#tbt: Digital services to reach the unreachable at the 2013 Summit

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Speakers in the “Reaching Deeper and Lowering Costs: The Path ahead for Digital Services” plenary session at the 2013 Partnerships against Poverty Summit in Manila, Philippines. We learned how mobile devices can help provide better options to those who are reliant upon riskier, costlier options.

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Highlighting technology innovations in the microfinance sector, the plenary session “Reaching Deeper and Lowering Costs: The Path ahead for Digital Services” at the 2013 Partnerships against Poverty Summit was moderated by our very own Sabina Rogers, filling in for Karen Dávila, noted Philippine broadcast journalist.

It was a fun session, using visual aids to represent certain aspects of a value chain for delivering mobile and financial services. A house represented the client and the start of the digital transaction value chain; then images showed the mobile interface for conducting transactions; a sari-sari represented an agent kiosk; a net represented both communications networks as well as financial networks; and a bank stood in for a variety of types of financial institutions.

Speakers were asked to make use of the array to help them illustrate where the companies and organizations the represented fit into the value chain.

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Gordon Cooper, Head of Emerging Market Solutions, APCEMEA, VISA, and Raj Singh-Khaira, Vice President, RM & Consumer Services, FINO PayTech

Nadeem Hussein of Tameer Microfinance Bank (Pakistan) led off the discussion demonstrating how Tameer had a role in supporting a number of points along the value chain overall from understanding the consumer landscape to developing mobile transaction interfaces including working with agents, and all as a financial institution.

Raj Singh-Khaira of FINO PayTech (India) and focused on the need for institutions like his to diversify their involvement in a number of ways along the value chain because “the market is not mature enough for us to be just this one component…the agent kiosk in this example.” He pointed to the wide array of services FINO provides to achieve this diversity including a number of types of savings products, insurance, and some loans.

FINO serves over 67 million clients and employs more than 50,000 agents. Technology is important to help reach this kind of scale as opposed to manual transactions. He also mentioned the ability to better track and secure transactions through the use of digital means of transacting.

The role of VISA was presented by Gordon Cooper. “Visa is a Network, a network service provider. It’s all about interoperability,” cited Cooper; continuing, he described a project VISA launched several years ago which focused on finding one key way VISA could contribute to increasing access to formal financial services for low income individuals.

The result: launching mVISA in Rwanda, a mobile transactions platform (see this video). He focused on the necessity of interoperability, which refers to the ability of one financial service provider’s platform to link up with others’ platforms in order to enable customers on different networks or in different financial systems to transact. Increasing interoperability as a means to support wider access will be one major focus for VISA in the digital area.

Napoleon Nazareno of Smart Communications, one of the largest mobile network operators working in the Philippines, echoed Khaira. Smart is not isolated to only providing mobile phone connectivity, but also goes beyond to touch on all aspects of the value chain. Beginning more than a decade ago, Smart launched a small mobile banking service platform. By partnering with financial service providers over the years, this has now grown into a full-fledged mobile microfinance service platform.

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Ian Radcliffe, Director, WSBI-ESBG

Ian Radcliffe of WSBI illustrated their role in supporting the actors involved in the value chain as direct service providers. Their core activity is advocacy, but apart from that, they also deliver training and consultancy services to providers.

He highlighted an initiative begun about four years ago, to understand what it would it take to double the number of savings accounts among poor people. This launched the WSBI savings account program, which is now working with banks in 10 countries to develop and improve agent banking models and mobile banking models now, too.

Nazareno summarized the session nicely at one point during the presentations, pointing to the power of digital channels for reaching the financially exclude citing recent national survey in the Philippines.

He said, “80% of the households in the Philippines don’t have a bank account. On the other hand, 90% of Filipinos have a cell phone,” which highlights the viability of using mobile devices to provide financial services to those who would otherwise remain excluded. Mobile devices can help provide better options to those who are reliant upon riskier, costlier options, and, ultimately, ones that would stand in the way of their journey out of poverty.

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A participant at the 2013 Summit was having a great time.

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Watch the full video of this plenary

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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5 lessons on expanding financial inclusion and usage

Source

Source: The 2015 Brookings Financial and Digital Inclusion Project Report: Measuring Progress on Financial Access and Usage.

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>>Authored by Mbaye Niane, 100 Million Project intern

The Center for Technology Innovation (CTI) at the Brookings Institute recently published the 2015 Brookings Financial and Digital Inclusion Project (FDIP) Report and Scorecard. It evaluates access to and usage of affordable financial services across 21 different countries in Africa, Asia, and Latin America.

These countries are geographically, economically, and politically very diverse, but many of their citizens share a common experience of being excluded from formal financial services. Governments from these 21 countries [1] have made a commitment to achieve financial inclusion by improving access to and usage of appropriate, affordable, and accessible financial services. At the Microcredit Summit Campaign, we are mobilizing commitments from private sector actors as well as governments to expand access to and usage of just such high quality financial — as well as non-financial — services.

We know many organizations in the microfinance and financial inclusion sectors affirm a vision of ending poverty. The aim of this coalition is to tie visions to actions and action to achievement. For example, the Technical Secretariat for Disabilities (Secretaría Técnica de Discapacidades) of the Vice-What is a Commitment + Actions to end extreme povertypresidency of the Republic of Ecuador has committed to support 500 entrepreneurial projects led by persons with disabilities through the Productive & Financial Inclusion Network and to implement of a set of poverty measurement indicators that will allow the Technical Secretariat to assess progress in meeting its objectives in serving persons with disabilities.

