Full Download The New Microfinance Handbook A Financial Market System Perspective 1st Edition Joanna Ledgerwood PDF
Full Download The New Microfinance Handbook A Financial Market System Perspective 1st Edition Joanna Ledgerwood PDF
Full Download The New Microfinance Handbook A Financial Market System Perspective 1st Edition Joanna Ledgerwood PDF
com
https://textbookfull.com/product/the-new-
microfinance-handbook-a-financial-market-
system-perspective-1st-edition-joanna-
ledgerwood/
textbookfull
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
https://textbookfull.com/product/labour-market-and-retirement-
interactions-a-new-perspective-on-employment-for-older-
workers-1st-edition-hairault/
https://textbookfull.com/product/emerging-challenges-and-
innovations-in-microfinance-and-financial-inclusion-michael-
oconnor/
https://textbookfull.com/product/financial-accounting-a-
managerial-perspective-6th-edition-narayanaswamy/
https://textbookfull.com/product/financial-reporting-financial-
statement-analysis-and-valuation-a-strategic-perspective-
baginski/
New Framings on Anti Racism and Resistance Volume 2
Resistance and the New Futurity 1st Edition Joanna
Newton
https://textbookfull.com/product/new-framings-on-anti-racism-and-
resistance-volume-2-resistance-and-the-new-futurity-1st-edition-
joanna-newton/
https://textbookfull.com/product/the-handbook-of-market-
design-1st-edition-nir-vulkan/
https://textbookfull.com/product/making-it-in-the-market-richard-
neys-low-risk-system-for-stock-market-investors-1st-edition-
richard-ney/
https://textbookfull.com/product/psychotherapy-and-the-market-
system-easing-the-pain-kalman-glantz/
https://textbookfull.com/product/the-handbook-of-mobile-market-
research-tools-and-techniques-for-market-researchers-1st-edition-
poynter/
Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
75183
Casual labor Harvest
Sale of livestock Remittance
School fees
The New
Microfinance
Handbook
On microfinance and The New Microfinance Handbook
“Financial services help to smooth cash flows, build assets, invest productively, and, importantly, man-
age risks. Increasing the outreach of financial services that are affordable and meet the varied needs of
poor women and men can contribute significantly to economic development and overall quality of life,
key objectives of practitioners and policy makers alike.”
—Maria Otero, former CEO, Accion International
“The journey from microfinance to financial inclusion began in earnest when we understood that cli-
ents need diverse services such as savings, payments, and insurance, as well as loans. The New
Microfinance Handbook reflects a lesson we learned many years ago—that sharing knowledge and best
practices is so important to help providers, policy makers, and others to continue to innovate, adapt,
and scale financial services in order to add real value to customers in a responsible way.”
—H.R.H. Princess Máxima of the Netherlands, The UN Secretary-General’s Special Advocate for
Inclusive Finance for Development (UNSGSA)
“The New Microfinance Handbook fills a critical gap in the current literature on financial inclusion. I am
particularly pleased with the explicit focus on consumers and their needs—this, together with the
onset of technology-based delivery models, has been the most important shift in the microfinance field
over the past 15 years. I am sure that by taking the financial ecosystem approach and compiling all the
current trends into one volume, this book will serve as a reference for the large and growing financial
inclusion community for years to come.”
—Brigit Helms, author of Access for All
“Financial services that support asset building, investment, and risk management are critical for people
of all ages in frontier and postconflict environments. In The New Microfinance Handbook, the authors
highlight the importance of understanding client needs and the need for a more inclusive financial
sector. This work provides an excellent resource for navigating a diverse and rapidly changing micro
finance sector.”
—President Ellen Johnson Sirleaf, Liberia
“Poor people’s lives are complex; the goods, services and amenities that they need to escape from
poverty—and the means by which they get them—are equally diverse. One-size-fits-all solutions are an
illusion. Our challenge as development policy makers, researchers, and practitioners in all fields—be
that in finance, agriculture, health or education—is to understand and respond to this complexity in
ways that help build diverse, resilient socioeconomic systems that are able to serve the needs of the
poor, sustainably and at scale.
