Webinar recap: Is it too late for microfinance to be pro poor?

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On April 21st, the Microcredit Summit Campaign co-hosted with Uplift a webinar discussion focusing on the promise that graduation holds for sustainably reaching the ultra-poor. Our featured speakers were Debasish Ray Chaudhuri, CEO of Bandhan Konnagar in India, Rachel Proefke, a research associate with BRAC Uganda, Mark Daniels, the Philippines director for Opportunity International, and Allison Duncan, CEO of Amplifier Strategies and founder of Uplift. Anne Hastings, a global advocate with Uplift, moderated the webinar.

The conversation looked closely at the experiences that each of the three practitioners on the panel have had in implementing the program as well as the global advocacy message supporting the graduation approach being delivered by Uplift and its allies.

We hope you will get engaged with this promising avenue for reaching those living in ultra-poverty and be inspired by the potential it holds for helping microfinance institutions to reconnect to their original purpose. Some final thoughts from speakers on the webinar follow.

Anne Hastings noted,

We weren’t really able to address in depth how a pro-poor MFI, struggling for sustainability in a competitive, regulated environment can attain sustainability while operating the graduation program. In the models we saw, the institution was either an NGO or a regulated MFI that had formed a non-profit foundation for the graduation program and perhaps the delivery of other non-financial services. We shouldn’t be surprised or embarrassed that donor funding may still be needed, but partnerships with government safety net programs and other NGOs can also be very helpful in paying for the program. As the 6 RCTs funded by the Ford Foundation concluded, “Although more can be learned about how to optimize the design and implementation of the program, we establish that a multifaceted approach to increasing income and well-being for the ultra-poor is sustainable and cost-effective.” (Science Magazine, 15 May 2015, Vol 348 Issue 6236, p. 772.)

Rachel Profke added,

I think the point that I would stress, which we begun to address in the discussion, is the importance of finding the right partner for the implementation of components that an MFI does not have the core capacity to implement. While BRAC is able to leverage both microfinance and additional programming in the areas that we operate all programs, this is not always the case for us or other MFIs that will be interested in implementing graduation programming. Often, MFIs can provide the scale in identifying communities and in providing financial services, but linkages with implementing partners providing similar programming is fundamental to ensuring best practices in programming — as Mark highlighted. However, aside from NGO implementers, governments are often running existing programming that can be leveraged not only in identifying beneficiaries through such channels as social protection programming but also in providing some components through existing service provision, in terms of health or extension services. We find it helpful to look at what is already at place — and at scale — through government programs is useful, as we have done in Tanzania. This is also useful as we think about scaling because, apart from donor buy-in, governments offer larger potential through larger budgets and capacity.

Thank you to all panelists for contributing to this important conversation about the importance of the graduation approach. We also wish to thank all participants who submitted thought-provoking questions and comments to help make the session a very lively and interactive discussion!

Couldn’t join us? Watch the session recording!

Oradian’s innovative cloud system in West Africa empowers the microfinance community

Oradian customers

Oradian customers

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>>Authored by Vedrana Legovic, marketing and communications officer of Oradian

Vedrana Legovic_contributor

Vedrana Legovic

Last month, we travelled to Abu Dhabi for the 18th Microcredit Summit, which hosted a number of microfinance and financial inclusion experts from around the world. The summit explored new and effective ways in advancing financial inclusion and featured successes in Africa and the Middle East. One of those success stories is certainly that of Oradian, and we are honoured that the Microcredit Summit Campaign recognised the impact of our work in West Africa. By using our latest cloud-based technology, services, and domain expertise in that region, we increase efficiency and effectiveness of microfinance institutions (MFIs).

We had the opportunity to attend inspiring plenary and breakout sessions and be a part of the arena where so many great ideas were shared. Oradian’s co-founder and managing director, Antonio Separovic, spoke at the “Innovative Products and Services for Financial Inclusion” panel. Oradian creates technology (SaaS software) for MFIs. With our technology, we remove complexity, empower our users, and enable their growth because most of them still use pen and paper.

Antonio discussed Oradian’s experience in enabling ‪‎ MFIs to advance financial inclusion by using our innovative technology. More specifically, he shared our story about empowering microfinance communities in some of the most remote rural areas in Nigeria, our core market, where we have had impressive results with local MFIs in applying our multi-award winning software, Instafin, to their operations.‬‬‬‬‬‬‬

Oradian’s Core Microfinance System Instafin awarded to one lucky MFI

Antonio handing the Oradian winner certificate to the representative of Vicoba Village Community Bank from Tanzania

Antonio Separaovic, managing director of Oradian, hands the Oradian winner certificate to the representative of Vicoba Village Community Bank from Tanzania

We had the privilege of partnering with the 18th Microcredit Summit. On the second day of the summit, we held a raffle in which one lucky MFI, Vicoba Village Community Bank from Tanzania, won a 9-month pilot to use our Core Microfinance System – Instafin along with all the training and support.

As Instafin is very easy to implement, we are happy to be able to offer such pilots and we look forward to awarding a similar prize next year. Commenting on the Summit, Antonio Separovic, managing director at Oradian said:

Attending the 18th Microcredit Summit was truly a rewarding experience. We received excellent feedback from attendees and were delighted to join other participants and delegates in so many motivating discussions that highlighted the importance of innovation in financial inclusion. We’re grateful for many opportunities that arose from an inspiring networking environment. I would say the Oradian team is now even more excited to continue working on our mission — to empower the delivery of financial services to the underserved and unbanked. Needless to say, we are already looking forward to the next year’s event.

How we empower MFIs with Instafin

Microfinance institutions in Africa offer both loans and savings, but they operate in outdated technical environments. This creates a struggle with day-to-day operations and, more often than not, causes confusion and uncertainty.

This is where Oradian steps in. Our SaaS Instafin is changing the way MFIs in developing markets operate, enabling them to serve the most rural clients affordably and efficiently. Specifically designed for financial institutions servicing the base of the socio-economic pyramid, Instafin is the world’s first true core microfinance platform, designed by experienced practitioners.

Oradian’s role in women’s empowerment

This year’s summit discussions highlighted once again that microfinance incentives provide much needed access to financial resources that are crucial to the people at the bottom of the socio-economic pyramid, among whom women comprise the majority. Women have earned the reputation of being more financially responsible regarding investment, savings, and paying back loans in time. This makes them key drivers for sustainable development and a prime focus of microfinance institutions.

Our customer using Instafin

An Oradian customer using Instafin

By using our technology, the process of delivering microfinance services is more affordable and efficient for MFIs. Instafin is easy to implement and use, which results in savings in costs and time. Having in mind that over 90 percent of Oradian’s end clients are women, it is necessary to recognise the role we play in enabling women to access financial services.

Where is Oradian in advancing financial inclusion in West Africa

We are honoured to have had the opportunity to attend so many inspiring speeches at the Summit and engage in thoughtful discussions, with focus on financial inclusion strategies.

While it is a far stretch to claim that financial inclusion guarantees to bring people out of poverty, having access to financial services is the first step and microfinance institutions are at the forefront of providing these services. Without a doubt financial services help individuals to reach their economic potential, invest in opportunities, and start small businesses or expand them.

In order to advance the financial inclusion efforts, we need to develop an open ecosystem for financial inclusion. Our philosophy is that technology should support a platform that nurtures both our customers as well as a vibrant third party marketplace of solution providers. The Oradian Ecosystem is how we grow and drive change for our customers — now and into the future.

We are committed to increasing financial inclusion in West Africa, given the global demand and scalability of Oradian’s products and services, we are also developing regional partnerships and planning roll-out across the rest of Africa. Our goal is to enable MFIs to extend financial services to 100,000,000 underserved families, touching the lives of half a billion people globally.

