MICROFINANCE PAPER ROUND-UP: Measurement: from Financial Access to Economic Empowerment; Savings Groups’ Impact; MFIs’ Role with Startups

“Advancing Financial Inclusion Metrics: Shifting from Access to Economic Empowerment,” by Matthew Blake and Drew Propson, published by the World Economic Forum, January 2018, 24 pages, available at
http://www3.weforum.org/docs/WEF_White_Paper_Advancing_Financial_Inclusion_Metrics.pdf

The authors of this report address how to improve the measurement of financial inclusion and ultimately how to bridge financial inclusion with financial health. They identify the following mechanisms as critical to successful financial inclusion: (1) payments; (2) savings; (3) credit; and (4) regulation and policy. Regarding the connection of financial inclusion to financial health, the authors consider three case studies: (1) Insight2Impact, a data-analysis company seeking to measure financial inclusion based on the needs of consumers rather than on the products they are offered; (2) the nonprofit Center for Financial Services Innovation (CFSI), which measures “long-term” consumer outcomes in the US; and (3) the application of CFSI’s model to other countries by

MICROCAPITAL BRIEF: IFC Buys $9m in Local-currency Bonds from CRRH-UEMOA to Support Housing Finance in West Africa

The World Bank Group’s International Finance Corporation has purchased the equivalent of USD 9 million in bonds issued by the mortgage refinancier Caisse Regionale de Refinancement Hypothecaire de l’UEMOA (Union Economique et Monétaire Ouest Africaine). The goal of the investment is to catalyze USD 500 million in

MICROCAPITAL BRIEF: World Bank Lending $15m to Jamaica for Microfinance Credit Guarantees, SME Fund

The World Bank recently agreed to lend USD 15 million to the Development Bank of Jamaica to support micro-, small and medium-sized enterprises via partial credit guarantees and an SME (small and medium-sized enterprise) fund. Galina Sotirova, the World Bank country manager for Jamaica, described the program as an effort to “…diversify and expand financing mechanisms for small businesses to promote entrepreneurship and job creation.” The objectives includes raising USD 10 million from private funders and guaranteeing

MICROCAPITAL BRIEF: Pride Uganda, Harvesting, CGAP Partner to Develop Alternative Credit Scoring Model to Boost Microfinance, Crop Yields for Small-scale Coffee Farmers

With support from US-based nonprofit CGAP (the Consultative Group to Assist the Poor), US-based social enterprise Harvesting Incorporated is partnering with Pride Microfinance, which is owned by the government of Uganda, to devise a new model for lending to small-scale coffee farmers in Uganda. Greta Bull, the CEO of CGAP, states that “limited access to timely credit products for agricultural inputs [is detrimental to farmers’] crop yields and productivity.” This project will combine traditional data sources with “alternative” ones, such as

MICROCAPITAL BRIEF: As China Tightens Online Lending Market, Ant Financial Pauses $37b in Annual Sales of Asset-backed Securities; Nexgo, Zhejiang Busen Garments Cancel Plans to Offer Loans

Amid criticism of China’s online lending industry as having “sometimes high interest rates and underhand lending practices,” the nation’s government has taken steps to slow the sector. It has urged local regulators to cease granting approvals to new microloan firms, citing the risk of over-indebtedness. It reportedly has also stopped approving the sales of asset-backed securities by Zhejiang Ant Small & Micro Financial Services Group (Ant Financial), which is controlled by Alibaba co-founder Jack Ma. Anonymous sources indicate that such sales could continue for

MICROCAPITAL BRIEF: Global Parametrics, 6 VisionFund Microfinance Institutions Prepare for Climate Disasters Under African and Asian Resilience in Disaster Insurance Scheme (ARDIS)

Global Parametrics, a for-profit risk manager funded by UK-based and German development institutions, and the UK-based NGO VisionFund International recently established the African and Asian Resilience in Disaster Insurance Scheme (ARDIS), to protect six VisionFund microfinance institutions (MFIs). In case of drought or extreme storm, the MFIs can access up to USD 10 million to manage delays in client repayments and

MICROCAPITAL BRIEF: 11 Microfinance Institutions in Cambodia Lose Licenses for Noncompliance

