The following was originally posted on CGAP Microfinance Blog. 

The SEEP Network recently released a new study, “Codes of Conduct and the Role of Microfinance Associations in Client Protection” that ... Read More >]]>

Cara Forster (center) presented on SEEP's new "Codes of Conduct" publication at the Finca offices for the Women of Microfinance (WAM) DC panel on January 25.

The following was originally posted on CGAP Microfinance Blog. 

The SEEP Network recently released a new study, “Codes of Conduct and the Role of Microfinance Associations in Client Protection” that explores the potential for codes of conduct to improve industry practices in client protection through three case studies: the Pakistan Microfinance Network, the Microfinance Institutions Network in India, and ProDesarrollo in Mexico.

The publication uses these case studies to demonstrate how industry actors are addressing some of the core consumer protection issues—transparency and disclosure, dispute resolution and complaints channels, responsible lending, and fair treatment—as well as some country-specific issues—such as a “staff bureau” in Pakistan that tracks past and current employees of PMN members who have committed fraud at work to warn others against hiring them.

But what does this movement towards codes of conduct amongst microfinance associations mean from the policy perspective? Policymakers (and the rest of us) cannot count on the microfinance industry to handle client protection all on its own, not least of which because it is only one niche amongst the broader range of financial services used at the base of the pyramid. So what then is the right balance between regulation and self-regulation in consumer protection?

To answer this question it is useful to analyze the comparative advantage of regulators and retail providers on an issue-by-issue basis. Some consumer protection goals and principles are more amenable to self-regulation and others less so. And there are a few areas where both providers and regulators can collaborate for better outcomes. Here are a few examples of what I mean:

Less amenable to self-regulation:
Pricing transparency and disclosure. All three cases in the SEEP study described how difficult it can be for associations to achieve consensus amongst their members on pricing and disclosure rules. In some cases it is even profitable in the short-term for a provider to obfuscate terms and collect high interest, fees, or penalties even if the loans provided are not sustainable in the long-run. Even if consensus is achieved by an industry association, it will likely not cover a large segment of the market, leaving some actors capable of continuing to gain market share and competitive advantage through price obfuscation.  For example, in Mexico, the ProDesarrollo network includes 85 financial institutions, including many leading MFIs, but does not cover most of the hundreds of the consumer credit institutions common in the Mexican market.

Regulatory rules on pricing transparency can achieve broader market coverage than most association-driven efforts. For example, in 2001 the National Bank of Cambodia prohibited the use of flat interest rate calculations amongst MFIs, which recent analysis by MFTransparency shows helped increase pricing transparency and reduce borrowing costs across the entire sector, something that may be beyond the reach of even the most powerful national MFI Association.

Finally, since transparency and disclosure are fairly rules-based issues  where unambiguous guidance and definitions can be established for all to follow, they lend themselves well to a legal and regulatory approach to develop market standards that can be applied broadly and effectively enforced.

Amenable to self-regulation:
Collections practices. Experience suggests that while regulators have a role in pointing out practices that are unacceptable, providers are better at developing operational solutions to the problems. Collection practices probably fall into this category. While regulators might want and need to set some basic rules (for example, around abusive behavior, property seizures, or handling of collateral), it is unlikely that they can determine the best way to implement those rules. Regulators’ impact on the market is likely to be limited without providers taking the lead in translating ideas into specific rules regarding collections staff and agents, training and internal controls to ensure compliance. Furthermore, given the reputational risk and politicians’ sensitivity to any whiff of abusive behavior, the industry has a strong self-interest to fix this particular problem.

May depend on the market context:
Responsible lending. Private sector efforts to improve lending practices through a code of conduct can include measures concerning affordability assessments, appropriateness of product design, or flexible payment terms. However, these topics are fairly subjective and hard to properly define and monitor. This means that the success of such measures will likely depend in great part on the level of influence and market share coverage of a particular industry association. Similarly, the theory that increased competition in a market will punish bad actors and reward responsible lenders with new customers does not always hold true in the short-term, and so there may be a need for policymakers to intervene and stem a growing credit bubble or widespread improper practices before they impact the entire market.

Opportunities for public/private collaboration:
Recourse and dispute resolution. Effective recourse systems generally involve both internal and external complaints and dispute resolution mechanisms, which ideally are coordinated. Many complaints made by consumers are actually questions or inquiries for further information, and can be handled quickly and efficiently at the provider level.  In general it is important that complaints be addressed and resolved as close to the customer and transaction as possible and that they be filtered from minor to more severe so that the government body responsible for recourse is not overwhelmed by handling hundreds or thousands of lower-level complaints, and can focus its time on the more significant or egregious cases. Sharing of consumer complaints data between public and private complaints mechanisms is also an important component of a public/private approach to recourse, and can help both sides monitor and detect client protection “hot-spots” as they arise.

