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> Posted by Sonja E. Kelly, Fellow, CFI
There’s a lot of data out there. And some of us are brave enough to use it (including you, my friend).
Recently we released an interactive Data Explorer tool and individual Country Profiles, allowing users to visually explore financial inclusion data in comparison with other development indicators in one central location. You can see our analysis of some of the data, but more importantly, we would like to invite you to explore the data for yourself.
For those interested in financial inclusion figures in specific countries, regions, or income groups of interest, visit Country Profiles. There we display data from the Global Findex along with demographic data relevant to understanding financial inclusion across the lifecycle. As we continue our own analysis of global trends, we will add figures on income, urbanization, technology, and more for each country.
Click on the financial inclusion bars to see a breakdown of the data by client segment, and use the tool to understand why or how people use financial services in particular countries. At the bottom of the page, you can interact with the demographic data by scrolling through the years to see past and projected population trends from 1950 to 2100. (This is very cool.)
> Posted by John Gitau, CEO, Kenya Financial Education Centre
If the Financial Inclusion 2020 campaign asked me how I can accelerate financial capability to meet full inclusion by 2020, I would start looking for already established systems with wide consumer outreach that I can leverage with ease. One such system is religion. I would seek the help of religions to spread financial literacy and invigorate financial capability for the world’s excluded majority.
Why do I believe that religious orders systems hold the key to faster capability building and inclusion? Here are a few reasons to support my belief:
- The religious orders’ outreach infrastructure to the intended beneficiaries of formal financial services is wide and deep, cutting across all demographic and geographical regions in the world. The infrastructure is more elaborate among the poor since spiritual seeds are better received in the fertile poverty seedbeds. You may miss everything else in the poor neighborhoods but you will find a house of prayer of some kind.
- Religious orders have perhaps the most frequent touch points with their followers other than perhaps schools. Most religious orders have at least four days of contact in a month. Christian denominations, for example, have frequent contacts going by different names such as worship, mass, fellowship, and others. Fortunately, the consumers of spiritual products are also consumers of financial services. In fact, religious organizations reach the intended financial inclusion target almost effortlessly with permanent co-existence among them.
- Religious orders, in addition to their spiritual roles, are strong stakeholders in the financial system as they derive their incomes from their customers. They invest in schools, hospitals, and real estate, and create businesses that generate further incomes.
- They can be good collaborators and champions in financial capability because their adherents look up to them for guidance.
- The religious orders enjoy a privileged position of undivided attention in spiritual moments during service and worship. Perhaps a monologue such as a sermon or homily can snatch some moments for financial literacy messages. The moment after offertory can be a great touch point for financial literacy messages. This is the moment when a congregation feels the joy of giving which triggers humility and submissiveness conducive to mental/emotional learning. Short financial literacy messages can be offered at such moments.
> Posted by John Gitau, CEO, Kenya Financial Education Centre
The other day, I received a text message from an engineer keen on financial inclusion matters. He wrote:
“Morning Sir! I was just thinking. At what cost is financial inclusion? I have just read a big sign in Donholm: Redeem your airtime for cash. Does this add to financial inclusion? If I am stuck, someone can sambaza (share) airtime and then I can redeem it as cash and get fare to go home. In financial inclusion, since you are in this field, is it all about such access and convenience to financial services?”
I didn’t immediately have an answer to his question. It sent me thinking broadly and deeply. Through M-Pesa, Safaricom has a “financial inclusion” base of over 16 million Kenyans. Then I remembered that in the G20 Los Cabos Summit of June 2012,* mobile money use was left out as one of the measures of financial inclusion. Having a formal bank account was in. But this realization left me more confused. Safaricom mobile connectivity through its M-Pesa product is excluded as an inclusion parameter just because Safaricom isn’t a bank? Wait a minute, now we have M-Shwari, a bank account at Commercial Bank of Africa available to M-Pesa customers through Safaricom. How shall that be treated? Inclusion within a largely excluded service? Of all Safaricom M-Pesa customers, are only those with M-Shwari accounts counted as included?
