You are currently browsing the monthly archive for October 2012.
> Posted by Dave Grace, Advisor, CFI
HOPE! Maybe it’s my punch drunk self toward the end of a way too long U.S. election cycle, but it’s the word that comes to mind following the meeting of 80 regulatory agencies in Cape Town. The Cape Town affair was the Alliance for Financial Inclusion’s (AFI) annual Global Policy Forum.
What was so hopeful? That 35 central banks from developing and emerging markets made or reported on past commitments to increase financial inclusion! In my two decades of work in development finance, this is the first time that policymakers, who have the power to change financial systems, are creating a global movement to help the poor in a material way. While some of the commitments from central banks are malleable, most are concrete. For example, Malaysia is seeking 95 percent access by 2012, Ghana is seeking 70 percent inclusion by 2017 and is changing its payments, financial literacy and mobile financial services framework to get there.
> Posted by Alex Counts, President & CEO, Grameen Foundation
An Important Book with Implications for Poverty Alleviation Globally
This post by Alex Counts was originally published on his blog, where he describes the process of writing a book on Haitian microfinance pioneer Fonkoze.
It has been a few weeks since I have posted on this blog, but I have continued to study and to work inside Fonkoze all along. Now I feel like I finally have a juicy topic to write about and time to do so.
In response to my post on outcomes and impact (as opposed to inputs) in poverty reduction programs, Meredith Kimbell, a top-notch management consultant in the Washington, DC area whom I have known for years, mentioned the book Better by a physician named Atul Gawande, and in particular a chapter towards the end titled “The Bell Curve.” I read the entire book, which is basically about how the practice of medicine has been and can be improved (with lessons for other disciplines). I found that the book had some important lessons for the effort to end poverty through holistic approaches to microfinance such as those employed by Fonkoze.
The first third of the book is made up of some powerful examples of how medicine has improved, from the mundane (ensuring hospital staff wash their hands more frequently) to the dramatic (the story behind the massive improvements in battlefield medicine through trial and error-based innovation and rigorous quality control). The main lesson I took away from this section was that significant improvement in performance can be realized simply by more rigorously applying known best practices. Certainly this has applications to microfinance and poverty-fighting generally.
> Posted by Ignacio Mas, Independent Consultant
“I feared and distrusted them: feared them because they could reject me and expose me to mortification of defeat, and mistrusted them because I did not understand them.”
In his reminiscences of youth, Alan Moorehead said this of women, but it could equally apply to many people’s attitude to banks. People’s concerns about banks are phrased in surprisingly similar terms wherever you go in the developing world. (See this clip for a typical example.)
This got me thinking: how much of people’s fear and mistrust of banks is due to a lack of understanding? Let’s explore three typical articulations of the distance between banks and ordinary people.
“Banks are for rich people; what do they want from me?”
The understanding gap here is in the motivations and intentions of banks when they approach the base of the pyramid. It’s a very human reaction: if someone who has never shown any interest in me suddenly starts cozying up, I get on guard. Banks venturing down-market need to explain where they see the opportunity, otherwise people will not believe there is a commitment or, worse, will interpret ulterior motives. This requires articulating a joint vision of success for the bank and the new client segments, and consistently demonstrating behaviors that gives credence to the claim. Equity Bank in Kenya has been particularly effective in conveying the idea that its success is intertwined with the success of ordinary Kenyans; its positioning is credible.
> Posted by Meghan Greene, Manager, CFI
In the run up to this year’s U.S. presidential election, there has been much controversy over the topic of voter IDs. Seeking to curb voter fraud, numerous states have sought to implement stronger voting ID laws that would require prospective voters to present government-issued photo identification such as a drivers license or non-driver state ID. Additionally, last week the Supreme Court agreed to review Arizona’s law, which would require voters to demonstrate citizenship (via a document such as a passport or birth certificate).
Do many Americans really lack ID? As it turns out, yes. In a 2006 study , the Brennan Center for Justice at the New York University School of Law found that 11 percent of American adults – or more than 21 million people – do not have a government-issued photo ID. This group is composed disproportionately of elderly, minorities, and low income persons: Read the rest of this entry »
> Posted by Leah Wardle, Tool Development Specialist, The Smart Campaign, CFI
The Smart Campaign will soon launch its certification program on client protection for microfinance institutions (MFIs). In this third post in a series, Leah Wardle uses her experience from the field to shed light on standards that are often overlooked by MFI managers but that are a crucial part of client protection.
Living in Kenya, I’ve had the opportunity to work in one of the most dynamic microfinance markets on the African continent. Given the variety and number of providers in this country, I often wonder if MFIs in Kenya and their clients will soon contend with over-indebtedness—the situation where clients are taking more loans and/or bigger loans than they can repay.
It’s my sense that Kenyan MFIs—like MFIs everywhere—should at least be aware of the potential for an overheated market, and should regularly monitor the indebtedness levels of clients. But here—as in many places—monitoring this risk does not seem to be a priority. Here are some common responses that I get when I ask MFIs: “Why don’t you regularly monitor the indebtedness levels of your clients?” Read the rest of this entry »
The following post by Jerry Brady was originally published on the Accion Ambassadors Blog. Among Accion’s founders, Jerry Brady is currently working alongside Accion’s portfolio company, Vindhya, as part of Accion’s 2012 Ambassador Class. Vindhya – a company that provides data processing services – is eighty-percent staffed by “differently-abled” individuals. CFI is working specifically towards achieving full financial inclusion for differently-abled individuals through its Financial Inclusion for Persons with Disabilities project.
