Comments on: The Financial Inclusion 2020 Global Forum: A Letter to Microfinance Institutions

By: Frank Cianciullo

Frank Cianciullo — Sat, 22 Feb 2014 04:34:08 +0000

Post offices can offer the financial services that people need and they can be successful as we have seen in Brazil. However, first we must dramatically expand the networks of post offices in countries at the base of the pyramid.
Post Offices can offer postal, banking, financial services, telecommunication services and any number of government-to-citizen services such as licensing, access to social programs, vital certificates, etc. through a Microfranchised Village Post Office model.
Microfranchising provides all of the same fundamentals of the business-format or packaged franchise model, but requires a much smaller investment from both the franchisor (the Post supported by an NGO or Multinational Development Bank) and the franchisee. It borrows the existing, successful franchise business concepts, scales them down and applies them in countries at the base of the pyramid. A microfranchised post office model, in every village, that has a minimum sustainable number of people, would make the village post office relevant to the people; develop a host business or make it more successful and may have a dramatic, positive impact on the economy and the quality of life of poor people, at very little cost.
When you apply microfranchising principles of branding and standardization to ensure quality and replication, it allows a postal administration, even one that lacks any great amount of development funds, the ability to expand quickly to reach a critical mass, achieve economies of scale and the ability to sustain itself, which in-turn lowers the service and product cost for the group of franchisees to offer the services.

By: Geprge Robert Kinyanjui

Geprge Robert Kinyanjui — Tue, 19 Nov 2013 13:35:18 +0000

I posted a comment a few days ago. We need to collaborate.

By: Hugh Sinclair

Hugh Sinclair — Fri, 15 Nov 2013 18:00:36 +0000

Anne, this is an interesting post. You begin with an encouraging definition of full financial inclusion – a simple summary that states quite explicitly that loans to the poor should be “affordable”. Do you observe any irony in the fact, sourced entirely from publicly available information provided by Chuck Waterfield’s excellent transparency initiative, that Opportunity International do not appear to meet this rather simple criteria? As manager of the Microfinance CEO Working Group I wonder what criteria you apply to the members of this elite organisation with regards their own compliance with the definition you cite. Conveniently the word “affordable” is not defined explicitly.

In my blog of October this year (“Exploitation Declines, a bit”), using data from http://www.mftransparency.org, I wonder if you find interest rates to Kenyans of 135% affordable? Ghanaians pay up to 124.1%, Malawians 144.5%, Mozambicans cough up 152.7%, and Ugandans pay a mere 103.1%. Rwandans and Tanzanians receive relative bargains, with rates not exceeding 76.8% and 92.1% respectively.

These are the interest rates charged by Opportunity International, according to publicly available, and independently verified data.

Do these qualify as “affordable”?

It appears there are only three answers possible here. Firstly, that you do find these affordable, in which case some may wonder what the purpose of such a ridiculous definition is. Where do you draw the line? is an APR of 1.000% “affordable”? Or you may suggest these are not affordable, in which case does Opportunity International deserve a place in this club? Or thirdly, you may evade the question entirely and retain a nebulous, nice-sounding but toothless definition of such an obvious point in order to present the image of ethical microfinance without actually obliging exploitative operators to address such a simple facet of lending to poor, vulnerable people.

And do also note that despite the fact that MFTransparency manages to calculate Opportunity’s interest rates to two decimal places, Opportunity themselves make no mention of interest rates on their entire website save a vague comment on their FAQ section: “Opportunity International charges interest in order to cover its costs and achieve operational sustainability”. Would this fall under any sensible defintion of “transparency” I wonder? Another buzz word we hear much of nowadays but see little evidence of.

You are striving to do good work, which I applaud, but you need to ensure those you partner with credible players, and live up to the same standards that you promote. Otherwise you risk looking like yet another failed attempt to perk up the reputation of an ailing sector. Take action, not simply sprout nice heart-warming words. So, I ask the question directly, and would respect you a lot more if you would dare to provide an explicit answer: what is an “affordable” loan? If you prefer not to define the words you use, perhaps you could pay us the courtesy of simply not using these words.

By: George Kinyanjui PhD

George Kinyanjui PhD — Fri, 15 Nov 2013 12:18:05 +0000

Dear Anne,
Great reading!
‘It means shifting from financial education as knowledge transfer to financial capability as promoting sound financial choices and behavior. Do you know how to do that?’
For me it starts with financial awareness, financial education,financial literacy, financial capability, financial freedom of choice, and financial emancipation then financial inclusion.
At FinInc Systems we have walked this path. It is not a well trodden path. No wonder because it is not an easy path. It involves all the players as Michael very correctly puts it. Getting them to see the same elephant is quite a task given that each has their own interests which override their need to corroborate. Its a careful walk through tenets of Project management, change management, organizational development, and behavioral science. The tools that work in Haiti will not necessarily work in Indonesia,Africa or anywhere else. So we draw board for every intervention. Can we do it? We give it a pretty good shot! There needs to be goodwill nurtured in the process. Its a development paradigm shifting walk and like in all development implementations requires time, Patience here is a truly a virtue.
You have said well in your blog and God speed in your new role