Category: News

Financing the frontier: approaching financial sector development in fragile and conflict affected states

Posted on by TIMOTHYRADIER

From 2016, FSD Africa will increase its focus on inclusive financial sector development in Fragile and Conflict Affected States (FCAS).

Working with key partners, it will identify and apply learning from excellent practice so far to support the well-being of the most vulnerable and marginalised on the African continent.

With this in mind, FSD Africa will work with Mercy Corps to produce a focussed think piece on ‘Approaching Inclusive Financial Sector Development in FCAS in Africa’ by June 2016. 

To do this, the team will produce four mini-cases of ‘promising practices’ and will answer the three following questions:

  • Defining and understanding FCAS in Africa. What are FCAS, where are FCAS in Africa, and why do they warrant dedicated attention by the international development community?
  • Defining and understanding financial sector development in African FCAS. What makes financial sector development in FCAS unique and/or the same and why is it important? What is the role of the financial sector in resilience-building and fostering economic opportunity in FCAS?
  • Approaching future financial sector development in African FCAS. What have donors learned so far to improve what they could do in the future? 

The learnings will support smart programming by the FSD network and other financial market facilitation agencies. It will also help to identify future key partners with which to work and a list of priority countries and market failures on which to focus.

If you’d like to learn more about the FSD Africa approach to FCAS or know of a ‘promising practice’ that should be showcased then please contact: Joe Huxley, FSD Africa’s Regional Co-ordinator (joe@fsdafrica.org).

Financial service providers ought to focus on the cusp group

Posted on by TIMOTHYRADIER

Central Bank Governor Dr Patrick Njoroge fielded some tough questions from the audience on 9th February 2017 at FSD Kenya’s annual financial inclusion lecture. British economist, Professor John Kay, had just delivered a provocative talk on the risks of financialization in the economy. He cautioned Kenyan bankers and policymakers to avoid the mistakes of the Anglo-American finance model and work towards building a financial sector with local solutions that deliver real value for real people.

The point was not lost on the Governor. In the question and answer session, he was grilled on the future of finance in Kenya and how the CBK would ensure access to services that delivered real value to consumers.  In his response, the Governor singled out the financial needs of “cuspers,” getting by on about $2-5 per day.

This market segment, now includes about 12.6 million Kenyans.  These are not the poor, on the brink of survival.  But nor have they achieved firm footing in the middle class – they live “on the cusp”.  The sheer size of this group means we must pay it attention. Cuspers affect the economic lie classes in innumerable ways. The future of this segment will be affected by changes in the financial sector more than any other.

Providing cuspers with helpful financial tools to smooth the volatility in their incomes and build enduring assets will be key to ensuring that Kenya develops a bigger and more inclusive middle class and benefits from the economic and social gains that such a transformation entails.

But such transformation is not automatic.  In our own research on this market segment, we found that the vulnerabilities of the cusp group mean they could end up simply churning within this low-level income band without ever building real capital or income security. We find that cuspers are very much exposed to macro-level shocks and often lack the tools to manage micro-level ones without major financial setbacks.

We also find that credit can be an important tool for upward mobility, and Kenya’s digital credit revolution is opening up those possibilities more rapidly than anyone could have expecteven three years ago. The question today is whether the financial sector is being driven by short-term profits or taking the long term view of sustainable profits by prioritizing cusper client welfare. We have to ask ourselves – how useful is M-Shwari or Branch or Tala to the asset-building ambitions of the cusp group?

“Good credit” for the cusp group happens when borrowers are not overwhelmed with options, they have a plan for the use of capital, have practiced borrowing, understand their debt service obligations, and select from a diversity of credit offerings to fit the right borrowing need. Most importantly, good credit unlocks a pathway towards real assets like land, housing, businesses, and higher education.

I am pleased to hear that the Governor is thinking and talking about those living on the cusp. The question is, are bankers list

FSD Africa and ILO’s impact insurance facility partner to launch a micro-insurance innovation facility to reach 1 million new clients in sub-Saharan Africa

Posted on by TIMOTHYRADIER

FSD Africa and ILO’s Impact Insurance Facility have entered into a partnership to promote innovation for micro-insurance products to serve low income households and MSMEs across Sub-Saharan Africa. Insurance penetration in Sub-Saharan Africa remains at dismally low levels with an estimated penetration rate of below 1%. This programme seeks to provide a cushion for low income households to better deal with shocks hence reducing their vulnerability.

