women

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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Working with women refugees in Northern Iraq

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Mandana Hendessi, Iraq Country Director for Women for Women International, will be speaking at a dinner hosted by WAM UK on Tuesday 2nd May 2017 in London.

She will be talking about the work that Women for Women International (WfWi) and its partners are doing in and around refugee camps in the Kurdistan region of Northern Iraq where they are providing life and business skills training to women refugees, as well as psycho-social support and crucially, a safe space for women to gather, share experiences and support each other. Tickets to the event are available here.

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Ahead of the event, we asked Mandana to tell us a little of the work that is going on and why it has been important for Women for Women International to engage in this issue.

What impact is the project having on women refugees in areas like Northern Iraq?

We have reached out to 600 Syrian refugee women living both inside and outside camps in the Kurdistan Region of Iraq since November 2014. We have provided psycho-social support, livelihood training, women’s rights and gender-based violence awareness and prevention and access to justice. We have also provided training in business and leadership skills for the women. As a result of our training and support, we have seen the women improve their self-confidence, which enables them to be more involved in decision-making in the household as well as in the community. It empowers them to build and develop support networks in the community, connect to essential services, as well as become more confident in reporting harassment, abuse and violence to authorities. Importantly they are improving their income generation.

Why has WfWi chosen to work in this specific area?

When the war in Syria intensified in 2012, we were concerned about Syrian women and tried to find ways of supporting them but found it impossible to work in Syria itself as the security there deteriorated very rapidly. So we decided to support Syrian refugee women in neighbouring countries. The Kurdistan Region of Iraq was chosen because of the large influx of Syrian refugees there and the relative security it provided to work with the women through local partners.

What is it like for women living in the camps and surrounding areas?

Whilst living in a camp can provide some security and protection for women, it takes away their individuality, reducing them to a number. However, women who live outside camps are often more vulnerable to harassment and abuse by local men. They are often caring for their families on their own. Furthermore, they are more likely to be poorer, having to make ends meet on very low income.

The biggest threat to Syrian women in Kurdistan Region of Iraq is gender-based violence, which impedes their chances of finding gainful employment. Many of our beneficiaries have recounted experiences to us of when they have searched for jobs and were told by prospective employers that they would get a job if they had sex with them. Other women say they do not set foot outside the home because they fear abuse and harassment by local men ranging from taxi drivers to doctors.

What would happen to some of these women and their families if they didn’t receive support?

I can think of a few obvious possibilities: chronic physical and mental ill-health, heightened risk of violence, poor hygiene and nutrition, losing hope and inspiration – to sum up, the slow and painful death of a generation.

What are the prospects for people living in the camps?

Living in a camp should just be an emergency measure. It’s cruel and inhumane to expect people to live in a camp for years with no prospect of integration into the wider host country. We cannot subject people to such a restricted and soul-less existence for so long! The host countries have to find creative measures of integrating refugee and displaced families into the community. This is essential – refugee and displaced women have so much to offer not just to their own communities, but also to the host community, enriching the local culture.

Of course one would hope that the conflict in Syria and Iraq ends soon, that infrastructure is reconstructed, peace and reconciliation achieved so that Syrian refugees and displaced Iraqi women and their families are able to return home – but some may bond with their places of exile and with people who have embraced them; they settle into new jobs and new ways of living. They need to be allowed to exercise choices about where they want to settle – where they feel secure and comfortable.

 Is the situation getting worse in these areas/camps?

The current situation is desperate – I can’t think of a situation that could be worse than this! For the long-term, we need to work for peace and justice for all in the region; meanwhile, we need to run programmes for refugees and displaced women that aim to nurture their resilience and talents, helping them to rebuild their lives wherever they are and live more fulfilled lives with their families.

 

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Mandana Hendessi is an international development professional with over 25 years’ experience in management, consulting, designing and developing programmes for civil society organisations, governments, International NGOs, and the UN, covering a diversity of socio-economic and human rights issues.

Nearly all of her international experience has been in conflict-affected contexts. For example, in Iraq, Mandana supported the nascent women’s movement to secure a 25% quota for women’s representation in the parliament (2004). In the West Bank, she provided technical assistance to Palestinian women’s enterprises on a range of issues from market research to business planning (2007). In Afghanistan, as the Head of Mission for Medica Mondiale, an international NGO, she led on the development of psycho-social counseling and legal aid for Afghan women who have experienced gender-based violence, promoting access to justice for women who came into conflict with the law.