About Vedrana Legovic

Trained Internet Marketing Specialist, with MA in Marketing Management and background in journalism, Vedrana has been working in the digital media industry for 8 years. She focuses on social media and content marketing. You can connect with her on LinkedIn.

Sohelia Haque: MFIs better serve the poor than traditional banks

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Sohelia Naznin Haque of Society for Development Initiatives (Bangladesh) discusses the role of microfinance to help end poverty and the lessons learned at the 18th Microcredit Summit with Miranda Beshara, editor of the Arabic Microfinance Gateway.

Haque echoed Dr. Muhammed Yunus, supporting the goals of zero poverty, zero unemployment, and financial inclusion through technological advancement. She explains how SDI reaches the poor in a way that big banks do not, going to their homes and visiting rural areas.

“We go to them, think about or listen to their demands, needs, motives, drives. According to that, we make our microfinance products and try fulfill their demands,” said Haque. “[Commercial] banks’ interest rates are too high, but our interest rates are not too high according to the demand we provide them.”

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Research on Ecuador’s digital platform to be featured at 18th Microcredit Summit

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The Microcredit Summit Campaign, as part of its 6 Pathways, is helping to highlight ways that digital platforms are helping to expand financial inclusion, especially for the extreme poor. We are pleased to share with you this Executive Summary of their research.

At the 18th Microcredit Summit this research will be included in the breakout session “The Digital Revolution and Financial Inclusion.” We hope to see you there!


>> Authored by Jorge Moncayo and Marcos Reis.

Financial systems have a vital role in national economies. They provide savings, credit, payment, and risk management products to society. In this sense, inclusive financial systems — those with a high share of individuals and firms that use financial services — are especially likely to benefit poor people and other disadvantaged groups. On the contrary, poor people must rely on their limited savings to invest in their education or become entrepreneurs. In addition, small enterprises must rely on their limited earnings to pursue promising growth opportunities (Demirguc-Kunt and Klapper, 2012).

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Grameen Fdn expands our knowledge on poverty measurement

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Photo credit: Grameen Foundation
We are pleased to post an update from Grameen Foundation about the Campaign Commitment that they launched in 2014. Focused on supporting the growth of the use of a very effective poverty measurement tool, the PPI®, their Commitment also underscores the importance of using the data from tools like this in helping to improve the way we support and serve those living in poverty.

You can learn first-hand how such tools can be used, not just to prove that you are reaching the extreme poor, but to improve the services that you offer and the way you interact with the extreme poor. We are organizing a breakout session at the 18th Microcredit Summit called “Innovations in Measuring Social Impact.” Learn more and register today!


>> Authored by Julie Peachey, Grameen Foundation

In early 2014, Grameen Foundation made several commitments, as part of the Microcredit Summit Campaign’s 100 Million Project, towards achievement of the collective goal of helping 100 million families escape poverty. Our commitments focused on demonstrating use of the Progress out of Poverty Index® (PPI®) for measuring household-level poverty, because reaching and lifting people out of poverty requires knowing who is actually poor.

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Campaign to host workshop with World Bank Annual Meeting in Peru

Attending the World Bank meeting in Peru? Join our workshop, “6 Financial Inclusion Pathways to End Extreme Poverty – What Role Can You Play?”

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Are you attending the 2015 Annual Meetings of the World Bank Group and the International Monetary Fund in Lima, Peru? Join us at the Civil Society Policy Forum* for a workshop to explore how microfinance and financial inclusion can contribute to the fight against extreme poverty.

The Microcredit Summit Campaign will host a workshop at the Forum at the World Bank Annual Meeting in Lima from October 6-9. The Forum promotes substantive dialogue and an exchange of views between Bank/Fund staff, civil society organizations (CSO), government officials, academics, and other stakeholders.

6 Financial Inclusion Pathways to End Extreme Poverty

What Role Can You Play?

As the 2014 Global Findex has shown, important progress toward universal financial access is evident. However, there has been much less progress for groups commonly considered to be among the most excluded or hardest-to-reach. Ensuring that these groups are not left out of the march toward universal financial access in the coming four years, intentionality in our approach will be essential as will be a clear framework for actors to coordinate their efforts.

The Campaign is highlighting six pathways that have shown positive outcomes for reaching and including the hardest-to-reach groups especially when delivered in an integrated manner. This lens can offer helpful ways to view opportunities where investment can accelerate progress in including the most excluded, hardest-to-reach populations by 2020.

Session Objective

We will show how the Universal Financial Access by 2020 (UFA2020) campaign links with ending extreme poverty by 2030. In breakout groups, participants will brainstorm how organizations like theirs (CSOs, in Bank-speak) can contribute to financial inclusion pathways to end extreme poverty.

Speakers

  • Larry Reed, Director, Microcredit Summit Campaign
  • Susy Cheston, Senior Advisor for the Center for Financial Inclusion at Accion and leads the Financial Inclusion 2020 campaign
  • Martin Spahr, Senior Operations Officer at the International Finance Corporation
  • Carolina Trivelli, Economist, CGAP

Date

October 8, 4-5:30 PM

Contact Jesse Marsden for more information.

* Note that registration for the Forum is closed. You can see the full Forum agenda here.


The 2015 Annual Meetings of the World Bank Group (WBG) and International Monetary Fund (IMF) will be held on October 9 – 11 in Lima, Peru. The Civil Society Policy Forum, a program of events including policy sessions for civil society organizations (CSOs), will be held from October 6 – 9, 2015.

Imprimir

Some Annual Meeting sessions will be livestreamed. Find out how to watch.

The registration platform for CSO representatives interested in attending the Civil Society Policy Forum is now closed. We will be processing registration requests that were received within the last few days and will be notifying applicants on the status of their request. This process can take a couple of weeks and so we ask for your patience. As previously published, no new registration request will be entertained.

Does anti-poverty work actually … work?

Photo credit: Giorgia Bonaga & Shamimur Rahman

Photo credit: Giorgia Bonaga & Shamimur Rahman

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The following blog post is re-posted with permission. Read the original article on Next Billion, “NexThought Monday – Does Anti-Poverty Work Actually … Work?: Three questions every ‘pro-poor’ group needs to ask themselves.”


>>Authored by Chris Dunford and Carmen Velasco

This month, the United Nations will celebrate achievement of Millennium Development Goal No. 1. The number of people living in extreme poverty has fallen by more than half, from 1.9 billion in 1990 to 836 million in 2015. How did this happen? Is it because of targeted anti-poverty programs, or is it due to broad-based economic growth, especially in China and India? If economic growth is the main cause, as it seems to be, further progress may be doubtful. Economic growth alone is unlikely to reach the residual hundreds of millions still living in extreme poverty.

Nor is it likely that anti-poverty programs, whether public or private, will lift this “bottom billion” from extreme poverty. For example, the U.S. poverty rate hovers around 15 percent of the population, nearly unchanged for decades, despite the hundreds of billions of dollars spent on U.S. anti-poverty programs. For another example, in poorer countries, microfinance was billed as a self-financing solution to deep poverty and became a darling of international development donors in the 1990s and “social investors” in the 2000s. Then smart social scientists tested the claims with sound field research and found little to no impact on poverty.

Is it reasonable, however, to expect anti-poverty programs, by themselves, to lift large numbers of people above an arbitrary poverty line? Given that the poor must overcome many burdens before they can seize whatever economic opportunities are available, perhaps we should ask a different question:

Do anti-poverty programs ease the burdens of poverty?

