financial inclusion

Building Resilience for Women: Bridging the Gender Financial Inclusion Gap

By Fatima Iqbal, WAM UK Steering Committee Member

 

On September 26, Women Advancing Microfinance and the Financial Inclusion Forum hosted a panel with Maria Largey, CDC, Isabelle Nowack, VisionFund, Susan Forester, Global Parametrics with Adrienne Klasa, fDi and The Banker, moderating the discussion. The aim of the panel was to discuss the increasing risks that populations face from disaster events, be they climate change related, conflict related or otherwise. Women are more likely to experience poverty and be excluded from mainstream financial products than men, and as a result are often more vulnerable in disaster situations. The panel discussed tools that promote resilience and productivity in women in the face of shocks and disasters.

It’s important to understand women’s challenges in various markets, before tailoring and offering the right solutions. Promoting financial resilience, through literacy and insurance, can be a useful buffer for these shocks. Prior to the panel, the audience had the chance to learn about CDC’s new partnership with six development finance institutions to promote the 2x challenge, aiming to invest nearly $3 bn by 2020 in addressing this issue.

What are some factors that create the gender financial inclusion gap? The panellists highlighted cultural barriers, the quality of jobs for women and inadequate solutions. In periods of external shocks, women may have to return to paid employment where they can face discrimination, fuelling an imbalance. Also, the issue isn’t always viewed from a gender policy lens. Governments, investors and companies all have important roles to play, yet they disregard the challenges.

To close this gap, Maria suggested a combination of financial literacy programmes and more tailored financial and insurance products, with the former beneficial in the short-term and the latter in the long-term. She also talked about the need for those in the industry tasked with selecting clients to be more educated on women’s needs – when this issue first started coming to the fore, institutions set gender quotas on their customer base and used gimmicks such as pink credit cards to attract more women, but the products weren’t always right. Institutions need to think more about women’s cash flow patterns, their access to branches, cultural sensitivities, and this level of awareness has to occur across the supply chain.

Susan highlighted that since the launch of the UN’s Sustainable Development Goals, six of these goals include gender-specific targets, giving more significance to solutions with women in mind. This differentiates the goals from the Millennium Development Goals, and is also applicable to all countries, not only emerging markets.

The percent of women excluded from formal banking products, from saving accounts to cards, is still higher than men. Isabelle proposed increased mobile distribution, as another solution to foster inclusion. Yet, even if more women had access to these products, it can be argued that the metric of accessing a bank account is insignificant; women could have this on paper but never use it, or, men could be in control of the account. Isabelle also explained that VisionFund has implemented a deliberate policy to hire and train women, particularly respected women in a community, to become loan officers as they are more likely to understand the needs and concerns of their female customers – for example they understand the challenges of bringing up a family – and can act as a good sounding board for their customers, where a young male graduate (the profile of a typical loan officer in the field) is less likely to have that empathy or understanding. VisionFund is also asking its microfinance institutions (MFIs) to use questionnaires more often to find out what customers need – this is partly driven by the need to be more segmented with product offerings, as disrupting technology makes the sector increasingly competitive – but this can be good for women also if their needs are recognised.

The panel also spent some time discussing the best way to address increasing risks from Climate Change and other disasters. Susan from Global Parametrics felt that more needs to be done to help local communities think through and plan for disasters before they even happen and put in place mechanisms that will simply kick in when disaster strikes when relief needs to be immediate.

Global Parametrics is focused on microinsurance products that will automatically payout given proof that certain weather events have occurred. Susan explained that proof of loss in an extreme weather event is very difficult – traditional crop insurance for example is very expensive to run as officers on the ground have to check and verify, which may put off many MFIs. But if the MFI knows they simply have to check if a local weather station has validated certain events or ‘parametrics’ and they know they will be paid by the underwriter/ funder in those situations – then the whole arrangement can operate well. When challenged on whether enough gender consideration is undertaken with these products (for example, how easily can women access or claim payout in the specific cultural context) Susan agreed that microinsurance institutions and investors should think more about this issue when developing products.

 

Bringing the discussion back to the challenges, the key is to identify unique challenges faced by women in different markets and then find the right solutions. For example, if the issue is that women are unable to visit a bank, then loan officers could visit their homes. If the gender of loan officers poses a problem, then more women can be trained for the role. Simple questionnaires are a great way to get this information.

Two country examples provided more context on products and policy during the discussion:

  • In regards to microfinance emergency loans, the example of Typhoon Haiyan in the Philippines was given, where more liquidity was offered to affected areas, with the provision of extended recovery loans.
  • In terms of cultural change, the example of a new policy in Pakistan was provided, where banks have incorporated gender quotas on their boards. Change is needed at a policy level, and this isn’t evident only in emerging markets, but around the world.

During the Q&A session, the panel advocated that everyone can raise awareness on gender disparity and be more mindful about the issues faced by women. A more holistic approach is needed to make an impact, with governments, investors and companies driving the development agenda.

Stay tuned for more events from Women Advancing Microfinance and the Financial Inclusion Forum!

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Entrepreneur Development in West Bengal

By Dr. Natalie Schoon, Steering Committee member

 

On the 6th of February, we were joined by Olly Belcher and Victoria Denison of Shivia for the first WAM Dinner of 2018 at the Waterloo Bar & Kitchen. After a brief introduction, the rest of the evening was an open exchange of views and questions. You just know when an event is successful when the discussions continue well after the bill has been paid.

Founded in 2008, Shivia operates in rural West Bengal and has specifically chosen to assist not by giving money or lending, but by promoting entrepreneurial activity. A poultry toolkit comprises of chicks, training, and inoculation and on-going guidance by a local specialist. The farmer contributes £5 to the £15 cost of a toolkit, which further promotes the entrepreneurial proposition. To date in excess of 42,000 tool-kits have been delivered to more than 10,000 farmers across 1,028 villages impacting an approximate 61,000 people. Shivia carefully manages the number of tool-kits provided per farmer and per area to make sure they do not flood the market. An additional benefit from the project is that local staff of Nirdhan (Shivia’s India operations) are also recruited from the villages where the tool-kits are supplied.

In case you missed the event, but would be interested to support Shivia, click here.

