The 2015 Listening Tour: Mapping pathways for ending extreme poverty

Photo credit: by Geoff (originally posted to Flickr as Pilgrim’s path) [CC BY 2.0], via Wikimedia Commons

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“Wars of nations are fought to change maps. But wars of poverty are fought to map change.”
— Muhammad Ali

After the success of Generation Next: Innovation in Microfinance, our 17th Microcredit Summit (Mexico in 2014), the Microcredit Summit Campaign conducted a Listening Tour to identify how this next generation could contribute to ending extreme poverty (those living on less than $1.25 a day) by 2030. The theme that emerges from this consultation will be reflected across the Campaign: in the 2015 State of the Campaign Report, the 18th Microcredit Summit, and Campaign Commitments.

With the post-2015 development agenda under negotiation, the financial inclusion and microfinance sectors have an opportunity to assess our role in shaping the international development framework and reflect on the impact we can have on the lives of millions of the world´s extreme poor. Our Listening Tour was the first step in surveying our coalition of partners to see what our role in this endeavor should be.

The Listening Tour was our time to listen — and your time to speak — on the issues that the microfinance and financial inclusion sector face and served two purposes. First, it was our hope to find out how our audience (you) felt about the World Bank’s goal of eradicating poverty by 2030, and equally important, we wished to consult you in identifying the topics that were most pressing and urgent.

We collected your feedback through an online survey where we received 151 responses from participants from around the world representing practitioners, advocates and support organizations, funders, investors, policymakers, and regulators. We also conducted phone interviews with 27 leaders in the microfinance and financial inclusion sectors. Below are some key findings from our Listening Tour calls and survey.

A client of Fundacíon Capital wiht her daughter Photo credit: Fundacíon Capital

A client of Fundacíon Capital wiht her daughter

Photo credit: Fundacíon Capital

1. Ending extreme poverty.

Our members believe that our main objective should be to end extreme poverty, but they acknowledge that microfinance and financial inclusion actors need to be mobilized around this objective. We need to take a leadership role in re-focusing the microfinance sector on a pro-poor mission and helping the microfinance community build confidence in a system that protects and benefits those who we serve. In order to accomplish this, we need to galvanize new visionaries and champions for the movement.

2. Universal financial access, financial inclusion, and ending extreme poverty.

The strategy for achieving both universal financial access by 2020 and the 2030 goal must be clear, and clear linkages should be created between these two goals. In addition, we need to clarify the definition of financial inclusion, especially in how it relates to ending extreme poverty. We cannot get to full financial inclusion unless inclusive financial systems are created that serve the extreme poor.

3. Defining roles.

It’s unclear what role each stakeholder plays in achieving these goals. Our challenge is to create a unified voice in support of this agenda among a diverse group of microfinance stakeholders, who sometimes have divergent priorities. How do we design a strategy and create a sense of responsibility to provide the appropriate products and services that help people move out of poverty?

4. Pushing innovation while maintaining client protection.

Innovation is key, and technology will need play an important role in reaching full financial inclusion. The microfinance community tends to copy successful ideas but hesitates when it comes to new methodologies. While we need to do away with this risk-averse culture when it comes to innovation, we need to make sure there is adequate regulation and client protection practices in place where our clients could be vulnerable.

Organizations that made a Campaign Commitment are recognized on stage at the 17th Microcredit Summit in Mexico.

Organizations that made a Campaign Commitment are recognized on stage at the 17th Microcredit Summit in Mexico.

5. Financial inclusion to end extreme poverty: six pathways.

Finally, we saw an emphasis on six topics that we have framed as our “pathways out of poverty;” these are financial inclusion strategies that reach people living in extreme poverty and facilitates their movement out of poverty:

  • Mobile money linked with agent networks in low-income communities (for example)
  • Agricultural value chains that reach to small scale producers (for example)
  • Savings groups (aka village savings and loans associations) (for example)
  • Conditional cash transfers linked with mobile delivery and asset building (for example)
  • Ultra-poor graduation programs (for example)
  • Microfinance savings and/or borrowing groups linked with health education, health financing, and health product delivery (for example)
Dignitaries who attended the 1997 Microcredit Summit.

Dignitaries who attended the 1997 Microcredit Summit. From L-R: Tsutomu Hata, Former Prime Minister, Japan; H.E. Pascoal M. Mocumbi, Prime Minister, Mozambique; H.E. Alberto Fujimori, President, Peru; H.M. Queen Sofia, Spain; H.E. Sheikh Hasina, Prime Minister, Bangladesh; Hillary Rodham Clinton, First Lady, United States; Prof. Muhammad Yunus, Managing Director, Grameen Bank, Bangladesh; Elizabeth de Calderón Sol, First lady, El Salvador; Ana Paula dos Santos, First Lady, Angola; H.E. Dr. Siti Hasmah, First Lady, Malaysia; H.M. Queen Fabiola, Belgium.

Let’s take a quick ride down memory lane. In February 1997, we convened the first Microcredit Summit in Washington, D.C., bringing together more than 2,900 delegates from 137 countries. This event resulted in the Declaration and Plan of Action in which Summit delegates promised to work towards making the Campaign a “global effort to restore control to people over their own lives and destinies” [1]. Since 1997, the Microcredit Summit Campaign has been leading, supporting, and guiding the microfinance field to address failures in reaching the extreme poor.

Jump forward to 2015. We still have a lot of work to do, but the will of our community to map out a better future together is evident. This is a time for change and transformation in the global development sector, and we must be bold in setting our goals.

