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.

Lea en español *** Lisez en français


>>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


Get Inspired. Set a Goal. Make a Commitment.

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

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

Lea en español *** Lisez en français


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…

Get Inspired. Set a Goal. Make a Commitment.

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

#tbt: 2011 workshop paper on financial literacy

#Tbt_18

Lea en español *** Lisez en français


In 2011, we commissioned more than 40 papers to accompany the workshops and plenaries organized at our Global Microcredit Summit 2011. This week’s #ThrowbackThursday is a great opportunity to review the wealth of knowledge generated by the Summit. Listen to the audio recording from the workshop here.


Financial Literacy: A Step for Clients Towards Financial Inclusion

Authors: Monique Cohen and Candace Nelson

Introduction: Financial Education for Financial Inclusion

These are tumultuous and exciting times for microfinance, marked equally by the stunning potential of the cell phone to change the face of financial services and disturbing reports of suicides linked to over-indebtedness. Against this backdrop, a shift in the industry is taking place, drawing our attention from the financial institution back to the client. Indicators of a renewed concern for clients include research to quantify the “unbanked,” rallying calls for consumer protection, and efforts to better meet customer needs with diversified products. A key driver of this change in focus is the now widely embraced goal of “financial inclusion.” Governments of developed economies, in G20 Summit agreements, have recognized financial inclusion and consumer protection as integral to achieving financial stability and integrity. Financial access has been highlighted as a “key accelerator” to meet
the Millennium Development Goals. Key to attaining this laudable goal is financial education (World Savings Bank Institute, 2010).

Financial inclusion is a multi-dimensional, pro-client concept, encompassing better access, better products and services, and better use. Herein lies its challenge — without the third element, use, the first two are not worth much. Technological innovations are bringing both new customers, potentially including millions of unbanked cell phone owners, and new service providers — a diverse array of retail outlets, telcoms and others — into the market. Diversification of products and services has already resulted in rich, and complex, choices for consumers, especially compared to the early days of one-size-fits-all working capital loans. Yet, increased access and better choices do not automatically translate into effective use. The path from uptake (i.e., opening an account) to usage is still an uncharted course. Effective use is hampered by asymmetries of information and power between financial institutions and poor consumers, an imbalance which grows as customers are less experienced and the products they can choose are more sophisticated an imbalance which holds real potential for negative outcomes due to institutional abuses or ill informed client decisions.

Financial education is an important tool to address this imbalance and help consumers both accept and use the products to which they increasingly have access. Because it can facilitate effective product use, financial education is critical to financial inclusion. It can help clients to both to develop the skills to compare and select the best products for their needs and empower them to exercise their rights and responsibilities in the consumer protection equation. Properly designed, financial education is tailored to the client’s specific context, helping them to understand how financial instruments, formal or informal, can address their daily financial concerns, from the vagaries of daily cash flow to risk management. Its power lies in its potential to be relevant to anyone and everyone, from the person who contemplates moving savings from under the mattress to a community savings group, to the saver who tries to compare account choices offered by competing banks. As such it spans the informal and formal financial sectors, supporting clients’ access to, and more importantly, use of, diverse financial services.

Current developments in microfinance are both exciting and potentially perilous. To take advantage of the former and protect against the latter, those placing the client at the center of their efforts are embracing financial education. This paper will situate financial education in an evolving financial landscape, identify its stakeholders, and most importantly, summarize experience to date and explore how that experience is shaping the vision and agenda for its future.

Read the full paper.

Listen to the audio recording of the workshop.


Related reading

Connecting across continents at the RESULTS International Conference

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!

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!

Lea en español *** Lisez en français


This article was originally posted by RESULTS on April 16, 2015. Re-posted with permission. KANCO, the Kenya AIDS NGOs Consortium, is a member of the ACTION global health advocacy partnership with RESULTS.

>>Authored by Joyce Matogo, KANCO Grassroots Manager.

“Connecting with other human beings about issues that affect human beings, you’re able to relate to these issues more closely…. When you step outside of your own continent and see other people who have good will, other people who care, it’s very empowering.”

I never thought I’d go to the U.S., much less Capitol Hill. But on the last day of the RESULTS International Conference, that’s exactly where I found myself. Standing in front of the Capitol dome with hundreds of other advocates, all I could think was, “This is a central place of power. Decisions are made here. And here I am, giving the human face to the vaccines issue.”

When I went back home to Kenya, I used the lessons that I learned at the conference to arrange an advocacy day and implement the RESULTS organizing model. I wanted grassroots volunteers in Kenya to feel the same sense of empowerment that I felt when I advocated in Washington. When our grassroots sat down with members of Parliament, they were well prepared to inform their MPs about the TB epidemic, explain the value of vaccines, and communicate a clear call to action.

Just like at the International Conference, our grassroots were ready to discuss not only problems but also solutions. Later that day, an MP that we’d spoken with brought our legislative ask on tuberculosis to the floor of Parliament. This prompted discussion on the deteriorating status of health in the country. The event was so successful that the Kenyan government expanded funding for immunizations and tuberculosis.

The RESULTS International Conference was an eye opener for me. I realized that anyone and everyone can be an advocate for issues that matter. I encourage you to come to the conference this year to see the success of our efforts. Let’s celebrate our incredible progress and encourage each other to keep going.

Want to have your own experience lobbying on Capitol Hill? Join RESULTS and attend the International Conference.

We are all lobbyists

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!

Lea en español *** Lisez en français


This article was originally posted by RESULTS on June 23, 2015. Re-posted with permission.