More recently, Shivia has started to explore two new programmes: Agri-management services and Goateries. Agri-management provides training and advice to farmers with unproductive plots of land. In addition to providing food for the families, there is an opportunity to sell these fruits and vegetables in the city where many Bengals have moved in search of work. Initially the project worked with the husbands of the poultry beneficiaries, but has since been rolled out to farmers beyond those and includes male as well as female farmers. Among the benefits for the farmers are lower cost of agri-inputs, increased yields, higher quality of produce, and increased profits.

To date, 1,050 farmers have benefited from training across 60 villages. The next phase of this project will be to construct a Farmer Producing Company, a co-operative structure with approximately 1,000 members, which will provide the farmer with enhanced purchasing power, a better position as a seller, and access to larger, low-interest bank loans to further grow the business. Shivia has joined forces with a local company who buys from the farmers and sells the produce to the West Bengal community in Delhi. When surveyed, it transpired that the consumers buy the produce because it is clean, well packaged, and very fresh. To them, the fact that they are helping poor farmers is almost an afterthought. Which means that the business model is solid and these farmers will, at some point not too far in the future will be able to stand on their own feet.

The latest Shivia programme is goateries. Farmers will receive two female goats on loan for three years as well as training, insurance, and access to a male goat for breeding. In each year, the farmer will retain half of the kids for sale or breeding and return half of them to Shivia. After three years, the original goats are returned. This way, farmers can establish a small goat farming enterprise. In addition, the programme will become self-funding. Goats can be given to other farmers, and a profit may be made from the sale of goats which can be re-invested. The programme has successfully completed its pilot phase and is set to be rolled out on a larger scale early 2018.

Shivia was awarded International Charity for 2017 by the Charity Times and there are more exciting projects in their future. Certainly one to watch! To support their work check out this link.

 

 

Financial Education for Girls – successes and learnings from Credit Suisse, Aflatoun International and Plan International

by Kim Croucher, WAM UK Steering Committee – with contribution from Eva Halper (Credit Suisse), Aukje te Kaat (Aflatoun International) and Clare Daly (Plan International)

On 13th September, WAM were hosted by Credit Suisse’s Global Education Initiative to hear about their programme providing financial education to girls as a means to their future economic empowerment. Credit Suisse is supporting Aflatoun International and Plan International who, working in partnership, have designed and are implementing financial education and life skills programmes in Brazil, China, India and Rwanda. The evening was a really interesting insight into their findings in developing financial education for girls and their varying experiences in different country contexts.

201607-IND-45-scrPhoto: Plan International UK

Why Girl’s Financial Education?

Eva Halper, Head of Credit Suisse’s Global Education Initiative, explained that the bank carried out research which revealed that although many financial institutions were focusing on financial literacy, and many NGO programmes were addressing the gender issue in education, no-one appeared to be focusing on financial education specifically for girls. This therefore was the impetus behind the decision to address financial education for girls. The programme subsequently launched in 2014 and aims to improve the financial education and life skills of approximately 100,000 adolescent girls and encourage them to transition through secondary school. A research project (thought leadership) based on the programme, is a parallel component of the partnership and was the focus of this event.

Many young people aged 14–25 in developing countries are already economically active but without a basic education in the key tenets of finance. This is a barrier to them being able to fully reap the benefits of their own economic activity, and puts them at risk of making decisions that could lead to a lifetime of debt and continued poverty into adulthood. Girls in developing countries often face steep obstacles to access education, not least financial education. Empowering girls means enabling them to manage their own savings and spending and allowing them to take a more informed view of their future options and endeavours – which can transform lives.

 The Most Successful Programmes Deliver Financial Education Alongside other Social Skills Training

Before embarking on programme design, the team produced a policy brief – a systematic review of girls’ economic empowerment programs to determine which interventions are most effective.

Aukje te Kaat from Aflatoun International spoke about the work that went into this and that the team had found limited literature available on the impact of financial education in children in general and in particular research that contained a gender lens. In the end, the team looked at 12 studies where the objectives had been economic empowerment of adolescent girls and crucially included a financial education component.

One of the key findings was that to be truly effective, financial education should not be implemented by itself but rather it should be combined with other interventions, whether this be microfinance, access to savings, vocational education, social education/life skills or sexual and reproductive health education. Evaluations of financial education programmes implemented together with social components – e.g. rights education, life skills education, confidence building – were the most successful.

This finding was in-keeping with Aflatoun’s own approach which is to always incorporate social skills building alongside more tangible skills training in order to transform behaviour (something hard skills alone cannot necessarily achieve). Aukje talked about helping the girls gain self-awareness of their own goals and where they stand in their community, which enables them to plan for the future and make better decisions.

Programme Design Needs to Acknowledge the Importance of the Girls’ Wider Communities and Influences

The team was able to create a global Theory of Change for economic empowerment interventions for adolescent girls, which suggests that holistic thinking in programme design, as well as creating or maintaining enabling environments, is key to ensuring successful outcomes. For example, social norms around the role of girls within a household or community can impact the community’s view about girls’ financial education. The education level of parents has been found to be hugely important: it helps with community buy-in, but if a parent cannot grasp the importance of what their daughter has learnt, they will not support her and she will struggle to implement her new skills and plans.

Another barrier can be related to how easy it is to set up a small enterprise (which is what the young people in this programme are encouraged to do). If there are no financial institutions or financial products it will be difficult for girls to implement their skills in practice.

Findings from Country Programmes –

BRAZIL – Tackling topics such as gender-based violence

  • 25 junior secondary schools (ages 11-14)
  • Pernambuco, Maranhão and Piauí states in northeast Brazil
  • 3-year target: 3,250 girls; 6,500 children

In Brazil, the programme team noticed that it was important that the girl’s father understood the aims of the programme and was fully on-board with these, in order for it to be a successful experience for the girl – perhaps a sign of the gender dynamics in society there.

In all four country programmes financial education is delivered by teachers in schools, but there are also after-school clubs. In Brazil, the training has shifted from being purely teacher-led to a peer-led model. Girls’ clubs have been set up where girls learn about life skills and topics such as gender-based violence. Girls’ clubs have been a great success and the girls really appreciate this as a safe space.

