Led by an independent judging panel of experts, the Inclusive Fintech 50 initiative looks for early-stage fintechs in advanced or emerging markets that offer a solution among credit, insurance, payments and remittances, savings and personal financial management, or infrastructure addressing special challenges of underserved customer segments.
The global pandemic has underscored the importance of having access to financial services, which act as a stabilizing force for low-income households and businesses. Fintechs play an important role in expanding access to these vulnerable populations, but these startups themselves need access to capital and connections. <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener">Inclusive Fintech 50</a> makes these startups more visible to investors and partners who can help them reach more of the 3 billion financially underserved people.

This report and infographic examine application data from nearly 300 eligible fintech applicants from the 2021 Inclusive Fintech 50 competition to better understand the state of early-stage fintechs and identify opportunities for further exploration.

Report

The <a href="https://www.inclusivefintech50.com" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> application data from the third year signals continued progress on innovations to onboard low-income customers, despite the challenges posed by the pandemic:
<ul>
 	<li>Inclusive fintechs are using creative approaches to serve new customers. From retail partnerships that help drive customer acquisition, to insurance platforms offering micro-coverage, to native language chatbots, to enhanced biometric identity verification solutions, early-stage inclusive fintechs are pursuing outside-the-box solutions to reach un/underbanked people around the world.</li>
</ul>
Nevertheless, there are two areas of concern:
<ul>
 	<li>Funding concentration persists. While fintech investments across emerging markets have been increasing, early-stage inclusive fintechs continue to face disparities based on geography, funding status, and gender.</li>
 	<li>Potential customer risks persist around data usage. Although data is central to the business models of inclusive fintechs, some applicants require customer consent related to data, and some still do not.</li>
</ul>

Insights from the 2021 Inclusive Fintech 50 Applicant Pool

Dive into the Data

Visit inclusivefintech50.com for key dates, past winners, the Investors' Network, and much more.

