Mental health matters for microfinance

psychologyofscarcity_top

Lea en español *** Lisez en français


>>Authored by Bobbi Gray, Research Director, Freedom from Hunger

First of all, a disclaimer. I am by no means a mental health expert. Like many, I’ve had my own experiences which have led to interests into the causes and impacts of mental health issues as well as the coping mechanisms we might use when we or someone we know suffers from a mental illness.

It’s Mental Illness Awareness Week, as you might know, and it has reminded me of a conversation that Josh Goldstein, vice president of economic citizenship and disability inclusion at the Center for Financial Inclusion at Accion, and I started a while back. A conversation that also led to an exchange of ideas on his blog post “4 interventions to help victims of trauma find hope and dignity” in which he summarized his remarks at the 8th Annual PCAF Pan-African Psychotrauma Conference held in Nairobi, Kenya. (Josh’s full conference remarks can be found here.) During this conference, Josh tried to answer the question of whether microfinance institutions (MFIs) can help victims of trauma who suffer from mental health disorders, such as post-traumatic stress disorder (PTSD), to find hope and dignity through self-employment.

In his post, Josh suggests steps to be taken by our sector to be inclusive of those suffering from mental health disorders. In this post, I’ll address two of those steps:

  1. More linkages between mental health providers and MFIs can take place such that people have access to financial services and business and financial training.
  2. Create a set of global standards and indicators for MFIs and other financial service providers to follow that will establish the importance of and offer guidance on serving PTSD survivors and other persons with psycho-social disabilities.

While Freedom from Hunger works actively with our partners to link their clients to health service providers through our integrated approach, I can’t speak yet to having a lot of success on Josh’s first step above — i.e. the specific linkage to mental health service providers. Though this doesn’t mean there aren’t already bright spots. This (really interesting) Freakonomics podcast discusses how cognitive behavioral therapy (CBT) and cash transfers are being combined for child soldiers in Liberia. Spoiler alert, CBT plus cash transfers leads to men staying out of trouble, compared to getting only CBT or only a cash transfer.

On Josh’s second point, regarding the need to start by understanding and measuring the extent of psycho-social disabilities, we’re just dipping our toes in the water.

In the paper we produced called “Healthy, Wealthy, and Wise: How Microfinance Can Track the Health of Clients,” in which we share experiences in selecting and pilot-testing our Health Outcome Performance Indicators (HOPI) among MFIs, some of our initial testing around mental health indicators was limited and was initially driven by the acknowledgement that consequences of domestic violence should be better understood and tracked.

Since the publication of that paper, we’ve conducted research in Burkina Faso with 46 women that we followed over a 7-month period to better understand resilience. We tried to look at resilience holistically and included “attitude” questions in all 10 surveys we conducted. One survey focused entirely on attitudes and perceptions of one’s life. We pulled heavily from research conducted by Johannes Haushofer, who is a professor and researcher of psychology and public affairs at Princeton. He took variables from a World Values Survey and compared them to poverty status.

In the research in Burkina Faso, we compared self-perceived resilience status (i.e., “Based on what you consider to be a resilient household, do you believe your household is resilient?”) to a series of indicators, approximately 14 of which were attitude/perception indicators. We found that those who considered themselves resilient were also likely to report feeling supported, hopeful, capable of meeting one’s financial obligations, trustful of others, and not living one’s life “day to day.” They reported that they would try anything to improve their life. (This research will be available by the end of October through CGAP).

These indicators are just one slice of mental health — but it is a starting point. We have Haushofer’s research as well as our simple forays into developing the HOPI, which we think MFIs can use to measure and monitor client status. Given this headway, I think we all can have a greater appreciation of the power that positive or negative mental health can have on a person’s productivity and their likelihood of success with the types of financial tools we can provide.

For microfinance and beyond, I think we have the research we need to argue that mental health matters. (See this recently published paper in the Lancet regarding mental health research in Europe.) The direct costs (i.e., healthcare costs and productivity losses) and the indirect costs (i.e., wage and productivity losses of caregivers and family members) can be significant.

And mental health matters even if we’re not distinguishing between people with diagnosed mental health impairments versus the mental health challenges poverty often creates. In fact, in the book Scarcity by Sendhil Mullainathan and Eldar Shafir, we are challenged to recognize this. They explain how “scarcity captures the mind. The mind orients automatically, powerfully, toward unfulfilled needs. Scarcity…changes the way we think. It imposes itself on our mind. The consequence of having less than we want is simple: we are unhappy.”

I think we’ve all had periods of our life in which we can relate to what mental distress feels like. Your mental bandwidth is limited, and its hard to feel hopeful when you’re going through a trial. I wonder if we should assume that the starting point is that all clients we serve could benefit from mental health support given what we know about the psychology of poverty. Everyone deserves a financial product or process that helps them through life’s short and long-term crises — whether it’s a purely economic crisis, a visible health crisis like dealing with cancer, or a mental health crisis that has no obvious cause.