Interestingly, boys in schools in Brazil reported feeling left-out. This prompted a discussion with the audience about the need to bring boys into the programme, but also crucially into conversations on gender parity, particularly gender-based violence. The team agreed and recognised that boys would benefit from financial education but the remit of the programme was to look at the impact on girls’ financial education and so at this stage there are no plans to widen the scope.

CHINA – Creating positive future aspirations and confidence-building

  • 26 middle schools and one vocational school (ages 12-17)
  • 18 townships in Guangnan County, China
  • 75% left-behind and 61% ethnic minority children
  • 3-year target: 11,541 girls; 26,800 children

In China, the programme is implemented in rural areas where there are a high number of ‘left-behind’ children of migrant workers who are often looked after by grandparents or in boarding school. The programme has the full support of the regional education authorities and is delivered in schools via weekly financial education classes.

Apart from financial education skills, the programme provides elements of career guidance and counseling. The aim is to foster more optimistic ideas amongst the girls about their future opportunities – where many may see their paths destined to be the same as their parents. However, prospects for migrant workers are bleak and quality of life poor. The programme attempts to encourage the girls to look at alternative ways to engage in economic activity – potentially localized entrepreneurial activity – which would help to prevent these rural areas from becoming deserted. Financial and life skills also help safe-guard the girls’ rights since as migrant workers they typically find they have limited protection or safety nets when they move to cities to work.

The programme team found that confidence building was key to help girls become more aware of their opportunities, choices and dreams. Given the culture in China of high expectations for academic performance, there is less emphasis on life skills and emotional wellbeing. The programme team reported some encouraging examples where girls enjoyed an increased sense of confidence and well-being as part of the programme’s work.

INDIA – Community perceptions are key but the programme is creating role models

  • Ages 7-18 in Government schools and educational camps
  • Bikaner district, Rajasthan
  • 3-year target: 82,300 girls; 154,570 children

In India, the programme has been integrated into the national teacher training system and the national curriculum. It therefore benefits from a significant level of government support

The main finding in India was that community perceptions can be a huge barrier to the girls using the skills they acquire in a real-life context. Even if a girl’s parents approve of her taking part in the programme, this did not mean they were then comfortable with her using the skills to engage in economic activity outside the home or direct community. This is due to how a women’s role in society is viewed: a girl engaging in home-based entrepreneurial activity (e.g. sewing or knitting from home) is acceptable, but to travel to another village or region to work in a commercial organisation, is not. However, role models – prior beneficiaries of the programme – have been effective as advocates in trying to reverse these perceptions.

RWANDA – Encouraging developments in integrated girls & boys after-school clubs

  • Students aged 12 -15 years
  • Bugesera and Nyaruguru districts
  • 3-year target: 3,200 girls; 4,200 children

In Rwanda, the programme leveraged one of Plan International Rwanda’s existing programmatic expertise: Boys4Change clubs that explore themes of masculinity and leadership and the role of girls and boys in society. The formal teaching component – financial education for girls – is delivered in schools, but the after-school clubs have become integrated whereby both boys and girls take part. They also engage in income-generating activities (such as keeping and rearing of animals like goats and chickens).

The programme team in Rwanda has seen really great developments whereby boys have become much more understanding of the pressures on girls to carry-out domestic/house work which often results in the girls having limited time to study or become entrepreneurial. In some cases, boys have offered to share the burden of tasks normally done by girls to give their female peers more time to achieve their goals. This raised the question of why a similar model of integrated clubs and/or boys’ education in gender equality and male leadership in this context is not more widely pursued in the other country programmes. The programme leaders are considering this for future phases.

In Rwanda, efforts are made to engage with parents to ensure they are aware of the topics the students are being exposed to. The students launch campaigns to which parents are always invited and there is a lot of dialogue with them. The result is that parents and teachers have started their own savings clubs in many cases.

P1030291Photo: Plan International UK

Delivery Through Schools Helps to Ensure the Programmes’ Long-Term Sustainability

There was a good deal of discussion with the audience during the evening – one important question was around sustainability. Credit Suisse cannot support the continuation of the programme indefinitely nor its replication to other regions/countries. Eva made the point that this is why the decision was made to deliver the content in a school setting. Schools provide a structure for delivery where attendance and participation is ensured (at least more so than in community projects). By training teachers in the system, this helps sustainability even after programme partners have left (although there is a question over continued and refresher teacher training, which can be a challenge to deliver). A question was raised as to why there was no focus on girls outside of the formal school system. The same answer applied as well as programme delivery capacity.

M&E Statistics Show Encouraging Impact from Programmes So Far

Monitoring and evaluation are also more easily achieved within the formal school system, which helps to collect and deliver data. Both Aflatoun International and Plan International conduct M&E – although their focus has been the monitoring of girls only as that is the current target group. Some key and encouraging statistics include an 18.2% increase in girls’ financial education and life skills (FELS) knowledge globally, with India showing the largest increase at 43.1%. In addition, there has been a 31.5% increase in fathers who ‘strongly agree’ it is important for girls to learn about money and financial skills globally.

However, it was also recognized that the impact of work such as financial and life skills training (aimed at future economic empowerment) can only be expected to come to full fruition much later in the girl’s life and by that time many other variables will have also influenced outcomes – so measurement of outcomes and evaluation is not easy in this area.

201607-IND-42-scrPhoto: Plan International UK

Future Plans

The next phase will see the addition of a new partner to the programme, Room to Read in Tanzania and Sri Lanka. Any further research will need to incorporate experiences from these contexts also. And this will be examined together with the many questions that the current research has thrown up. For example, how these programmes influence girls and boys differently. In specific country contexts different questions are being asked. For example in India, programme leaders want to look at which social norms act as the largest barrier to a girls’ acquisition of life and financial skills; whereas in Rwanda, the question arising is how the work on gender norms with girls and boys impacts on girls economic empowerment.

We understand that the project will be announcing results of its second phase of research in the next few years – we wait with interest to learn more about this when it is published and we may invite Credit Suisse, Aflatoun International and Plan International to return and tell us more of their fascinating findings then.