VISA

MetLife Foundation

Jersey Overseas Aid / Comic Relief

Accion

International Finance Corporation

Sponsors & Partners

Julia Arnold

To further illustrate this point, below are profiles of two Inclusive Fintech 50 winners that both have similar missions to serve underserved, unbanked rural communities with access to payments or financial services. While a majority of their customers are women, neither fintech set out to specifically target them. Were these fintechs to focus further on their female clients’ needs and preferences, they could potentially reach more women and provide them with beneficial services.
<h2>Paycode</h2>
Headquartered in South Africa, Paycode offers last‑mile delivery financial services technology solutions to unbanked populations offline in real‑time. Paycode links government social payments, mobile money, or payments to farmers or rural recipients without a formal bank account. The company addresses three key needs among rural populations: lack of formal identification, little to no connectivity, and high cost of service delivery. To do this, Paycode offers end users a biometric-linked smartcard which can be used at point-of-sale (POS) machines. Since a vast majority of end users live in remote, rural places, Paycode brings the POS to rural villages by putting cash machines on the back of pickup trucks. This branchless banking model is designed to work entirely offline — end users confirm their identity, access their accounts, and withdraw their funds with no internet or mobile connection. Their transaction data is uploaded when the Paycode employee reconnects to the internet.
Several aspects of Paycode’s delivery model and design unintentionally meet some of women’s unique needs. First, introducing a new technology in a rural setting, particularly one involving so many moving parts (fingerprints, smartcards, POS, etc.) can be tricky. Building trust among users can take time. Before going into a community, Paycode scopes the village to understand the needs of potential customers as well as identify and train locals who can act as facilitators on behalf of Paycode. When ready, Paycode provides all the necessary equipment and systems to onboard a customer and issue them with a biometric smart card on the spot. The onboarding process takes a total of seven minutes.
<blockquote class="pullquote--right">Several aspects of Paycode’s delivery model and design unintentionally meet some of women’s unique needs.</blockquote>
Another innovation involves the biometric ID itself. End users are onboarded using their fingerprints — to verify their identity and proof of life. End users select a finger to act as their primary ID. They also select up to three individuals to act as a back-up in case their fingerprint is unreadable (many smallholder farmers have rough hands and fingerprints can be tricky to obtain). In addition to selecting proxies for access, end users also select an “alert” finger — a risk mitigation strategy that silently triggers a false low balance in their e-wallet while simultaneously alerting Paycode’s system of a potential theft. This risk mitigation strategy was designed to mitigate the threat of gun violence, but it also provides safety and control for female end users if their male partner attempts to co-opt their funds.
Both these aspects of Paycode’s business, and particularly the alert finger, meet women’s specific needs, even if they weren’t designed with that intent. Control over income or assets can be particularly challenging for women in light of informal rules that, for example, may expect a woman to hand over her money to her male partner. The alert finger enables her to navigate economic violence that could potentially escalate into physical violence while maintaining control over her assets.
<h2>Extramile Africa</h2>
Extramile Africa targets savings groups in Nigeria by offering increased security of their funds and the ability to earn interest on their savings. <a href="https://mangotree.org/what-are-savings-groups" target="_blank" rel="noopener">Informal savings groups</a> such as rotating savings and loan associations (ROSCAs) are common throughout the world and have mostly female membership. These groups are an informal way for women to save, collect lump sums of savings, and access a form of credit.
Extramile targets two segments of women: smallholder farmers who make up the ROSCAs and women-run microbusinesses who make up two-thirds of their merchant network. The savers receive free and ongoing extension services, including advice at planting, harvest, and selling. The assistance is meant to ensure market linkages for farmers to sell their goods, which can be difficult or unpredictable for many smallholders. The savers transact — make deposits as well as withdrawals — with any Extramile merchants, who tally their savings on a unique ID card and are paid a small sum to take all the cash weekly to a bank, a sometimes two- to four-hour bus ride.
Savers must have a basic feature phone on which they receive SMS confirmation messages about their deposits. The use of technology increases transparency and security among group members, mitigating group infighting around transactions and savings totals, as well as improving financial accountability among savers. Extramile also created an app on which their merchants, who must have smartphones, can provide offline deposit taking and withdrawals. Extramile also uses the app to identify farmers or microbusinesses in each community with whom to invest part of the total savings by analyzing savings transaction data linked to each user. Profits from the investments are shared out every six months, with savers and farmers or businesses receiving 40 percent each, and Extramile receiving 20 percent as part of a sustainability strategy. This investment scheme enhances the economic resilience within communities.
To gain the trust of communities served, Extramile targeted community leaders and held community-wide meetings where they provided food and offered agricultural technical assistance. Extramile banking partners provided POS machines that Extramile brought to the community meetings to familiarize the community as well as train merchants how to use them. Their farmer co-ops and groups are targeted for onboarding as well as for financial management information around their savings behavior — for example, given that their savings are leaving their hands, they are told to keep cash on hand for daily expenses.
<blockquote class="pullquote--right">Extramile addresses the insecurity of women&#8217;s funds through placing some of it in bank accounts</blockquote>
Like Paycode, some of Extramile’s design choices benefit women. Savings groups are primarily made up of women and are a critical, if insecure, means to save cash outside of homes. Extramile addresses the insecurity of their funds through placing some of it in bank accounts, improves group members’ knowledge through financial and agricultural education, and even provides another income source through community investments. Targeting female merchants is similarly beneficial as these are usually lower-resourced businesses than male-run counterparts. Extramile improves female merchants’ technological capacities and adds income sources by paying merchants to make the trek to urban centers and through profit-sharing.
<h2>Adding a Gender Lens</h2>
Both Paycode and Extramile have been successful at embedding a deep understanding of rural livelihoods into their product design. Through mobile cash machines or providing a secure way to save, these two businesses clearly seek to address the informality and related vulnerability of their customers’ lives. They also clearly understand that building trust is foundational to their work, addressing it with community engagement or on-the-spot proof of concept. Given the fact that women make up a majority of both companies’ clients, going further to understand women’s lives, economic needs, and constraints will increase both the impact of their services and the growth opportunities for their businesses. Fintechs are uniquely positioned to take a gender-intelligent approach to design: they are close to their customers, collect all sorts of customer data which they can use to build products for women’s needs, and have the <a href="https://www.centerforfinancialinclusion.org/rapid-innovation-how-fintechs-are-adapting-under-covid-19" target="_blank" rel="noopener">flexibility to pivot and experiment</a> when necessary.
<blockquote class="pullquote--left">Going further to understand women’s lives, economic needs, and constraints will increase both the impact of their services and the growth opportunities for their businesses.</blockquote>
For Paycode, that might look like providing parallel investments in financial and digital capability in ways to enhance their primary business of cash disbursement. Due to the constraints they face, women are often less literate or lack key skills compared with men that are needed to <a href="https://link.springer.com/article/10.1007/s10708-019-10098-y" target="_blank" rel="noopener">increase their incomes or yields from their agricultural labor</a>. Financial capability is critical to women’s and households’ long-term financial health. Partnering with financial experts or training local agents to provide financial information — ideally linked to a financial service — and digital literacy that may encompass uses of technology beyond Paycode’s specific services would greatly increase women’s inclusion and increase their capability to use Paycode’s products. Digital capability may also include designing for the fact that <a href="https://www.pciglobal.org/wp-content/uploads/2020/09/DSG-Study-Brief-Impact-of-gender.pdf" target="_blank" rel="noopener">mobile phones are often a shared resource</a>, and thus any messaging or nudges might be seen by more than just the intended recipient.
Building out organizational partnerships to meet the full range of customer needs is critical, and this has become essential during the <a href="https://www.centerforfinancialinclusion.org/rapid-innovation-how-fintechs-are-adapting-under-covid-19" target="_blank" rel="noopener">COVID-19 pandemic</a> for fintechs and customers alike. Partnering with a microfinance institution or savings association with formal financial linkages may help build healthy behavior and provide a customized experience for Paycode’s end customers. Paycode and Extramile could partner with agricultural small and medium enterprises (agri-SMEs) that often provide training and also financial services (i.e., credit) to farmers. Customer transaction data from both fintechs can be used as an alternative credit score for women to get access to capital they are disproportionately excluded from. Extramile could offer this type of service by leveraging data on savings behavior for lines of credit to be reinvested into the communities. Finally, both fintechs could seek out ways to address some of women’s non-economic constraints, such as the intra-household power dynamics around household budgets and expenditures that often hand control over to male partners. Addressing these dynamics as it pertains to economic decisions takes specific training, and Paycode and Extramile could partner with trained facilitators to have information sessions with customers. These types of <a href="https://www.tandfonline.com/doi/full/10.1080/09614524.2019.1651251" target="_blank" rel="noopener">parallel investments</a> have been known to improve women’s financial inclusion and overall household economic well-being. Women’s financial inclusion is only as deep as women’s ability to <a href="https://www.scribd.com/document/398638800/Kabeer-Gender-Livelihood-Capabilities" target="_blank" rel="noopener">make decisions over their financial assets and see those decisions through to their completion</a>.
<blockquote>Both fintechs could seek out ways to address some of women’s non-economic constraints, such as the intra-household power dynamics around household budgets and expenditures that often hand control over to male partners.</blockquote>
Gender-blind digital financial technology can and does reach women customers. However, <a href="https://www.cgap.org/blog/personas-show-how-social-norms-impact-womens-financial-inclusion" target="_blank" rel="noopener">embedding women’s unique needs and constraints</a> into product design enhances women’s inclusion, ensuring their lived experiences are accounted for, thus making a financial product more meaningful to each customer and more valuable for the business. Fintechs like Paycode and Extramile have already done the difficult work of innovating to reach these last-mile populations — they are in the ideal position to make adjustments to their design that account for their female customers’ wants and needs. By gathering information on their female clients’ financial constraints, habits, and dreams, they can strengthen their impact on individual clients and their communities and take their businesses to new heights.
&nbsp;