Financial capability and customer education. Increased government interest in financial capability and consumer education programs is occurring simultaneously with interesting findings that point to the benefits of using actual consumer experiences to design more salient and “sticky” financial education programs. There is an opportunity here for providers and governments to partner and develop joint financial education initiatives that are based on products consumers use, but achieve national scale in their outreach (just such a campaign was recently launched in Colombia.)

What do you think? Are there other client protection issues that you feel are particularly “private,” “public,” or “both?” Are there other success stories you have seen of coordinated regulation/self-regulation efforts to improve financial consumer protection? How can we make effective business cases for these client protection measures that help industry associations convince their members to adopt these codes of conduct?

_____

Rafe Mazer is a financial sector analyst for CGAP’s Government & Policy team.

•         What capacity do you need in your organization to engage the private sector effectively?

•         What risks do you see in private ... Read More >]]> At the 2011 SEEP Annual Conference’s “Market System Facilitators Engaging with Corporates” workshop, the three speakers—Alison Griffith of Practical Action, Stephanie Daniels of Sustainable Food Labs, and myself (CARE)—asked the audience these three questions:

•         What capacity do you need in your organization to engage the private sector effectively?

•         What risks do you see in private sector engagement and how can they be managed?

UK supermarket ASDA stocks flowers from small-scale farmers in Kenya. | Sustainable Food Laboratory

It is interesting to put the workshop into perspective with the plenary session that came before it, “Leveraging Private-Sector Incentives and Strategies for Development Outcomes.” While the plenary session gave us a very good overview of the potential of the private sector as a development actor in terms of outreach and income (mainly from the perspective of international agencies and donors), the workshop described the point of view of NGOs, pointing at the necessary elements to make things work in practice.

It became clear in the workshop’s group discussions that while leveraging private sector resources and motivations can be a key element of success for market engagement initiatives, this approach is not a silver bullet. Other important elements need to be taken into account, as highlighted by the discussion:

We need to take the entire system into account: Engaging with corporations does not necessarily work unless the whole market system is analysed and engaged.

Engaging with corporations, especially in high-value export markets, presents risks for small producers, particularly in terms of food security. Mitigation strategies–for instance, promoting a mix of food crops and cash crops among smallholders–are necessary.

Facilitators should: 

-      Engineer relationships, rather than being part of the system

-      Build capacities in order to meet opportunities

-      Support smallholders to assess risks themselves.

The next generation of market facilitators will need blended skills. They must be able to speak both NGOs’ and corporations’ languages. In some cases this implies a cultural change as well.

Timelines conflict: project cycles happen in the medium term, while commercial cycles occur in the short term.

The reputational risk for NGOs to engage with some “not so responsible” corporations also remained between the lines of the discussion, and needs to be clearly addressed through a structured analysis.

The role of the private sector in market systems became a sort of sub-track within market development during the conference, and the question of how to make these partnerships work effectively should constitute a key learning theme for the development community.

Presentations from this workshop are available in PDF form here, under Enterprise and Market Development Systems Track.

The last question we want to look at (and the one raised in our prior post) is how financial inclusion data can be used in practice. The first step here is ... Read More >]]> Pour accéder la traduction française, veuillez défiler vers le bas.

What do we do with this data? How do you get the right data to the right people?

The last question we want to look at (and the one raised in our prior post) is how financial inclusion data can be used in practice. The first step here is to look at the different potential audiences for this data and how they may use the information. Do these align with goals and audiences of networks?

A first audience is policy-makers. So far, much activity on ‘financial inclusion’ has taken place in the high-level policy sphere. Regulators and policy-makers use data on financial inclusion to develop policy and to monitor progress. For instance, the superintendency in Peru uses benchmarks on financial inclusion to measure progress in reaching under-served areas. The Central Bank of Nigeria (among the markets with the largest access gaps) has set ambitious goals for the reach and scope of the sector. (Expect to see more research on this via MIX soon!)

The data needed to measure this progress is precisely the type of data that networks are well-placed to provide though – in the case of Peru, for instance, some large MFIs are not regulated, but are members of local and international networks. For networks that have policy advocacy as part of their focus, building up financial inclusion data can support that agenda.

MFIs can also use landscape data. If an MFI wants to expand into new markets or offer new products, a comprehensive landscape view can help to support business planning. What types of competition might they encounter? Which populations are most under-served? This is where a sub-national view on the data can be even more valuable. Data at a country-level may be of some use, but data at a branch or district-level will be even more powerful for MFI practitioners.

Networks themselves are another potential beneficiary from landscape data. How many networks produce state-of-the-sector reviews or annual updates for members? Landscape data can give the big picture on the sector for members, and place their activities in context, whether the network itself has a broad or a narrow focus for membership. Information as in these sector maps from AEMFI or APIM – BF or MITAF or the DRS in Senegal – provides a baseline. Networks can also use landscape data to highlight gaps or opportunities for donors and investors.

Our knowledge and standards on financial inclusion are still developing. But if we want to build a realistic understanding of the world – and not just where the streetlight shines – networks can play a key role in data collection, data sharing and analysis.

