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> Posted by Sonja E. Kelly, Director of Research, CFI

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As we have watched events unfold in Iran, it has become increasingly clear that major problems with stability and security of funds in the financial system is a driver of civil unrest and political instability.

Over the last few weeks more than a dozen people have been killed and thousands have been arrested in demonstrations across the country. These demonstrations have involved tens of thousands of people in the most significant public display of opposition that the government has seen in a decade. The magnitude of this unrest is significant, and global concern is growing.

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> Posted by Center Staff

2017 was certainly an eventful year. And our year at CFI was no exception. Through our CFI Fellows Program and partnership with the Institute of International Finance, Mainstreaming Financial Inclusion, we produced thought-provoking research on fintech partnerships, the role of human touch in a digital age, breakthroughs in insurance and more. In the client protection area, 24 financial institutions were Smart Certified, bringing the total number of certified institutions to 94. The Africa Board Fellowship Program continued to make a difference at the governance level of financial institutions across Africa, and now roughly 200 CEOs and board members have participated in the program. And more…

Before we celebrate the New Year, we wanted to pause and look back at some of our favorite moments of 2017.

Financial Health as a Global Framework

We developed a new model for assessing financial health. The financial health framework was developed through a project led by the Center for Financial Services Innovation (CFSI) with CFI and Dalberg as partners. The framework offers a globally applicable model for financial health that includes six indicators of financial health and four contributing factors that are particularly relevant to the developing world.

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> Posted by Carmen Paraison, Senior Program Associate, Africa, the Smart Campaign

Nigeria has an ambitious target of including 70 percent of its population in the formal financial services fold by 2020, from a baseline of 44 percent with access to an account in 2014. But financial inclusion involves a lot more than account access. The Center for Financial Inclusion defines financial inclusion as a state in which all people who can use them have access to a full suite of quality financial services at affordable prices delivered by a range of providers in a competitive market with convenience, dignity and consumer protections, to financially capable clients. Protection for consumers is an important part of that definition, and I recently had the opportunity to visit Lagos to learn more about consumer protection challenges in the country. In particular, I wanted to see how Smart Certification can help Nigeria reach its financial inclusion goals in a way that provides benefits to customers.

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> Posted by the Microfinance CEO Working Group

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What’s been happening with the Microfinance CEO Working Group (MCWG)? We’re glad you asked. Fresh-off-the-press is a new annual report from the MCWG, detailing the Working Group’s key accomplishments and activities of the past year. Consumer protection is among the standout areas for the MCWG for 2016. Over the course of the year, 14 local partners belonging to the MCWG network achieved Smart Certification, including BRAC Bangladesh, the first microfinance provider in the country and the largest in the world to reach the consumer protection milestone. In total, 21.9 million clients are served by 39 MCWG network Smart Certified institutions.

The MCWG is comprised of the leaders of 10 global microfinance organizations: Accion; Aga Khan Agency for Microfinance; BRAC; CARE; FINCA; Grameen Foundation; Opportunity International; Pro Mujer; VisionFund International; and Women’s World Banking. The newest member, added in 2016, is the Aga Khan Agency for Microfinance and its General Manager Jesse Fripp. The MCWG also harnesses the expertise of more than 40 senior staffers across the member organizations, who meet regularly across seven Peer Groups focused on specific areas of microfinance, from digital financial services, to social performance, to communications, taxation, and others. Members and local partners work with more than 89 million clients in 87 countries, providing them with financial services as well as other support to help them succeed and lift their families out of poverty.

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> Posted by Miranda Beshara, Arabic Microfinance Gateway

Alex Silva, Executive Director, Calmeadow

Governance is a business imperative, and investors are willing to pay a premium for effective corporate governance. This was one of the key takeaways from the Middle East and North Africa (MENA) Governance and Strategic Leadership Seminar, held recently in Amman, Jordan. We’ve seen this stated priority of governance in the MENA microfinance market exhibited elsewhere, too. A joint IFC-Sanabel report assessing the top perceived risks facing the microfinance industry in the Arab world uncovered that the market’s stakeholders viewed weak corporate governance structures as one of the more threatening risks out of roughly 30 risk categories. Financial service providers in particular perceive this risk to be rising.

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> Posted by Center Staff

What’s better than blog posts? As a blogger, I’m inclined to assert that nothing is in fact better than blog posts. Alas, with self-awareness, I think we can all agree that interactive websites are cool. And that interactive websites about client protection in microfinance are especially cool!

Created by Nathalie Assouline of Alia Développement, a new interactive website offers users a media-rich experience for learning about the development of the microfinance industries in Cambodia and Morocco, with a special focus on client protection.

