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> Posted by Anne H. Hastings, Manager, Microfinance CEO Working Group
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A few weeks ago, I attended the Global Forum on Remittances and Development sponsored by the International Fund for Agricultural Development (IFAD), the European Commission, and the World Bank. Much of the meeting was focused on two critically important questions:
- Are or could remittances be a major driver of financial inclusion?
- Is it possible (and desirable) for a greater percentage of remittances to be put to productive use as opposed to consumption once the funds arrive in the hands of the recipient?
First, a few facts to underscore why these discussions are so important:
- In 2014 there were at least 240 million international migrants. That is a BIG number – bigger than the populations of all the countries of the world except China, India, the U.S., and Indonesia.
- This year these migrants will send back to their countries of origin more than 440 billion U.S. dollars! This amount is more than three times the amount of foreign aid. It is estimated that $200 billion of this amount goes directly to rural areas in developing countries where the most poverty is.
- Remittances can constitute up to 40 percent of GDP or more in some countries, often the most fragile, most conflict-ridden countries in the world.
- Some 750 million people are estimated to receive remittances, the vast majority in developing countries. Forty percent live in rural areas.
- The global average cost of sending this money home is 8.6 percent of the amount sent, so the potential customer benefits to cost reduction are very important. (In July 2009 the G20 set a goal of reducing the average cost from 10 percent to five percent in five years. Despite failing to achieve the objective, it recently established a new goal of three percent by 2030!)
Are remittances a driver for financial inclusion? Could they be? In a moment of frustration, Fernando Jimenez-Ontiveros, the Acting General Manager of the Multilateral Investment Fund said at the conference, “We’ve been working on these issues for some 15 years, and estimates are that 60 percent of senders and recipients still don’t even have an account! We’ve got to do better!”
> Posted by Steven Werlin, Communications and Learning Officer, Chemen Lavi Miyò Program, Fonkoze
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A new initiative of Haiti’s Secretary of State for the Integration of Persons with Disabilities (PwDs) promises to push financial inclusion for some of the country’s most vulnerable citizens. Prior to Haiti’s catastrophic earthquake in 2010, roughly 800,000 Haitians had disabilities. An estimated 300,000 more were injured in the earthquake. The Secretary’s office is facilitating a partnership between Fonkoze, Haiti’s largest MFI, and Texas Christian University (TCU), with additional support from the Digicel Foundation, to carry out a program that offers financial and livelihood empowerment services for PwDs.
The pilot for the project will test a combination of Fonkoze’s Chemen Lavi Miyò (CLM) program, which translates as the pathway to a better life, and TCU professor Dawn Elliott’s More than Budgets (MTB) program. CLM is a comprehensive graduation program for the ultra poor, based on the approach developed by BRAC. It is a tailored, sequenced program that provides participants with cash installments to build businesses, productive assets (such as goats, chickens, and merchandise to sell), a savings account at Fonkoze, and regular training and confidence-building support in areas of enterprise management, health and nutrition, and life skills. Most importantly, CLM offers weekly one-on-one meetings with trained case managers. It targets the poorest families – those too poor to use traditional microfinance services. Many participants graduate from the 18 month program and go on to join a group credit program to further support their business efforts. MTB, employing a combination of education and incentives, is a personal financial training program that was developed to help poor, unbanked Texans build up savings, gain access to financial resources, and reduce financial vulnerabilities. The program has been applied in homeless shelters and with people recently released from prison.
> Posted by Deborah Drake and Andrea Horak, Vice President/Program Manager and Program Coordinator, Investing in Inclusive Finance, CFI
The Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.
With good governance a top priority for investors, donors, and regulators, it’s time to ask exactly what good governance looks like. A recent debate about the Anglo-American (shareholder) versus the European (stakeholder) models of governance set out to answer that question. The Governance Working Group (GWG), a 25-member group of microfinance professionals focused on governance, hosted by CFI, sponsored a webinar to discuss the characteristics of the two models and their implications for microfinance institutions, equity funds, and clients.
Lauren Burnhill of One Planet Ventures started off the debate by describing the model of single tier governance commonly used in the U.K. and U.S. In this model, each company has a single board that includes both executive directors, who are employed by the company or have significant ties to its corporate management, and non-executive directors who have no direct relationship with the company or its management. The company CEO may serve as chair of the corporate board, in which case a great deal of power is invested in that board position. The overarching duty of the board is to protect the interests of shareholders. In this model, particular importance is given to the protection of minority shareholder rights.
> 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.
> Escrito por Laura Galindo, Asociada Senior, the Smart Campaign, CFI
El siguiente blog está disponible también en inglés.
Desde su lanzamiento en 2009, the Smart Campaign ha desarrollado y difundido un número importante de herramientas para ayudar a que las instituciones financieras pongan los Principios de Protección al Cliente en práctica. Hoy en día, el sitio web de la Campaña se ha convertido en el lugar predilecto para la industria de microfinanzas cuando se trata de herramientas y recursos sobre temas de protección al cliente. Con más de 60 herramientas diferentes y más de ciento veinte mil visitas a esta sección de la página web, nos complace poder seguir ayudando a los proveedores de servicios financieros a pasar de la sensibilización de la importancia de los Principios de Protección al Cliente a la implementación práctica de éstos.
> Posted by Laura Galindo, Senior Associate, the Smart Campaign, CFI
The following post is also available in Spanish.
Since its launch in 2009, the Smart Campaign has created and disseminated numerous tools to help financial institutions put the Client Protection Principles into practice. Today, the Campaign’s website is the go-to place for tools and resources on client protection for the microfinance industry. With more than 60 different tools and over one-hundred and twenty thousand website hits, we are excited to continue helping financial service providers move from being aware of the importance of Client Protection Principles to implementing them.