*             *             *             *             *

Que faisons-nous avec ces données? Comment obtenez-vous les bonnes données aux bonnes personnes?

La dernière question que nous voulons regarder (et celle soulevée dans notre blog précédent) est de savoir comment les données de l’inclusion financière peut être utilisée dans la pratique. La première étape est ici d’examiner les différents publics potentiels de ces données et comment ils peuvent utiliser l’information. Ces s’alignent sur les objectifs et les publics de réseaux?

Une première audience est les décideurs politiques. Jusqu’à présent, beaucoup d’activité sur «l’inclusion financière» a eu lieu dans la sphère politique de haut niveau. Les régulateurs et les décideurs politiques utilisent des données sur l’inclusion financière pour élaborer des politiques et à surveiller les progrès. Par exemple, la surintendance au Pérou utilise des repères sur l’inclusion financière pour mesurer les progrès pour atteindre les régions mal desservies. La Banque centrale du Nigeria (parmi les marchés les plus grands écarts d’accès) a fixé des objectifs ambitieux pour la portée et l’étendue du secteur. (Attendez-vous à voir davantage de recherches sur ce mélange via MIX bientôt!)

Les données nécessaires pour mesurer ces progrès est précisément le type de données que les réseaux sont bien placés pour fournir – dans le cas du Pérou, par exemple, certaines grandes IMF ne sont pas réglementés, mais sont membres de réseaux locaux et internationaux. Pour les réseaux qui ont plaidoyer politique dans le cadre de leur orientation, la constitution de données de l’inclusion financière peut soutenir que l’ordre du jour.

Les IMF peuvent également utiliser les données du paysage. Si une IMF souhaite développer de nouveaux marchés ou d’offrir de nouveaux produits, une vue complète du paysage peut contribuer à soutenir la planification d’entreprise. Quels sont les types de la concurrence ils pourraient rencontrer? Quelles sont les populations les plus mal desservies? C’est là une vue sous-national sur les données peuvent être encore plus précieux. Les données à un niveau national peut être de quelque utilité, mais les données dans une succursale ou au niveau du district sera encore plus puissant pour les praticiens de l’IMF.

Réseaux eux-mêmes sont un autre bénéficiaire potentiel à partir des données du paysage. Combien de réseaux produisent les revues de l’état du secteur ou de mises à jour annuelles des membres? Paysage de données peut donner une vue d’ensemble sur le secteur pour les membres, et le lieu de leurs activités dans le contexte, si le réseau lui-même a une large ou une vision étroite de l’adhésion. L’information comme dans ces cartes à partir du secteur de AEMFI ou APIM – BF ou MITAF ou le DRS au Sénégal – fournissent une base. Les réseaux peuvent également utiliser les données pour mettre en évidence les lacunes du paysage ou des opportunités pour les donateurs et les investisseurs.

Nos connaissances et des normes sur l’inclusion financière sont encore en développement. Mais si nous voulons construire une compréhension réaliste du monde – et pas seulement là où brille le lampadaire – les réseaux peuvent jouer un rôle clé dans la collecte de données, le partage de données et d’analyse.

When MIX took on the project to create the map of financial inclusion in Africa, the first question we asked ourselves was, “Where are we going to get this information?”  We know that data is not always easy to come by, especially within the microfinance world. ... Read More >]]> Pour accéder la traduction française, veuillez défiler vers le bas.

When MIX took on the project to create the map of financial inclusion in Africa, the first question we asked ourselves was, “Where are we going to get this information?”  We know that data is not always easy to come by, especially within the microfinance world.  There are myriad agencies across sub-Saharan Africa collecting various data points from all kinds of financial service providers, but little consistency of the data or frequency of collection.

Some financial service providers are regulated, and thus required to report to Central Banks – but which data points, and how frequently they are required to report lacks consistency even within a given market, let alone across the continent.  Many others are not regulated, and who they report to can be complicated and multi-fold.  Often credit unions have their own apex body to report to, not to mention the global credit union association, WOCCU.  Mobile banking tends to have its own very specific legislation, as well as the international mobile money focused organization GSMA.  But what of the NGOs and the non-bank financial intermediaries (NBFIs)?  Who do they report to? Who is collecting data from them to help track the outreach and performance of these institutions which are providing access to financial services to the poor?

This is one place where national level networks play a key role.  There are many institutions that regulators don’t see; networks are our unique window onto this world – they help us look outside the streetlight.  But what is the role of networks as data providers? How do networks chose from whom they collect data?  Do they target only those institutions that are not already reporting elsewhere?  If so, there really is no single repository for information on inclusive access to financial services across any given market.  Yet, trying to collect data from all institutions providing financial services to the poor on an annual or potentially quarterly basis, would require strong capacity.  So where to draw the line?  How does your organization select which institutions to target for data collection?  What role does data collection play for your organization?

