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> Posted by Center Staff
Last week Safaricom, one of the Kenya-based mobile network operators (MNOs) behind the flagship mobile money service M-Pesa launched Zindua Café, an online interactive portal that enables developers to share ideas, prototypes, and applications. In the industry of financial services for clients at the base of the pyramid, the move represents an intriguing arrangement for the development of new and improved services, which can be resource intensive and given little institutional priority. The arrangement works, because Safaricom purports intellectual property and related laws will be protected as the MNO considers an idea’s potential utility.
Zindua Café is open to external innovators and developers across Kenya. On the portal, Joe Ogutu, Safaricom’s Director of Strategy and Innovation, said, “Over the years we have received numerous proposals from customers on new ideas, products and services. This portal will serve as a central place where those ideas are captured.” As part of the launch, Safaricom held an intellectual property educational forum, where participants received guidance on understanding and monetizing the intellectual property that is their ideas.
M-Pesa in Kenya has over 19 million registered customers, Safaricom reported mid last year. Along with the service’s payment and store of value capabilities, additional products have been released in recent years including M-Shwari, which offers borrowing and saving, and M-Ledger, a smart phone application that provides accounting tools. Although smart phones make up a minority portion of Kenya’s phone market, reducing the reach of certain apps, in 2013 67 percent of the handsets sold by Safaricom were smart phones.
> Posted by Elisabeth Rhyne, Managing Director, CFI
Major traumas in history are relived in song and story, with each different point of view adding layers of complexity and understanding, until you can’t absorb any more. My friend Anne said she’s full up and never wants to read another book about the Civil War or World War II, but perhaps she’s just not that interested in military history.
As historical traumas go, the 2008-2009 global financial crisis is still fresh, and, especially for those of us interested in financial sectors, it is well worth examining from many different vantage points. No viewpoint could be more central than Tim Geithner’s. Geithner was the head of the New York Federal Reserve Bank when the crisis began and Secretary of the Treasury as the Obama Administration inherited the disaster. The span of his involvement allows his book, Stress Test, to cover the whole sequence from the initial red flags when Countrywide Financial and other actors in the subprime mortgage market went down in the summer of 2007 to the wrap-up with the passage of the Dodd-Frank Act in 2010. Simply as storytelling, Stress Test is a well-written, gripping narrative – a ringside seat at the crisis.
But because Geithner, perhaps more than any other single person, was the point man on the crisis, Stress Test is also about explaining how and why the Fed and later the Administration acted as it did. While Geithner clearly justifies the majority of the decisions taken, unlike many post-service memoirs, self-justification does not get in the way of the book’s ultimate purpose: to explore Geithner’s philosophy of financial crisis management, as advice to future generations.
> Posted by Center Staff
Yesterday a digital finance event in Bogota hosted by the Colombian government and the Better Than Cash Alliance celebrated a pioneering business-to-business electronic banking program that’s led to over 300,000 Colombian coffee farmers receiving access to formal banking services. Launched in 2006 by the Colombian Coffee Growers Federation (FNC), the Smart Coffee ID Card program offers the farmers represented by FNC with a dual identification/e-banking card that can be used for payments, debits, and savings. It now encompasses over 8 million transactions totaling nearly $1 billion. The event launched a Better Than Cash Alliance case study on the Smart Coffee ID Card program, which finds that the FNC initiative is a benchmark example of how transitioning from cash to e-payments in emerging economies can lead to increased safety, productivity, growth, and greater quality of life.
> Posted by Steven Werlin, Communications and Learning Officer, Chemen Lavi Miyò Program, Fonkoze
A new initiative of Haiti’s Secretary of State for the Integration of Persons with Disabilities (PwDs) promises to push financial inclusion for some of the country’s most vulnerable citizens. Prior to Haiti’s catastrophic earthquake in 2010, roughly 800,000 Haitians had disabilities. An estimated 300,000 more were injured in the earthquake. The Secretary’s office is facilitating a partnership between Fonkoze, Haiti’s largest MFI, and Texas Christian University (TCU), with additional support from the Digicel Foundation, to carry out a program that offers financial and livelihood empowerment services for PwDs.
The pilot for the project will test a combination of Fonkoze’s Chemen Lavi Miyò (CLM) program, which translates as the pathway to a better life, and TCU professor Dawn Elliott’s More than Budgets (MTB) program. CLM is a comprehensive graduation program for the ultra poor, based on the approach developed by BRAC. It is a tailored, sequenced program that provides participants with cash installments to build businesses, productive assets (such as goats, chickens, and merchandise to sell), a savings account at Fonkoze, and regular training and confidence-building support in areas of enterprise management, health and nutrition, and life skills. Most importantly, CLM offers weekly one-on-one meetings with trained case managers. It targets the poorest families – those too poor to use traditional microfinance services. Many participants graduate from the 18 month program and go on to join a group credit program to further support their business efforts. MTB, employing a combination of education and incentives, is a personal financial training program that was developed to help poor, unbanked Texans build up savings, gain access to financial resources, and reduce financial vulnerabilities. The program has been applied in homeless shelters and with people recently released from prison.