Brookings’ Financial and Digital Inclusion Project (FDIP) measures the progress achieved in those 21 countries and seeks to answer important questions related to global financial inclusion efforts [2], questions that we are interested to know the answer to as well.

  1. Do country commitments make a difference in progress toward financial inclusion?
  2. To what extent do mobile and other digital technologies advance financial inclusion?
  3. What legal, policy, and regulatory approaches promote financial inclusion?

The FDIP Scorecard assesses the accessibility and usage of financial services in each country using 33 indicators across four dimensions: country commitment, mobile capacity, regulatory environment, and adoption of traditional and digital financial services. This scorecard will help non-governmental organizations, policy makers, private sector representatives, and others examine the best practices for facilitating and measuring financial inclusion.

The FDIP reports that Kenya, South Africa, and Brazil lead the 21 countries overall on financial inclusion. Rwanda and Uganda follow, tied at fourth place. These high-performing countries took the critical steps towards financial inclusion such as policy and regulatory changes. Creating an accessible and affordable path for poor families to use digital technology is a strategic way to get them out of poverty. The FDIP report and scorecard give us valuable information about financial inclusion. It is valuable to show that countries making commitments, solving regulatory issues, and creating an accessible and affordable path for poor families to use digital financial services (i.e., mobile money and e-wallets) is a strategic way to get them out of poverty.

Achieving financial inclusion: Five critical conclusions

The 2015 FDIP Report can be summarized with the following five critical conclusions on how to best expand financial inclusion across the world.

[ONE] Country commitments are vital to reach financial inclusion.

They facilitate knowledge-sharing and engagement among groups and assure that national financial inclusion strategies include measurable targets and a strong coordination across government agencies with the public and private sectors. Country commitments allow the creation of developing surveys that diagnose the status of financial inclusion, a critical step to develop a targeted strategy and assessing the success of future inclusion initiatives.

[TWO] Digital financial services are important for accelerating financial inclusion.

Governments and the private sector will need to increase investments in digital communication and payments infrastructure and ensure services are affordable. The use of digital financial services has grown significantly in recent years among many people who have little or no previous experience with formal financial services. Many households have more than one mobile phone, smartphone or tablet.

We believe that mobile money linked with agent networks in low-income communities is a key financial inclusion strategy — one of our six “pathways” — to help end extreme poverty. According to the Groupe Speciale Mobile Association (GSMA) in 2015 the number of cellular connections through mobile phones, smartphones and tablets increased to more than 7.5 billion and is expected to increase to over 9 billion by 2020. Additionally, smartphone penetration will allow non-bank institutions to expand access to more user friendly interfaces such as mobile financial services. However, for several reasons, feature (or “dumb”) phones will remain the preferred option in many developing community contexts (i.e., poor villages in Africa) for a while still.

[THREE] Geography generally matters less than policy, legal, and regulatory changes.

With this said, there are some regional trends in terms of financial services provision, however. Regulatory and policy changes will likely accelerate financial inclusion outcomes, but in order to promote digital financial services — which, as we explain above, is important for accelerating financial inclusion — countries need a robust digital ecosystem that promotes innovation.

[FOUR] There are many important actors with major roles and they need to coordinate closely.

Central banks, ministries of finance and communication, regulated banks and non-bank financial providers, and mobile network operators each have a major role in achieving financial inclusion. They should closely coordinate with respect to advances in policy, regulation, and technology to ensure a vibrant and inclusive financial ecosystem.

The Microcredit Summit Campaign organized a Field Learning Program last year for ministers and directors of social protection programs in Africa who were interested to learn how to replicate and scale up important, accessible, and affordable financial services to the extreme poor. They observed how flagship programs like Ethiopia’s Productive Safety Net Program are combating extreme poverty pairing financial services with social protection programs. In Mexico, they examined how the government and regulatory authorities coordinate with financial entities and technology companies to deliver a conditional cash transfer (CCT) program. The national development bank, BANSEFI, plays an integral role as a facilitator of cash transfers and an accounting hub for the social protection program.

[FIVE] Tackle the gender gap and address diverse cultural contexts with respect to financial services.

Solving these two problems will help achieve global financial inclusion. For example, formal financial service providers encounter mistrust and a lack of awareness. Public and private sector leaders need to educate the public about these services and mobilize their efforts to improve the efficiency and reliability of communication networks.

The FDIP Scorecard

The FDIP Scorecard provides us an overall ranking for each country on the rate of financial inclusion, a country’s commitment, the mobile capacity, the regulatory environment, and adoption of traditional and digital financial services.

The FDIP Report and Scorecard are instructive to us as we pursue our advocacy on uptake of the six pathways (mobile money, integrated health and microfinance). The FDIP report and scorecard hold valuable information that can provide positive guidance to the design and delivery of financial inclusion interventions. This report strengthens the growing body of evidence demonstrating effective ways of reaching the hardest to reach and poorest individuals with programs that support their sustained progress out of poverty.

The scorecard offers an easy-to-understand progress report on financial inclusion commitments. How can we assess, in the future, progress made on Campaign Commitments?

Here is an example of one of the 21 scorecards in the report:

We hope this report provides strength to the growing body of evidence demonstrating effective ways of reaching the hardest to reach and poorest individuals with programs that support their sustained progress out of poverty.


Footnote

[1] The 21 countries are Afghanistan, Bangladesh, Brazil, Chile, Colombia, Ethiopia, India, Indonesia, Kenya, Malawi, Mexico, Nigeria, Pakistan, Peru, the Philippines, Rwanda, South Africa, Tanzania, Turkey, Uganda, and Zambia.