This reminded me of a story in Chinua Achebe’s Things Fall Apart about a character called Dimaragana who could not give his knife to cut dog meat because dog meat was taboo, but he was ready to cut the dog meat with his teeth. So, Safaricom customers using M-Pesa are not included but perhaps if they go deeper into its system and buy a product called M-Shwari, they’ll get included? Unsatisfied, I thought about a few other financial services scenarios. If an M-Pesa customer were to close off her M-Shwari account while still using M-Pesa, would that be exclusion? Suppose instead of M-Shwari, she sends money to her retirement benefit scheme through her Mbao Pension scheme. Would she then be considered included? She could also buy an insurance policy from CIC Insurance using their Ksh 20 insurance-per-day scheme and make her payments through M-Pesa… Still excluded?
> Posted by Jeffrey Riecke, Communications Assistant, CFI
The majority of individuals around the world without formal bank accounts are women. In the developing world, 63 percent of women lack accounts, versus 54 percent of men. Mobile financial services offer a path to inclusion given that 1.7 of the 2.5 billion unbanked own mobile phones. However, the path is longer for women, as the majority of mobile phone owners are men.
Visa, mWomen, and Bankable Frontier Associates are working together to bring mobile services to women. Today at the Mobile World Congress in Barcelona they’re releasing joint research that examines how to best design mobile financial services to reach women at the base of the pyramid (BoP), Unlocking the Potential: Women and Mobile Financial Services in Emerging Markets.
You might remember our posting about mWomen research on mobile phone usage among BoP women earlier this year. The previous report, Striving and Surviving: Exploring the Lives of Women at the Base of the Pyramid, cast light on the opportunity for mobile money services to benefit BoP women. This potential was evidenced in the report’s findings that BoP women are largely responsible for managing their family’s finances, that they often go to unsafe, costly, and time-consuming lengths to do so, and that one of the biggest barriers preventing their use of formal financial services is a lack of nearby facilities.
Unlocking the Potential builds off Striving and Surviving to establish where the developing world is with mobile financial services among BoP women. Over the past few months the research team has worked with women in Indonesia, Kenya, Pakistan, Papua New Guinea, and Tanzania to better understand their relationship with mobile financial services, examining how they manage their money, what their needs are, and how mobile financial services can fit into their lives.
> Posted by Jeffrey Riecke, Communications Assistant, CFI
In this decade, Africa is undergoing urbanization at a faster rate than Latin America, Asia, or anywhere else in the world. In these burgeoning areas, the majority of people are building their own housing, and doing so in an incremental fashion – adding what they can, when they can, and developing their facilities as their means allow.
There are a few big challenges to this. In Africa’s urban centers, there is a limited supply of affordable housing, and financial services to aid housing development are also scarce. Global Findex Data indicate that access to and usage of credit in sub-Saharan Africa is among the lowest in the world. Specifically looking at mortgages, a recent study from FinMark Trust revealed that across the populations of Zambia, Malawi, Botswana, and Tanzania, less than 1.5 percent of individuals utilize mortgages.
Enter microfinance. Typical mortgages don’t fit well with the financial profile of most Africans. Compared to microloans, they’re generally for longer terms, larger amounts, and they are less flexible. Most mortgages require clients to provide documentation of regular incomes. Many Africans operate in the informal sector and lack regular income streams. In Tanzania, for example, only 28 percent of the population is able to satisfy this income requirement.
The following post, written by Tilman Ehrbeck, CEO of CGAP, was originally published on the Huffington Post Business Blog, with the title Behavioral Insights to Advance Financial Inclusion — or Why Swedes Are Not Necessarily Better Human Beings Than Danes.
In Sweden, all new drivers start out registered to be organ donors in the event of their passing. They have the freedom to opt out without negative consequences. Fourteen percent decide to do so and 86 percent remain organ donors. Across the Oresund, less than 10 miles away, Danes have to proactively decide whether they want to become organ donors. Less than 5 percent do, and more than 95 percent don’t. On the global scale of things, Sweden and Denmark are culturally quite similar: generally credited with being open-minded, socially responsible, common-sense Scandinavians.