>>Authored by Susan Fleurant, 2015 RESULTS U.S. Poverty Campaigns Intern

I arrived in Washington, D.C. this summer for an internship at RESULTS with only the certainty of ceaseless heat and humidity and not fully knowing what else to expect. Then on June 9, I went to Capitol Hill and lobbied for the first time with Bread for the World, an anti-hunger organization. Lobbying is a word that carries with it a heavily negative connotation, a word that evokes images of wealthy businessmen persuading legislators one way or another. As a student pursuing a career in policy, I always said that I would never be a lobbyist, because I subscribed to this professional and negative definition of the word. While much of politics in the United States these days does involve the interests of wealthy corporations and professional lobbyists, the reality is that we can all be lobbyists.

It is easy to forget that Congress works for us, the voters. Our votes put people into office, and our votes can remove people from office. Yes, that oversimplifies the process, and while I acknowledge the role of campaign finance and special interests in both the campaign and legislative processes, citizens are not doing enough to change what has become the not-so-pleasant status quo of American politics. The truth is, the United States has abysmal voter turnout, yet a high percentage of the population complains about those in office and policy decisions that are made.

So what are we doing about it? Complaining to our neighbors and coworkers about the state of the nation will not move us in a new direction. We need to channel our concerns and our visions for the future of the country into positive civic engagement. We need to teach our children the importance of voting and the significance of civic engagement in maintaining a healthy democracy. As citizens of a representative democracy we have the opportunity to speak with our representatives whether through writing a letter, making a phone call, or scheduling an in-person meeting, and we must exercise these rights. Too few people take advantage of these opportunities, leaving lobbying to the groups that give the act its negative connotation. This lack of engagement is likely the result of a cynical view towards American politics in general paired with a lack of knowledge about the avenues available for engagement and correspondence. This is where educators and parents play a key role in providing the information from a young age about the variety of ways to engage in our democracy in order to demystify the process.

As I sat in a senator’s office on Capitol Hill speaking with a legislative advisor about why child nutrition programs are important, providing factual evidence paralleled with a personal story, I realized that I was a lobbyist, and it was perhaps one of the most democratic acts in which I could take part. I felt both empowered and perturbed. Empowered because I realized that I could lobby and make my voice heard on Capitol Hill, and perturbed because I did not understand why it took me this long to realize that. I feel lucky to have had this opportunity now before I carried on with a skewed idea of lobbying.

I think that government is too often presented as a separate entity to which average citizens do not have access, and this sentiment undermines democracy by leaving people uneducated about their ability to participate in the political system. Voting is often the extent of political participation for many people, and others do not even make it that far. It is time for us to reexamine our democracy and encourage active engagement through a variety of means. Lobbying is not just wealthy corporations and special interest groups; lobbying is citizens writing letters, making phone calls, and stopping by for visits. Get out there and lobby, trust me, it is empowering. You can make a difference. Share your concerns, describe your visions for the future, tell your personal stories, and make your voice heard. In the end, we are all lobbyists.

Want to have your own experience lobbying on Capitol Hill? Join RESULTS and attend the International Conference.

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

Lea en español *** Lisez en français


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:

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

Lea en español *** Lisez en français


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,
url

“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:
logo-Gap

“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.

Voices from the Field: Beth Porter

Financial inclusion to end extreme poverty

“By reducing vulnerability to economic shocks and boosting job creation, financial inclusion can be a key driver of poverty reduction and economic growth and at the same time contribute to promoting greater equality,” explains Beth Porter, policy adviser for financial inclusion at UNCDF.

Lea en español *** Lisez en français


In preparation for our 18th Microcredit Summit, the Campaign conducted a Listening Tour from December 2014 through February 2015. The Listening Tour was our time to listen — and your time to speak — on the issues that the microfinance and financial inclusion sector face and served two purposes. First, it was our hope to find out how our audience (you) felt about the World Bank’s goal of eradicating poverty by 2030, and equally important, we wished to consult you in identifying the topics that were most pressing and urgent.

We collected your feedback through an online survey and organized conversations with 27 leaders in the microfinance and financial inclusion sector. We heard from them on how financial inclusion can contribute to the goal of ending extreme poverty by 2030 and the role of microfinance in the post-2015 agenda. The results of this consultation will be reflected in the 2015 State of the Campaign Report, the 18th Microcredit Summit, and Campaign Commitments.

Below is a short excerpt from our conversation with Beth Porter, policy adviser for financial inclusion at the United Nations Capital Development Fund (UNCDF) in New York.

Q: What is the role of microfinance and financial inclusion in the post-Millennium Development Goals (MDGs)/ Sustainable Development Goals (SDGs) era?

Beth Porter

Over the course of 2015, the Open Working Group, comprised of 30 member states, discussed the shape of the post-2015 agenda. The post-2015 agenda set out to build upon the Millennium Development Goals (MDGs, 2000-2015) and incorporate some of the broader global stewardship goals that came out of the Monterrey Consensus. To do so, they proposed a set of 17 goals and 169 targets (the MDGs had 8 goals with 10 targets each) to the UN General Assembly in September 2014 — a document which was adopted as a “zero draft.”

In 2015, member states began to consider the overarching vision for the Sustainable Development Goals (SDGs), examine more closely the goals and targets, set forth the means of implementation, and identify indicators. While such a large number of goals and targets are certainly unwieldy, many member states want to ensure that the SDGs are truly comprehensive and feel that further whittling them down would leave out important parts of the development agenda. So the targets are being examined to ensure that they are consistent with other global agreements and commitments and that are measurable, but the targets themselves have not, to date, been opened up for major changes or reduction in number.

Financial inclusion figures prominently amongst the targets. Financial Inclusion is achieved when individuals and enterprises have access to a wide range of financial services provided responsibly and at reasonable cost by diverse and sustainable institutions in a well-regulated environment. By reducing vulnerability to economic shocks and boosting job creation, financial inclusion can be a key driver of poverty reduction and economic growth and at the same time contribute to promoting greater equality — and, indeed, it is a target in all three of these goal areas (poverty eradication, economic growth and job creation, and reducing inequality). Financial inclusion also figures as targets under goals on food security, women’s economic empowerment, health, etc. This is consistent with financial inclusion being a means to achieving broader development goals. As a result, we hope that it will continue to be embedded in the targets under the eight goals where it is mentioned.

