Voices from the Field: Syed Hashemi

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

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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 Syed Hashemi, senior adviser for the CGAP Vulnerable Segments Initiative and professor at BRAC University in Bangladesh.

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?

Syed M Hashemi_BRAC_187x249There have been major efforts to achieve financial inclusion through developing better and more flexible products to meet client demand, using technology to lower costs and financial education to improve client money management. Far less has been happening on linking access to finance to extreme poverty eradication. In fact, few MFIs actually reach out to those in extreme poverty. Part of this is due to the singular focus on credit which is not what the poorest often need immediately. And, possibly more importantly it is the failure of the microfinance sector to work with other development sectors.

What microfinance needs to do is better understand the lives of the poorest (as distinct from “the poor”), the risks they face and the needs they have. So, savings and insurance, specially designed for this group, as well as financial education, is what is required. But, too often the poorest spend all their time with the day to day struggles for food security. And too insecure to even plan for the future. This is where the primary need is for safety nets to guarantee them basic consumption levels.

Now if microfinance was to work closely with safety nets and build on top of the food security that safety nets provide, it could assist in creating a ladder for the poorest to eventually use financial services, build sustainable livelihoods and graduate out of extreme poverty. This is the graduation model that BRAC pioneered and CGAP and Ford Foundation adapted and promoted globally.

However, it is not enough to have some models that work or some products that increase outreach. What is required is massively scaling these up so that we can indeed achieve the global goals we set out. This is where governments and policy makers are key. MFIs can only achieve so much on their own. It will ultimately be governments who have the bandwidth to make this happen, of course with MFIs and NGOs as critical strategic partners.

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

Many of the sustainable development goals will focus on building resilience of different demographic groups — children, the youth, the elderly, the disabled — as well as the extreme poor. Microfinance has a huge role in the effective design and delivery of child support grants, universal pension schemes, health insurance as a key element of universal health coverage, financing schooling and training, credit for micro and small enterprises, better transfer payment and emergency loan mechanisms, deposit services and of course partnering with graduation programs.

The Summit is an ideal platform to convene people to show case ideas and campaign for financial inclusion and the end of extreme poverty through more effective use of financial services.

Q: What are the most recent innovations and proven best practices in the field helping those living in extreme poverty? What are key themes to consider or important debate topics we need to address in the microfinance & financial inclusion sector in the coming year?

Let me highlight the key concerns moving ahead:

  1. Financial education and consumer protection.
  2. Children, the youth, the elderly, and the disabled.
  3. The environment, climate change, and the shrinking ecological reserves.

And the way forward in addressing these issues (and addressing pervasive market and government failures) is far greater collaboration with governments. We know governments can be slow and unresponsive, but ultimately, they have the budget and the constitutional obligation to increase the welfare of its citizens. We need to hold them accountable to that.
19_plenary_Going-the-extra-mile_SyedHashemi_594x345_photo credit - Vikash Kumar Photography

About BRAC University

BRAC University (BRACU) was established in 2001 building on BRAC’s experience of seeking solution to challenges posed by extreme poverty by instilling in its students a commitment to working towards national development and progress. The mission of BRAC University is to foster the national development process through the creation of a centre of excellence in higher education that is responsive to society’s needs, and able to develop creative leaders and actively contributes to learning and creation of knowledge.

Syed M. Hashemi is Professor and Chair of the Department of Economics and Social Sciences at BRAC University. Prior to that, he spent five years as founder-director of the BRAC Development Institute—a resource center for promoting research and building knowledge for addressing poverty, inequity and social injustice. Hashemi also spent nine years with CGAP at the World Bank in Washington DC, focusing on identifying pro-poor innovations and disseminating best practice lessons related to poverty outreach and impact. Hashemi was amongst the pioneers who started the Social Performance Task Force to promote a double bottom line in microfinance. He also headed a multi-country program to develop new pathways for the poorest to graduate out of food insecurity through building sustainable livelihoods. Hashemi continues to be involved with the graduation work at CGAP. Earlier, Hashemi directed the Program for Research on Poverty Alleviation at Grameen Trust and taught Development Studies at Jahangirnagar University in Bangladesh. He has a Ph.D. in Economics from the University of California at Riverside.

Click here to visit the BRAC University website.