A question that may be even more important is, “What’s the point?”.  Collecting data requires substantial time and effort, so why bother?  Who uses it?  Earlier this year MIX conducted a survey across sub-Saharan Africa on the reporting burdens of MFIs, and discovered that the total burden of reporting to central banks, networks, investors, MIX and others can be extremely cumbersome, sometimes necessitating a full time employee to focus solely on preparing reports to external stakeholders. This can be both time consuming and expensive.  So again, what’s the point?

They say knowledge is power.  However, this is only the case if one actually utilizes this knowledge in a productive way.  So, who currently is using this data that is so painstakingly collected by hundreds of organizations?  Who should be using this data?  In what format do your organizations collect data, and how is the information that you have collected disseminated back to the financial service providers?  Are they receiving any benefit from reporting, or is it only a drain on their time and resources?  Is this information also getting into the hands of decision-makers on a higher level, to play a role in the development of appropriate legislation?

We know that it can be difficult to obtain accurate and timely information from MFIs.  We also know that it is essential that we do this.  But how can we ensure that we are maximizing our use of the information that we have?  How does your organization use the data that you collect?  How can organizations within the industry work together to get the right information into the right hands in a useful way?

*              *              *              *              *

Lorsque MIX a commencé le projet pour créer la carte de l’inclusion financière en Afrique, la première question nous nous sommes demandé était: «Où allons-nous obtenir cette information?” Nous savons que les données ne sont pas toujours faciles à trouver, surtout dans le monde de la microfinance. Il existe une myriade d’agences à travers Afrique sub-saharienne recueillant différents points de données de toutes sortes de prestataires de services financiers, mais peu de cohérence des données ou fréquence de la collecte.

Certains fournisseurs de services financiers sont réglementés, et donc requis de faire rapport aux banques centrales – mais quels points de données, et à quelle fréquence ils sont requis de faire rapport manque de cohérence, même au sein d’un marché donné, et encore moins à travers le continent. Beaucoup d’autres ne sont pas réglementés, et qui font rapport à qui peut être compliqué. Souvent les coopératives de crédit ont leurs propres organe suprême de lui faire rapport, sans parler de la Global Credit Union Association, le WOCCU. Les services bancaires mobiles tendent à avoir leur propre législation très spécifique, ainsi que l’organisation GSMA, axée sur l’argent mobile international. Mais ce que les ONG et les intermédiaires financiers non bancaires (NBFI)? Qui ont-ils des comptes? Qui collecte les données de leur part pour aider à suivre la diffusion et la performance de ces institutions qui sont l’accès aux services financiers aux pauvres?

C’est un endroit où les réseaux au niveau national jouent un rôle clé. Il ya beaucoup d’institutions que les régulateurs ne vois pas; réseaux sont notre unique fenêtre sur ce monde – ils nous aident à regarder à l’extérieur du lampadaire. Mais quel est le rôle des réseaux en tant que fournisseurs de données? Comment les réseaux choisissent de qui de recueillir des données? Est-ce qu’ils ne ciblent que les établissements qui ne figurent pas déjà des rapports d’ailleurs? Si oui, il n’ya vraiment pas de référentiel unique pour l’information sur l’accès aux services financiers inclusifs dans un marché donné. Pourtant, en essayant de recueillir des données auprès de toutes les institutions fournissant des services financiers aux pauvres sur une base annuelle ou potentiellement trimestriels, exigerait une forte capacité. Alors, où tracer la ligne? Comment votre organisation sélectionner les établissements à cibler pour la collecte des données? Quel rôle joue la collecte des données de votre organisation?

Une question qui peut être encore plus importante est: Quel est le point? La collecte de données nécessite du temps et des efforts substantiels, alors pourquoi s’embêter? Qui l’utilise? Plus tôt cette année MIX a mené une enquête à travers l’Afrique sub-saharienne sur les charges des rapports des IMF, et a découvert que le fardeau total de rapports aux banques centrales, des réseaux, des investisseurs, MIX et d’autres peuvent être extrêmement lourdes, nécessitant parfois un employé à temps plein pour concentrer uniquement sur la préparation des rapports aux parties prenantes externes. Cela peut être à la fois long et coûteuse. Encore une fois, quel est le point?

Ils disent que la connaissance est pouvoir. Cependant, ce n’est le cas que si l’on utilise réellement ces connaissances de manière productive. Alors, qui utilise actuellement ces données qui est si minutieusement recueillies par des centaines d’organisations? Qui devrait être d’utiliser ces données? Dans quel format vos organisations recueillent des données, et comment sont les informations que vous avez recueillies diffusées aux fournisseurs de services financiers? Ont-ils reçu aucun bénéfice de rapports, ou est-ce seulement une ponction sur leur temps et de ressources? Est-ce que cette information est également tombé entre les mains des décideurs à un niveau supérieur, à jouer un rôle dans le développement d’une législation appropriée?