While the recent research into microfinance shows little to no increase of annual household income, on average, the same studies very often show that the burden of poverty is alleviated by giving microfinance participants access to money when they really need it during the year. Economists call this impact “consumption smoothing.” In plain terms, it means people get enough to eat throughout the year instead of going without adequate food for a day, a week, or even months at a time. If so, this is an impact worth celebrating, is it not?

Even with this more modest and realistic expectation, some anti-poverty programs are effective and some are not. We know this from our collective experience in anti-poverty work, with more than 70 years between us. We know the challenge is to distinguish what works from what does not. It is better to seek out “pro-poor” rather than “effective” anti-poverty work, because there are gradations of effectiveness. All programs have room to improve. “Pro-poor” programs actually strive to improve toward greater effectiveness. Transparency and accountability are not just about separating wheat from chaff; they are about improving.

How can we fully distinguish pro-poor programs from those that are not?

In a volunteer initiative called Truelift, leading thinkers of the “social performance” movement in microfinance (seeking social as well as financial return on investment) have hit upon a truth that applies to all anti-poverty work: Truly pro-poor programs provide the right answer to each of three straightforward questions.

First: Does the program work with people living in poverty?

Straightforward indeed! But how do you know a person living in poverty when you see one? More important: How does a program know them, recruit them, include them and keep others who are not poor from co-opting what the program offers?

Too many anti-poverty programs cannot answer this question. Regardless of legitimate reasons, these programs are flying blind in their poverty outreach and, therefore, their potential to impact poverty. “Blind” programs may be “wasting” precious resources on the “wrong” people — even though much good may be done. Such programs are not entitled to the “pro-poor” label — they need a different justification. Or, they can get serious about knowing the poverty status of the people they work with.

Second: Does the program design and adapt its services specifically for people living in poverty?

The staff of a pro-poor program changes and adapts the services and products they offer — intentionally and systematically, always listening carefully to people living in poverty and being clear about the benefits the program seeks to provide them. It is basic good business practice — know your customers, listen to them, design for them, satisfy them.

The Réseau des Caisses Populaires in Burkina Faso (RCPB) discovered while providing savings and credit services to groups of rural women that they wanted information about how to prevent and treat malaria, a disease that kills children and robs adults of far too many productive work days. At left, an RCPB animatrice (field agent) shows a women’s group how to understand the symbols on a take-home card that shows illiterate people how malaria is prevented and treated. (Image credit: Karl Grobl for Freedom from Hunger)

Third: Does the program track the progress of the people using its services?

It is not enough to reach out to people living in poverty and to design and adapt services to suit their needs and constraints. We must have some evidence that our work is helping them move in the right direction, even if not all the way to the intended destination. This is not just to show that our work is worthy of the money spent, but also to know how to improve our work. We need “real time” information about change in clients’ lives.

We operate programs in a world where sophisticated research into cause and effect is rare and likely to remain so. Logic, experience and some evidence indicates that programs providing the “right” answer to each of the three Truelift questions are likely to show positive impacts on people living in poverty, if and when sophisticated impact research is done.

It is not too difficult for managers, donors, investors, regulators and business leaders to ask these three questions and know when they get good answers. We can know a pro-poor program when we see one — and act to support it.

Truelift_RGBChris Dunford and Carmen Velasco are co-chairs of the Truelift Steering Committee.


Read the full article on Next Billion.

Learn more about Truelift.

#tbt: Affordable Transactions for the Poor

#Tbt_10

Photo courtesy of Jeffrey Ashe

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We are pleased to bring you this #ThrowbackThursday blog post, which was originally published in Resilience: The State of the Microcredit Summit Campaign Report, 2014, under the chapter “Mobile Network Operators Can Build Systems that Reach the Poorest and Most Remote.” The section excerpted below describes how important mobile technology and digital financial services are for reducing the cost of doing business with the poor and hard-to-reach — both for the provider and the client. Read also Ian Radcliffe’s blog post from Tuesday in which he describes WSBI’s progress achieved so far toward a related Campaign Commitment.


Transaction costs pose a significant challenge to those seeking to provide financial services to people transacting in very small amounts or living in remote areas. The cost of providing the service often exceeds the price that the client can afford to pay. People living in poverty must manage daily transactions with incomes that are small, inconsistent, and often unpredictable.

Ian Radcliffe, of the World Savings Bank Institute (WSBI) reported its research that calculates that people living in poverty can only afford to pay about USD 0.60 a month for financial transactions, an amount far lower than the cost to employ staff to manage the transactions. Moving transactions to mobile platforms can drastically reduce many of these costs.


An interview with Ian Radcliffe, Director of World Savings Bank Institute. Download a transcript of the video [PDF].

Low-income clients have shown the ability to adopt new technology when it provides them with essential services at much lower cost or with much easier accessibility than the alternative. A study by William Jack and Tavneet Suri of the M-PESA mobile payment system in Kenya describes how their system grew from its launch in 2007 to cover 70 percent of the Kenyan population today. The study stated that “while M-PESA use was originally limited to the wealthiest groups, it is slowly being adopted by a broader share of the population,” including those in the bottom quartile of household expenditure. [1] Compared to the option of receiving money from relatives far away only on their sporadic visits home, or through a USD 5 bus ride into the city, low-income people in rural areas quickly found out how to get access to a mobile phone, receive a funds transfer on it, and travel to the nearest agent to turn the digital funds into cash.

In addition, access to mobile payments can play a key role in reducing vulnerability and building resilience. Jack and Suri studied low-income families in rural Kenya who experienced economic shocks. Those with access to M-PESA received a greater number of remittances and more money from friends and family than those who did not have access to M-PESA. Access to mobile money gave them the ability to tap into a larger network and weather the economic crisis.


[1] William Jack and Tavneet Suri, 2011, “Mobile Money: The Economics of M-PESA,” http://www9.georgetown.edu/faculty/wgj/papers/Jack_Suri-Economics-of-M-PESA.pdf.

4 interventions to help victims of trauma find hope and dignity

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Josh Goldstein (CFI) gives a keynote speech at the 8th Annual PCAF Pan-African Psychotrauma Conference in Nairobi, Kenya, a multidisciplinary event that focuses on psychological trauma in Africa’s war-affected societies. Photo: Josh Goldstein

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The Center for Financial Inclusion at Accion has made a Campaign Commitment to bring greater attention to the issue of aging and financial services and further support the inclusion of those with disabilities. Learn how you can join the global coalition of organizations working to help 100 million families lift themselves out of extreme poverty.

Read the full text of Josh Goldstein’s keynote speech.


>>Josh Goldstein, Vice President, Economic Citizenship & Disability Inclusion, The Center for Financial Inclusion at Accion

“Over a sixth of the world’s population has directly experienced armed conflict, torture, terrorism, sexual and gender-based violence, ethnic cleansing or genocide.”
— The Peter C. Alderman Foundation (PCAF) website

I recently attended the 8th Annual PCAF Pan-African Psychotrauma Conference in Nairobi, Kenya, a multidisciplinary event that focuses on psychological trauma in Africa’s war-affected societies. PCAF operates mental health clinics in Cambodia, Kenya, Liberia, and Uganda and conducts trainings for mental health professionals. At the conference,I was surrounded by global leaders from health care, academia, and a litany of organizations working in the mental health space.

At first blush, my placement at such an event might seem odd as my work focuses on disability inclusion for microfinance. But, I’d argue that’s more of a reflection of how society, and our industry, views mental disabilities — with reductive biases — rather than how they fit within microfinance.

I had the privilege of presenting a keynote to the attendees. I discussed whether it’s possible for trauma patients who have gone through a successful course treatment that includes counseling, medication, and livelihood trainings to become clients of microfinance institutions (MFI) and build small-sized enterprises. Immediately below is an abridged version of my speech, with the complete text linked at the end.

