SPECIAL REPORT: How Holistic Approaches Can Advance Rural Enterprise Through Microinsurance, Technology, Market Research

At the start of the second day of conference sessions at Semaine Africaine de la Microfinance (SAM), Renée Chao-Beroff of the Participatory Microfinance Group for Africa (PAMIGA), a France-based network of 14 African microfinance institutions, argued, “Microfinance has to be with something else to have effect. Standalone financial services are no longer working. We have to question our practices and go to a more holistic approach.” As an example, Mark Rueegg of Swiss microinsurer CelsiusPro explained how his firm distributes some of the satellite data it collects for actuarial purposes directly to farmers via mobile phones. “These data can give optimal planting dates instead of farmers going by what they were taught by their father, their neighbor…. This can allow them to increase their yield dramatically without extra costs, such as for additional fertilizer.”

Brian Kuwik of US-based NGO Accion, explained, “We felt microfinance was not enough…. We have been going to fintech [financial technology] in the last two to three years, looking for specific financial services that can support value chains in urban and rural areas…. Often the ideas are ‘pre-income’ so our investments are as small as USD 200,000.” One of these placements is in Kenya’s Umati Capital, which is using crowdfunding to bring working capital to dairy and grain farmers via “invoice discounting.” This method involves buyers of agricultural products agreeing to repay farmers’ loans directly upon delivery of the crop.

Regarding bringing new services to rural areas, Mr Kuwik stated that, “Where we’ve seen the most mistakes is when internal controls are not there and a new product is rolled out without market research.” Also, the “original concept must be tested and adjusted [in] a much more iterative process.” Henri Dommel of the UN Capital Development Fund (UNCDF) explained his organization’s new focus on data. In partnership with two South African NGOs, the Centre for Financial Regulation and Inclusion (CENFRI) and FinMark Trust, UNCDF created the Making Access Possible (MAP) program, publishing “Finscope” surveys for 12 countries. In each country, researchers survey 3,000 to 6,000 individuals and analyze regulation and distribution networks. Mr Dommel said, “MAP gives the kind of detailed data that is interesting to the private sector. So much so that private banks in South Africa financed the survey there.”

Echoing the theme of partnership that the SAM’s 560 participants have heard throughout the week, Mr Dommel added, “We have to look at leverage…because what we have done so far is limited.”

This story is part of a sponsored series on the second SAM, which is being held from June 29 to July 3 in Dakar, Senegal, by Luxembourgish NGO ADA in partnership with the African Microfinance Network, the African Microfinance Transparency Forum, the African Rural and Agricultural Credit Association and the Microfinance African Institutions Network (MAIN). MicroCapital is reporting on SAM live from Dakar.

Additional Sources and Resources:

African Microfinance Week Website: http://www.microfinance-africa.org

MicroCapital Coverage of African Microfinance Week: https://www.microcapital.org/category/semaine-africaine-de-la-microfinance-sam/

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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