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> Posted by Center Staff
Borrowing money from family, friends, or acquaintances is nothing new, of course. Whether it’s a spur of the moment decision or a more structured arrangement, sidestepping a formal financial institution for at least some of your cash flow needs can be attractive.
The technology community has started to recognize an opportunity in entering this space. Puddle, a smart phone application-based service that allows you to create a “bank” with your friends, was launched late last year.
With Puddle, you and your friends form a collective bank, contributing funds, deciding who can be members, and what the borrowing interest rates will be. The service is set up so that the profit made off of interest is distributed back amongst group members. Puddle is still in early launch stages, but currently you can request an invitation to try it out. Here’s a screen shot of what the browser-based interface looks like. It’s advertised that no fees or applications are associated with the service. A similar smart phone application-based social lending service, Lendstar, currently in beta, was launched earlier this year.
Would you be willing to use an app service and lend money to your friends? One detail that isn’t clear for either app was what happens when someone defaults on their loan repayments. An important detail…depending on who your friends are.
> Posted by Center Staff
This week the global financial inclusion community saw a mini-milestone: with the newly signed-on Nepal, 40 countries have committed to the Maya Declaration. The Maya Declaration is a global and measurable set of commitments by developing and emerging country governments to greater financial inclusion.
When a country commits to the Maya Declaration, they make measurable commitments in four financial inclusion areas: create an enabling environment to harness new technology that increases access and lowers costs of financial services; implement a proportional framework that advances synergies in financial inclusion, integrity, and stability; integrate consumer protection and empowerment as a key pillar of financial inclusion; utilize data for informed policymaking and tracking results.
Nepal announced its Maya Declaration commitment on Tuesday. In the commitment, Nepal Rastra Bank (NRB) vowed to increase the country’s financial literacy through the development of a national-level Financial Literacy Strategy by mid-2014. The bank also committed to conducting a financial literacy program for students, “NRB with Students,” and widely disseminating financial literacy materials to promote public awareness. To strengthen the country’s mobile money services, the commitment includes provisions to improve the quality of existing mobile money services and to introduce new services before the end of 2014. Also before the end of 2014, Nepal’s commitment outlines that NRB will direct a national-level survey on rural credit and create a Financial Sector Development Strategy. Other recent country commitments came from Belarus this past May and El Salvador this past March.
> Posted by Sebastian Groh, Project Manager, MicroEnergy International
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.”
United Nations Secretary General Ban Ki-moon recently called upon the international community to commit to a new groundbreaking initiative seeking Sustainable Energy for All (SE4A) by the year 2030. At MicroEnergy International (MEI) we have been working towards this goal since 2002 by supporting microfinance institutions (MFIs) in the process of developing and providing “green microloans,” financial products that help clients finance a renewable or efficient energy system for their home or business. Our work is based on the fundamental belief that the relationship between energy inclusion and financial inclusion is a critical impact point that has positive effects on the poverty levels of low-income clients.
Perhaps the linkage isn’t immediately clear, so a few examples will help us explain.
Financial inclusion leads to energy inclusion. Access to finance can lead to energy inclusion simply in terms of affordability and financial means. People who have access to financial services are able to finance their basic energy needs and either pay for grid-supplied electricity or purchase a distributed energy generation system of their own. These systems have a prohibitive initial investment burden that usually cannot be covered by those at the base of the pyramid (BoP). Innovative green credit design allows clients to pay in monthly installments that correspond to their current expenditures on energy appliances and sources as well as potential savings and income generation opportunities. A scheme of that type has paid off for about two million Solar Home System users today in the country of Bangladesh, according to the World Bank’s IDCOL Solar Home Systems Project.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
For many of us in the U.S., it’s largely happenstance that we cross paths with the topics of microfinance and financial inclusion in a meaningful way. Personally, I remember first hearing about microfinance from friends during college, but it was always in passing, never to the extent or specificity needed for it to make a lasting impression on me. I wish this wasn’t the case! I wish my college self, and all students for that matter, had more exposure to these areas.