“The New Microfinance Handbook reflects this challenge. It moves beyond the original Microfinance
Handbook’s focus on retail microfinance to deal with the imperative of understanding and strengthen-
ing the wider financial ecosystem, which is essential to making financial markets genuinely work
better—inclusively and responsibly—for poor men and women. This shift has significant implications
for development agencies, requiring ‘smarter’ subsidies, different types of partners, and more facilita-
tive or catalytic interventions.”
—Robert Hitchens, Director, Springfield Centre, United Kingdom
The New
Microfinance
Handbook
A Financial Market System Perspective
1 2 3 4 16 15 14 13
This work is a product of the staff of The World Bank and external contributors. Note that The World Bank does not necessarily own
each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained
in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you.
The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board
of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this
work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the
part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.
Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World
Bank, all of which are specifically reserved.
This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creativecommons.org/licenses/
by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for
commercial purposes, under the following conditions:
Attribution—Please cite the work as follows: Ledgerwood, Joanna, with Julie Earne and Candace Nelson, eds. 2013. The New
Microfinance Handbook: A Financial Market System Perspective. Washington, DC: World Bank. doi: 10.1596/978-0-8213-8927-0.
License: Creative Commons Attribution CC BY 3.0
Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation
was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable
for any content or error in this translation.
All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington,
DC 20433, USA; fax: 202-522-2625; e-mail: [email protected].
Cover Image: Embroidery by Kaross Studio, Letsetele, South Africa. Used with permission from Gerhard Coetzee, who commis-
sioned the artwork. Non-English terms in the image and their translations are as follows: ABSA: Bank; KAART: Card game; LOBOLA:
Negotiated payment before a wedding; SAB: South African Breweries; STOKVELA: ROSCA (Rotating Savings and Credit
Association).
Foreword xv
Preface xvii
Acknowledgments xix
About the Authors xxi
Abbreviations xxiii
Introduction 1
Chapter 2. Clients 49
Stuart Rutherford, Daryl Collins, and Susan Johnson
Contents v
PART TWO. FINANCIAL SERVICE PROVIDERS 147
Index 479
Boxes
I.1 A Market This Big Needs Many Types of Providers 5
I.2 Latest Findings from Randomized Evaluations of Microfinance 6
1.1 From Microfinance to Financial Inclusion 17
1.2 Youth Financial Services: An Opportunity for the Future 18
1.3 Gambian Family Structure and Impact on Financial Behavior
and Demand 19
1.4 The Financial Service Needs of the Poor in Mexico 21
1.5 Reaching the Poorest: Lessons from the Graduation Model 22
1.6 Religion and Caste in India 23
1.7 The Embeddedness of Financial Service Use in Gender Norms
in Kenya 24
1.8 Understanding the Financial Market System 28
1.9 The Range of Providers in Sub-Saharan Africa 30
1.10 Savings-Led Financial Services in Bangladesh 31
1.11 Key Rules and Supporting Functions for Savings Services 33
1.12 Formal and Informal Rules 34
1.13 Understanding Informal Rules through Financial Landscapes 35
1.14 Potential of Mobile Banking 42
1.15 New Branchless Banking Business Models 43
2.1 Income Volatility, Week-by-Week and Year-by-Year 53
2.2 Cash Flow Management Given Volatile Seasonal Income 55
2.3 Ramna’s Top-Ups 56
2.4 Enayet’s Foot 57