FSD Africa will invest USD 1.83 million over 4 years in an innovation laboratory that will be managed by ILO’s Impact Insurance Facility. The innovation laboratory will support five insurance companies and/or distributors, operating in five different countries in sub-Saharan Africa, to develop innovative micro-insurance products that will reach 1 million new clients in 4 years. They will be selected through a competitive call for proposal process that will be managed by the ILO Impact Insurance Facility.

Selected insurance companies and distributors will also ive technical support for change management in order to facilitate the successful implementation of innovative insurance products. This will involve: providing support for changes in organisational structure, capacity building for staff in order to fill the gaps identified from a needs assessment process and the development of business analysis tools that will help to increase client value.

FSD Africa is delighted to partner with ILO’s Impact Insurance Facility to promote innovation for micro-insurance products. The long term goal is to enable the sector to achieve scale with a balance between broad inclusion, sufficient benefits, low premium rates and sustainability.

Paul Musoke, Director, Financial Institutions, FSD Africa

Learnings from the programme will be documented in a training module and toolkit that will be accessible to insurance companies and distributors. The insurance industry will also have access to case studies that will capture learnings from the programme. These documented resources will provide incentive and guidance to other insurance companies in developing micro-insurance products and related delivery channels.

We are excited to work with FSDA to enhance the social and economic development impact of insurance providers in Africa.

Michal Matul, Chief Project Manager of ILO’s Impact Insurance

Over 1,000 senior and mid-level executives to benefit from FSD Africa’s USD1.14 million grant to strathmore business school

Posted on by TIMOTHYRADIER

FSD Africa is pleased to announce that it has signed a USD 1.14 million grant agreement with Strathmore Business School – SBS to develop and deliver training to over 1,000 senior and mid-level executives in the financial sector in Tanzania, Rwanda and Uganda. Funded by the UK’s Department for International Development, FSD Africa supports financial sector development to help reduce poverty in sub-Saharan Africa.

This grant builds on FSDA’s strategy of supporting the emergence of strong centres of excellence that provide best practice training to financial sector professionals.

Strathmore Business School has for the past 10 years demonstrated its ability to deliver transformative executive development programmes in Kenya which has positively impacted the business community. We are delighted to partner with SBS to spread this success into the region.

Julias Alego, FSD Africa’s Director of Professional Education

Since 2013 SBS has trained over 200 senior and middle level managers in Uganda under the Uganda Leadership Development Academy – ULDA. This grant will support the expansion of the programme into Tanzania and Rwanda until the end of 2018. It will essentially be used to develop faculty, course material, case studies and limited scholarships to pioneering financial institutions for the programmes.

Over the next three years, it is expected that the target financial institutions to which these course participants belong will develop innovative products and deliver effective service to reach out to up to 5 million of existing and new customers in underserved market segments.

This partnership with FSDA will further enable Strathmore Business School to expand its leadership development programmes in the region and thus reach out to more executives and change livelihoods. We are excited with this partnership and look forward to working closely with FSDA to change lives.

Dr. George Njenga, Strathmore Business School Dean

Beyond the funding: creating a lasting market for financial consumer protection training

Posted on by Kihingu Inc

Between August 2014 and December 2014, the Uganda Institute of Banking and Financial Services (UIBFS) led a project to embed the Bank of Uganda’s (BOU) Financial Consumer Protection Guidelines (FCPG) in the day-to-day operations of the 31 Supervised Financial Institutions (SFI) in Uganda.

The project aimed to increase the capacity of Ugandan training firms and SFI Human Resource teams beyond a critical minimum threshold to enable the delivery of financial consumer protection (FCP) training to SFIs in Uganda on a lasting basis. This would then lead to long-term implementation of the FCPGs in all branches of SFIs to consumers across Uganda.

To support this process, Financial Sector Deepening Africa (FSDA) competitively procured UIBFS for £105,000 to lead a consortium of five FCP-enabled Ugandan training firms (Corporate Concepts, Demis, Komunda Investments Ltd, Sonamoney and UIBFS).

In total, 12 FCP qualified Ugandan trainers used bespoke FCPg materials to train 1,038 staff at 575 branches of 31 SFIs in all regions of Uganda. A total of 1,004 (96.7%) participants were awarded certificates for successful completion of the course. The training was delivered on time, reached 86.5% of the intended 1,200 participants, and was highly rated by SFI staff participants, SFI Human Resource Managers and BOU.

