Join us in celebrating International Women’s Day 2018!
Through our #PressforProgress campaign, we are proud to share information about our partnerships that are supporting women’s economic empowerment in a variety of ways.
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Author: Kihingu Inc
Join us in celebrating International Women’s Day 2018!
Through our #PressforProgress campaign, we are proud to share information about our partnerships that are supporting women’s economic empowerment in a variety of ways.
Cenfri supports financial inclusion and financial-sector development through facilitating better regulation and market provision of financial services through research, advisory services and capacity-building programmes. FSD Africa and Cenfri have partnered on the Risk, Remittances and Integrity (RRI) programme which seeks to strengthen the integrity and risk management role of the financial sector and to facilitate remittance flows within and into the continent.
With respect to remittances, research conducted by Cenfri indicates that remittances are an important source of income for women in sub-Saharan Africa. They are used to meet monthly expenses, deal with unexpected shocks, and support family obligations (e.g. paying school fees).,
Join us in celebrating International Women’s Day 2018!
Through our #PressforProgress campaign, we are proud to share information about our partnerships that are supporting women’s economic empowerment in a variety of ways.
The Digital Frontiers Institute is a one-of-a-kind institution that is building human capacity in digital financial services by equipping a new generation of fintech professionals with the information, skills and vision they need to deliver and guide society towards inclusive digital financial solutions. DFI recognises the under-representation of women in leadership roles in digital financial services and fintech as well as the general lack of financial inclusion for women across the world, particularly in sub-Saharan Africa. Through support from FSD Africa and other partners, DFI is addressing these issues by equipping women with the necessary qualifications and training to develop digital financial services and products that sustainably include them and that, in turn, allow women actively participate in the economy.,
In early November, FSD Africa brought two worlds together for the first time: taking five prominent financial service providers (FSPs) to Gihembe Refugee Camp in Rwanda to participate in a ‘Financial Product Design Sprint’ in partnership with UNHCR, Government of Rwanda, and Access to Finance Rwanda (AFR). We were also joined by a member of UNHCR from Geneva, the International Finance Corporation and FSD Uganda.
Earlier that week, FSD Africa and BFA presented research on ‘Refugees & Their Money’ to over 20 FSPs in Kigali – highlighting the business case for financial products focused towards refugees (you can find a short summary found here). Philip Kakuru, from Tigo, said ‘With the limited access of the refugees, there was little to know about them, but the sprint design opened our eyes’. These FSPs, along with any others, now have an opportunity to win one of our four £10,000 grants in our Innovation Competition – Financial Services for Refugees in Rwanda.
To read more about the wider FSDA approach to refugee finance, take a look at last month’s blog here.
Day One: Any ideas?
The next day, the five FSPs, chosen through an open competition, began the Financial Product Design Sprint. The FSPs were a diverse group representing MMOs, MNOs, MFI and banks: MobiCash, Equity Bank, Vision Fund, Tigo and Commercial Bank for Africa. This three-day event hoped to challenge misconceptions about refugees, their potential and FSPs to consider a refugee product seriously. The first day began with an in-depth presentation of BFA’s research and details regarding the structure of refugee camps. This was followed by product brainstorming with each FSP, before narrowing down to a select two or three ideas which were fleshed out.
Day Two: What are the financial lives of refugees?
On the second day, these FSPs were taken to Gihembe Refugee Camp, a camp with a population of around 12,000 refugees from DRC and located only an hour drive from Kigali. Here, each FSP had the opportunity to speak to at least two refugees and over the course of two hours get a better feel for their financial lives. For most, this was their first time interacting with refugees and particularly in a refugee camp. As one FSP noted ‘With this segment, there is a lot to offer and learn from them’. This was followed by further prototyping of the FSP’s idea and customising their product to the needs of refugees.
Day Three: Is this the right product for refugees?
The final day offered an opportunity to return to the camp and with initial prototypes, in the form of a drawing, poster or app, get direct customer feedback. This proved particularly helpful for many FSPs to refine their product. As Peter Kawumi, from FSD Uganda, said ‘Through the design sprint’s customer interaction iterations, misconceptions about the refugees’ technology literacy, economic independence and financial ambition were debunked.’