Nous savons qu’il peut être difficile d’obtenir des informations précises et en temps opportun auprès des MFI. Nous savons également qu’il est essentiel que nous le fassions. Mais comment pouvons-nous nous assurer que nous maximisons notre utilisation des informations que nous avons? Comment votre organisation utilise-t-elle les données que vous collectez? Comment peuvent les organisations au sein de l’industrie travaillent ensemble pour obtenir la bonne information dans les bonnes mains de manière utile?

Researchers sometimes speak about ‘the streetlight effect.’ There are different versions of this story, but most follow along these lines:

A policeman sees a man searching for something under a streetlight and asks what he has lost. ... Read More >]]> Pour accéder la traduction française, veuillez défiler vers le bas.

What do we need to know about financial inclusion in Africa?

Researchers sometimes speak about ‘the streetlight effect.’ There are different versions of this story, but most follow along these lines:

A policeman sees a man searching for something under a streetlight and asks what he has lost. He says he lost his keys and they both look under the streetlight together. After a few minutes the policeman asks if he is sure he lost them here, and the man replies, no, that he lost them in the park. The policeman asks why he is searching here, and the man replies, “this is where the light is.”

Working in development, we should be familiar with the notion that good information can be hard to find – that “it is often extremely difficult or even impossible to cleanly measure what is really important.” The challenge then is to see if we can shed light in the areas that matter the most. The topic of financial inclusion is one area we have an opportunity to illuminate, with the goal of eventually providing better financial services for the poor.

Earlier this year, MIX worked to compile a dataset on financial inclusion for sub-Saharan Africa. This dataset brings together information from over 60 distinct industry resources along with hundreds of individual institutions, covering some 23,000 providers of financial services reaching low-income populations in Africa. The results of this are available here, and would not have been possible without the efforts of networks in Africa and abroad.

Our focus was on products and institutions with a dedicated focus to serving poor and low-income populations. Microfinance is defined by this same purpose – to serve poor and low-income populations. We know from financial diaries, such as Portfolios of the Poor, and demand-side surveys, like Finscope, that the financial lives of the poor are complex, relying on a range of different providers, often many at once.

The language of the microfinance community is similarly evolving and we hear more and more discussion of terms like ‘financial inclusion,’ ‘inclusive finance’ and ‘access to finance.’ Do these terms mean the same thing as ‘microfinance’ or are there differences? Does data on microfinance help us to gain an understanding of financial inclusion? Do current surveys or reviews of access to finance shed light on microfinance and the financial needs of the poor?

Africa has a diverse landscape of financial services providers – specialized microfinance institutions are an important part of this, but the poor also access financial services through banks, credit unions and cooperatives, postal savings banks, village savings-and-loan associations (VSLAs) and many other types of providers. Figure 1 below shows the outreach for these different types of providers across Africa.

Fig. 1: Outreach by type of provider and product

As a first result, this is useful for putting specialized microfinance institutions in context. We can add further detail to help us see the role that cooperatives, savings groups, banks and others play in different markets. Landscape data helps to evaluate the competitive landscape or to find potential opportunities for partnership, to link clients to additional services.

Broad landscape data helps measure financial inclusion, which can be useful for tracking country-level progress and for informing policymakers. However, most surveys on access to finance rely primarily on data from regulators, which can give a distorted picture of the world, especially for Africa. For instance, only five countries in Africa – Comoros, Ethiopia, Madagascar, Mauritius, Rwanda – report data on credit outreach (‘Overall Borrowers Per 1000 Adults’) to the IMF Financial Access Survey.

The next question is to see where there are gaps in our information – where does the streetlight not shine? We can then begin to look at ways to learn more about those portions of the sector that have less frequent or less reliable data. In particular, we can see the role that networks can play in building this knowledge.

Questions for the readers:

Do you view your work as relating to ‘financial inclusion/inclusive finance’ or ‘microfinance’ or ‘access to finance’ equally or are some of these concepts more important than others for your work?

Do these all mean the same thing?

Are there gaps in our information on financial inclusion?

*           *           *           *           *

Que devons-nous savoir au sujet de l’inclusion financière en Afrique?

Les chercheurs, parfois parler de « l’effet réverbère. » Il existe différentes versions de cette histoire, mais la plupart suivent le long de ces lignes :

Un policier voit un homme qui cherche quelque chose sous un réverbère et lui demande ce qu’il a perdu. Il dit qu’il a perdu ses clés et ils cherchent tous deux sous le lampadaire ensemble. Après quelques minutes, le policier lui demande s’il est sûr qu’il les a perdu ici, et l’homme répond, non, qu’il les a perdu dans le parc. Le policier lui demande pourquoi il cherche ici, et l’homme répond: « c’est là où la lumière est. »

Travailler dans le développement, nous devrions être familiers avec la notion que la bonne information peut être difficile à trouver – qu’« Il est souvent extrêmement difficile, voire impossible à mesurer proprement ce qui est vraiment important. » Le défi est alors de voir si nous pouvons faire la lumière dans les domaines qui importent le plus. Le thème de l’inclusion financière est un domaine que nous avons une occasion d’éclairer, avec l’objectif d’éventuellement de fournir de meilleurs services financiers pour aux pauvres.