Obviously, this is easier said than done. But, over time, I’ve come to really value and appreciate what the mental health and psychosocial indicators can tell me about a person’s life. Even if a person’s poverty status hasn’t changed but their belief that their life is better and more manageable, I can see where that can be considered success.

psychologyofscarcity_v2Related reading

Rating progress toward financial inclusion on a scale of 1 to 10

fi2020 progress report homepage2

Lea en español *** Lisez en français


The Microcredit Summit Campaign is delighted to support CFI’s efforts to track the progress of the Financial Inclusion 2020 project. In contribution to the “Financial Inclusion 2020 Progress Report,” we recently conducted a series of interviews with microfinance leaders around the world who are committed to reaching the most marginalized. Read “Addressing the financial needs of the most excluded” to hear directly from practitioners engaged in this work. Elisabeth Rhyne believes you will be both astonished by the progress and daunted by the gaps that remain” in financial inclusion. Read her post below and visit the interactive Progress Report website to take part in this financial inclusion diagnosis.


The following blog post was originally published
by the Center for Financial Inclusion at Accion

>>Authored by Elisabeth Rhyne, Managing Director, Center for Financial Inclusion

Today the Center for Financial Inclusion (CFI) is proud to launch the Financial Inclusion 2020 Progress Report, an interactive website that portrays the recent progress and unmet challenges on the path to global financial inclusion.

When we began the FI2020 project in 2011, we hoped to create a sense of both urgency and possibility. We believed that enabling everyone in the world to gain access to quality financial services was a goal of major development significance. We also saw that with many active players and the promise that digitization would enable many more people to be reached at lower cost, it was no longer simply wishful thinking to call for full inclusion within a reasonable timeframe. Global financial inclusion had entered the realm of the possible.

Today, in 2015, we are both astonished by the progress and daunted by the gaps that remain. Global Findex data shows 700 million new accounts in the three years from 2011 to 2014, reducing the number of unbanked worldwide from 2.5 to 2 billion. National governments have created ambitious financial inclusion strategies, the FinTech industry is exploding with $12 billion in global investments in 2014 alone, and the World Bank has a plan for reaching universal financial access to transaction accounts by 2020.

Our quantitative review, By the Numbers revealed that if the current trajectory of expansion in accounts continues, many countries will achieve full account access by 2020. The rails are being laid at a rapid rate, and there is great momentum toward universal access. But access to an account is not the same thing as financial inclusion, and progress toward meaningful financial inclusion, in which people actively use a full range of services, is lagging. The passengers — customers — are often still waiting at the station for services that take them where they want to go.

With assurance of great momentum around access, CFI believes that the time is right to turn greater attention to quality and value for the customer, which are the genuine heart of financial inclusion. In the Progress Report, you will find a recurring concern with the customer side of the equation. Meeting the customer challenge requires everyone — national policymakers, regulators, financial service providers of all types, non-profits, and global bodies — to step up. The challenges range from protecting consumers in the digital age, to building financial capability, to creating services that enable customers to meet important life goals.

As you read the Progress Report you will see just how many players are actively pursuing these goals in innovative ways all over the world. We cite and celebrate dozens of examples. Nevertheless, we find that in many areas, such as financial capability, the level of effort is not yet commensurate with the challenge at hand, and large shifts are called for, both in deployment of resources and in assignment of roles and responsibilities. For example, we find that meaningful financial inclusion requires providers to take on greater responsibility for customer value.

This slideshow requires JavaScript.


In the Progress Report, we present our assessment of progress toward global financial inclusion through the lens of five topics that will shape its future: Financial Capability, Addressing Customer Needs, Technology, Credit Reporting and Data Analytics, and Consumer Protection. The report provides a qualitative and interactive assessment of who is doing what, as a companion piece to By the Numbers. The FI2020 Progress Report celebrates the most significant accomplishments, and highlights the gaps that create the agenda for the coming years.

Aside from the content of the Progress Report, we are excited to share with you the format for its presentation. Rather than producing a traditional document, the report takes the form of an interactive website, which allows you to move from topic to topic according to your own interest, and which allows us to bring you many specific examples and graphic illustrations in sidebars throughout the report. We hope you enjoy the format. (If you prefer a traditional PDF, that is also available.)

To provoke a conversation, we have rated progress in each area on a scale of 1 and 10, and we explain why we chose that score. We invite you to use the interactive feature on the website to cast your own vote and compare your scores to ours. Go ahead, disagree with us! While we stand behind the research and analysis that went into our ratings, they are — of course! — our own, and they reflect a global look, which may vary greatly from one region or country to another.

Most of all, consider with us the ways to close the gaps so that each of the scores rises to 10. That’s the point of this exercise, after all: to diagnose where we are today in order to work toward a future of full, meaningful financial inclusion.

Addressing the financial needs of the most excluded

Anowara Begoum lives in Kazipara village. Anowara received a cow and goat to from BRAC through its STUP Special Targeting Ultra Poor. AusAID funds BRAC's work in Bangladesh, its estimated that BRAC works within 70,000 of Bangladesh's 86,000 villages. Photo: Conor Ashleigh for AusAID.