The first ‘Financial Product Design Sprint’ was well received by all FSPs and there is also potential for replication in Uganda, with FSD Uganda, and as Vishal Patel from the IFC said ‘helped inform IFC’s work in Kenya in Kakuma refugee camp and town.’
Learning from risk taking
Working with banks and beneficiaries in this way is new to FSD Africa. It builds on the FinDisrupt model, pioneered by our sister organistion – FSD Tanzania. We learned a lot, especially on the value of bringing the refugee voice into FSD Africa planning and FSP business casing. The type of discussion it generates, out of the office environment, created momentum that would otherwise never have been achieved.
To read more about the wider FSDA approach to refugee finance, take a look at last month’s blog here.
Alex is a mid-manager at an NGO in Nairobi. He’s servicing a home loan for a two-bedroom apartment in an upmarket neighborhood, and two car loans – one for him and one for his wife. His four-year-old son is in a private nursery school and Alex is considering enrolling him in a private elementary school next year.
Two years ago, he took another loan to buy the land where he intends to build his family home. The land is 50 kilometres from the main road and the access road is yet to be paved. None of the owners of other plots near his have considered developing their properties but there are plans to connect electricity and water.
The family goes on holiday twice a year – again, financed through personal loans. Alex is also financially responsible for taking care of his elderly mother, who has no income and lives in the village. On top of that, he pays for his younger sister’s college education; she’ll be finalising her diploma course in the next two years. He also employs his cousin, who recently of college, in a small business Alex started to supplement his income.
Since he has a pay slip and a contract of employment, the bank considers Alex to be a good customer and often tops up his home loan whenever he faces financial pressure. In addition, Alex is a member of a SACCO. He has a loan there, as well as two peer groups – one is a welfare group and the other is an investment club.
With all this to consider about Alex’s background, how can the bank properly assess the risk of lending to him? Risk management practices vary from bank to bank depending on their policies on granting credit. Poor credit risk management can lead to institutional failure. This, in turn, can reduce financial inclusion.
In 2016, FSD Africa commissioned a market study to assess demand for, and supply of, risk management training for the financial sector. The study looked at three markets: DRC, Ghana and Kenya.
It found that in most institutions, after a brief orientation or introductory course, new staff members are puto operations without appropriate skills training. In a majority of institutions surveyed, no risk management training is provided to entry-level staff (those in their first or second year at the institution).
Not surprisingly, most institutions cited poor portfolio performance as a symptom of poorly trained staff. But the importance of entry-level training is still underestimated. Entry-level staff are the foundation of any financial sector. Without strong skills at the foot of the staff pyramid, middle managers struggle to control risk in daily operations. And in addition to strengthening risk management, better entry-level staff training can lead to an improvement in the quality of customer service.
How, then, can such training be improved? Above all, the study recommends the development of a comprehensive risk management training programme. This would address risk management training needs, particularly for entry-level staff, and help them to stem the rising tide of bad loans.
FSD Africa’s funded project hits 1 million target of clients accessing financial services in Nigeria
In May 2015, FSD Africa and Women’s World Banking signed an agreement to support Diamond Bank Nigeria in its aim to reach a total of 1 million new clients by the end of 2018. In June of this year, that target of 1 million clients was achieved.
FSD Africa’s support has been focusing on two main initiatives. The first is the expansion of an existing value proposition, a transaction account which is focusing on giving market traders a way to keep their money safe digitally (BETA). The second is the introduction of bank accounts for young people (from 13-25).
FSD Africa also supports the expansion of BETA products. To this end, FSD Africa has been funding the development of two distinct credit products focusing on individuals and Micro, Small and Medium Sized Enterprises (MSMEs). This work shows some of the problems with creating greater access. But it also demonstrates how to overcome them.
Creating access to Financial Services for Women
One of the core focus of the project was to deliver an increase in the number female account holders. The aim was always achieve as many women signing up to the new accounts as men. However, it soon become clear that an inherent disparity exists in the number of women who sign up, relative to the number of men. The figures for June 2017 suggest the percentage of female account holders is 38% for the BETA account.