Plus tôt cette année, MIX a compilé un ensemble de données sur l’inclusion financière pour l’Afrique subsaharienne. Cet ensemble de données regroupe des informations provenant de plus de 60 ressources de l’industrie distinctes avec des centaines d’institutions individuelles, couvrant quelque 23 000 prestataires de services financiers pour atteindre les populations à faible revenu en Afrique. Les résultats de ce projet sont disponibles ici, et il n’aurait pas été possible sans les efforts des réseaux en Afrique et à l’étranger.

Notre concentration était sur ​​les produits et les institutions avec un accent dédiée au service des populations pauvres et à faible revenu. La microfinance se définit par ce même but – pour servir les populations pauvres et à faible revenu. Nous savons par les journaux financiers, tels que Portfolios of the Poor, et les enquêtes côté de la demande comme FinScope, que les vies financières des pauvres sont complexes, en s’appuyant sur un éventail de fournisseurs différents, souvent plusieurs à la fois.

La langue de la communauté de la microfinance est également en évolution et nous entendons une discussion plus en plus de termes tels que «l’inclusion financière», «la finance inclusive» et «l’accès au financement». Est-ce que ces termes signifient la même chose que «microfinance» ou est-ce qu’ils sont des différences ? Est-ce que les données sur la microfinance nous aider à acquérir une compréhension de l’inclusion financière? Est-ce que les enquêtes actuelles ou examens d’accès au financement éclairent la microfinance et les besoins financiers des pauvres?

L’Afrique a un paysage diversifié de fournisseurs de services financiers – les institutions de microfinance spécialisées sont une partie importante de cela, mais les pauvres aussi accédent à des services financiers par les banques, les coopératives de crédit et les coopératives, les caisses d’épargne postales, associations de village d’épargne et de prêt (VSLAs) et de nombreux autres types de prestataires. La figure 1 ci-dessous montre le rayonnement de ces différents types de prestataires à travers l’Afrique.

Fig. 1: La portée par type de fournisseur et produit

Comme premier résultat, cela est utile pour mettre les institutions de microfinance spécialisées dans leur contexte. Nous pouvons ajouter plus de détails pour nous aider à voir le rôle que les coopératives, les groupes d’épargne, les banques et les autres jouent dans différents marchés. Paysage de données permet d’évaluer le paysage concurrentiel ou de trouver des opportunités potentielles de partenariat, pour relier les clients aux services supplémentaires.

Paysage de données vaste permet de mesurer l’inclusion financière, qui peut être utile pour le suivi des progrès au niveau des pays et pour informer les décisionnaires. Cependant, la plupart des enquêtes sur l’accès au financement s’appuient principalement sur les données des organismes de réglementation, ce qui peut donner une image déformée du monde, en particulier pour l’Afrique. Par exemple, seuls cinq pays en Afrique – Comores, Ethiopie, Madagascar, l’île Maurice, Rwanda – transmettent de données sur la portée de crédit (« Emprunteurs global par 1000 adultes ») pour l’enquête d’accès  financier du IMF.

La question suivante est de voir où il y a des lacunes dans nos informations – où ne brille pas le lampadaire? Nous pouvons alors commencer à chercher des moyens d’en apprendre davantage sur ces portions du secteur qui ont des données moins fréquentes ou moins fiables. En particulier, nous pouvons voir le rôle que les réseaux peuvent jouer dans la construction de ce savoir.

Est-ce que votre travail se rapportent également à «l’inclusion financière» ou «la microfinance» ou «l’accès au financement» ou sont certains de ces concepts plus importants que d’autres pour votre travail?

Ces termes signifient tous la même chose?

Y at-il des lacunes dans nos informations sur l’inclusion financière?

The presentations in the workshop entitled “Integrating Microfinance and Livelihoods: Plus Models that Make Business Sense” and the questions they raised  ... Read More >]]> (This is the third part of a three-part blog on the Vulnerable Populations track. Read about the Bermuda Triangle of economic empowerment in the first part here and more about the workshops in the second part here.)

The presentations in the workshop entitled “Integrating Microfinance and Livelihoods: Plus Models that Make Business Sense” and the questions they raised  made clear to me the divergent ways of navigating the Bermuda Triangle of economic empowerment.

BRAC Village Organization member

Here we had two organizations articulating what look like impressively effective models, but whose success depended a lot on sheer size. BASIX and BRAC are integrating activities all the way up the value chain, and all the way around the sustainable livelihoods framework, enabling their target groups wherever they need enabling. They are working on a large (if not very large) scale. And while they are not taking a facilitative approach, but rather delivering functions in the value chain themselves, the nature of the organizations makes it difficult to argue that they are not permanent market actors (as a market system facilitator might). In this sense, their models are fairly sustainable.