Anowara Begoum lives in Kazipara village. Anowara received a cow and goat to from BRAC through its STUP Special Targeting Ultra Poor. AusAID funds BRAC’s work in Bangladesh, its estimated that BRAC works within 70,000 of Bangladesh’s 86,000 villages. Photo: Conor Ashleigh for AusAID.

Lea en español *** Lisez en français


The following blog post was originally published
by the Center for Financial Inclusion at Accion

>> Authored by Larry Reed, Director, the Microcredit Summit Campaign, and Jesse Marsden, Research and Operations Manager, the Microcredit Summit Campaign

In collaboration with the CFI’s process to develop the Financial Inclusion 2020 Progress Report (to be released October 1, 2015), the Microcredit Summit Campaign recently conducted interviews with microfinance leaders* around the world committed to reaching the most excluded. In this post, we share some of the insights from these conversations about how to ensure that the most invisible clients are financially included, directly drawn from the experiences of those who are doing it.

To set the stage, Luis Fernando Sanabria, general manager of Fundación Paraguaya, made this central point: “Our clients need to be the protagonists of their own development stories. Our products should be the tools they use to meet their needs and empower their aspirations.” With that reminder of the purpose of financial inclusion, we begin the discussion by asking who are the most excluded.

In each country, people living in extreme poverty (below US$1.25 a day) make up the largest segment of those excluded from the financial system. We spoke with leaders from organizations that make intentional efforts to reach this large excluded market: Fundación Paraguaya, Pro Mujer, Fonkoze, Plan Paraguay, Equitas, Grama Vidiyal, and TMSS. These organizations not only address poverty, but also a host of other dimensions that lead to exclusion, including literacy, race, gender, physical disabilities, and age. Less frequently-discussed reasons for exclusion include sexual orientation, language barriers (especially among indigenous populations), and mental or emotional health issues. In India and Bangladesh, for example, those interviewed noted that the lack of personal identification often drove exclusion, especially among women, persons with disabilities, and the socially excluded, such as transgender individuals.

In order to reach the most excluded, you have to know who they are. “Often the poorest families are invisible in their own communities,” said Steve Werlin of Fonkoze in Haiti. “When we do the wealth rankings in a community, they aren’t even mentioned.” Fonkoze takes steps to make sure that all households get included in their surveys so that the community can see who they have left out. Creating this visibility is essential. On a wider scale, in government statistics on economic activity, data on people over 65 is simply discarded or never collected.

Everyone, and every client, is unique. One of the messages of the FI2020 Progress Report is that the base of the pyramid (BoP) is not a monolithic bloc. Arjun Muralidharan of Grama Vidiyal in India noted, “You need to have a particular and unique strategy to seek out and serve these groups. This begins with deciding who you are going after. Different populations have very different problems.”

Two key elements for including the most excluded populations are building trust and overcoming prejudice. Not only do the financially excluded need to become confident in their services providers’ ability to responsibly manage their money, but they often have to become comfortable participating in a society that has regularly closed its doors to them.

“Working with disenfranchised groups is hard. We need to provide extra training and services to help overcome their self-exclusion,” said Muralidharan. Grama Vidiyal provides health services and legal rights training to members of the Dalit group (formerly known as untouchables) before including them in savings and lending groups.

On the other side of the equation are financial services staff attitudes. “In order to include people with disabilities, we need to train our staff first, to get them to overcome their prejudice,” said John Alex of Equitas in India. Equitas provides disability awareness training for its staff and clients and encourages them to find people with disabilities in their communities to include in the institution’s borrowing groups. Equitas also adapted its training and application systems to be accessible for people who are blind, deaf, mute, or face other physical limitations.

Excluded groups may have financial needs that do not fit the typical cash flows of other clients. TMSS asked rural farmers in northern Bangladesh what programs the farmers felt would be best to introduce. This client-first approach led to new programs that combined loans and savings in sync with the growing season. TMSS also changed its policies and products to meet the needs of an aging population — eliminating its age limit for borrowers. The institution also provides savings services for these clients and training for the next generation of family members to make sure they will be cared for as they age.

Those excluded from financial services often face many other types of exclusion as well, leaving them with a range of constraints that they need to address:

  • Both Fonkoze and Plan Paraguay employ the Ultra Poor Graduation Model developed by BRAC that provides a combination of cash transfers, training, savings, an asset, mentoring, and access to credit.
  • Equitas works with homeless people and provides housing and financial capacity training before providing loans.
  • TMSS provides health services, financial capability training, and vocational training.

These organizations often partner with the government and others to make sure their clients have access to the range of services they need. Fundación Paraguaya uses its Poverty Stoplight monitoring system to assess its clients on a checklist of 50 items related to poverty, health, education, and employment. It uses this data to bring in government services for common areas of need. Equitas partners with local hospitals, and Grama Vidiyal works with the government health insurance system to provide for the health needs of clients.

