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> Posted by Center Staff

The 2017 Harvard Business School – Accion Program on Strategic Leadership in Inclusive Finance is now accepting applications for what will be another exceptional week of learning and exchange among world leaders in financial inclusion. The program will take place April 17 – 21, 2017 at the HBS campus in Boston, Massachusetts.

The 2017 HBS-Accion Program builds on 11 successful years and over 700 alumni – CEOs, presidents, executive directors, and other high-level professionals – from roughly 100 countries.

Today’s landscape of financial services for the base of the pyramid is increasingly complex, with a diversity of products, providers, and support organizations extending services to previously excluded populations. Disruptive technologies and new ways of doing business are creating new possibilities for reaching more people with more types of services. It’s an exciting time for financial inclusion, though for leaders steering their organizations through this landscape, the pace and magnitude of change may look overwhelming.

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> Posted by Steve Hollingworth and Kathleen Stack

Grameen Foundation and Freedom from Hunger are proud to announce that we have joined forces to form a single unified organization.

Under the banner of Grameen Foundation, our mission is to enable the poor, especially women, to create a world without hunger and poverty.

This is more than mere words. It is an unflagging commitment to focus our resources and combined expertise on charting new paths out of poverty with programs that expand financial inclusion, enhance health, strengthen resilience and improve livelihoods for the world’s poorest people.

Through combining the programs, expertise and talent of Grameen Foundation and Freedom from Hunger we will further broaden and deepen our impact, and build a whole that is truly greater than the sum of its parts.

Both organizations have roots in the earliest movements for microfinance, and today conduct programs that tackle poverty and hunger from multiple directions.

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> Posted by Masrura Oishi, Tanjilut Tasnuba, and Isabel Whisson, BRAC

The following post was originally published on NextBillion.

It is part of Financial Inclusion Week, a week of global conversation on advancing financial inclusion. This year’s theme is keeping clients first in a digital world. Throughout the week participants will share their thoughts in events and webinars, on social media, and through blog posts. Add your voice to the conversation using #FinclusionWeek.

The integration of mobile money into microfinance operations is one of the most exciting yet challenging prospects facing microfinance providers today. Mobile money presents a fast, cost-efficient and flexible alternative delivery channel through which money can be transferred, loans can be repaid and savings can be deposited. Yet, globally, active usage of mobile money on a 90-day basis remains low, at around 33 percent.

BRAC has been gradually integrating mobile money into its microfinance operations since 2011. Among many of its microfinance clients, who are predominantly poor rural women, the prospect of transacting with money via mobile phone instead of cash at first seems suspicious and daunting. In seeking to promote responsible, confident and active use of its financial services, BRAC has introduced a number of initiatives. These have included investing heavily in client protection, customer service and financial education and developing mobile money use cases that made sense to the average microfinance client, such as using mobile money to pay deposits into monthly savings schemes.

As part of Financial Inclusion Week, which this year puts the spotlight on keeping clients first in a digital world, we spoke to one of BRAC’s clients about her experience using mobile money in microfinance. A client for more than 10 years, Maloti Rani Das has witnessed several key changes that have in turn changed her experience and view of microfinance. In a brief one-on-one interview, she took us through her journey with BRAC, from why she borrowed her first loan, her feelings when she first started using mobile money, and what has helped her become a confident user.

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> Posted by Nadia van de Walle, Lead, Africa Partnerships and Programs, the Smart Campaign

Almost two years ago, the Smart Campaign surveyed financial service providers in Uganda as part of our study, What Happens to Microfinance Clients Who Default (WHTCWD). In summarizing what they described, we did not mince words, reporting the environment as “Hobbesian” at the time. Providers in Uganda described default as a major issue of concern for them. Borrowers in arrears would skip town or change their name, behaviors enabled by the lack of government IDs and credit bureaus.