> Posted by Center Staff
Alex Counts captures the excitement at the Global Microcredit Summit in the latest post on his blog, the cyberspace outpost where he describes the process of writing a book about Haitian microfinance pioneer Fonkoze.
Counts, the CEO of Grameen Foundation, notes that Fonkoze “was, among participating organizations working in a single country, the one that received the most exposure to tell its story.”
Counts, who was interviewed for the Center’s “Microfinance Matters” series, joined other friends of Grameen Bank to set up Grameen Foundation in 1997. During his recent trips to Haiti, he has been meeting with microfinance industry leaders in general, and in particular with Fonkoze staff.
“Fonkoze at the Global Microcredit Summit,” his most recent post, begins:
The recent Global Microcredit Summit held in Valladolid, Spain brought significant new exposure to the innovations and accomplishments of Fonkoze. Anne Hastings spoke at the first substantive plenary (right after the ceremonial opening session), and followed that up with presentations at several workshops and finally well-received remarks at the closing plenary. Gauthier Dieudonne presented Fonkoze’s institutional action plan in a plenary alongside the head of CARE’s microfinance initiative, ACCESS Africa. (CARE is one of the largest humanitarian organizations in the world.) Finally, Fonkoze Diaspora liaison Katleen Felix chaired a workshop while CLM regional director Steve Werlin presented an important paper that he had co-authored with Anne. Read the rest of this entry »
> Posted by Steven Werlin
[The following post is Pt. II of a two-part series. In this post, Steven Werlin explains what his organization, Fonkoze, is trying to accomplish through group microfinance. The first part, by Beth Rhyne, appeared on November 17, 2011.]
It is easy to imagine solidarity-group microcredit as a method that both minimizes the costs an MFI faces in making its loans and protects the institution from risk. It’s easy to imagine both those things, because they are both true.
Using groups to makes loans means that the loans can be delivered and reimbursements collected at central locations without the borrowers’ having to come in to a branch. The borrowers save much of the direct transportation cost they would otherwise be stuck with if they live far from a branch, and the branch saves mileage because its loan officer doesn’t have to find each borrower individually. Borrowers and loan officers meet halfway, in a credit center.
The group also significantly reduces the lender’s risk. Group members can be held responsible for one another’s delinquent payments. Their need to vouch for one another means they are likely to choose fellow-members carefully, selecting friends whom they believe to be good risks. And making members agree on the size of each loan can protect against the over-indebtedness responsible for many write-offs. Read the rest of this entry »
> Posted by Center Staff
Alex Counts finds himself reflecting on patriarchy in the latest post on his blog, where he chronicles writing a book about Haitian microfinance pioneer Fonkoze.
I sense that part of what feels liberating to work as a woman in Fonkoze is not getting ones strengths “stripped out” and seeing one’s ability to contribute “dry up” as often happens in patriarchal (i.e., “normal”) organizations. (At the same time, I have been wondering how my own organization, Grameen Foundation, and others that I am associated with score on this spectrum, and on the experiences of women staff at all levels.)
Counts, the CEO of Grameen Foundation, notes Fonkoze’s “culture rooted in strong female leadership.”
Counts, who was interviewed for the Center’s “Microfinance Matters” series, joined other friends of Grameen Bank to set up Grameen Foundation in 1997. During his recent trips to Haiti, he has been meeting with microfinance industry leaders in general, and in particular with Fonkoze staff.
“Insights from ‘The Female Vision’ for Fonkoze and Microfinance,” his most recent post, begins:
Despite my busy fall schedule working as CEO for Grameen Foundation, the book on Fonkoze is advancing in exciting ways. I’ve written a draft of the first chapter and gotten helpful feedback from my writing guru Mark Levy. I’ve talked to Jessica Papin, the woman who is likely to be my agent, and she had some great feedback on the overall project.
One of Jessica’s recommendations is that for the book to have the best chance of success, Fonkoze needs to become better known prior to publication. So, she suggested that I first write a 10-15,000 word “long form article” for publication in something like Harpers or the New York Times magazine. (This could push back publication of the book by a year while giving me more time to do research next summer.) On first blush, I think this sequenced approach is a great idea and most of all, I like the energy and ideas she brings to the project. It’s exciting to see the team of people who believe in this book and are helping it succeed grow each and every month!
One of the most important and enjoyable parts of writing a book is reading other books whose content and/or approach is helpful. I recently finished The Female Vision by Sally Helgesen and Julie Johnson after someone who read my earlier blog on Fonkoze as matriarchy. Read the rest of this entry »
> Posted by Center Staff
“Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?”
Alex Counts poses that question to himself on the blog where he narrates his Fonkoze book project. It’s a query someone might naturally make, Counts says, upon learning that he is chronicling the work of the Haitian MFI.
Counts, the CEO of Grameen Foundation, sketches out a number of answers to the question based on his recent travels around Haiti. There, he’s been meeting with microfinance industry leaders, and in particular with Fonkoze’s stalwarts and trailblazers.
Counts, who was interviewed for the Center’s “Microfinance Matters” series, joined with other friends of Grameen Bank to set up Grameen Foundation in 1997.
His recent post “Microfinance, Short-Cuts, and Fonkoze” begins:
A natural question people in or close to the microfinance movement could ask me is, “Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?” There are many plausible answers.
It is operating, with considerable success, in a so-called “failed state” and working with very poor people – at a time when many question whether microfinance can be effective in either context, let alone both. Furthermore, it is populated by some fascinating people and its history is punctuated by dramatic events. And as noted in an earlier post, it is a women-led organization in a sense that goes far beyond who the CEO is, and extends to who occupies the vast majority of leadership posts and, not unrelated, who defines the cultural norms. Read the rest of this entry »
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