A Comprehensive Approach to Helping the Poor Lift Themselves out of Poverty

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Partnerships against Poverty Summit Banner with logos

Going the Extra Mile: From Safety Nets to Pathways out of Poverty
Track: Partnerships Targeting the Vulnerable
Date: Thursday, October 10th
Time: 9:00 – 10:30 AM

Going the Extra Mile_Picture _Roshaneh Zafar_288x360

Roshaneh Zafar, Managing Director, Kashf Foundation

Partnerships between financial institutions, governments, and social welfare programs are essential for empowering the extreme poor reduce vulnerability and gain self-sufficiency. Moderating the 2013 Partnerships against Poverty Summit plenary session “Going the Extra Mile: From Safety Nets to Pathways out of Poverty,” Roshaneh Zafar of the Kashf Foundation (Pakistan) noted that “poverty is a complex matter. We need multiple solutions, we need synergy, we need leverageability, we need scalability; and we all need to work together and do much more.”

The discussion opened with Department of Social Welfare and Development (DSWD) of the Philippines Secretary Corazon “Dinky” Juliano-Soliman, who told of their “convergence strategy,” a means to help beneficiaries graduate and stay out poverty through conditional cash transfer (CCT) community-driven development and sustainable livelihoods converging. Through this program, they also partner with microfinance institutions to provide credit to clients that need larger loans than DSWD provides (10,000 pesos, or approximately $230).

Juan Borga (Inter-American Development Bank) and Secretary Soliman

Juan Borga (Inter-American Development Bank) and Secretary Soliman

Juan Borga of the Inter-American Development Bank shared their efforts toward poverty reduction. Working mostly with conditional cash transfer (CCT) programs, they are trying to create a system that creates a relationship between the recipients of the CCTs to the financial institutions so that they will have “the right instruments [to save] and the right incentives to do it.” Commonly, “the financial institutions are not really providing them with the right products they’d like to have.”

Nelly Otieno of CARE International in Kenya and Yves Moury of Fundación Capital (Colombia) highlighted the necessity of building assets through methods such as savings groups and CCTs in order to create pathways out of poverty and to prevent long term dependence on financial programs.

Moury, in particular, stressed the importance of asset building and capacity building as a catalyst to spur sustainability and self-sufficiency–and thus an exit strategy for the implementers. According to Moury, “Linking savings and CCTs has been just like putting wheels on suitcases—a powerful combination.”

The speakers agreed that health insurance, mobile phones, identification cards, social protection, and bank accounts, working in tandem, greatly help to supplement financial inclusion initiatives and create pathways out of poverty.

Syed Hashemi,  CS Ghosh, and Nelly Otieno

Syed Hashemi, CS Ghosh, and Nelly Otieno

Syed Hashemi of BRAC Development Institute (Bangladesh) spoke about incorporating governments into exit strategies that allow clients to protect their assets and take advantage of new opportunities. He emphasized that, “through national governments, we can come up with an integrated, holistic, national social protection system that combines CCTs with graduation programs so we can collectively achieve this commitment of eradicating extreme poverty by 2030.”

Hashemi also touched on the cost-effectiveness of social protection policies that include safety nets and offer self-employment because, although graduation programs that include extremely intense monitoring and coaching have been seen to have an initially higher cost, they require a shorter timeline.

Innovative methods of providing health services to the poor are equally crucial to comprehensively reducing the amount of individuals living in extreme poverty. Chandra Shekhar Ghosh of Bandhan (India) stated, “Poverty is a complex syndrome. It is not only possible to eliminate poverty through credit support to the poor.”

23_plenary_audience(4)_MarciaMetcalfe+CarmenVelasco+JohnHatch_400x300_photo credit - Vikash Kumar

(Photo credit: Vikash Kumar Photography)

Organizations and government institutions working toward eliminating poverty must implement additional services beyond credit, including social, health, and educational programs that target the underlying causes of poverty beyond financial inclusion.

Overall, the plenary constructively critiqued the current successes, challenges, and future opportunities in the effort to create the pathways the extreme poor can take advantage of to lift themselves out of poverty.

However, the speakers recognized that the road ahead is difficult. As Secretary Soliman stated, “We hesitate to say graduation or exit because poverty is very complex. The notion of graduation gives the impression that we are done. But with poverty you can never be done, and that’s why we call it transition.

Watch the full video of this plenary