Achieving financial inclusion requires consistent energy to attain, maintain, and measure progress. Fundación Paraguaya uses its Stoplight system to enable clients to define and measure their own achievements over time, and provides incentives to its staff based on these clients’ achievements. Equitas provides incentives to its account officers for including persons with disabilities and measures the progress of its clients along consumption and health indicators. Plan Paraguay and Fonkoze measure the success of their ultra-poor graduation programs based on the numbers of clients who “graduate,” having met a comprehensive set of indicators related to food security, income security, asset ownership, school enrollment, housing quality, etc., and having reached a level at which they can use unsubsidized financial services.

Financial inclusion has always been about going where others wouldn’t go, addressing the needs of people who were excluded because it was too hard to serve them, or too risky, or too unsustainable. The people we spoke with represent the many financial pioneers who use innovation to expand the boundaries of inclusion, reaching those assumed to be impossible to reach.

For more on addressing client needs, check out the interactive FI2020 Progress Report, launching on Thursday (10/1).

Persons interviewed for this post: Luis Fernando Sanabria, Fundación Paraguaya; Carmen Velasco, co-founder of Pro Mujer; Steve Werlin, Fonkoze, Haiti; Mariella Greco, Plan Paraguay; John Alex, Equitas, India; Arjun Muralidharan, Grama Vidiyal, India; and Munnawar Reza, TMSS, Bangladesh.

How to be disability inclusive and age friendly

Lucía Urtecho Calderón, client of Financiera FAMA, sells candy and candied fruits in Mercado Carlos Roberto Huembes, Nicaragua on December 13, 2012

Lucía Urtecho Calderón, client of Financiera FAMA, sells candy and candied fruits in Mercado Carlos Roberto Huembes, Nicaragua on December 13, 2012. Photo credit: Center for Financial Inclusion at Accion

Lea en español *** Lisez en français


>>Authored by Sonja E. Kelly and Misha Dave, Center for Financial Inclusion at Accion

Almost a year ago now, the Center for Financial Inclusion at Accion launched two Campaign Commitments for further research and action on the inclusion of persons with disabilities and older people in financial services. If there is one lesson we have learned from following through on these Commitments, it is that including these populations in financial services is in some ways easier than practitioners expect it to be but, in other ways, harder than it looks.

In our research on aging and financial inclusion, one of the key insights was that financial service providers of all sizes often apply age caps on credit products. However, many institutions we talked with did not know exactly where these standards came from. Some attributed them to concerns about life expectancy of older clients, some to institutional history (“that’s just the way we do it”), some to the increase of credit portfolio insurance it would incur, and some to a perception of older people as economically dormant.

Many of these concerns can be mitigated by better research and dispelling myths about the creditworthiness of older people. Easy, right? In fact, there are some institutions that apply creative ideas to providing credit to older people. Group guarantees and automatic withdrawal payments on loans from publicly administered pensions through government partnerships are both examples of this.

However, such institutions providing credit to older people seem to be the exception rather than the rule. Worse, convincing institutions to care about this population is not easy. One institution we spoke with in India was baffled by the idea of providing credit to people over the age of 55. “But they [the older people] could die and wouldn’t pay the loan,” the product developers insisted. Doing the research and articulating the issue was the easy part — now the hard work begins of advocating on behalf of older people.

Similar attitudinal barriers exist in financial institutions for serving persons with disabilities. Let’s take stock: over one billion people around the world — 1 in 7 of us — have a disability and four-fifths live in developing countries like India. Despite this and the fact that many microfinance institutions (MFIs) claim to be dedicated to “serving the world’s financially excluded people,” less than 1 percent of their clients are persons with disabilities.

In India, disabled persons have limited or no access to formal credit and other financial products for education, housing, skills development, business, and such. In addition, insurance companies in India do not cover assistive technology like wheel chairs and hearing aids that disabled persons need to be mobile, avoid further injury to themselves, and work and live full lives. The gap between demand and supply is enormous, and this creates a dangerous hotbed for informal credit and loan sharks to exploit an already vulnerable and marginalized population, dragging them further into poverty.

Disabled persons and older people have similar physical challenges (mobility, visual, and hearing impairment) and misperceptions about their capabilities to work and run businesses. Therefore, helping to financially include one group will serve to make positive changes for the other. Whether it be through changing attitudes and perceptions or implementing universal design principles in their operations, financial institutions can better serve all clients with physical challenges by becoming disability inclusive and friendly.

Equitas_PWD_Dhanalakshmi

Dhanalakshmi was not born blind. She was badly burnt and lost her vision 23 years ago when her husband poured acid over her, her two sisters, and mother. Dhanalakshmi’s loan group has fully included her by using very simple accommodation measures like reciting the MFI pledge aloud and taking turns to assist her to attend the meeting.

Through financial inclusion of disabled persons, we see a compelling story of social inclusion can be seen at the community level. Leveraging the group-based model in microfinance, disabled persons, mostly women, receive community support and social acceptance from other group members. Dhanalakshmi, an Equitas client, exemplifies this.