[2] John D. Villasenor,West, Darrell M., and Lewis, Robin J. The 2015 Brookings Financial And Digital Inclusion Project Report. Pg.3: http://www.brookings.edu/~/media/Research/Files/Reports/2015/08/financial-digital-inclusion-2015-villasenor-west-lewis/fdip2015.pdf?la=en


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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.

ESAF Microfinance commits to comprehensive services for clients

ESAF Microfinance trains community health workers and organizes health fairs for their clients and poor communities. Photo courtesy of ESAF Microfinance
— Read the press release announcing ESAF Microfinance’s Campaign Commitment
— Read their Commitment letter

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The Microcredit Summit Campaign welcomes ESAF Microfinance as the 57th organization to make a Campaign Commitment. ESAF joins a global coalition to help 100 million families lift themselves out of extreme poverty. ESAF will help support their clients in uplifting themselves from poverty by providing them with education, training, and support services.

ESAF and the Campaign strongly believe that microfinance services should be complemented by education, training, and other supporting programs that help poor families battle chronic poverty and social exclusion. For example, in partnership with the Campaign, ESAF trained community health workers (Arogya Mithras in Hindi) to provide health education and front-line screening services for non-communicable diseases to poor communities. You can learn about that project in “Integrating Health with Microfinance: Community Health Workers in Action.”

For the financial year 2015-2016, ESAF Microfinance aims to reach out to new clients through its products and services, committing to the following:

  1. To offer microfinance services to 200,000 new clients through expanding the geographic reach in some of the backward states of Chattisgarh, Jharkhand, West Bengal, and Bihar.
  2. To increase the reach of financial services to an additional 10% of clients, making it to a total of 50% of clients who belong to socially backward communities/tribes (scheduled castes and scheduled tribes as per government of India)
  3. To offer livelihood support services to at least 10,000 clients who shall be in a position to contribute to the income of their household.
  4. To measure the poverty levels of 200,000 clients using PPI.
  5. To offer financial literacy training to at least 50,000 clients.
  6. To offer health education and awareness sessions to at least 50,000 clients and to offer health check-up services to benefit at least 5,000 clients.
  7. To offer financial and non-financial services to at least 3,000 PWD (persons with disabilities) clients.
  8. To offer women’s leadership and empowerment programs to benefit at least 50,000 clients.
  9. To reach at least 2,000 children through educational programs for academic growth and value education.
  10. Educate at least 50,000 clients on environment protection and use of clean energy products.

Chairman and managing director, K. Paul Thomas, explains why their commitment includes a number or programs addressing multiple aspects of the client’s life such as health:

“ESAF’s vision and mission very clearly emphasize on holistic transformation of its poor clients,” he said, “and, we are convinced this cannot be achieved unless their health issues are addressed.”

ESAF Microfinance is one of the premier microfinance institutions in India today, particularly in Kerala, effectively empowering 750,000 members through 160 dedicated branches. The founder of ESAF ventured into microfinance in 1995, by organizing self-sustainable groups, to alleviate poverty and generate employment. Since then, ESAF has grown by leaps and bounds in the microfinance sector, promoting microfinance as a viable, sustainable, and effective means for creating jobs and reducing poverty.

Read the Commitment Letter from ESAF Microfinance.

The Microcredit Summit Campaign looks forward to welcoming our new partners to the global coalition and sharing their progress towards the Commitment achievement at the 18th Microcredit Summit. The Campaign’s 100 Million Project is building a movement among financial service stakeholders committed to helping to end extreme poverty through: public statements of commitment to action, expanding practices to reliably measure movement out of extreme poverty, and promoting innovations and best practices to accelerate movement out of poverty.


We invite you to join ESAF Microfinance and…

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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

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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

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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.

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


Related reading

#tbt: The Faces Behind the Statistics

#ThrowbackThursday

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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 2005. Microfinance client Janèt Dèval attended literacy courses offered by Fonkoze and shares how her business has been improved. Indeed, it has cemented her determination to continue improving herself and her loyalty to her microfinance institution.


Microfinance stands as one of the most promising and cost-effective tools in the fight against global poverty.

Jonathan Morduch, Chair
United Nations Expert Group on Poverty Statistics

Janèt Dèval, a client of Fonkoze, a microcredit institution in Haiti, is one of the 66.6 million poorest clients reached. Janèt has been a credit client for more than two years and comes regularly to all meetings. She has also been a part of every literacy program available and is about to start the newest module on developing business skills. Not only could she not read or write when she started, but she has had an extra challenge: Janèt has only a fraction of her hearing due to an injury when she was 20 years old.

My husband didn’t want me to send my five children to school because his parents didn’t send him to school. From the beginning, he said he would not pay and he has never given even one goud, but I always knew it was important. For a long time I have gone to Port-au-Prince to buy goods to sell in Hinche, and I put all my money into paying for school for my children.

When I found out that Fonkoze gave literacy classes for market women, I was so happy. I never went to school even one day. I didn’t know anything about school. I started right away with basic literacy and I have tried to never miss a class.

I couldn’t write my name and I didn’t understand anything, but I kept going even when my husband got angry. My kids pushed me and encouraged me and they helped me practice my letters. The monitor, Christa, told me to keep writing every day even when I didn’t understand.

