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> Posted by Stephen Thomas, Director of Risk Management, Credit Suisse
Morocco has one of the most extensive and vibrant microfinance sectors in the Middle East/North Africa region, with roughly 800,000 clients and $60 million in outstanding loans. The country’s microfinance industry hasn’t always undergone steady growth. After years of early, strong growth in a relatively lightly regulated environment, Morocco’s microfinance industry underwent a period of crisis beginning around 2006. During this time default rates rose to worrisome levels and the financial soundness of a number of microfinance institutions became imperiled.
The country’s government moved swiftly, both over this period of time, and continuing to the present. It enacted a number of laws designed to improve industry regulation. In 2006, it formalized the country’s Central Bank’s regulatory authority over the industry through Law No. 34-03. The Bank then took a series of steps to effectively enforce the government’s laws and expand its oversight of the lending activities. These steps included enacting additional legislation, conducting on-site inspections, and, when necessary, intervening. In September 2009, additional regulatory requirements were issued through the Directive on the Governance of Microfinance Associations. The Directive provided further clarification of managerial obligations with regard to governance, internal controls, external audit, the management of credit, liquidity and operations risks, and transparency. Other government-led measures during these years following the 2006 crisis include enhancements to regulations regarding risk management practices and contract transparency, and formally defining industry client protection principles. Adopted in 2010, these client protection principles were outlined in the Microfinance Code of Ethics and incorporate the concepts that are enumerated in the Smart Campaign’s Client Protection Principles.
> Posted by Meghan Greene, Manager, CFI
The Center for Financial Inclusion works with teams of volunteers from Credit Suisse, one group of whom investigated programs that have features in common with the Financial Access at Birth concept. In this post, the group explores Mexico’s path-breaking Oportunidades program.
Government leadership in child finance programs can be both a blessing and a curse, as we outlined in another post. While governments can catalyze rapid scaling, they are also under constant pressure to reduce costs, and thereby may cut corners on key components, such as adequate marketing and advertising. Further, programs that receive their funding from the government are subject to the whims of budget decision making, as evidenced by the abrupt end to the UK’s Child Trust Funds.
Is it possible to design a program that can incorporate the advantages of government engagement while also minimizing potential pitfalls? Many turn to the Oportunidades conditional cash transfer program in Mexico for an example of the best-case scenario. In fact, Oportunidades seems to have come up in many CFI blog discussions in the last few months (see here, here, and here!). In this post we briefly explain what the Oportunidades program is and what makes it so successful.
> Posted by Meghan Greene, Manager, CFI
FAB (Financial Access at Birth) has been working with volunteers from Credit Suisse who helped dig deeper into the assumptions behind FAB and identify cutting-edge research on child and youth finance.
The Financial Access at Birth initiative (FAB) aims to equip every child in the world with a funded savings account at birth – an ambitious goal that would certainly require input and support from government entities. With that in mind, we set out to examine and learn from government-led examples of child and youth finance.
Governments have approached child and youth finance in many different ways. Some regions are testing universal funded savings accounts, and others are testing conditional cash transfers (CCTs) that provide incentives for educational achievement. Some programs are led by city or state governments in partnership with private entities, while others are fully implemented and funded by national governments. With such a diversity of approaches, are any overarching lessons emerging? The Credit Suisse volunteers studied examples from the United States to Colombia to South Africa to find a cross-section of the various asset-transfer or asset-building programs. They found the following takeaways:
> Posted by Nika Tumao, Analyst at Global Treasury, Credit Suisse
This post is the third of a three-part series from Credit Suisse Virtual Volunteers, sharing reflections and insights from their investigations into the state of financial inclusion for persons with disabilities (PWDs) across several country contexts. The three posts will examine past efforts and offer potential solutions for creating more inclusive societies in Ecuador, India, and the Philippines. The post begins:
If we built a microfinance institution (MFI) focused solely on persons with disabilities (PWDs), what would it need to do to be successful? I examined disability inclusion in the Philippines to find out.
Laws in the Philippines support access by persons with disabilities (PWDs) to many of the elements necessary to succeed in life, including employment, education, infrastructure, and rights in court. Although these laws are well-intentioned, the Philippines lack the government budget to create and staff regulatory agencies that make sure they are effectively implemented . Here is where self-help groups, NGOs and MFIs have room to address the unmet needs of PWDs.
> Posted by Shubha Kastiya, Fund Accountant in Prime Fund Services, Credit Suisse
This post is the second of a three-part series from Credit Suisse Virtual Volunteers, sharing reflections and insights from their investigations into the state of financial inclusion for persons with disabilities (PWDs) across several country contexts. The three posts will examine past efforts and offer potential solutions for creating more inclusive societies in Ecuador, India, and the Philippines. The post begins:
In my Virtual Volunteer assignment, I wanted to get a solid understanding of the factors and issues affecting persons with disabilities (PWDs) and what is being done to remedy them.
One such issue is accessibility, which means that disabled persons can approach, enter, pass to and from, and make use of a built environment without undue difficulties or outside assistance. Accessibility and associated technology for PWDs are quite advanced in India. There are numerous organizations working exclusively on making society more accessible, and I was surprised to find that they have been fairly successful in implementing their strategies. Although this is not the case for all MFIs and socially-driven organizations in India. I want to introduce you to six impressive initiatives that have made great strides in making accessibility a reality.