SOCIAL ENTERPRISE AND MICROFINANCE – A POWERFUL PARTNERSHIP

by Miranda Barham, WAM UK Steering Committee

jesca-makumbi

WAM UK hosted a very interesting evening with special guest, President & CEO of FINCA, Rupert Scofield.  Rupert shared with us the journey he has been on since starting FINCA in 1984 to today’s challenges of finding social enterprises, running profitable microfinance institutions and running fundraising campaigns.

FINCA started on a quest to identify investible social enterprises to fund and partner and in doing so, discovered that they were already funding a number of these.   Examples of this include over 200 “charter schools” in Uganda, and a community health clinic in Lumbumbashi, Democratic Republic of the Congo.

Rupert explained, “I stumbled upon a charter school on the outskirts of Masaka, Uganda when I went to see some clients who had purchased solar lanterns from Brite Life.   “Do you want to see our school?”  one of the clients asked me.   “You have a school?”   It seemed unlikely; this was a remote community many miles from the nearest paved road.   They took me to meet a former teacher who had left the public school system and, with a series of Finca loans, built seven classrooms and hired other teachers to teach grades K through 6.”

By having the school right in the community, the students avoided the perilous 5 kilometer walk to the nearest public school where they could be preyed upon by pedophiles.   Finca was also financing the other side of the transaction, making loans for school fees to the parents of the children.

In Lumbumbashi, two physicians had left the public healthcare system and, with a series of Finca loans, build a small clinic and a 10-bed hospital.  They were treating the people of the community for the four most common illnesses in rural Africa and charging $2.50 per consultation.  If the patients were destitute, they provided treatment for free.

FINCA is passionate about social enterprise.  Rupert believes that the current trend of social enterprises moving into the vacuums left by a faltering, underfunded public sector services will continue, and eventually social enterprises, small, medium and large, will be the main vector for meeting the basic needs of people living at the bottom of the pyramid.   He explained that an added bonus will be that these social enterprises will collectively employ millions of currently un/underemployed young people, which is a huge and growing time bomb which, if not addressed, will destabilise all developing societies.

eucharia-nwanguma_nigeria

For those of you inspired to take up the social enterprise challenge, Rupert has some words of wisdom, “Find a disadvantaged/oppressed constituency, live amongst them, walk in their shoes until you feel their pain and figure out a way to be useful.”  He recommends working or volunteering for an organisation that works in this space and then with experience gained, striking out on your own.   He says that’s when the real adventure begins.

“If your idea is powerful enough, it will withstand the many mistakes you will make.   Remember that nothing works the first time, so be stubborn and persistent.   Stand up to the skeptics and keep plugging away.   You will find, also, that your passion for your mission will attract fellow travelers.   You also have to pick your head up every now and then and see who is imitating you and possibly doing it better than you are.   The life cycle of new technologies is getting shorter and shorter.   Picking the winners is going to make the difference between success and failure.” And After five decades in the space, Rupert should know.

If you would like to support FINCA’s latest campaign to raise £1 million in support of women taking their first teps in business, please donate here so that FINCA can help them generate the extra income they need to buy food, pay for healthcare, and put their children back into school.

In the last few months, faced with rising levels of conflict and migration, women have been forced to find new sources of income to support themselves and their children. With your help, FINCA can make a difference.

Investing in Social Enterprise to Fight Poverty

FINCA

By Rupert Scofield, President and CEO of FINCA International 

Rupert Scofield will be speaking at a dinner hosted by Women Advancing Microfinance UK on Tuesday 10th May in London. He will talk to us about the work FINCA does and the impact it’s having, in particular in the social enterprise and innovation space. Tickets to the event are available here

Ahead of the event, we asked Rupert to give us some thoughts about what it is that makes FINCA different, how they have evolved their approach and support for those they work with and their unique approach to fostering social enterprises.

 Tell us about the clients FINCA reaches and what it is about your offering that allows you to reach clients other microfinance organisations don’t.

FINCA’s segment is not “the poorest of the poor”, which are now reached by specialised “Ultra Poor” or “Graduation” programmes which provide subsidies not loans, although some of our most successful clients have come from that segment.    Most of our clients live on $2 to $4 per day when they take their first FINCA loan and then progressively move up the ladder.

The vast majority have an existing business when they join FINCA, but not all.  In Africa, for example, we encourage our village banks to take on one or two younger women who want to start a business but need mentoring and support from the group in order to succeed.

While many other MFIs work in this segment, FINCA is unique in that we have done this now for three decades and on four continents, learning to adapt our methodology to many different cultures.   We still deliver the majority of our loans through “village banks”, and although that methodology has been adapted over time, it remains largely the same, depending on local knowledge and a group rather than physical guarantee.   When you visit a village bank, you can see that it is a strong, community-based support group where the members help each other weather the adversities that come with living at the base of the economic pyramid.

You developed an initiative called FINCA Plus back in 2012. Can you explain a little about what you hoped to achieve?

We saw an opportunity to become a “holistic” MFI, one that would also provide non-financial services of value to our clients, things that would make them more resistant to the contra temps that threatened to knock them off the ladder out of poverty.   We sought instead to develop interventions in new sectors like healthcare, water & sanitation, education, energy, and agriculture.   While organisations like BRAC had been doing this for decades, we decided to take a different approach.   Rather than becoming experts in these sectors, we would find partners whose products and services would be of high value to our clients, and figure out how to finance and deliver them.

We discovered that there were literally hundreds of social enterprises doing amazing work, and who were eager to partner with FINCA and take advantage of our well-known brand.

Furthermore, there are “incubators” working with social entrepreneurs and helping them to develop their concepts to the point where they are “investible” and scalable.   This led to our decision to create the Social Enterprise Collider, a facility that will invest in early stage social enterprises deemed promising but too risky for institutional investors or even most Venture Capitalists.   At the same time, we created Brite Life, a distribution company that markets solar energy products, fuel efficient cook stoves, water filters and other products which bring a powerful value proposition to our clients, providing benefits in the health, education, and energy areas.

To hear more from Rupert about FINCA’s unique approach to social enterprise initiatives, please join us for the dinner discussion on Tuesday 10th May 2016. Tickets for the event are available here.