I can write my name now, and I write it everywhere. Imagine, I used to go to Port-au-Prince to buy and I couldn’t read the bags and I felt lost. I couldn’t keep track of what I bought. The drivers sometimes would take my boxes off the truck and give them to someone else, but I didn’t know until I got all the way home. Now, I can’t lose anything. Now I write my name on every box and I know what I buy.

I finished Alfa Baz and Alfa Pos and then I went to the Health Program, too. I still don’t know many things, so I want to keep going. I take my notebook to my school and I write in it because one day I hope to read and understand everything. I bought two books in the market and my kids help me read them.

I work hard in the market so that I can repay my loans, keep going to school and so that my kids have that chance, too. If my parents would have sent me to school, I would have thrown a party for them to say thank you.[1]

The Microcredit Summit was launched to multiply stories like this 100 million times, but a number of barriers continue to impede the Campaign’s success.

Read the 2005 Report.


Footnote

[1] From the Fonkoze website www.fonkoze.org.

How you can influence global policy priorities at the World Bank (event)

RESULTS is hosting its 35th annual International Conference on Capitol Hill in Washington DC from July 18th to July 21st, featuring many leading poverty experts, activists. and policy makers.

Join us at the 2015 RESULTS International Conference in Washington, D.C., this July 18-21. Leading poverty experts, activists, policymakers, and YOU will convene for a unique conference that mixes an educational experience and advocacy opportunities around increased access to education, health, and economic opportunity. Together, we can change the world!

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In just two weeks, RESULTS Educational Fund, the parent organization of the Microcredit Summit Campaign, will celebrate its 35th anniversary with the 2015 International Conference in Washington, D.C. We invite you to join in the festivities and attend our workshop called “Partnerships to End Poverty: Health, Government, and Financial Services” on Sunday, July 19th at 4:30 – 6:00 PM. The conference will be held at the Washington Court Hotel on Capitol Hill.

Only $85 a day!

RESULTS International Conference — only $85 a day!

Attendees of the International Conference will hear from leading experts, activists, and policymakers on the challenges and solutions to ending poverty. Join World Bank President Jim Yong Kim, Senator Sherrod Brown (D-Ohio), and Nobel Peace Prize laureate Muhammad Yunus (and, of course, founder of the Grameen Bank). Find out who else will be speaking here.

The conference agenda is designed to provide the information and tools to influence policymakers — so you can deliver the message directly to your representative on Capitol Hill and policymakers at the World Bank and USAID!

The Microcredit Summit Campaign’s role at RESULTS is to lift up financial inclusion solutions designed for the world’s extreme poor, creating economic opportunities to help lift themselves out of poverty. The Campaign will be leading a workshop at the International Conference about the future of financial inclusion.

Our session, entitled Partnerships to End Poverty: Health, Government, and Financial Services,” will focus on integrated health and microfinance and linking the graduation model and conditional cash transfers (CCTs). Learn why these are key pathways to help end extreme poverty and how you can influence the global development agenda. (Read more about the six pathways.)

Sonja Kelly of the Center for Financial Inclusion at Accion will moderate a panel discussion with Olumide Elegbe of FHI 360 and our own Dr. DSK Rao and Larry Reed. Join us to develop your message and advocacy strategy around financial inclusion to end extreme poverty, and take it directly to major financial inclusion funders like the World Bank and USAID to influence their programmatic priorities in the over coming years.

About the panelists


Sonja Kelly, Fellow, CFI

Sonja Kelly is a fellow at the Center for Financial Inclusion at ACCION (@CFI_ACCION). She conducts research on supply and demand side opportunities to advance financial inclusion around the world, including income growth, demographic change, and policy shifts. Ms. Kelly is finishing her PhD at the School of International Service at American University, writing her dissertation on financial inclusion policy and regulation in low and middle income economies. Her research articulates the ways that international organizations and internal politics influence financial sector policy. She is also a consultant at the World Bank and the president of the DC chapter of Women Advancing Microfinance. Prior to joining CFI, Ms. Kelly worked in microfinance at Opportunity International.

Olumide Elegbe Olumide Elegbe, senior relationship manager at FHI 360, is a health and development expert with demonstrated results of building successful partnerships across sectors and geographies. With a focus on forging trusted, long term partnerships between the government, nonprofit and private sectors, Mr. Elegbe has a track record of brokering collaborative partnerships that drive social change by addressing health, education, sustainability and/or other development challenges. This, while delivering results and outcomes tailored to suit the needs of stakeholder individuals and organizations including market access, efficiencies in supply chain, and contribution to local GDP.

Mr. Elegbe has extensive international and cultural experience, spanning sub-Saharan Africa, Eastern and Western Europe as well as the USA. Prior to joining FHI 360, he worked as a public health specialist and a visiting lecturer in population medicine in the United Kingdom, and as technical advisor on public health programs in Nigeria.

Mr. Elegbe holds a Master’s Degree in Public Health with a minor in Health Services Management from the London School of Hygiene & Tropical Medicine in the United Kingdom.

Dr. D.S.K. Rao, Regional Director for Asia-Pacific, Microcredit Summit Campaign

Dr. DSK Rao has been the regional director for the Asia-Pacific region with the Microcredit Summit Campaign since 2000. The Campaign draws heavily on his wide experience and familiarity with the sector while organizing the regional and global summits. Dr. Rao has conducted scores of workshops and trainings on tools for practitioners in Asia to track poverty and other social outcomes including the Cashpor Household Index, Poverty Wealth Ranking, and the Progress out of Poverty Index. Dr. Rao is presently implementing a Johnson & Johnson-funded project for integrating health with microfinance in India, in collaboration with Freedom from Hunger. He has co-authored two books on microfinance: The New Middlewomen and Development and Divinity and Dharma.