Q: What do you think will be needed to achieve the goal of global financial inclusion by 2020 and how can this contribute to the goal of eradicating extreme poverty by 2030?

In regard to the link between the goals of financial inclusion by 2020 and eradicating extreme poverty by 2030, let me say that while I believe that we can go far towards providing financial access by 2020, any declaration of reaching that goal will be based largely on transactional accounts. The fastest growing part of financial inclusion is in the area of payments: people using a phone to send or receive money to/from family or friends, to receive social transfer payments from governments or development organizations, or to pay bills more conveniently. Digital channels are opening up the possibilities for a large array of products and services.

But, where there will likely still be gaps by 2020 is going beyond access to usage. Providing a payment option or opening a bank account is a starting point but not enough; people must use those payment options or accounts in order to benefit from them and to be fully included financially. To drive usage, these payment services must be designed based on client needs and preferences. Furthermore, payments are just one aspect of the kinds of products and services that people want and need. They may be the entry point, but it will be critical that other products and services such as savings, credit, and insurance are layered on the payment services.

That takes us to the link between financial inclusion and eradicating extreme poverty. I am amongst the many who believe that financial inclusion is a critical factor in addressing poverty. We all know that the causes of poverty are complex, however, and the solutions are not simple either. Financial inclusion is necessary, but not sufficient, to eradicate poverty.

One of the things that we at the United Nations Capital Development Fund (UNCDF) are particularly focused on, given our mandate to work first and foremost in least developed countries (LDCs), is to look at ways that greater financial inclusion can help contribute not only to better developmental outcomes for people, but also contribute to more vibrant economies and greater availability of domestic resources.

We recognize a clear link between national financial inclusion strategies—and the ensuing implementation plans—and higher levels of financial inclusion. We believe that this in turn leads to both poverty alleviation and economic growth. As a result, we are stepping up our efforts to support the development, implementation, and monitoring of such plans through the Making Access Possible (MAP) initiative.

We have seen tremendous leverage from small amounts of “smart” overseas development assistance (ODA) and philanthropic funding used to help financial service providers (FSPs) to develop the business models that will help them meet the real needs of women and men. Such investments can help encourage private sector players move into riskier markets and demonstrate the potential of these markets to be profitable, and thereby “crowd in” domestic and South-South capital to scale up and replicate these models.

When people have convenient access to formal accounts, individuals and households of even limited means as well as micro- and small enterprises (MSMEs) will place their savings in institutions where their money is safe and accessible, as we have seen through the MicroLead initiative, amongst others. Such savings, when taken cumulatively, can then be directed into financial services that promote local markets, small-holder agriculture, MSME development, education for girls, and so on.

Q: In relation to our host region, what are the challenges and opportunities facing Africa & the Middle East in regards to microfinance and financial inclusion?

The Ebola crisis has forced a recognition that a public health crisis has many other dimensions, and one of those is related to the payments infrastructure—and, more broadly, how financial services can be relevant in the response, recovery, and rehabilitation stages in natural disasters and post-conflict situations. Given the number of countries in the region that are affected by these humanitarian crises, it is critical that governments, development organizations, and providers know when and how to use financial services to get through and beyond the crisis to secure, healthy, and productive lives. We are working on a policy guidance note on this topic, based in part on our experience supporting the Ebola response, and there are many others who are doing terrific work in this space.

An area in which Africa is leading the way globally is in mobile money. Indeed, mobile money was the major contributor to the increase of financial inclusion in Africa, according to Global FinDex. More people in Africa have phones than bank accounts. And, increasingly, mobile network operators are taking advantage of that—often in partnership with financial institutions—to offer people not only payment services, but also other products using the mobile platform. There is still much work to be done, however, to realize the promise of digital finance (i.e., mobile money and other services including the use of electronic vouchers, debit and credit cards, etc. in conjunction with ATMs, POS [point-of-sale], and other devices), but it has great potential in connecting low income and rural customers with the services that they need, not only financial services, but health, education, energy, water and many more.

We believe — and particularly at the Better Than Cash Alliance and the Mobile Money for the Poor initiative — that taking an “ecosystem approach” to digital finance will be essential to realizing that promise. Such an approach involves policymakers and regulators, the various providers of digital financial services, as well as retailers and others in the acceptance networks, and it requires the support of development partners and must take as its starting point the wants and needs and capabilities of the consumer. We are encouraged to see such approaches start to take root in a number of countries in the region.

Related reading

About the United Nations Capital Development Fund

The United Nations Capital Development Fund (UNCDF) is the UN’s capital investment agency for the world’s 48 Least Developed Countries (LDCs). UNCDF uses its capital mandate to help LDCs pursue inclusive growth. UNCDF uses “smart” Official Development Assistance (ODA) to unlock and leverage public and private domestic resources; it promotes financial inclusion, including through digital finance, as a key enabler of poverty reduction and inclusive growth; and it demonstrates how localizing finance outside the capital cities can accelerate growth in local economies, promote sustainable and climate resilient infrastructure development, and empower local communities. Using capital grants, loans, and credit enhancements, UNCDF tests financial models in inclusive finance and local development finance; de-risks” the local investment space; and proves concept, paving the way for larger and more risk-averse investors to come in and scale up.

About Beth Porter

Beth Porter has over 20 years of experience in microfinance and organizational development in 30 countries in Africa, Asia, and Latin America. As a policy adviser at the UNCDF, Beth provides policy guidance and support to the global team on financial inclusion. She previously launched and directed the YFS-Link initiative at Making Cents International to build the capabilities of financial services providers and youth-serving organizations in youth-inclusive financial services.