To help students and the U.S. academic community engage with microfinance and financial inclusion, Citi Microfinance and Kiva have teamed up to launch Kiva U. The mission of Kiva U, built around three core initiatives, is to create a community for our future inclusion leaders and to support the expansion of full financial inclusion. There’s a big opportunity in the combination of modern communications technology and academia’s inherently social environment, though few interactive financial inclusion platforms for students and educators exist. Kiva U aims to gain popularity as such a platform.
The three core initiatives of Kiva U are expand campus-based microfinance clubs, develop classroom-based microfinance and financial inclusion curriculum for all learning levels, and foster leadership among students interested in social enterprise, international development, and financial inclusion.
There are currently Kiva clubs at 67 colleges and 60 high schools in the United States. Providing online and offline engagement tools, Kiva U plans to leverage this foundation and connect with additional students and educators throughout the country’s academic community.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
If you regularly follow financial inclusion news, you probably come across articles on the financial inclusion progress of particular countries all the time. Just today I read headlines on the extent of inclusion in Bangladesh as compared to other South Asian countries, on the growing mass of mobile money subscribers in Kenya, and on life insurance penetration in India. Last week we added to the conversation with a post on Nigeria’s financial inclusion strategy. Keeping track of all these national developments is a challenge, even for those of us who have the opportunity to focus much of our attention on financial inclusion.
Earlier this month AFI released the National Financial Inclusion Strategy Timeline, a document that chronicles the steps AFI member institutions have taken in recent years to develop and implement national financial inclusion strategies in their countries – a resource any of us financial inclusion media junkies can embrace. Created by AFI’s Financial Inclusion Strategy Peer Learning Group (FISPLG), the timeline is organized by region and lists national-level developments for 28 countries from 2007 to the present. Here’s the Sub-Saharan Africa region section.
In looking at the timeline, a few trends quickly come to the surface. Not surprisingly, there’s been an increase in inclusion activity among central banks and financial regulatory institutions in the past few years. Specifically in 2013, a number of countries have drafted or implemented national strategies, including the Philippines, Thailand, Belarus, Turkey, Nepal, and Tanzania. Another trend expressed in the timeline is the rise of branchless banking, with many countries developing guidelines for agent and mobile banking.
> Posted by Center Staff
Today, we’re excited to announce that Michael Corbat, CEO of Citi and Ajay Banga, CEO of MasterCard will attend and deliver remarks at the Financial Inclusion 2020 Global Forum. Taking place in London on October 28-30, 2013, the Forum is a one-time event that will promote a global agenda for bringing about the financial inclusion of more than 2 billion people around the world, using the year 2020 as a focal point.
Other confirmed speakers to date include:
- Shamshad Akhtar, Assistant Secretary-General, United Nations
- Matthew Bishop, U.S. Business Editor and New York Bureau Chief, The Economist
- Cherie Blair, Founder, the Cherie Blair Foundation for Women
- Elizabeth Buse, Global Executive, Solutions, Visa Inc.
- Sendhil Mullainathan, Professor of Economics at Harvard
- Duvvuri Subbarao, former Governor of Reserve Bank of India
Organized in partnership with Citi, Visa Inc., MasterCard, the Bill and Melinda Gates Foundation, Western Union Foundation, MetLife Foundation, and the Financial Times, the Global Forum is a unique opportunity to engage a broad range of players in financial inclusion through a collaborative environment. The Forum will build on the project’s two-year efforts and unveil recommendations from the Roadmap for Financial Inclusion that outlines the most important steps to advance financial inclusion in 2014 and beyond.
“We are thrilled and grateful to have the support of such a wide range of high-level participants at the Global Forum,” said Elisabeth Rhyne, Managing Director of CFI. “The breadth of involvement – from across the private and public sectors – demonstrates the broad support of Financial Inclusion 2020 and the fact that reaching full global financial inclusion will require the combined efforts of all stakeholders.”
> Posted by Alexandra Rizzi, Deputy Director, the Smart Campaign
Defaulting on a loan can have very serious consequences for both financial providers and low-income families, but to-date the microfinance industry has not gathered systematic information on how financial institutions serving the poor treat defaulting clients.