Rupert

Rupert Scofield, FINCA International President and Co-Chief Executive Officer, also serves as President and CEO of FINCA Microfinance Holdings, LLC, a first-of-its-kind, socially-responsible investment partnership for microfinance, formulated to strike the right balance between attracting capital needed for expansion and protecting the integrity of FINCA’s charitable mission.

Mr. Scofield co-founded FINCA in 1984 with John Hatch, and has served as its President and CEO since 1994. A practitioner at heart, he is actively involved in the management of FINCA’s operations, and is also a frequent keynote speaker. As author of The Social Entrepreneur’s Handbook: How to Start, Build and Run a Business that Improves the World, Mr. Scofield seeks to inspire the next generation of microfinance leaders and social entrepreneurs.

Prior to FINCA, Mr. Scofield served as the CEO of Rural Development Services, a consulting firm, and country program director of the AFL-CIO’s Labor Program in El Salvador. He earned two Masters of Arts degrees in agricultural economics and public administration from the University of Wisconsin, as well as a Bachelor of Arts from Brown University, and served in the Peace Corps in Guatemala.

Read more about FINCA here.

Celebrating IWD: Q&A with Diana Noble, CEO of CDC

In celebration of International Women’s Day (IWD), March 8th 2016, WAM UK interviewed Diana Noble, CEO of CDC Group Plc. 

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Diana Noble, CEO of CDC, the UK’s development finance institution.

What is CDC?

CDC is the UK’s development finance institution. Wholly owned by the UK Government, we invest in the private sector in Africa and South Asia – where over 80 per cent of the world’s poorest people live – to support the building of businesses and to create jobs.

We focus on investing in sectors where growth leads to jobs.  These include microfinance institutions, as well as companies in agribusiness, construction, manufacturing and broader financial services. In 2014, our investments created around 1.3 million direct and indirect new jobs and livelihoods.

Why is microfinance important for women and their families?

Many of the businesses we support help empower women and this is particularly true of microfinance institutions and other financial services companies. CDC has invested over US$300m in microfinance institutions and funds to date, reaching out to over 15 million women clients.

There are a number of reasons why microfinance is important for women and their families. According to the World Bank, only 50 per cent of women in the world have access to formal financial services and microfinance institutions aim to improve this statistic. However microfinance is not only economically but also socially empowering for women by enhancing their status in male-dominated societies, improving financial literacy, and allowing them to scale up their businesses. Also, when women participate in the workforce and are earning, it tends to have a positive impact on the family as a whole with evidence suggesting that women reinvest 90 per cent of their income back into the families, while that figure is just 35 per cent for men.

Can you give us any examples of how CDC’s investee companies have supported women?

CDC recently invested in Equitas, an Indian microfinance institution based in Chennai, Southern India. Its clients are women who run small businesses.

We decided to invest in Equitas because the company prides itself on being a responsible lender – before loans are given, borrowers attend three days of financial training and further support and advice is provided afterwards too. Equitas has helped many women entrepreneurs. Kala was given a loan equivalent to around US$160 to buy a sewing machine and start her tailoring business. When colleagues met Kala recently in Chennai, she said she was close to repaying the loan and she uses the extra income she now generates to pay for her children’s education.

Kala.jpg

Kala, Entrepreneur. Source: CDC

In Africa, CDC has invested in DCFU Bank in Uganda, which helps support women entrepreneurs to start and build their businesses. For example, Yvonne Katamba used a loan to help grow her cleaning business. In just 10 years, it grew from an annual turnover of US$2,000 to US$275,000, and she now employs 175 people.

Yvonne Katamba.jpg

Yvonne Katamba, Entrepreneur. Souce: CDC

What plans does CDC have for future investments?

At CDC, we will continue to invest in sectors and business which can create jobs and make a lasting impact to people’s lives. This includes supporting companies in Africa and South Asia that help to empower women.

In the last financial year, our figures suggest the businesses we invest in employ 165,000 direct jobs for women. Our aim is to continue to build on this, so we can provide opportunities to even more people in some of the poorest parts of the world.

Dinner Debrief: Digital currency platform, Uphold, making global remittances more cost effective

by Miranda Barham, WAM UK Steering Committee Member

group uphold wam

WAM UK Dinner with Uphold on Digital Currency & Financial Inclusion

WAM was delighted to have Diana Biggs, VP of Uphold, the fastest growing money platform, speak at our latest dinner on how digital currencies can enable financial inclusion.

Today, more than 50 percent of the world’s adult population is denied access to affordable banking or basic financial services. Globally, 2.6 billion people are considered ‘unbanked’ or ‘unbankable’. The World Bank has identified cost and travel distances as two of the key reasons that 73% of the world’s poor remain unbanked: two factors that digital currencies can severely undermine.

Often the people who can least afford banking services are charged the most for them in the form of over-priced money transfer services, expensive currency exchanges, costly payment processors and risky cash couriers.

One of the major ways technology can enable financial inclusion is in making it cheaper and easier to send money quickly and safely. The World Bank’s data[1] shows that money sent home by migrants now represents one of the largest foreign income inflows to developing countries.  Eighty to 90 percent of remittance money is spent on basic necessities including food, clothing, shelter, healthcare etc.

Remittance funds are no small fry. Globally, remittance receipts (including both developing and high-income countries) were estimated at $563 billion in 2014 and are forecast to increase to $636 billion in 2017.  Typical remittance fees for sending $200 are around seven to eight percent.  Such fees are diverting money away from the recipients who need to keep as much of it as possible.

Uphold’s mission is to make it easier and cheaper for everyone to send, hold and receive money and allows its customers to do so only paying a small fee locally when the funds are withdrawn.  Users of Uphold’s platform, located in over 170 countries around the world, can upload funds through a variety of methods, including cash deposit, bank transfer, credit card and Bitcoin and send funds to other users regardless of their location instantly and for free. One of Uphold’s partners, LibertyX, allows access to bitcoin purchase and transfer using cash at 19,000+ plus stores across the US, many of which are convenience stores, and has become an increasingly popular tool for Latin American immigrants to store and send money abroad.

Users can also hold their funds on Uphold’s platform and swap it between currencies of their choice.  This allows users to protect themselves from fluctuating currencies and also have the option to store their funds in one of four precious metals.