Larry Reed, Director, Microcredit Summit Campaign

Larry Reed has headed up the Microcredit Summit Campaign (@MicroCredSummit) since taking over the reins from founder, Sam Daley-Harris in 2011. Mr. Reed has co-authored the annual State of the Campaign Report for the last 5 years. He has worked for more than 25 years in designing, supporting, and leading activities and organizations that empower poor people to transform their lives and their communities. For the majority of that time, Reed worked with Opportunity International, including five years as their Africa regional director and eight years as the first CEO of the Opportunity International Network.


Our workshop will be held on Sunday, July 19th
from 4:30 – 6:00 PM
.

To attend the workshop and the International Conference, email IC2015[at]results.org
or register online

Daily registration is only $85.

RESULTS is an international movement of grassroots advocates raising their voices to end poverty. Through government program and policy advocacy, RESULTS staff and its massive network of grassroots activists help to address the root causes of poverty: lack of access to medical care, education, and opportunity to move up the economic ladder. Click here to read more about RESULTS.


Get Inspired. Set a Goal. Make a Commitment.

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

Equitas commits to improve focus on clients and service coverage

Read the press release announcing Equitas’ Campaign Commitment
Read their Commitment letter
Photo courtesy of Equitas

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The Microcredit Summit Campaign welcomes Equitas, a major Indian microfinance institution (MFI), as the 56th organization to make a Campaign Commitment, joining a global coalition working to help 100 million families lift themselves out of extreme poverty.

Equitas is committing to expand its financial services and non-financial services to the following number of clients in the financial year 2015-2016 :

  • Provide 1.5 million clients with financial services.
  • Cover 70,000 clients under the food security program.
  • Cover 50,000 clients under the health education program.
  • Screen the health of 850,000 clients.
  • Partner hospitals will provide 3,000 Equitas clients discounted consultation/ treatment.
  • Use the Progress out of Poverty Index to measure the poverty level of 1.5 million clients.
  • Provide financial support to 3,000 disabled women.
  • Rehabilitate 200 homeless pavement dwellers.
  • Screen, educate, and track the health of 3,500 students in the 6 schools run by Equitas Trust.
  • Provide gainful employment to 15,000 unemployed youth.
  • Train 50,000 women in new skills to increase their income.

P.N. Vasudevan, founder and managing director of Equitas Micro Finance India P. Ltd., explains their mission and how they support the well-being of their clients:

“When we founded Equitas in 2007, we wanted to create an MFI which would be a global benchmark in fairness and transparency, two facets sadly missing from most of the MFIs globally.  Equitas is a Latin word meaning ‘Equitable,’ which means fair and transparent, and this philosophy is woven into every action of Equitas.  Equitas had started lending at 25.5% in 2007 (at a time when the other MFI rates were in the high thirties) and after 4 years, Reserve Bank of India capped the lending rate for MFIs in India at 26%! The Equitas Ecosystem Model is designed to support the well-being of our clients by providing financial and non financial services with a clear focus to address a large spectrum of their requirements in the field of health, education, skill development, food security during emergencies, placement for unemployed youth and many more.”

Equitas is an NBFC MFI with headquarters at Chennai, India, and operations in eight states, namely Tamil Nadu, Pondy, Karnataka, Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, and Chattisgarh. Equitas has about 2.8 million active borrowers as of 31st March, 2015. Along with financial services, Equitas is also promoting several non-financial services aiming at holistic development of their clients and their families.

Read Commitment Letter from Equitas.

The Microcredit Summit Campaign looks forward to welcoming our new partners to the global coalition and sharing their progress towards the Commitment achievement at the 18th Microcredit Summit. The Campaign’s 100 Million Project is building a movement among financial service stakeholders committed to helping to end extreme poverty through: public statements of commitment to action, expanding practices to reliably measure movement out of extreme poverty, and promoting innovations and best practices to accelerate movement out of poverty.


We invite you to join Equitas and…

Get Inspired. Set a Goal. Make a Commitment.

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

The Business of Doing Good: A Chat with Anton Simanowitz

BizofDoingGoodCover

The Business of Doing Good by Anton Simanowitz and Katherine Knotts

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Larry Reed, director of the Microcredit Summit Campaign, recently sat down with Susy Cheston, senior advisor to FI2020, and Anton Simanowitz, co-author of the new book The Business of Doing Good, to discuss how organizations can do good work and turn a profit, particularly in the microfinance sector.

In exploring this question, Simanowitz draws on key insights from the new book, in which he and co-author Katherine Knotts studied the success of AMK, a social enterprise which has touched the lives of millions of people living in poverty in rural Cambodia. This study revealed six powerful strategies to improve business to do good:

  1. Don’t just offer products; respond to client needs
  2. Ask good questions and have good conversations
  3. Do what it says on the tin
  4. Motivate staff to do difficult work in an excellent way
  5. Own the dirt road
  6. Adapt to the changing landscape

Find out more about the thinking behind these insights.

In the latter half of the book, the authors explore the disconnect between theory and practice and the resulting implications for client value. AMK’s success is largely attributed to its recognition of the distinction between client wants and client needs, which are rooted in the meaningful conversations the organization has with its clients. The authors observe, through their exploration of AMK, that vision is ensured only when it follows intent, instead being constrained by conventional wisdom.

