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> Posted by Center Staff

Today, the global financial inclusion celebrity (and Prime Minister of India) Narendra Modi visits with United States President Barack Obama. The pair will discuss the deepening U.S.-India relationship, including progress on climate change and clean energy partnerships, security and defense cooperation, and economic growth priorities. As a reader of our blog, you’re likely aware of Prime Minister Modi and India’s commitment to advancing financial inclusion in the country. Indeed, at the close of 2015, we named India our Financial Inclusion Country of the Year. In honor of Prime Minister Modi’s visit today, we wanted to take a moment to spotlight some of the strides that India has taken to bank the unbanked. After a brief review of the broad initiatives, we identify some highlights from recent months.

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> Posted by Ben Mandell, International Programs Manager, Water.orgAccess to safe drinking water and hygienic sanitation are true necessities for healthy families. Yet, access rates for water and sanitation remain stubbornly low in most low-income countries. The negative health implications can be dire and include diarrheal disease which can result in premature mortality and childhood malnutrition and stunting.  From an economic perspective, “The health consequences of poor sanitation are substantial and contribute to over US$50 billion in GDP loss annually,” according to a new India focused learning note jointly developed by Water.org and the World Bank Water and Sanitation Program (WSP).

In the learning note, Water.org and WSP, both active globally in working to expand access to water and sanitation, collaborate to share their research and findings on how household lending can help drive improved water and sanitation uptake as well as provide economic and social benefits to local financial organizations.

Water.org, through its WaterCredit program, provides capacity-building grants and technical assistance to create, pilot, and scale water and sanitation financing. Currently, WaterCredit provides funding to microfinance providers and NGOs to support the creation of programs and these partners then leverage funding from banks and capital markets to disburse loans to people in need. Accordingly, “Water.org has provided US$11.3 million in subsidies to financial institutions and NGO partners worldwide, which in turn have disbursed over US$120 million in loans reaching 2.4 million people.”

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> Posted by Habitat for Humanity International

Microfinance in Cambodia has seen tremendous growth throughout the past two decades. The first microfinance institutions were initially established by relief organizations to provide cash transfers to poor families, to build incomes and reduce poverty. Fast forward to 2015, and the financial landscape is thriving with over 45 regulated microfinance institutions (MFIs) operating in the country. Improved financial access is contributing to 7.3 percent GDP growth and reducing poverty rates for those living under $2 per day.

Despite impressive economic growth, housing quality for many Cambodians remains below standards. A 2014 study conducted by the Ministry of Planning in Cambodia revealed that nearly 27 percent of homes in rural areas still use temporary materials for walls and roughly 83 percent have temporary floors.

As migration brings more people to urban and peri-urban areas, and as a young population seeks to build new housing, there is a growing need for financial products that match the term and usage that housing requires. Recently, housing microfinance (usually characterized by larger loan amounts and longer terms than traditional microfinance) has gained traction in Cambodia as a funding source for home construction and home improvements for low income families.

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> Posted by Center Staff

Good morning! Freshly published is the latest edition of the Financial Inclusion 2020 News Feed, our weekly online magazine sharing the big news in banking the unbanked. Among the stories in this week’s edition are the World Council receiving a USAID award to catalyze affordable housing in Haiti, a multi-partner initiative to train women across Nigeria to become mobile banking agents, and Tanzania setting a new financial inclusion goal. Here are a few more details:

  • The World Council with support from USAID and others will work directly with financial institutions and housing developers to help expand affordable housing financial products and services in Haiti.
  • The Cherie Blair Foundation for Women is working with FirstBank to provide technical, business, and financial literacy training to 2,500 women across Nigeria to become agents for FirstBank’s mobile banking platform.
  • Last week Tanzania set a new goal of extending financial services access to 75 percent of the population in 2016 – as a follow-up to the goal of 55 percent in 2016, which was surpassed in 2014.

For more information on these and other stories, read the latest issue of the FI2020 News Feed here, and make sure to subscribe to the weekly online magazine by entering your email address in the right-hand menu so you can be notified when the latest issue comes out.

Have you come across a story or initiative you think we should cover? Email your ideas to Eric Zuehlke at ezuehlke@accion.org.

> Posted by Elisabeth Rhyne, Managing Director, CFI

I recently attended the annual meeting of the Microfinance Network (MFN), which was hosted by the Alexandria Business Association in Alexandria, Egypt. MFN is a global network of some of the largest and leading microfinance institutions, and its annual meeting has long been known for candid and in-depth sharing of experience among the leaders of these institutions, as this post demonstrates.

Ask a microfinance CEO what’s making his or her life hard these days, and the answer is likely to be politics.

That’s hardly surprising when the speaker is Motaz Tabaa, CEO of the Alexandria Business Association (ABA), one of the largest microfinance institutions (MFIs) in Egypt. On January 28, 2011, when the occupation of Tahrir Square in Cairo held the world’s attention and led to the resignation of then-President Mubarak, it became impossible for ABA to operate. But before the week was over, staff were back on the streets, collecting and disbursing loans, and sleeping at the office to guard the cash that couldn’t be deposited in banks, which remained still closed.

Nearly every MFI in the group had a similar encounter with crisis – consider the political violence (and/or natural disaster) that has touched Uganda, Nigeria, Armenia, Mexico, Haiti, and Bangladesh in recent years. Today, Al Majmoua in Lebanon and Tamweelcom in Jordan are overwhelmed with the attempt to serve the Syrian refugees that have crossed their borders. The CEOs who have experienced such upheaval agreed about the role of MFIs in responding quickly to help clients obtain cash, keep their businesses open, and then rebuild. Given how prevalent political and natural crises are, organizations have developed protocols for responding quickly. Even while we met, Enrique Majos of Compartamos received news of a tornado in Mexico, and sent the Compartamos natural disaster team into action.

