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> Posted by Alexia Latortue, Deputy CEO, CGAP
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process, and highlights findings from “Mapping the Invisible Market.”
When I was young, the word “camp” was synonymous with freedom and fun. These days are long gone. Today, the word conjures images of debate at best and of self-righteous positioning at worst. There seems to be a tendency in many fields for participants to divide themselves into opposing factions. Even in the field of financial inclusion, where we may share a common vision of full inclusion, there are at least two camps with deeply held beliefs about how to get there.
Some people are in a camp that is all about the economics of supply. They posit that if we can find ways to offer insurance to poor and low-income people profitably, the rest will follow. If we can collect tiny amounts of cash in cost-effective ways, bingo, small balance savings accounts will be available to all. The promise of cost innovations, combined with increasing incomes among base-of-the-pyramid customers may be all that is needed. This is the “If We Build It, They Will Come” camp.
Another camp is all about deepening our understanding of clients. We need to empathize, focus group, observe, and ethnographically study more and more deeply. We need to get into the clients’ shoes, probe their needs, and predict their behaviors. If only we understood clients better, we would serve them better. This is the “If We Understood Better, They Would Be Better Served” camp.
I don’t particularly want to play in or debate on behalf of either camp.
We have seen savings accounts opened that remain dormant, and payment systems that are not leveraged. The “If We Build It, They Will Come” camp just doesn’t do it for me. We have also seen organizations that possess deep insights about their clients and potential market, but have no idea how to translate the knowledge or deliver anything at scale. The “If We Understood Better, They Would Be Better Served” camp also doesn’t do it for me.
> Posted by Larry Reed, Director, Microcredit Summit Campaign
On February 5, the Microcredit Summit Campaign released Vulnerability: The State of the Microcredit Summit Campaign Report, 2013 by announcing that in 2011, 13 million fewer of the world’s poorest families received access to microcredit and other financial services than in 2010. This is the first time since 1998, when the Campaign began tracking this data, that the total number of clients and the number of poorest families reached have declined. We found in our data that the total number of clients fell from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, fell from 137 million to 124 million. (Visit the report website to learn more.)
I presented the report at a launch event at Busboys and Poets in Washington, D.C., and Susy Cheston (Senior Advisor at the Center for Financial Inclusion at Accion) moderated a lively discussion with my co-panelists Wendy Abt (Deputy Assistant Administrator, USAID), David Roodman (Senior Fellow, Center for Global Development), and Alexia Latortue (Deputy CEO, CGAP). Not surprisingly, the most salient exchange of the panel arose with David in the role of provocateur.
Challenging the Campaign, he contrasted simple but powerful messages that communicate well to the mass public—“microcredit can help people lift themselves out of poverty”—to more nuanced messages that better communicate reality but are harder to condense into a soundbite. Many of us are trying to figure out how to convey the nuanced message that “a range of financial services, when combined with other important development services, may provide tools that people can use to move away from poverty.” David asked whether, after seeing the results of unchecked growth in Andhra Pradesh, the Campaign wanted to rethink its goal-setting role.
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