This would suggest that the uptake of products by women have not been successful. However, changes in marketing have raised this percentage from 35%. Most important of these changes has been to increase the engagement with women about the upsides of the product. This helped to overcome an initial scepticism about working with a formal financial institution. Although the project is still short of its targets, marked improvements have been made.
For the youth products the picture is markedly different. Here the gender split is almost 50/50 (49% girls). The key difference between the products is the sign-up process. For the youth proposition, the registration occurs with the parents. This means the deliberation is much less, when signing up. A core lesson is therefore to encourage marketing that helps women to understand how the product would help solve their problems. Activity rates for female youth accounts are higher which shows that early engagements helps people to take control of their finances early.
For BETA accounts, women tend to be much more deliberate about signing up for new products. In many cases the agents who manage the financial products make multiple visits to a potential client. But, this investment pays off; female clients are more likely to be active on the platform, have higher standing balances and deposit more regularly.
Managing Change within Institutions
Within Diamond Bank the changes have also been marked. When the project started our work was housed in the retail segment. Yet, overtime it became clear that in order to create long lasting change the product needed to have its own segment. Creating a separate unit has increased the accountability within the institution and shown that the product can stand on its own feet, financially.
Our project conducted both senior and middle management leadership development programmes. These focus on helping Diamond Bank understand the complexity of change management, helping the team to “buy-into” the desired change. It also helped prepare them to manage future challenges. Our support set clear goals which ensure better teamwork, create a common purpose and helped management support the process of change.
Looking ahead, this project still has more targets to achieve and although good progress has been made work still needs to be done on increasing access to credit. They key to achieving these goals is learn from lessons that have been discovered through our work. We want to share these and will be launching a series of blogs here, from next month, that will look at the key successes and challenges from this project.,
Part Two: How do you get a banker interested in refugees?
Between 1-3 November 2017, FSD Africa brought two worlds together for the first time. Working with UNHCR, Government of Rwanda, and Access to Finance Rwanda (AFR), we took decision-makers from the banking community into Gihembe Refugee Campin Rwanda to participate in a ‘Financial Product Design Sprint.’
Refugees and other displaced populations are not an obvious place for FSD Africa to be working. We are a financial sector development programme, focused on developing markets and commercially viable financial systems over the medium to long term. Refugees, in much of the popular narrative, are transient, risky and poor – not a client group that a bank would typically target. So how do you foster private sector interest in refugees as customers?
The role of markets in humanitarian crises is not a new subject. Amartya Sen wrote Development as Freedom (1999) almost twenty years ago, making the argument that famines and other crises are caused by a complex web of economic, political and social forces, not just a disruption to food supply. If we focus on one cause of a humanitarian crisis, we’ll miss the underlying challenges that allowed it to happen. The failure of markets is often a critical factor in creating a crisis, and the development of functioning markets are vital for any long-term solution. We think that financial markets play a key role in a long-term, sustainable response effort, by easing transactions, supporting safety nets, helping to manage risk and channeling credit to those who can use it productively.
Sen was writing about famines in the late 1990s, when the total number of people of concern (refugees, IDPs and other forcibly displaced people) in the world had plateaued at around 20 million. Today, this number is 67 million, and rising. There are more forcibly displaced people in Sub-Saharan Africa than there were worldwide in 1999, and almost half of these (9.8 million people) live in countries where the FSD Network has a presence. So if we are on the ground, and accept that markets (including financial markets) have a role to play, we have a strong imperative to respond.
But how? Bankers are profit-driven and risk-taking is generally disincentivised by regulatory frameworks. How can we, as the development sector, help them to build a viable business case for serving refugees?
We’re new to this. So, a test-and-learn approach makes sense. But, so far, some important themes have emerged that are guiding our work:
- Help to build the business case: Much of the data and information behind the successful business models can be a public good, which is a good use of development spend. Banks might not want to cover the costs of gathering market intelligence, but if – the role of the institution is to use this information smartly (and better than its competitors). Watch this space for market intelligence gathered by <"http://bfaglobal.com/">BFA and FSDA.
