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> Posted by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign

This is the fourth and final blog entry in a series exploring how financial services can be leveraged to assist refugee populations. This entry will consider the future of refugee financial services and what our sector can do to ensure that the future is an inclusive one that serves genuine needs and protects refugee rights.

Syrian refugees shop at a market with their bank card given by the Turkish Red Crescent.

It is worth asking whether the financial inclusion sector is at the forefront of the movement to financially include refugees. The humanitarian sector has long struggled to determine how to provide assistance during a crisis in a way that is sustainable, effective, and accountable. Recently, humanitarian organizations such as Oxfam and the International Finance Corporation (IFC) have begun considering whether it’s possible to use payments as an on-ramp for financial inclusion of refugees. Cash transfers have historically facilitated corruption and failed to make it into the hands of the people who needed it most. In-kind donations of goods such as tents, food, sleeping material and other items undermined local merchants who made their livelihoods selling these very goods. In response, the sector has begun experimenting with digital financial payments. In Afghanistan, for example, the World Food Program (WFP) has issued e-vouchers and mobile money to cover food aid. The first e-voucher pilot was carried out on a small user base of 603 recipients in Kabul for a three-month disbursement cycle from April to June 2014. The total value of e-vouchers disbursed was US$72,360. The program proved successful and the WFP launched several follow-on pilots across the country in the subsequent year.

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> Posted by Guy Stuart, Ph.D., Executive Director, Microfinance Opportunities

Can government-to-person (G2P) payments to low-income beneficiaries translate into their formal financial inclusion? This might happen if those beneficiaries can gain experience in dealing with a formal financial service provider (FSP) when they pick up their payments. This is especially the case where the government pays the beneficiaries of the program through a digital channel, such as a debit card or mobile money, and the payment pick-up process gives beneficiaries the chance to interact directly with this new technology. Furthermore, given that G2P programs are often targeted at women, there is the potential for these programs to increase the inclusion of the half of the population traditionally more excluded from formal financial services.

As part of the CFI Fellows Program, Microfinance Opportunities, in partnership with the Pakistan Microfinance Network and Centro de Formación Empresarial de la Fundación de Mario Santo Domingo, looked at the relationship between G2P payments and financial inclusion. For this project we analyzed global survey data and conducted field research in Colombia and Pakistan—two countries with large, well-established G2P programs.

The focus group discussions with the beneficiaries of the Familias program in Colombia showed the potential of G2P programs to have a direct effect on enabling women to become comfortable with using digital channels to receive money. The women unanimously reported that they used their Familias debit cards to withdraw their G2P payment from an ATM without any help from anyone else. They did report that, at first, they needed help, but soon learned how to use the cards themselves without any problem.
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> Posted by Center Staff

Financial Inclusion Forum UK event yesterday at the European Bank of Reconstruction and Development (EBRD)

This post is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

We are one day into Financial Inclusion Week 2016 and are so excited to already see stakeholders from across the globe coming together to discuss the week’s theme of keeping clients first in a digital world. As our global financial ecosystem undergoes a digital revolution, we are presented with great opportunities and great challenges to extending financial services in a responsible manner. At CFI, we believe that access to financial services is not enough. We define financial inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services provided at affordable prices, in a convenient manner, with respect and dignity. Additionally, financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”

Keeping clients first in a digital world requires looking beyond access to the essentials of quality services and client treatment. Financial technology has the potential to improve access, as well as the potential to improve convenience, lower prices, and build financial capability. However, fintech also has the potential to take away some of the respect and dignity present in an in-person banking transaction, and it can present new risks. We hope that this week you will explore the best ways to ensure that this digital revolution is not compromising clients, but instead further protecting them against risks and empowering them through new channels.

What’s Happening

Financial Inclusion Forum UK: Last night in London, over 200 stakeholders gathered at the European Bank of Reconstruction and Development (EBRD) for a conversation focused on “The Progress and Future of Financial Inclusion.” The three-hour event, organized by the Financial Inclusion Forum UK, consisted of a keynote and two panel discussions. The first panel discussion, featuring representatives from CDC, VisionFund, and EBRD, and moderated by Yasmina McCarty of GSMA, assessed current progress in financial inclusion. The second panel looked to the future with panelists from Financial Services for All, DoPay, Leapfrog Labs, and the Centre for the Study of Financial Innovation.

