life.” Where are these men? What does this mean to the women in their communities? The answer to the first question is that they often die early or are living out much of their lives behind bars. And the answer to the second question is equally tragic and heartbreaking: In many ravaged communities, there are not enough men to be fathers and husbands. In our republic, this reality of the missing men is a profound challenge to our values, our democracy, and our future as a nation. I think there is a consensus on that.

So, you ask me: What does this terrible set of facts about an American tragedy have to do with microfinance and international development? In my opinion, an awful lot. As policy makers and practitioners, it often seems that men have disappeared from our “interventions” and work plans. Resources are focused on empowering poor women, who will work hard and take care of the children (half of whom are boys), while the men are scoundrels or losers who cannot be counted on when it comes to the family’s well-being. Why prioritize men in poverty reduction strategies? Why waste resources on this failed sex?

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> Posted by Nelly Agyemang-Gyamfi, Program Coordinator, CFI

On the 6th of April, 68 financial inclusion stakeholders from 23 countries across the globe arrived in (a thankfully snowless) Boston to commence the 10th annual HBS-Accion Program on Strategic Leadership in Inclusive Finance. Over the past decade, the deeply immersive, week-long program has trained over 660 high-level executives from more than 250 organizations spanning 90 countries. As in past years, this year’s program was held on the beautiful campus of the Harvard Business School and led by world-renowned HBS professors Michael Chu and V. Kasturi Rangan. As a Center for Financial Inclusion staff member who helped organize the course, I was privileged to take part, and I offer these reflections on what I saw and learned.

Participants were exposed to a wide range of issues pertinent to inclusive finance, from managing political uncertainty to impact investing and measurement. This year, reflecting the changing landscape of inclusive finance, the course included seven new sessions including cases on China’s CreditEase, Massachusetts’ Pay-for-Success, and Peru’s Edyficar.

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> Posted by Monique Cohen, Independent Advisor, and Founder of Microfinance Opportunities

When an Equity Bank client in Kenya was asked if she saw value in financial education, she replied without hesitation, “Yes, but I thought it was only for rich people.” Delighted with this ringing endorsement the interviewer never asked her what financial education meant for her. If she had we might have gone down a different track.

Intuitively, financial education seems like a good thing. Many experts will tell you that it or financial capability are important for achieving financial inclusion. Yet, the research tells a contrary story: financial education, building financial literacy, or financial capability interventions in developing countries have little effect on changing financial behaviors, including the uptake and usage of formal financial services. I keep asking: What am I missing in this picture? Why doesn’t it add up? With 12 years of experience in this space I would argue that there is much confusion about what financial education is, what it can do, and what we want it to do.

Financial institutions have much to gain from effective financial education, as, of course, do clients. At present, however, the field is torn between two paradigms – a money management paradigm and a product usage paradigm. Though both have merits, neither gets it quite right. I propose a more client-led perspective as a way to ensure that financial education can become more meaningful for the user.

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> Posted by Bobbi Gray, Research Director, Freedom from Hunger

While recent research indicates that access to and use of microcredit alone is not transformative for the average client served (see “Where Credit Is Due”), there has been very little discussion about the types of indicators being used to measure “transformation” in the ongoing debates. In fact, it seems that we all have accepted the general findings that microcredit has only had modest impacts on, along with other indicators of poverty and well-being, education, health, and social capital because the randomized controlled trials (RCTs) have said so. There needs to be greater thought and debate about the choices of indicators used to support these conclusions.

Freedom from Hunger over the past 20-plus years has integrated health with microfinance and helped build a body of knowledge indicating that microfinance plus health services can enhance health outcomes. In an ongoing partnership with the Microcredit Summit Campaign, supported by Johnson and Johnson, we have pilot-tested a series of health indicators that financial service providers (FSPs) can use to track client health outcomes. This pilot test was built on years of experience of evaluating health outcomes with our FSP partners, as well as on similar experiences of developing common tracking indicators in the health sector. We created a list of criteria to assess the types of indicators we felt would be meaningful to track—for individuals with and without health services – which included dimensions of feasibility, usability, and reliability. Initial results have been shared in several webinars with SEEP and the Social Performance Task Force.

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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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