The firm is actively working on partnerships to create more ways for people to access, send and hold money in more countries around the world.  It is also dedicated to keeping its pricing as low as possible, with the majority of services being free with the company instead charging small fees at the point of withdrawal of funds – it is after all intended to be a sustainable business model.

Diana notes that there is still much work to be done in working towards full financial inclusion via digital currency and platforms, such as access to connectivity and technology, educating customers on how to use the service and the technology that enables it, However electronic money transfer and digital currencies could be a powerful tool to enhance financial inclusion and much of its potential is yet to be explored. Moreover it can provide opportunities for those who live in unstable monetary regimes to manage their savings and payments by keeping their savings with Uphold in US$ for example or other more stable forms of value.

The point was made by some at the dinner, and agreed by Diana, that Uphold is not yet set up to reach the poorest who may even have issues with technological or even more basic literacy which will be a barrier to them accessing these services, unless through a grassroots partner that Uphold might work with. But we also concluded that the service fills an important gap in providing access to financial services to many who are unbanked or have limited access.

 

Group pic digital dinner

Event Attendee Group Photo  On the night, we discussed how decentralised blockchain currencies work, details of which are covered in a Q&A we did with Diana ahead of the event to bring us up to speed on this financial technology. It is clear that globally there is a lot of interest and momentum behind digital currencies and blockchain, however we do not often hear of strategies that grow financial inclusion or even consider it at all in their expansion plans. Diana gave us an interesting perspective as to how a disruptive, high growth technology could consider and be used to expand the global reach of financial services for all – including the unbanked and hard to reach – and therefore not exacerbate financial exclusion through a digital divide.

 

[1]World Bank press release October 22, 2015 http://www.worldbank.org/en/news/press-release/2015/10/22/world-bank-forecasts-a-slowdown-in-migrant-remittances-in-2015

 

Can Digital Currencies Enable Financial Inclusion?

Uphold invite

On January 26th, Tuesday, Women Advancing Microfinance UK are hosting a dinner in London to explore how innovations in financial technology, especially digital currencies, can further financial inclusion. Tickets to the event are available here.

On the night, Diana Biggs from Uphold, the fastest growing money platform in the world since its launch in 2014, will be leading the discussion. Diana is listed as one of the Top 25 FinTech influencers in the UK by City A.M.

Ahead of the event we asked Diana some questions for a primer on digital currencies and how we can reach the unbanked to ensure that they are not overlooked by technological advancement.

First things first, Diana, what are digital currencies and how do they work?

When we talk about digital currency, broadly we mean electronic money: payments that happen online, outside of a banknote, a coin; this could be paying online with paypal or credit cards and online bank transfers. Money is, from economic theory, a store of value, a medium of exchange and a unit of account. For a digital currency to serve as money, it must fulfill these things.

Virtual currencies, on the other hand, do not exist outside of the digital world – for example, payments you make on a video game, or Facebook credits.  According to a recent European Central Bank report on emerging currencies, one could argue that the line between a virtual currency and a digital currency lies in the interchange – if they can be traded P2P and used in the real world for physical goods and services they tend toward digital currencies; if used only for virtual world purchases in closed loop systems, then they are likely virtual currencies.

Finally, we have cryptocurrencies made popular by bitcoin, introduced in 2009. Cryptocurrencies use a cryptographic algorithm for security and anti-counterfeiting – they can also be, as is the case with bitcoin, decentralized, meaning there is no central government or party controlling it. Bitcoin’s value is determined by the market forces of supply and demand. While still very much in the early stages and likely not about to replace any of our home currencies anytime soon, it has opened up a lot of thought as to the benefits that come with truly digitizing money. Bitcoin is now used for interchange in the real world, so in that, it is also a digital currency.

We often hear of Bitcoin as a blockchain technology, what is that? And is it safe?

A blockchain is essentially a distributed ledger. A distributed ledger isn’t necessarily anything new technology wise, but it has been brought to the fore recently given the novel approach of bitcoin, which is the first and arguably only decentralized ledger – meaning there is no one central party controlling it.

The bitcoin blockchain is a secure database of all the transactions which have occurred on the bitcoin network. The “blocks” in the blockchain are groups of transactions, which have been computationally verified by bitcoin miners. Each of these blocks are time-stamped and secured cryptographically. For transactions to be approved, it need to be openly verified by all parties, using a consensus algorithm.

All nodes in the bitcoin system can download the blockchain ledger, meaning each node can have a full record of all transactions (hence, distributed and decentralized – there is no one central database). You and anyone else are free to download this, and all transactions are public and transparent. Being open and cryptographically secured, the blockchain is essentially tamperless.

Now that we know more about digital currencies, how can they help enable financial inclusion?

Digital currencies can take on the properties inherent in the internet, holding advantages over real cash, as email does compared to mailing a letter: it’s efficient; global and works across distances and borders; 24/7 and instant; peer to peer, and can have near zero cost – bringing massive efficiencies and cost savings over traditional methods.

With these advantages in mind, we begin to see how this kind of digitization of money and financial services, enabled by new technology, can help open doors for women and forward financial inclusion.

Can you give an example of how digital currencies further financial inclusion?

Sure. I’ll take the Uphold platform as an example, since that is what I am closest to.

Uphold’s digital money account provides individuals excluded from the banking system with a safe place to send and store their money, without cost and without borders. Within the platform, which is free to join, members can instantly send, hold, or convert between any of the 25 currencies on the platform at zero cost, with currencies converted at the mid-market rate – meaning no hidden fees in the exchange, bringing massive efficiencies and cost savings over traditional methods. Accessible from any connected device, Uphold is unique in being a truly global money account, available to individuals and businesses around the world, unlike banks whose operations are geographically siloed by country.

Our partners, who integrate with our platform via our open API, bring new on-ramps and off-ramps in various markets which further the opportunity. For example, LibertyX allows individuals without access to bank accounts to deposit their money into an Uphold account at over 10,000 retail locations in the US. This gives them a safe place to hold money, in the currency of their choice, be it US dollars or Mexican Pesos, with no account fees, transfer fees or FX fees, and send it worldwide instantly and for free.

