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> Posted by Jeffrey Riecke, Communications Associate, CFI

A few days ago news broke that Facebook, the social media giant with over a billion users worldwide, is making preparations to begin offering international money transfer services. Although the development has been dismissed by Facebook as rumor, the prospect of this enormous network enabled for money transfer and the huge global need for this service makes this a story worth following.

The news, initially shared by the Financial Times and sourced from individuals involved in the proceedings, indicates that Facebook is weeks away from securing regulatory approval from Ireland’s central bank to allow its users to store money on the site and use it to pay others. Facebook’s headquarters for Europe, the Middle East, and Asia is in Dublin. If approved, Facebook would be permitted to issue units of stored monetary value represented as “claims” against the company. Regulation in this area pertaining to Europe would allow approval in Ireland to green light services throughout the entire continent. The Financial Times also mentions that Facebook has had discussions about potential partnerships with several start-ups that offer international money transfer services through both smartphone and online platforms.

Facebook’s reach is massive, 1.23 billion at the end of last year, and it’s becoming increasingly diverse. Last week, thanks to increases in internet access and mobile penetration, the company achieved a milestone in India: 100 million users. Some analysts say by the end of this year India will surpass the United States (with 180 million) as the country with the most Facebook users. The social media site is big elsewhere in Asia, too. It is the most popular social network service in all but six of the region’s countries. After the US and India, Facebook’s largest countries by-users include Brazil, Indonesia, Mexico, Turkey, the United Kingdom, and the Philippines. Facebook has a large presence in Africa, as well, with 13 million users in Egypt, 9.4 million in South Africa, 5.3 million in Nigeria, 1.8 million in Kenya, and 1.4 million in Ghana.

Like Facebook, remittances volumes are increasing on the whole around the world. In a new brief on remittances and migration released last week by the World Bank, it’s shown that remittances to developing countries reached about $404 billion in 2013, an increase of 3.5 percent over 2012. Annual growth is expected to increase to an annual average of 8.4 percent over the next three years. In 2013, India received the most international remittances with $70 billion, followed by China with $60 billion, and the Philippines with $25 billion.

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

The Group of Twenty Finance Ministers and Central Bankers (G20) is targeting financial inclusion through the G20 Development Working Group (DWG), which is in the process of finalizing an agenda for its 2014 goals. The DWG focuses on developing an agenda for tackling development challenges, with the intent to remove constraints to sustainable growth and poverty alleviation. Recently, through our participation in InterAction’s G20/G8 Advocacy Alliance, CFI teamed up with other non-profits in the financial inclusion community to develop a set of recommendations for G20 leaders. While the Alliance and DWG span a diverse range of issues, our focus was, of course, on financial inclusion.

Our recommendations to the G20 were developed in coordination with CARE International UK, the Grameen Foundation, the Cherie Blair Foundation for Women, HelpAge USA, and the Microcredit Summit Campaign, among others. They urge governments to implement national strategies for financial capability and client protection, ensuring that these strategies and targets address a full suite of financial services and include underserved groups. You can read the full set of recommendations and contributing organizations here.

Last week we had the opportunity to discuss our recommendations with senior leadership from the Australian G20 presidency. As you may know, the G20 Presidency rotates each year, and this is Australia’s year. Each presidency takes a lead in setting the agenda and priorities, which are then discussed and (ideally) implemented by all G20 members.

The G20 Australian presidency issued a global development agenda, which was supported by the DWG. It highlighted two major outcomes for 2014 related to financial inclusion and remittances. We were happy to see an expressed desire to move beyond a focus on cost reduction for remittances, where there has been a great deal of progress, to maximizing the potential of remittances to increase financial inclusion.

During the meeting, our financial inclusion team brought three key points to the conversation: Read the rest of this entry »

> Posted by Center Staff

This edition of Top Picks features posts highlighting findings from new research on the global mobile money industry and on remittances in Africa and Asia, as well as a post on how innovation can encourage savings at the base of the pyramid.

A new post on GSMA’s Mobile Money for the Unbanked Blog shares preliminary findings from the MMU 2013 Global Mobile Money Adoption Survey. The Adoption Survey, which offers insights on the development of mobile money services and how they’re enabling the expansion of financial inclusion, will be published at the 2014 GSMA Mobile World Congress, February 24-27 in Barcelona. These preliminary findings included a few industry milestones. A few weeks ago the global industry surpassed 200 mobile money service deployments to total 208 services spread across 83 developing countries. Mobile money services are become a mainstay among mobile network operators, rather than a differentiator. In Sub-Saharan Africa, for example, mobile money is available in 36 out of the 47 countries in the region.

In Africa and Asia, domestic remittances may far surpass international remittances in both frequency and magnitude, two recent joint-reports from the Gates Foundation and Gallup found. That’s the subject of a new post on the Financial Access Initiative Blog, which details the reports’ key results and provides a brief overview of domestic remittances, internal migration, and how they relate. The reports revealed that across the 11 surveyed countries, 14 percent of people had sent money to family or friends within the country within the previous 30 days, and that 32 percent of these respondents had been on the receiving end of such a money transfer. In contrast, one to two percent of people reported sending an international remittance, and about three percent reported receiving an international remittance, in the previous 30 days.

