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Strong board leadership can help reduce a financial service provider’s vulnerability to external shocks and enhance its resilience.

> Posted by Paul DiLeo, Founder and Managing Director of Grassroots Capital Management and Governance Expert for the Africa Board Fellows Program

30784872334_b499dfc281_mThe following is part of an Africa Board Fellowship blog series spotlighting the experiences of participants and reflections from industry experts.

 

In the previous blog in this series, we reframed external challenges as a “normal” part of doing business for financial service providers (FSPs) targeting the base of the pyramid. And based on insights from Africa Board Fellows, we looked at specific ways board members can anticipate and even shape the challenging aspects of their operating environment. However, while most boards have more potential for external influence than they often exercise, there are always external factors that cannot be controlled. Boards must also continually focus on reducing the FSP’s vulnerability and enhancing its resilience31479737602_1ed7a2ba32_k

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Strong FSP boards prepare for and respond to external shocks as a rule, not an exception.

30784872334_b499dfc281_mThe following is part of a blog series spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s Africa Board Fellowship program.

> Posted by Paul DiLeo, Founder and Managing Director of Grassroots Capital Management and Governance Expert for the Africa Board Fellows Program

Far from being “extraordinary and rare,” challenging environments are a “normal” part of business for financial service providers (FSPs) targeting low-income populations. We tend to think that external environment challenges are extraordinary events that cannot be predicted or are too varied and diverse to prepare for—and therefore are best confronted as they arise. What do currency devaluations, deteriorating security, political interference or regulatory upheavals have in common? Can we can plan for them all and prepare effective responses in advance? Do responses need to be tailored to each circumstance?

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30784872334_b499dfc281_mThe following is part of a blog series spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s Africa Board Fellowship program.

Africa Board Fellowship graphic harvest illustration

By Danielle Piskadlo, Director, CFI

In recent years, some African countries have experienced slower economic growth and less stability in their currencies. This deterioration in macroeconomic conditions has presented challenges for financial service providers (FSPs) seeking to serve the base of the pyramid and improve financial inclusion. Some ways macroeconomic conditions impact FSPs include:

  • Higher operational expenses (e.g., imported IT equipment and software; office leases and technical services invoiced in foreign currency)
  • Increase in non-performing loans as small businesses have had fewer growth opportunities
  • Higher cost of funds (both deposits and debt)
  • Reduced access to debt from international and local providers
  • Decrease in revenue or tighter margins

We’re talking to Africa Board Fellowship (ABF) alumni to share their experiences dealing with deteriorating macroeconomic conditions.
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The following is part of a blog series spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s Africa Board Fellowship program.

ABF Fellows discussion at table

ABF Fellows group discussion. November 2016.

> Posted by Danielle Piskadlo, Director, CFI

Few countries have escaped socio-political unrest, conflict or periods of crisis. As the consequences of such events can be severe for both financial service providers and their customers, it behooves every board and CEO to consider how they might prepare themselves to respond when the political environment around them deteriorates.

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30784872334_b499dfc281_mThe following is part of a blog series spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s Africa Board Fellowship program.

> Posted by Alexis Beggs Olsen, Consultant and CFI Fellow

The mention of overheated credit markets sends chills up the spine of anyone who lived through the crises in Bosnia, Andhra Pradesh, Morocco, or Nicaragua, where market saturation played a prominent role. While regulators and investors have key responsibilities in avoiding these crises, boards of financial service providers (FSPs) must also steer their organizations carefully when more companies enter the space to compete for the same customers. And since portfolio at risk at 30 days (PAR30) is a lagging indicator in the earlier stages of a credit market cycle—growth and high liquidity mask debt stress for a time—boards have to be more creative about how to understand what is actually happening.

Woman explains graphic harvest visualization of client centricity and competition.