- Be honest about what can (and can’t) be done: Some forcibly displaced people cannot be feasibly reached in a commercially viable way. For example, very new migrants, or very poor in remote areas with minimal economic activity, pose difficult challenges. Some of the responsibility will inevitably still fall on humanitarian agencies, especially in the short term. The key is to develop a credible path to more sustainable models to improve the lives of FDPs over the longer-term.
- Look for partnerships that fill gaps in capacity and outreach: There aren’t many people out there with expertise in both financial market development and humanitarian crises. So, partnerships are critical. We are working closely with UNHCR, AFR and other agencies that know and understand refugees better than we do. Similarly, a bank might not serve refugees directly but it might work with an NGO and a mobile money provider to build an integrated solution.Bring the refugee voice into the conversation: Refugees and other displaced people have very different stories, and are not a homogenous group. They use money differently and have various needs from financial services. Some of these are counterintuitive and hard to predict. For every event we have held with financial service providers, we have invited refugees themselves, and, as a next step, we are taking bankers into a refugee community to participate in a product design sprint. This is, we think, the best way to break down information barriers and build empathy.
- Incentives matter: Information and exposure are useful tools, but sometimes financial support is needed to change behaviors. So, we are looking for ways to use financial subsidy to unlock innovation in the financial sector. We do this by identifying where the blockages are, and understanding how development money can be used to incentivize a decision (developing a new product, building a nhannel) that could genuinely impact the lives of refugees. FSDA will launch a Product Design Competition in December 2017. Round One will provide up to x4 awards of £10,000, while Round Two will provide up to x3 awards of up to £150,000.
The current crises of displaced populations such as those in Rwanda, Uganda, Nigeria and DR Congo are going to be long and complex, and solutions need to take into account this complexity. Financial markets can play a small but critical role in the overall picture, and for that to happen, we need to get bankers interested in refugees – as incongruous as those two worlds ma
In August 2017, FSD Africa launched a fresh drive to build measurement know-how across the FSD Network – a family of ten like-minded financial sector development programmes across sub-Saharan Africa funded by UK Aid. These projects – the development of a Value for Money (VfM) framework & the development of a compendium of indicators for financial sector development interventions – are the latest departure in a journey that began just over three years ago. This blog tells its story…
Over the last two decades, the role of Monitoring and Results Measurement[1] (MRM) in the field of international development has become more and more critical. The presence of MRM systems within organisations implementing development projects, irrespective of the strength of such systems, is now more the norm than the exception. Though MRM remains an important accountability tool, what’s more striking is the increasing role it plays in the ways in which interventions are planned, designed and implemented by development practitioners. Thus, MRM systems have many stakeholders – from funders and board members to project managers and delivery partners – and they need to be robust enough to meet their various needs.
While it’s critical to make MRM systems robust and efficient, achieving this is not an easy undertaking. It requires financial investment, commitment at CEO-level and the wider team, and continuous learning and improvement. This has very much been the case for the FSD Network.
Investing in stronger MRM systems began in earnest in July 2014, when FSD Africa began an FSD network-wide consultative process aimed at strengthening MRM processes within individual FSDs, both at project and programme level. The initiative also sought to achieve a more consistent approach to MRM across the FSD Network, one that would spur seamless cross-learning amongst its members. The result of this extensive consultation was publication of the Impact Orientated Measurement guidance paper, or IOM, which was launched in December 2015.
The launch of IOM, was an important milestone; one that was received with mixed feelings – of both excitement and anxiety. A vision of what an effective MRM system looked like was clearly established in theory, but the delivery of one in practice – across the FSD Network – quickly became FSD Africa’s challenge. This has required systematic effort over recent months since its launch.
Here’s what we did…
First, MRM diagnostic clinics were undertaken between April and July 2016, in partnership with Genesis Analytics. The objective of this exercise was to determine the readiness of FSDs to implement IOM. It involved evaluating the status of the different FSD MRM systems, as well as establishing the knowledge and attitudes of staff, senior management and governing bodies towards MRM, and more specifically IOM. Light-touch tailor-made support was also offered during these clinics, benefiting 47 FSD staff. Through this exercise, FSD Africa gained a better understanding of the unique needs of each FSD and their perceptions on how to address these challenges. By and large, it also provided an opportunity for individual FSDs to decipher IOM and define how they could start applying it.