Read the rest of this entry »

> Posted by Center Staff

This edition of Top Picks features a post that offers a fresh framework for examining savings groups, a post that synthesizes recent research on payments in South Asia, and a post on the relative effectiveness of aid approaches.

Steering the conversation on savings groups towards foundational concerns, or at least towards more interesting matters than the oft-trodden territory of model and methodology specifics (e.g. passbooks versus ledgers), Paul Rippey in a new Savings Revolution blog post offers six questions for potential consideration. Here’s a portion of one of the questions: “How big is the gap within the program between what is said and written, and what is done? Said another way, the casual disrespect and bending of procedures makes management incredibly difficult and inefficient.”

In South Asia, domestic remittances are conducted much more than international remittances, and they’re carried out mostly in cash through informal channels. These are two of the big findings from a recent Gates Foundation survey, highlighted by Jake Kendall in a new Next Billion blog post. The post provides a brief overview of the importance of digital payment options for the poor and shares the big findings from the Gates survey, which interviewed individuals in South Asia (Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka) and Indonesia on their experience with payments. Another key finding from the survey, demonstrating a big potential market for digital payments, was that the majority of those interviewed – who represent the majority of a population of 1.9 billion adults – reported having sent, brought, or received a domestic or international remittance in the past 12 months.

What’s better?: an organization giving money to the poor with no strings attached, or an organization giving the poor productive assets which require higher expenditures that hinder the organization’s scope? That’s one of the big questions presented in a new post, “Cash or Cows?“, on the Innovations for Poverty Action (IPA) blog. It’s a question getting a lot of attention recently thanks to the increasingly talked-about organization GiveDirectly that gives money directly to the poor in Kenya, with no associated conditions, via M-PESA mobile money transfers. To put this approach to the test, GiveDirectly agreed to allow IPA to conduct a public evaluation (which is currently underway) of the effectiveness of their work. In addition to exploring this question, the post takes an additional half-step of comparing the net impact of conditional and unconditional cash transfers, drawing on IPA research.

Image credit: Ianf

> Posted by Sarah Hugo, Project Manager, Developing Markets Associates (DMA)

The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

For unbanked citizens in developing countries, the collection of remittances sent by friends and family overseas is sometimes their only interaction with the formal financial sector. Yet remittances are too often overlooked when considering approaches for increasing financial inclusion. For Armenia, a country that receives 16 percent of its GDP from remittances, only 2.5 percent of people use an account to receive them.

In a recent workshop we conducted with middle managers from five banks in Armenia, staff admitted they were initially skeptical about the implementation of a financial education program aimed at remittance recipients. Even though the pilot was to be fully funded through the European Bank for Reconstruction and Development’s Early Transition Country Multi-Donor Fund, staff remained unconvinced about the potential impact and effectiveness of financial education and how it would be received by customers. These opinions were primarily due to expressed beliefs: that people would not be receptive to the program’s unplanned financial consultations, that their bank already did a good job at offering financial products to remittance recipients, and that most remittance recipients only have money to cover their basic needs and therefore have no need for financial products.

Halfway through the pilot, the results of the financial consultations have been impressive, and bank management and staff admit that their preconceptions were misplaced. The results indicate that there is indeed value in providing financial education and in targeting remittance recipients.

Read the rest of this entry »

> Posted by Danielle Donza

Change. People fear it, they avoid it and resist it, but ultimately change is the only constant in life. Some of the microfinance industry’s heavy hitters have weighed in recently on how they believe the industry is – or needs to be – changing.

Marguerite Robinson, Michael Chu, and Robert Christen, three microfinance industry leaders, discussed this topic at a recent MIT panel. They have all spent years in the trenches building microfinance institutions to prove to the financial industry that microfinance was worth taking seriously. But now that the industry has “cracked the capital markets,” they are advising the next generation of microfinance leaders that it is time to shake it up again. But how?

One answer is mobile and agent banking. After 40 years of building microfinance banks, it is time to move beyond them.  By some estimates, as many as 2.7 billion people in developing countries are still unbanked and we are never going to reach them all unless we drastically re-think the way we deliver financial services to the poor, especially in remote rural regions. Even when microfinance clients can get to a microfinance institution (MFI), it still costs that MFI roughly US$1 per transaction. Obviously not a very cost-effective business model when clients only want to transact 50 cents. Read the rest of this entry »

> Posted by Josh Goldstein, aka Mr. Provocative

The proliferation of smart and cell phones in Haiti is nothing short of remarkable. Even people who seem to be among the poorest of the poor have them. When people at the so-called bottom of the pyramid truly desire a new technology and the price is not outlandish, they find a way to purchase it. Marchands (market women) peddle their wares on Port-au-Prince’s teeming streets under ubiquitous sun umbrellas that Digicel, the largest cell phone provider, has handed out by the tens of thousands.