Simanowitz was here in D.C. yesterday to discuss his book with Larry Reed and Susy Cheston on-site at the Center for Financial Inclusion. He spoke about the importance of conversation in the social sector, both with customers and within the organization itself. From his exploration of AMK, Simanowitz noted that client-centricity extends far beyond identifying the needs of the clients and becomes a feedback loop built on what he called conversational interplay.

An organization that successfully addresses the reality gap between theory and practice, he argues, embraces reality. It understands that following its social vision is everyone’s responsibility and so is built into the business model. Anton noted that we all have something to learn from this exploration of AMK, an organization that “has the client in their DNA” and “reinforces the truism that focus on the customer is good for business.”

Listen to the conversation


If you prefer, you can stream the podcast from SoundCloud, or you can download the audio file.

Voice your opinion in our comments section. How can organizations best do good and do well?

Following the conversation, we asked Larry and Anton to write up a few closing thoughts.

Larry said, “What struck me from our conversation today was how much the lessons we learn from AMK apply to any social enterprise that seeks to expand the positive results achieved by its clients while also earning enough income to sustain itself and grow. Social enterprises need to align all their people and systems around their mission, and they do this with good data, engaging and open conversations, lots of iterations and improvements, incentives that reward behavior that promotes the mission, and a governance structure that reviews performance according to mission at every meeting. The result is an enterprise whose corporate culture can consistently generate creative responses to changing client needs.”

Anton said, “Countless organizations of every shape, size, and orientation — not just in the realm of microfinance — are in the business of doing good and working with poor and vulnerable communities around the world to deliver potentially life-changing services to address a range of pressing social needs. Some are doing excellent work, and this book examines what it is that they do that makes the difference. But at the same time, a common theme has emerged in our work over the past 20 years: we see organisations missing opportunities to do things better and organisations getting things wrong, again and again. When surveying the landscape of missed opportunities, there is temptation to become blindsided by the success stories, but we must deliver on the ethical imperative to make good on our good intentions. This book explores the inevitable shortcomings of every success story and how we can learn from those who are ‘doing good’ well.”

The authors of The Business of Doing Good argue that social enterprises and organizations must understand the importance of response, be it to environment, best practices, or client needs and capacities. The Business of Doing Good challenges microfinance practitioners, social entrepreneurs, philanthropists, businessmen, and students of all kinds to reevaluate their respective journeys to deliver on their good intentions throughout their work and beyond.


Anton Simanowitz (@antowitz) has worked for the past 20 years to support social enterprises to be more effective in delivering impact, and for those who support and invest in them to make better investment, capacity building and policy decisions. For support on building organizations to deliver impact, contact him here. To receive current updates about The Business of Doing Good, follow the book on Twitter.

Larry Reed is the director of the Microcredit Summit Campaign (@MicroCredSummit). He has worked for more than 25 years in designing, supporting and leading activities and organizations that empower poor people to transform their lives and their communities. For most of that time Reed worked with Opportunity International, including five years as their Africa regional director and eight years as the first CEO of the Opportunity International Network

Susy Cheston is senior advisor for the Center for Financial Inclusion (CFI) at Accion (@CFI_ACCION) and leads the Financial Inclusion 2020 Campaign. Cheston has a long history of work in economic development, including leading roles at World Vision and Opportunity International, as well as being active in the leadership of the Microenterprise Coalition.


Related reading

Grama Vidiyal commits to expanding health services to clients

Read the press release announcing Grama Vidiyal’s Campaign Commitment
Read their Commitment letter
Photo courtesy of Grama Vidiyal

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The Microcredit Summit Campaign welcomes Grama Vidiyal, a major Indian microfinance institution (MFI), as the 55th organization to make a Campaign Commitment, joining a global coalition working to help 100 million families lift themselves out of extreme poverty.

Grama Vidiyal commits to expand its financial and non-financial services to the following number of clients in the financial year 2015-2016:

  • Provide an additional 150,000 clients with financial services in FY15
  • Help 1,050,000 community members through Grama Vidiyal’s empowerment program.
  • Organize 720 health camps for clients, screening 300,000 members.
  • Provide 10,000 clients with discounted consultation/treatment in partner hospitals.
  • Provide health education to 80,000 client families (or community).
  • Give access to health related products and medicines to 150,000 clients.
  • Help 800,000 clients with the Free Meals program.
  • Install 1,000 household toilet connections and 4,000 water tap connections.
  • Establish 80 Community Knowledge Centers, engaging 30 poor students each (a total of 2,400 students), to motivate learning basic math and English.
  • Help 500,000 clients with the Health Service and Development Program that provides sanitary napkins for women.
  • Use the Progress out of Poverty Index to measure the poverty level of 35,000 clients.

Sathianathan Devaraj, chairman and managing director of Grama Vidiyal, explains the importance of microfinance as a means to financial inclusionhealth:

“Microfinance is a very important tool for financial inclusion, which provides financial services for poor entrepreneurs and small businesses lacking access to formal banking and related services. Microfinance creates a window for the poor where they can access quality financial services such as credit, savings, insurance etc., without inhibition. A double bottom line approach with the right balance of fiscal performance and positive social impact is key to the microfinance’s success. Formal banks identified and promoted bankable people, but microfinance introduced and proved that even the poor are trustworthy and bankable.”

Grama Vidiyal is one of the largest Indian microfinance institutions, serving one million clients over 5 Indian states. Their objective is to focus on eradication of poverty and improving the standard of living of downtrodden women.

Read Campaign Commitment letter from Grama Vidiyal.

