MICROFINANCE PUBLICATION ROUND-UP: Remittances to Latin America and the Caribbean, Savings Groups Leading to Advocacy, Microinsurance in the Philippines

“Remittances to Latin America and the Caribbean in 2012: Differing Behavior Across Subregions;” by Maria Luisa Hayem; published by the Multilateral Investment Fund (MIF); 2013; 27 pages; available at http://www5.iadb.org/mif/HOME/Knowledge/tabid/426/idPublication/78709/language/en-US/Default.aspx

This report from the US-based Multilateral Investment Fund provides an analysis of remittances received across national borders by people in Latin America and the Caribbean (LAC). The report highlights that “rising unemployment in traditional remittance-sending countries such as the United States, Spain, and Japan, along with the resulting reduction in income of the LAC migrants living in those countries, led to an unprecedented drop in remittances to the region,” from USD 64.9 billion in 2008 to USD 56.5 billion in 2009. Flows began to stabilize between 2010 and 2011 as remittances to Central and South America grew by 7 percent and 4 percent, respectively. Ms. Hayem also notes that because local currencies of countries in LAC lost value against the United States dollar by an average of 3.1 percent in 2012, the purchasing power of remittances received in LAC fell. But data from 2012 show nominal growth, with the total value of remittances received by LAC countries measured at USD 61.3 billion. The author argues that “it is important to continue with ongoing efforts at both the international and national levels, in order to improve understanding of this phenomenon, reduce the costs of sending money, and support initiatives that allow families to accumulate assets through savings and also leverage these resources for productive investments.”

“Savings Groups at the Frontier;” edited by Jeffrey Ashe and Candace Nelson; published by Practical Action Publishing Limited; 2013; available for purchase at http://developmentbookshop.com/savings-groups-at-the-frontier-pb.html

This book presents arguments that savings groups, which allow members to save together, lend to each other and share the profits, can help mitigate some of the worst effects of poverty, as they are simple, scalable, low-cost, robust and self-replicating: “Savings groups have been the starting point for increased financial capability, community development efforts, linkages with formal finance, and new opportunities for the traditionally marginalized.” In an “increasingly resource-constrained world,” the authors argue that savings groups must expand and involve new partners; “reduce costs without sacrificing the overall objective of promulgating autonomous, quality financial service providers;” and explore the use of technology to manage group funds, link groups to financial institutions and lower the costs of training and support. The authors emphasize that “empowered groups are already starting to demand services from local government,” and that this bottom-up advocacy is expected to expand as savings groups proliferate.

“Assessment of Microinsurance as Emerging Microfinance Service for the Poor: The Case of the Philippines;” published by Asian Development Bank (ADB); 2013; 24 pages; available at http://www.adb.org/sites/default/files/pub/2013/assessment-microinsurance-service-for-poor.pdf

With approximately 2,000 microfinance institutions (MFIs) and a “regulatory environment that encourages banks to engage in microfinance,” the authors deem the Philippines “one of the countries in Asia with a relatively developed microfinance industry.” But with 23.1 million people in poverty, the gains resulting from access to microcredit are often eroded due to risks such as illness, injury and property loss. In 2009, the Department of Finance-Credit Council and the Insurance Commission of the Philippines, with technical assistance from ADB, formulated the National Strategy for Microinsurance, which was intended to establish an “appropriate policy and regulatory environment for the safe and sound provision of microinsurance by the private sector;” increase private sector participation in the provision of microinsurance; and institutionalize financial literacy in order to “highlight the importance of microinsurance, the applicable rules and regulations, the duties and responsibilities of the providers, and the rights of the insured.” Before 2008, there were 6 licensed microinsurance mutual benefit associations (MBAs), “very few commercial insurance companies with microinsurance,” and 3.1 million individuals covered by microinsurance in the Philippines. But as of July 2012, there are 17 licensed microinsurance MBAs, 28 commercial insurance companies selling microinsurance products, 7.8 million insured Filipinos and 116 licensed microinsurance agents.

By Sam Allmendinger, Research Associate

Sources and Additional Resources:

“Remittances to Latin America and the Caribbean in 2012: Differing Behavior Across Subregions,” http://www5.iadb.org/mif/HOME/Knowledge/tabid/426/idPublication/78709/language/en-US/Default.aspx

“Savings Groups at the Frontier,”
http://developmentbookshop.com/savings-groups-at-the-frontier-pb.html

“Assessment of Microinsurance as Emerging Microfinance Service for the Poor: The Case of the Philippines,”
http://www.adb.org/sites/default/files/pub/2013/assessment-microinsurance-service-for-poor.pdf

MicroCapital Universe Profile: Multilateral Investment Fund,
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Multilateral+Investment+Fund+%28MIF%29

MicroCapital Universe Profile: Asian Development Bank (ADB),
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Asian+Development+Bank+%28ADB%29

MicroCapital. April 4, 2013, “MICROCAPITAL BRIEF: MicroEnsure to Retail “Triple 10” Microinsurance in the Philippines,” https://www.microcapital.org/microcapital-brief-microensure-to-retail-triple-10-microinsurance-in-the-philippines/

MicroCapital. April 7, 2013, “MICROCAPITAL BRIEF: NGOs, Government Unite In Effort to Increase Savings Group Membership to 50m Worldwide by 2020,” https://www.microcapital.org/microcapital-brief-ngos-government-unite-in-effort-to-increase-savings-group-membership-to-50m-worldwide-by-2020/

MicroCapital. April 9, 2013, “MICROCAPITAL BRIEF: MoneyGram, Globe Telecom to Offer Remittances at G-Xchange Outlets in the Philippines,” https://www.microcapital.org/microcapital-brief-moneygram-globe-telecom-to-offer-remittances-at-g-xchange-outlets-in-the-philippines/

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