While many assume that financial institutions treat defaulting clients in similar ways, anecdotally there appear to be big differences across countries and between providers. Many questions exist around what policies and practices kick into motion after a client defaults and what could drive differences in practice across or even within countries (i.e. regulation vs. culture vs. educational levels of loan officers vs. how an MFI prices for risk etc).
To begin to address this knowledge gap the Smart Campaign is launching an exploratory project to map out default management practices among providers in several key markets in order to analyze trends and determinants, and to extract good practices. But before jumping into the key markets, as an initial step the Campaign has created a basic survey for its endorsers, partners, and other interested parties to take so that we might first learn more about default management.
> Posted by Sonja E. Kelly, Fellow, CFI
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.”
While in Chile this summer, I met with a number of people from SERNAC, Servicio Nacional del Consumidor (the national consumer protection agency). They mentioned that after a number of lawsuits in Chile involving credit providers taking advantage of consumers, the agency recently helped to usher in a new law that improved financial capability.
Here’s what astounded me about the law: it requires that the lending terms and conditions be boiled down to a two-digit number, and that that number be prominently displayed for the consumer. That’s right, the terms and conditions of each credit product in the country are translated into a two-digit number… Talk about a challenge!
The law creates a structure under which credit-issuing institutions must combine various aspects of terms and conditions into one simple number so that consumers can interpret and compare different credit offers. This number is displayed in bold, big numbers in the top right corner of the first document that a consumer receives regarding the loan as well as on subsequent monthly statements. Read the rest of this entry »
> Posted by Nadia van de Walle, Senior Africa Specialist, the Smart Campaign
A year ago, Nigeria put forward an ambitious financial inclusion strategy. This National Financial Inclusion Strategy (NFIS) is an exciting development, and with this post I want to take a closer look at it and spotlight some areas to watch as implementation progresses in the years to come.
So, what is it all about? In October 2012, President Goodluck Jonathan and the Central Bank of Nigeria (CBN) promoted the program as a key driver for achieving their larger Vision 20: 2020 strategy, an ambitious initiative aiming to make Nigeria one of the world’s 20 largest economies by 2020.
The CBN is already one of 36 national institutions that have signed the AFI Maya Declaration, a set of commitments from emerging economies’ governments’ designed to increase access to and lower the costs of financial services, and its governor often makes the case that financial inclusion benefits economic growth. After all, despite being West Africa’s largest economy and holding an impressive mass of natural resources, Nigeria is also home to 100 million people living on less than US$1.25 a day. In the financial sector, only 30 percent of adults have an account at a formal financial institution. Public sector borrowing crowds out private borrowers and lending institutions have become increasingly risk averse, reflecting recent crises and adjustments to new regulatory reform. Credit markets remain underdeveloped with limited products, short-term horizons, and high borrowing costs. Making the financial landscape even harsher, Nigerians must contend with inadequate physical infrastructure, ineffective legal institutions, and everyday challenges like distant bank branches, missing identification documents, and high fees.
> Posted by Josh Goldstein aka Mr. Provocative
Economic inclusion for persons with disabilities (PWDs) is more possible than ever because of technological innovations that can transform the workplace, by making it accessible for persons with different kinds of disabilities. Screen reading software for the blind is just one example. Furthermore, there are some twenty-first century jobs that may perfectly fit the skill set of certain PWDs.
One recent stellar example of PWDs entering the workforce in a new way was reported by Emma Jacobs of the Financial Times on June 7. She spotlights the achievement of Thornkil Sonne, a Danish businessman (and Ashoka Fellow) who supplies autistic recruits to the IT industry and has shown that people with autism routinely demonstrate superior skills compared to their non-autistic peers. Many persons with autism (but by no means all) excel at data entry, software programming, and other technical tasks. This has persuaded SAP, the profit-driven German business software company to recruit 110 autistic employees to test its software products.
Globally, there are millions of vacant jobs in IT. So this could just be the beginning! Such employment opportunities that capitalize on the strengths of the differently-abled to such a degree that they are actually preferred candidates for certain positions in a competitive marketplace is truly extraordinary, even revolutionary, and is something we can all celebrate. But there is a dark side to technological innovations that may doom PWDs just as new opportunities and new acceptance appear on the horizon.
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