The National Bank of Cambodia (NBC), the central bank of the country, recently revoked the licenses of 11 microfinance institutions (MFIs) for failing to maintain compliance with a “diverse” range of rules. The MFIs, which are classified as “rural credit operators,” reportedly comprise a

MICROCAPITAL BRIEF: “Microinsurance Master” Program Offers 10 Weeks of Immersion, Coaching on Scaling Up Insurance Services for Poor People

A new program called Microinsurance Master is offering two weeks of training at Pioneer Microinsurance, a Philippines-based firm with 18 million customers, followed by eight weeks of remote coaching intended to help participants “focus on client-centric solutions that reduce the vulnerability of low-income people and

SPECIAL REPORT: Clients Come Clean on Sneaking Contraception, Practitioners Move from Serving Women to Empowering Households as European Microfinance Week Closes

During the closing day of European Microfinance WeekEuropean Microfinance Week 2017, Imran Matin of the US-based nonprofit Innovations for Poverty Action (IPA) stressed the importance of not just whether women will use financial services, but “what account ownership will translate into in terms of achievement.” Foreshadowing a theme of the session, he added that “intra-household dynamics is very important and also particularly difficult to measure.”

Bdour Al-Hyari of Jordan’s Microfund for Women (MFW) described a long-running insurance product offered by her microfinance institution (MFI). The coverage provides cash to clients who are hospitalized or have a family member who is. While health issues were a major cause of default in the past, women who got “hospital cash” from MFW reportedly repaid their loans at a rate of

SPECIAL REPORT: Zemidjam Motorbike Drivers in Benin, Civil Service Retirees in Senegal Participate in Human-centered Design of Mobile Money Products

During the closing day of European Microfinance Week, European Microfinance Week 2017 Karima Wardak of the UN Capital Development Fund argued that copying digital financial services from country to country is not working. The same is true of country-specific “products that were designed in board rooms,” she said. Gilda Zarate Chabluk of Innate Motion, a consultancy with staff in 27 countries, launched the discussion of how concepts of human-centered design can sidestep these problems. All staff involved in a project should observe and talk to end-users early in the design process. She suggests a meeting at the home of the end-user that lasts about two hours, with most of that time focused on the user’s life rather than the product. The idea is to create the product with the users not for the

SPECIAL REPORT: Registering Property, Charging Up to 3% Monthly Interest, Promoting Local Currency for Housing Loans at European Microfinance Week

At European Microfinance Week 2017the session titled “Building an Enabling Environment for Low-Income Housing Finance,” R V Verma, former Chairman of the National Housing Bank (NHB) (India) and consultant to the World Bank Group, said that “pushing the formal financial system to reach out to the informal sector [presents] a lot of challenges, but also huge opportunities. As part of financial inclusion, housing microfinance has a very important role.” Mr Verma went on to describe the market in India, which has an outstanding mortgage balance of INR 13 trillion (USD 200 billion) but a shortage of 24 million housing units. He also explained efforts to mitigate risk for housing lenders – both credit risk and issues with land title. Among the tools in use is a central registry of outstanding property loans. Mortgage insurance is also available even to informal workers – when lenders are willing to issue them loans.

Adedeji Adesemoye of the Central Bank of Nigeria described his institution’s efforts to address Nigeria’s shortage of 17 million housing units via resources including a loan package of USD 300 million awarded by the World Bank’s International Development Association (IDA) in 2012. While much of this package was for refinancing mortgages, USD 15 million of it was earmarked for housing microfinance. That portion was disbursed to nine microfinance institutions to test lending to existing (non-housing) clients for land acquisition, incremental construction and

SPECIAL REPORT: Scaling Up Implementation of Social Performance Management at European Microfinance Week

On European Microfinance Week 2017the first day of conference sessions at European Microfinance Week, experts in the social performance of microfinance institutions (MFIs) discussed how tools developed over the last ten years have reached a level of maturity warranting their wider rollout.