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> Posted by Tilman Ehrbeck, Partner, Omidyar Network

This post is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

The digitization of the retail financial services front-end has the potential to unlock access to formal financial services for the 45 percent of working-age adults in emerging markets who are currently disconnected from the global economy. A recent McKinsey & Company study estimates that digital finance could reach the bulk of today’s excluded, mobilize new deposits and expand credit, adding six percentage points to emerging market GDP in 10 years-time, worth some $3.7 trillion. The driving force behind the digitization of retail financial services in emerging markets is the mobile phone. Already today, more people worldwide own a mobile phone than a bank account and by 2020, 80 percent of working-age adults will have a smartphone in their pocket. But to capture this opportunity, a lot still has to come together.

To begin with, the mobile infrastructure needs to be expanded. Data plans can still be very expensive in emerging markets, and low-cost smartphones have limited memory, which means people can use only a few apps. In fact, most emerging market users are connected via 2G feature phones, hindering a number of financial innovations from running on them.

But things are looking up.

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> Posted by Center Staff

Financial Inclusion Week is fast approaching! From October 17-21, 2016 partners all around the globe will hold conversations focused on advancing financial inclusion, and more specifically, this year’s theme: keeping clients first in a digital world.  So far over 30 organizations have signed on to participate in the week, including BRAC, Innovations for Poverty Action, and the U.S. Chamber of Commerce Foundation. Here is a rundown of the ways that you can get involved.

Hold a Conversation: We encourage organizations to gather internal or external stakeholders to discuss the theme in any conversation format that works for them. The link to register as a Financial Inclusion Week partner can be found here and you can check out a full list of this year’s events on the Financial Inclusion Week Website.

Talk to a Client: Given this year’s theme of keeping clients first, we are also doing a call for client visits. We encourage you to organize client visits for you and your staff, donors, or other partners – either in addition to or instead of hosting an event. This will provide an opportunity for you to hear directly from your clients on how they are engaging with digital financial services, and what they need from providers and support organizations.

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> Posted by the Smart Campaign

When most microfinance clients start out they’re first-timers at a formal financial institution. Like anything unfamiliar, a first foray with banks can be intimidating. You don’t want to be duped or make a mistake and lose precious savings. Peace of mind was granted to clients of two microfinance institutions, one in Paraguay and the other in the Dominican Republic recently as the first Smart Certifications in those countries were awarded. Fundacion Paraguaya and Banco ADOPEM were certified as meeting all the standards needed to treat their clients with adequate care. This certification demonstrates to prospective clients as well as investors and other industry stakeholders that their institutions are operating responsibly.

Fundacion Paraguaya and Banco ADOPEM are both market leaders in their own right. Banco ADOPEM is one of the largest microfinance institutions in the Dominican Republic. According to the MIX, 351,000 depositors in the Dominican Republic bank with Banco ADOPEM. When Banco ADOPEM pursues and achieves Smart Certification, that sends a message to MFIs and other stakeholders in the country that client protection is a key priority. In 2014 ADOPEM was named “Most Innovative Microfinance Institution of the Year” by Citi, in part because of ATA-Movil, a portable electronic application that allows credit advisers to assess customers in their businesses or in their homes. The mobile information system also allows for convenient and direct communication with clients.

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> Posted by Jeffrey Riecke, Communications Specialist, CFI

Over the past few decades, across demographics and regions, the proportion of people in the United States with bank accounts has increased steadily, a new report from the White House details. More specifically, the report found that between 1989 and 2013: the percentage of U.S. households with bank accounts increased from 86 percent to 93 percent; the percentage of households in the bottom income quintile with bank accounts increased from 56 percent to 79 percent; among racial minorities, the percentage of households with bank accounts increased from 65 percent to 87 percent; and regional disparities have diminished, with financial inclusion increasing across all geographies. All of this progress in financial services access warrants acknowledging, of course, yet there remain sizeable gaps toward financial inclusion that call for immediate action.

For example, like most countries that enjoy high access rates, many banked Americans remain underserved. Twenty percent of households in the U.S. with bank accounts also rely on alternative/informal financial services. In 2013, roughly 5 percent of unbanked or underbanked households turned to payday loans, the White House report found. Indeed a few weeks ago we spotlighted new proposed regulation from the Consumer Financial Protection Bureau (CFPB) to rein in the growing high interest rate/fee-laden payday loan and short-term credit markets.