Can MFIs help victims of trauma find hope and dignity through self-employment?

Josh Goldstein_keynote speech_portAs a post-traumatic stress disorder (PTSD) survivor myself from the U.S., who received treatment, I believe with all my heart that in a just society poor people with mental health challenges should get the help they need so they can flourish as human beings. Unfortunately, in the international development world I come from, this great cause is barely on the radar — in spite of the fact that reaching the most destitute is at the urgent core of all international development work. Indeed, I share your outrage at the paucity of funding and support for community mental health from governments and foundations.

But, why self-employment for those with mental health issues like PTSD? Why not go find a job and work for a business that provides a regular paycheck? Isn’t that easier and more secure? Of course it is. Most clients of MFIs are what we call “necessity entrepreneurs” and would rather have such jobs than start their own businesses. But, the sobering reality of limited formal sector employment opportunities across Africa makes finding such jobs for persons with physical disabilities, let alone psychosocial disabilities, even more challenging than it would be otherwise. Even in my country, the United States, unemployment of persons with disabilities in the formal workplace remains unconscionably high.

But are such financial products like credit or savings a good idea for someone with PTSD? For example, would the effort to save or borrow money bring greater stress? There is no easy answer based on my cursory review of the very limited research studies to date — the results are ambiguous and prove nothing conclusive one way or the other. What we do know, thanks to PCAF Uganda Program Director Dorothy Kizza, is that relapsing back into mental illness is often caused by a lack of employment. So, on balance, the stress of not working may be equally or more stressful than paying back a working capital loan which at least holds the promise of a more hopeful future. My own hunch is that the answer will only be decided on a case-by-case basis and so no generalization is really possible.

What seems beyond doubt, as Crick Lund, a professor at the University of South Africa and CEO of PRIME, a consortium of research institutions and ministries of health, has written, “is [the] growing international evidence that mental ill health and poverty interact in a negative cycle. This cycle increases the risk of mental illness among people who live in poverty and increases the likelihood that those living with mental illness will drift into or remain in poverty.” A big-picture study from the Harvard School of Public Health and the World Economic Forum estimates that the cumulative global impact of mental disorders in terms of lost economic output will amount to US$16.3 trillion between 2011 and 2030.

I am happy to say that the Center for Financial Inclusion (CFI) and its allied partners working on disability inclusion have begun to demonstrate significant success in including persons with physical disabilities in microfinance in Bangladesh, Ecuador, India, Nigeria, Paraguay, and Uganda, and I hope we can expand this initiative to include persons with mental health issues.

However, achieving the progress needed to financially include people with physical disabilities is not the same as that of including people with mental health issues. Persons with psychosocial disabilities in Africa and in many other places in the world are, in the words of Nigerian healthcare advocate Ifesinanchi Sam-Emurwa, “doubly stigmatized” for having a disability and for that disability being a mental one.

And, to paraphrase remarks by Columbia University psychiatrist Dr. Evaristo Akerele, who spoke this past June at the only mental health session on psychosocial disabilities at the U.N. Conference of State Parties annual disability conference: The person with mental health issues is blamed for bringing what psychiatrists call depression, or anxiety, on themselves. Beliefs such as that God is upset with them, that drug use is to blame, that witchcraft is at work, are all common. In most places, the term “depression” is not culturally acceptable or even understood; there is not an accepted and shared nomenclature for describing mental suffering.

An interesting example of how this “double stigma” plays out also comes from Nigeria, in the financial services arena. The Central Bank of Nigeria recently earmarked US$20 million to financial service providers to make loans to persons with disabilities — a great step forward. But, it explicitly excluded persons with mental health disabilities as recipients of these loans.

So, what can be done to improve the situation? I want to suggest five of the biggest challenges we face and interventions that I believe we can undertake together to answer these challenges and improve the livelihood possibilities of persons with psychosocial disabilities. I hope this will form the beginning of an action plan.

Challenge 1: How can the staff of an MFI with no training in psychology even begin to identify clients with mental health issues if there are no common, agreed on terms of reference for describing distressed states of mind? How do we sensitize staff to work with this client segment?

It is relatively easy to determine a baseline of the numbers of persons with physical disabilities who are clients, by asking medically non-invasive questions (or just through observation) about their state of wellness. Unless a person with mental health issues self-discloses, it is impossible to know if they are suffering from a depressive, anxiety, or other disorder.

Intervention: Volunteers from the mental disability space, like attendees of these annual PCAF Conferences,can help financial service providers design survey questions that allow MFI staff to get a better count of current clients with mental health issues. These volunteers along with PTSD survivors themselves can help sensitize MFI staff on how to best reach out to persons with mental health disabilities. They can connect MFIs with community mental health leaders and, in particular, patient advocates. These learnings can then be incorporated into the Framework for Disability Inclusion so that a set of best practices can be developed and shared with MFIs from around the world.

Challenge 2: Access and support for basic capital and business training for persons with psychosocial disabilities is largely lacking.

Intervention: Connect PCAF graduates, and those of other mental health clinics that include business training, to microfinance providers, credit unions, self-help savings groups, and otherproviders offering group-based financial services as well as enterprise-building support to professionalize the business training and operations of the clinic patients. The natural intermediary to make first contact with the MFI or other provider might be the PCAF social worker, during their weekly or monthly follow up outreach to former PCAF patients in their villages, homes,and workplaces.

Just as CFI identified two or three institutions in India that were eager to do a pilot to include persons with disabilities in their programs, we can work to identify two or three MFIs in the PCAF countries of Cambodia, Kenya, Liberia, and Uganda who want to be leaders in including persons with psychosocial disabilities in credit and/or savings groups. Success is promising here since a portion of PCAF livelihood trainings are done in groups,suggesting that the transition to group lending methodologies could prove to be quite natural and comfortable.

Challenge 3: The United Nations (U.N.) does not do enough to recognize the importance of mental health disabilities — when it comes to collecting good statistics, when it comes to prioritizing it as a Sustainable Development Goal to reduce extreme poverty, when it comes to seeing therapeutic intervention as a significant part of the Constitution on the Rights of Persons with Disabilities treaty.

Intervention: Those working in this field and other interested parties should lobby the Washington Group on Disability Statistics (the U.N. body charged with disability statistics) to include a specific question on mental health in its so-called “short set” of questions that it provides to governments that do censuses and disability surveys. Similarly, while they’re still being shaped, pressure should be applied to modify the Sustainable Development Goals to include much stronger language on mental health.

Finally, there must be concerted lobbying by PCAF, and others, to ensure that in implementing the articles of the U.N. Convention on the Rights of Persons with Disabilities, the right to receive treatment for mental health ills gets equal billing with assuring the right to vote and enjoy equal protection before the law. If this does not happen, it will be much harder for mental health practitioners to obtain funding from governments and foundations to expand their community mental health programs — something critically important in countries like Burundi that have only one psychiatrist in the whole country!

Challenge 4: To create a new set of global standards and indicators for microfinance institutions and other financial service providers to follow that will establish the importance of and offer guidance on serving PTSD survivors and other persons with psychosocial disabilities.

Intervention: The CFI will work collaboratively to push the microfinance industry-wide standard-setters to add mental health indicators. With the help of key industry standard-setting groups, I believe that we can help to break down the attitudinal barriers that keep persons with psychosocial disabilities in extreme poverty unbanked and stigmatized. For example, I am delighted to announce that the Poverty Stoplight has offered to take the lead in creating a mental health indicator for its assessment tool. The Poverty Stoplight set of indicators, pioneered by Fundación Paraguaya and now used around the world, sees poverty as multidimensional and have developed a tool that allows the poor to measure their own poverty, broken down into different categories. Adding a mental health indicator could be a source of data that could be used not only by MFIs but by local community mental health leaders and other public health providers.

