The Financial Access Initiative (FAI) at New York University recently completed a study spanning seven countries, collecting data from firms with up to 20 paid employees. Researchers visited hundreds of these companies every few weeks for one year to support them in completing diaries of their financial lives. Among the takeaways are that the owners of the firms want to maintain stability and grow at a moderate pace and that they are most in need of working capital loans to leverage assets that they already own.
The Dutch NGO L-IFT developed the app Finbit to facilitate the tracking of households’ and small companies’ use of resources such as money, time, food and energy. Financial services providers (FSPs) use the app to help their customers manage their businesses. Customers can choose to share the data they generate with an FSP to apply for a loan. Other FSPs require potential borrowers to use the app for a period of time to establish an alternative credit history. For example, L-IFT recently began a project with the Association of Ethiopian Microfinance Institutions whereby graduates from a business training program can use the diaries for several months and then submit their data to get matched with the most appropriate microfinance institution to meet their needs.
In Uganda, FAI has initial data indicating that users of the diaries generate significantly more income if they are presented with their own data trends as well as comparisons to their peers. In contrast, those who used the diaries without seeing this data did not experience much change in income.
This report is part of a sponsored series on European Microfinance Week 2023, which continues today in Luxembourg and is also accessible online. MicroCapital has been engaged to promote and report on the event each year since 2012. Stay tuned over the coming days for more news from the conference! Learn more about European Microfinance Week at https://www.emw2023.eu/.
Additional Resources
European Microfinance Week 2023 homepage
https://www.emw2023.eu/
MicroCapital coverage of European Microfinance Week since 2012, including the European Microfinance Award
https://www.microcapital.org/category/european-microfinance-week/
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