2.5 Building a Home Little by Little 60
Contents vii
2.6 How MFI Loans Are Used in Bangladesh 62
2.7 Daisy’s ROSCA 65
3.1 Bank and Retail Network Partnership 73
3.2 Encouraging Stakeholders to Adopt New Rules 76
3.3 Policy for Microinsurance 76
3.4 Financial Capability Strategies 77
3.5 Financial Literacy in the Russian Federation 77
3.6 Financial Inclusion in Mexico 78
3.7 Financial Inclusion in India 80
3.8 Negotiating a Special Microfinance Law in Uganda:
The Outcome of Competing Interests 83
3.9 The Maya Declaration 84
3.10 The G-20 Principles for Financial Inclusion 85
3.11 SEEP’s Toolkit for Policy Advocacy 87
3.12 Battling Over-Indebtedness in Azerbaijan 90
3.13 Financial Education as Part of the Business Model 92
4.1 Shaping Intervention from an Understanding of the Market
System 105
4.2 Financial Sector Deepening Kenya (FSD Kenya) 106
5.1 Using Data to Increase Financial Inclusion 114
5.2 Evidence of Over-Indebtedness through Research 116
5.3 Microfinance Information eXchange 118
5.4 Savings Groups Information Exchange 120
5.5 Who Uses Landscape Supply Data? 121
5.6 Core Indicators of Global Findex 122
5.7 FinScope Surveys 123
5.8 Interpreting Financial Access Strands 125
5.9 Cash-In, Cash-Out: Financial Diaries in Malawi 127
5.10 Financial Landscapes in Kenya 129
5.11 Livelihood Landscape Studies 130
5.12 Measuring Outcomes of Facilitating Savings Groups 131
5.13 The Changing Focus of Impact Assessment 132
5.14 Participatory Rapid Assessment 135
5.15 The Difficulty of Proving Causation 137
6.1 Ghana’s Susu Collectors 152
6.2 Beyond Carrying Cash: Informal Money Transfer Systems 153
6.3 Rural ASCAs in India 155
6.4 Savings Groups and Other Activities 159
6.5 Paths to Savings Group Replication 160
6.6 Fee-for-Service: Variations on a Theme 161
Contents ix
10.3 Warehouse Receipt Systems: Lessons from Niger 242
10.4 Crop Receivables 244
10.5 Heifer International 245
10.6 FONDECO: Microfinance Innovations along the Value Chain 246
11.1 Key Insurance Terms 251
11.2 AKAM’s Experience with Village-Based Health Microinsurance
in Pakistan 253
11.3 IFFCO-Tokio’s Bundled AD&D Coverage 255
11.4 Collaborating with a Utility Company in Colombia 257
11.5 Savings Completion Insurance Offered by TUW SKOK 262
11.6 Microfund for Women’s “Caregiver” Product 263
11.7 Public-Private Partnerships and Health Microinsurance in India 264
11.8 Index Insurance and Technology: The Case of Kilimo Salama,
Kenya 265
12.1 Trends in the Average Cost of Remittance Services 273
12.2 Mobile Money Innovations in Microinsurance in the Philippines 274
12.3 Mobile Money in Papua New Guinea 275
12.4 Glossary of Terms Related to Alternative Delivery Channels 276
12.5 Expanding Rural Finance in Sri Lanka 279
12.6 World Food Programme Card Pilot, 2009 281
12.7 Cardless ATM Transactions 281
12.8 Payment Terminals in the Russian Federation 282
12.9 Urwego Opportunity Bank’s Mobile Bank and Open
Sky System 283
12.10 M-PESA Reaching Scale with Mobile Money 285
12.11 Banking with a Mobile Phone: The Customer Experience 286
12.12 Third-Party Providers: New Business Models 289
12.13 bKash Ltd. 290
12.14 Branchless Banking in Brazil 291
12.15 From Payment Terminals to Multiple Services 292
12.16 Cost of Managing Agent Liquidity 293
13.1 IFMR Trust in India 303
13.2 What Are the Attributes of Success in Adjacent Sectors? 305
14.1 Performance Monitoring of Savings Groups 323
14.2 Software Application Controls 327
14.3 Universal Standards for Social Performance Management 341
14.4 Social Audit Tools 346
15.1 Board Consideration for NGO MFIs Transforming into
Regulated Institutions 353
15.2 Principles of Well-Designed Incentive Schemes 357
Contents xi
18.10 Call Center at the First Microfinance Institution Syria 454
18.11 In Practice: Paraguay Financiera El Comercio 455
Figures