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> Posted by Daniel Balson, Lead Specialist for Eurasia and MENA, the Smart Campaign

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Smart Certification requires a substantial commitment from the financial institutions that choose to seek it. These institutions face a thorough audit by an independent third-party and may be required to improve client-related policies and practices at multiple levels, drawing in staff from the executive suite to the field offices.

In short, is it worth it? Why would a financial institution elect to participate in such a program – especially if the institution is operating smoothly?

A new survey conducted by Deutsche Bank and the Smart Campaign captures the perspectives and experiences of over 24 Smart Certified institutions and yields insights on why nearly 80 financial institutions around the world have achieved Smart Certification, with many more on the path to be certified.

The surprising result is that in addition to the benefit of publicly affirming that financial institutions treat their clients well, Smart Certification helps energize corporate culture and shift it toward client-centricity.

First off, Smart Certification allows financial service providers to distinguish themselves from the competition by demonstrating to their market and the industry that they provide a higher level of service to their clientele. Smart Certified institutions have to exhibit to independent auditors that at every stage from product design through customer acquisition and service delivery, they are governed by standards that ensure clients are treated fairly. Financial institutions have found a wide audience for their newly certified status. Half of all certified institutions reported that their regulators took positive and formal notice of their certification. Additionally, the majority reported positive media attention.

Respondents agreed that the biggest benefit of Smart Certification was in helping them see the world from their clients’ perspective and infuse client protection into the DNA of their operations. Over 90 percent of certified financial institutions agreed that Smart Certification has helped them prioritize their clients’ rights and reshape their institutional culture around client protection.

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> Posted by Isabel Whisson, Deputy Manager, Microfinance Programme and Ultra Poor Graduation Initiative, and Onindita Islam, Management Professional Staff, Microfinance Programme

This year BRAC in Bangladesh became the largest microfinance institution, in terms of number of clients, to be Smart Certified, signifying to our country market and to the industry writ large that we treat our clients with adequate care.

As a non-profit dedicated to poverty reduction, client welfare has been central to BRAC’s mission since its inception in 1972. In Bangladesh in general, almost all microfinance institutions are non-profits, and so microfinance has always been seen as a tool for alleviating poverty in the country.

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> Posted by Lizzy Bolze, Analyst, Investing in Inclusive Finance, CFI

The following post was originally published on the Accion blog. 

Accion client Ma San Htwe selling fish in Myanmar, one of the key areas discussed at European Microfinance Week 2016.

European Microfinance Platform is celebrating 10 years of supporting inclusive finance innovation, and hosted European Microfinance Week 2016 (EMW) in Luxembourg a few weeks ago. At the conference, I joined discussions about key organizations and challenges in the industry. Here are five of the main takeaways from the week:

1. The Underserved Refugee Population

The Social Performance Task Force (SPTF) is helping to provide financial services to the refugee population, which is now approximately 20 million people. In reality we don’t know very much about the socioeconomic needs of refugees, and much of the research is focused on humanitarian efforts. SPTF is working to research and provide guidelines to financial service providers to better serve the financial needs of this population. The guidelines will be published on SPTF’s website in the coming months. Learn more about leading organizations supporting refugees from CFI’s blog series on refugees.

2. Opportunity in Myanmar

Representatives from VisionFund, Advans, UNCDF, and M-CRIL provided a look at the economic landscape of Myanmar and the future of financial inclusion there. In Myanmar, 70 percent of the population was excluded from formal financial services until 2011, when microfinance rapidly expanded. After 2011, 267 licensed Monetary Financial Institutions (MFIs) opened. This opportunity comes with many barriers to inclusion, such as a lack of government regulation and funds and capacity-building issues. However, there is widespread optimism with an adoption of regulations proposed by the Smart Campaign, as well as further demand for microfinance in Myanmar. Investors should consider moving into the region for long term impact.

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> Posted by Haset Solomon, Communications and Operations Associate, the Smart Campaign

La Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), the common central bank of eight West African countries (Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo) has prioritized financial inclusion in the region. A recently announced financial inclusion strategy led by BCEAO in partnership with the several national Ministries of Finance aims to include 70 percent of the adult population by the year 2020. Financial access rates range from 7 to 34 percent across the region, according to the Global Findex.

BCEAO is expanding its financial inclusion efforts, including in mobile and e-money, and financial inclusion is slowly progressing in the region, but the opportunities and challenges of the member countries vary significantly, and serious client protection issues remain, particularly among unregulated institutions and in countries with weak national supervision and enforcement. A recent IMF spotlight on Senegal calls for steps to strengthen the sector’s governance through technical assistance to improve supervisory capacities and training to improve reporting standards and practices.

Weak supervision can lead to problems like those the Smart Campaign uncovered during its Client Voice research in Benin, where illegal microfinance institutions collected and disappeared with clients’ savings.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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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.