We spoke with two Africa Board Fellowship alumni from Uganda, ECLOF Board Chairman Vincent Kaheeru and UGAFODE Board Member Olive Kabatalya, to capture their insights on governing in a competitive environment. “There are about 2,000 institutions [in Uganda] that could pass for microfinance institutions,” explained Vincent. “It’s quite a complicated market because there are both big and small players. Even the big banks target the smallest savers and borrowers.”

Based on their experience, Vincent and Olive offered other board members the following guidance:
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We hope reading this post is just one of many activities you undertake today that acknowledge and celebrate the achievements of women. This International Women’s Day, we turned to a few of the women of CFI to share their thoughts on the gender gap facing lower income women around the world and ways to shift the balance in their favor.
 

Deborah Drake

Deborah Drake says, “International Women’s Day gives us a chance to appreciate the hard work and sacrifice women make every day for their families. It also highlights the challenges involved in giving women the opportunity for economic empowerment and the ability to make choices, including financial decisions for themselves and their families.” (As Vice President of CFI’s Investing in Inclusive Finance Program, Deborah leads the Africa Board Fellowship Program and the Financial Inclusion Equity Council.)
 
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> Posted by Lizzy Bolze, Project Specialist, Investing in Inclusive Finance, CFI

Digital trends in the African financial inclusion sector are evolving quickly. With the entrance of fintech startups and a more tech savvy client base, the role of corporate governance is more important than ever. As David Kombanie, Board Member of VisionFund put it: “Disruptive innovations are here with us. It’s change or die.”

Kombanie, along with more than 50 CEOs, board members, investors, fintech leaders, and regulators from Africa’s financial inclusion industry, engaged in a peer-learning exchange roundtable, Governing in a Digital World. This video provides an overview of discussions and key takeaways from the participants:

Governance for Financial Service Providers in a Digital World

The roundtable’s peer-to-peer exchanges provided three important governance considerations and recommendations for the boards of financial service providers (FSPs) as they evolve with the digital world:

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Key fintech trends include publishing open APIs, which helps to expand customer bases and improve services offerings 

> Posted by Geraldine O’Keeffe, Chief Innovation Officer, Software Group

The following post is part of a blog series spotlighting perspectives and experiences from the Africa Board Fellowship.

Access to financial services in Africa is on the increase, up 10 percent from 2011 to 2014, according to the Global Findex. This change can largely be credited to digital financial services. New entrants to the financial sector such as telcos, fintechs, and in the near future bigtechs like Facebook and Google are all offering technology-centered financial services that are changing the landscape and posing a competitive threat to traditional financial services providers (FSPs). At the same time, new technologies can allow traditional FSPs to expand their outreach and radically improve operational efficiency.

Considering both challenges and opportunities, now, more than ever, financial institutions of all stripes have to accept that technology and innovation are integral to their business strategy. These changes require a shift in culture throughout the institution and among the leadership. Board members, for example, have to embrace this change, understanding the current industry trends, experiencing these financial innovations firsthand, and taking concrete actions.

Through our work with board members of financial service providers in the Africa Board Fellowship program, we have identified three key fintech trends especially relevant for institutions in Africa focused on financial inclusion.

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CEO of the largest investment firm asserts understanding social impact among most pressing issues facing investors today

> Posted by Lizzy Bolze, Project Specialist, Investing in Inclusive Finance, CFI

Embed from Getty Images

Just prior to the global elite gathering at Davos, Larry Fink, Chairman and CEO of BlackRock investment firm wrote a letter to CEOs about the importance of long-term, sustainable strategy and understanding the social impact of the companies BlackRock and others invest in. He emphasizes that “Without a sense of purpose, no company, either public or private, can achieve its full potential.” As the largest investment firm, managing $6.3 trillion in assets, BlackRock’s message represents a social shift that blends the lines between impact investing and the profit-driven investment space. The letter sparked conversation and debate last week at the World Economic Forum in Davos where leaders across the investment, political, academic and public spheres met to discuss key global issues.

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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.

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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.