The Microcredit Summit Campaign looks forward to welcoming our new partners to the global coalition and sharing their progress towards the Commitment achievement at the 18th Microcredit Summit. The Campaign’s 100 Million Project is building a movement among financial service stakeholders committed to helping to end extreme poverty through: public statements of commitment to action, expanding practices to reliably measure movement out of extreme poverty, and promoting innovations and best practices to accelerate movement out of poverty.


We invite you to join Grama Vidiyal and…

Get Inspired. Set a Goal. Make a Commitment.

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

E-Workshop Recap: Helping Clients to Prepare for their Old Age

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On June 9th, the Microcredit Summit Campaign co-hosted with the Center for Financial Inclusion (CFI) an E-Workshop focusing on financial inclusion for the elderly. This is part of their 2014 Campaign Commitment to bring greater attention to the issue of aging and financial services and to further support the inclusion of those with disabilities. HelpAge International and Micro Pension Foundation helped make it a great discussion about opportunities for organizations (specifically microfinance institutions) to help clients prepare for their old age. The conversation looked both at the supply and demand sides of financial inclusion to better understand what is happening in clients’ lives and how best to approach these issues.

Watch the session recording:

Review the panelists’ slides:

Recap of the E-Workshop

Sonja Kelly from CFI introduced the focus of the session:

“Financial services needs change throughout the lifecycle, and if a client of microfinance services reaches their old age without having developed a plan to meeting their expense needs, it will be too late. Almost all participants in our webinar reported that they knew someone who had inadequately prepared for their older age. This common issue is one that microfinance can help to address by developing longer term savings products and pensions either in-house or through partnerships.”

Eppu Mikkonen-Jeanneret, head of policy at HelpAge International, began the discussion introducing the shift in populations and subsequently labor markets, noting that there are currently about 800 million people who are over 60 around the world. In 15 years, there will be over 1.3 billion people over the age of 60, of which 60 percent will live in low- and middle-income countries.

The common perception is that the 60 percent in low- and middle-income countries either will not save for their old age or lack the capacity to do so. However, the Global Findex report, which looks at the demand side data of financial inclusion, shows otherwise. According to the report, almost 25 percent of all adults say they have saved for old age in the past year — though it is predominately happening in high-income OECD countries and in East Asia and the Pacific. “Around 40 percent of adults in these two regions reported saving for old age, a far greater share than the roughly 10 percent who reported doing so in all other regions” (The Global Findex Database 2014, page 47).

Eppu explained that 18 percent of the pyramid base reported having saved for old age and 60 percent of the top. Sonja Kelly (CFI) noted that the question now is whether they are doing so in safe and secure mechanisms.

Eppu  expanded on this issue following the session, saying,
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“The world is in the middle of demographic sea change; the global population is growing older. This is a result of hugely successful development. We are healthier and better educated, we have less children and we live longer. As a result, in just 15 years the population of 60 years and over will increase from 800m to 1.3b. Far from being a developed country trend, aging is actually fastest in the low and middle income countries. Where it took the European countries over 100 years to transit to an aging population, countries like Bangladesh will do this in just a few decades. In fact, 60 percent of the 1.3 billion people will live in the developing countries.

“We know that people in developing countries continue to work into old age even though the type of work may change. Many work in the informal sector and women especially carry on providing unpaid labour at home. Yet our thinking is locked in outdated associations with people in the 60s onwards as somehow inherently, homogeneously vulnerable. It’s time we embrace the change and take action. Financial inclusion of people across the life course, facilitating social pensions, linking pensions with other financial instruments, and working closely with older women and men will help us all to adjust to the new world.”

Parul Khanna, associate director of projects for Micro Pension Foundation, continued the conversation. She noted this:

“Globally, rapid advancements in technology, telecommunications, and banking outreach have had a powerful impact on the ability of governments to deliver targeted fiscal transfers to the poor, including pension benefits to the elderly. Simultaneously, technology and telecom are reshaping financial services access and delivery, especially among low income excluded households. Most developing countries have a large young workforce, a predominantly informal labour market with modest incomes and savings capacities, a huge pension coverage gap, low banking and formal finance penetration, and limited capacity for large scale fiscal transfers.”

Parul presented their Gift-a-Pension project, which provides micropensions to low-income domestic workers, and she called on participants and readers to take action:
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“Can we do something for informal workers around us…[those] who touch our lives every day? Our maids, drivers, security guards or our washerwomen? Or the guy who we buy our bread from every day? Or our barbers? That seems feasible, right?

“For example, it is possible for you to imagine going home today, and spending just a few minutes with your maid or driver to tell them about the importance of saving for old age. And then spending just 10 minutes on the internet to open their own pension account for them? If your answer is yes, then you have within you the power to gift 20 years of a dignified old age to your maid or driver. And if all did this, we could collectively, as a civil society, change the lives of 40 million domestic help forever. Which, incidentally, is more than the total population of Canada.

It took India 6 years to get 3 million low-income people to start a pension account. If each of us go home today and gift a pension to just 1 excluded person in our lives, we could reach from 3 million to 43 million by this weekend!  After all, just 10 minutes of your time can change 20 years of someone else’s life. You can be the change! Try now with Gift-a-Pension.


Thank you to all panelists for contributing to this important conversation about the importance of saving for old age and how organizations can simplify the process for their clients. We also wish to thank all participants who submitted thought-provoking questions and comments to help make the session interactive!

Related resources:

Film on the micro pension model

About Gift-A-Pension


CFI launched a Campaign Commitment in 2014! 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.

#tbt: The 1997 Microcredit Summit, where it all began

#Tbt_14

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.

