“Financial Constraint, Entrepreneurship and Sectoral Migrations: Evidence from Madagascar,” by Pierrick Baraton and Florian Léon, published by Making Finance Work for Africa, July 2016, 50 pages, available at https://www.mfw4a.org/nc/knowledge-center/resources/documents/documents-details/file/financial-constraint-entrepreneurship-and-sectoral-migrations-evidence-from-madagascar.html
The authors of this paper analysed data from 3,017 micro- and small enterprises that were clients of a microfinance institution (MFI) in Madagascar between 2008 and 2014. They found that 921 of the enterprises migrated from one business sector to another during their first five years of operations. There is a strong correlation between the size of each enterprise’s first loan and the probability of sectoral migration. The authors conclude that constrained initial funding leads entrepreneurs to engage in sectors that are not preferred and do not suit their entrepreneurial talents optimally.
In addition, the authors recommend that microfinance practitioners screen borrowers for potential sectoral migration, adapt to their financial needs and help them select the best sector to invest in from the outset.
“Tanzania Postal Bank Digital Financial Inclusion Through Popote,” by the World Savings and Retail Banking Institute and PHB Development in collaboration with the European Microfinance Platform (e-MFP) Digital Innovations for Financial Empowerment Action Group, published by e-MFP, October 2016, 14 pages, available at http://www.e-mfp.eu/sites/default/files/resources/2016/10/Tanzania%20Postal%20Bank%20Case%20study%202016%20final.pdf
This report reviews the financial services offered in Tanzania with a focus on digital financial services (DFS). The authors state that Tanzania is the second best-served country in Africa in terms of DFS, partially due to the country’s liberal telecommunications policy. As of 2016, four mobile payments providers and 14 banks offered digital financial services via channels including 20,000 agent outlets. During 2013, users carried out transactions worth USD 17.7 billion via 31.5 million mobile accounts.
The Tanzania Postal Bank (TPB) targeted underserved populations by creating partnerships with village-level financial institutions and informal savings groups. This strategy involves the bank’s mobile banking service, Popote, which has helped TPB increase the portion of its transactions that are mobile-based from 8.8 percent in 2012 to 44 percent in 2014. Part of this increase was attributed to TPB offering free mobile banking transactions to clients who receive services via groups.
The authors attribute the general success of Popote to collaboration, its low-cost model and adaptations to customer needs.
“Case Study: The Philippine Approach to Inclusive Insurance Market Development,” by Shayne Rose R. Bulos and Dante Oliver Portula, published by Deutsche Gesellshaft für Internationale Zusammenarbeit (GIZ), March 2016, 28 pages, available at http://www.microinsurancenetwork.org/sites/default/files/CaseStudy-Philippine-approach-to-developing-inclusive-insurance-market.pdf
The authors of this study cite data indicating that the number of people in the Philippines purchasing insurance grew from 3.1 million in 2010 to 31.1 million in 2014. Over this time period, the number of service providers rose from six to 22, expanding the range of available products beyond the dominance of credit-life to other types of such as health and natural catastrophe.
The microinsurance sector in the Philippines began to form in the 1990s, when deregulation allowed for the growth of private microfinance institutions (MFIs), the diversification of microfinance products and the growth of mutual assistance funds (MAFs). Despite providing informal insurance services, MAFs increased risks relating to consumer protection, financial stability and MFIs’ reputations.
In 2006, the government issued a package of regulations to control rural banks, cooperatives and nonprofit organizations that offered informal insurance services. In 2010, a second wave of regulations created a “product value and claims efficiency-driven market.” The third regime, which started in 2014, segmented the market into categories such as natural catastrophe, health, agriculture and small business services. The Micro Pre-Need Regulatory Framework was created to prepare Filipinos for future events that require financial outflow: children’s education, old age and death. As a whole, the regulatory changes improved coordination among government and private actors, and informal insurance services became much more formalized.
The authors conclude that the regulatory reforms enhanced financial inclusion in the country, resulting in positive client impact. They also note that further action is needed, including continued strengthening of coordination as well as improving monitoring and reporting systems.
By Alíz Crowley, Research Associate
Sources and Additional Information:
 Making Finance Work for Africa, Financial Constraint, Entrepreneurship and Sectoral Migrations: Evidence from Madagascar
 MicroCapital Universe Profile: Making Finance Work for Africa
 World Savings and Retail Banking Institute, Tanzania Postal Bank Digital Financial Inclusion Through Popote
 MicroCapital Universe Profile: World Savings and Retail Banking Institute
 Deutsche Gesellshaft für Internationale Zusammenarbeit (GIZ) GmbH, Case Study: The Philippine Approach to Inclusive Insurance Market Development
 MicroCapital Universe Profile: Deutsche Gesellshaft für Internationale Zusammenarbeit (GIZ) GmbH
 European Microfinance Platform (e-MFP), Action Groups
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