Second, based on findings[2] from the MRM diagnostic clinics, FSD Africa worked with Adam Smith International to develop and deliver a 2.5-day training course christened Results Measurement for Systems Approaches in Financial Sector Deepening. The training, which took place in November 2016, focused on the five principles of IOM[3]. In total, 20 FSD staff drawn from FSD MRM units, intervention teams and programme management benefited.
One unexpected, but positive outcome of the MRM training was an increased appetite for FSD-specific MRM support, delivered through in-country support to staff. Two FSDs (FSD Uganda and FSD Mozambique) have so far benefited from this initiative. The results are evident – FSD Uganda now has an IOM-enabled MRM manual, and staff with a greater understanding of how to plan and execute results measurement initiatives. Its Board of Directors has a better appreciation of the intricacies of implementing and measuring results of projects that utilise the M4P approach, and are willing to support the course. FSD Mozambique has also just embarked on a process of reviewing its own results measurement guidelines and tools.
FSD Africa appreciates that, though IOM is a useful conceptual cornerstone, it is no panacea for measuring the results of complex financial sector development programmes. There is need to augment it with practical tools that can be easily deployed across the FSD Network.
In response, in August 2017, FSD Africa commissioned two other initiatives, which are being delivered in partnership with Oxford Policy Management:
- the development of a Value for Money (VfM) framework that seeks to strengthen the internal technical and operational capacity of FSDs to assess and manage their programme/projects’ VfM, and
- the development of a compendium of indicators that enables FSDs to better measure market system changes and how FSD programmes have contributed to these.
Amidst all these developments, is a thriving MRM Working group – an experience-sharing platform for MRM staff across the FSD Network. FSD Africa acts as its secretariat. The Chair rotates between individual FSD MRM leads.
Has this been an easy-to-execute task? Not at all. But, substantial progress has been made. In my next article, I will reflect on the lessons FSD Africa has learned during our work towards a harmonised MRM approach across the FSD Network.
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[1] Also commonly referred to as Monitoring and Evaluation (M&E)
[2] A generally poor comprehension of the value of Theories of Change in effective results measurement, as well as insufficient skills in applying the same; widespread desire to understand how to effectively measure systemic change; weakness in assessing causality and building credible ‘contribution’ narratives; infrequent and meaningful engagement between some MRM units, intervention teams, and programme/organizational management.
[3] Aligning monitoring with measuring impact (the ‘sweet spot’); using the ToC as a strategic framework for planning and impact evaluations; focusing on the FSD programmes primary interest (as regards measurement), which is assessing changes in inclusive financial markets; identifying and measuring systemic change; measuring impact from the perspective of both the FSD programme (‘bottom-up’) and the sector/market system (‘top-down’)
FSD Africa announces the completion of its £15.3 million ($20.3 million) investment in the African Local Currency Bond Fund (“ALCBF”).
Since FSD Africa announced its intention to invest in the fund in May this year, ALCBF has continued making good progress.
It has invested a total of approximately $10 million in four more bonds – including in Nigeria and Lesotho, extending its geographic reach and its financial support for developmentally important sectors, such as agriculture and housing. ALCBF entered Côte d’Ivoire with a $ 3.1 million bond investment in Alios, a regional leasing company. The bond proceeds will benefit the company’s operations in Burkina Faso and Mali, demonstrating that there are opportunities for bond financing even in fragile and conflict affected markets.
ALCBF has also received funding commitments from lenders totaling $40 million – including the International Finance Corporation ($20 million), Calvert Foundation ($10 million) and the Dutch development bank, FMO ($1s additional funding has enabled the fund to establish a permanent presence in West Africa, where it has now opened an office in Lagos, Nigeria.
As such, with invested capital of $40 million and a total fund size of over $100 million, ALCBF is strongly positioned to fulfill its objective of developing capital markets across Africa, by helping companies issue bonds in local currencies and by building technical capacity in the markets where those bonds are being issued.
