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> Posted by Center Staff
> Posted by Jeffrey Riecke, Communications Assistant, CFI
A few weeks ago Tanzania launched a National Financial Inclusion Framework, which includes the ambitious goal of expanding access to more than half the country’s population by 2016. As of 2012, 17 percent of Tanzanians had access to formal financial services accounts, compared to an average of 24 percent for all of Sub-Saharan Africa.
H.M. Queen Máxima of the Netherlands in her role as UN Special Advocate on Inclusive Finance for Development joined the framework’s launch event, and emphasized how the effort builds on the country’s recent national commitments. At the G20 Leaders Summit in 2012, Tanzania was one of 17 countries that pledged to create a national financial inclusion strategy. It was also one of the first countries to make a Maya Declaration commitment.
Despite disappointing account ownership figures, the country has achieved progress in other areas. Between September 2012 and 2013, access to mobile money services increased from 63 to 90 percent nationally, with nearly 43 percent of the population actively using a mobile money service.
The national framework, alongside the goal of 50 percent account ownership by 2016, aims to achieve 50 percent regular usage, 25 percent of adults with at least two weeks’ worth of income in formal savings accounts, and 25 percent of adults with electronic personal financial records.
> Posted by Jaclyn Berfond, Senior Associate, Network Engagement, Women’s World Banking
Women have long been the face of microfinance, a fact reflected by the mission and goals of the institutions that serve them. According to the Microfinance Information Exchange (MIX), most microfinance institutions (MFIs) claim to target women (74 percent) and just over half declare women’s empowerment or gender equality as an objective.
Big commitments are all well and good, but if we are going to espouse the importance of serving low-income women, we must be able to hold ourselves accountable. How do we do that?
For many years now, the microfinance industry has focused on financial performance, with sustainability and later profitability driving outreach. In the wake of crisis – often the consequence of rapid growth – the industry has re-focused on social performance, getting back to the basics of ensuring that financial institutions adhere to their mission of serving low-income clients. We strongly believe that there must be a balance between financial and social performance, and that in order to achieve either, the industry must take a good look at their clients – still predominantly women. By truly analyzing this client base, MFIs can both build the business case for serving women, and ensure that they are serving these women well. This is gender performance.
In 2011, Women’s World Banking launched the Gender Performance Initiative (GPI) to develop a framework that defines what it means to serve women and measures how effectively MFIs do so. We wanted to establish a set of indicators that would enable MFIs to consider not only how many women they serve, but how they can enhance their understanding of customers to tailor products, marketing strategies and delivery channels to meet women’s needs. The initiative also set out to demonstrate the benefits of financial inclusion for women and their households, as well as the benefits of gender diversity among staff, management, and board.
Developing the indicators. There is no easy place to start when it comes to measuring performance, and we wanted to be sure that the metrics we chose would truly tell us whether an institution was serving women well. First and foremost, we needed to start with the right questions, in the areas that matter most to women. Beyond outreach, we looked at product design and diversity, service quality, and client protection, as women have specific life-cycle needs and goals that must be considered. For example, women may need a convenient and confidential way to save for children’s education expenses, or an insurance product that offers cash benefits for hospitalization to cover lost income from time away from their business (and includes maternal health coverage). We also looked at the diversity of staff and management, because we believe that in order to be the best place for women customers, a microfinance institution should be a place that welcomes women employees and women leaders. Finally, we wanted to understand how serving women clients contributes to institutional financial sustainability, as well as outcomes for clients.
> Posted by Center Staff
We’re pleased to introduce you to our online interactive Global Forum Roundup. This one-time “magazine” includes key messages from the plenary sessions and roundtables on the Roadmap to Financial Inclusion, personal commitments from many participants, resource links, and FI2020’s plans for 2014 and beyond.
Click on any photo within the magazine to watch session videos and other content.
To view the magazine, click here or on the image below. A PDF version of this Roundup is available here.
> Posted by Sonja E. Kelly, Fellow, CFI
I was thrilled when I opened the paper this week to the news of Michelle Bachelet’s victory in Chile. The first female president in Chile, first elected in 2006, is back in office after a one-term break. I have long admired her advocacy for those living in poverty, her tenacity, and her activism. However, her victory also means a question of what will happen to the admirable financial inclusion initiatives begun by the Piñera administration.
In many of my conversations with government employees in Chile in the past year I have heard some caveat to the effect of, “I’m not sure what we’ll be able to do in the coming months given the upcoming election.” Initiatives like electronic government-to-person (G2P) payments, for example, were pushed forward by people connected with the Piñera government, and if the new administration does not prioritize such initiatives, financial inclusion may receive less policy attention.
This highlights a larger issue of who “owns” government-initiated financial inclusion efforts. The answer matters because the leadership structure of government-led initiatives determines longevity. If financial inclusion policy is spearheaded by the Central Bank, and the Central Bank ministry is largely independent, financial inclusion initiatives are unlikely to change course with an administration change. If it is a Ministry of Finance-led push, however, financial inclusion may indeed be an administration-specific initiative.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
Town of Ollantaytambo, Peru
Peru is widely recognized as one of the best environments for microfinance and financial inclusion in the world. In fact it ranked first in this year’s Microscope on the Business Environment for Microfinance, out of 55 countries. But the prime movers of financial inclusion in the country are not satisfied. At a recent CFI-Oikocredit event they gathered to consider a new CFI-Oikocredit report, Opportunities and Obstacles to Financial Inclusion in Peru. The report shares insights from surveys and interviews with service providers, investors, policymakers, and other players working to advance inclusion in the country.