On the first floor of the Vindhya office in Bangalore, India, excitement is building on a Friday evening in October. Soon we’ll learn who won the best employee awards for the third quarter.
I’ve staged many of such events myself, but this one buzzes with a higher energy because of who is gathering and the momentum Vindhya has gathered in the last quarter.
Staff has been at work all day, as usual, on 15 projects that demand a high degree of concentration, working side by side in tight quarters. Some have been digitizing documents into master files; some recording data, often translating from one of seven languages into English; others have been making or receiving phone calls. After a full day, you might expect them to be tired. Doesn’t look like it.
To the outsider, the work done by the Vindhya staff may look like the classic, back-office work we’ve come to associate with India, and what one expects to be truly mind-numbing. But closer examination shows skill, judgment and experience are just as important as discipline. For example, one team has been calling people who have just signed up for the first pension they have ever known. ‘Are you in the right investment, are you keeping your money at work (and not withdrawing it for a wedding, for example), can we answer any questions for you?’ they ask, 900 times a day.
> Posted by Amanda Lotz, Financial Inclusion 2020 Project Coordinator, CFI
Schwab Foundation describes a social entrepreneur as possessing a healthy impatience. Leila Janah arrived on a red eye to Washington to speak at the Business Civic Leadership Center (BCLC) and then traveled back to San Francisco for another engagement that afternoon. I’d call that a little healthy impatience.
I was fortunate to attend the Global Corporate Citizenship Conference at the BCLC in the company of a highly socially conscious audience to listen to Janah, founder and CEO of Samasource.
Initiated in Kenya in 2008, Samasource provides people at the base of the pyramid, currently earning less than a living wage, with the opportunity to earn a sustainable source of income in support of complex digital projects needed by large enterprises, such as Google and eBay. Through in-country partners, employees are recruited and validated. Using the internet, Samasource equips its employees with technological skills and 2-4 weeks of training. It then connects them to digital work that requires a “human touch” and is not easily completed by automated systems. Even better, the target employees of Samasource are women and youth (two client populations to consider when discussing current financial inclusion challenges). Since its inception, Samasource has expanded operations to a total of nine countries, including India, Haiti and Pakistan – more evidence of healthy impatience.
> Posted by Shannon Mudd, Coordinator, Microfinance and Impact Investing Initiative, Haverford College
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.
What factors determine where microfinance institutions (MFI’s) locate their branches – and where they do not? A group of students at Haverford College set out to explore this question, initially focusing their efforts on Uganda.
The project grew out of a conversation with Susy Cheston of CFI about who is excluded from financial services and whether maps might help us understand more about who these excluded are and the challenges in reaching them. As coordinator of Haverford’s new Microfinance and Impact Investing Initiative (MI3) I was seeking ways to engage students in research that bridged theory and practice. Recalling that our new Librarian had previously been involved in a mapping project, I returned to Haverford to see what resources we might bring to bear. I discovered that we had the right software, a skilled and supportive library and, best of all, some terrific students in the Microfinance Consulting Club who were willing to roll up their sleeves and get to work (properly fueled by pizza, carrots and seltzer water).
Why Uganda? Not surprisingly, such an effort is largely driven by data availability. We became aware of a directory of MFI branches in Uganda published by the Association of Microfinance Institutions of Uganda (special thanks to Scott Gaul of TheMIX.org!). The directory provided us with district level locations across Uganda’s 100 districts). Additional research helped us to further refine locations for a majority of the branches. We then looked for sub-national socio-economic data that we could turn into map layers to conduct our analysis. The product of our initial efforts has been posted here.
> Posted by Paul Breloff and Nathan Gonzalez, Managing Director and Senior Analyst, Accion Venture Lab
The following post was originally published on the Ashoka Changemakers’ blog.
We are living an exciting time for financial inclusion. The microcredit model proved it’s possible to reach the poor and underserved masses with financial services in a profitable manner and at scale.
While there is still plenty of work left to be done to expand access to basic livelihood finance, the next natural question is: what’s next? The socioeconomic base of the pyramid (BOP) needs a full range of financial tools to improve their lives, from credit to insurance to savings, transfers, and more—and traditional “status quo” models will likely not be sufficient.
Where will this disruptive technology and business innovation come from to realize the promise of full financial inclusion?
Startups can drive innovation in this space. Certain characteristics of early stage companies put them in a great position from which to experiment and develop innovative products, technology, and delivery models.
> Posted by Sergio Guzmán, Lead Specialist, The Smart Campaign, CFI
The Smart Campaign will soon launch its Certification Program on client protection for microfinance institutions (MFIs). In this second post in a series, Sergio Guzmán uses his experience from the field to shed light on standards that are often overlooked by MFI managers but that are a crucial part of client protection.
When I talk with microfinance practitioners about interest rates they often say, “Clients don’t care about the interest rate; they care about the installment amount and how quickly you can disburse the loan.” Also, I’ve often heard from providers the following gem: “The most expensive loan is the one you never take out.”
In my experience, it’s absolutely true that clients are very concerned with how expensive loans are going to be relative to their monthly income, and it’s also true that when seeking a loan, clients want the money now if not sooner. But providers should not let those client traits become an excuse for non-transparency in price structure and calculations.
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