Freedom from Hunger in conjunction with the Microcredit Summit Campaign has just published a new guide called “Healthy, Wealthy, and Wise: How Microfinance Can Track the Health of Clients,” in which they share experiences in selecting and pilot-testing health indicators among four MFIs. The researchers asked questions around six health indicators: food security and nutrition, preventive health care, poverty, curative health care, sanitation and safe water, and attitudes. The results demonstrated the added value of health indicators when combined with poverty measurement in helping MFIs understand client well-being. Their “theory of change” is that with greater financial resources, the clients will be able to meet their essential needs as outlined above — like having cleaning water or improved nutrition. I have consulted with the guide’s author, Bobbi Gray, and she is very willing to work with us to see if we can help her develop a seventh indicator around mental health — which is great news.

My conclusion is that self-employment can offer dignity and hope to persons recovering from mental illness. And, that like persons with physical disabilities, many can make excellent clients. I think it is worth exploring how we can do more to connect to PTSD survivors with MFIs and other financial service providers to open their doors to PCAF clients and those of other clinics. At the very least, this initiative will help fight stigma and bring down attitudinal barriers. Let us see what works and what sticks. It is certainly worth a try.

Read the full text of Josh Goldstein’s keynote speech.


Related reading

Post-MDG 2: Bringing the “last mile” children into our schools

MDG 2

Millennium Development Goals: 2015 Progress Chart
Published articles to date: Introduction | MDG 1 | MDG 2 | MDG 3 | MDG 4

Lea en español *** Lisez en français


The United Nations recently issued The Millennium Development Goals Report, 2015, the latest assessment of progress towards the eight MDGs. In short, they have had mixed results. This article is part of a blog series reflecting on the MDGs and the U.N. report. These are produced in partnership with our colleagues at RESULTS (our parent organization).

MDG 2 is focused on primary school enrollment for children everywhere, including the poorest of the poor. The children of tens of millions microfinance clients may be some of the “last milers” still left behind, still excluded from primary school, and many MFIs are actively working to solve the access gap in their own corner of the world. For example, ESAF Microfinance (India) has just launched a Commitment to reach at least 2,000 children with educational programs for academic growth and value education. Fafidess (Guatemala) committed to offer education loans to their clients.


>>Authored by William C. Smith, Right to Education Index Senior Associate, RESULTS Educational Fund

Millennium Development Goal Achievements

Target 2.A: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling

MDG 2 - Global out-of-school children of primary school age & Primary school net enrollment rate in sub-Saharan Africa

From The Millennium Development Goals Report, 2015

During the Millennium Development Goal (MDG) period, the world saw a huge surge in the number of students enrolled in primary school. In 2015, an estimated 91 percent of all primary age students are enrolled in primary school with the largest increases in enrollment over the 15-year period found in sub-Saharan Africa and Southern Asia.

Worldwide, this impressive expansion in access has cut the number of out-of-school children by approximately half, from 100 million in 2000 to 57 million in 2015. This is especially impressive when seen in light of the rapidly expanding growth rate of the primary-school-age population in many regions.

Although the world fell short of the MDG 2 target, the growth in enrollment over the 15-year MDG period outpaced the decade before 2000, ensuring that a greater number of children have access to the education essential to their well-being and that of the wider community. These results clearly indicate that when attention and resources are strategically directed they can make a difference.

Equity Concerns

As impressive and important as the rapid expansion from the MDG period was, there are several concerns as the world moves beyond the MDGs to the Sustainable Development Goals (SDGs, also referred to as the “Global Goals”). While MDG 2 focused on universal enrollment in primary education the education, SDG (#4) attempts to “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.”

The general shift from access to quality makes one wonder, who will be left behind? As the SDGs move forward, emphasis on the goals last two words “for all” is essential. Unfortunately, bringing the final 9 percent of students, the last milers, into school is challenging and expensive. Recent trends suggest that as the world moves forward to address the differences in student achievement and education quality, those left behind by our inability to completely close the access gap are further disadvantaged.

The challenge of reaching the last milers is illustrated by the stagnating global enrollment rate. Between 2000 and 2007 the global primary net enrollment rate quickly increased from 83 percent to 90 percent. Over the last seven years, however, the rate moved slightly from 90 percent to 91 percent. The missing 9 percent represent 57 million primary age children out of school.

Based on estimates made in 2012, 43 percent of these 57 million children are expected to never go to school. Identifying who these children are and including them in the education system is paramount to reaching the SDGs.

The Last Milers

The last milers represent students that have yet to be included in the rapid expansion of education from the MDGs. The number of last milers are difficult to calculate as they are at times invisible to society and living in extreme poverty.

Number of out-of-school children of primary school age, selected regions, 1990-2015 (millions)

From The Millennium Development Goals Report, 2015

Surveys suggest that these remaining out-of-school children are more likely to be female, live in a rural setting, or have a disability. Students in the poorest quintile are less likely to enroll in school or complete school if they do.

For example, while 9 percent of primary age children overall are not enrolled in primary school, 22 percent of children in the poorest quintile remain out of school. And, of those who do enter primary school, nearly 35 percent of children in the poorest quintile do not complete primary school. For the poorest 20 percent of children worldwide, this means that for every child in school, his or her sibling will not complete primary school while nearly 90 percent of children in the wealthiest 20 percent move onto secondary school.

Accessing education may be increasingly challenging for children in poor families in some areas. Countries such as Kenya, Uganda, and Ghana have seen a sharp increase in private schools that price these families out of education. When national governments abdicate responsibility and see private education as a substitution for public education, the well-researched equity concerns with private education are likely to leave the last milers on the outside looking in.

In addition to the groups mentioned above, children in conflict areas and children of refugees are especially struggling to enjoy the benefits of education. For example, the conflict in Syria not only reduced the enrollment rates of children in the country, but refugees that fled Syria found education in refugee camps sparse. Estimates from refugee camps in Lebanon from 2013 place the enrollment rate of children at approximately 12 percent, a sharp contrast from the 91 percent global number.

Collective Will

Ensuring that the last milers have access to education is a challenge to our collective will. The remaining 9 percent represent those with the highest per capita cost to access. A large financing gap remains in education globally with resources moving away from improving access and away from primary education. This trend suggests that in the coming years, reaching these last milers will be challenging, at best.

The transition of funding beyond primary education is evident in the decrease in official development assistance (ODA) from European Union institutions. ODA targeting basic education has fallen from 50 percent in 2002-2004 to 43 percent in 2009-2011. Furthermore, the focus on quality over access is illustrated by two developments. New projects funded by the United Kingdom’s Department of International Development (DFID) prioritize student achievement as the primary measure for education system quality, and the World Bank has recently shift education resources to results-based financing that focuses on student literacy and numeracy.

While quality is important, the stagnating enrollment rates from the past seven years and the shift in attention and resources away from access and toward quality, makes one question whether the last milers will be left behind in the SDG era.


About the author

William C Smith

William C. Smith is a Senior Associate with RESULTS Educational Fund where he is developing the Right to Education Index (RTEI). The index will eventually provide a globally comparative alternative measure to national education quality while identifying specific target areas for countries to address. Prior to this position he completed a dual title Ph.D. in Educational Theory and Policy and Comparative International Education at The Pennsylvania State University and was a Thomas J. Alexander Fellow at the Organization for Economic Co-Operation and Development (OECD). His research addressing education’s role in international development and educator based testing for accountability has resulted in over 15 academic and policy publications. William is the editor a forthcoming book (Spring 2016) in the Oxford Studies in Comparative Education Series titled “The Global Testing Culture: Shaping Education Policy, Perspectives, and Practice.”