At Freedom from Hunger, Beth led program strategy and managed delivery of integrated microfinance services to 1.2 million women and their families in 16 countries. She has provided technical assistance and training in strategic and business planning, product design, and organizational effectiveness and operational efficiency, and is experienced in program appraisal, design and evaluation. In addition, Beth is on the boards of the SEEP Network, the Bolivian MFI CRECER, the SMART Campaign in Microfinance, Child and Youth Finance International, and was a founder of Women Advancing Microfinance (WAM)-International and past Chair of WAM-Northern California.

Visit the UNCDF website: http://www.uncdf.org/

CRECER Commitment focuses on women and movement above national poverty line

A female client from CRECER is managing her financial assets. Read the press release about CRECER’s Commitment, which focuses on women and movement above national poverty line
Photo courtesy of CRECER Bolivia

Lea en español *** Lisez en français


The Microcredit Summit Campaign welcomes CRECER Bolivia as the 53rd Campaign Commitment maker, joining a global coalition working to help 100 million families lift themselves out of extreme poverty. A press release was issued on the Campaign website. CRECER was one of some 200 attendees that visited the Commitment Café during the 17th Microcredit Summit in Mexico last September to write on the Commitment Wall. (Read more about that.)

In their Commitment, Crédito con Educación Rural (CRECER) commits to support the Campaign’s goal in the following ways:

  • Continue to prioritize services for female clients: CRECER has 152,000 clients and will grow 3 percent per year to reach 166,000 clients by the end of 2017 while maintaining a rate of 80 percent women clients.
  • Clients in rural areas: Maintain a rate of 56 percent of total clients living in rural areas.
  • Strengthen financial education targeted towards women: By the end of 2015, have 75,000 female clients attend financial education events.
  • Support cervical cancer prevention: By the end of 2015, 25 percent of female clients will be receiving preventive screening each year, and it is expected that approximately 32,000 will benefit from this screening by the end of 2015.
  • Improve the quality of life: Of CRECER’s 152,000 clients, at least 65 percent live on less than double Bolivia’s poverty line ($2 per person per day), which is to say they live on less than $4 per day per person, while 41 percent are below the national poverty line. Our goal is that 10 percent of clients who are currently below the national poverty line raise their incomes from less than $2 to at least $4 per day, thus surpassing the poverty line. This process will be monitored with the Progress out of Poverty Index (PPI).

José Auad, CEO of CRECER, explains why they have joined the Microcredit Summit Campaign and this global coalition:

“Being a part of the Campaign…coincides with CRECER’s institutional philosophy. We are mindful of the responsibility that this signifies, as well as the responsibility we take on through the Commitment, for our fight against poverty began more than 25 years ago. We focus on a very vulnerable population, such as women in rural areas who, while truly experiencing poverty, are heroines in their daily struggle. We are convinced that by joining efforts and taking action…, we will reach the great goal of helping 100 million families around the world.”

CRECER is a development financial institution that provides financial and educational services to low-income women in Peru, in order to improve their quality of life and their families. It was founded in 1999 and its mission is to provide excellence and warmth with integrated financial products development services to improve the quality of life preferably women and their families. Read CRECER’s Campaign Commitment letter.

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 CRECER and…

Get Inspired. Set a Goal. Make a Commitment.

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

Tackling poverty by combining saving, training, and microcredit

Martha Kimuyu Kinai, 68, started a woman's group when she was 18. She has 4 grandchildren and teaches her community how to make charcoal clay using wood charcoal and soil mixture. Martha is an example in Mumandu 15kms from Machakos near Nairobi, and has learned more business skills from Hand in Hand training.

Martha Kimuyu Kinai, 68, started a woman’s group when she was 18. She has 4 grandchildren and teaches her community how to make charcoal clay using wood charcoal and soil mixture. Martha is an example in Mumandu 15kms from Machakos near Nairobi, and has learned more business skills from Hand in Hand training.
Photo courtesy of Georgina Goodwin for Hand in Hand International

Lea en español *** Lisez en français


>> Authored by Josefine Lindänge, CEO of Hand in Hand International

Decades of microcredit have shown us that while it is a powerful tool in the arsenal of international development it is not, as the World Bank Forum on microcredit in February made clear, a magic bullet to tackle poverty. Over the years there have been many studies into the effects of microcredit, most recently by Innovations for Poverty Action (IPA) and The Abdul Latif Jameel Poverty Action Lab (J-PAL) which concluded that small, short-term loans generally do not lead to increased income (American Economics Association). But, is this a reason for the sector to discard microloans all together?

On the contrary. At Hand in Hand, our experience in the field has taught us that access to finance is vital in the fight against poverty. But on its own, it will not transform a microenterprise from loss to profit nor will it transform a small scale farmer eking out a living on a small plot of land into a micro-entrepreneur. In order to achieve our ambitious objectives we need to understand our clients, as the World Bank Forum in February highlighted.

Microcredit is more effective when supported by non-financial services like financial and business training.

We have been providing a package of business training and credit to more than one million people in some of the world’s most deprived countries since 2003. As a result, they have created 1.4 million micro-enterprises which provide jobs and incomes for 2 million people.

Of course millions of microentrepreneurs already exist in the informal economy where, the World Bank (World Development report 2013, page 48) estimates, more than 3 billion people are working, nearly half of whom work in farming, small household businesses, or in casual/seasonal day labor, earning a poorly paid and often vulnerable living. Rather than seeing this as a problem, we should ask ourselves what these people need to establish or transform their small, unprofitable enterprises into thriving businesses.

The power of microcredit +

Of course, combining group savings and skills training with microcredit is not unique. But most NGOs focus just on one or two of these elements. At Hand in Hand we combine all three and even add a fourth by connecting entrepreneurs to larger markets.

Firstly, we create community groups who support each other, save together, and learn together. Then we train the group members to discover and develop small businesses that make use of their skills and potential; the training includes bookkeeping, profit and loss, creating a basic business plan and marketing. Members have to complete these first two steps before we provide access to microcredit. Finally, we help scale up their businesses by facilitating access to larger markets and advising on the production of higher value products rather than commodities.