Prior to joining WfWI in February 2015, Mandana most recently directed the Afghanistan Program at Global Rights, where she engaged young Afghans to support and promote democratic values, the rule of law, and the rights of women.

Since 1993, Women for Women International has helped more than 447,000 marginalised women in countries affected by war and conflict. They serve women in 8 countries including Afghanistan, Rwanda, Nigeria, Democratic Republic of Congo and northern Iraq, offering support, tools, and access to life-changing skills to move from crisis and poverty to stability and economic self-sufficiency.

Women for Women International brings women together in a safe space to learn life, business, and vocational skills.  Once enrolled, each woman receives a monthly stipend – a vital support that enables her to participate. Women increase their ability to earn an income with new skills that are in demand. They learn about their legal rights, and they become knowledgeable about health and nutrition. The result: stronger women, stronger families, and stronger communities. The ripple effect is profound.

Key learnings about women & enterprise from the Trust Women Conference 2016

By Miranda Barham, WAM Steering Committee
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Cherie Blair moderates Women Entrepreneurs panel at Trust Women Conference, December 2016

  1. “The established way is not necessarily the best. If you want a different outcome, you need to do things differently. You need to be defiant.”

These were wise words from Professor Muhammad Yunus who talked to us about his experience in setting up Grameen Bank. He wanted to set up a bank for the poor, that lent to women. His contemporaries thought it could not be done. Prof Yunus looked at what the banks did that lent to the rich and he decided to do the opposite. Instead of pursuing contemporary banking models, he removed the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. More than thirty years later, Grameen Bank’s success has defied all those who told him he would not succeed. Not only has he created a successful bank in his home country of Bangladesh, but he has set up projects in 58 countries, including the US when in 2008, he created Grameen America. It now has 19 branches with over 85,000 borrowers. All the borrowers are women and the repayment rate is 99.5%. As Prof Yunus says to all those naysayers, “Trust women.”

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Professor Muhammad Yunus makes the keynote speech on Day 2 of the Trust Women Conference

  1. Cherie Blair, human rights lawyer and founder of the Cherie Blair Foundation for Women told us that, “155 countries have a law that impedes women’s economic development.”

Mrs Blair quoted a World Bank report released in 2015 which analysed the legal restrictions to women’s employment in 173 countries. It found that 155 of these countries have at least one law impeding women’s economic opportunities and in 18 countries, husbands can legally prevent their wives from working.

The report goes on to say that lower legal gender equality is associated with fewer girls attending secondary school relative to boys, fewer women working or running businesses, and a wider gender wage gap.

  1. Women lead only 5% of global companies but in the UK, women lead 40% of social enterprises.

While women lead very few companies on a global basis, they are much more highly represented in the UK when it comes to leading social enterprises.

Servane Mouazan, Founder of Ogunte, a firm that offers coaching and services to women in social enterprises and their business support providers, felt that this is because traditionally women’s enterprise has been promoted in areas where women have been serving for some time, as members of the voluntary sector, as unpaid carers, or in roles where women have been ‘relegated’ for centuries – such as the domestic sphere and education. As women started to volunteer and professionalise, they have done so in areas where social enterprise businesses emerged, and hence are more likely to lead them than mainstream commercial businesses.

  1. Only 5% of venture funding goes to women.

Clearly this is a major hurdle for women entrepreneurs seeking funding for new ventures and is at odds with global intelligence network Thomson Reuters’ assertion that ‘companies run by women perform better’. If they perform better, it should be an obvious investment choice, which leads to the next point.

  1. There is a pervasive unconscious bias when it comes to women

The conclusion was that much greater awareness and education is needed to counteract what appears to be a pervasive unconscious bias towards women whether it is in gender stereotyping of the toys girls play with, attitudes at educational institutions or in the workplace.