MFIs often adjusted for these thin credit envelopes and their high distrust of clients by meting out harsh, inflexible punishments on an immediate basis to those who missed a repayment. For instance, providers, suspecting customers of being at flight risk often seized collateral immediately after missed payments in ways that contrasted sharply with the Client Protection Standards and best practices guidance. Some providers explained that they had to act quickly because borrowers have multiple loans and if they didn’t seize the collateral quickly, another lender would swoop in, leaving them with nothing. Unfortunately, all of this was occurring in an environment of weak due process and slow legal enforcement, and we heard about instances where lenders were paying off local law enforcement, turning to local councils to pressure defaulters, and even getting clients thrown in jail.

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> Posted by Center Staff

Looking Beyond [Universal Financial] Access

CFI defines Financial Inclusion as “a state in which everyone who can use them has access to a full suite of quality financial services…”

The World Bank’s latest edition of the Global Findex revealed that between 2011 and 2014 over 700 million people were newly financially included, at least according to the top line metric of account ownership. The Universal Financial Access program continues to drive home the message that financial access is within reach, even possibly by 2020. We at CFI are now shifting our focus to the other elements of financial inclusion, those which we have always stood by and advocated for, but those that will certainly take longer than 2020 to reach.

Our definition continues:

“… provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable, competitive market to financially capable clients.”

In this issue of our ongoing Financial Inclusion 2020 e-magazine series you will find insights from recent or ongoing CFI research projects. In a rundown of our Business of Financial Inclusion report, you will hear what commercial bank managers told us about the opportunities and challenges that they face in reaching unbanked and underbanked customers. You will also dive into how commercial banks are partnering with financial technology startups to serve new customers and broaden their product offerings. In the e-zine’s research spotlight, we take a critical look at how effective G2P payments have been in advancing financial inclusion. We also explore the role of microfinance in microenterprise growth. In addition, we discuss the importance of two emerging concepts, financial health and financial capability, and what these two frameworks mean for regulators, providers, and customers.

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> Posted by Christy Stickney, Independent Consultant and CFI Fellow

After decades of directing financial services to owners of micro-enterprises, many microfinance institutions are now finding themselves serving a growing population of small business owners.  Thus, with increasing global attention directed to small and medium enterprises (SMEs) and their potential contribution to economic growth, it seems fitting to look more deeply into microfinance portfolios, and discover what can be learned from entrepreneurs whose businesses have arisen out of poverty and marginalization into what can be classified as emerging SMEs. My recent research as a CFI Research Fellow led me to delve deeply into the stories of entrepreneurs who have grown their businesses from micro-enterprises into SMEs.

As someone who has focused much of her career on pushing microfinance downward, towards smaller enterprises and those earning lower incomes, this focus on emerging SMEs both inspired and taught me a great deal. While the analysis of these stories is the focus of my report coming out next month, I’d like to share here two stories that inform our understanding of the nature, growth trajectories, and financial service usage of SMEs arising from within microfinance portfolios. They describe the experiences of two clients of Banco ADOPEM in the Dominican Republic – one of three microfinance banks I visited as part of this study. (All names have been changed to protect identities.) While these two stories may resemble the classic “client story” in that they show how people have moved up the economic ladder, pay attention to the markers of success – both financial and non-financial – that distinguish these clients from those that may have not grown.

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> Posted by Center Staff

banana.skins.coverWhat do industry leaders feel is the biggest risk facing their institutions in 2016? This question is the focus of the latest Banana Skins report for the financial inclusion sector, Financial Services for All: It’s All about Strategy. The report ranks the top perceived risks facing those providing financial services to un/under-served people in emerging markets. Produced by the Centre for the Study of Financial Innovation (CSFI), and sponsored by Citi and CFI, the study examines the rapidly changing and expanding financial inclusion landscape to better understand how providers view challenges like new technologies, new market entrants, client repayment capacity, and macro-economic risks.

This year’s report, the sixth in the series surveying risks facing the inclusive finance industry, embraces a broader scope than previous editions, which focused exclusively on microfinance institutions. The new report reflects the advances in the provision of financial services to the base of the economic pyramid and encompasses both established providers and newer entrants like commercial banks, technology companies, and telephone and communication companies. A survey with respondents spanning practitioners, investors, regulators, and other industry stakeholders comprise the report’s findings. It’s important to note that in addition to the Banana Skins report series on inclusive finance, there is also a Banana skins report series on insurance and on banking.