I.1 Financial Access Strands—Country Comparisons (July 2012) 4
1.1 Financial Service Needs for Different Livelihood Segments 20
1.2 Stylized View of the Financial Ecosystem 27
1.3 The Range of Financial Service Providers 29
B1.9.1 Number of Clients, Loans, and Deposit Accounts in Africa, by Type
of Provider 30
1.4 Market System Players and Facilitators 37
1.5 Evolution of Intervention Focus from Financial Institutions to
Financial Systems 39
B2.1.1 Revenues and Inventory Expenses of a South African Small
Businesswoman, Daily Cash Flows Aggregated Fortnightly 54
3.1 Financial Inclusion Strategies and Responsible Finance 80
3.2 Responsible Finance: A Multiple-Stakeholder Approach 86
4.1 The Role of Donors in Financial Market System
Development 98
4.2 Stylized View of the Financial Market System 100
4.3 The Purpose of Donor Commitments 102
5.1 FinScope Financial Access Strand: Definitions 124
5.2 FinScope Access Frontier 124
B5.8.1 Access Strand Analysis 125
B5.8.2 Service-by-Service Analysis 126
5.3 Logic Model Definitions 130
B5.15.1 The Spectrum of Evidence 137
6.1 The Range of Financial Service Providers 150
7.1 The Range of Financial Service Providers 172
8.1 How Savings Can Improve the Lives of the Poor 200
10.1 Using the Value Chain for Agricultural Financing 237
10.2 The Warehouse Receipts Financing System 241
12.1 Relationship between the Customer, the Agent, and a Bank in
Conducting a Mobile Banking Transaction 287
12.2 Monthly Costs in Dollars Associated with an Illustrative
Transaction Account 294
13.1 A Platform Perspective 307
13.2 Transactions in Space and Time 311
13.3 Channel Mix 316
14.1 The Social Performance Process, Indicators, and Assessment
Tools 343
Tables
1.1 Gender-BasedObstaclesinMicrofinanceandMicroenterprise 25
1.2 Illustrative Solutions to Household Financial Management
Needs 32
1.3 Key Characteristics of Facilitators and Providers in the Financial
Market System 38
3.1 Potential Barriers to Effective Consumer Protection through
Standards and Guidelines 91
4.1 Spectrum of Donors in Financial Inclusion and the Way
They Operate 99
5.1 Research Methods and Their Usefulness 139
5.2 Main Poverty Assessment Tools Available for Microfinance
Practitioners 140
6.1 Characteristics of Community-Based Financial Service Providers:
Indigenous Groups 151
6.2 Characteristics of Community-Based Financial Service Providers:
Facilitated Groups 157
7.1 Characteristics of Institutional Financial Service
Providers 173
11.1 Two Long-Term Insurance and Savings Products in India 261
B14.1.1 Key Indicators of Performance for Savings Group
Facilitation 323
14.1 Efficiency and Productivity Ratios (MFRS) 335
14.2 Profitability Ratios (MFRS) 336
14.3 Asset Quality (Portfolio Quality) Ratios (MFRS) 337
14.4 Capital Ratios (MFRS) 338
14.5 Liquidity Ratios (MFRS) 339
14.6 Balanced Performance Management 342
14.7 Indicators in the Social Performance Standard Report 344
Contents xiii
15.1 Roles and Responsibilities for Risk Management 365
16.1 Public and Private Funders 384
16.2 Holding Company Investment Examples 394
17.1 Regulatory Objectives for Microfinance 417
18.1 Implications of Telecommunications Connectivity for the
Provision of Branchless Financial Services 443
Foreword xv
PREFACE
Imagine a life without access to financial services: no deposit account, no debit card,
no fire insurance, no college savings plan, no home mortgage. Life would be an
incredibly stressful roller coaster ride, and most dreams would remain unfulfilled.
The day you get paid for work would be good, the other days rough. Any accident
would set your family back. Sending the kids to college? Too difficult. Buying a
house? Forget it. Nobody can pay for such needs out of cash accumulated under the
mattress. For us, life without access to financial services is unimaginable.
