The Microcredit Summit Campaign would like to thank everyone who participated in the Virtual Conference on May 2, 3, and 4 entitled “Extending the Conversation on Reaching the Poorest: Another look at the 2011 Global Microcredit Summit.” A lot of great ideas were covered, and a great many thoughts and experiences shared which brought depth and clarity to the conversation. In an effort to help provide an accessible synopsis of the discussion for the third session, Fonkoze’s Steve Werlin and Carine Roenen assembled their notes and the comments from the discussion (still available here) into the following review. It’s a great way to familiarize yourselves with the topics covered on Day 2’s “Reaching the Poorest in Remote Areas: Understanding the Nexus of Product Design and Product Delivery.” You can continue the conversation with us on Linked In with STEP UP, an initiative of the SEEP Network.
Our topic was on extending access to financial services to especially remote, hard-to-reach places, and participants touched on a range of issues related to the question. The conversation divided itself roughly into two main threads, each touching on a different kind of financial service. There was a brief discussion as to whether that was the right thing to do. All who voiced an opinion agreed that savings, credit, and access to remittances and other financial services complement each other and that it is access to the package that is important to the poor. However, we found in our discussions that the operational realities of these three services are often very different, hence the need to consider delivery mechanisms separately.We talked first about credit, mainly focusing on the kind of traditional, Grameen-style solidarity group credit that Fonkozeoffers. We talked about both the higher costs of credit in more remote areas and about the higher returns that can come from the higher quality of remote portfolios. Participants from other institutions, like Trickle Up, tended to reinforce our sense of the solidarity-group-based credit center as a good model for remote places by sharing how important they’ve discovered access to outside credit, and not just pooled savings, to be.The key to successful solidarity-group credit is to get the right amount of credit to women who will use it well. That might sound simple, but it can be difficult in remote areas because it is harder to maintain the contact with borrowers that a good credit agent/borrower relation depends on. It’s harder for credit agents to get to know borrowers well when both agents and borrowers travel long distances just to get to where credit centers meet. And it’s harder for agents to ensure that they know members’ businesses well. In one remote area, Fonkoze solved this problem by having the agent overnight near a remote credit center, holding the center’s two monthly meetings on consecutive days, but that required opening another large center in a nearby community so that the portfolio in the area would be large enough to cover the expense of maintaining it.
For Fonkoze, the difference between success and failure has often been the willingness of managers to take the time to travel to remote areas to supervise credit agents’ work and provide adequate coaching. Our experience for credit for very poor borrowers in a region called Tit Montayn has shown clearly that a lack of supervision can easily lead to a portfolio’s suffering losses because agents don’t know how to ensure proper investment of loans. Other institutions—SKS, for example—have shifted the model to ensure appropriate staffing in remote areas. In one tribal area where they work, they have found that local para-professionals have been a viable option. But we continue to believe that supervision is key.
We also spoke about savings, and there our conversation was a little more wide-ranging. It’s clear that simply adding branches isn’t a solution for getting savings to outlying areas; various solutions were proposed as an alternative. Anasuya Sengupta wrote about Voluntary Savings and Lending Associations, but some wondered whether remote rural communities would be able to generate all the savings that their credit needs would require.We spoke some about the kiosks that we at Fonkoze plan to start opening in rural markets as a way to push access deeper into the mountains outside of Haiti’s towns, but several people pointed to the potential of mobile banking, specifically about the use of banking-by-phones, as a way to bring financial services to the hard-to-reach.Thank you again, and we hope this review was a helpful summary of the discussion.
—Carine Roenen, Executive Director, Fonkoze
—Steven Werlin, Regional Director, Fonkoze, and Shimer College