Expert Exchange: Building a Movement Toward Financial Inclusion by 2020

> Posted by Sonja E. Kelly

The Center for Financial Inclusion at ACCION International has set an audacious commitment to build toward full financial inclusion by 2020. As part of this movement, we are starting a conversation on this blog. We look forward to what will come out of this.

In September, we began a series of roundtable discussions aimed at deepening the consensus around the steps to reach full financial inclusion by the year 2020. In each roundtable, experts from the microfinance industry consider the Center’s report on the “Opportunities and Obstacles to Financial Inclusion.”Participants include providers, investors, donors, regulators, academics, and other industry influencers.

With this post we are taking that process virtual and kicking off a blog series on financial inclusion.

We hope this series will deepen our understanding of financial inclusion, using the year 2020 as a target date to help galvanize our thinking, and exploring the implications of the Center’s definition of full financial inclusion:

Full financial inclusion is a state in which all people who can use them have access to a suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. Financial services are delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, and rural populations.

Governance: The Buck Has to Stop Somewhere

> Posted by Danielle Donza

The stories of crises and failures in microfinance often seem to involve the same underlying problem: weak governance.

“Weathering the Storm: Lessons in Microfinance Crisis Survival from Those Who Have Been There” found that “good governance is the ultimate backstop for crisis prevention and management,” and the recent “Failures in Microfinance: Lessons Learned” concluded that, “the clearest and strongest conclusion derived from this study is that an institution’s governance structure proved to be  the  primary  differentiating factor between those entities that overcame a crisis and those that did not.”

In the “Weathering the Storm” case study of “FuegoNord,” an MFI in Lagos, Nigeria closed in 2010 partly because it tied up large amounts of capital in illiquid assets. Yet the management of the MFI invested a large chunk of newly raised equity in three expensive branch buildings without getting the board’s approval.

Exploring the Financial Inclusion Blog Community

> Posted by Holly Padgett

In my opinion, blogs provide a great way to stay involved and up-to-date with current discussions about topics of interest. However, if you ever feel bombarded with information (and how does anyone have time to follow all the interesting blogs?), I understand. After all, at last count, Technorati was tracking over 100 million blogs.

With the idea of zeroing in on some of the most valuable resources out there, I recently took on the quite extensive project of creating a visual map of blogs related to financial inclusion.  I started with three relevant blogs and mapped connecting blogs (based on blogrolls) to get a better idea of the blog community surrounding CFI. While the map was definitely not exhaustive, it was very informative.

If you’re interested in blogs related to financial inclusion and international development, I hope this post will act as a good resource.

Here’s a short list of blogs I uncovered that I, personally, find very interesting (this list is also not exhaustive – there are so many other great blogs I could add):

• David Roodman’s Microfinance Open Book Blog – This blog was an important part of the creation of Roodman’s new book Due Diligence (which looks incredibly interesting).  Now that the book has been released, I hope he will continue to blog on relevant issues.
• Creating a World Without Poverty – This blog, by Grameen Foundation, discusses microfinance, financial inclusion, and the foundation’s initiatives, and gives a great overview of some of the toughest problems facing the world’s poor.

BlueOrchard Investments CEO Comments on the ‘Road Map for the Microfinance Industry’

> Posted by Meghan Greene

Jean-Philippe de Schrevel of BlueOrchard had this to say about the Microfinance CEO Working Group’s just-released “Road Map for the Microfinance Industry: Focusing on Responsible and Client-Centered Microfinance.”

Dear colleagues,

We have read your letter “Road Map for the Microfinance Industry.” We fully share your vision and commitments.

We too have endorsed all of these initiatives (Smart Campaign, MFTransparency) and we are participating actively in the Social Performance Task Force, to which we have offered feedback on the universal standards for social performance. Not only have we backed these initiatives, we are advocating for further endorsement by MFIs and other microfinance stakeholders.

Mexico, Indonesia and Haiti Advance Financial Inclusion with Bold Approaches to Account Opening

> Posted by Ignacio Mas and Claire Alexandre

A policymaker’s dilemma: how to pursue a policy of access to a bank account for everyone, while at the same time erecting regulatory barriers to the opening of those accounts to prevent their misuse. It’s like pushing the accelerator and putting on the brakes at the same time.  This is not to belittle law enforcement concerns, chiefly the need to prevent or detect money laundering.  But as we argued in a previous blog post, neither financial inclusion nor law enforcement are well served by keeping the bulk of the population away from modern digital — and hence, inherently more traceable — payment systems.

These objectives can be easily reconciled by making account opening trivially easy at first, and tightening the requirements for documentation and record-keeping progressively as the accounts become larger and more active. With this approach, everyone wins. New-to-banking customers can learn about how to use the account before they are asked to submit to onerous Know Your Customer (KYC) obligations. Banks don’t need to put in place costly KYC processes for customers that are not yet profitable. And law enforcement agencies can get relevant information on accounts commensurate with the risks involved.

Microfinance CEOs Unite on Road Map to Responsible Microfinance

> Posted by Meghan Greene

Coordinating in an unprecedented way, a group of eight microfinance CEOs from leading organizations has just issued a “Road Map for the Microfinance Industry: Focusing on Responsible and Client-Centered Microfinance.” The Microfinance CEO Working Group is a collaborative effort by the CEOs of a number of pioneering microfinance organizations, including ACCION, FINCA, Freedom from Hunger, Grameen Foundation USA, Opportunity International, Pro Mujer, VisionFund International, and Women’s World Banking.  The Center for Financial Inclusion currently serves as secretariat for the Working Group.