Inclusive Fintech 50 Sponsors

Brief

For low-income women, digital financial inclusion offers an opportunity to upend entrenched gender inequalities by entering spheres from which they have been otherwise excluded. Financial services delivered via mobile phone can bridge the last-mile gap, bringing financial tools and services directly to women where they work and live. However, women are underrepresented customers of digital financial providers and platforms. Well-established impediments such as cost, literacy, and normative barriers (that shape the way people behave and expect others to behave) prevent low-income women from using such services at the same rate as men. These demand-side constraints, combined with a dearth of sex-disaggregated customer data, leave most fintech firms without a clear picture of women’s wants and needs for digital financial tools. As such, most mass-market tools are not designed with women in mind.
<blockquote>Demand-side constraints and a dearth of sex-disaggregated customer data leave most fintech firms without a clear picture of women’s wants and needs for digital financial tools.</blockquote>
It’s not just digital financial inclusion: Fewer women than men have access to formal bank accounts and mobile technology. Globally, 65 percent of women, compared with 72 percent of men, have bank accounts, while 197 million fewer women own a phone than men, according to the <a href="https://www.gsma.com/r/gender-gap-2019/" target="_blank" rel="noopener noreferrer">GSMA Mobile Gender Gap Report 2019</a>. Regional variations make these gaps more striking. In Sub-Saharan Africa, for example, home to many promising emerging market fintech innovations, the mobile gender gap is 15 percent, while in South Asia (including Pakistan, India, and Bangladesh) the gap is 28 percent. Further, access to formal bank accounts is extremely low across Africa. For example, the gender gap in account ownership in Kenya, according to the table below, looks to be only about 8 percentage points. However, the gap widens when adults with only a mobile money account are disaggregated from formal bank accounts and mobile money accounts. Around 65 percent of men in Kenya have both a formal bank account and mobile money account, while only 50 percent of women do. Interestingly, the gender gap in adults with only a mobile money account is reversed; more women than men have only a mobile money account, likely because the barriers to entry are lower than for a formal bank account. This trend can be seen throughout Africa.

<img class="aligncenter size-full wp-image-41359" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/Sample-of-countries-in-Africa-Table-VF2-800.png" alt="table " width="800" height="412" />