Zacharie Itegekaharmde, a mobile phone agent (Kayonza District, Rwanda)

Zacharie Itegekaharmde, a mobile phone agent (Kayonza District, Rwanda)
Photo courtesy of Hand in Hand International

We work with our members for up to three years, and it is only after they have completed all the training modules, can demonstrate high attendance rates at meetings, good repayment on internal lending, a required level of savings, and submission of a solid and approved business plan that they qualify for credit — either from our own microfinance facilities or from partners.

Saving: the key to financial success

There are two dimensions within our program to facilitate financial inclusion: access to savings and then access to credit.

Saving is an important component of financial education and one many in the developed world take for granted. But, the question is, do the poor have any “spare” money to save? Surely that is exactly why they need microcredit?

Among the many entrepreneurs I have met and talked to over the years, saving is always mentioned as the most important skill they have learned. The change to spending what they need and saving the rest for “a rainy day” is transformative and, I think, best explained by one of our successful entrepreneurs in Rwanda, Rahabu: “You know what it is like. You go to the market because you need salt. But when you are there, you see some nice tomatoes so you buy those as well. I don’t do that anymore. I have learnt to buy what I need and save what is left.”

Rahabu Mukampenda, Retailer, Rwanda.
Photo courtesy of Georgina Goodwin for Hand in Hand International

Our members start out in saving groups before receiving microloans. The savings enables them to buy the first stock, equipment, animals, or crops they need to get their microenterprise off the ground. Once they have met all the requirements I mentioned earlier, then they are able to apply for microcredit. The credit history they have built up as members and within the internal saving-loan-repayment system of our savings groups is crucial to securing that first microloan.

Group members wishing to borrow from the group savings fund are required to present a basic business plan to the group. It is then up to the group to decide whether or not to invest, how much to invest, and what the rate of return should be, which demonstrates a clear understanding of some fairly complicated financial transactions, auguring well for future debt repayments.

Members are selected for credit or linked to microfinance institutions (MFIs) when they meet the criteria I have described and we are confident they are fully prepared to take on the risk of a loan because our training focuses on the meaning of debt, importance of repayment, as well as the opportunities presented by a loan. Although we do not recommend particular MFIs to our members, we do make them aware of the various financial institutions or banks that exist, their different requirements, and what to look for or avoid. Since 2003, we have overseen the dispersal of more than US $240 million in microloans.

These partnerships with microfinance institutions are essential for our microentrepreneurs to take the next step on their journey. An independent review of our work in India in 2012 found that over 95 percent of loans were used for productive purposes and the repayment rate is 99.8 percent.

In short then, a symbiotic approach between access to finance and non-financial services like Hand in Hand’s support is needed to tackle the root cause of poverty.

About the author

JosefineJosefine began her career at the United Nations Department for Economic and Social Affairs, Finance for Development section. After working a number of years in the private sector, she joined Hand in Hand in 2008. Josefine played a decisive role in establishing Hand in Hand Eastern Africa, and was promoted to Chief Operating Officer of Hand in Hand International in 2011. She holds a B.Sc. and M.Sc. in Development Economics and International Economics from Lund University in Sweden and studied strategic leadership for microfinance at Harvard Business School.

Relevant Resources

Voices from the Field: William Derban

Pathways: financial inclusion to end extreme poverty | Find out what we heard from the industry in this year’s Listening Tour

We’ll be bringing you articles throughout April that reflect the results of this year’s Listening Tour
Photo credit: by Geoff (originally posted to Flickr as Pilgrim’s path) [CC BY 2.0], via Wikimedia Commons

Lea en español *** Lisez en français


April is the Month of MicrofinanceLearn more

April is the Month of Microfinance
Learn more

In preparation for our 18th Microcredit Summit, the Campaign conducted a Listening Tour from December 2014 through February 2015. The Listening Tour served two purposes. First, it was our hope to find out how our audience (you) felt about the World Bank’s goal of eradicating poverty by 2030, and equally important, we wished to consult you in identifying the topics that were at the top of everyone’s mind.

The Listening Tour is our time to listen — and your time to speak — on the issues that the microfinance and financial inclusion sector face. We collected your feedback through an online survey and organized conversations with 27 leaders in the microfinance and financial inclusion sector. We heard from them on how financial inclusion can contribute to the goal of ending extreme poverty by 2030 and the role of microfinance in the post-2015 agenda. The results of this consultation will be reflected in the 2015 State of the Campaign Report, the 18th Microcredit Summit, and Campaign Commitments.

Below is a short excerpt from our conversation with Dr. William Derban, director of financial inclusion (CSR & PMO) at Fidelity Bank in Ghana.

Q: What do you think will be needed to achieve the goal of global financial inclusion by 2020 and how can this contribute to the goal of eradicating extreme poverty by 2030?

William DerbanGovernments are trying to create a good environment, and while MFIs and SACCOs have stepped in to fill a gap, it seems banks have been left out. We need to include them [banks], looking at this not as corporate social responsibility, but as an opportunity for businesses to expand their client base and a responsibility that they have to the people. The key question is, “How can microfinance and the financial inclusion sector better partner with banks and help improve their by creating linkages?” This should not be about competition, but a way that we can collaborate to provide financial services that they [clients] can graduate into as part of this value-chain of financial services.

Q: In relation to our host region, what are the challenges and opportunities facing Africa & the Middle East in regards to microfinance and financial inclusion?

We need more awareness and campaigning of the issues especially in the countries most affected by poverty. In Africa, there is a lack of awareness among the poor about the benefits of having formal financial services. There is a need for financial education so that they understand what impact this can really have on their lives. People need to understand that this is not about financial services for the sake of it, but that a bank account can help you manage your finances and it can serve as a safe place to save for your child’s educations and this can all help you live a better life. In this way, financial education can create empowerment and change.