We’re currently building out partnerships with mobile wallet providers and remittance companies across several geographies. The average cost of sending remittances worldwide is 7-8%. With Uphold, this is dramatically reduced – sending and converting is free and the only cost involved might be a fee for local cash out.

How big is the digital currency market currently and where do we expect it go?

At present, the understanding around digital currencies and integration into society remains relatively small. A recent report  by the Bank of England noted that although digital currencies could, in theory, serve as money for anybody with an internet-enabled device, at present they act as money only to a limited extent and only for relatively few people.

Despite the widespread use of cards, innovations like contactless and Apple Pay, and apps like Uber saving our card details sparing us from needing cash, today, in both rich and developing countries, cash remains king. Cash, however, has its disadvantages. It is easily lost, it is untraceable (whether that is a disadvantage or an advantage can be debated), it can be difficult to move around, risky to carry, and can even spread disease.

I believe, however, that the movement to digital currencies – whether a new currency itself or the digitization of fiat currencies (on Uphold, we work with both) – is inevitable and a matter of time. As mobile phones and internet connectivity becomes more ubiquitous, this is a key enabler. Comparable to email vs. the post, using and sending money digitally, makes it instant, secure, globally accessible and low cost to free. Governments, banks and businesses are beginning to realise these benefits and open up to the possibilities here.

How can those that are excluded by mainstream financial services access digital currencies?

There are a variety of ways. Anyone with a connected device and a form of ID can join an online platform, such as Uphold. There are no costs or restrictions to making an account. As mentioned above, LibertyX is one example of a platform (and there are more coming on each day) that allows individuals without bank accounts to store their money, deposited as cash, safely and securely in the cloud.

Interested in more? Come join us at the WAM UK dinner event in Central London on 26th Jan. Tickets available here.

This blog also appears on Business Fights Poverty, the world’s largest community of professionals passionate about harnessing business for social impact. 

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Q&A With Thea Anderson, Director of Financial Inclusion at Mercy Corps

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Two women transacting payments over their phones in Kathmandu, Nepal Source: Mercy Corps

WAM UK hosted a dinner with Thea Anderson, Mercy Corps’ Director for Financial Inclusion, with our members to learn more about the global organisation’s engagement in advancing access to financial services for women. Mercy Corps operates in 42 countries and is a leader in integrating mobile technology in financial inclusion. On the night, Thea shared her experiences working directly in designing and implementing solutions on the ground for Mercy Crops, and for the benefit for those who couldn’t join us, we asked her some questions here:

Thank you Thea for sharing your experiences with WAM, but first things first, could you introduce us to Mercy Corps?

Mercy Corps is an international non-governmental, non-profit agency impacting over 30 million people each year in the world’s most difficult places and emerging markets. We focus on solutions to systemic global poverty through humanitarian relief and long-term development. We recognize that new technology, business models and creative partnerships provide transformational opportunities to overcome poverty. Managing and providing technical assistance to over 40 country offices, with US and European Headquarters (based in Scotland) and a representative office in London U.K. Mercy Corps complies with the U.K. International Aid and Transparency Initiative and is rated each year by the U.S. Better Business Bureau and Charity Navigator – the premier American charity evaluator. Consistently, Mercy Corps receives the highest ratings. Mercy Corps ranked in the Top 10 in the 2013 Global Journal list of top 100 NGOs.

As Director of Financial Inclusion you’ve worked on expanding the reach of financial services in some of the world’s most fragile environments. Could you tell us more about Mercy’s Corp’s approach to financial inclusion?

Mercy Corps leads financial inclusion initiatives in over 30 countries partnering with commercial and public banks, MFIs, non-bank financial institutions, community-level financial institutions, and technology providers.  Even as a non-profit, we have launched commercial bank models in the Philippines, Mongolia and Indonesia, and most recently agent banking in Ethiopia which all use digital payments to serve millions of low-income clients without the need of a physical bank branches.

We recognize that traditional foreign aid hand-out programs will not lift and keep the billions of people at the bottom of the pyramid out of poverty. Mercy Corps therefore uses market-based approaches in partnership with commercial actors where feasible. We see technology as the key driver to lower transactions costs and payments as the entry point for other financial services allowing people to access money with the longer-term goal of establishing a place where they can safely save money, access capital and insurance products.

How does Mercy Corp use Technology to achieve financial inclusion, in particular with women?

Globally, Mercy Corps supports technology providers, financial institutions, and mobile network operators (MNOs) to identify and expand access to financial services at scale through the use of mobile and cashless technologies. This includes digital financial services and e-commerce platforms, agent networks, and bundled technology solutions such as the examples below:

  • In Nepal, Mercy Corps works with over 260 community-level financial institutions to access wholesale capital as well as introduce new savings, affordable credit, and remittances. This includes scaling several mobile payment platforms to rural Nepal in partnership with banks and Nepal’s largest branchless banking provider to reach thousands of new clients.

  • In Indonesia, Zimbabwe, and Uganda, Mercy Corps bundles financial services and farm- and crop-management tools for 170,000 small-holder farmers on affordable, unified mobile phone platforms. Farmers move along a four-step process using access to digital information and payments solutions as an entry point. Through these digital transactions, farmers build a transaction history to develop credit scores that enables them to engage with more formal financial services, including remittances, savings, credit, and insurance.

  • Mercy Corps hosted Tunisia’s first ‘Innovation Challenge for Financial Inclusion’ with financial institutions, crowd- sourcing platforms and angel investors for new mobile financial products for the growing Tunisian market. As a result, Mercy Corps is co-financing new crowdfunding platforms targeting youth entrepreneurs. In 2015, the Tunisian Post Office, which has over 1,000 branches and millions of clients, will launch a micro-savings product via mobile phones and electronic cards across the country with support from Mercy Corps.

Is Technology an effective enabler for financial services? If so, how can we ensure that women are not left out of the digital revolution?