The vast difference between Swedish and Danish organ donor participation rates (technically “presumed consent”) despite all the cultural similarities is one of the most dramatic examples of the power of policy design that takes into account pervasive human cognitive and behavioral biases to help us do what we generally think is a good thing, but often have a hard time following through with. One such bias is that, when decisions are tough, we tend to prefer the status quo; and relatedly, it’s much harder to proactively opt for something, rather than to simply stick with the offered default choice. (The approach, popularized by the term ‘nudging,’ even led the UK Prime Minister to set up a ‘nudge’ policy advisory unit.)
>Posted by Ignacio Mas
A review of Money Real Quick: The Story of M-PESA by Tonny K. Omwansa and Nicholas P. Sullivan
When it comes to mobile payments, Kenya has become a global innovator. Almost three-quarters of the adult population knows how to fiddle with a small keyboard in order to send money to someone else or check their balance. They haven’t been seduced by Jobsian gadgetry (any phone will do), but rather by the sheer simplicity and convenience of the M-PESA service. Anywhere you go you find stores offering to help you with the bothersome business of getting cash into or out of your phone. It’s practically doorstep service. Indeed, the most striking thing about M-PESA is how visible it is.
In their new book, Money Real Quick: The Story of M-PESA, Omwansa and Sullivan have done an excellent job of consolidating all that we know about M-PESA today, following every nuance in its development and every tentacle in its growing reach. This book will become not only the classic story but also the reference for all things M-PESA. Read the rest of this entry »
> Posted by John Gitau, CEO, Kenya Financial Education Centre
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.
As I mentioned in a blog post yesterday, financial literacy is a recipe that does not come together automatically, even if you seem to have all the right ingredients. You may have funding, but the funding could come with unrealistic expectations. You may have students, but the students may not have a good reason to pay attention to the lessons financial literacy training offers.
While I am new to the Financial Inclusion 2020 campaign, I am certain that full financial inclusion, with fully financially capable clients, will not happen without a sound structure to support financial literacy efforts. Read the rest of this entry »
> Posted by John Gitau, CEO, Kenya Financial Education Centre
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.
I have taught financial literacy in East Africa for the past eight years, and have managed my own firm for the past four. And here is one thing I have noticed: the financial inclusion community as a whole does not have a common definition or goal for financial education. This lack of an agreed-upon definition makes difficult the process of creating financially capable populations.
Here is how I define key terms:
Financial education is the process of teaching the knowledge, skills and attitudes necessary in personal money management. The end result of financial education is financial literacy. Financial literacy is the ability to manage personal money well. But financial literacy is not an end in itself. It is a tool which when used well results in financial capability. Therefore, financial capability is the ability to apply financial literacy in personal money management to improve financial well-being. When a financially literate person takes action in a way that results in better money use, we say such a person is financially capable.
Not everyone maintains these definitions and goals, though. MFIs, corporations, NGOs, and SACCOs (savings and credit cooperatives) each come to me with different goals, some impossible to achieve. MFIs want me to teach their clients quickly so that they can improve on their loans repayments and increase saving. They are not keen on me teaching investment and some even warn me to be careful when handling the topic of the use of financial services. They want me not to dwell on costs but emphasize benefits. I sometimes find these requests quite amusing. Read the rest of this entry »
> Posted by Center Staff
The following is an excerpt from a private email conversation between two CFI staff members, Sergio Guzman (based in Washington, DC) and Leah Wardle (living abroad in Nairobi, Kenya).
Sergio writes:
Hey Leah –
I just read this article, which was tweeted by Tilman Ehrbeck at CGAP, about mobile money contributing to inflation in Kenya. The article claims that MPesa – especially since it has started allowing people to store money (creating something that looks an awful lot like a bank account) –causes Kenyans to move money around so fast that it sparks inflation. Read the rest of this entry »
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