Q: What are key themes to consider or important debate topics we need to address in the microfinance & financial inclusion sector in the coming year?

Innovation is key! We cannot get to full financial inclusion without technology, but we need to actually develop new ideas and not just replicate what may have worked in one specific country or environment. When innovating in mobile technology, we cannot just work with telecommunications companies but need to include mobile phone manufacturers, app developers, and retail shops. We must find a way to ensure that the public is educated on new innovations and make sure they learn how to use this new technology.

We also need to find ways to scale down or “bank downwards” where banks work on a model that works for the poor. However, we need to create the appropriate partnership in order to do this. Banks can decide to “scale down” [i.e., target poorer populations], but if they do it by themselves, there are certain services they won’t be able to provide.

Related resources

About Fidelity Bank

Corporate social responsibility (CSR) lies at the heart of the vision and mission of Fidelity Bank, Ghana’s largest private indigenous bank. Since inception, CSR at Fidelity has mostly focused on philanthropic endeavors, but now, as a bank that is consolidating its world class status, it has become imperative to align our CSR with our corporate strategy, allowing us to leverage our collective expertise and resources for maximum impact.

Under the theme “Building Lives through Finance,” Fidelity’s CSR work is being led by the director for financial inclusion and CSR, Dr. William Derban. Dr. Derban’s areas of focus are microfinance, payment services, and running the first agency banking service in the country. He is also responsible for aligning the Bank’s corporate responsibility strategy to its core business strategy. In the past 14 years, he has focused on providing sustainable, market based, financial services to the unbanked within the financial industry in Africa, Europe, and the Middle East. Dr. Derban earned his doctorate in Microfinance and Development Finance from the Nottingham Business School, UK. He provides lectures on sustainability and financial inclusion and is also a passionate speaker at various conferences on development across Africa, the Middle East, and Europe. Prior to working for Fidelity Bank, Dr. Derban was the head of community relations with Barclays Africa and Emerging Markets where he managed the community investment strategy across 14 countries in Africa, the Middle East, and Asia. Subsequently, he led the strategy of downscaling to informal groups with a £10m project working with savings groups across Africa, Asia, and Latin America with CARE international and Plan. In addition to financial inclusion, he has established successful projects on youth entrepreneurship, preventative health, clean energy solutions, female empowerment, and integrated rural development programs.

Learn more about Fidelity Bank.

How families are creating step-by-step plans for poverty elimination

This family has used the Poverty Stoplight to self-assess their situation and needs. They will now work with Fundación Paraguaya to develop a plan to lift themselves out of poverty.

Lea en español *** Lisez en français


Fundación Paraguaya declared its support for the goal of helping 100 million families lift themselves out of extreme poverty by making a Campaign Commitment at the 17th Microcredit Summit in Merida, Mexico. The Microcredit Summit Campaign recently caught up with Fundación Paraguaya to learn about the ways they are working towards the end of extreme poverty.

Luis Fernando Sanabria: what drives their Commitment to end extreme poverty


>> By Luis Fernando Sanabria, Gerente General, Fundación Paraguaya

logo_fundacionparaguaya

This year, Fundación Paraguaya celebrates its 30-year anniversary working in microfinance and entrepreneurial education. During this time, we have seen the following economic progress of many of our clients and their families: increased income (116 percent on average), better business management practices, and increased loan amounts.

In spite of these inspiring achievements, we know that many of our clients and their families have remained poor even when they earn more money. While many clients have significantly increased their income, others hover near the official poverty line or have unstable income and lack family savings. Moreover, many of the families we work with lack modern bathrooms, live in overcrowded and unsafe housing, cook on the ground, have no access to clean water, do not vaccinate their children nor send them to school, and live in contaminated environments. Additionally, many suffer from low self-esteem, do not have entrepreneurial spirit, and are victims of domestic violence.

The above description shows us that families can be poor in many ways. Poverty, as we have come to understand, can be seen as a “grey cloud” that hinders poor families because it can so complex and overwhelming that they do not know where to start. Fundación Paraguaya has developed the Poverty Stoplight to simplify and operationalize this concept by dividing the problem of poverty into smaller pieces so that families can overcome their deprivations step-by-step. The Poverty Stoplight methodology is based on the following principles:

  1. Poverty is multidimensional.
  2. Poverty can be eliminated.
  3. Poverty affects different families in different ways.
  4. Poor people should take a participatory role in overcoming their own poverty condition instead of being simply program beneficiaries.
  5. Given that poverty is multidimensional, the involvement of multiples role players from the public and private sector as well as the civil society is needed in order to eliminate it.
Don Aníbal Borja is a client from Fundacion Paraguya

Don Aníbal Borja is a client from Fundacion Paraguya, watch his interview HERE

We have deconstructed the concept of poverty into 6 dimensions that are operationalized in 50 indicators. These dimensions are: Income and Employment, Health and Environment, Housing and Infrastructure, Education and Culture, Organization and Participation, Interiority and Motivation. In the Poverty Stoplight, all indicators have the same weight. That is, it is not an index but a dashboard, a list of items that define how poverty affects a particular family.

Families are “owners” of their poverty and therefore must accountability and an active role to overcome it. Fundación Paraguaya’s role in this process is to offer each family a “Menu of Solutions” to the different poverty indicators (goods and services), and at the same time, develop a plan based on the Influencer theory[1] to train and motivate families to solve the issues of poverty that affect them. This “Menu” defines solutions that (a) are directly provided by our organization, (b) are made available through strategic partnerships (with NGOs, government, and the private sector), and (c) originate from the social activism of each individual family.

