Category: Blog

Addressing the gender gap in fintech

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Just as in technology and finance industries around the world, fintech companies in Africa are grappling with a severe under-representation of women in leadership roles and throughout their businesses. When compiling the data in the 2017 Fintech Talent Africa report, Digital Frontiers Institute (DFI) made gender balance a particular focus of the research, knowing that this is a significant problem in the industry.

The findings of the report validated this belief. More than 400 industry leaders and professionals responded to the survey and of these, only 12.5% were women. The gender gap was reflected again in the data they reported: respondents indicated that the teams they lead are made up of approximately 39% women, while senior or executive teams are made up of 43% women. This data highlights that there is still a way to go in order to achieve gender parity.

To learn more about addressing the gender gap in fintech, access the full blog via this link.,

Building women’s skills and capacity

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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 Strathmore Business School (SBS) is a renowned institution in East Africa that aims at developing transformative business leaders to tackle the various social and economic challenges facing Africa. With support from FSD Africa, SBS has developed and expanded its Leadership Academy in East Africa including creating a ‘Women in Leadership’ programme. The programme is targeted at women in management and equips women with skills to perform effectively and efficiently to achieve excellence in the various spheres of their lives.

Additionally, The Chartered Institute for Securities & Investment (CISI) through FSD Africa’s support, is providing skills development and training in order to strengthen professional standards among Capital Markets Professionals – women included. CISI is a professional body that offers a wide range of qualifications in the financial sector including Operations, Wealth Management, Compliance/Risk, Capital Markets/Corporate Finance, Financial Planning and Islamic F

Remittances as a source of income for women

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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).,

Women and digital financial services

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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.,

Notes from the frontier: FSD Africa’s fragile states approach – a learning journey (

Posted on by 5iveafrica

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.

Unmasking executive education in sub-Saharan Africa

Posted on by TIMOTHYRADIER

Cathy pauses by the window of her fifth-floor office to look at the rain clouds gathering and the traffic beginning to build.  It is four o’clock in the afternoon and her boss has just walked in to ask for a ‘short’ team meeting. She is anxious; an important customer has just called to query some figures in his bank statement and wants it addressed by the end of the day.

A mother of two, Cathy has recently enrolled for an executive MBA programme at a local university. Her classes start at 5:30 p.m. and she knows only too well that she has to leave the office by 4:45 to beat the traffic. A few months earlier, during her performance review, her boss told her that she needed to improve her qualifications to advance further into management. But a colleague of hers, who got a promotion after completing an MBA, recently had a bad review. She wonders if taking the executive programme will be worth all the effort.

Will Cathy’s investment in executive education improve her career prospects? Will it lead to rease? And will her newly acquired skills improve her day-to-day job performance? In 2016, FSD Africa commissioned research to assess the impact of executive education in financial services firms and to help answer these questions.

On the subject of pay, it found that many employees with ExEd qualifications do not feel their salary is commensurate with their education, especially as many have had to pay fees to advance their studies. ExEd graduates do report, though, that they are more mobile in terms of career prospects than their peers. Importantly, managers respect the work of employees with ExEd qualifications, reporting that they perform well and are innovative – particularly in terms of applying the skills they acquired to problem solving.

Qualitative data from the report indicates that ExEd employees in financial services firms improve the image of their organisation and play a key role in shaping customer perceptions of it. What’s more, both employee and manager groups reported that ExEd is particularly effective in improving customer service skills – and therefore increasing customer satisfaction.

The research recommendss in the delivery, scope and content of executive education, in order to address the needs of the financial sector. The most important of these is that ExEd should be more practical in nature, instead of focusing so heavily on theory. In addition, longitudinal research is necessary to measure the impact of executive education programmes on students and organisations. And lastly, improvement is needed in performance measurement within financial services firms, in order to better demonstrate the link between ExEd and performance, pay and mobility.

Click here to download the full report: ‘The Impact of Executive Education in sub-Saharan Africa’.

 

Written by Dr. Moses Ochieng, Consultant-Professional Skills Development, FSD Africa<

What banks can do to tame the tide of bad debts

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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

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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.,

Notes from the frontier: FSD Africa’s fragile states approach – a learning journey

Posted on by TIMOTHYRADIER

In September 2017 we set out for Kinshasa, the capital city of the Democratic Republic of Congo, to conduct FSD Africa’s first scoping mission in the country. Having had a new fragile states strategy approved by the board earlier in the year, we were excited to get to know the country finally, a little bit of its people and explore the potential areas where FSD Africa could bring in its combination of resources, expertise and research to address financial market failures and deliver a lasting impact.

We spent almost two weeks meeting various stakeholders in the financial sector, understanding first-hand the constraints faced by different actors and charting paths of engagement with various institutions to improve the Congolese financial sector.

A few things stood out for me as we went about the scoping mission:

Collaboration with other development partners and private sector actors is critical in the quest to deliver sustainable financial sector development in the region.

FSD Africa is sed in Nairobi and therefore operating on a fly-in, fly-out model would be quite cumbersome and expensive. Striking the right partnerships with other development partners operating in DRC helps FSDA have critical boots on the ground, with the right expertise and local knowledge to inform its intended portfolio of work in DRC. During our scoping mission, we had the chance to meet and be part of the GPTF (Groupe des Partenaires Techniques et Financiers), a group of technical and financial partners who are all working to enhance financial sector development in DRC. Increasing donor collaboration and harmonization goes a long way in reducing duplication of efforts and wastage of valuable resources.