The United States also ranks dismally when it comes to financial literacy. In the S&P Global FinLit Survey, it was determined that 57 percent of the American population is financially literate, which puts the country at 14th globally, according to the S&P.

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> Posted by Tyler Aveni, Positive Planet Co-Country Director (China)

Through the support of Diageo’s Plan W initiative, Positive Planet’s three-year women’s empowerment project Banking on Women has provided financial education to more than 8,000 women across Huimin Dongfang Microcredit Company‘s client network in Ningxia Autonomous Region, China. The project’s curriculum, which is based in the core financial concepts of savings, risk protection, and digital finance, is intended to empower women in the household and community through increased financial decision-making power. With the project more than two-thirds completed, Positive Planet has just published a case study that explores the project team’s experience in working to build the financial capability of rural Chinese women.

As written here before, China’s rural women stand to greatly benefit by being introduced to financial concepts and related services. However, China’s government has yet to establish a national strategy for financial education that clearly looks beyond urban residents’ financial capability needs. (Current efforts mostly cover security precautions for traditional banking, anti-fraud measures, counterfeit currency awareness, and illegal investment prevention.) Serving rural residents and their unique set of circumstances and needs will require a greatly expanded financial capability-building offering. For such an expansion to work well, it will need to include programming that looks at the rural population separately. Further, implementation for rural programming should lean on the experience and opinions of diverse local groups and township government offices. Unique cultures, language dialects, and market distinctions across China’s many regions make one-size-fits-all financial educational content less effective. Central planning and support play a crucial role, but resource design must allow for calculated flexibility per the local settings.

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> Posted by Guy Stuart, Ph.D., Executive Director, Microfinance Opportunities

Can government-to-person (G2P) payments to low-income beneficiaries translate into their financial inclusion? One way this might happen is if those beneficiaries can gain experience in dealing with a formal financial service provider (FSP) when they go to pick up their payments. This is especially the case where the government pays the beneficiaries of the program through a digital channel, such as a debit card or mobile money, and the payment pick up process gives beneficiaries the chance to interact directly with this new technology. Furthermore, given that G2P programs are often targeted at women, there is the potential for these programs to increase the inclusion of the half of the population traditionally more excluded from formal financial services.

As part of the Center for Financial Inclusion Fellows Program, Microfinance Opportunities, in partnership with the Pakistan Microfinance Network and Centro de Formación Empresarial de la Fundación de Mario Santo Domingo, looked at this issue as part of a larger project on the relationship between G2P payments and financial inclusion. For this project we analyzed global survey data as well as conducted field research in Colombia and Pakistan—two countries with large, well-established G2P programs called Familias en Acción (Familias) and the Benazir Income Support Program (BISP) respectively. The field research involved focus group discussions with the beneficiaries of the programs and, in Pakistan, a series of observations of transactions at the shops of agents of one of the commercial banks distributing payments to the beneficiaries of BISP.

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> Posted by Beth Porter, Financial Inclusion Policy Advisor for the United Nations Capital Development Fund (UNCDF) and the Better Than Cash Alliance

The following post was originally published on the Better Than Cash Alliance blog and has been re-published with permission. 

Did you ever wonder why there is not International Men’s Day? There actually is such a day, by the way—it’s on November 19th, but there aren’t too many people marking it with a night off from cooking or cleaning or childcare for the guys!

The reason we celebrate International Women’s Day on March 8th each year is that the other 364 days look quite a bit like men’s days. In fact, globally, women spend an average of 4.5 hours a day on unpaid work, while men spend less than half that much time—and the unpaid labor gap is particularly large in developing countries. We are a long way from Planet 50:50 or gender parity. Indeed, the World Economic Forum predicts that the gender gap will not be closed until 2133.

This lack of parity manifests itself in many ways, including gaps in education, employment, and wages, and in the board room and public high office. And access to finance is no different.

While globally ownership of accounts is on the rise, the gender gap persists in developing countries, with the majority of the 2 billion globally without access to finance being women. We should not simply conclude that women do not want accounts—just as we cannot suppose that they do not want more education, the opportunity for gainful employment, or equal wages for equal work. We know that women living in a cash-only economy do not have adequate control over their finances, do not have the confidentiality they need to save and borrow and can only make or receive payments at others’ convenience, not their own. Wouldn’t a more plausible conclusion regarding the gender gap in financial inclusion be that women face barriers that men do not encounter in accessing financial services? Let’s explore this idea a bit further.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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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.