Given the gender gaps in bank account ownership and mobile technology, it is not difficult to see why many fintech firms do not have visibility on how to better serve women. With fewer women users, and little to no sex-disaggregated data around how women’s use of and needs for these products differ from men’s, it can be difficult to identify low-income women’s needs and preferences. Excluding women is often unintentional — “gender-blind” design is thought of as an inclusive strategy. If “bias” is not baked into the design, the thinking goes, then anyone who wants to use the product can. Unfortunately, the opposite is true. Gender-blind product and platform design strategies allow products to flow in the way they always have: into the hands of those who are already in the marketplace and who make the decisions about who else can benefit from or access these products. A “gender-intelligent” or “gender-aware” approach, on the other hand, seeks to overcome women’s specific constraints through <a href="https://financialallianceforwomen.org/download/how-fintechs-can-profit-from-the-multi-trillion-dollar-female-economy/" target="_blank" rel="noopener noreferrer">data-driven design based on market research</a> in order to create distinct customer value. And the numbers in the table demonstrate that men disproportionately benefit from bank accounts and mobile technology.
<blockquote class="pullquote--left">We show the potential of gender-aware design, and how to design for specific needs and constraints of women, while accounting for the norms that define their lives.</blockquote>
This brief examines design principles employed by two fintechs, <a href="https://paycode.com/">Paycode</a> and <a href="https://extramileafrica.com/" target="_blank" rel="noopener noreferrer">Extramile</a>, working in Sub-Saharan Africa. We show the potential of gender-aware design, and how to design for specific needs and constraints of women, while accounting for the norms that define their lives. These two examples provide insights into why intentionally focusing on women can bring benefits to this largely untapped market and how fintechs can design products that meet women’s needs. Only by improving women’s meaningful use of financial services through concerted efforts to close the gender gaps will low-income communities and households begin to see potential economic benefits from inclusion, benefits that will also flow back to the providers that serve them. It is vital that fintechs move away from gender-blind or -neutral strategies toward gender-aware <a href="https://www.ifpri.org/publication/beyond-access-gender-transformative-financial-inclusion-agriculture-and-entrepreneurship" target="_blank" rel="noopener noreferrer">and even transformative strategies</a> that bake in access pathways for potential customers with limited knowledge or physical mobility. <a href="https://medium.com/hh-design/the-world-is-designed-for-men-d06640654491" target="_blank" rel="noopener noreferrer">Gender-blind design is not gender-neutral</a>.
<h2>Fintechs in Sub-Saharan Africa and a Gender-Blind Approach</h2>
According to data collected by <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> (IF50) -- a competition founded by MetLife Foundation and Visa, with support from Accion and IFC, and additional funding from Jersey Overseas Aid &amp; Comic Relief -- only six of the 403 fintech applicants claimed women as their target customers. Most applicants selected “rural households,” “MSMEs,” or “low-income individuals” as their target market. This belies the fact that all of these fintechs reach women — for many of the IF50 winners, women make up nearly 50 percent of their customers. Indeed, women make up a large proportion, if not the majority, among those market segments.

This trend continues among the IF50 fintechs focused on the African continent. Of the 2020 winners in Africa, the product and livelihood focus ranged from mobile banking, water and utility payments, mobile-based crop insurance, and a range of credit and savings products directed at low-income populations. For example, OKO secures the income of farmers of unirrigated farms in Mali and Uganda through a mobile-based crop insurance that automatically compensates them if they suffer from adverse weather.

<img class="alignright wp-image-41342" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/Social-Norms-Table-VF-1005x1024.png" alt="" width="400" height="407" />Within the profile descriptions of the 15 IF50 winners based in or delivering services in Africa, their customer segments were primarily described as “unbanked,” “underserved,” or “low-income.” A few mentioned women, but most called out their customers by their lack of access to financial services. Only three out of the 15 mention women in their key problem statement, while eight mention “unbanked” populations. Identifying women as their target market is not a requirement, even if women make up nearly half of their customers. But by calling out their target customers in terms of livelihood rather than by gender, these fintechs may assume that every “unbanked” person or MSME has the same level of access to their products. This is rarely, if ever, the case.

If these fintechs do not see women as their target market, how do they reach so many women? Gender-blind product design does not translate into complete exclusion — but it does mean that a product is more likely to reach and work well for certain segments of customers, namely men. Gender-blind design can be seen in mass-market items like car seatbelts and mobile phones as well as digital financial tools such as chatbots with basic financial literacy information or a mobile wallet. In some cases, targeting certain livelihood segments may lead fintechs to see where their design is ill-suited for their women customers and make adjustments. In 2019, <a href="https://www.uncdf.org/article/5171/uncdfs-sprint4women-design-sprint-competition-to-increase-zambian-womens-financial-inclusion-kicks-off" target="_blank" rel="noopener noreferrer">UNCDF hosted a design sprint in Zambia</a> for fintechs seeking to increase their female customers — the finalists all designed and modified their products after interacting with women customers. In other cases, women may in fact be a central target segment, but aspects of a woman’s life, such as normative constraints (like care responsibilities or intra-household decision-making), and thus the product doesn’t achieve desired inclusion or impact.

The Case for a Gender-Intelligent Approach: An Opportunity for Inclusive Fintechs