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We are pleased to bring you this #ThrowbackThursday blog post, which was originally published in the 1997 Microcredit Summit Report. As we explore the Six Pathways in financial inclusion to end extreme poverty, we look back at the wise words leaders from around the world had to say about ending poverty. We’ve included just a few in this blog post.


Connie Evans*, President, Women’s Self-Employment Project, Council of Practitioners

Connie Evans

Connie Evans is now the president and CEO of the Association for Enterprise Opportunity

Collectively, we represent what can be a glorious future with our voices and our vision. It is a vision for a global movement whereby poor families, especially the women in those families, are joined by practitioners, CEOs, Presidents and Parliamentarians, advocates from all disciplines and walks of life, to eradicate poverty. A global movement whereby microcredit, microfinance, and microenterprise are supported and fostered.

As practitioners, we must develop — and continue to develop — programs that directly and profoundly empower people to help themselves. We must develop and manage sophisticated data information systems so that we can strategically share best practices and avoidable mistakes. We must develop human and financial resources to sustain the best programs. We must hold accountable all those responsible for the management and administration of our governments…And, most importantly, we must incorporate our clients into decision-making positions in our institutions, our communities, and our governments…

Be renewed, be assured, have courage, and let’s all be bold. Embrace the goal of the Microcredit Summit. Speak loudly and proudly of our task to reach 100 million of the world’s poorest, especially the women, with all the tools of microenterprise…Give your voice to the vision and make your commitment to the Declaration and Plan of Action.

Fawzi al-Sultan*, President, IFAD, Co-Chair, Council of International Financial Institutions

Access to even small-scale deposit and credit services, together with other productive services, can work something close to miracles. Our experience, in a variety of conditions across the developing world, underlines that the rural poor are really bankable…

We must nonetheless keep in mind not only the benefits but also the limits of microfinance as a tool…it is not enough by itself to ensure sustainable development for the rural poor. the poor equally need access to better technologies, to health and education services, to fair markets and adequate infrastructure…

Throughout our efforts, we must make sure our work addresses the real needs and priorities of the people we want to serve. We also need to be realistic about the capacity of the microfinance providers themselves…Banking with the poor requires good management ability, especially in controlling the costs of operations and in assessing risks…

And, finally, we have to make sure the financial sector as a whole is set up to support our efforts…Interest-rate structure, monetary policy, and requirements for registration and reserves can make or break microfinance providers…

To help [the Summit’s] goal, IFAD is committed to allocating up to 30 percent of its loan portfolio, or about US$ 125 million a year, to promote financial services to the poorest…

We will integrate the microfinance strategy into our overall program planning and work with others, wherever possible to further the Summit Action Plan.

*Connie Evans is now the president and CEO of the Association for Enterprise Opportunityand Fawzi al-Sultan is now a senior partner with F&N Consultancy.

Related reading

#tbt: What Happens When You Measure Your Clients’ Poverty Levels

Microfinance clients in the Philippines (December 31, 1997, to December 31, 2012). Check this out in the 2014 Report.

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The 2014 State of the Campaign Report features various actors in the microfinance sector that are taking steps to helping their clients lift themselves out of poverty. In this interview with Julie Peachey (director of social performance management at the Grameen Foundation), learn about how the Progress out of Poverty Index® (PPI®) can help organizations better target the poorest. Peachey provides examples of PPI usage as well as recommendations on how to best make use of the results provided by the tool. Below is a summary of the key points from the interview.


Julie Peachey, Director of Social Performance, Grameen Foundation

Julie Peachey, Director of Social Performance, Grameen Foundation

The Grameen Foundation developed the Progress out of Poverty Index (PPI) because they noticed that microfinance institutions were failing to meet poverty outreach targets, and, worse, there really wasn’t a good way to determine how poor clients actually were.

The PPI is a ten question survey based on a household’s income and expenditures, and it is available for 50 countries. The PPI allows an organization to measure in absolute terms how poor a client’s household is by calculating the likelihood that they are living below one of several poverty lines. Further, the PPI can be used by any organization that has a social mission to serve and reach the poorest.

The PPI can be used for:

  1. Targeting the very poor (those living on less than $1.25 a day) to make sure that they aren’t being excluded.
  2. Product design to make sure that poorer clients aren’t being excluded from the organization’s services based on the way their products are designed.
  3. Tracking progress over time to see if the client is becoming better off and moving out of poverty.

Generally speaking, Grameen Foundation has found that organizations that start using the PPI find that their clients are not as poor as the organizations thought and, as a result, that they aren’t actually reaching the very poor.

For example, at CARD Bank in the Philippines, the Grameen Foundation used the PPI to survey the poverty level of clients receiving a new product in order to determine what CARD needed to do to make the product viable. When they saw the product was not taking off as expected, they lowered the price and then experienced a great increase in clients opening up a new account. They then looked at the PPI score before and after the prices were lowered.

Before the change, approximately 27% of clients who opened an account were below the $2.50 a day line; after the price was lowered, CARD saw an increase in the number of clients opening an account as well as a 7-8% increase in the number of clients opening accounts that were below the $2.50 a day line. The conclusion is that lowering the price of the product made it more feasible to the poorer population.

Organizations are also able to use the PPI to calculate the percentage of very poor households in a given area they are serving. The Grameen Foundation conducted a series of “poverty outreach reports” that looked at “concentration, penetration, and scale, which allows an organization to really look more deeply into what the overall total percentage of poor people that are [being] served ideally to be able to see the progress over time.”


Relevant resources