You are currently browsing the monthly archive for February 2012.
> Posted by Julie Shea
Loan officers have a tremendous effect on the productivity and income of the MFIs that employ them, and their compensation often comprises over half of the MFI’s costs. Most MFIs are double-bottom-line organizations dedicated to the social mission for which they were founded as well as to achieving financial health. So it’s no wonder that management has an interest in tools that encourage and promote superior loan officer performance, in relation to social as well as financial goals. One such tool is a staff incentive scheme.
A recent visit to a Nicaraguan MFI provided me with firsthand insight into a mission-driven organization that uses a monetary incentive scheme to motivate and reward its loan officers. I approached the project with the assumption that some degree of tradeoff exists when an organization is balancing social and financial objectives. But how much of a tradeoff is there really? Focusing on the social mission can have financial payoffs in the form of loyal clients willing and able to pay back their loans. On the other side, by ensuring strong financial performance, the MFI is also increasing the likelihood that it will reach sustainability, scale, and scope and thereby continue to be able to provide necessary services to the world’s poor. So if the two goals are not mutually exclusive, how can an incentive scheme be designed to promote both?
Within the organization’s staff incentive scheme, loan officers are able to earn 50 percent of their total income in bonuses (effectively doubling their salary). As the cornerstone of my master’s thesis research, I set out to answer the important question: how does this MFI’s incentive scheme influence loan officer behavior, and more importantly do monetary incentives introduce a risk that loan officers will drift from the organization’s social mission? Read the rest of this entry »
> Posted by Sonja Kelly
My bank does not maintain a branch in my state. Actually, according to my bank’s website, the nearest branch to my home is over 100 miles away.
The problem for me is actually not a lack of bank branches near my home. The problem is my own inertia. Somewhere between my August 2010 move to Washington, DC and the present, I lost the will to find a new bank and transfer my funds.
So I have to be creative. When I know I need cash, I have to go to my grocery store so that I can get cash back after using my debit card. I know I could use another bank’s ATM, but I justify the grocery store trip by telling myself that the $3 fee per transaction could be better spent on a couple pounds of fruit. Large checks, unfortunately, must be sent to a central “bank by mail” address whose name sounds laughably similar to “Pony Express” days. Read the rest of this entry »
> Posted by Susy Cheston, Senior Advisor for the Center for Financial Inclusion at ACCION International
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at ACCION International.
“Are we talking to ourselves? Who is not represented in this conversation?”
That was the question that Beth Porter from the United Nations Capital Development Fund asked at our first Financial Inclusion Roundtable, held in New York. Many of the participants nodded in agreement, and Bob Kennedy, sitting next to me, whispered, “plus one.”
“Plus one.” It is the shorthand we use when we see an invitation that reads “and guest.” We bring our “plus one” to a party or event, introduce them to our friends, and make them feel welcome. Our “plus ones” expand the community with new energy, new ideas, and new connections. Read the rest of this entry »
> Posted by Barbara Magnoni, President of EA Consultants
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at ACCION International.
When I was first asked to reflect on the Center for Financial Inclusion’s Opportunities and Obstacles paper, I immediately began thinking of the practical implications for providers of turning the survey responses into actions.
The diverse list of opportunities and obstacles that were highlighted in the survey shows just how dynamic the process of action toward financial inclusion must be. Read the rest of this entry »
> Posted by Adriana Magdas
This weekend I watched a TEDx Talk, “Women Entrepreneurs: Example not Exception,” by Gayle Tzemach Lemmon, a reporter turned business woman and writer. Lemmon discusses women’s success stories as entrepreneurs in developing countries and their lack of access to financial services (beyond microcredit) and other resources that would allow them to grow their businesses at a faster pace and on a larger scale.
Gayle highlights women entrepreneurs who were resilient in situations of poverty and conflict. These women pursued business opportunities that produced a raft of benefits. The businesses allowed the women to care for multiple family members, support and develop local economies and earn income that increased their power and the respect granted them by men in an otherwise unequal society. These examples of empowerment and increased economic well being are exactly what microfinance aims to produce.
But I wonder if many or most women who are currently clients of microfinance are able to use their businesses to such great advantage. Are these women operating at the peak of their potential? Could they develop their businesses more efficiently if they had access to larger loans and a wider array of financial products? How much would they benefit from increased financial capability and access to trustworthy business networks that would provide them with training, resources and peer support? Read the rest of this entry »
> Posted by Beth Rhyne
I had the opportunity last week to inform the philanthropic community about the Smart Campaign through a piece in the Philanthropy News Digest. For those of you who follow the Campaign, the piece may sound familiar. Nevertheless, it’s exciting to be able to get the Smart Campaign message in front of the broad range of people who work in philanthropy.
To read the article, please click here.
> Posted by Holly Padgett
Can financial access and citizenship feasibly begin at birth? According to the Financial Access at Birth (FAB) initiative, with the right resources and momentum, it can. Bhagwan Chowdhry, FAB’s founder, recently published an article in the Stanford Social Innovation Review (SSIR) that highlights the main ideas behind FAB and addresses some of the tough questions raised by supporters of the program.
The aim of FAB is to provide an initial deposit – say $100 – in an electronic savings account for every child at the time of birth. The bank account would be paired with a universal ID and mobile technology, creating a powerful system of incentives that would foster financial inclusion and possibly access to other services. Ultimately this system would lay the “plumbing” for numerous social, financial, and health services. According to Chowdhry, “it is an investment for an economically democratic society”. Read the rest of this entry »
> Posted by Holly Padgett
In December 2011, a bill was introduced in the United States Senate that would advance concepts of financial inclusion in USAID’s (United States Agency for International Development) approach to microfinance and international development.
The bill, called the “Microfinance and Microenterprise Enhancement Act of 2011”, highlights some of the steps that need to be addressed if we are to achieve full financial inclusion by 2020. The bill addresses the need for more financially inclusive practices and highlights the Smart Campaign’s Client Protection Principles:
“The United States Agency for International Development should ensure that providers of financial services benefitting from United States Agency for International Development assistance adhere to client protection principles, such as the Client Protection Principles of the ‘Smart Campaign’, and take concrete steps to protect clients from potentially harmful financial products and to support equitable and fair treatment.” Read the rest of this entry »
> Posted by Center Staff
While visiting India earlier this month, Beth Rhyne participated in an interview with the Indian newspaper, The Financial Express. The interview focused on the importance and state of client protection within the microfinance industry in India.
The interview begins as follows:
Financial Express: Why do we need a code for client protection in microfinance?
Rhyne: One of the starting points of the problems facing the industry was its rapid growth, leading to slippage in some of the standards. When you grow very fast, you can’t keep training staff fast enough to maintain the level of quality needed. Read the rest of this entry »
> Posted by Larry Reed, Director, Microcredit Summit Campaign
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For questions about this series, write to , Fellow, Center for Financial Inclusion at ACCION International.
Does the ambition of the Center for Financial Inclusion’s (CFI) Financial Inclusion 2020 initiative include reaching people with little income who live in remote places—places far from urban centers with their financial institutions and communications hubs? That’s what the website says; it states that (emphasis mine): Read the rest of this entry »
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