Tess Johnson

<h2>Providing a Lifeline to Mobile Money Agents</h2>
Mobile money agents serve as the infrastructural backbone of the mobile money system and are brand ambassadors of digital finance providers. They are often a community’s <a href="https://centerforfinancialinclusion.org/uniting-tech-and-touch-why-centaur-products-are-better-for-consumers-and-providers-evidence-from-kenya/" target="_blank" rel="noopener">human touch point</a> to mobile money, helping build their communities’ capabilities in mobile money services and products. Agents provide essential services to individuals and businesses in rural and other difficult to reach areas not served by traditional financial institutions, but are limited by their own liquidity. Many agents tend to have a limited amount of cash on hand — approximately two months’ worth in Kenya, for instance — to be able to buffer against any emergency or shock, founder and CEO Andrew Matua said in a December 2020 interview.
In serving a network of more than 7,600 mobile money agents across Kenya (and soon Tanzania), the majority of whom run microbusinesses of their own in addition to their mobile money businesses, PesaKit has a deep understanding of the links between financial resilience and financial health, and crucially the interconnectedness between the microentrepreneurs’ household finances and the businesses themselves. PesaKit’s goal is to strengthen their agents’ defenses against emergencies or shocks by building a safety net of Ksh 15,000 to Ksh 60,000 so that agents and their families can sustain themselves for a period of one to four months without any income.
<img class="aligncenter size-large wp-image-41299" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/PesaKit-Overview-V3-929x1024.png" alt="pesakit overview" width="929" height="1024" srcset="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/PesaKit-Overview-V3-929x1024.png 929w, https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/PesaKit-Overview-V3-272x300.png 272w, https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/PesaKit-Overview-V3-768x846.png 768w" sizes="(max-width: 929px) 100vw, 929px" />
To accomplish this, after completing a simple onboarding process, PesaKit equips agents with liquidity management tools, which are crucial to agents’ ability to build and maintain trust with their customers. Liquidity management remains a notoriously difficult challenge in operating mobile money agent networks, and as noted by PesaKit founder and CEO Andrew Mutua, liquidity is “actually what they [agents] are in business for. If they have enough float or enough cash, they are able to serve customers. If you don’t have that [as an agent], you are losing income and you are also losing your reputation and the community trust.”
<blockquote>Liquidity management remains a notoriously difficult challenge in operating mobile money agent networks.</blockquote>
Leveraging data generated through agents’ interactions with PesaKit’s app and predictive analytics, its cash flow insights tool provides agents with the granular information agents need to effectively manage their liquidity, such as how much cash they need, how much float they need, how many customers they might serve, and how much they might earn in commissions.
The biggest challenge for PesaKit has been getting enough robust and consistent data to provide agents with accurate and relevant business insights. While M-Pesa’s continued domination of the Kenyan mobile money market impedes PesaKit’s ability to directly access some mobile money transaction data, PesaKit collects other data through agents’ interaction with its app that reveals key information about agents’ businesses (e.g., demand, business operations, footfall). This information helps agents access small loans that will then generate a credit history and afford them the opportunity to access larger value loans over time.
<h3><img class="alignright wp-image-41236 size-medium" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/komesha-corona-wait-here-feet-pesakit-sign-300x212.png" alt="corona social distancing kenya sign" width="300" height="212" srcset="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/komesha-corona-wait-here-feet-pesakit-sign-300x212.png 300w, https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/komesha-corona-wait-here-feet-pesakit-sign.png 585w" sizes="(max-width: 300px) 100vw, 300px" />Protecting Agents from the Pandemic’s Worst Economic Impacts</h3>
The pandemic reinforced the important role of PesaKit’s data-driven model, as COVID-19 presented significant challenges to business as usual. At the height of the pandemic, starting in March 2020, the Kenyan government imposed a strict 7 p.m. curfew, which curtailed agents’ hours of operation, restricted the movement of cash, and placed a heavier financial burden on agents overall. PesaKit agents faced increased costs to rebalance their cash flows, as customers were making more deposits than withdrawals, coupled with having to equip their locations with the personal protective equipment, hand sanitizers, cleaning products, and masks they needed to be able to serve their customers safely while observing social distancing guidelines.
To strengthen agents’ social safety net in this time of immense need, PesaKit introduced a 12-month hospital cash insurance cover to provide agents with greater financial security if they tested positive, were quarantined, or were hospitalized due to COVID-19. Again, PesaKit’s proximity to clients enabled them to move quickly and provide appropriate services to help their customers navigate these difficult times.