#tbt: Clients Continue Movement above the US$1 a day Threshold

The study found that, on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008.

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We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2011. We commissioned a study to estimate the net number of microcredit client households in Bangladesh that crossed the US$1.25 a day threshold between 1990 and 2008. You can download a copy of the study from our Resource Library as well.


Authored by Sajjad Zohir, the director of the Economic Research Group; he is based in Bangladesh.

The Microcredit Summit Campaign is committed to using microfinance to powerfully contribute to the end of poverty. Its decade-long focus on client poverty measurement and progress out of poverty underscores this commitment. To this end, the Campaign continues to track progress towards its second goal to ensure that, from a starting point in 1990, 100 million of the world’s poorest families move from below US$1 a day adjusted for purchasing power parity (PPP) to above US$1 a day adjusted for PPP by 2015.

Evidence from Bangladesh

Findings from a nationwide study in Bangladesh commissioned by the Campaign shows promising results. The study, undertaken by the Bangladesh-based Economic Research Group, was administered between February and August 2009. Researchers surveyed a nationally representative sample of 4,000 Bangladeshi microcredit clients and estimated the net number of households in Bangladesh that crossed the US$1.25 a day threshold between 1990 and 2008.[1]

The study found that, on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008. A second key issue raised in the report, seen in Figure 1 below, was that in some years a large percentage of clients left poverty, whereas, in years coinciding with the 1998 floods and the food crisis of 2008, many households, including some who where non-poor when they joined the microcredit program, slide below the $1.25 threshold.

Figure 1: Percentage of Client Households, on Net, Crossing the US$1.25 Threshold in Bangladesh

Figure 1: Percentage of Client Households, on Net, Crossing the US$1.25 Threshold in Bangladesh
Data showed that among those taking their first microcredit loan between 1990 and 2008, the following poorest client households crossed the US$1.25 threshold:

1990-1993 8.94%
1994-1997 19.83%
1998-2002 0.33%
2003-2008 1.84%

It is important to note that the findings in this report were significantly influenced by the period in which the data was collected. In 1998 Bangladesh suffered from what are often described as the most severe floods ever to hit the country. In 2008, a food crisis coupled with political instability in Bangladesh and the global economic crisis led to a general slack in economic activities. All these factors may have led to the depletion of assets that are commonly chosen as proxies to measure poverty status among the very poor in Bangladesh. This in turn may have led to under-estimation of the number of microcredit client households that may have otherwise crossed the threshold.


Footnote

[1] This study made no attempt to establish causality between microcredit and poverty alleviation. Instead, it simply estimates the change in status of microcredit client households between 1990 and 2008, when compared with their status during the time of the first loan received by any member of the household.


Related reading

Post-MDG 1: Focusing the lens on those still in extreme poverty

Millennium Development Goals: 2015 Progress Chart
Published articles to date: Introduction | MDG 1 | MDG 2 | MDG 3 | MDG 4

Lea en español *** Lisez en français


The United Nations recently issued The Millennium Development Goals Report 2015, the latest assessment of progress towards the eight MDGs. In short, they have had mixed results. This article is part of a blog series reflecting on the MDGs and the U.N. report. These are produced in partnership with our colleagues at RESULTS (our parent organization).


>>Authored by Sabina Rogers and Maeve McHugh with support from Anushree Shiroor from RESULTS UK

MDG 1: Eradicate extreme poverty and hunger

graph_MDG1

From The Millennium Development Goals Report, 2015

The overall number of people living in poverty in developing countries fell by more than half since 1990. The rate dropped to 14 percent in 2015 and the absolute number to 836 million people. There has also been significant progress made towards curbing hunger worldwide.

Target 1.A: Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day

Looking at the regional distribution of data, poverty reduction was concentrated in eastern and southern Asia thanks to immense poverty reduction measures in China and India. Progress is less apparent in other regions. In sub-Saharan Africa, 40 percent of the population still live in extreme poverty, and in western Asia, extreme poverty is actually expected to increase between 2011 and 2015.

The mix of progress and failure provides some guidance to the Sustainable Development Goals (SDGs). Namely, they must continue the campaign around eradicating extreme poverty while also confronting challenges that hinder progress in the regions that have seen marginal improvement.

While the world met its goal of halving the proportion of people living in extreme poverty, we must now look with a narrower lens at those remaining in extreme poverty. We must ask what changes must be made to the policies that did not succeed.

Full and productive employment

Target 1.B: Achieve full and productive employment and decent work for all, including women and young people

From The Millennium Development Goals Report, 2015

From The Millennium Development Goals Report, 2015

This target faced various challenges. First, the global labor force grew, and continues to grow, faster than employment opportunities. The global working-age population that is employed actually declined 2 percent between 1991 and 2015. (The 2008-09 global economic crisis certainly didn’t help.)

Youth (15-24 years) are especially affected by unemployment, with three times as many unemployed than adults. Young women are especially affected by unemployment and have few employment opportunities. They face unequal access to work as well as unequal pay, inadequate social protection, and unsatisfactory access to assets. These factors all contribute to women’s overall greater vulnerability of living in poverty.

Additionally, the situation is precarious for both those living just above the $1.25 a day line and those working in vulnerable employment conditions (i.e., unpaid family workers and own-account workers). Half of the developing regions’ workforce live on less than $4 a day, necessitating improvements in social protection programs and policies that see beyond extreme poverty. We need to take into account what comes after.

Halving hunger

Target 1.C: Halve, between 1990 and 2015, the proportion of people who suffer from hunger

From The Millennium Development Goals Report, 2015

From The Millennium Development Goals Report, 2015

Progress has alternated between slow and rapid declines in the proportion of undernourished people since 1990. Current estimates indicate that approximately 795 million people are undernourished globally, and for the developing regions, the proportion of undernourished people is projected to drop to 12.9 percent, or 780 million, in 2014-2016.

The vast majority of undernourished people live in developing regions. They experience various risks of food insecurity, namely natural disasters, volatile commodity prices, rising food and energy costs, and periods of economic stagnation, among other difficulties.

Addressing child health, specifically, is an important challenge to tackle in order to end hunger. While the proportion of underweight children under the age of five has been halved, the absolute numbers are still high at 90 million. Furthermore, sub-Saharan Africa and Southern Asia are home to nearly 90 percent of all underweight children.

Looking Forward

SDG 1The world has made immense progress in improving the lives of millions of people since 1990. While MDG 1 can be called a qualified success, the targets must remain a linchpin in the post-2015 agenda. Sustainable Development Goal (SDG) 1 is to “End poverty in all its forms everywhere.” However, the SDGs, which are to be approved at the U.N. General Assembly next month, need to address the shortfalls in reaching the MDGs within regions and the individual factors that combine to cause people to slide back into poverty.

SDG 2SDG 2 proposes to “End hunger, achieve food security and improved nutrition and promote sustainable agriculture.” While the MDGs considered only one aspect of undernutrition in children (i.e., underweight), we now have a better understanding of other forms. We know that stunting, wasting, micronutrient deficiencies, as well as overweight and obesity are all important factors to track. These indicators in the SDGs are more reliable than “underweight” alone in predicting growth, development, and well-being of children.

The World Health Assembly (WHA) has also set targets to reduce multiple forms of malnutrition by 2025. If we want the world to commit resources and take action to meet these targets, indicators must be built into the proposed SDGs to track these multiple forms of malnutrition the WHA is seeking to address.

