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>Posted by Center Staff
It has been an eventful week here in Washington DC, with historic Supreme Court rulings on health care and immigration and a long-awaited deal on student loans. But in the midst of their busy summer season, a number of U.S. Senators found time to support global microfinance.
On Wednesday, all of the female United States Senators joined together to pen a letter to Prime Minister Sheikh Hasina of Bangladesh, expressing their strong support for the Grameen Bank. These 17 women declared that the Grameen Bank has served as a model for innovation worldwide, positively affecting the communities in which it works and inspiring countless individuals to tackle the issue of poverty alleviation. The Senators expressed their worry that actions to impact the Bank’s operations would ultimately harm its 8.3 million members – 97 percent of whom are women. These members own 97 percent of the Bank’s shares, making the Grameen Bank one of the largest institutions in the world owned by rural women. Read the rest of this entry »
>Posted by Stephanie Geake
There are a number of valuable governance initiatives going on in our sector. We count five at the practitioner level, four at the investor level and four more led by policy-makers. While these projects are coming out with interesting new insights and a range of practical tools that could be of use to other actors, they have limited dissemination channels for reaching those for whom their work is intended.
Enter the Governance Working Group (GWG), created by the World Microfinance Forum in Geneva in 2010 and housed within the Center for Financial Inclusion at Accion since April 2012, with CGAP as an active partner. The group is made up of experts in microfinance governance, many of whom are leading the initiatives mentioned above. They cover governance projects spanning a number of geographies, topics and players: one initiative is developing a governance rating methodology in a pilot project in Central America; another has produced a publication on current Board composition and structures across MFIs in several regions, yet another sub-group is testing peer-to-peer learning workshops in the field, where CEOs and Board Chairs share governance experiences amongst each other. Read the rest of this entry »
>Posted by Kirsten Hansen
Risk. This four-letter word was prominent in the major headlines last week,
as legislators met with the CEO of JP Morgan to discuss the company’s 2 billion dollar losses. Why had JP Morgan taken such enormous risk? Why had JP Morgan’s risk management strategies failed to prevent the risky trades?
In times of financial crisis, risk is an easy scapegoat. The financial institution took on too much credit risk. Interest rates on the company’s liabilities rose unexpectedly. If risk were fundamentally bad, the obviously solution would be eliminating all risks. But, as outlined in a recent Harvard Business Review article, for every financial institution there are always risks that a company actually chooses to take on in order to generate returns, and which are well encapsulated in the idiom, “Nothing ventured, nothing gained.” Since such strategic risks can’t be eliminated but are an essential part of the pursuit of returns, such risks must be carefully managed to maximize potential gains and minimize potential losses. Read the rest of this entry »
>Posted by Ignacio Mas
A review of Money Real Quick: The Story of M-PESA by Tonny K. Omwansa and Nicholas P. Sullivan
When it comes to mobile payments, Kenya has become a global innovator. Almost three-quarters of the adult population knows how to fiddle with a small keyboard in order to send money to someone else or check their balance. They haven’t been seduced by Jobsian gadgetry (any phone will do), but rather by the sheer simplicity and convenience of the M-PESA service. Anywhere you go you find stores offering to help you with the bothersome business of getting cash into or out of your phone. It’s practically doorstep service. Indeed, the most striking thing about M-PESA is how visible it is.
In their new book, Money Real Quick: The Story of M-PESA, Omwansa and Sullivan have done an excellent job of consolidating all that we know about M-PESA today, following every nuance in its development and every tentacle in its growing reach. This book will become not only the classic story but also the reference for all things M-PESA. Read the rest of this entry »
>Posted by Center Staff
Join the Grameen Foundation and the World Bank’s Open Data Initiative for a discussion about the importance of data in alleviating poverty and create effective development interventions.
Using Data To End Poverty:
How macro- and micro-data improve
development interventions
Wednesday, June 27
8:30 AM – 10:00 AM*
*Coffee starts at 8:30 AM, panel begins at 9:00 AM
Grameen Foundation
1101 15th St. NW, 3rd Floor
Washington, D.C. 20005
Interested in attending?
In-person: Please RSVP to Emily Hosoya at ehosoya@grameenfoundation.org.
Live outside DC? Please join us virtually! Please contact Emily Hosoya (ehosoya@grameenfoundation.org) for the appropriate dial-in number.
> Posted by John Gitau, CEO, Kenya Financial Education Centre
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 , Fellow, Center for Financial Inclusion at Accion.