What’s the biggest opportunity for advancing financial inclusion in Peru? David Alvarez, an international consultant, lead author of the report and co-organizer of the event, asked the audience this question. Thirty-seven percent of the audience responded with financial education, while 30 percent chose mobile money – responses that confirmed the report study’s responses. When David polled the audience on the biggest challenge to inclusion in Peru, the top response was limited understanding of client needs, chosen by 30 percent of people, followed by financial education with 24 percent.
> Posted by Ashutosh Misra, Principal Consultant, Interactive Forum on Indian Economy
New modes of payments, such as electronic cards, mobile money, and internet-based payments, are in some cases causing financial exclusion for those who prefer, or are only able to pay in cash. This is the major finding of a study commissioned by the European Foundation for Financial Inclusion (EUFFI) on the impact of new payment systems on financial exclusion in the U.K., France, Italy, Poland, and Sweden.
The report is of interest to India for three main reasons: the Reserve Bank of India’s emphasis on financial inclusion when granting new bank licenses; Indian banks expanding their use of electronic payments and non-branch interaction with customers; the Indian government’s focus on promoting direct electronic transfer of social benefits. The five European nations of the study are smaller than India in size and population, but they’re ahead technologically and in financial services market development. Nonetheless, millions of their citizens are restricted from having a bank account and hence do not have access to many new payment technologies. Also, significant populations are unable to perform transactions using the new technologies or would prefer to use traditional methods. If the new payment systems can be so disruptive there, India has miles to go before electronic payments can become the norm here.
For financial inclusion, access to basic banking services must be complemented by the right to use traditional means of payment, such as cash, if that’s the customer’s desired payment form. The EUFFI study finds that cash is often the only means of payment for those at risk of exclusion, but shows it is becoming harder or more expensive to pay in cash. On the other side of this, many merchants still aren’t able or don’t want to accept cards. An example of this shared in the report is unsuccessful asylum seekers in the U.K. who can get financial support from the government only in the form of plastic payment cards. These cards are credited weekly, and enabled to purchase essential goods from a restricted subset of shops. This inability to pay in cash results in hostile behavior towards asylum seekers in some shops and supermarkets.
> Posted by Susy Cheston, Senior Advisor, CFI
The Financial Inclusion 2020 campaign 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.”
The Financial Inclusion 2020 project has centered around a set of five roadmaps, each covering a major challenge in reaching full inclusion: financial capability, addressing customer needs, client protection, technology, and credit reporting. At the Financial Inclusion 2020 Global Forum in October, participants met in focused roundtable sessions to talk about moving the roadmap recommendations toward action. In this post we highlight some of the main takeaways from these roundtables.
1. What works? We need evidence! Many of the roundtables dreamed of a clearinghouse of case studies, research, country examples, and other evidence on the effectiveness of different approaches to technology, financial capability, and client protection. Part of the dream was a platform for governments and providers to share and disseminate their experiences.
2. We want metrics. Are our services customer-centric? Do we have effective client protection practices? Do we track complaints? Do we know who is or is not opting in to our services? And are we getting all the data we have into the hands of people who can use it to make our services better?
3. Who’s at the table? The drivers of financial inclusion within governments are not just bank regulators, but telecommunications, insurance, and utility regulators, and many ministries (finance, agriculture, social welfare, education, etc.).
> Posted by Caitlin Sanford, Lanna Lome-Ieremia, and Sameer Chand, Bankable Frontier Associates, Central Bank of Samoa, and Reserve Bank of Fiji
Another version of this post is published on the Alliance for Financial Inclusion website.
Sigatoka Market, Sigatoka, Fiji
Until now there have been few sources of publicly available data about financial access and usage in the Pacific Islands. Although individual central banks are measuring and tracking progress towards financial inclusion, the small island countries in the Pacific region have often been left out of international financial inclusion datasets, such as the Global Findex. The IMF Financial Access Survey captures some key financial inclusion indicators but this does not include all the countries from the Pacific.
The Pacific Islands Working Group on financial inclusion (PIWG) of the Alliance for Financial Inclusion came together this year to define and collect financial inclusion data specifically tailored to the region. Fiji, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu participated in this data project. While the Alliance for Financial Inclusion (AFI) and the Global Partnership for Financial Inclusion (GPFI) have elaborated key sets of financial inclusion indicators to be used for global comparison, in some instances, individual countries such as Mexico, Brazil, Tanzania, and others have crafted broader sets of country-level indicators. This is the first time a broader set of common indicators have been developed at a regional level.
> Posted by Amanda Lotz, Financial Inclusion 2020 Consultant, CFI
Microinsurance matters, especially as we see an increase in climate change related disasters.
On October 28, Alexia Latortue of the U.S. Treasury moderated the opening plenary of the Financial Inclusion 2020 Global Forum featuring two leaders in microinsurance, Michel Khalaf of MetLife and Martyn Parker of Swiss Re. One of Alexia’s remarks at the Global Forum deeply resonates with me today: “The occurrence of a risk event can set a family back an entire generation.” Among other things, she suggested, there are new and emerging risks linked to climate change.
Shortly after the Forum, we saw haunting evidence of this. On November 8, Typhoon Haiyan devastated much of the Visayas region in the Philippines, with the city of Tacloban being the hardest hit. Typhoon Haiyan is a reminder of why we must prepare to face natural disasters. Microinsurance is one form of advance preparation that can prove instrumental in the disaster rebuilding stage.
In a disaster prone country such as the Philippines, where over 41 percent of the population lives on under $2 per day, ensuring greater access to microinsurance could make an enormous impact. In the country’s rural areas, which encompass roughly half of Filipinos and about 80 percent of those living in poverty, agriculture is the primary source of income. Government data from 2009 indicates that poverty among fishermen is at 41 percent, with farmers close behind at 36 percent. Think about the opportunities for providing microinsurance to farmers and fishers, whose livelihoods and families depend on productive land and assets that can be tremendously affected by weather!
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