Significantly, a review in February 2015 (three months after the delivery of the training) indicated initial, positive signs of market-system change. For example, all five participating training firms intend to provide an FCP training module on a commercial basis as a result of this project. A total of 4 of the 12 surveyed SFIs indicated they plan to pay for the outsourcing of FCP training to local Uganda training providers. Finally, BOU expressed confidence that supervisory and public pressure would increase the demand for FCP training among SFIs into the future.

Looking beyond Uganda, this project has thePtrong>potential to provide a model for replication in other sub-Saharan African (SSA) countries. It demonstrates how donor-funded market facilitators (GIZ & FSD Africa) can build on new Central Bank FCP regulations by putting in place the critical building blocks for the development of a local FCP training market.

Looking towards next steps, a repeat evaluation is planned for December 2015 to determine whether lasting market-system change is likely to be achieved. In the meantime, FSD Africa is working with BOU, GIZ and a Ugandan communications firm to deliver a public awareness raising campaign around financial consumer protection. The aim is to increase demand for high quality SFI customer service, which will likely lead to increased demand by SFIs for FCP training. FSD Africa will also work with GIZ and BOU to disseminate lessons learned across SSA and identify opportunities for enhanced supervision to catalyse the development of the training market in Uganda. Finally, the conversion of learning materials into an e-learning module is also under discussion.

According to GIZ Uganda: “the FCP training programme has beenshining example of what a committed regulator can achieve in the financial inclusion space. Working with like-minded development partners such as FSD Africa and local implementers such as UIBFS, this project has developed and implemented a carefully designed, sustainable approach to the long-term mainstreaming FCP within the Ugandan financial sector. FSD Africa’s support has been invaluable as a catalyst to scale-up and ensure the project has lasting outcomes. Without FSD Africa building on progress made by BOU and GIZ, the necessary momentum to support Uganda’s financial sector to deliver better financial services to consumers in a fairer and more transparent way may not have been achieve

“Beyond the funding: creating a lasting market for financial consumer protection training”

Posted on by Kihingu Inc

Between August 2014 and December 2014, the Uganda Institute of Banking and Financial Services (UIBFS) led a project to embed the Bank of Uganda’s (BOU) Financial Consumer Protection Guidelines (FCPG) in the day-to-day operations of the 31 Supervised Financial Institutions (SFI) in Uganda.

The project aimed to increase the capacity of Ugandan training firms and SFI Human Resource teams beyond a critical minimum threshold to enable the delivery of financial consumer protection (FCP) training to SFIs in Uganda on a lasting basis. This would then lead to long-term implementation of the FCPGs in all branches of SFIs to consumers across Uganda.

To support this process, Financial Sector Deepening Africa (FSDA) competitively procured UIBFS for £105,000 to lead a consortium of five FCP-enabled Ugandan training firms (Corporate Concepts, Demis, Komunda Investments Ltd, Sonamoney and UIBFS).

In total, 12 FCP qualified Ugandan trainers used bespoke FCPg materials to train 1,038 staff at 575 branches of 31 SFIs in all regions of Uganda. A total of 1,004 (96.7%) participants were awarded certificates for successful completion of the course. The training was delivered on time, reached 86.5% of the intended 1,200 participants, and was highly rated by SFI staff participants, SFI Human Resource Managers and BOU.

Significantly, a review in February 2015 (three months after the delivery of the training) indicated initial, positive signs of market-system change. For example, all five participating training firms intend to provide an FCP training module on a commercial basis as a result of this project. A total of 4 of the 12 surveyed SFIs indicated they plan to pay for the outsourcing of FCP training to local Uganda training providers. Finally, BOU expressed confidence that supervisory and public pressure would increase the demand for FCP training among SFIs into the future.

Looking beyond Uganda, this project has thePtrong>potential to provide a model for replication in other sub-Saharan African (SSA) countries. It demonstrates how donor-funded market facilitators (GIZ & FSDA) can build on new Central Bank FCP regulations by putting in place the critical building blocks for the development of a local FCP training market.

