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“Progress happens, just not according to our wishful time frames.” Greta Bull responds to CFI’s paper about the latest Findex data.

This post was originally published on the CGAP Blog and is re-published here with permission.

> By Greta Bull, CEO of CGAP and a Director at the World Bank Group

We can choose to see a glass as half empty or half full. And our perspective often has a lot to do with our initial assumptions.

Beth Rhyne and Sonja Kelly of the Center for Financial Inclusion (CFI) have generated discussion in the financial inclusion community with their paper exploring the latest Findex data, titled “Financial Inclusion Hype Versus Reality.” In the paper, Rhyne and Kelly express concern that the rate of access to new accounts slowed between 2014 and 2017 and that the usage gap for those accounts appears to be growing. They also highlight stagnation in the growth of credit and a decline in savings, but an increase in the use of payments. While I have very little to disagree with in their paper, I think the financial inclusion community has a lot more cause for optimism than it makes out.

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> Posted by Jeffrey Riecke, Communications Specialist, CFI

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With their soaring ubiquity and utility, mobile phones are revolutionizing disaster and crisis relief, as recent experiences have shown. From Typhoon Haiyan in the Philippines to Ebola in West Africa, we’ve seen mobile networks help provide critical financial services, information, and communication – in every stage of a crisis. And all signs point to this support expanding.

A few weeks ago GSMA spotlighted a growing collective of mobile network operators (MNOs) working together to aid those hit by crisis. The Humanitarian Connectivity Charter, an initiative launched by GSMA in 2015, aims to unite the industry under a set of principles for harnessing mobile technology to support people affected by humanitarian emergencies. GSMA recognized four new member MNOs that signed onto the Charter, joining more than 60 other MNOs from around the world. By signing the Charter, MNOs commit to a common set of principles designed to enhance coordination, standardize preparedness and response activities, and strengthen partnerships between industry, government, and humanitarian organizations.

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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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> Posted by Saran Sidime, Operations Assistant, the Smart Campaign

West Africa is the second-fastest growing regional economy in Africa. Its GDP is more than double that of East Africa. However, its impact investing landscape doesn’t reflect this.

There are currently 45 impact investors active in the region, including 14 development finance institutions (DFIs) and 31 non-DFIs. Direct impact investments deployed in the region totaled $6.8 billion between 2005 and 2015. This is small relative to East Africa, which has over 150 investors and $9.3 billion in deployments on the books for roughly that same time period. Nevertheless, the investing trends in West Africa are encouraging, according to The Landscape for Impact Investing in West Africa, the third in a series of regional market landscaping studies published by the Global Impact Investing Network (GIIN).

The main barriers to impact investment in the region, according to the GIIN, include a lack of investment readiness among entrepreneurs and investees (in part due to difficulty obtaining bank financing), unpredictable policy environments, difficulty raising capital locally (among fund managers) compared to global standards, few exit examples, and macroeconomic and political instability. That is a truly daunting array of challenges. While in recent years there has been strong growth and investment in ecosystem actors such as incubators, accelerators, associations, and technical assistance providers, the ecosystem is not at sufficient scale to service the needs of the region.

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> Posted by Aissatou Diallo, Special Assistant to the CEO, BRAC USA

For the three countries most affected by Ebola – Liberia, Sierra Leone, and Guinea – the impact of the disease on society came in waves. The first wave happened around March, after the virus was first confirmed in the region. It was characterized by denial, disbelief, and a general numbness. The second wave, in May, happened as the disease spread geographically with a corresponding increase in cases and deaths. During this time, people felt overwhelmed. Even though a lot of people still doubted that the disease existed, they knew something was wrong because people were getting sick and dying at an alarming rate. The third wave, in August, blew the lid wide open on shortcomings and vulnerabilities in the region as Ebola spun out of control. Health systems collapsed, schools closed, communities were quarantined, and supply chain systems broke down. People lived in fear.

These factors contributed to severe economic losses in the region, especially for actors in the informal economy (e.g. traders and farmers) who depend on moving freely to sell their goods at markets and have little financial flexibility or cushion to absorb a shock to the system.

I just returned from a five-week trip to Liberia. In the towns and villages I visited, people told me that August was characterized by bleakness and despair. Communities looked like ghost towns, social ties were weakened, and there were sick people dying on the streets because no hospitals or care facilities were available.

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> Posted by Jeffrey Riecke, Communications Associate, CFI

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New World Bank analysis indicates that along with the already devastating loss of life, the Ebola outbreak could cause “potentially catastrophic” economic effects on West African countries, especially in the three hardest hit. According to the analysis, Liberia’s GDP could fall by 12 percent, Sierra Leone’s by 9 percent, and Guinea’s by 2 percent.

Efforts to contain the epidemic are fueling much of the economic slowdown, like the closings of businesses, transportation infrastructure, and critical air and sea links with other nations. As mentioned in a post on this site a few weeks ago, microfinance institutions are being affected, too.

Between 80 and 90 percent of the economic losses suffered from Ebola are related to containment behavior, a dynamic consistent with recent SARS and H1N1 outbreaks. A lower supply of available workers – due to employee illness, death, and caregiving – is a smaller factor. At the same time, health systems are collapsing under the onslaught of the epidemic, leaving those with other serious illnesses unable to receive treatment. These conditions cause shortages, panicked buying, and speculation, which lead to rises in food prices and inflation. Economic life in the affected areas was already extremely tough to begin with. In Liberia, Sierra Leone, and Guinea, more than 50 percent of the population lives below the poverty line.

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> Posted by Center Staff

This edition of top picks features posts highlighting discussions at the 17th Microcredit Summit, how the Ebola crisis is affecting microfinance in West Africa, and new statistics on the continued growth of the mobile money industry worldwide.

The 17th Microcredit Summit, this year’s iteration of the Microcredit Summit Campaign’s annual conference, is underway this week in Merida, Mexico. For those of us not in attendance, the Campaign is live streaming the sessions online. NextBillion is also sharing the experience through blog posts, including one published yesterday providing a report-back on day one of the event. The post offers insights from the day, including notable quotes from keynote speeches and panel presentations, and themes that emerged across sessions.

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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.