<h2>Leveraging Community Trust to Expand Access to Healthcare</h2>
reach52 seeks to shield low-income, underserved households in rural areas from the disruptive financial burden of out-of-pocket (OOP) health expenditures and protect their livelihoods by providing access to affordable and comprehensive health insurance and healthcare services.
<a href="https://www.cgap.org/blog/financial-services-health-treating-cause" target="_blank" rel="noopener">Research by CGAP</a> found that those living in low- and middle-income countries pay as much as 60 percent of their health expenditures out of pocket. An unexpected health crisis can force a family to make one of two nearly impossible choices: borrow from an informal moneylender at great expense or sell a household asset to make ends meet. If neither of these are options, families have to suffer poor, if not catastrophic, health outcomes by rationing necessary medical treatment or forgoing it entirely.
<img class="aligncenter size-large wp-image-41318" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/reach52-Overview-V3-763x1024.png" alt="" width="763" height="1024" srcset="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/reach52-Overview-V3-763x1024.png 763w, https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/reach52-Overview-V3-224x300.png 224w, https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/01/reach52-Overview-V3-768x1030.png 768w" sizes="(max-width: 763px) 100vw, 763px" />
Insurance products are meant to help households avoid facing any of those decisions, yet providers often find that<a href="https://www.centerforfinancialinclusion.org/inclusive-insurance-closing-the-protection-gap-for-emerging-customers-2" target="_blank" rel="noopener"> insurance is a difficult product to sell to low-income, underserved households</a>. Consumers with less experience or comfort with the formal financial system don’t always understand the basics of how insurance works, how it benefits them, what adverse events it protects or mitigates against, and how claims on their policies are paid. Rather than focusing on the intangible nature of insurance and the functional details of their plans and policies, reach52 taps into the emotional and practical benefits of insurance. “Nobody really wants to buy insurance,” notes Rich Bryson, Chief Strategy and Marketing Officer at reach52. “But everybody does want to protect their families and look after them. That is a universal trait and that is absolutely the case in the communities that we’re operating in.”
<blockquote class="pullquote--right">“Nobody really wants to buy insurance. But everybody does want to protect their families and look after them.”</blockquote>
reach52 builds on communities’ trust of local leaders, fellow residents, and community-based nongovernmental organizations that are already locally embedded to drive adoption of its insurance products and to scale its solutions more widely. “Trust is absolutely huge,” continues Bryson. “There can be distrust of external organizations in communities where information is less available and quite a lot of scamming goes on. Partnering with NGOs and individuals in the communities to run the services helps to overcome this. You can then build trust obviously as more people use the service and by sharing positive claims stories, showing how community members have benefited from insurance when they needed it most.”
reach52 recruits and equips Marketplace Area Managers (MAMs) from these aforementioned groups to lead its outreach and onboarding efforts, either in sites directly managed by reach52, or those run by reach52’s on-the-ground partners such as NGOs. MAMs serve as the bridge that connects low-income and rural clients with established insurance providers, using the reach52 marketplace mobile app to help clients find affordable health coverage, as well as prescription and over-the-counter medicines to meet their unique needs.
<h2>Expanding Service Offerings and Forging New Partnerships</h2>
reach52 drew from a wealth of guidance from its local teams and partners to understand how it could operate safely given travel restrictions and social distancing protocols. With its teams not able to travel, the fintech shifted to focus on its strategy, response, and the development of remote services that could help healthcare workers and the local community. For instance, they developed Facebook Messenger-enabled health chatbot services — used by more than 100,000 people — for sharing information on topics such as COVID-19 and its symptoms.
Specifically, reach52 has focused its recent efforts on combatting COVID-19, addressing barriers to healthcare access the pandemic has created for rural and low-income populations, and examining the adverse economic impacts it has had on livelihoods. In <a href="https://reach52.com/leading-the-fight-against-covid-19-in-partnership-with-johnson-johnson/" target="_blank" rel="noopener">partnership with Johnson &amp; Johnson</a>, reach52 has provided upskilling and remote learning opportunities for nearly 2,000 of its community health workers in the Philippines and Cambodia through its mediconnect platform. It has also expanded the range of healthcare products and services available through the reach52 marketplace, including reach52’s launch into <a href="https://reach52.com/reach52-launches-health-services-on-the-ground-in-india/" target="_blank" rel="noopener">India</a> and <a href="https://reach52.com/expansion-of-reach52s-insurance-services-into-cambodia/">Cambodia</a>.
<blockquote>reach52 has focused its recent efforts on combatting COVID-19, addressing barriers to healthcare access the pandemic has created for rural and low-income populations</blockquote>
More broadly, the increased focus on global health and health access issues has accelerated reach52’s partnerships with public and private sector health actors and other key stakeholders, including Pfizer, Biocon, Allianz, and UNICEF Innovation, among others. These new initiatives have ranged from exploring new models of care to address both communicable and chronic health conditions (e.g., dengue fever, diabetes, and hypertension) to new insurance plans and mobile wallet services for low-income communities.

<h2>Beyond COVID</h2>
reach52 and PesaKit credit their success to placing their end users at the center of everything they do. By focusing on developing solutions that address customer pain points and working to provide additional opportunities for agents to generate income, PesaKit stakes its success on the success of its agents, which it believes will build and maintain customer loyalty and is key to the sustainability of its business over time.
Emphasizing the importance of community and global health, Bryson of reach52 argues that “no one is protected until everyone is protected […] it is critical that we look at global health and by nature the global economy” as being interconnected in this way.
As the world continues to grapple with the health and economic fallout from the COVID-19 pandemic, the financial needs of customers will continue to evolve. Inclusive fintechs must remain agile and continue adapting to the ever-changing context and evolving needs of their customers. Doing so can help customers manage their immediate needs while also building their financial resilience to mitigate against future crises.

The severe economic impacts of COVID-19 on low-income households and small businesses have underscored the need for innovative solutions that can build greater financial resilience. Findings from <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/" target="_blank" rel="noopener noreferrer">surveys of MSMEs</a> conducted by the Center for Financial Inclusion (CFI) show that since COVID-19 struck, many small businesses in Indonesia, Colombia, and Nigeria have either had to close or found their profits significantly decreased. At the same time, the pandemic has provided opportunities for inclusive fintechs to <a href="https://centerforfinancialinclusion.org/rapid-innovation-how-fintechs-are-adapting-under-covid-19/" target="_blank" rel="noopener noreferrer">leverage their agility and adaptability</a> to strengthen and support the financial resilience of low-income, financially underserved customers.

