News Type: News

FSD Africa, cenfri and the FSD network commit to collaborating on insurance market development

Posted on by TIMOTHYRADIER

In sub-Saharan Africa (SSA), insurance markets are yet to fully develop. Despite a population of over 1 billion people, there are only an estimated 60 million risks covered and total premiums for life and non-life insurance accounted for only 1.4% of the global insurance market in 2015. The contribution of the insurance sector to the economy in sub-Saharan Africa, in terms of premiums to GDP, is amongst the lowest in the world at 2.9%. If South Africa is excluded, it drops below 1%.

The lack of market development within the region undermines the contribution of insurance to a range of poverty alleviation and economic growth outcomes. As a risk transfer tool, insurance not only assists economic actors to protect the economic and social assets they accumulate, but also unlock new opportunities for economic activity. As a mechanism for intermediation, it directly supports economic growth, and indirectly aids the development of capital markets.

However, developing a well-functioning insurance market is not a quick and easy process. Several financial sector development programmes (FSDs) across SSA have been making substantive gains over the last decade. Nevertheless, gaps still exist in recognising the potential of insurance market development to contribute fully to poverty alleviation and economic growth.

FSD Africa, in partnership with Cenfri, is working with the network of FSDs across SSA to derive key learnings, as well as identify and suppo new opportunities and approaches to insurance market development. This new collaboration kick-offed at the first FSD Insurance Market Development Workshop which was held in Nairobi, Kenya on March 27th and 28th. In attendance was FSD Kenya, FSD Mozambique, FSD Tanzania, FSD Uganda, FSD Zambia and Access to Finance Rwanda.

There were two key objectives for the workshop. The first was to share strategies, approaches, challenges and successes in insurance market development. The second was to identify opportunities for cross-country learnings and future collaboration.

The workshop was structured around the insurance market development curve and the four stages of insurance market development it introduces. The discussions revealed that while insurance market development is a key focus for many FSDs, many of their approaches differ. The stages provide the FSDs with a tool to inform their approach and there was interest in how their interventions could be shaped per the stages of market development.

The workshop emphasised the need to learn from common successes and challenges. Challenges identified by the FSDs included:

  • Limited awareness and use of insurance;
  • Limited incentives for business to serve low-income people;
  • Questionable sustainability of certain agriculture and health products;
  • Lengthy regulatory change processes; and
  • Limited skills, capacity and data available on the benefit and impact of insurance for poverty alleviation and growth.

Successes highlighted focused on:

  • Creation of local working groups t promote and support inclusive insurance and microinsurance;
  • Innovations in product design such as index insurance and mobile microinsurance; and
  • Capacity Building for regulators and providers.

The FSDs also identified the importance of on-going and sustained engagement with regulators and the private sector. They noted that this engagement has led to increased provider and stakeholder interest; and support for inclusive insurance and microinsurance, as well as positive regulatory relationships and influence.

Going forward, FSD Africa, Cenfri and the FSD network have agreed to collaborate on insurance market development to address these challenges and amplify successes through a Community of Practice to be established for this purpose.

Credit on the cusp

Posted on by Kihingu Inc
Building healthy credit markets in Africa by 2026

African economies are currently undergoing dramatic changes, including a changing consumer base.  Absolute poverty is reducing as a new class of consumer—the cusp group—emerges.  This group (we call “cuspers”), which now accounts for 23% of sub-Saharan Africa’s population, covers a segment of active earners getting by on $2-$5 per day and straddling the formal and informal worlds.  For this group, healthy credit markets could expand opportunity and enable upward mobility, helping to build a true middle class.  But, for this to happen, credit needs to expand and to do so in healthy ways.

In the Credit on the Cusp project, we look at the experience of cusp group borrowers and the lenders who serve them in three distinctive markets—South Africa, Ghana, and Kenya—to better understand what healthy credit market development would mean for this group.  We explore some ways donors and policymakers can help build credit marable upward mobility for Africa’s cuspers

A review of some of Africa’s housing finance markets

Posted on by Kihingu Inc
Overview

Across Africa, the residential investment opportunity is increasingly driving conversations about economic growth. While the definition of who is middle class and how many such households there are continue, the fact of Africa’s rising population and rapid urbanisation is palpable in its cities where the inadequate housing conditions of the majority are obvious.

For every problem, there is an opportunity for a solution, and in increasingly creative ways, this is what Africa’s housing investors are finding.