Yet according to 2011 data from the World Bank, an estimated 2.5 billion
working-age adults globally—more than half of the total adult population—have to
do exactly that. They live a life without access to the types of financial services we
take for granted. Of course, they cannot do without financial intermediation, so they
rely on age-old, informal mechanisms. They buy livestock as a form of savings; they
throw a village feast to cement local ties as insurance against a future family crisis;
they pawn jewelry to satisfy urgent liquidity needs; and they turn to a moneylender
for credit. These mechanisms are risky and often very expensive.
Increasingly robust empirical evidence demonstrates how appropriate finan-
cial services can help to improve household welfare and spur small enterprise
activity. Macro evidence also shows that economies with deeper financial inter-
mediation and better access to financial services grow faster and have less income
inequality. Policy makers and regulators worldwide recognize these connections.
They have made financial inclusion—where everyone has the choice to access and
use the financial services they need, delivered in a responsible fashion—a global
development priority.
A powerful vision of responsible financial market development is emerging—a
vision that aims to bank the other half of the global working-age adult population
by leveraging what we have learned from the microfinance story to date, using
advances in technology to spur product and business model innovation, and
encouraging new ways of thinking about how to create an enabling, risk-
proportionate regulatory and supervisory environment.
Preface xvii
The New Microfinance Handbook reflects the current frontier of our collective
thinking and experience. It starts with the need to understand the demand side.
Poor households in the informal economy are producers and consumers. They
need access to the full range of financial services to generate income, build assets,
smooth consumption, and manage risks. The global financial inclusion agenda rec-
ognizes these broader needs. It also recognizes the importance of financial literacy
that builds consumer financial capabilities and of consumer protection regimes
that take into account the conditions and constraints of poor families in the infor-
mal economy.
The Handbook also takes a broad look at the diversity of providers required to
meet these needs and at the business model challenges of different products. The
original microcredit revolution found an ingenious way to overcome the previous
obstacle to providing credit for the poor. How do you manage credit risk and
repayments at the local level when working with a segment of the p opulation that
has no traditional collateral? The breakthrough was the joint-liability group loan—
social collateral to allow the poor to pledge for each other. But the business model
challenges are different for other financial services. For small-denomination sav-
ings and remittances, transaction costs must be ultralow; for insurance, risks must
be pooled and managed at an actuarially relevant scale; for pensions, micro contri-
butions must be invested in ways that generate adequate long-term returns.
Continued innovation in products and business models is needed so that we
can reach more people with a broader range of products at lower costs. No one
type of provider will be able to overcome the very different business model
challenges of all products. What is needed instead is a variety of financial service
providers that come together in a local-market ecosystem that works for the poor
at the base of the economic pyramid.
Lastly, the Handbook takes a fresh look at the enabling infrastructure and
regulatory environment. The infrastructure requirements range from a larger num-
ber of low-cost, physical access points in harder-to-reach geographic areas to
nationwide unique financial identities that facilitate consumer enrollment and pro-
tection. On the regulatory side, policy makers are recognizing that financial exclu-
sion poses a risk to political stability and impedes economic advancement, and they
are increasingly willing to balance the ultimately mutually reinforcing needs for
financial stability, financial integrity, and financial inclusion.
With a better understanding of demand, ongoing innovation in products and
business models to better meet that demand, and recognition of the need for a
protective and supportive enabling environment, I believe we have the knowledge
and the means to achieve full financial inclusion in our lifetime. Read on to learn
how this is already happening and what more is needed.
Tilman Ehrbeck
CEO
Consultative Group to Assist the Poor (CGAP)
The writing of this book has been a highly collaborative effort and there are many
people we wish to acknowledge and thank for their support and contributions.