The Poverty Stoplight methodology starts with a family self-assessment. For this, families with support from an advisor take a visual survey using software developed in partnership with Hewlett Packard. The visual survey uses pictures to illustrate different situations of poverty for each of the 50 indicators. Each family evaluates their situation and for each indicator they select the picture that better depicts their family condition. Indicators have three possible definitions (defined by 3 pictures) and define situations of extreme poverty (red), poverty (yellow) and non-poverty (green).  In addition, the software allows us to geo-tag Poverty Stoplight data, which results in a “Poverty Map” displaying how each indicators affect different families.

DSC_6492

Upon complementing the 50 indicators self-assessment, families have a better understanding of how poverty affects them: they can see how many “reds” and “yellows” they have. At the same time, they can see that family already has “blessings” or aspects in which the family is no longer poor. This is visualized by all the “greens” displayed in their Poverty Stoplight. With support from a village bank advisor, families then create a “Life Map”; that is, they identify the indicators they want to solve, and establish family’s short and long-term goals aimed at overcoming poverty (turning all indicators from red and yellow into green).

The Poverty Stoplight approach has been applied in different settings. In addition to its microfinance clients, Fundación Paraguaya has applied this methodology with its 400 employees during the past three years. As a result, 35 businesses and private industries in Paraguay are using the Poverty Stoplight in order to better understand their employees’ situation and help their families overcome poverty. Moreover, the Government of Paraguay’s Central Department[2] has started a pilot project at a marginalized neighborhood, which is being followed by the Government of Villa Hayes Department.[3] At an international level, organizations from 18 different countries have launched pilot projects using the Poverty Stoplight methodology in Tanzania, India, South Africa, Uganda, Nigeria, Dominican Republic, Colombia, Guatemala, and others.

Our institution aims at achieving financial inclusion of poor families with the soul purpose that they overcome poverty. Using the Poverty Stoplight methodology, 20,000 families have overcome income poverty, and 2,000 families have overcome multidimensional poverty as measured by the 50 indicators over the past 3 years.

With the Microcredit Summit Campaign, we are committed to reach 125,000 families in the next three years, contributing to a total of 30,000 families that overcome income poverty and a total of 9,000 families that overcome multidimensional poverty in all 50 indicators in Paraguay.

Every family has all of the accumulated potential needed to overcome poverty. Our role as a microfinance institution is to develop appropriate methodologies to unleash that potential. The Poverty Stoplight is our way of “rubbing the magic lamp” to liberate the energy trapped within each family to overcome poverty.

The same family from the top of the article has gone through the Stoplight process and now their situation is much improved.

The same family from the top of the article has gone through the Stoplight process and now their situation is much improved.

[1] Influencer Theory, developed by https://www.vitalsmarts.com

[2] Regional Government, Paraguay

[3] Regional Government, Paraguay

To learn more about Fundacion Paraguaya, click here.


Join Fundación Paraguaya in stating YOUR Campaign Commitment!


Más que inclusión financiera, eliminación de pobreza

Este año Fundación Paraguaya cumple 30 años trabajando en programas de emprendedurismo y microfinanzas. Durante este tiempo, hemos visto el progreso económico de muchos de nuestros clientes; como aumentaban sus ingresos (en promedio, 116%!), administraban mejor sus negocios e incrementaban los montos de préstamos solicitados.

Sin embargo, muchos de ellos siguen siendo pobres! Aunque aumentaron sus ingresos significativamente, muchos no superan la línea de pobreza nacional, o sus ingresos son inestables o no tienen ahorros. Muchos siguen careciendo de baño moderno, viven hacinados y en viviendas inseguras, cocinan en el suelo, no tienen acceso a agua potable, no vacunan a sus hijos, no los educan y viven en un medio ambiente inapropiado. Muchos sufren de baja autoestima, no tienen espíritu emprendedor, y sufren de violencia doméstica.

Muchas maneras de ser pobre. La pobreza es como una “nube gris” que aplasta a las familias pobres, pues es tan compleja que las mismas no saben por donde empezar!. Fundación Paraguaya ha desarrollado el Semáforo de Eliminación de Pobreza para simplificar y operativizar el concepto y dividirlo en “pedacitos” de manera que las familias puedan resolver sus carencias paso a paso.

La metodología, se basa en las siguientes premisas: 1) la pobreza es multidimensional, 2) la pobreza puede ser eliminada, 3) la pobreza afecta de manera distinta a cada familia, 4) la familia debe ser protagonista en su salida de pobreza, 5) se debe involucrar a la mayor cantidad posible de actores para que contribuyan a eliminar la pobreza: familias, ONGs, gobiernos, empresa privada.

Hemos dividido el concepto de pobreza en 6 dimensiones, operativizadas por 50 indicadores. Las dimensiones son Ingresos y Empleo, Educación y Cultura, Vivienda e Infraestructura, Salud y Medio Ambiente, Organización y Participación e Interioridad y Motivación. Todos los indicadores tienen el mismo peso: no se trata de un índice sino mas bien de un listado de ítems que definen la pobreza.

Las familias son las “dueñas de su pobreza” y quienes deben superarla. El rol de la Fundación es poner a disposición de las mismas un “Menú” de soluciones a los indicadores de pobreza (bienes y servicios) y desarrollar un Plan de Influencia Positiva[4] para capacitar y motivar a las familias. Este “menú” contiene soluciones (a) proveídas directamente por la institución, (b) a través de alianzas (gobiernos, ONGs., empresas privadas), o (c) mediante el activismo social de las mismas familias.

El programa se inicia con una autoevaluación de las familias para lo cual utilizan un software (desarrollado con HP) que emplea fotografías para ilustrar los 50 indicadores de pobreza. Cada familia se autoevalúa (en cada indicador) como pobre extremo (Rojo), pobre no extremo (Amarillo) o no pobre (verde). El software permite georeferenciar la información, lo que nos proporciona un mapa de la pobreza, indicador por indicador, familia por familia.