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> Posted by Bruce MacDonald, Senior Vice President, Communications, Accion

My first love was Susan Morasky, but my second – and far more enduring – has been Africa. For that I credit Mrs. Walden, my third-grade teacher, who encouraged us to think big.

Sadly, even the loves of your life can let you down. In Nairobi last week to promote the Africa Board Fellowship, our new program on governance for sub-Saharan MFIs, all went well. Until, that is, I tried to go home. A 20-minute taxi ride to the airport became an hour, then two, then four.

I missed the KLM flight to Amsterdam, and of course the connecting flight home. As I sat in the cab, fuming in First-World frustration, I peppered the driver with questions. “What’s the cause of this?” Rain. “Can’t you go another way?” This is the only way. “Where are all the policemen directing traffic?” Incoherent response. And, finally, snippily, “How on earth do you people put up with this?” Obviously embarrassed, he finally stopped answering my questions.

Everything’s relative, especially in Africa – something I should have remembered, given the banking and finance conference I’d just come from, and the presentation by Amish Gupta, head of investment banking at Standard Investment Bank in Nairobi.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

The impact investing space is growing and benefitting an increasingly diverse array of areas including financial services, agriculture, healthcare, housing, energy, and more. Expanding too is the number of impact investing organizations incorporating impact measurement as part of their investment activities. As more players enter and the industry matures it’s even more important that the industry embraces the capture of impact data and assessment of progress against stated goals. This information validates the industry, helps investors manage investee companies, and improves investor and investee strategic decision-making. It also positions the industry to convince funders, especially new ones, to mobilize additional capital.

Last year the G8 created the Impact Measurement Working Group as part of its Social Impact Investing Taskforce. A few weeks ago the group released its “Measuring Impact” report, which includes seven guidelines for impact measurement and five case studies of how investing organizations have put the guidelines to good use. The initiative by the G8 reflects an elevated priority and the development of the industry.

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> Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI

In Latin America and the Caribbean, approximately 40 percent of families live in houses to which they have no title or that lack sewage systems, water, electricity, or proper building materials, according to the Inter-American Development Bank (IDB). However, current annual investments in living solutions by the base of the pyramid in LAC total $56.7 billion, confirming the increasing buying power of this segment and the growing opportunity in developing housing finance business models.

A few weeks ago I attended an event hosted by the IDB to launch the report Many Paths to a Home: Emerging Business Models for Latin America and the Caribbean’s Base of the Pyramid. The report was written by Christy Stickney for the Opportunities for the Majority Initiative (OMJ), a part of the Private Sector Group of the Inter-American Development Bank. OMJ provides finance to small, medium-sized, and large companies, as well as financial institutions and funds to support the development and expansion of business models that serve BoP markets.

The report analyses cases within OMJ’s housing portfolio in countries such as Colombia, Mexico, Nicaragua, Paraguay, and Peru. Stickney found  two main housing solutions for the BoP, a “complete” housing solution and an “incremental” housing solution.

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> Posted by Patrick McAllister, Asia-Pacific Housing Finance Director, Habitat for Humanity

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.”

Housing remains one of the most pressing issues in Asia. United Nations estimates show that more than 500 million people, or one in eight, still live in slums on the continent. That figure will surge as the Asian population increases from the current 4 billion to 5 billion by 2050, according to Asian Development Bank projections. Low-income people can improve their living conditions, but with much difficulty if they are excluded from the markets that provide goods and services to their wealthier compatriots, including affordable financial services that can be used for home repair and improvement.

Despite recognition in recent years that low-income people need a variety of financial services to manage their surprisingly complicated financial lives, progress in offering new products has been slow. The lack of financing to repair or improve homes is a case in point. Evidence of the need is clear, both from the statistics on the shortage of decent houses, and from the actions of low-income families themselves: studies have shown that 20 to 30 percent of microfinance loans intended for income-generating activities are actually diverted towards home improvements.

Perhaps things are about to change. Recent research by Habitat for Humanity’s Center for Innovation in Shelter and Finance (CISF) shows that in 10 MFIs around the world, offering housing microfinance loans is good business: risk is more diversified, administration costs are lower, and client retention and repayment rates are higher. Reasons for these trends certainly include the higher loan size and longer terms of housing loans. It could also be that MFIs are watching these new products closely, or are still in a “honeymoon period.” But speaking to customers and MFI staff, one gets the sense that perhaps the most important reason is the increased motivation by clients to repay loans that are tied to a family’s most valuable asset – their home.

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> Posted by Jeffrey Riecke, Communications Assistant, CFI

In this decade, Africa is undergoing urbanization at a faster rate than Latin America, Asia, or anywhere else in the world. In these burgeoning areas, the majority of people are building their own housing, and doing so in an incremental fashion – adding what they can, when they can, and developing their facilities as their means allow.

There are a few big challenges to this. In Africa’s urban centers, there is a limited supply of affordable housing, and financial services to aid housing development are also scarce. Global Findex Data indicate that access to and usage of credit in sub-Saharan Africa is among the lowest in the world. Specifically looking at mortgages, a recent study from FinMark Trust revealed that across the populations of Zambia, Malawi, Botswana, and Tanzania, less than 1.5 percent of individuals utilize mortgages.

Enter microfinance. Typical mortgages don’t fit well with the financial profile of most Africans. Compared to microloans, they’re generally for longer terms, larger amounts, and they are less flexible. Most mortgages require clients to provide documentation of regular incomes. Many Africans operate in the informal sector and lack regular income streams. In Tanzania, for example, only 28 percent of the population is able to satisfy this income requirement.

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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.
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