First of all, our Advisory Committee, composed of David Ferrand, Steve Rasmussen,
Tom Austin, Ann Miles, and Benoit Destouches, provided sound guidance and
leadership for which we are very grateful. We also appreciate the significant effort
and expertise of the contributing authors, without whom this book would not
have been published: Ines Arevalo, Craig Churchill, Daryl Collins, Mayada
El-Zoghbi, David Ferrand, Barbara Gähwiler, Alan Gibson, Susan Johnson, Kate
Lauer, Joyce Lehman, Ignacio Mas, Peter McConaghy, Calvin Miller, Geraldine
O’Keeffe, Stuart Rutherford, Lisa Sherk, Stefan Staschen, and Joakim Vincze. In
addition, we are deeply grateful to Peter McConaghy, who conducted excellent
research and provided significant draft material for a majority of the chapters. We
also thank those who contributed to specific chapters, including Cheryl
Frankiewicz, Liz Case, Alyssa Jethani, Linda Jones, Emilio Hernandez, and Ruth
Dueck-Mbeba.
For their insightful feedback, we thank our peer reviewers of which there were
many: Elizabeth Berté, Anita Campion, Liz Case, Gerhard Coetzee, Monique
Cohen, Christoph Diehl, Thomas Engelhardt, Laura Foose, Cheryl Frankiewicz,
Martin Habel, Michel Hanouch, Tor Jansson, Susan Johnson, Kabir Kumar, Kate
Lauer, Joyce Lehman, Ignacio Mas, Janina Matuszeski, Sitara Merchant, Ann
Miles, Hanif Pabani, JR Rao, Steve Rasmussen, Rich Rosenberg, Adam Sorensen,
Ingrid Stokstad, Joakim Vincze, Leah Wardle, Martina Wiedmaier-Pfister, and
Kim Wilson. In particular we are extremely grateful to Bob Christen for reviewing
the initial draft of the book and suggesting a significant new direction that, at the
time, seemed like a very big task but was exactly what was needed; we appreciate
his honesty and guidance. We are indebted to Ruth Dueck-Mbeba, who reviewed
the entire book, providing excellent feedback and suggestions as well as a signifi-
cant portion of chapter 15.
We are very grateful to The MasterCard Foundation and the Aga Khan
Foundation for the support provided throughout the making of this book, in
Acknowledgments xix
articular Reeta Roy, Ann Miles, Ruth Dueck-Mbeba, David Myhre, Tom Kessinger,
p
Mike Bowles, Erin Markel, Sam Pickens, Helen Chen, Jayne Barlow, and especially
Tom Austin.
We greatly appreciate the efforts and patience of Paola Scalabrin for her persis-
tence in requesting this update, ensuring that the book was published, and her
patience and advice during the process. We thank Aziz Gökdemir for a brilliant job
managing the publication process and we extend our thanks to Elizabeth Forsyth
and David Anderson for their excellent editing, as well as to Nora Ridolfi for dili-
gently overseeing the printing of the book. Thank you as well to Ellie Mendez and
Alyssa Jethani for checking sources.
Joanna would like to thank Alan Gibson for sharing his deep knowledge and
experience of the market systems framework, David Ferrand for suggesting we use
the framework and his guidance in doing so, and Steve Rasmussen for his thought-
ful and generous support. She also thanks Alyssa Jethani for taking on much of
what needed to be done at the Aga Khan Foundation during the process of bring-
ing this book together, for her high level of productivity, and for being a wonderful
colleague. She is grateful to her family, especially Joakim, and her parents, for
their consistent support throughout. In particular, she thanks her father, Doug
Ledgerwood, for his guidance and advice during this project and always.
Julie is grateful for the encouragement and technical guidance from her col-
leagues at the International Finance Corporation, in particular Jean Philippe
Prosper for his strong support and endorsement of this book to the World Bank
publication committee; Tor Jansson for his numerous reviews of chapters; and
Barbara Sloboda and David Crush for always finding a solution. She would also like
to thank her many clients in Africa who have provided years of inspiration through
their hard work and success in some of the world’s frontier countries. Finally, Julie
thanks the many friends who have supported her work on this book with every-
thing from advice, shelter, and a friendly ear; and gives a special thanks to her
family for keeping her close despite how far away she lives.