Dhanalakshmi was not born blind. She was badly burnt and lost her vision 23 years ago when her husband poured acid over her, her two sisters, and mother. While her sisters recovered with minor injuries, got married, and have families of their own, Dhanalakshmi lost her vision and sustained major burns on the right-hand side. Constrained by her disability, she confined herself to her home for many years.

Four years ago, Dhanalakshmi joined Equitas as a member. She took out a small loan and started her garments business, buying clothes from the wholesaler and selling them door-to-door. Dhanalakshmi’s group has fully included her by using very simple accommodation measures like reciting the MFI pledge aloud and taking turns to assist her to attend the meeting. This has given her the confidence and the ability to support herself and her mother financially. Along with economic independence, she has also been socially accepted by people around her.

Group members often help support disabled persons in their businesses, as well. For example, they may purchase raw materials, sell/distribute products, collect and repay loans on behalf of the disabled client. This inclusion is creating role models by empowering disabled persons to be economically self-sufficient while also empowering communities to break down social stigma and attitudinal barriers on what a disabled person can and cannot do.

To help further financial inclusion for persons with disabilities, CFI at Accion’s Disability Financial Inclusion Program in India has provided trainings and resources to sensitize and equip microfinance institutions to serve this marginalized and underserved population, recognizing that globally less than 1 percent of persons with disabilities are served by microfinance. The program provides disability awareness and sensitization trainings, inclusion assessments, and recommendations to make operations and processes more disability inclusive and friendly.

In the past two and half years, the program has helped sensitized three microfinance partners (Equitas, ESAF, and Annapurna Microfinance) in three states (Kerala, Tamil Nadu, and Orissa). These three MFIs have financially included more than 30,000 low-income disabled persons, including over 2000 visually impaired, a severely excluded disability segment. Last year, the program won an award for its innovation in promoting accessibility and universal design to “ensure a life of equality and dignity for disabled persons.”

This year, we are expanding to three more financial partners in four new Indian states (Karnataka, West Bengal, Jharkhand, and Uttar Pradesh). One partner organization has a network of 33 sub partners providing social and as well as financial support, spreading the seed of inclusion across India. We are also developing strategies to expand disability inclusion with our partners and other stakeholders through advocacy and awareness. We are facilitating partnerships between the financial industry and disability organizations in India, many of which provide livelihoods training, skills development, and other social supports to disabled clients. In sum, we are helping provide a strong ecosystem for sustainable financial inclusion for persons with disabilities.

We remain convinced of the value of including persons with disabilities and older people in financial services outreach. Indeed, financial inclusion is a valuable instrument to equip people with the tools they need to manage and grow their income. As we continue to pursue this goal — despite how challenging it can be at times — we eagerly look forward the day when all people who can use financial services have access to a broad range of quality financial tools.

Event Recap: Partnerships to End Poverty Workshop

RESULTS grassroots activists discuss the policy implications of the six pathways that were presented by the Microcredit Summit Campaign. It’s now their turn as RESULTS volunteers to decide what to do with that information. Learn how you can join RESULTS.

Lea en español *** Lisez en français


On Sunday, July 19th, the Microcredit Summit Campaign hosted a standing-room-only workshop with attendees to the 2015 RESULTS International Conference. Those who came heard from leading voices on the future of financial inclusion, focusing on the crucial role of partnerships and advocacy in reaching the poorest.

Larry Reed, director of the Microcredit Summit Campaign, began the session by introducing the Campaign’s role in pushing for an understanding that achieving full financial inclusion means including those living in extreme poverty.

From the start, the Microcredit Summit Campaign has advocated scaling up microfinance and other financial inclusion interventions. They can provide those living in extreme poverty with the diverse array of financial and non-financial services that will support their journey out of poverty.

Reed spoke about the need for continued innovation in client-centered development of financial tools, creative ideas for reaching the hard-to-reach at affordable prices, and the promise that smart microfinance can help create positive and durable changes in the lives of those being served.

Six Pathways

Read more about the six pathways.

The Campaign is advocating for closer consideration of six financial inclusion strategies — our “six pathways” — that show promise in reaching people living in extreme poverty with needed products and services. These are the six pathways:

  1. Integrated health and microfinance
  2. Savings groups
  3. Graduation programs
  4. Financial technology
  5. Agricultural value chains
  6. Conditional cash transfers

In the discussion that followed, moderated by Sonja Kelly (fellow at the Center for Financial Inclusion at Accion), the panelists responded to questions about the importance of partnerships in achieving the goal of ending extreme poverty by 2030 and the role, present and future, of microfinance and financial inclusion in supporting these efforts.

DSK Rao, regional director for Asia-Pacific at the Campaign, focused on the immense potential for integration of health education and services into the delivery model of microfinance. He explained that “microfinance institutions shouldn’t run hospitals, but should spread essential health information and services to their clients when needed.”