Financial resilience is the ability to mitigate, adapt to, and recover from shocks and stresses in a manner that reduces chronic vulnerability and facilitates inclusive growth. Individuals must deftly navigate a delicate balancing act to stay afloat and may be thrown off course by a whole host of shocks, ranging from unexpected health crises to weather-related disasters that can disrupt otherwise appropriate financial plans. The nuances associated with financial resilience can complicate the financial service industry’s ability to develop and design comprehensive solutions for low-income customers.
<blockquote class="pullquote--right">PesaKit and reach52, two winners of the 2020 Inclusive Fintech 50, have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs.</blockquote>
PesaKit and reach52, two winners of the 2020 <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> -- a competition founded by MetLife Foundation and Visa, with support from Accion and IFC, and additional funding from BlackRock and Jersey Overseas Aid &amp; Comic Relief -- have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs. In this paper, we share insights on how these two fintechs have adapted to a challenging economic landscape to serve as early examples of how fintechs have leveraged their agility and innovation during crisis. These findings build on the 2020 Inclusive Fintech 50 <a href="https://www.inclusivefintech50.com/white-paper-2020" target="_blank" rel="noopener noreferrer">white paper</a> that draws on the data submitted by the 2020 cohort of applicants and highlights how fintechs are continuing to advance financial inclusion and resilience for the estimated 3 billion financially underserved people worldwide.

Agility Breeds Resilience: A Tale of Two Fintechs Innovating in the Face of a Pandemic

Spotlight on 2020 Winners

Blog Post

Imagine a woman, Rita, who owns a food shop in Delhi. She lives in a small home with her husband and two children. The incomes from her business and her husband’s job cover the rent for their small apartment, household essentials, and school expenses, while also allowing them to send money to their family in the village and save for future expenses. Climate change has intensified the monsoon season in the past few years, and two years ago, a record-setting flood caused damage to Rita’s shop and all her business supplies. She has been working hard to rebuild her business, but a lack of capital has prevented her from operating at full capacity. <a href="https://www.washingtonpost.com/weather/2022/04/28/india-pakistan-heat-wave-records/" target="_blank" rel="noopener noreferrer">An intense heatwave now is affecting Delhi</a> and posing new hurdles to Rita’s business. 

Rita’s situation is not unique and many small businesses around the world face similar challenges. Climate change disproportionately impacts low-income and vulnerable people and climate-related shocks are drastically altering the livelihoods and living conditions for many. Globally, MSMEs make up over <a href="https://www.un.org/en/observances/micro-small-medium-businesses-day" target="_blank" rel="noopener noreferrer">90 percent of firms and provide 70 percent of employment</a>, and many are struggling with intensifying climate risks. As part of CFI’s <a href="https://www.centerforfinancialinclusion.org/research/covid-19-and-msmes-data-and-analysis-to-understand-impact">longitudinal</a> research on the impact of COVID-19 on MSMEs in four different markets (Colombia, India, Indonesia, and Nigeria), we conducted a dipstick survey in 2021 to understand the consequences of climate shocks on MSMEs and the ways they are preparing to adapt to climate change.

Our research revealed three takeaways:
<h1>1  Climate Change is Impacting MSMEs and Hindering Their Recovery from COVID-19 Financial Impacts </h1>
Thirty-two percent of survey respondents reported that at least one climate shock – including flooding, sea level increase, heat wave, or drought – has impacted their business within the past five years. The types of climate shocks and their impact varied by country (see graph below).

<img class="size-full wp-image-44468 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/05/MSME-Climate-Graph1-1.png" alt="" width="2696" height="1308" />

While climate change impacts all people, women bear the brunt of the escalating climate risks. <a href="https://www.unwomen.org/en/news/in-focus/csw61/women-in-informal-economy" target="_blank" rel="noopener noreferrer">Women make up much of the informal economy</a> and their <a href="https://www.un.org/en/chronicle/article/womenin-shadow-climate-change" target="_blank" rel="noopener noreferrer">livelihoods are more likely to be impacted by climate risks</a>. CFI’s data indicates that women show a higher level of concern than men that climate change will affect their ability to operate their business and maintain their quality of life – 61 percent of women business owners were concerned about this compared to 52 percent of men.

Additionally, among the MSME respondents who had been impacted by a climate shock, <a href="https://www.centerforfinancialinclusion.org/the-precarious-state-of-msmes-understanding-the-impact-of-covid-19-and-opportunities-to-support-their-recovery">recovery from the financial impacts of the pandemic appears to be slower</a> than those who had not faced a climate-related shock (see graph below).

<img class="size-full wp-image-44469 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/05/MSME-Climate-Graph2.png" alt="" width="2766" height="1394" />
<h1>2  MSMEs Are Unable to Actively Prepare for the Accelerated Effects of Climate Change</h1>
Extreme climate events are becoming a more frequent phenomenon around the world. And for MSME owners with limited resources and time, preparing for climate change can be a challenge. Across all survey respondents, only 47 percent reported that they had an operating plan in place for business continuity (see graph below).