And Haitians, as I recently learned, often use these phones to text, email, or call relatives in the diaspora to ask them to remit money. Remittance transfers from relatives in the US, Canada, and elsewhere is the one source of reliable income for many of Haiti’s poor. When I visited Fonkoze’s bank in Port-au-Prince, every person in the waiting area was there to collect a remittance — not to save or borrow.

Visitors to the island with any kind of conscience struggle with the enormity of the suffering they encounter. Many provide cash gifts to Haitians they get to know, just to “do something,” hoping to make a small difference in a life or two. There is nothing new about this kind of direct philanthropy in the poorest country of the Western Hemisphere. But today, thanks to the communications revolution, that sense of responsibility for acquaintances (who are not relatives) can persist, and vividly so, after visitors leave the island.

Before departing from Boston for Haiti this spring, I hired a driver, based in Port-au-Prince, whom I will call Hector, to drive my daughter and me around the island.  We had “met” through email, connected by a friend who had used his services in the past. Hector and I exchanged a few courteous emails and telephone calls to take care of logistics (I assumed he was a man of some means because the Haiti I knew in the 1990s was a place where only the wealthy had phones.) Hector wrote me exactly as follows:

my dear friend Johs, the pleasure  is mine to get ur massage today, i think whenever you wanna come in haiti u will be welcome, and i will be glad to spend you my time.i will be happy to receive u may 18th,11 cause it’s haitian’s flag party,my phone number is:xxxxxxxxxxx available anytime

The Hector who met us at the airport was a very nice 28-year-old man, brimming with life and contagious bonhomie. He was available to chauffeur because he was unable to find any steady work — in spite of having some college education.

There are, of course, millions of poor Haitians like Hector, but they usually remain a bloodless, undifferentiated abstraction, and it is hard for most of us to stay emotionally connected to an abstraction for long. It was Hector I got to know as person, who took good care of me and my daughter. I learned about his evangelical minister father, his little brother (a part-time dispatcher for Handicap International), and his fiancée (a nursing student in New Orleans). I met a sister-in-law. Solidly lower-middle class, I suppose, but by Haitian standards. He did not shout his desperation — he had too much dignity for that. He had many dreams, but his frustrated ambition to do something with his life in Haiti was heartbreaking. Read the rest of this entry »

Guest blogger Tomas Bilbao is Executive Director of the Cuba Study Group with which the Center for Financial Inclusion has collaborated.  Bilbao shares his strongly held views on how efforts to reverse positive policy changes announced by the Obama Administration in April of 2009 would hurt the budding entrepreneurial class in Cuba and would represent an obstacle to needed change.

For over 50 years, US policy toward Cuba has had the single aim of isolating Cuba from the outside world and forcing the collapse of the island nation’s economy in hopes of bringing about regime change. Other than a small, vocal group in Miami and Washington, the rest of the world now acknowledges the obvious truth that US policy has been a categorical failure. It is less often recognized, however, that US policy may actually have made change on the island less likely. An amendment last week proposed by Florida Rep. Mario Diaz-Balart, a longtime defender of the status quo in US policy toward Cuba, is the most recent evidence of this fact.

Last week, Rep. Diaz-Balart introduced an amendment to the FY2012 appropriations bill, which, if signed into law, would roll back the positive steps taken by President Obama to allow Cuban-Americans to travel and send money to their families in Cuba. “The changes [implemented by the Obama Administration] have been the largest source of revenue of [Castro’s] dictatorship,” stated Rep. Diaz-Balart. Rep. Diaz-Balart’s statement to the Miami Herald reflects a profound disconnect with the realities on the ground inside Cuba as well as human disconnect regarding the impact of these policies on Cuban families both on the island and in the diaspora. Read the rest of this entry »

> Posted by Center Staff

The Center for Financial Inclusion (CFI), in conjunction with the Cuba Study Group, in January sponsored the “Cuba Small Business Summit.”

Participants in the event, which was hosted by the Council of the Americas in New York, examined questions that included: “Could remittances from the US play a key role in providing finance to Cuban new start-up enterprises, in the absence of private or public banks in a position to lend?”

The Miami Herald this week published an op-ed by Sergio Bendixen and Donald Terry that fleshes out the answer to that question.

Bendixen is a founding partner of Bendixen and Amandi International; Terry is former general manager at the InterAmerican Development Bank and current lecturer at Boston University Law School and consultant with the World Bank in Africa. Terry is also a member of CFI’s advisory and faculty councils.

Highlights of the piece, “Remittances and Cuba,” include:

“A commitment from the Cuban government to allow all remittances to enter the Cuban economy freely, unburdened by taxes or other cumbersome regulations, could result in remittances reaching $2 billion to Cuba in the coming years.” Read the rest of this entry »

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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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