We will be partnering on various projects with ELAN RDC, a market development programme funded by UKAid and working to promote sustainable and inclusive economic development by empowering businesses and entrepreneurs in the Democratic Republic of the Congo.

The IDP and refugee crisis in DRC is worse than ever.

Last year, UNHCR received less than US$1 per person in donor contributions for its programmes for the internally displaced in the DRC. For 2018, UNHCR is appealing for US$368.7 million for the Congolese situation. A total of US$80 million is required to support the internally displaced populations inside the DRC.[1] This goes to show that a more sustainable approach for the economic livelihood of refugees is needed and refugee agencies such as UNHCR are now shifting emphasis from humanitarian aid to socio-economic inclusion and support for market-based livelihood strategies. There needs to be a paradigm shift towards private sector-led delivery of solutions in which financial sector providers have a big role to play.

Building on the success of its approach in Rwanda, FSD Africa will undertake a joint piece of research with ELAN RDC to assess the size and the scope of the demands of goods and services from IDPs and refugees in the DRC. The research will also provide evidence on the size and the dynamics of the demand and supply of financial and non-financial services amongst refugees and IDPs. We hope that the research will also shed some light on the constraints faced by private sector stakeholders that prevent them from serving the target population of IDPs and refugees in DRC and later communicate evidence fom the study to help change the perception of some actors that IDPs and refugees do not represent a viable client segment.

There exists a huge need for the development of capital markets in DRC.

Capital markets play a critical role in achieving developmental goals of ending extreme poverty, strengthening resilience as well as tackling global challenges such as climate change and urbanization. Capital markets facilitate the long-term financing of essential sectors such as infrastructure (ports, roads, power and water), and housing. They provide capital to growing businesses that generate income and jobs to households. They also widen the range of opportunities available to domestic investors, such as pension funds and insurance companies.  Furthermore, domestic bond markets help reduce foreign currency risk which arises when local investments are financed with foreign currency denominated loans.

The Democratic Republic of Congo is like many countries in Sub-Saharan Africa whose capital marets are at different stages of development with varying activity, liquidity, regulatory frameworks, market infrastructure and market structures.  Most markets lack depth, instruments and sophistication. Capital markets development seeks practical approaches that foster sustainability and FSD Africa is naturally poised to deploy its tried and tested approach from markets like Kenya and Nigeria to DRC and bring its experience from projects with a footprint in 15 countries (including the regional programmes in East Africa and West Africa).

Infrastructure remains challenging and development finance can play a huge role in addressing these challenges.

Energy, transport, water and communications infrastructure are all critical to private sector investment, competitiveness and job creation: yet across Africa and South Asia, 1.2 billion people lack access to electricity,[2] 1.3 billion lack access to an all-weather road, and 1.6 billion people lack improved sanitation.

The DRC remains one of the most infrastructurally challenged countries in the world. Road and rail transport is severely underdeveloped with only 2,250km of Congo’s roads being paved.

The country’s vast geography, low population density, extensive forests, and criss-crossing rivers further complicate the development of infrastructure networks. Public-Private Partnerships (PPPs) are a very useful means of harnessing private sector participation in the provision of high-priority infrastructure. Among the many benefits that PPPs can bring, PPPs can build local capacity and expertise (resulting in more cost efficiencies), encourage increased competition, and create opportunities for broader economic growth.[3]

Projects geared towards addressing infrastructure challenges have the potential to generate economic opportunity and employment through the creation of both direct and indirect jobs, and increase access to basic goods and services, especially in remote areas or fragile states.

Funded by CDC Group plc, the UK’s development finance institution, Virunga Energy, is a hydroelectric power company in the Eastern DRC, which provides electricity to a conflict-prone region where only three per cent of the population has access. The Virunga Foundation aims to provide clean electricity to communities living in and around Virunga National Park in North Kivu, Eastern Congo. CDC’s investment will support the development of the existing electricity grid and the construction of two new plants resulting in almost 50MW of total generation.

The investment, made through the Department for International Development’s (DfID) Impact Acceleration Facility, will establish power infrastructure in a region of four million people that faces a chronic lack of electricity supply. In many target areas of the Virunga grid there is currently no access to electricity; in the wider Kivu area there is only 3% electrification and around 15% in the DRC in general.[4]

Political stability remains a huge influencer but it should not deter us from doing work in DRC.

We cannot gloss over the conflict and political uncertainty in DRC. However, we also cannot close our eyes to the fact that despite the conflict and tension, DRC remains a country with enormous potential for growth. There is a lot of work to be done in a country where less than 11 percent of adults in the DRC have an account with a formal financial institution, and only 2 percent have access to formal and regulated credit services.[5] This level of financial exclusion can be a huge impediment to individual and overall economic development. FSD Africa remains committed to its mandate to create jobs and provide services for more people, particularly from economically excluded groups such as women, the poor, and those who live in fragile and conflict-affected states, and will endeavor to make inroads in the development of the financial sector in DRC.

[1] http://www.unhcr.org/news/briefing/2018/2/5a8be92c4/unhcr-alarmed-reported-atrocities-dr-congos-tanganyika-province.html

[2] World Energy Outlook 2015.

[3] http://ppp.worldbank.org/public-private-partnership/small-and-medium-enterprises-and-ppps

[4] http://www.cdcgroup.com/Media/News/News-CDC-investment-brings-electricity-to-Eastern-Congo/

[5] http://www.worldbank.org/en/programs/globalfindex