Cecile Lapenu of France-based Cerise described SPI4, the fourth iteration of a set of Social Performance Indicators intended to simplify reporting and provide a common language for different stakeholders to discuss social performance management (SPM). SPI4 incorporates the Smart Campaign’s Client Protection Principles and the Social Performance Task Force’s Universal Standards for SPM. It also includes optional modules on poverty, gender and the environment. To date, 432 SPI4 audits have been completed on institutions in 88 countries.

Jurgen Hammer of the Luxembourg-based Grameen Credit Agricole Foundation explained his organization’s use of the SPI4/ALINUS (Aligning Investors’ Due Diligence to the Universal Standards) framework to evaluate and benchmark the social performance of its partner MFIs. The foundation was meeting or exceeding the benchmark data in all categories except

MICROCAPITAL BRIEF: Alternative Credit Scorers Lenddo, Entrepreneurial Finance Lab (EFL) Merge

Two organizations that facilitate lending to people and small businesses with limited credit histories, US-based Entrepreneurial Finance Lab (EFL) and Singapore-based Lenddo, recently merged. Prior to the merger, the organizations had completed a total of 5 million

MICROCAPITAL BRIEF: National Bank of Cambodia: Foreign Banks Struggling to Meet 10% Local-currency Lending Requirement Should Partner with Microfinance Institutions

The National Bank of Cambodia (NBC) continues to resist suggestions that it soften the decree it made in December 2016 that all financial institutions boost their local-currency lending to 10 percent of their portfolios by December 2019. NBC Director General Chea Serey reportedly said foreign banks struggling to meet the new threshold should partner with microfinance institutions (MFIs) because

MICROCAPITAL BRIEF: Platform for Economic Inclusion (PEI) to Carry on CGAP’s Work on Graduation Programs

CGAP (the Consultative Group to Assist the Poor), a nonprofit research center seeking to expand financial services in poor regions, recently announced the establishment of the Platform for Economic Inclusion (PEI) to “accelerate innovation and scaling of graduation-style programming.” Initiated by Bangladeshi NGO BRAC (formerly the Bangladesh Rehabilitation Assistance Committee) in 2011, the graduation approach involves: targeting only

SPECIAL REPORT: HR Challenges Within MFIs at European Microfinance Week: “Banking Is People”

MicroCapital: Do you find that microfinance institutions (MFIs) tend to underinvest in human resources (HR)?

Rüdiger Meister: Definitely! Despite the efforts of many consultants in this field, the crucial role of HR management remains under-estimated. Technical assistance interventions, which often accompany investments into MFIs, tend to focus on discrete areas rather than following a holistic and structured approach to capacity building.

There is also a problem of short-term versus long-term thinking. In the short term, the MFI will function even if there are weaknesses in HR management. But in the long term, the MFI will have to pay for mistakes in areas such as

MICROCAPITAL BRIEF: MicroFinanza Rating Issues 27 Rating Updates, New Reports for Microfinance Institutions in the Philippines, Latin America

During October 2017, MicroFinanza Rating (MFR) issued a Micro­finance Institutional Rating (MIR) of BB with a Stable outlook to Rangtay sa Pagrang-ay Microfinance of the Philippines. MFR also updated the MIRs of three affiliates of US-based Pro Mujer Incor­porated: Pro Mujer Argentina’s was confirmed at BB+ with a Positive outlook; Pro Mujer Nicaragua’s was confirmed at BBB+ with a Stable outlook; and Pro Mujer Mexico’s was upgraded

SPECIAL REPORT: Innovations in Fintech, Human Resources Development at SAM (Semaine Africaine de la Microfinance)

At SAM Conference 2017, Addis Ababa, Ethiopiathe SAM (Semaine Africaine de la Microfinance) conference in Addis Ababa, a wide variety of vendors presented their wares. Among these were several core banking system providers. Antonio Separovic of Oradian previously had set the stage for the conversation at the fintech (financial technology) session organized by Dutch development bank FMO. He argued that microfinance institutions (MFIs) shouldn’t start by thinking about whether to buy a new system, but about where the MFI wants to go and how to get there. “Fintech may be able to reduce the friction to do these things,” he said.

Cameron Goldie-Scot of Musoni agreed: “It’s about what are the challenges in your organization? Is it too expensive to handle cash in rural areas? Do you have trouble getting