The SEEP Network
September 19 - 21, 2016
2013 Plenary Sessions
Wednesday, November 6th Plenaries
The development of sectors and systems requires collaboration across a range of partners – civil society organizations, development practitioners, businesses and business associations, government agencies and financiers from microfinance institutions to commercial investors. Whether initiatives relate to an economic sector such as manufacturing that integrates small-scale suppliers into value chains, or a social sector like education that provides affordable quality alternatives to inadequate public systems, partnerships are needed to strengthen both the sector and the larger system within which it exists.
SEEP members have been applying a market system’s perspective to development for over 10 years. From a SEEP member perspective, a huge stumbling block in the development of sectors often occurs when additional investment is needed for entities that could benefit an entire sector or system – particularly when the perceived investment risk versus potential financial and social benefit is not well understood. For example, investments may be needed in information infrastructure such as credit bureaus, microfinance institutions that wish to serve small-scale producers, SME firms that will benefit BOP suppliers, employees and consumers, and so on – that serve the development of an entire system and not just individual businesses.
From an impact investor perspective, an important challenge is finding scalable business models that are ready to receive investment . This requires moving from a firm focused perspective to one that looks at whole sectors or systems systems as described in the recent Omidyar Network publication, “Priming the Pump: The Case for a Sector Based Approach to Impact Investing”. This requires specific knowledge to determine the leverage points for investment in infrastructure development, market innovators and essential services that will lead to the creation of dynamic and competitive market systems.
Panelists will discuss how the two can join forces to ignite systems change and accelerate economic development.
How can collaborative efforts between market and financial system specialists and impact investors bring much needed infusions of capital to sectors in ways that catalyze inclusive growth while reducing investment risk?
What do we need to know about sectors in order to improve the potential for impact investing in the given context?
How can sector knowledge be applied to support impact investments in individual firms?
Are there ways to invest in an overall sector or part of a sector so that the investor can still realize a return on investment?
New technology is altering the financial landscape. New entrants seeking large scale deployment are entering into the traditionally reserved market segment for microfinance institutions. A more complex and competitive environment requires new strategies, services, and partnerships. Microfinance providers need to become more sophisticated to stay relevant. Stagnation and reluctance to adopt new technology have been noted as dominant concerns in the most recent Microfinance Banana Skins survey. There is a perceived risk that faster-moving rivals will gain market share from MFIs if the industry does not evolve at a quick enough pace. “New, innovative players are rapidly entering and have potential to eclipse MFIs’ relevance, especially in Africa with mobile network operators”- remarked one global investor. In order to face these challenges, a greater understanding of the pros and cons of different partnership models is required. This includes a careful look at both incentives and risks along with the compatibility of underlying business models.
Can MFIs stay relevant in an increasingly complex and rapidly evolving technological landscape?
Can they innovate at the pace needed to contend with new entrants?
What are the principal barriers to innovation, both intra-organizational as well as inter-organizational?
Thursday, NOVEMBER 7TH PLENARy
There are a number of gaps that create challenges in financial service delivery to smallholder farmers: poor infrastructure - for example, inconsistent or non-existent electricity, poor roads and transportation networks, lack of water sources and delivery systems, and underdeveloped information and communication systems; a regulatory environment that has not defined or enforced property and other rights (with impacts on collateral and other issues); and frequently disorganized agricultural value chains that do not function to the benefit of smallholders. These challenges, among others, increase the costs of financial services for smallholder farmers and create risks for financial institutions thereby demanding greater attention and innovation.
The FAO, for example, recommends that the way forward in reaching smallholders with financial services is “to embrace a multiplicity of financial service providers, approaches and products” including informal savings, value chain finance, collateral expansion and technology innovations. CGAP suggests that “different kinds of [agricultural] households have different kinds of financial needs, and that this variety in demand cannot be met by the same suite of financial products, terms of service, or even formal financial service providers.”
How can the majority of the 500 million smallholder farmers who are currently underserved be reached with appropriate financial services?
What are the most promising pathways to overcome obstacles and reach smallholder farmers with financial services?
Are financial solutions sufficient, or do they require non-financial solutions in parallel?
Does the answer lie in new technologies (such as mobile phone banking), provision of finance throughout-grower schemes or farmer aggregation, or the scaling of direct in-person lending? What should we be doing to advance financial access for smallholder farmers?