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> Posted by Center Staff
2017 was certainly an eventful year. And our year at CFI was no exception. Through our CFI Fellows Program and partnership with the Institute of International Finance, Mainstreaming Financial Inclusion, we produced thought-provoking research on fintech partnerships, the role of human touch in a digital age, breakthroughs in insurance and more. In the client protection area, 24 financial institutions were Smart Certified, bringing the total number of certified institutions to 94. The Africa Board Fellowship Program continued to make a difference at the governance level of financial institutions across Africa, and now roughly 200 CEOs and board members have participated in the program. And more…
Before we celebrate the New Year, we wanted to pause and look back at some of our favorite moments of 2017.
Financial Health as a Global Framework
We developed a new model for assessing financial health. The financial health framework was developed through a project led by the Center for Financial Services Innovation (CFSI) with CFI and Dalberg as partners. The framework offers a globally applicable model for financial health that includes six indicators of financial health and four contributing factors that are particularly relevant to the developing world.
> Posted by Danielle Piskadlo, Director, Investing in Inclusive Finance, CFI
Embed from Getty ImagesIt may have been the worst-timed joke ever.
At an Uber all-hands meeting for the company’s 12,000 staff to announce how the board planned to address the findings of an investigation that confirmed Uber’s toxic workplace culture and serious instances of sexual harassment, Arianna Huffington, the lone woman on the board, noted that a second woman would be added to the board as one part of the response. “There’s a lot of data that shows when there’s one woman on the board, it’s much more likely that there will be a second woman on the board,” said Huffington. That’s when investor David Bonderman, another member of Uber’s board, blurted, “Actually, what it shows is that it’s much more likely to be more talking.” He claimed to be trying to lighten the mood, but in the firestorm of criticism that followed his ill-considered remark, he quickly resigned from the board.
> Posted by Kettianne Cadet, Lead Analyst, Investing in Inclusive Finance, CFI
“Evolve or die, it is that simple!” remarked Kelvin Twissa, Board Member of FINCA Tanzania. His comments came during a session on Disruption at the recent Africa Board Fellowship (ABF) seminar in Cape Town. In an era where business is definitely not usual, many incumbent financial institutions and their operating models are being threatened by disruptors, and the ability to continuously innovate and evolve has become an increasingly important ingredient for survival.
Graphic harvesting image from May 2017 Africa Board Fellowship Seminar
> Posted by Ellen Metzger, Consultant
Embed from Getty ImagesWith stories of fintech success and excitement showing up everywhere, it’s hard not to wonder about the place of banks in the financial landscape of the future. Are fintech providers here to stay or are they the buzz of the day?
The chief officer of finance, innovation and payments at Equity Bank in Kenya, John Staley, strongly stands in favor of banks. He recently argued that banks are in it for the long-term and that fintech companies will come and go – or get absorbed by the banking industry.
> Posted by Center Staff
You’d be hard-pressed to list all the ways corporate governance can make (or break!) an organization. In the financial inclusion sector, strong boards ensure effective strategic planning, manage sustainable growth, bolster attractiveness to investors, balance risks, develop client centric products and delivery channels, and, increasingly, act as “strong digital sparring partners for management.” Yet, a recent study sponsored by the Sanabel Network and the IFC that inspected risks confronting the microfinance sector in the Middle East and North Africa (MENA) found that half of their interviewees perceived corporate governance risk as “high” or “very high.”
Being a board member or CEO of a financial inclusion institution is a great responsibility, and can also be a complex task. All boards have different dynamics and governance best practices can sometimes be nebulous. To address these challenges, Calmeadow, FMO, Sanabel and the CFI are hosting a “Governance and Strategic Leadership Seminar” this March in Amman. This seminar brings together CEOs and board members of leading financial institutions serving the financially excluded in the MENA region to strengthen board capacity through peer learning and exchange. If you’re a leader in MENA’s inclusive finance sector, please consider attending this seminar to contribute your unique experiences and perspectives, and also to learn from the experiences of your peers.
> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI
Those who work in the financial inclusion space need a deep understanding of how low income people manage their money, and there is no better guide to develop this understanding than Ignacio Mas, who recently spoke at the Africa Board Fellows seminar in Cape Town. Here are some of his insights.
Unused money is vulnerable if you are poor. You have to protect it from a lot of things – theft, friends and family, and, also, your future self… (Let’s not underestimate the threat of the future you as someone who has the most access to, and authority over, those funds.) And there is no saying how resolved you will stay toward your savings goals. One way to protect any unused money against these threats is to make it less liquid. For example, you could convert your savings into a goat. In many countries, a goat can be sold if an emergency should arise, but you certainly wouldn’t sell or trade it to make an impulse purchase. Or as the vendor I just bought holiday jam from put it: “Making jam is like forced savings for me. I spend it in the summer on jars and sugar and fruit and get it back in December for Christmas shopping money!” These are examples of self-nudges that enable clients to better stick to their goals – one of the seven behaviorally-informed practices for financial capability. These approaches create behavioral roadblocks, so that individuals are able to save with less effort.
> Posted by Mark Napier, Director, FSD Africa
The following post was originally published on the FSD Africa blog.
Yesterday, Zambia’s central bank announced it had taken over a commercial bank, Intermarket, after the latter failed to come up with the capital it needed to satisfy new minimum capital requirements. Three weeks ago, a Mozambican bank – Nosso Banco – had its licence cancelled, less than two months after another Mozambican bank, Moza Banco, was placed under emergency administration.
At the end of October, the Bank of Tanzania stepped in to replace the management at Twiga Bancorp, a government-owned financial institution which was reported to have negative capital of TSh21 billion. A week before that, just over the border in Uganda, Crane Bank, with its estimated 500,000 customers, was taken over by the central bank, having become “seriously undercapitalised”. In DR Congo, the long-running saga of BIAC, the country’s third-largest bank, continued in 2016, forced to limit cash withdrawals after the termination of a credit line from the central bank. And in Kenya, Chase Bank collapsed in April, barely six months after the failure of Imperial.
> Posted by Nadia van de Walle, Lead, Africa Partnerships and Programs, the Smart Campaign
Organizational change doesn’t always start from the top, but if it originates elsewhere, and the change is to last, it’s essential that leadership and management eventually get on board. For years, most of us in financial inclusion have advocated client centricity. If previously unserved client segments are to take up and use products and services for the first time, it’s essential that these products and services meet their needs. But how do institution leaders look at client centricity? I attended the recent Africa Board Fellowship (ABF) seminars in Cape Town, South Africa and joined discussions among financial inclusion CEOs and board members on this topic.
The CEOs and board members participating in the ABF program are from financial service providers offering a range of products and services in countries ranging from Kenya to Burundi to Tunisia and Uganda. On our first day, we discussed client centricity, a trending topic and one of interest to me as a manager of the Smart Campaign. The fellows’ varied experiences and ideas led us to some takeaways:
- Board members and CEOs see a clear business case for client centricity. Participating leaders viewed actively listening to their clients and mapping customer preferences and journeys as imperative for designing better products, building customer loyalty, fostering referrals, and developing competitive advantages.
> Posted by Bruce MacDonald, Senior Vice President, Communications, Accion
Embed from Getty ImagesMy 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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