Candace has deep appreciation for several long-term colleagues who have done
so much to cultivate and sustain her commitment to clients, including Paul Rippey,
Monique Cohen, Kathleen Stack, Jeffrey Ashe, and Jennefer Sebstad. Seasoned
professionals, they have inspired her with their intelligence, integrity, and passion.
As ever, Candace is grateful to SEEP’s Savings-led Financial Services Working
Group for its high degree of collaboration; she would especially like to thank the
authors of the SEEP publication, Savings Groups at the Frontier, from which she
drew extensively in writing chapter 6.
Joanna Ledgerwood
Julie Earne
Candace Nelson
Ines Arevalo is a consultant to the Aga Khan Agency for Microfinance. She holds
an MA in Development Economics (University of Sussex) and focuses on client
research and social performance management.
Craig Churchill is the head of the International Labour Organization’s Social
Finance Programme, which supports the use of productive and protective financial
services, particularly for excluded populations. He serves as the team leader of the
Microinsurance Innovation Facility and the chair of the Microinsurance Network.
Daryl Collins is a Director at Bankable Frontier Associates, a niche consulting
practice aimed at providing financial services to low-income people. She is also
co-author of Portfolios of the Poor.
Julie Earne is a Senior Microfinance Specialist at the International Finance
Corporation. She has worked extensively throughout Africa, investing in and
enabling financial sector development in frontier countries for more than 15 years.
Mayada El-Zoghbi is head of CGAP’s office in Paris. She manages CGAP’s support
to donors and investors as well as in the Middle East and North Africa Region. She
holds a Master of International Affairs from Columbia University.
David Ferrand is Director of Financial Sector Deepening Kenya, a multidonor
facility supporting market development. He holds a PhD from Durham University
and has worked in the financial inclusion field for 20 years.
Barbara Gähwiler is a microfinance expert at GIZ in Tunisia and previously
worked with CGAP’s donors and investors team. She holds a Master of International
Affairs from University of St. Gallen and Sciences Po, Paris.
Alan Gibson is a Director of the Springfield Centre. He has been influential in
developing the “making markets work for the poor” (M4P) approach and in sup-
porting its application in different spheres of development.
Susan Johnson is a Senior Lecturer in International Development at the
University of Bath. She has extensive research experience in the microfinance
field, in particular in impact assessment, gender, and the embeddedness of local
financial markets in social relations.
Abbreviations xxiii
ID identification PSP payment service provider
IMF International Monetary Fund RCT randomized control trial
IPO initial public offering RIA regulatory impact assessment
IT information technology ROSCA rotating savings and credit
association
IVR interactive voice response
RTGS real-time gross settlement
KfW Kreditanstalt für Wiederaufbau
SaaS software as a service
KYC Know Your Customer
SACCO savings and credit cooperative
MDB multilateral development bank
SAR Special Administrative Region
MDI microfinance deposit-taking
institution SAVIX Savings Groups Information
Exchange
Me2Me me-to-me (payment)
SEEP Small Enterprise Education and
MFI microfinance institution
Promotion
MFRS Microfinance Financial
SG Savings Group
Reporting Standards
SHG Self-Help Group
MII microfinance investment
intermediary SIM subscriber identity module
MIS management information system SMART specific, measurable, achievable,
realistic, and time-bound
MIV microfinance investment vehicle
SMS short messaging service
MIX Microfinance Information
eXchange SPV special purpose vehicle
MNO mobile network operator SRI socially responsible investing
NBFI non-bank financial institution STK SIM Tool Kit
NGO nongovernmental organization SWIFT Society for Worldwide Interbank
Financial Telecommunication
P2B person-to-business
TCP transmission control protocol
P2P person-to-person
USAID U.S. Agency for International
PAT poverty assessment tool
Development
PCG partial credit guarantee
USSD unstructured supplementary
PIN personal identification number services data
POS point-of-sale VPN virtual private network
PPI Progress out of Poverty Index WSBI World Savings Banks Institute
PRA participatory rapid assessment WOCCU World Council of Credit Unions
Introduction 1
economic growth and the overall stability of the expected increase in financial inclusion resulting
system. from the gradual substitution of donor funding
Increasingly, best practice in microfinance is with private sector capital has yet to happen. The
responsible finance, defined as the delivery of retail majority of poor people remain outside the main-
financial services in a transparent, inclusive, and stream financial sector, and many MFIs continue
equitable fashion (BMZ, CGAP, and IFC 2011). to depend on subsidies.