Looking towards next steps, a repeat evaluation is planned for December 2015 to determine whether lasting market-system change is likely to be achieved. In the meantime, FSDA is working with BOU, GIZ and a Ugandan communications firm to deliver a public awareness raising campaign around financial consumer protection. The aim is to increase demand for high quality SFI customer service, which will likely lead to increased demand by SFIs for FCP training. FSDA will also work with GIZ and BOU to disseminate lessons learned across SSA and identify opportunities for enhanced supervision to catalyse the development of the training market in Uganda. Finally, the cversion of learning materials into an e-learning module is also under discussion.

According to GIZ Uganda: “the FCP training programme has been a shining example of what a committed regulator can achieve in the financial inclusion space. Working with like-minded development partners such as FSDA and local implementers such as UIBFS, this project has developed and implemented a carefully designed, sustainable approach to the long-term mainstreaming FCP within the Ugandan financial sector. FSDA’s support has been invaluable as a catalyst to scale-up and ensure the project has lasting outcomes.Without FSDA building on progress made by BOU and GIZ, the necessary momentum to support Uganda’s financial sector to deliver better financial services to consumers in a fairer and more transparent way may not have been ach

Kenya’s CMA to benefit from £1.1m FSDA TA programme to strengthen capacity

Posted on by TIMOTHYRADIER

FSD Africa and the Capital Markets Authority of Kenya (CMA) are pleased to announce a strategic partnership to strengthen the CMA’s institutional and staff capacity to support the development of Kenya’s capital markets.  FSD Africa will invest £1.1 million over three years in a technical assistance programme. The investment will be substantially matched by the CMA itself.

The partnership will ensure that the CMA has the resources it needs to enable it to meet a number of the strategic objectives set out in the ten-year “http://www.cma.or.ke/index.php?option=com_docman&task=doc_download&gid=293&Itemid=102″>Capital Markets Master Plan (2014-2023) (CMMP) adopted by industry and the Government of Kenya.  The CMMP aims to position Kenya as an international financial centre and a regional hub for capital markets investments in Africa.

The technical assistance programme focuses in particular on strengthening the CMA’s institutional capacity and developing staff skills.  It also aims to: facilitate the promotion of Islamic finance (in capital markets and other parts of the financial industry); support the implementation of corporate governance reforms; and help raise professional standards across the capital markets industry.  In addition, the partnership will allow the CMA to encourage capital markets integration across the East African Community (EAC) by providing funding for projects carried out jointly between EAC member states.

We strongly welcome the collaborative nature of the relationship we have with FSD Africa, which is aligned to the full implementation of the Capital Markets Master hrough the provision of complementary resources and facilitating access to top quality global expertise to support excellence in the delivery of the Authority’s mandate.

Paul Muthaura, Acting CEO of CMA

 

Well-functioning capital markets can play a vital role in driving economic growth and reducing poverty by encouraging investment and providing access to long-term capital.  We are delighted to have the opportunity of working with the CMA on this programme which we believe will boost innovation in Kenya’s capital markets and further strengthen investor confidence.

Mark Napier, Director of FSD Africa

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“Going for inclusive growth – building capital market capacity for the ling-term in Tanzania”

Posted on by Kihingu Inc

With support from FSD Tanzania, FSD Africa worked with the London Stock Exchange (LSEG) Academy in 2014 to build capacity within Tanzania’s capital markets through targeted skills development.

Starting in January 2014, three phases of training were delivered to 103 professionals from the Dar Es Salaam Stock Exchange (DSE), Capital Markets & Securities Association (CMSA), Office of the Prime Minister, Ministry of Finance and a range of local brokers. To help achieve a lasting impact, LSEG Academy trainers also trained 14 Tanzanian trainers from local institutions such as the University of Dar Es Salaam and the University of Dodoma.

The training rated well, scoring an average of 4.8/5 on overall satisfaction. Evidence indicates that knowledge and expertise has increased. In Phase 2 and 3, practitioner test scores increased from 58% and 69% on entry to 84% and 77% on exit respectively.

A more detailed evaluation shows promising signs of s on the wider capital market system. In September 2014, the CMSA signed an MoU with London-based Chartered Institute for Securities & Investment (CISI), which will accelerate the development of a new capital market qualification for East Africa. There are also signs of replication. Again in September 2014, the LSEG Academy was separately contracted by a Tanzanian broker to deliver a training course to 15 participants on the post trade environment.

Between January and December 2014, the DSE reported an increase in total market capitalisation of 30%, 2 listings and an increase in market liquidity. According to the DSE CEO, Moremi Marwa: ‘our partnership with the UK is now moving away from aid towards trade and investment