Rao explained that the presence of MFIs, with their deep penetration into hard-to-reach communities, offer important opportunities to also deliver valuable health services (both financial and non-financial) to families often excluded from more mainstream service channels.

Larry Reed discussion possible advocacy options RESULTS’ citizen activists could take to policy makers in the coming days and months.

Reed also expanded on the power of government partnerships — specifically through conditional cash transfer and graduation programs — to reach those living further down the poverty ladder than those included in other social protection program designs.

Another guest speaker in the workshop, Olumide Elegbe from FHI 360, has extensive experience designing long-term partnerships between the government, nonprofit, and private sectors. He explained that “successful development is cross-sectoral and integrated,” much like poverty itself.

The mission of RESULTS and RESULTS Educational Fund, the parent organization of the Microcredit Summit Campaign, is to end the worst aspects of hunger and poverty. The annual International Conference aims to empower their grassroots activists from around the world to become strong and knowledgeable advocates for issues related to the RESULTS mission.

Therefore, after the panel discussion, workshop participants broke into small groups to take the discussion into brainstorming advocacy actions that can promote the kinds of financial inclusion interventions that will help end extreme poverty. These small group discussions focused on tangible points of action both for the longer term future as well as in anticipation of their meetings with representatives on Capitol Hill and at the World Bank on Tuesday, July 21st.

Voice your opinion in our comments section. How can you advocate for financial inclusion?

Learn more

Become a citizen advocate!

The Microcredit Summit Campaign’s role at RESULTS is to lift up microfinance solutions designed for the world’s extreme poor, creating economic opportunities to help lift themselves out of poverty.

The Campaign hosted a standing-room-only workshop with attendees to the 2015 RESULTS International Conference who came to hear from leading voices on the future of financial inclusion and the crucial role of partnerships and advocacy in reaching the poorest. Read RESULTS’ annual report today!


Related reading

“By the Numbers”: Financial inclusion still limited for the hardest-to-reach

CFI_by_the_numbers_FINAL-fig08

Figure 8 in By the Numbers shows the projected size of the excluded population by country in 2020. Download the full report.
Click on the image to zoom in.

Lea en español *** Lisez en français


>>By Jesse Marsden. Jesse is the program manager for the 100 Million Project at the Microcredit Summit Campaign.

Bravo to the Center for Financial Inclusion’s (CFI) latest By the Numbers report. It does an excellent job of succinctly parsing a large amount of information in such a way that makes the implications of that information quite accessible. Here’s our key takeaway from the report:

We are making the least progress on the hardest-to-reach groups, and unless the financial inclusion community works together to develop a strategy for reaching those groups, there is no way we can meet the goal of full financial inclusion by 2020.

To begin with, we need to address the fact that the rate of improvement reported in the Global Findex seems likely to be overstated. CFI refers, in By the Numbers, to the criticism levied by Daniel Roodman and Daniel Rozas against the claims of this year’s Findex. They very clearly lay out how the differences between the 2011 and 2014 Findex questionnaire could have an inflationary impact on estimating progress.

Of particular interest to the Campaign is how the report demonstrates the unequal gains in access (what CFI calls “access gaps”) for certain segments of the population. The Campaign has a particular focus on understanding financial inclusion efforts as a piece of a larger effort to build pathways that help those in extreme poverty better manage the risks they face and seize on opportunities they find. In this light, it is worrisome that the progress reported by the Findex, and illuminated in By the Numbers, demonstrates that for those living in extreme poverty — often the hardest-to-reach — financial inclusion is still quite limited.

While the overall increase in financial access reported by the Findex was 20 percent, access has improved little or not at all for women since 2011 and there was no change in access for those without secondary education. Rural populations saw an increase in access by a mere 2 percent, and those aged 15 to 25 saw only a 3 percent gain. The wealthiest 60 percent of the population had faster gains in access than that of the poorest 40 percent, who saw only a 6 percent change.

Source: CFI, By The Numbers

Source: Center for Financial Inclusion, By The Numbers

We need a bottom-up strategy

The overall picture we get from CFI’s analysis is that very little of the progress being reported has been among the hardest-to-reach groups. This points to a central weakness of the strategies being employed by the World Bank and others. Most are top-down strategies trying to extend the reach of existing services to new populations. This means they are employing an overall strategy for increasing access that must slow, and eventually crawl to a stop, as it gets to less populated areas and poorer communities where top down approaches become less affordable to implement.

At the Microcredit Summit Campaign we firmly believe full financial inclusion will require a different approach: one that starts with the hardest-to-reach segments of the population and works its way back. It is relatively easier to add features and services to attract higher income groups once you have designed a service that reaches the lowest margin customer first. On the other hand, it is almost impossible to sufficiently reduce costs of a service or product originally designed to reach middle income customers so that it is affordable to the poorest.

If we want to reach full financial inclusion by 2020, the leaders in the financial inclusion movement should be agreeing on who are the hardest to reach and what are ways to begin reaching them now. Thanks to the work from CFI, we know in broad categories who the hardest to reach will be: the extreme poor, women, and those living in rural or remote regions. We will be able to move beyond these general categories to more specific population segments when the World Bank releases the full Findex micro-data in October.

