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AXA shares insights on and solutions to women’s unmet insurance needs in emerging economies.

By Garance Wattez-Richard, Head of Emerging Customers, AXA Group

Women-focused insurance solutions are a central part of AXA’s Emerging Customers work. In our SHEforSHIELD report, launched with the International Finance Corporation in 2015, we found that the market is growing quickly, as women become more risk-aware and willing to invest in protection. We conducted focus groups with women in Indonesia, Nigeria, and the United Arab Emirates (UAE) and learned that women have very specific, yet unmet needs when it comes to insurance. I am happy to share the stories of three of the women we met on our customer insights journey, diving into their fears and desires and the role that inclusive, women-focused insurance solutions could play.

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Three questions every ‘pro-poor’ group needs to ask themselves

> Posted by Chris Dunford and Carmen Velasco

The following post was originally published on NextBillion.

This month, the United Nations will celebrate achievement of Millennium Development Goal No. 1. The number of people living in extreme poverty has fallen by more than half, from 1.9 billion in 1990 to 836 million in 2015. How did this happen? Is it because of targeted anti-poverty programs, or is it due to broad-based economic growth, especially in China and India? If economic growth is the main cause, as it seems to be, further progress may be doubtful. Economic growth alone is unlikely to reach the residual hundreds of millions still living in extreme poverty.

Nor is it likely that anti-poverty programs, whether public or private, will lift this “bottom billion” from extreme poverty. For example, the U.S. poverty rate hovers around 15 percent of the population, nearly unchanged for decades, despite the hundreds of billions of dollars spent on U.S. anti-poverty programs. For another example, in poorer countries, microfinance was billed as a self-financing solution to deep poverty and became a darling of international development donors in the 1990s and “social investors” in the 2000s. Then smart social scientists tested the claims with sound field research and found little to no impact on poverty.

Is it reasonable, however, to expect anti-poverty programs, by themselves, to lift large numbers of people above an arbitrary poverty line? Given that the poor must overcome many burdens before they can seize whatever economic opportunities are available, perhaps we should ask a different question:

Do anti-poverty programs ease the burdens of poverty?

While the recent research into microfinance shows little to no increase of annual household income, on average, the same studies very often show that the burden of poverty is alleviated by giving microfinance participants access to money when they really need it during the year. Economists call this impact “consumption smoothing.” In plain terms, it means people get enough to eat throughout the year instead of going without adequate food for a day, a week, or even months at a time. If so, this is an impact worth celebrating, is it not?

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> Posted by Grace P. Sengupta, Assistant Manager, BRAC Social Innovation Lab, and Maria A. May, Senior Program Manager, BRAC Social Innovation Lab and BRAC Microfinance Research and Development Unit

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Bangladesh is a fast-growing mobile money market. With bKash, the second-largest mobile money provider in the world, industry growth in the country has reached impressive heights. Between January 2013 and February of this year, the number of mobile money clients in Bangladesh increased five-fold to 25 million users, with the number of monthly transactions increasing from 10 million to 77 million.

Yet many have found that much of the mobile money usage in Bangladesh is still over the counter – that is, many people who use mobile money rely on an agent to complete their transactions for them. There is strong speculation that the current mobile money interfaces are just too complicated for the average rural, low literacy user.

Last year, BRAC, our Bangladesh-based organization, decided to try going (nearly) cashless in a very rural, very remote branch run by our Integrated Development Programme (IDP). Many of the institution’s financial transactions, such as giving staff mobile allowances, paying extension workers, and collecting loan installments (for clients who opted-in), were digitized.

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> Posted by Eric Zuehlke, Web and Communications Director, CFI
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“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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> Posted by John Gitau, CEO, Kenya Financial Education Centre

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What are the sources of income for the poor surviving on two dollars a day? While every financial inclusion advocate wants to recommend savings, credit, and insurance products to the poor, offered by the formal financial institutions, there is a loud silence on the earning component of financial capability.

Could the silence be judged as complacent satisfaction that the earnings currently available are good enough? Suffice it to say that even though the current financial products do not produce income for the users, if they are well designed, they should facilitate the earning of income and certainly the use of income in money management. However, we do realize that if we want to talk of increasing income, we are onto a whole different development agenda: livelihood.

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> Posted by Center Staff

A mother and child stand outside a health clinic where they both received check-ups and necessary vitamins and vaccines. Great Rift Valley Region, Kenya

In Kenya, where public health insurance has been available since 1965 and access to health care is a constitutional right, only 20 percent of the country actually has access to some sort of medical coverage, according to the World Bank. With a population of 44 million, this means that 35 million are excluded from coverage and millions are unable to afford services at private or public health facilities. In terms of the money spent, about one quarter of health care services spending in Kenya comes out of pocket. Each year, about one million Kenyans fall below the poverty line because of health care related expenses. Recent investments in the industry indicate that this grim reality could be changing, however, and soon.