> Posted by Jeffrey Riecke, Communications Associate, CFI
Last week global leaders across industries gathered in the tiny mountain town of Davos, Switzerland for the 2015 World Economic Forum (WEF). (Though you probably already knew that, given the annual event’s ever-swelling stature and press.) The WEF fosters strategic dialogues in the hopes of developing ideas, insights, and partnerships around the most pressing issues and transformations reshaping our world. This year’s WEF included sessions from Jack Ma of Alibaba on the future of commerce, German Chancellor Angela Merkel on global responsibilities in a digital age, IMF Director Christine Lagarde on global monetary policy, former Israeli President Shimon Peres on political affairs affecting the region, and Bill Gates on sustainable future development. Of course we were following the topic of financial inclusion, and the action that got underway made it a week worth noting. Here’s a snapshot of some of the financial inclusion happenings at Davos.
In the “Inclusive Growth in a Digital Age” session held on Wednesday, a panel, which included MasterCard CEO Ajay Banga, considered how our age of digitization can confront income and wealth inequality, support investments in education and work-based training, and address vulnerable employment. Among the points of discussion was mobile phone penetration leveraged for financial services access. A full video recording of the session is available, here.
> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI
In the client protection section of the FI2020 Roadmap to Financial Inclusion, a specific recommendation was made for financial providers to embrace consumer protection as part of their professional identity, and applying a “financial consumer bill of rights” was identified as a key action point.
Looking into the state of this industry area for our upcoming FI2020 Progress Report on Financial Inclusion, I came to realize that the subject of consumers’ bills of rights is not as straightforward as it seems. Although the recommendation from the roadmap was aimed specifically at providers, the truth is that this is an area where a diversity of players is getting involved. I found a range of approaches: codes of conduct, codes of ethics, charters of rights, and bills of rights, coming from a wide spread of stakeholders, from MFIs to global associations to governments. At the heart of each of these initiatives was the same objective: for service providers to operate ethically and responsibly.
> Posted by the Steering Committee of Truelift
Institutions built upon a promise of poverty alleviation must be motivated and supported to make good on that promise. This continues to be the goal and promise of Truelift, even as we depend more than ever on volunteer leadership and support for Truelift’s journey toward greater transparency and accountability in pro-poor development. Before looking to the future, let’s review where we’ve been.
Among the diverse, and mostly complementary, objectives sought by financial inclusion and social enterprise efforts, poverty alleviation has been by far the most important and the most widely adopted objective, whether in the minds of practitioners, supporters, or the general public. Yet this objective challenges our collective ability to be clear about our intended destination and to show that we are on the right path toward it. It is even more difficult to show how far along this path we have come and how far we have yet to go. How do we motivate and support transparency and accountability for practitioners who claim to pursue poverty alleviation and for those who support them?
The most exciting trends and startups in inclusive finance this year
> Posted by Vikas Raj, Director of Investments, Accion Venture Lab
There has been a lot of buzz in the financial technology (FinTech) space over the last several months, with a high-profile IPO, several more apparently on the way, and more and more venture funding flowing into FinTech startups. Bold ideas for financial services innovation are getting more visibility – just this month, Australian Wealth Index (AWI) listed the 50 Best FinTech Innovators, and CFI’s Elisabeth Rhyne conveniently categorized the list so it’s easy to see at a glance where the innovations are.
At Venture Lab, we found the AWI list interesting but also felt it missed something significant: namely, that one of the biggest opportunities for FinTech is figuring out new solutions to include the billions of lower-income people who are today excluded from formal financial services. And it’s not charity that compels us to reach these customers – it’s good business. These customers represent a big market. In fact, they’re such a significant part of any emerging market’s customer base that any global providers with dreams of international expansion must cater to them if they want to succeed.
> Posted by Eric Zuehlke, Web and Communications Director, CFI
“I took today off because the stress is too high. I was going to borrow $200 from a friend and it fell through. I truly need it. I want to cry and can’t. I need it before the month is out. I had it and lent it to my family and I’m catching hell getting it back.”
— Tammy, age 60, U.S. Financial Diaries participant
According to the U.S. Census Bureau, the U.S. supplemental poverty rate is 15.5 percent, meaning that 48.7 million Americans live below the poverty line.¹ While poorer households face higher difficulties to make ends meet, households across the lower and middle-income spectrum in the U.S. struggle with income volatility, unplanned expenses, and finding ways to save and invest. But they also use creative ways to manage their budgets and money.
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