We have taken it upon ourselves to make sure that the microfinance and financial inclusion movement is included as a tool in ending extreme poverty by 2030. Financial inclusion needs to serve the bigger purpose of helping people in poverty mitigate vulnerability, build resilience, and take advantage of opportunity. But, to reach the ambitious goal of ending extreme poverty by 2030, we need to draw a map of how to get there. We need to show how digital payments, savings groups, conditional cash transfers, agricultural value chains, and graduation programs intersect with other sectors like health, education, housing, and nutrition to build pathways out of poverty. We must map out pathways for how these different interventions, stakeholders, and initiatives can work together to achieve our shared goal.

We share responsibility for promoting microfinance and financial inclusion practices that put clients at the center and show progress toward poverty eradication. At the World Bank’s 2015 Spring Meetings, the Campaign made a commitment to support the World Bank Group’s goal to reach universal financial access by 2020 (UFA2020). Through our commitment, we have joined a global coalition of partners that includes Visa, Mandiri, the State Bank of India, the World Council of Credit Unions, WSBI, the Microfinance CEO Working Group (a group of 10 international microfinance networks), Telenor, Ooredoo, Equity Bank, and Bandhan.

We know that the hardest part of reaching UFA2020 will be to ensure that financial services reach those living in extreme poverty, and the Microcredit Summit Campaign will work with its reporting institutions to help them expand their outreach by at least 53 million of the world’s poorest families, bringing the overall total of the world’s poorest families reached by microfinance to 175 million by 2020.

UFA2020 will be a stepping stone to achieving the post-2015 development agenda, and the Campaign will document what is being done well and disseminate those lessons far and wide through the State of the Campaign Report and our Microcredit Summits. The 18th Microcredit Summit will be an opportunity to learn about these six pathways and engage in a thoughtful discussion around the role each of us plays.

We invite you to join us and take part in leading this movement; start by organizing a breakout session for the 18th Microcredit Summit and making a Campaign Commitment. Submit your breakout session proposal for the 18th Microcredit Summit, and use our platform to inform our community about what you are doing to contribute to our common mission. You can also join our own coalition of Campaign Commitment makers by announcing specific, measurable, and time-bound actions that you will take to support our goal of helping 100 million families lift themselves out of extreme poverty. This is a key step in reaching the end of extreme poverty by 2030, and by focusing on our six pathways, we can design a better future and create a map of opportunity.

Financial inclusion to end extreme poverty

Related resources

Sources

Declaration and Plan of Action. Microcredit Summit Campaign. February 1997, Washington, D.C. http://www.microcreditsummit.org/resource/58/the-microcredit-summit-declaration-plan.html

Friday News Round-up: January 16, 2015

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#action2015 digital rally

This is a screenshot of the #action2015 digital rally this morning

This has been an exciting week for people interested in and organizations committed to achieving the MDGs and getting the next round of goals-setting right with the sustainable development goals (SDGs).

Yesterday, we saw the launch of Action/2015, a growing global movement of more than 1000 organisations in over 120 countries that will use large-scale mass-mobilization campaigns throughout 2015 to call on our global leaders to take ambitious decisions for our future. The hashtag #action2015 was trending worldwide due to the synchronized efforts of organizations around the world the publicize the event in a “digital rally.” (See the hashtag trending over the past 24 hours.) From the U.S. Department of State to our very own Twitter chat on #SocialDeterminants, thousands of people from around the world shared their thoughts on achieving the MDGs and setting the SDGs.

In our Twitter Chat yesterday, one of the questions asked how sanitation affects the health MDGs.

This photo article from November of last year, “Microfinancing to improve sanitation in Dodoma, Tanzania” illustrates how some organizations are building local capacity to improve sanitation solutions and providing financial services to enable families to build latrines.

On Thursday, we announced the first Campaign Commitment for 2015. The Mifos Initiative is committing to integrate social performance management and poverty measurement tools into its free and open source cloud-based core banking system. The Mifos Initiative joins a global coalition of 56 other Commitment makers working to help 100 million families lift themselves out of extreme poverty. Learn more.

On Monday, Martin Ravallion published an article on Vox (“No-one left behind?“) that might have a profound effect on the way that our sector thinks about measuring progress out of poverty. Is it enough to count the numbers under a certain poverty line (be it $1.25/day or $0.50/day) or should we, as Ravallion argues, adopt an additional indicator that assesses the success in raising the consumption floor of the ultra-poor (those living on less than $0.50/day) in order to measure the movement of extreme/ultra poor households out of poverty? In his conclusion, Ravallion explains,

To anticipate one response, it might be argued that progress in lifting the floor is a second-order issue, as long as fewer people live near the floor. That is implicit in the traditional counting methods used to assess progress against poverty. However, proponents of this view must surely take pause when one notes that for a long time, and across countries at very different levels of development, social policies have often claimed that they aim to ensure a minimum level of living above any biological consumption floor required for mere survival.

That same day, The Guardian published “The ultra-poor: a pioneering technique is helping the hardest to reach,” an article by Scott MacMillan at BRAC USA about the Targeting the Ultra-Poor Programme (better known as the graduation model) and help them lift themselves out of poverty in a sustainable way. MacMillan announced, “We’re now ready to open-source that approach.” We salute BRAC for their hard work and well-earned recognition; indeed, they’ve been a favorite topic in our annual State of the Campaign Report, as you can see in “Graduating out of CCTs” and our infographic, “The CCT-Graduation Model Ecosystem”:

cct-grad-model_infographic_final_en1_SMALL