But what can most of us learn from these “integrated” models? Most practitioners don’t have the capacity to build the diverse skill sets required to work effectively on so many levels. Most practitioners don’t have the capacity to drive impact at scale through sheer scale of programming. Most practitioners have to live with project cycles and grant funding, and the challenge of sustainability in this environment (not to mention the moral hazard of it all).

So while one side of the fork in the road takes us into the territory of multi-faceted, integrated programming, the other side takes us into the territory of the smaller organizations and what they can learn to improve their poverty outreach, sustainability, and leverage for cost-effective scale. Down this road, we head into the territory of core competencies and complementary partnerships.

I learned an enormous amount from my fellow panelist Janet Heisey’s case in the “A Rising Tide Won’t Lift All Boats: From Differential Needs of the Extreme Poor to Market Participation” workshop. This was helped along by the dialogue Jan facilitated between us ahead of the workshop itself. Bringing together such different projects (Trickle Up and Practical Action) challenged me to take a different lens to reflect on Practical Action’s project, be honest about its limitations, and therefore genuinely seek to learn from others. At the same time, it reinforced my convictions about the project’s strengths, hopefully helping me to articulate it better to others.

The role of the coach in Trickle Up’s project and the facilitator in Practical Action’s project is critical. The skill sets of a good coach or facilitator, which contrast with each other on many levels, are united in their complexity. Good coaching, like a good facilitation, is not about following a foolproof recipe. Rather it requires probing at a situation, sensing how it reacts, and responding and amplifying based on that feedback. Furthermore, these skills must be embodied not just by the field staff, but by the program itself, and the managers responsible for creating the working environment that encourages this behavior.

Dave Snowden introduces the Cynefin Framework.

Capacity building is one of the issues that goes deeper and beyond questions of “best practice.” These are the issues that put into question whether it even makes sense to look for “best” practice. Don’t get me wrong – we need to be practical. But that which has most practical value may not be a list of best practices.

More valuable may be addressing what USAID’s Jason Wolfe – who moderated the “Strengthening the Bottom Billion” plenary – and Lauren Hendricks (executive director, CARE USA) referred to as a “culture clash,” where programs are not encouraged to take risks, be innovative, make the necessary mistakes, and learn from the them in the pursuit of greater effectiveness. What are rare examples of programs with the confidence to overcome the rut? How do they do it? What do they look like?

More valuable may be to draw on the Cynefin Framework, presented by Coady Institute’s Anuj Jain at the “Economic Strengthening Approaches for the Bottom Billion” training. The Harvard Business Review-featured framework presents the distinction among simple, complicated, complex, and chaotic situations, and argues that appropriate decision making requires divergent approaches depending on what kind of situation we are dealing with. Underlying this entertaining video, Anuj was suggesting the same question as the Enterprise and Market Development Systems track workshop on complexity theory: Have we oversimplified development practice? Are we ignoring that most situations we face are complicated or complex, and need to be recognized as such if the appropriate decision-making modes are to be deployed?

More valuable may be to think more carefully about how we build capacity of those who are supporting the process of change, such as market system facilitators and field coaches. It may be helpful to continue exploring what capacity it requires to implement integrated programs really effectively. How often are skill sets, methodologies, time-frames, and even basic values too diverse and even inconsistent for integrated programs to work well? If evidence suggests this is often the case, what can we learn about development’s successful partnerships, where the contrasting and complementary skills of a variety of partners come together to manage complexity and leverage sustainable impact on the very vulnerable on a large scale?

In this workshop we heard from three programs that work from two ends. On one end, these programs push vulnerable people up a pathway out ... Read More >]]> (This is the second part of a three-part blog on the Vulnerable Populations track. Read the first part here. The presentations referenced below are available in PDF form here under Track 4.)

Reaching Vulnerable Households through Value Chain Development

In this workshop we heard from three programs that work from two ends. On one end, these programs push vulnerable people up a pathway out of food insecurity, asset de-accumulation, and social marginalization. On the other, they seek to support effective and inclusive value chains that can reach down to envelop these people into sustainable livelihoods and expanding incomes. What I found most interesting were the experiences and lessons around the “push” end.

Member of Cardno's Value Girls program in Kenya.

Jay Banjade at CARE Ethiopia flagged the importance of thinking carefully about the expected trajectory for their Productive Safety Net Program (PSNP PLUS) target groups, and then designing the sequence of interventions accordingly. Not thinking about the trajectory can lead to programs providing the right type of support at the wrong time, or even worse, the wrong type of support at the wrong time.

Furthermore, Jay emphasized that graduation is not just about good sequencing. It is also about facilitating people to have the right motivations and aspirations. He recounted one example of a woman who hid her assets so she would not graduate, because she feared losing the support of the program. He also recounted a family graduating earlier than expected, propelled by their negative perceptions of themselves as the beneficiaries of aid. Jay wants to explore how to better build the capacity of his field staff to deliver the kind of mentoring that helps vulnerable people increase their confidence and change their attitudes.