Consumer protection and financial capability are Looking forward, it appears likely that tech-
now seen as important policy objectives, particu- nology will enable customer touch points to pro-
larly in a context of new providers, more sophisti- liferate among nontraditional service providers.
cated products, and technology-enabled delivery The technology drivers of financial inclusion will
channels. Recent media attention to the significant come from innovations in mobile money, biomet-
profits made through initial public offerings of ric identity systems, smart phones, and wireless
microfinance banks6 have highlighted the need for broadband Internet access. At the same time,
transparent pricing and appropriate interest rates. however, much remains to be learned to effec-
Unlike 15 years ago, funding for microfinance tively increase outreach in a substantial way,
today is no longer the purview of donors alone. As including, for example, developing appropriate
of 2011 more than 100 microfinance investment regulatory frameworks for branchless banking
vehicles were managing close to US$7 billion models (Alexandre 2010). Further, it is vitally
(Symbiotics 2011), making private and quasi- important to better understand the social dimen-
private sector capital readily available. With the sions of how households manage financial
recognition that grant funding crowds out the resources, particularly in the informal sector, and
private sector, responsible donors have shifted the role of technology to work within these social
from providing funds for loan capital and operat- dynamics (Johnson 2012).
ing subsidies to more of a facilitation role Thus, the well-documented and widely
supporting the development of enabling environ- applauded achievements of microfinance are
ments, provision of information, and financial increasingly coupled with recognition of its lim-
infrastructure. itations and the need to take a more holistic view.
Although significant investments have been Concerns include the following:
made to reform regulatory systems to accommo-
• Outreach—In many countries outreach
date microfinance and transform microfinance
remains a small percentage of the population;
institutions (MFIs) into regulated institutions
only 41 percent of adults in developing econo-
complete with return-seeking investors, rela-
mies report having an account at a formal
tively few MFIs can absorb a significant amount
financial institution,8 8 percent report having
of capital. “However, the pool of investment-ready
originated a new loan from a formal financial
MFIs is small and is not expanding at the speed of
institution in the past 12 months, and 2 percent
the supply of equity investment. Indeed, 52 per-
report having personally paid for health insur-
cent of all foreign debt is channelled to only 25
ance (Demirgüç-Kunt and Klapper 2012);
MFIs, out of a total of 524 MFIs that receive for-
more than half the world’s adult population
eign debt finance. At the country level, foreign
does not use formal or semiformal services,
investment is, to a large degree, still focused on a
nearly all of whom live in Africa, Asia, and
small number of countries in LAC and ECA7 with
Latin America (Chaia et al. 2009).
only moderate levels of financial exclusion”
(Reille et al. 2011, p. 10). Given the concentration • Sustainability—Although figures are not pre-
of investment in relatively few institutions, the cise, many microfinance operations continue
Introduction 3
Another random document with
no related content on Scribd:
semmoisina jälle sateena alasputoavat, maassa ollen, kunne'ka
uudelleen hienontuvat ilmaan nouseviksi, niin yhä ilman ja maan
vaiheilla kaikki vesi liikkuen.
Usvasta.
Auteresta.
Sateesta.
Lumesta.
Rakeista.
Kasteesta ja Härmästä.
Ukkosesta.
(Lisää toiste).
R. Tiilonen.
Mielen muutos.
R. Tiilonen.
Elias ja Anna.
(Suunnitelma).
Ign.
Satuja.
1. Kärpänen ja Poikansa.
Kehotus laulamaan