> Posted by Annie Martyr, Associate in Fixed Income, Credit Suisse
This post is the first of a three-part series from Credit Suisse Virtual Volunteers, sharing reflections and insights from their investigations into the state of financial inclusion for persons with disabilities (PWDs) across several country contexts. The three posts will examine past efforts and offer potential solutions for creating more inclusive societies in Ecuador, India, and the Philippines. The post begins:
When I learned about the Virtual Volunteering program at Credit Suisse, I jumped at the opportunity to learn more about microfinance, and specifically financial inclusion for individuals with disabilities. My first experience researching disability inclusion was as an intern working for a company that created software designed to teach soft skills in the workplace. I conducted research and wrote grants for a program for individuals with autism and other disabilities. I was shocked to learn about the lack of resources available to PWDs, particularly adults. The opportunity to work with the Center for Financial Inclusion at Accion seemed a perfect way to dig further into this topic. I hoped to provide much needed information on the needs of this population in the country context of Ecuador, and help further the CFI’s goal of providing access to financial services not only to the poor and needy, but to persons with disabilities, a subset of the population that has historically been marginalized and largely excluded from society.
In some ways Ecuador is ahead of other developing nations in its legal framework’s support of disability rights and in the visibility of these issues, due in part to the fact that the vice president of Ecuador is paralyzed. The victim of a shooting in 1998, Lenin Moreno was elected in 2007 as a paraplegic and has since become a public advocate for disability prevention and the protection of disabled individuals in Ecuador. In addition to having a very public advocate for disability rights, Ecuador has an established legal framework to protect the rights of PWDs and promote their inclusion in society. I quickly found, however, that while Ecuador is further along than many other countries in terms of visibility of disability rights, the needs of individuals with disabilities are still very great, as are the obstacles they have to overcome to gain access to financial services.
> Posted by Anne Ackermann, Marika Canonica, Emaan Mahmood, and Laura Spicehandler, Credit Suisse Virtual Volunteers
In an earlier blog post, we explored the major challenges the United States and United Kingdom are facing with regards to impact investing, including investing in microfinance in developing countries. In this post, we look at the current state of impact investing in Luxembourg, Switzerland, and the Netherlands, in an attempt to understand how tax and legal frameworks are promoting impact investing in these countries.
Switzerland
Switzerland has been a leader in creating and managing some of the first and largest microfinance investment vehicles (MIVs), with more than 20 MIVs either managed or advised in Switzerland. As of December 2007, 1.5 billion Swiss Francs (approximately USD $1.65 billion), 25 percent of all international private microfinance investments worldwide, were managed in Switzerland. The MIVs present in Switzerland are generally funds and are regulated by the Swiss Financial Market Supervisory Authority (FINMA). FINMA has authority over banks, insurances companies, stock exchanges, securities firms and collective investment schemes. Read the rest of this entry »
> Posted by Anne Ackermann, Marika Canonica, Emaan Mahmood, and Laura Spicehandler, Credit Suisse Virtual Volunteers
Why are investors in some countries so much more involved in “impact investing” – including microfinance – than their counterparts in other countries? Investing in microfinance in developing and emerging markets has gained more traction in certain continental European countries, for example, than it has in the United States and United Kingdom.
Last year the CFI undertook a project in partnership with a group of “Virtual Volunteers” from Credit Suisse to examine how legal and tax frameworks in various countries influence investors’ willingness to invest in microfinance. The Credit Suisse Volunteers examined the policy and regulatory frameworks surrounding impact investing, particularly in microfinance, in five countries: Luxembourg, the Netherlands, Switzerland, the United States, and the United Kingdom. Volunteers also conducted interviews with a variety of actors from impact investing in each country.
This describes some features of the framework for impact investing in the U.S. and U.K. A subsequent post will examine the European countries – Luxembourg, Switzerland, and the Netherlands – in an effort to illustrate the differences. Read the rest of this entry »
> Posted by Rosita Najmi
Credit Suisse is a strong believer in corporate social responsibility, and a key part of its strategy is the establishment of the Microfinance Capacity Building Initiative in 2007. This initiative seeks to strengthen microfinance institutions by investing in training structures and facilitating the flow of knowledge between microfinance institutions and the financial services industry. By combining charitable contributions with employee engagement, Credit Suisse fully invests its resources in building capacity and expanding the reach of microfinance institutions. Credit Suisse officially partners with four microfinance institutions, one of which is ACCION. Through this sponsorship, Credit Suisse became a proud founding sponsor of the Center for Financial Inclusion at ACCION. Credit Suisse also supports the establishment of training centers in India and China to provide training in credit methodology, program management, and best practices to staff at all levels.
In addition to sponsorships, Credit Suisse’s Microfinance Capacity Building Initiative mobilizes employees all across the bank to spread awareness of microfinance — educating one another and sharing knowledge. The Microfinance Advocates network was formed globally with regional steering committees in London, New York, and Singapore/Hong Kong and is now more than 500+ members strong, including an impressive pool of individuals to whom an opportunity to virtually volunteer with the Center was presented in the spring of 2011. Read the rest of this entry »
> Posted by Alexandra Mihailescu Cichon, Sustainability Affairs and Microfinance Officer, Microfinance Capacity Building Initiative, Credit Suisse
“Microfinance Advocates.” What started off in 2009 as a handful of Credit Suisse employees interested in microfinance has grown into a global network 500 strong. They receive regular microfinance news clippings, event invitations, and volunteering opportunities – but have recently been demanding a more active role in the space. They want to contribute, to get involved.
In response to this growing interest, the concept of Virtual Volunteering was born. Since microfinance is not an area that matches traditional concepts of volunteering, a different approach was needed. Read the rest of this entry »
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