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> Posted by Kimberly Mitchell, Business Analyst, Credit Suisse
The Financial Inclusion 2020 project at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
This is the first in a series of several posts from this year’s Credit Suisse Virtual Volunteers, where research and insights across a variety of financial inclusion areas will be shared. The post begins:
Over the past few years, microfinance initiatives have empowered micro-entrepreneurs the world over to create and enhance their own businesses. However, not everyone has the ready-skills and resources to create their own successful business from scratch. For some entrepreneurs, it makes more sense to invest in a proven business model. In poor villages, this can take the form of a microfranchise.
In the developed world, everyone is familiar with franchises. The same goes for a big portion of developing regions. Businesses like McDonalds, Planet Fitness, and Pearl Vision provide a predictable and consistent-quality experience for consumers, a proven business model, marketing strategy, and often consistent source of supply for franchisees, and a scalable and profitable source of sales for the franchisor company. Microfranchise initiatives apply the principles of franchising on a smaller scale, with the aim of engaging a previously untapped market to provide a reliable source of income for the franchisees and more accessible products for consumers. The principle differences are that the amounts required for the business investment are smaller, and that the products are designed for the lower-income communities that the franchisees live in.
What potential does microfranchising hold to advance financial inclusion?
> Posted by Josh Goldstein aka Mr. Provocative
The elephant in the room of vulnerable minorities that continue to be excluded in large numbers from microfinance services is the globe’s second largest population after women: men. The vulnerability of men is often overlooked, due to their historic domination of women and their control of wealth in most societies throughout recorded history. Of course for every wealthy landowner or merchant, there were many slaves, landless laborers, and indentured servants, who controlled none of the world’s wealth and were lucky if they scratched out a living.
When microcredit first gained traction and credibility as a poverty alleviation strategy in the seventies, creating self-employment opportunities for women in the informal sector was central to its mission. Organizations like Women’s World Banking (birthed at the UN’s World Conference on Women in 1975) and Pro Mujer (1990) embodied this outreach strategy. There were very sound reasons to focus on women, who are and remain the poorest of the poor. And this emphasis reflected the zeitgeist of the time, as many of the early leaders of microfinance came of age in the women’s movement. Theirs was a struggle for equal rights and equal pay in societies that were patriarchal and discriminatory. It was a logical next step to bring this message of women’s rights to international development work.
> Posted by the Smart Campaign
The Smart Campaign is pleased to announce the release of a new tool to be used during the “Compulsory Group Training” portion of many group lending methodologies.
The tool – available for download on the Smart Campaign website – is designed to help microfinance institutions incorporate the Client Protection Principles into their compulsory group trainings (CGT). These trainings are group-level customer education programs MFIs use to interact with and screen prospective clients. CGTs are conducted by institutions practicing village banking methodology, and Grameen-style Joint Liability Group methodology, prior to the client group’s obtaining credit. The trainings are often the first formal interaction between the prospective clients and the MFI.
> Posted by Hema Bansal and Alexandra Rizzi, India Manager and Deputy Director, the Smart Campaign
The following post was written by Hema Bansal, with support from Alexandra Rizzi.
Over the past year and a half, while conducting several client protection assessments across India, I have often thought about what it takes for an institution to meet the Smart Campaign standards on appropriate products and delivery channels. Among its requirements, the Smart Campaign Certification standards state that providers design products that incorporate client characteristics – and needs, as well as customer feedback into new and existing product offerings.
From engaging with many financial institutions, I have seen that the product design and improvement process is influenced by multiple factors and can be quite complex. A particular challenge in India is the inertia of (and now regulatory emphasis on) the original Grameen lending methodology. While the Grameen joint-liability group methodology was the innovation that enabled millions without collateral to access small loans, its pervasiveness today can often overshadow additional products based on client characteristics and needs. The Grameen methodology has clear advantages for both the lender and the clients, particularly its scalability, but client needs often merit additional products in a lending portfolio. For example, products should have flexible payment options that adjust to clients’ economic and business cycles. Payment options should not limit themselves to mandatory weekly group meetings. They should encompass a wide array of payment periods (bi-weekly, monthly, quarterly, or semestral) and vehicles (pay loan officer, deposit at bank or partner intermediary, telephone payments, etc.) that are suitable to clients. Really the sky is the limit!
> Posted by Henry Jackelen, Jackelen Associates
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to , Fellow, Center for Financial Inclusion at Accion.
We’ve always known that microcredit is not a panacea.
During the heady days of the microcredit revolution in the 1980s and 90s, I was part of a veritable village of practitioners. It was a remarkable group of driven, passionate, and often iconoclastic individuals. We lived in our own Utopia, defining and inventing the concept of social enterprise. But even then we knew that our microcredit efforts weren’t perfect.
When I first visited Bangladesh in 1983, my role was to review the Grameen and BRAC programs as part of developing a new World Bank program (which proposed what became known as the Palli Karma Shayak Foundation or PKSF, a successful Apex for MFIs). Read the rest of this entry »
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