As an equity investor in the fund, FSD Africa will join the Board of ALCBF. Completion is subject to satisfaction of certain conditions precedent, expected shortly.
If you’ve ever been to Africa (or even the United States), chances are that you’ve had your finger prints taken on a scanner on the desk at immigration. If you’ve tried to skip the queue at Heathrow, you’ve probably tried to use the facial recognition scanners, which always seem to have a shorter line. None of us try to travel across borders without our passports but we probably don’t give the biometric databases they connect to a second thought.
But one of the biggest challenges in sending and receiving money in developing countries stems from the need to be able to identify yourself at both ends of the transaction. The world over, millions of people do not possess any form of formal identification. But biometric technology could be an important part of the solution.
Banks, money transfer operators and other, all need to comply with so called ‘know-your-customer’ regulations. But the World Bankestimates that more than half the people in sub-Saharan Africa have no official identification record. That’s more than half a billion people. This issue is key to the broader agenda of financial exclusion since it prevents an estimated 375 million adults around the world from obtaining a bank account.
And it is not just banks but prepaid SIM cards in many countries also require proof of identity to register. So people without ID fall at the first hurdle of being eligible for mobile money wallets. Using biometric technology to identify people and assign them an identity for life, is key to improving financial inclusion; improving access to bank accounts and mobile wallets, and the uptake and use of digital financial services. It is literally the first step on the journey to formal financial inclusion.
Biometric-based ID cards can be used for multiple purposes apart from identifying people who are sending and receiving money across international borders. They can also enable the distribution of government services and social security benefits, and act as an electronic passport, voter identity document, and offer identification for healthcare and welfare service distribution. As a result, various governments, including Nigeria, Ghana, Kenya, Egypt, DRC and Malawi in Africa, are recognising the value of electronic IDs that utilise biometric technology. Investment has begun and the benefits being seen.
When it comes to moving money, the widespread lack of formalised ID in sub-Saharan Africa, combined with the largely cash-based economies makes the traceability of funds difficult and makes financial service providers nervous. Each party involved in processing a money transfer from the UK into Africa is accountable for ensuring that funds not are being used for money laundering or terrorist financing. And it is this perceived risk that is at the root of many UK banks’ decision to ‘de-risk’ money transfer operators. In fragile and conflict affected states, meeting know-your-customer regulations can be particularly difficult, especially where there are international sanctions in place and the risk is higher due to known or suspected terrorist activity.
A national electronic ID scheme, with biometrics used to authenticate and verify money transfer beneficiaries, could help to sustain formal remittance services to these markets. The difficulty of cheating or defrauding such a system should help reassure money transfer operators and in turn, international banks, that the recipient is who they claim to be. This is of crucial importance in economies like Somalia, Eritrea, Liberia, Libya and the Democratic Republic of Congo, where international remittances make up between a fifth and half of the entire national GDP.
In a few countries, biometric electronic IDs are actually being directly linked to digital payment instruments (such as a bank account, credit or debit card, or mobile wallet). The Aadhaarscheme in India is undoubtedly the largest and most advanced. By April 2016 the Indian government had captured the fingerprints and iris scans of 1 billion people (93% of the population) which have been stored on an open platform so that they can be seeded to bank accounts and digital payment instruments. In Africa, the National Identity Management Commission in Nigeria has also started its electronic ID scheme, collecting ten fingerprints, a facial image and a digital signature which are stored in a central database. The new electronic ID cards offer MasterCard payment functionality to help drive financial inclusion.
It will, however, be some time before a biometric electronic ID system can become reality for everyone across Africa. Its roll out requires significant commitment and coordination, both human and financial, at a national level, and then there is still the thorny question as to who owns the data and how it will be used.
Biometric electronic identification technology will certainly have a key role to play in improving access to, and the security of, remittances into Africa. Biometric ID will also have a key role to play in moving remittances from cash to digital, which ultimately, is the only way to significantly reduce the cost of sending money.
A new report on remittances from the UK to Africa was published in June 2017 by Financial Sector Deepening Africa. For more details see:https://fsdafrica.org/uktoafricaremittances/