MICROCAPITAL PUBLICATION ROUND-UP: Microcredit Summit Campaign Report; responsAbility Financial, Social Impact Assessment; Microinsurance Education in Zambia

“Resilience: The State of the Microcredit Summit Campaign Report, 2014;” published by RESULTS Educational Fund; 2014; 68 pages; available in web format at http://stateofthecampaign.org/2014-report-executive-summary/or for purchase as a PDF or in print form at http://www.scribd.com/doc/229959504/Resilience-The-State-of-the-Microcredit-Summit-Campaign-Report-2014

This report examines the reach and effectiveness of microfinance institutions (MFIs) on a global scale using data as recent as from 2012. The authors note that MFIs worldwide saw a continued increase in overall clients to 204 million in that year, but a drop in the number of the poorest clients: from 138 million in 2010 to 116 million in 2012. The report promotes two strategies to improve the lives of the poorest people. The first is to combine education with financial assistance programs. According to the authors, providing “livelihood training” to clients in addition to conditional cash transfers (CCTs), social assistance programs that provide cash to families only if the recipients comply with certain conditions, improves the odds of the clients emerging from extreme poverty [1][2]. The second strategy the authors advocate for is partnerships among different types of organizations to improve client service, for example MFIs, mobile network operators and health organizations. Finally, the authors outline a commitment that the Microcredit Summit Campaign has made to achieving two goals for 2015: provide 175 million families access to microfinance and help 100 million families exit extreme poverty. This is part of a larger effort by the organization to end extreme poverty by 2030 [1].

“Perspectives: Edition 2014;” published by responsAbility Investments; 2014; 53 pages; available at http://www.responsability.com/investing/data/docs/en/5365/Perspectives-2014.pdf

ResponsAbility Investments reports total assets of USD 1.9 billion as of 2013, a net increase of USD 516 million from 2012. The total includes allocations in finance, agriculture, energy, health and education. While acknowledging that many oppose microcredit services due to relatively high interest rates and limited proof that it reduces extreme poverty, the authors argue that there are sustainable and effective ways to increase financial inclusion and reduce poverty. The report claims that focusing on strengthening the financial sector through investment and promoting financial inclusion for those in extreme poverty can having lasting positive results. The authors go on to discuss the potential for the sectors in which the company invests. In terms of health investment, the report stresses the importance of a diverse portfolio that encompasses different types of insurance coverage, hospitals and clinics. In terms of investment in financial services, the authors argue that equity investments are a particularly effective way of supporting financial inclusion because they can help MFIs improve the quality of their loans and other services, and they also allow the investor to actively influence the development of an institution [3].

“Microinsurance Consumer Education: Directions for Zambia;” published by FinMark Trust; March 2014; 7 pages; available at http://www.finmark.org.za/wp-content/uploads/pubs/FocNote_MicroinsuranceConsumerEducation.pdf

This report argues for the importance of educating low-income people about microinsurance in Zambia and across the globe. Microinsurance is a financial service targeted to low-income populations covering risks such as death, illness, accidents or natural disasters. Education about microinsurance plans can vary, but it generally contains information about risks, insurance fundamentals, the benefits of insurance and how to obtain a plan. The authors suggest several ways to increase consumer education. For example, insurance companies could fund such education singly or in groups with or without the support of insurance trade associations. Alternatively, insurers could partner with regulators or other government entities. Regarding opportunities for donors to impact the industry, the authors propose subsidizing consumer education initiatives, aiding associations that have a focus on microinsurance and supporting institutions that supervise and evaluate insurers [4].

By Benjamin Krupp, Research Associate

About RESULTS Educational Fund

Results is a nonprofit advocacy group based in Washington, DC. It is divided into two arms; Results, which advocates for anti-poverty policies and legislation; and the Results Education Fund (REF), which conducts research on poverty issues and organizes programs that promote activism and teach strategies on addressing poverty. Results was founded in 1980, and REF was founded in 1983. In 1997, Results launched the Microcredit Summit Campaign, a project that promotes increased financial access and poverty reduction among people living in extreme poverty worldwide. As of financial year-end 2012, Results reported a total budget of approximately USD 8.3 million, of which USD 1.1 million was allocated to the Microcredit Summit Campaign.

About responsAbility Investments AG

Founded in 2003, responsAbility Investments AG is a Swiss investment company whose products aim to enable investors to earn a financial return while assisting people in emerging markets to access information and services in sectors such as microfinance, small and medium-sized enterprise (SME) financing, energy, health care, education and fair trade. As of 2014, responsAbility reported total assets under management of approximately USD 1.9 billion. ResponsAbility is backed by Swiss financial institutions and a social venture capital company as founders and shareholders including Baumann & Cie, Banquiers, Credit Suisse, Raiffeisen Schweiz, Swiss Re, Bank Vontobel AG as well as George Avenue. Among other entities, responsAbility Investments manages responsAbility Participations AG, a public limited investment company that was founded in 2012. ResponsAbility Participations’ shareholders include German development bank Kreditanstalt für Wiederaufbau (KfW) and unspecified pension funds and Swiss banks.

About FinMark Trust

Established in 2002 in South Africa, FinMark Trust is a nonprofit trust, funded primarily by the UK’s Department for International Development (DfID). Its main goal is to “make financial markets work for the poor, by promoting financial inclusion and regional financial integration.” It does so by conducting research on financial policy and regulation, savings, consumer financial empowerment, housing finance and payment systems. Financial information for FinMark Trust is unavailable.

Sources and Additional Resources

[1] RESULTS Educational Fund: Resilience: The State of the Microcredit Summit Campaign Report, 2014

[2] International Labor Organization, Social Protection: Conditional Cash Transfer Programmes (CCTs)

[3] responsAbility: Perspectives: Edition 2014 

[4] FinMark Trust: Microinsurance Consumer Education: Directions for Zambia

MicroCapital, April 9, 2014: responsAbility Investments Lends $4m to Opportunity International Bank of Malawi

MicroCapital, March 10, 2014: Airtel Zambia to Include Life Insurance Coverage in Mobile Subscriber Plans

MicroCapital, February 7, 2014: Switzerland-based responsAbility Participations Completes Capital Increase of $26m to Increase Investments in Developing-Country Banks

MicroCapital, November 25, 2013: “The State of Microfinance Investment 2013,” Published by MicroRate

MicroCapital Universe Profile: RESULTS Educational Fund

MicroCapital Universe Profile: responsAbility Investments AG

MicroCapital Universe Profile: FinMark Trust

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

 

 

 

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