As I mentioned in a blog post yesterday, financial literacy is a recipe that does not come together automatically, even if you seem to have all the right ingredients. You may have funding, but the funding could come with unrealistic expectations. You may have students, but the students may not have a good reason to pay attention to the lessons financial literacy training offers.
While I am new to the Financial Inclusion 2020 campaign, I am certain that full financial inclusion, with fully financially capable clients, will not happen without a sound structure to support financial literacy efforts. Read the rest of this entry »
> Posted by John Gitau, CEO, Kenya Financial Education Centre
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 , Fellow, Center for Financial Inclusion at Accion.
I have taught financial literacy in East Africa for the past eight years, and have managed my own firm for the past four. And here is one thing I have noticed: the financial inclusion community as a whole does not have a common definition or goal for financial education. This lack of an agreed-upon definition makes difficult the process of creating financially capable populations.
Here is how I define key terms:
Financial education is the process of teaching the knowledge, skills and attitudes necessary in personal money management. The end result of financial education is financial literacy. Financial literacy is the ability to manage personal money well. But financial literacy is not an end in itself. It is a tool which when used well results in financial capability. Therefore, financial capability is the ability to apply financial literacy in personal money management to improve financial well-being. When a financially literate person takes action in a way that results in better money use, we say such a person is financially capable.
Not everyone maintains these definitions and goals, though. MFIs, corporations, NGOs, and SACCOs (savings and credit cooperatives) each come to me with different goals, some impossible to achieve. MFIs want me to teach their clients quickly so that they can improve on their loans repayments and increase saving. They are not keen on me teaching investment and some even warn me to be careful when handling the topic of the use of financial services. They want me not to dwell on costs but emphasize benefits. I sometimes find these requests quite amusing. Read the rest of this entry »
> Posted by Sonja E. Kelly
I remember my first bank account. I stood up on a stool and dumped out my piggy bank’s worth of change at the teller window to be counted. It was an account that came with photos of a clown on the ledger and a sucker each time I made a deposit. Now it’s 20 years later, and while I have changed I still haven’t moved my original funds. They’ve been transferred to a national bank through a series of mergers, and I have connected a checking account and credit cards to it, but I like to think those pennies and quarters are still being put to use in my bank.
I don’t think I am alone in being grateful for entering the formal financial system at a young age. It’s important to start smart financial habits with youth. Consider the following figures about Americans (originally compiled in the Financial Services Roundtable “Fast Facts”):
- 41 percent of U.S. adults grade their knowledge of personal finance as a C, D, or F.
- Many young adults don’t feel that they are adequately prepared to make good financial choices when it comes to using debt wisely (28 percent), saving for the future (40 percent), or investing their money (43 percent).
- 44 percent of parents report that they need more guidance in order to teach their children the necessary skills to become financially responsible and successful adults.
- The majority (52 percent) of young adults between the ages of 23 and 28 name the most important issue in the lives of individual Americans to be “making better choices about managing money.”
- Nearly half of teens do not know how to effectively use a credit card, but 24 percent of them think they should have a credit card either in high school or before.
- In 2011, the percentage of teens who used a savings account, checking account, debit card, or credit card amounted to 73 percent, compared to 66 percent only two years earlier.
>By Danielle Donza
My mother is a risk expert. Even now, when she walks into a room, she sees the choke-able object on the floor, the sharp corner of the coffee table, and the window open just enough for a baby to fall out. Sometimes I think she sits around all day dreaming up every risk her children could possibly face, no matter how absurd, and figuring out how she can prevent it. Some would call this paranoia, but some might call it risk management.
Whether it’s childrearing or MFI oversight, risk management is tricky business. It requires identifying plausible risk scenarios, deciding which risks are actually worth focusing on, understanding what you can do to mitigate them, and finding a balance so growth and development aren’t (too) negatively affected. And, for MFIs, it requires reaching consensus among board directors and management on an acceptable level of risk, and then complying with regulations, especially if taking deposits. Mom had a hard enough time getting Dad to agree, and comply.
In the Center’s recently released “Microfinance – A Risky Business ,” David Lascelles, senior fellow and joint founder of the Center for the Study of Financial Innovation, shares his insights about risk in a lively and provocative manner. He discusses some of the most important risks that boards should consider and highlights the importance of managing risk at all times, not just during crisis. In fact, effective board oversight of risk should help to anticipate and avert crises. Read the rest of this entry »
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