However, early signs point to the inclusion of merely one or two undernutrition indicators as was the case with the MDGs. This will lead to a very limited body of data with which to understand progress in achieving SDG 2 and an inadequate basis on which to measure and predict children’s growth, development, and well-being. Indicators on reducing stunting, wasting, anemia, and overweight that come under SDG 2 as well as promotion of exclusive breastfeeding during the first six months of infancy within SDG 3 will give a much more accurate picture of actions being taken, and progress made.

Looking beyond 2015 and the MDGs, it is clear that microfinance has a role to play in supporting achievement of the SDGs. It can be a tool to generate sustainable growth and ultimately create self-sufficiency for poor and vulnerable households.

When proper targeting is employed…

When integrated with important non-financial services like health…

When coupled with government programs like conditional cash transfers…

When the business model measures “success” in terms of their client’s well-being…

When these measures are taken, then microfinance institutions can work directly with individuals living in the very conditions the SDGs are aiming to address. Those living in extreme poverty or fighting hunger can use microfinance as a tool to mitigate the risks they face and seize opportunities to build lasting and positive change in their lives.

A deep dive into the Millennium Development Goals Report

Millennium Development Goals: 2015 Progress Chart
Published articles to date: MDG 1 | MDG 2 | MDG 3 | MDG 4

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>>Authored by Sabina Rogers, Communications and Relationships Manager

The United Nation’s (U.N.) Inter-Agency and Expert Group on MDG Indicators recently issued the latest assessment of progress towards the Millennium Development Goals (MDGs) in a 75-page report. The Millennium Development Goals Report, 2015 is a rich document presenting data on each of the eight goals. In short, the MDGs have had mixed results, and the headline of one billion people lifted out of extreme poverty (living on less than US $1 a day) is almost entirely a result of the massive gains in China and India.

The 2015 MDG report presents the successes and shortcomings in the areas reducing poverty, increasing employment, and eradicating hunger. In the foreword, U.N. Secretary General Ban Ki-moon extolled these successes while conceding that “inequalities persist and that progress has been uneven.” Specifically, few countries met their poverty alleviation targets, and women and other vulnerable groups still tend to be excluded in what gains there were. Maternal and child health is still a very serious problem around the world (especially these 17 countries), including the Philippines, where we have a project with Freedom from Hunger and CARD MRI whose express purpose is to address this problem.

In just a few weeks, world leaders will convene in New York to finalize the Sustainable Development Goals (SDGs), the successors to the MDGs. (Here is the SDG agenda for the U.N. Summit.) What is most important for the international community to consider is what worked with the MDGs and why. Moreover, we should take inspiration from the fact that the MDGs did reshape our world. Ban Ki-moon says it best:

“By putting people and their immediate needs at the forefront, the MDGs reshaped decision-making in developed and developing countries alike…Reflecting on the MDGs and looking ahead to the next fifteen years, there is no question that we can deliver on our shared responsibility to put an end to poverty, leave no one behind and create a world of dignity for all.”

In the coming weeks, we will be publishing articles reflecting on each MDG and the assessment as presented in the 2015 report from the U.N. These are produced in partnership with our colleagues at RESULTS (our parent organization), a non-profit that supports a movement of passionate, committed everyday people who use their voices to influence political decisions that will bring an end to poverty. RESULTS grassroots volunteers have been instrumental in so many (often unsung) ways over the years to bring about the successes that we do see in the 2015 report.

We will present the first post in that series tomorrow morning. In the meantime, check out this fantastic visualization of the MDG data from the Institute for Health Metrics and Evaluation.


Published articles to date:

Colombia, a “Pathways” poster child

cct-grad-model_infographic_final_en1_Medium

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>>Authored by Paul Gostomski, Microcredit Summit Campaign Program Intern

The 100 Million Project, an initiative of the Microcredit Summit Campaign, aims galvanize and support work that helps advance industry toward the goal of helping 100 million families lift themselves out extreme poverty. To do so, the Microcredit Summit Campaign advocates adoption of “Six Pathways,” which are financial inclusion strategies that can reach the extreme poor and facilitate their movement out of extreme poverty.

The Consultative Group to Assist the Poor (CGAP), a global partnership of 34 leading organizations that seek to advance financial inclusion, recently published a paper that does an excellent job highlighting two pathways that are currently being implemented in Colombia: conditional cash transfers and an initiative to link mobile banking services with agent networks.

Conditional Cash Transfers

The Más Familias en Acción program began in 2001 and aims to supplement the income of families who live below the poverty line and have children under 18. Mothers receive the cash transfer conditioned on their child’s regular attendance at school. This condition also qualifies the family for a health subsidy if their child receives regular health check-ups. In 2012, Más Familias en Acción was reaching 2.7 million families throughout the country. Between 2001 and 2012, malnutrition among children in Colombia aged two and under in rural areas decreased by 10 percent. Also in this time, school attendance for children between 12 and 17 increased by 12 percent.

The Campaign advocates for the use of conditional cash transfers (CCTs) within our six-pathways framework due to evidence such as is seen from programs like Más Familias en Acción. An array of positive externalities are also associated with CCTs, including income smoothing. Stabilizing income through CCTs help families better plan for the future as the immediate risks of today are somewhat mitigated.

Conditioned cash transfers are also incentivizing beneficiaries to make investments in themselves, often through participation in programs to increase health or education for the family. During last year’s Innovations in Social Protection program led by the Campaign, participants in PROGRESA (then called Oportunidades) indicated that while they appreciated and valued the security the transfer brought, they found that the greatest positive change was understanding the significance of the education and health investments they were making in their families.

Another positive externality of conditional cash transfer, and one we find significant, is its effect on women in poor communities. Almost all conditional cash transfers are administered to the mother of the household and this in turn increases women’s bargaining power, something that’s all too often neglected in poor communities.

 Mobile Money with Agent Networks

The second of the two pathways currently being implemented in Colombia is mobile money linked with agent networks in low-income communities through the mobile banking service DaviPlata. DaviPlata, launched as a private mobile service in 2011, was able to garner 500,000 customers in its first year of operation. Taking notice of this success, the government of Colombia contracted DaviPlata in 2012 to deliver the conditional cash transfers of Más Familias en Acción to its 937,000 beneficiaries.

After being contracted, the paper noted, DaviPlata as an organization began a new focus on how to serve the poorest in the country. DaviPlata, working solely through mobile phones, makes financial inclusion easier by making transferring, receiving, and withdrawing money less costly to the recipient of the conditional cash transfer. The recipient now spends less time traveling to the bank or post office and takes less risk as he or she has less cash on their person.

The World Bank reports that of the poorest two quintiles of those living in developing countries, only 30 percent have access to a savings account, whether formal or informal. The Campaign is looking at mobile money within its six-pathways framework because of how digital financial tools are decreasing the cost of transacting and, when linked with savings, increasing the ease with which the poor can access accounts, begin to develop savings, and more easily transfer money when needed.

Although many of the poor do not have savings accounts, many do have mobile devices. Mobile money linked with agent networks like DaviPlata helps link those living in more rural and remote areas to the mobile platforms where traditional financial institutions are less easy to find.

However, DaviPlata has room for improvement as a payments facility. The CGAP paper reports that DaviPlata faces an illiterate customer base and also issues with customers that do not understand the technology. DaviPlata must also deal with dormant accounts, where customers signed up for the service but their accounts have not been used in more than 30 days. Overcoming these challenges will be critical to moving forward.