So, what were the results?

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> Posted by Hannah Sherman, Project Associate, CFI

In a world of rapid change, few organizations have all the capabilities needed to accomplish every aspect of their business. This is true for commercial banks, which often find success in adapting to new opportunities through partnering. CFI’s most recent publication, The Business of Financial Inclusion: Insights from Banks in Emerging Markets, a joint publication with the Institute of International Finance (IIF), illustrates how banks use partners to adopt new technologies and reach previously underserved markets.

The report, based on interviews with the financial inclusion leads at 24 banks, shines a spotlight on the role of banks as leaders in financial inclusion and discusses their specific strategies related to technology, data, financial capability, partnerships, and other issues.

The report found that banks create a variety of partnerships. The banks in our survey partner with telcos, payments companies, insurance companies, microfinance institutions, retailers, and consumer-goods companies. They work closely with governments for G2P payments and with international development agencies and donors that provide start-up capital for new financial inclusion initiatives. They also contract with digital technology providers such as data analytics companies, back-office systems providers, digital channel providers, financial capability providers, and other fintech firms.

Among many other areas, banks often use partnerships to improve on the following:
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> Posted by Danielle Piskadlo, Manager, Investing in Inclusive Finance, CFI

#Allinforimpact was the hashtag at “Investing for Impact”, a socially responsible investing (SRI) conference in Boston. Maybe not “all” quite yet but certainly “more” investors are going in for impact, as indicated by the growth in attendance at the conference over the years. Investing for Impact was sponsored by socially responsible investors, such as Calvert Investment and Trillium Asset Management, who not only screen potential investee companies in terms of meeting certain environmental, social, and governance (ESG) criteria – but also serve as watchdogs for the sector and advocates for impactful companies.

A Few Top SRI Trends (from the conference)

Allowing Sinners to Repent: Some companies with bad names in the 1970’s such as General Electric and Ford have changed enough internally to now qualify within some investors’ ESG criteria. As one speaker put it, “What kind of church would we be if we didn’t allow sinners to repent?”

Shades of Grey: Tobacco, firearms, and carbon were across the board clear divestments. But the jury was still out on some companies and business models. For instance, Nestlé, which in the 1970’s came under fire for promoting baby formula in developing countries, has since done a lot to accelerate research on diabetes. Peapod, and other grocery delivery services, are making a pitch to be included as impact investments because the energy saved by not storing food, and the associated reduction in food waste, are positive externalities to consider.

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> Posted by Deborah Drake, Vice President, Investing in Inclusive Finance, CFI

Declare victory and go home. How often do you get to say that? But that’s exactly what we did a few weeks ago when we celebrated the closing down of the Accion Bridge Fund. Why a celebration? As the first guarantee fund to support the growth of microfinance institutions, it achieved its objective which was to open doors to private bank funding. This was 1984; microfinance was in its early days and was the purview of small NGOs which had little to no experience with banks. What they did have was deep experience with microlending and bold ambitions to scale this lending. Funding above and beyond grants would be needed.

The Bridge Fund – originally called the Latin America Bridge Fund – was a pioneering breakthrough for Accion and for the industry. By providing a partial guarantee in the form of a letter of credit to local financial institutions, Accion’s network partners were able to grow their portfolios and establish relationships with the formal financial sector of their respective countries. As they gained experience and credibility, MFIs were able to leverage the guarantees to achieve funding multiple times the nominal amount of the guarantee.

Such well known leaders in financial inclusion as Bancosol and Mibanco received early support from the Bridge Fund. Accion’s partners in Paraguay and Chile were able to grow and thrive because Bridge Fund guarantees facilitated funding that they could not obtain from multilateral sources due to their political regimes. Over time the Bridge Fund grew to approximately US $6 million and provided guarantees to 40 MFIs in 15 countries around the world.

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.