The Campaign wants to work with CFI, the World Bank (including Group members like the IFC), the Alliance for Financial Inclusion, and others to develop the strategies to reach the hard-to-reach groups.

In April, the Campaign introduced six “pathways” to reach the extreme poor and to help them move out of poverty. They are our proposal for the types of interventions we should focus on:

  1. Agricultural value chains
  2. The graduation approach
  3. Savings groups
  4. Conditional cash transfers
  5. Integrated health and microfinance
  6. Mobile platforms linked with agent networks

While these six pathways are not the only financial inclusion interventions, they are some of the more effective interventions currently in use. (This post from April outlines why each of these six pathways matter to the overall picture.)

Mapping target populations and successful programs

So the question becomes, how do we as diverse stakeholders work together to develop strategies that can address the “access gaps” in By the Numbers? Stakeholders working with data, such as the Campaign, World Bank, Microfinance Information Exchange (MIX), IFC, Finclusion Lab, and others, should begin mapping where these population segments live. We can then layer onto the map those stakeholders, projects, and partnerships that are successfully reaching the hard-to-reach. New collaborations should be created to expand work where populations are not being served.

On the flip side, we should also identify existing programs that are not reaching the hardest-to-reach and ask why they are not. What are the constraints holding back progress in these areas? Is it a misalignment of the regulatory framework? Is the program or intervention failing to use a reliable metric to target its activities? Are there critical stakeholders missing from the implementation equation?

Mapping the location of populations who face more and more challenging obstacles to using appropriate financial tools to support their movement out of poverty is an important step to understanding whether interventions are working in the right places. More specifically, it will also help identify programmatic challenges and, therewith, more relevant solutions to those challenges.

This is a process that will take time, and 2020 is only five years away. Ensuring access is an important first step, but that step must be taken in a way that looks and plans several steps ahead. Moreover, the Campaign is deeply invested in ensuring that the hardest-to-reach not only have access to appropriate financial services, but that those services have a demonstrable effect in support of those individuals’ movement out of extreme poverty. Therefore, if we are to ensure that financial inclusion indeed includes the hardest-to-reach and that it is a major step to ending extreme poverty, we must begin to intentionally develop strategies that work towards these goals in tandem now.

This will require that global players in this movement learn from those who are having success in reaching the poorest and most marginalized, support their efforts, and replicate their strategies. More importantly, we must learn together how we can provide the sort of services that will help those at the bottom of the economy reduce vulnerability and take advantage of opportunity. We look forward to working with CFI and others to make this happen. We invite you to get inspired by our coalition of Commitment makers, set your own goal to help end poverty, and make a Campaign Commitment.

Related reading

Register for our June 9th E-Workshop on Aging and Financial Inclusion

Lucía Urtecho Calderón, client of Financiera FAMA, sells candy and candied fruits in Mercado Carlos Roberto Huembes, Nicaragua on December 13, 2012 (Photo credit: Accion)

Lea en español *** Lisez en français


How are you helping your clients to prepare for old age?

Join our next Campaign Commitment E-Workshop to learn about providing micropensions


JOIN US…
Tuesday, June 9th
at 10:00 AM (GMT-4)

…for the E-WORKSHOP
“Helping Clients Prepare for Old Age”


The Microcredit Summit Campaign is proud to present the next installment in our Campaign Commitment E-Workshops Series. Co-hosted with the Center for Financial Inclusion, which launched a Campaign Commitment in 2014, this E-Workshop will focus on helping clients to prepare for old age, including through providing micropensions.

The issue of aging is a new global reality, given increasing life expectancy, shrinking family sizes, and better health systems. Today, the microfinance community has the opportunity to be a leader in addressing this issue, helping people to prepare for their older years and providing financial services for older people. The Center for Financial Inclusion recently published a report titled Aging and Financial Inclusion: An Opportunity addressing the issue and identifying priority actions for financial service providers that will be presented during the E-Workshop.

Presenting Organizations
Center for Financial Inclusion
Sonja Kelly
Micro Pension Foundation
Parul Khanna
Helpage logo Help Age International
Eppu Mikkonen-Jeanneret

This webinar will be conducted in English. We will live-tweet using the hashtag #Commit100M in English, Spanish, Arabic and French.


The Center for Financial Inclusion launched a Campaign Commitment! We invite you also to…

Get Inspired. Set a Goal. Make a Commitment.

Join the movement to help 100 million families lift themselves out of extreme poverty:

How are you building financial capability among clients?