Siobhan Reddy, co-founder and studio director of Media Molecule, told us that by age 12, women were already discouraged from pursuing a career in technology. Siobhan has made it a priority to seek and hire women in her high-tech business, which in the predominantly male sector of gaming, boasts 30 percent female staff and 26 different cultures. In pursuit of greater female empowerment, she has acted to address the unconscious bias in a whole range of ways from ensuring the inclusion of non-stereotyped female characters in games to discouraging her female colleagues from answering the phone, the door and making tea. No more ‘Polly put the kettle on’ here!

SOCIAL ENTERPRISE AND MICROFINANCE – A POWERFUL PARTNERSHIP

by Miranda Barham, WAM UK Steering Committee

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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.

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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

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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.

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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.

The State of Responsible Investment

by WAM UK

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For our dinner event on responsible investment, specifically looking at how we can influence the way global companies act and impact the world, we interviewed one of the speakers, Martina Macpherson, Managing Partner of SI Partners.  

On the evening Martina Macpherson will be accompanied by Natacha Dimitrijevic, Associate Director at Hermes Equity Ownership Services and together they will lead an interactive discussion on responsible investment and the role of stakeholders in the investment value chain.

In theory long-term shareholder interests are aligned with environmental and social good. How does this work?

Large institutional investors, most of them pension funds are, in effect, ‘Universal Owners’, as they often have highly-diversified and long-term portfolios that are representative of global capital markets. Their portfolios are inevitably exposed to the external costs of business. Corruption, for instance, could lead to a significant fine with a direct impact on a company performance, but it also raises the cost of doing business for all others. Unchecked carbon emissions raises questions on a company’s quality of management; it also contributes to climate change with increased financial risks for all.  Long-term economic value creation and the wellbeing of beneficiaries are at stake.  Hence, long-term investors can and should act collectively to reduce financial risk from environmental and social impacts which means they have a responsibility to adopt an investment approach which considers sustainability issues.

Some investors have started to utilise a proxy such as employee safety. If we look at BP, this is a prime example where the safety record could have signalled future risk. Imperfect safety procedures in its US operations led to accidents and eventually the Gulf of Mexico oil spill that cost the firm tens of billions. Another more recent example is BHP Billiton, where shares hit a seven-year low after the Brazil dam disaster in November 2015.

How sensitive are companies (board and management) these days to sustainability issues in their business – how has this changed over the last 10 years?

Over the past decade, companies have started to think more intentionally about how to maximize shareholder value by exploring the complex interplay between financial, human, social…. Investments in better training, healthcare for instance have demonstrated direct financial returns through gains in productivity and efficiency.  Support for social programmes has accelerated economic growth and raised incomes – creating a wider consumer base and easing entry into new markets.

Terms like ‘shared value’ and ‘triple bottom-line’ are now commonplace in board rooms around the globe. As a result, corporate social responsibility (CSR) is no longer conceived as a series of seemingly random feel-good grants, but as an essential tool that impacts a company’s philosophy and core business strategy including its brand value, market access and operations.

This development is also supported by global norms and social initiatives such as the Sustainable Development Goals, more defined reporting and accounting frameworks such as GRI, IIRC, SASB or UNGP and encouraged by legislation, such as the EU Directive 2014/95/EU of non-financial and diversity information and the Modern Slavery Act, UK.

 While it sounds like an ideal situation if all investors took a long-term approach to investing, it would seem that many still chase short term returns and gains.  What proportion of global investment really now takes into account ESG issues?

The global sustainable investment market has grown both in absolute and relative terms to US$21.4 trillion at the start of 2014 – equal to approximately 25% of all the world’s financial holdings.

Source: GSIA, ‘Global Sustainable Investment Review 2014’

Negative screening, integration of  environmental, social and corporate governance (ESG) factors into investment processes and corporate engagement have been identified as the key investment approaches (for market growth and ‘impact’), in Europe and across the globe:

Source: Eurosif, European SRI Study, 2014

Overall, the definition of best practices in ESG integration is evolving very quickly. A few years ago, being a PRI signatory – where signatories pledge their support for responsible investment and incorporate ESG factors into their approach – was considered as advanced; it is now seen as a requirement for asset managers and, instead, the focus has shifted to measuring and benchmarking the effectiveness of ESG factors.

This blog also appears on Business Fights Poverty

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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.

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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.

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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

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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.