A few days ago fund manager LeapFrog Investments bought a majority stake in Resolution Insurance, Kenya’s fourth largest insurance provider, for $18.7 million. The new funds will go towards realizing Resolution’s growth strategy of diversifying product offerings and extending services access to more Kenyans and other East Africans. The investment comes at an exciting time for both investors and providers. Though coverage remains low overall, the industry is growing rapidly. The non-life insurance market in Kenya is expanding at 20 percent annually, with health insurance at 38 percent annually. The deal is currently undergoing final regulatory processes.

Beyond Resolution Insurance, LeapFrog recently raised $400 million which it says will go toward investments in financial services across Africa and Asia, with a quarter of funds reserved for East Africa.

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> Posted by Debashis Sarker, Senior Manager, BRAC Microfinance Program, Bangladesh
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Microfinance institutions in Bangladesh have more than 30 years of glorious experience of serving poor people with the twofold objectives of women’s empowerment and poverty alleviation. The proven microfinance lending model has been replicated in many developing countries, and more people in Bangladesh have become financially included over time. But what about financial inclusion of a most vulnerable group, persons with disabilities (PWD)?

People with disabilities simply did not get access to the leading lending sources in Bangladesh because of discrimination and accessibility barriers. Regular discrimination, taking the forms of negative attitudes, social exclusion, lack of economic opportunities, and unpaid or underpaid work, has long been an integral part of the lives of PWD. Extremely poor disabled people in rural Bangladesh mostly work in the informal sector with minimum wage rates, reflecting severe discrimination in the workplace. Family members often see them as burden. They may be turned down when trying to rent houses in urban areas. People with disabilities, especially women, are disadvantaged when it comes to education, employment, and even marriage. They may be left out of decision-making and participation in social occasions. In fact, many Bangladeshi people see disability as a curse and cause of shame to the family, and at the national level, Bangladesh has not yet passed an anti-discrimination law.

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> Posted by Jeffrey Riecke, Communications Assistant, CFI


Last week Indian rating agency CRISIL, with support from India’s Ministry of Finance and the Reserve Bank of India, launched the CRISIL Inclusix index, a new tool for tracking financial inclusion throughout the country. Developed over the past two years from over two million data points collected from 165 banks, the index assesses financial inclusion at the district, state, and country level, as well as the reach achieved by individual banks.

The index is based on a scoring system from 0 to 100, incorporating branch, deposit, and credit penetration into one metric. As more data becomes available, the index will integrate additional areas, such as the availability of microfinance and insurance products. The aim of the index is to provide a means for financial inclusion stakeholders to monitor progress, identify priority areas, and inform future efforts.

The index was released in conjunction with a new report from CRISIL on the state of inclusion in India. Drawing from the data used to develop the index, the report’s gives the country as a whole a score of 40 for 2011, with a total of 624 million saving accounts and 160 million loan accounts. This equates to roughly one in two Indians having a savings account and one in seven having an outstanding loan. Inclusion in the country has expanded in recent years, however, as the country average for 2009 was 35.

Strong inclusion discrepancies were exhibited across different areas of India. At the region level, the southern portion of the country leads with a score of 62, followed by the west with 38, and the north and east with 37 and 29, respectively.

For more on the index and report, please see CRISIL’s website. For more ways to examine financial inclusion in India, check out MIX’s India Map of Financial Inclusion, or our Mapping the Invisible Market project’s interactive Country Profiles tool.

Image credit: CRISIL

Posted by Ignacio Mas and Premasis Mukherjee, Independent Consultant and Senior Analyst, MicroSave

We recently completed extensive field work on people’s money management practices in India and Bangladesh, funded by The Bill & Melinda Gates Foundation. Our ostensible purpose was to develop simplified metaphors that express vividly how people think about money. You can judge for yourself how close we came to that by viewing (here) 10 different outputs. While our intent was to simplify, we ended up evolving a more nuanced view of how poor people think about money management (see here for a fuller treatment).

We echo Collins and Zollmann’s observation from their research in Kenya that poor people’s financial talk tends to relate much more to short term income security than to longer term goals or risks. Their main concern is that they want to have enough recurrent income to meet routine expenses. We unpack this into three interlinked concepts which, while by no means new, deserve more attention.

Shaping income to increase income security

Unlike organized sector employees, the mass market lives on a diet of irregular and often unpredictable income flows. From this, some larger routine expenses like school fees need to be met and emergencies need to be dealt with. Stuart Rutherford has placed lumping of money – the accumulation of balances into useful lump sums – as the key financial mechanism people use. What is interesting is that so often people use those lumps to buy a cow (or a rickshaw, or some merchandise for trading), whose main attribute is that it produces small daily income rather than being a good store of value. So they go from collecting a meager stream of small daily cash flows, to building a lump sum, and from there to creating more small daily cash flows. What pushes them on this cycle of sacrificing, lumping, and regenerating daily income – which we call income shaping – is the desire to change not only the size but also the timing and predictability of cash inflows. They see that as the key to providing for daily expenses, and building the routine of setting money aside regularly to build further useful lumps.

Income shaping is people’s preferred mechanism to achieve consumption smoothing: by building a regular income profile.

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> 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.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.