The Road Map outlines the Working Group members’ vision for the positive evolution of the microfinance field and underscores their commitment to raising industry standards, starting with their own. Central to this vision is the Working Group’s support for three initiatives that are laying the groundwork for a more responsible, client-focused and transformative industry: the Smart Campaign, MicroFinance Transparency, and the Social Performance Task Force’s universal standards for social performance management.

In the Road Map, the CEOs call for their valued peers in the microfinance industry to take action by endorsing these three initiatives and transforming their principles into action.

The Working Group would value your feedback. Please feel free to comment here (all comments will be forwarded to the group) or email Meghan Greene, the group’s coordinator, at mgreene@accion.org.

Have you read?

Making Consumer Protection a Reality in Microfinance

Financial Inclusion: The Trust Factor

Microfinance Leaders Strive to Walk the Walk

The Smart Campaign Seeks Endorser Feedback on the Certification Program Proposal!

> Posted by Charlotte Connors

The Smart Campaign Certification Task Force needs the help of all Campaign endorsers!

The comment period on the Client Protection Certification Program  has been extended through the end of February 2012, as it is crucial to include the voice of endorsers in the development of this program.  The full proposal has also been translated into French and Spanish in order to receive feedback from diverse stakeholder groups.  With this input, the task force hopes to confirm the assumptions, refine the process, and pilot test the proposed adequate standards for client protection.

To read the full Certification Program proposal, please click here and then share your questions and/or comments by sending an email to comments@smartcampaign.org.  We appreciate your time and participation as we build this important industry initiative.

We are seeking the feedback of Campaign endorsers at this point. But we encourage everyone to read and think about the Certification Program proposal. It’s a way of keeping up with the Smart Campaign’s efforts to embed client protection in the industry’s DNA!

Have you read?

In the News: ‘Implementing Client Protection in Microfinance – The State of the Practice, 2011′

A First Look at How 300 MFIs Measure Up on Client Protection

IFC to Finance the Smart Campaign’s Microfinance Client Protection Initiatives in India

‘Lives Worth Living’ and Microfinance

> Posted by Adriana Magdas

President George H.W. Bush signs the Americans with Disabilities Act (ADA) on July 26, 1990.

How do you determine if a person’s life is worth living in freedom, independently and with the opportunity for education and a career?

The answer is: You don’t, because every life is worth living and all human beings have the right to be free, happy and a valuable part of society.

This belief was reaffirmed when I watched “Lives Worth Living,” a documentary released in 2011, which traces the development of the Disability Rights Movement in the United States from the 1950s until its culmination with the signing into law of the Americans with Disabilities Act.

Persons with disabilities (PWDs) have always been a large minority in the United States, but as a group, they were largely marginalized with little to no access to schools, public transportation, public buildings, and more. They were second-class citizens who were deprived of their rights in countless ways. This documentary vividly depicts the Disability Rights Movement in the United States and the commitment and determination of the pioneers who worked together tirelessly to win a battle that culminated in the signing of the Americans with Disabilities Act (ADA) by President H.W. Bush on July 26, 1990. This momentous piece of legislation prohibits discrimination based on disability, and is very much in the spirit of the Civil Rights Act of 1964, which made discrimination based on race, religion, national origin, etc. illegal.

OPIC Supports MicroEnergy Credits in Building Clean Energy Microfinance

> Posted by Holly Padgett

After my latest blog post concerning microfinance and environmental sustainability, I was excited to read about the recent decision by the Overseas Private Investment Corporation (OPIC), a US government development finance institution, to support clean energy initiatives around the world.

OPIC’s support came in the form of a $10 million loan to MicroEnergy Credits (MEC).  With the loan, MEC will assist microfinance institutions in providing microloans to individuals for the purchase of clean energy products (e.g. solar lighting).

In a recent blog post, MEC described some of the positive aspects of these clean energy initiatives:

“Individuals who receive microloans to purchase clean energy not only benefit the planet; they benefit from improved health due to reduced indoor air pollution and increased savings from reduced expenditure on traditional fuels.”

MicroEnergy Credits primarily works to connect MFIs with carbon markets to offset initial costs of clean energy microloans.  However, the organization also has a widespread impact on the microfinance industry as a whole. MEC founder and CEO, April Allderdice, recently worked with CFI on the Energy Links project and ‘Microfinance and Energy Poverty’ publication, a report on alleviating energy poverty.

Don’t Wait Until It’s Too Late! Apply Today for the HBS-ACCION Program on Strategic Leadership for Microfinance

> Posted by Elizabeth Davidson

The deadline to apply for the 2012 HBS-ACCION Program on Strategic Leadership for Microfinance has been extended to January 31!

This year, the program will take place April 9-14 at the Harvard Business School campus in Boston.

The program is tailored to meet the needs of executives of institutions ranging from MFIs to private-sector commercial banks and service providers. In the past six years, the HBS-ACCION Program has been attended by over 100 executives from some of the world’s most prominent MFIs, including the Grameen Bank, SKS, MiBanco, BRI, Compartamos, and Equity Bank.

Additionally, this year we invite regulators and investors engaged in expanding financial inclusion to apply.

The program will focus on fundamental challenges of doing business in the low-income segment of the financial sector, including:

• succeeding in highly competitive financial sectors
• balancing a social focus with a commercial setting
• reaching new business segments
• evolving products and delivery channels