This type of facilitation and mentoring was also a central point in the other two presentations in the workshop. Jacqueline Bass (Cardno Emerging Markets) explained that in the Value Girls Program in Kenya, mentoring included entrepreneurship and business support. Jacqueline made it clear that the scale-up success of the program’s poultry microenterprises was due to extensive piloting of these educational and business support activities.

Tom Roberts of World Vision focused half of his presentation on what he calls “internal drivers to help vulnerable households link to markets.” Developing these internal drivers involves helping target groups to overcome the stigma of poverty, improve their functional literacy and confidence in their abilities, and increase social cohesion around households. The approach of World Vision’s Promoting Agriculture, Governance and Environment (PAGE) project is to nurture these social drivers through savings groups. Interesting in its own right is PAGE’s attempt at leveraging new entrepreneurs’ sense of place in their societies to get micro and small businesses to contribute to community-based safety nets.

Savings-Linked Conditional Cash Transfers in Latin America

This workshop had many themes in common with the previous one. Ultimately the panelists were taking on the gap between formal systems (this time financial systems rather than value chains) and vulnerable populations from both sides at the same time: “reaching down” and “pushing up.”

Image by Rufino Uribe

Speaking on the first of those two methods, Carlos Manuel Parra of Citi Foundation and Fermin Vivanco of the Inter-American Development Bank presented the “last mile approach” of the Pro-Savings Program, in which the interventions focus on strengthening financial intermediaries’ ability and incentives to “bank” recipients of cash transfers. This process makes savings-linked conditional cash transfers more systemically effective and sustainable.

Chris McHugh discussed the “pushing up” approach through the experiences of the World Council of Credit Unions’ financial education programs. Key conditions of success were identified as the need to be context-responsive and tailored to the needs of a particular target group, recognizing that not all the poor are the same; a direct linkage between the training program and the financial products available to maximize the effect of the training; and the sustainability of its delivery, including an appropriate level of resource allocation, considering that training programs are typically under-resourced.

Integrating Microfinance and Livelihoods: Plus Models that Make Business Sense

This session gave us a glimpse into how BASIX and BRAC, some of the largest microfinance and development organizations in the world, tackle the issue of financial inclusion. The messages from the panelists and moderator Malini Tolat of Grameen Foundation were loud and clear. First, reaching the vulnerable requires a multi-pronged approach informed by an understanding of the multiple vulnerabilities very poor people experience in their livelihoods. Second, helping the poor overcome these vulnerabilities sustainably requires change at the level of the value chains in which these people participate.

(More on this in Part 3)

A Rising Tide Won’t Lift All Boats: From Differential Needs of the Extreme Poor to Market Participation

Jan Maes, co-facilitator of SEEP’s Poverty Outreach Working Group (POWG), brought Janet Heisey and I into this session to talk about two projects that each only focus on one side of “pushing up” and “reaching down.”

Janet directs Trickle Up’s Asia program, and presented on Trickle Up’s CGAP-Ford Foundation graduation pilot, which actively targeted extremely poor and vulnerable women in West Bengal. Trickle Up and partner Jamgoria Sevabrata designed and delivered intensive, multi-dimensional support through savings groups, and were heavy on personal coaching for the women.

A local para-vet runs a learning session with farmers as part of the business strategy he developed with Practical Action Bangladesh. | Image by Alexis Morcrette

Trickle Up’s project highlighted a number of very important lessons. First of all, there is a lot of confusion about the extreme/ultra/very poor. The very poor are often very difficult to reach, and projects can easily miss them. The most marginalized typically have so little confidence and are so busy that getting them involved in projects is a big challenge, and self-selection is almost impossible. Don’t assume that you are reaching the extreme poor if you have not deliberately gone out to get them. Secondly, extreme poverty looks very different in different places, and requires highly context-specific, tailored approaches.

Finally, as Janet described the intensive coaching that field workers carry out with the project’s participants, I drew a parallel with my field of market system facilitation: capacity. Good design is not even half the story of delivering the successful programs we promise. Capacity remains the biggest bottleneck to getting things right, and a limiting constraint to taking successful approaches to scale.

I presented Practical Action’s Shomparko project in Bangladesh. Shomparko means relationships in Bangla, and the name captures well the systemic, participatory, and facilitative principles of the project. Shomparko’s objective was to transform the market systems of dependable food crops to enable food insecure, net food-buying households to better provide for themselves and generate reliable and reasonable incomes from their production. The approach was to facilitate better relational conditions between market actors, including marginalized food insecure producers, in order for them to lead a process addressing issues around input provision, extension, and high transaction costs of sales. In practice, the project worked with both vulnerable households and less poor households, leveraging the productive and negotiating capacities of better-off farmers to deliver new market arrangements that food insecure target groups could also access.

(Read onto Part 3, “Questions for the future,” here).