Una vez que se ha autoevaluado en los 50 indicadores, cada familia sabe en que consiste su pobreza: cuantos y cuales rojos y amarillo tiene. Pero también sabe cuales son sus bendiciones: cuantos y cuales verde tiene. Con la ayuda de su asesora de crédito, la familia construye su Mapa de Vida; es decir establece sus metas para el año y para los subsiguientes y las acciones que tomará para transformar sus amarillos y rojos en verdes.

El Semáforo de Eliminación de Pobreza ya esta siendo utilizado en otros ámbitos. La Fundación lleva tres años implementándolo con sus propios colaboradores (400), pero además otras 35 empresas e industrias privadas en Paraguay están utilizando la metodología para lograr que sus empleados superen la pobreza. Además, la Gobernación del Departamento Central[5] ha iniciado un piloto en un barrio marginal y la Gobernación de Presidente Hayes[6] está próxima a hacerlo. Finalmente, organizaciones de 18 países han iniciado proyectos piloto de implementación de la metodología (Tanzania, India, Sudáfrica, Uganda, Nigeria, Rca. Dominicana, Colombia, Guatemala, entre otros).

Nuestra institución apunta a lograr la inclusión financiera de familias pobres con el único objetivo de que esta estas superen la pobreza. Mediante la metodología del Semáforo de Eliminación de Pobreza en los últimos 3 años hemos logrado que 20.000 familias superen la pobreza de ingresos y que 2.000 superen la pobreza multidimensional.

Nuestro compromiso con la Cumbre del Microcrédito es alcanzar 125.000 familias en los próximos 3 años y lograr que 30.000 superen la pobreza de ingresos y 9.000 superen la pobreza multidimensional.

Todas las familias tienen el potencial que se necesita para superar su propia pobreza. Nuestro rol como organizaciones de Microfinanzas es desarrollar la metodología apropiada para liberar este potencial. El Semáforo de Eliminación de Pobreza es nuestra manera de “frotar la lámpara mágica” para liberar la energía que cada familia tiene atrapada.

[4] Teoría de Influencia Positiva, desarrollada por https://www.vitalsmarts.com
[5] Gobierno Regional, Paraguay
[6] Gobierno Regional, Paraguay

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.

BRAC declares Campaign Commitment to graduate 250,000 households from ultra-poverty

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


Summary: The Microcredit Summit Campaign welcomes BRAC as the newest Campaign Commitment member, joining a global coalition to help 100 million families lift themselves out of extreme poverty. Read the full Press Release.
BRAC group meeting

Image courtesy of BRAC

BRAC is a development organization founded in Bangladesh in 1972 and has since become one of the largest NGOs in the world in terms of employees and number of clients served, spreading successful poverty alleviating solutions born in the developing world to other countries. In 2002, BRAC launched the Ultra-Poor Graduation Program, which aimed at lifting the ultra poor out of their situation of poverty so that they can access mainstream development services such as microfinance. The program targets extremely deprived women and their households, and maintains BRAC’s holistic approach to development by providing targeted asset grants, skill training and healthcare support. Since 2002, 1.4 million households have already graduated from BRAC’s Ultra-Poor Graduation Program. With this tremendous success, BRAC plans to continue the spread of this model to reach even more households around the globe.

When asked about the origins of BRAC’s Ultra-Poor Graduation Program, Program Manager Sadna Samaranayake responded,“The extreme poor, living on less than $1.25 a day, are far from homogenous. Among them are households trapped in the direst forms of destitution, who are chronically hungry, lack assets, income, or support from their communities. It was to address the needs of these populations, the ultra-poor at the margins and beyond the reach of microfinance and other development programs, that BRAC pioneered what is now known as the Graduation approach. Even the poorest can “graduate” from ultra-poverty with a set of carefully tailored interventions designed to help achieve increased incomes, food security and better resilience overall. A complement to MFI, NGO and government strategies to reach the ultra-poor, BRAC is committed to advancing knowledge and implementation of the Graduation approach.”

Some key excerpts of BRAC’s Campaign Commitment:

  • In Bangladesh alone, BRAC commits to graduating 250,000 households out of ultra-poverty by the end of 2016.
  • BRAC commits to publishing an in-depth implementation guide in September 2014 to help governments, microfinance institutions and NGOs execute their own ultra-poor graduation programs. Additionally, BRAC commits to providing technical assistance and consultation where requested to governments, NGOs and MFIs looking to implement the graduation approach.
  • BRAC commits to hosting a national conference on the graduation approach in a country where BRAC operates in 2014.
  • BRAC commits to hosting annual Immersion and Training Visits in Bangladesh for interested parties including policy makers, microfinance institutions, multilateral funders, and donors to witness the graduation program in action. During these visits, participants will get an in-depth look at the program, from field staff training ultra-poor women on how to realize a return on their new assets, to the healthcare, savings and social integration elements of the approach.

The next round of these Immersion Training Visits are on the weeks of August 18th and August 25th. Contact Sadna Samaranayake at sadna@bracusa.org to register.

Read the BRAC Commitment Letter.


Join BRAC and State your Campaign Commitment

Join us in the global coalition to help 100 million families lift themselves out of poverty – state your Campaign Commitment at mycommitment@microcreditsummit.org

Need additional guidance in formulating your own Campaign Commitment? Refer to our Commitment Development Toolkit.

Be social with us on Facebook and Twitter (@MicroCredSummit) using the hashtags #Commit100M and #100MGoal

How Can Microfinance Be More Inclusive to Children and Youth? Webinar Recording

Gallery

gmw_join_banner

On Wednesday, March 12th in celebration of Global Money Week 2014, we co-hosted with Child and Youth Finance International (CYFI) a webinar that explored how microfinance can be more inclusive to children and youth. A small but increasing number of MFIs now offer financial and non-financial services to children and youth. By doing so, they are building the next generation’s capability to save, build assets and, if needed acquire microloans to support their livelihood activities.

Español | Français | Continue reading