Digital technology can change lives. It provides access to critical information for women. Female farmers can learn to weather costs of agricultural inputs, be linked to financial services such as payments, remittances, and savings, and connect to social media and e-commerce platforms. However, to benefit from technology you must have access to technology. Globally, over a billion women do not have full access to a mobile phone or access to digital financial services even in its most basic form.[1] This is especially acute in South Asia. Recent data shows than more that up to 50% of women in Niger, the Democratic Republic of Congo, and Indonesia have never used a mobile phone, even for voice calls.[2]

As the world moves forward towards digital, huge numbers of the population are being left behind. Not only is this a missed opportunity for women on the customer-side this is a huge lost for the commercial sector – up to an estimated £111 billion for MNOs alone over the next five years.

Mercy Corps has a major role to play – to connect different segments of women to technology providers, financial institutions, and MNOs to expand their access to and usage of digital financial services. International agencies like Mercy Corps offer valuable insights about potential client demand to governments, multinational corporations and technology firms that don’t have first-hand knowledge of field realities and needs. Development actors like Mercy Corps play a critical partnership role by mitigating risks for other actors, especially in complex and fragile states.

Looking ahead, what are the key priorities for Mercy Corps’ in financial inclusion?

Mercy Corps will continue to prioritize countries in transition from war or natural disaster or in the midst of economic or social transformation. For us, ‘business as usual’ means partnerships with governments and the private sector to solve complex global challenges of both emerging and pre-emerging economies, including financial inclusion.

Please find more on Mercy Corps current work in financial inclusion here.

[1] http://www.gsma.com

[2] Ibid.

7 Things I Learnt at the Global Social Business Summit 2015, Berlin

By Sophia Velissaratou, co-founder WAM UK

GBS

Source: Global Social Business Summit 

Social business is a relatively new concept introduced by Nobel Peace Prize winner, Professor Muhammad Yunus, which he describes in detail in Building Social Business. Simply put, Yunus describes two types of social businesses:

Type I: a non-loss, non-dividend company devoted to solving a social problem (concerning education, health, environment, access to technology etc) and owned by investors who re-invest all profits in expanding and improving the business.

Type II: a profit making company, owned by poor people, either directly or through a trust that is dedicated to a pre-defined social cause.

Professor Yunus distinguishes Social Business from other concepts such as Corporate Social Responsibility (CSR), social enterprise and entrepreneurship; seeing CSR as charity (CSR) and social entrepreneurship as profitable outfit for investors. Since its first inception the Social Business movement had gained momentum amongst many, ranging from businesses to NGOs to academia.

On the 6th and 7th of November, I attended the 7th Global Social Business Summit in Berlin and as the co-founder of WAM UK, I would like to share a few things I learnt with the wider WAM community:

  1. The Social Business movement is here. To stay: During the summit I came to realise that there are many social business initiatives and they take many forms. Take for example Grameen Danone who set up a small unit in Bangladesh to produce nutrition fortified yoghurt for low income families. Or McCain industries who have a program helping Greek farmers in the Northern village, Notia. Not to mention numerous university programmes worldwide focussed on the research and promotion of social business, for example The Grameen Creative Lab and Yunus Social Business, both of which have ample information to share.
  1. It’s not about the star, it is about the purpose: This year’s summit was marked by Prof. Yunus’ absence. A minor health issue prevented him from travelling to Berlin to be there in person but he addressed the participants with a video message. Undoubtedly any event Yunus attends attracts notable crowds and WAM UK experienced that first hand when we organised an event with him back in 2011. Yunus is often lovingly described as a rock star in his own right within the sector, which despite its obvious benefits can also be a drawback, since his absence could have led to disappointment and deflation. However, that was definitely not the case. Organisers and participants alike worked, presented and interacted with incredible drive and on top of it all – we had fun!
  1. Some CEOs get it. Big multinationals like Danone, Veolia, McCain and others talk and think seriously from a business perspective on how to solve social problems. They are not just interested in ticking CSR boxes or having a good PR profile. They are showing commitment to this type of business. They understand that failure is part of the process and not all social business ideas will work but they allocate time, resource and energy just like any other business unit they are running. They showed us that they won’t stop until their social businesses become sustainable and poor or unprivileged people have profited from it.
  1. There is such a thing as ‘good’ business, it’s called social business: During my years in finance I was always wondering why profit and growth usually come at the expense of values such as partnership, compassion or empathy. Can you not have a serious business proposition by combining all these aspects? The summit made me realise that social business is a legitimate answer to this question. Yes, you can have a business which is both profitable and solves a social problem. Yes, you can generate profit and re-invest it in the business to create more jobs; ameliorate conditions for poor people – to change the world.
  1. Partnerships are a must: Listening to the panel discussion during the conference I was impressed to see the degree to which partnerships are important for the success of social business. Words like competition, confidentiality, possession were not part of the social business vocabulary. Instead words like transparency, exchange of ideas, collaboration, resilience, joy and facilitation are the language of social business. This was evident in focus groups where there was a genuine exchange of ideas. The workshop organisers were not interested in telling their stories but in hearing our ideas on how we would approach a social business idea differently or find a better solution than the ones they thought of.
  1. Youth is the future: Yunus’ decision to focus on youth and academia shows he is a visionary. Social business is a relatively new concept that taps on ideas such as non-dividend business, compassion and teamwork etc. These and similar ideas are not commonly found in the conventional business world, and that’s likely because today’s professionals were not educated to think otherwise. Educating people on the concept of social business from an early age is key. Because these young students will be tomorrow’s academics, investors and entrepreneurs who will strive for a better world. On top of that, youth are very creative and driven – and experience suggests they don’t give up easily. Moreover, today’s youth are raised amongst increasingly advanced technology, a leading force in social business.
  1. Location, location, organisation: Last but not least I would like to mention the organisation of the conference. First I was impressed by the venue: Hangar 7 at Tempelhof airport was for me the perfect location for such a conference. The set-up of the venue facilitated the smooth transition from the panel discussions to the meeting area where participants could meet, grab a coffee and roam around the various stands promoting social business. The organising team practiced what they preached: from the conference bags, the conference furniture, the catering, the products, everything had a social business story to tell. Every single moment you were surrounded by inspiring examples. Hans Reitz (Head of GSBS and Founder of the Grameen Creative Lab) and his team created a fantastic environment for participants and they deserve compliments all round.

In short, I can’t wait for next year’s summit.

Find pictures of the Summit on GSBS website newsroom , GCL Facebook page, and a new video on YouTube.