Most investment funds currently active were initiated when the African growth trajectory was on an upward curve. The past year has been challenging, however. Still among the fastest growing continents, Africa has seen its growth and development prospects seriously challenged by global economic pressures, the commodities downturn and the slowing Chinese economy. Where the prospects of oil and gas discoveries dominated the news five years ago, in 2016 it is their loss in value ng governments reconsider their economic development strategies. The key challenge in this environment, is economic diversification. Can housing contribute towards that opportunity?

Governments can contribute significantly to a developer’s ability to deliver affordable housing at scale, by paying attention to the rough spots along the housing value chain: the availability of land, its servicing (especially water and electricity), and its registration;
the availability of domestic building materials and a functioning construction sector; the time it takes to get administrative approvals for the building process, and the cost of such approvals; the taxation, finance and macro-economic framework; and the functioning of the labour market, among so many other factors.

Read full report from”http://housingfinanceafrica.org”>CAHF here.,

Digitisation of government payments task force benefits from digital money training

Posted on by TIMOTHYRADIER

Harry Mwangi (R) receiving his certificate from Stephen Mwaura (L), the Head of National Payment Systems at the Central Bank of Kenya during the graduation ceremony in Nairobi

Thursday  14th  July 2016, Nairobi — Financial Sector Deepening Kenya (FSDK), in partnership with FSD Africa and the Digital Frontiers Institute (DFI), held a graduation ceremony at the Serena Hotel for the Digitisation of Government Payments Task Force, who successfully completed the 12-week ‘Certificate in Digital Money’  programme.

Commenting on the programme, Victor Malu, Head of Future Financial Systems at FSD Kenya who also participated in the programme said: “This has been a very exciting 12 weeks. One of the really great aspects of this programme is the sharing of knowledge and experiences both among the participants in Kenya as well those from other countries across the world.”

The certified programme offered by DFI in partnership with the Fletcher School at Tufts University aims at equipping 1,500 digital finance professionals within the next two years with the technical knowledge, vision and skills to drive inclusive innovation in digital finance.

It is estimated that more than a third of the world’s adult population does not have access to basic financial services. In Africa, close to 200 million adults still have no bank accounts to enable them receive loans, send children to school or insure against illness. The training, mentoring and peer networking of DFI’s professional development programme is part of the strategic response to fill the financial inclusion capacity gap in underserved markets over the next five years.

The first cohort of the course, which is delivered using a highly interactive on-line platform, was attended by 125 applicants from 34 countries across six continents, including 21 people from Kenya.  Of this cohort, 31% were female while 69% were male, with 45% coming from private sector organisations, 22% from the development sector, 21% from government and 12% from the education sector. 87% of all participants passed the course successfully, with a commendable 100% pass rate from the Digitisation of Government Payments Task Force, who achieved some of the highest marks overall.

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Vincent Mutai at the ceremony

Vincent Mutai from the Task Force, who attained the highest mark of the cohort overall said: “The rich discussions on a range on topics in digital financial services throughout the 12 weeks greatly helped fill my knowledge gaps. Now, I have deeper understanding of how various elements within the digital payments ecosystem interrelate. I also feel more confident engaging in conversations on matters concerning digital financial services.”

Nzomo Mutuku, the Acting Director, Financial and Sectoral Affairs at the National Treasury commented: “This programme was extremely timely as it came at time when the [Kenyan] Government is working to fully digitize government payments and to enhance service delivery. The team from the Government Digital Payments Programme, including myself, who are graduating today will use the knowledge gained to not only accelerate digitisation, but also enhance financial inclusion which remains a key objective of the Government.”

FSD Africa has invested US$1.5 million into DFI, part of which is going towards the provision of scholarships and the convening of in-country “Communities of Practice” in Kenya and elsewhere in Africa. It is expected that these convenings, together with other networking activities, will help to strengthen the learning experience of the students participating in the course.

Commenting on the graduation, Juliet Munro, Director of Inclusive Programmes at FSD Africa said: “This marks a key step forward in building the skills and professional networks required to accelerate the growth and adoption of innovative digital solutions which, in turn, will contribute towards financial inclusion in Africa.”

The second cohort of the course began in July 2016 and is being attended by 180 participants. As demand for the training continues to grow, DFI’s focus will remain on equipping a new cadre of digital finance professionals with the knowledge and skills needed to engage in building digital economies in developing countries across the world.

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