Colombia’s Next Step

Colombia’s Más Familias en Acción, is a global leader in the use of CCTs to support increased health standards and school attendance among the poor. Now, work needs to be focused on decreasing the inefficiencies around the mobile banking service DaviPlata. In the CGAP paper on Colombia, it was made clear that Colombia’s greatest development challenge was in regard to DaviPlata and increasing its financial stability. This includes taking fuller advantage of the product while making the processes and channels more efficient. With a more effective method on distributing funds, the intended effects of Más Familias en Acción can then be multiplied.


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Community-based financial inclusion: Sarah’s story

Sarah Chikuse standing in front of her pigsty

Sarah Chikuse standing in front of her pigsty. She is proud to be one of the few women encroaching into this previously male dominated agricultural territory. Photo courtesy of Alex Dalitso Kaomba.

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>>Authored by Alex Dalitso Kaomba, development consultant and freelance writer

At 39 years of age, Sarah Chikuse’s health is visibly better than the other women in her village. A single mother of two, she lives in Kang’oma village on the outskirts of Lilongwe’s Area 23 in Malawi. Her day starts at 4:00 AM when she usually wakes up to the din of her neighbors’ jerry cans and water tins at the only borehole in the village.

Sarah starts by lighting up her charcoal burner so that it gathers heat while she fetches water at the borehole. Next on the routine (if it’s during school term) is preparing her daughters for school. Once she bids her daughters goodbye, she tends to her newly acquired livestock.

Sarah Chikuse_with pigsty

Sarah in front of her pigsty. Acquiring a pig is one highlight on her growing list of achievements. Photo courtesy of Alex Dalitso Kaomba.

Owning livestock is not only a symbol of status for the privileged but also an envied source of income in Malawi, which has one of the lowest livestock herds per family in Southern Africa. Sarah is proud to be one of the few women encroaching into this previously male dominated agricultural territory.

Acquiring a pig is one highlight on her growing list of achievements. Sarah counts herself a success in being able to afford three meals a day for her family and providing her children with a basic education. She has paid their school fees and provides their books, uniforms, and lighting for evening homework.

Two months ago, her daughter contracted malaria, and for the first time, Sarah managed to hire a car and take her to a private clinic where she got rapid, quality care. The hospital bill was US $12, and she managed to pay it in full.

Life before inclusion

Life has not always been so comfortable for Sarah and her family. After a bruising divorce, she was left with less than $4 tied up in her wrapped skirt, and she struggled to make ends meet. She could hardly afford a single meal for her children. She started selling vegetables at a local market, but her family’s daily expenses were much higher than her profits and the business did not grow.

Sarah desperately wanted to get a loan but did not possess any tangible property except the roofing sheets on her two bedroom house. One institution agreed to use the roofing sheets as collateral for a micro business loan, but after careful consideration, she could not accept the offer. She had seen people in her village having roofing sheets confiscated after defaulting on payments, and she was not ready to risk such humiliating consequences.

In January 2015, she joined a self-help group (SHG), a concept championed by a local NGO, Global Hope Mobilization (GHM), which is supported by a $150,000 two-year grant from Vibrant Village Foundation. The doors of opportunity for Sarah started opening then. (GHM’s self-help groups are basically savings groups.)

As a vegetables vendor, Sarah could make $2 a day from which she would have to provide for her family daily needs. However, the SHG she joined required that she contribute $0.20 a week into the pooled funds. She struggled to keep up for two months until her turn to borrow the funds came up. She used all the money she borrowed to buy a variety of vegetables for her fresh produce business.

Photo courtesy of Alex Dalitso Kaomba.

Sarah feeding her livestock. Photo courtesy of Alex Dalitso Kaomba.

Life after inclusion

Sarah showed me a tiny pigsty with one mother pig and eleven piglets, the first time in her whole life that she has owned livestock. In a few months, she expects to sell and collect over $500. This was possible because she joined an SHG from where she accessed loans totaling a little under $100 over a 3-month period. She pumped this money into her fresh farm produce business by ordering a wide variety of vegetables and fruits which her customers had always asked her to stock. Her business revenues increased rapidly.

I asked her what her most outstanding benefit from the SHG was. With a very wide smile and beaming face, Sarah had this to say:

“I was a pauper with no hope, but the SHGs taught me the importance of saving from the little I get and how to access low interest loans. Today I can feed my family good meals every day, I have a piggery project that will soon start bringing me revenues. I intend to diversify into selling kitchenware which brings me higher profits than vegetables and even if I stock more kitchenware it is not perishable.”

Anne Chiudza from Global Hope Mobilization says, “We are aware that the marginalized, poor, and unbanked population has its own means of survival, and from the little they get they can change their lot in life by using their numbers to pool funds together. Our organization believes in facilitating improvement of livelihoods through community owned strategies and the self-help group concept is one such strategy.”

A measure of how these groups can advance community development is a borehole which the women are planning to have drilled in a year’s time at a cost of $4,000 without any donor funding.

Sarah’s story is just one among many in her 20-member group. They have managed to improve the lot of their families by building or improving their homes, by improving their families’ nutrition, and by consolidating their economic independence through self-help groups. There are 15 more groups in surrounding villages, and evidence is clear that the women’s hard work and commitment is bearing fruit for the betterment of Kang’oma community’s standard of living.


More about Global Hope Mobilization’s self-help group model

Global Hope Mobilization’s (GHM’s) self-help groups are savings groups whose sole aim is to provide a low-interest pool fund from which members (and only members) of the group can borrow to inject into their businesses. Members can save through loaning out the savings over a period of four weeks.

The groups loan out the money from the very first meeting. No funds are kept in a box of any sort because soon after contributions have been made, a borrower must take the money immediately. The funds are only deposited in the bank when they have multiplied and no members are ready to borrow that week.

Question: How does GHM create the groups?

Answer: At the beginning of the project last year, Global Hope Mobilization trained four Community Facilitators who were all drawn from the catchment community. Their role is to spearhead the formation of the groups and act as resource persons for the groups on behalf of Global Hope Mobilization.

The SHGs are self-replicating because the roof limit for each group membership is 20 members only. To date GHM, is supporting 100 groups with a total of 2000 members, all of whom are women. There is, however, an emerging demand from men in some villages to join the groups.

Q: Are the SHGs self-sustaining or are they reliant on GHM for ongoing support / hand-holding?

A: The SHGs are self-reliant. GHM only facilitates their financial literacy training and monitors their early growth stages, providing guidance and advisory [services] where needed.

Q: What training does GHM provide to the SHG members? Do they offer other sorts of capacity building like financial literacy, health, women’s empowerment, etc.? Do they try to link SHGs to other services like government social protection services?

A: The flip side of [GHM’s] concept is to provide women with a platform and confidence to identify and demand social services from government departments like water, health, etc. Every group meeting ends with a social discussions segment. All issues are recorded for future reference and actioning. Using the SHG as a nucleus for change, GHM facilitates health talks and [sexual and reproductive health] SRH awareness campaigns.

Q: Do all SHG members take out a loan? Or, do some just use the SHG to save? What is the interest rate on loans (if there is interest) and what is the savings interest rate (if there is one)?

A: Around 75 percent of members take out loans at an average interest rate of 10 percent per month. The loans period is 4 weeks maximum, depending on the loan size and specific group by-laws. Interest [on] savings is 10 percent.


About the author

Alex KaombaAlex Dalitso Kaomba is a 35 year old Malawian rural development consultant and freelance writer. He lives in a village on the outskirts of Lilongwe the capital city of Malawi. He works with International and local NGO’s in Malawian villages in the areas of access to energy for maternal health and education, HIV and Aids, education and environmental interventions. Alex has a passion for development work and the African stories of self-sufficiency and sustainable rural development. His favorite pastime is reading, watching sport and playing cricket.

alex.kaomba[at]gmail.com | @AlexKaomba | https://www.facebook.com/kaomba


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