BRAC group meeting

How are you building financial capability among clients? Take the Center for Financial Inclusion’s financial capabilities survey today!
Photo credit; BRAC

Lea en español *** Lisez en français


Reposted with permission

Calling All Innovations in Financial Capability! A New FI2020 Project Needs to Hear about You

March 24, 2015 | Center for Financial InclusionCFI-at-ACCION-logo

>> Authored by Julia Arnold, Research Consultant

A colleague recently shared a story about helping a friend’s housekeeper open a Jan Dhan Yojana account in India – a free bank account offered through India’s massive new financial inclusion scheme. After being stonewalled by the bank teller and yelled at by the assistant manager, who insisted the bank no longer offered the account, my colleague and the housekeeper were ushered into the bank manager’s office. The bank manager proceeded to ask the housekeeper for multiple forms of ID, none of which are required for the Jan Dhan Yojana account. Only when the bank manager recognized my colleague as a financial inclusion expert and author of a scathing newspaper article on the Indian banking sector, did he “make an exception”. When the housekeeper returned the following day to get her debit card, she was asked for payment. Luckily, she pointed to a copy of a pamphlet in the local language, which showed that she should be allowed to open the account without a deposit. Now, after all that, she is a member of the formal banking system of India.

What this story shows is that a decree that banks must offer a financial product to the unbanked is not enough. Educating frontline staff, shifting workplace culture, and strengthening consumer protection laws are all key changes needed to enable genuine inclusion.

Read the full article.


Innovations in Financial Capability Survey

CFI is seeking innovations in financial capability to understand the range of ways the financial inclusion world is building financial capability among clients with an emphasis on innovations and use of tech and integration of behavioral insights. Financial capability refers to a person’s knowledge, skills, attitudes, and behavior, which lead to more informed, personal financial choices and outcomes. Innovations refers to any new or a new use of a delivery mechanism, program idea, or process. We are searching both for stand-alone efforts and especially for elements that are integrated directly into other processes.

Fill out the survey.

Truelift’s progress and what the future holds

Lea en español (traducido por Google) *** Lisez en français (traduit par Google)


A message from the Truelift Steering Committee was posted on the Center for Financial Inclusion blog on January 21st, “Truelift’s Progress and Future in Pursuit of Transparency and Accountability in Poverty Alleviation Efforts.” The message opens with the pronouncement that defines what Truelift is all about: “Institutions built upon a promise of poverty alleviation must be motivated and supported to make good on that promise.”

Formerly known by the name of The Seal of Excellence for for Poverty Outreach and Transformation in Microfinance, Truelift officially launched in 2011. It emerged through the coordinated action of leaders in the global microfinance community who were catalyzed the Microcredit Summit Campaign early in 2010. We have been and will continued to be strong supporters of Truelift.

Now, however, Truelift’s resources have diminished to the point where they must depend on volunteer staff and committee members to maintain access to the Truelift information, tool, and services. The Microcredit Summit Campaign is committed to helping maintain what Truelift has already built, and together, we seeking new funding to regain momentum.

In the meantime, practitioners and others can continue to access the Truelift information and tool through our website and to receive responses to questions/queries about use of the tool and interpretation of results. Self-assessments as well as external assessments by rating agencies remain viable options.

We invite you to read the entire message from the Steering Committee and learn more about Truelift’s progress and future in pursuit of transparency and accountability in poverty alleviation efforts.

www.truelift.org

Finance for All by 2020 in Order to End Extreme Poverty by 2030

Gallery

Originally posted on Center for Financial Inclusion blog:
> Posted by Larry Reed, Director, Microcredit Summit Campaign Why does the Microcredit Summit Campaign wholeheartedly support the goal of “Finance for All by 2020?” Because we see it as an important…

2013 Partnerships against Poverty Summit Declaration

Gallery

This gallery contains 6 photos.

2013Summit banner+MCS logo_transparent_596x91
From October 9 to 11 we held the Microcredit Summit in Manila on the theme “Partnerships against Poverty.” Delegates of the Summit drafted and approved the 2013 Partnerships against Poverty Summit Declaration, listing the principles that we will follow to insure that microfinance works as a worthy partner in the movement to end extreme poverty. This is the text of that powerful and inspiring Declaration.

We, the participants in the Partnerships against Poverty Summit, state collectively and enthusiastically, that:

EXTREME POVERTY CAN AND WILL BE ENDED BY THE YEAR 2030!

To reach this goal, we declare the following four commitments:

First, we commit to putting the poor first!

Español | Français | Continue reading

News Round-up for Friday, July 26

Gallery

Free solar panels for 2 m of the poorest families in Peru & our report on integrated health and microfinance in the Andes tops the charts Español Français Continue reading

News Round-up

Gallery

A special UN report on post-2015 agenda, measures from the World Bank to accelerate progress on malnutrition, and research on how VSLAs affect the well-being of children.Español Français Continue reading

Last Week’s News

Gallery

Read our round up of last week’s microfinance news: A Financially Capable Consumer Could Be Your Best Customer, The Future of Provider Ecosystems for Financial Inclusion, How to Build Successful BOP Business Models, and more! Continue reading

Last Week’s News

Gallery

This gallery contains 1 photo.

A round up of last week’s microfinance news: tests for credit bubbles, a challenge to the “old way” of thinking about microfinance, promising BoP business models in Latin America, and another paper about mbanking. Continue reading