Sixty-two percent said they are confident in their ability to get a loan to rebuild their business following a climate disaster, and 53 percent said they had friends and family who could provide financial support in the event of a climate shock. During the COVID-19 crisis, help from friends and family was essential to the ability of MSMEs to survive. In the immediate aftermath of the pandemic, 44 percent of business owners in Colombia said they borrowed from friends and family compared to 11 percent who borrowed from a financial service provider. This demonstrates the importance of both formal financial services and informal networks in supporting climate resilience.

Only 23 percent reported that they had an insurance plan for climate disasters, and 38 percent said they had savings set aside to cope with climate disasters. While there were variations among countries in the strategies employed to combat a future climate shock, data suggests that MSME owners are more likely to rely on reactionary strategies than preventative ones.

<img class="wp-image-44470 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/05/MSME-Climate-Graph3.png" alt="" width="1022" height="881" />
<h1>3  MSMEs Need Support From Governments and Financial Services Providers to Adapt Their Businesses to Increasing Climate Risks</h1>
<a href="https://www.centerforfinancialinclusion.org/green-inclusive-finance-a-framework-for-understanding-how-financial-services-can-help-low-income-people-weather-climate-related-risks">CFI’s green inclusive finance framework</a> outlines four pathways – Mitigation, Resilience, Adaptation, and Transition – that help to understand how inclusive finance can support low-income and vulnerable populations prepare for climate-related impacts. Financial services can help MSMEs build resiliency and respond to the disastrous effects of climate change. For example, access to savings products and emergency loans can help MSME owners carry out cost-intensive efforts to rebuild their business after an extreme weather event.

Our survey data indicates that MSMEs need support from governments and financial services providers to build resilience and adapt to climate change. In some cases, such as insurance products, governments and financial service providers will need to work together to ensure MSMEs have access to appropriate and affordable financial services.

A significant share of MSME owners who experienced a climate shock faced damage to their shop or inventory (see graph below). To manage the impacts of climate disasters on their business operations, MSMEs need financing to make upgrades to their business location or inventory storage. Governments can provide grants or low-cost loans to MSMEs for making upgrades that would help avoid more drastic consequences of a climate emergency.

Climate Change Adds to Challenges for MSMEs Recovering from COVID: Three Takeaways from CFI Surveys

Privacy Perceptions, Attitudes, and Behaviors: Perspectives from Indonesian Smartphone Users

CFI Advisory Council Member <a href="https://www.centerforfinancialinclusion.org/bio/david-ferrand">David Ferrand</a> has had a prolific career. Educated as an engineer and trained as a commercial banker, David shifted his focus to financial inclusion in 1993. After working in the space for 12 years, he became the director of <a href="https://www.fsdkenya.org/" target="_blank" rel="noopener noreferrer">Financial Sector Deepening (FSD) Kenya</a>, a multi-donor program established to support the development of inclusive financial markets. Now an independent consultant, David’s primary interest is in enhancing the impact of inclusive finance on the real economy and developmental outcomes. David joined CFI’s Advisory Council in July 2020.

As he reflects on how financial inclusion has evolved, David believes that we are at a turning point with potential for far greater developmental impact than has been seen to date. He also shares what he’s learned from nearly three decades in the Kenyan finance ecosystem, and what he believes are the crucial issues our community should prioritize.
<h1>How did you get involved in financial inclusion and what are you working on now?</h1>
DF: While I was working in banking in the UK, I received an opportunity to be posted to Kenya. I spent just over a year in corporate banking and it was there that I became interested in international development and financial inclusion. I decided to move out of the banking industry and return to the UK, where I got involved in microcredit enterprise development through the UK’s Department for International Development (DFID).

After working with DFID, I joined FSD Kenya where I worked until 2019. I then spent the next two years working with the FSD Network on strengthening how FSDs across Africa could work more effectively together. Most recently my focus has been on how we practically link the new possibilities for finance offered by digital technology with the pressing need to find new development pathways that work for Africa.

I’m interested in sustainability and the role of inclusive finance in accelerating or facilitating a more sustainable economic basis for developing economies. The green economic agenda is obviously critical now. And though I claim no expertise, I'm also very interested in gender – the question of gender and inclusive finance has become much more significant lately, and rightly so.
<h1>How has financial inclusion changed since you first became interested in the subject?</h1>
DF: It has changed massively. There's been sustained interest in financial inclusion for three decades which, in international development, is perhaps unusual. The space started with credit, broadened into savings, and then insurance was “discovered”. The idea of microcredit was replaced with microfinance to become, broadly, financial inclusion. And now today, I tend to talk about “inclusive finance” because, if our objective is to achieve positive developmental change, one aspect of finance – the direct delivery of financial services to underserved populations – cannot be separated from the rest of the financial system.

When I was first involved, things were positioned around microcredit and micro-enterprise, and the approach was very supply-side driven. We all felt there was a recipe: if we could build the financial institutions to deliver finance, then we’d have a massive development impact.

But we realized there was a need to instead be outcome-oriented. Our aim is to deliver a financial system that is more inclusive and delivers on economic and social empowerment objectives. There has been a necessary shift toward the demand side to understand how finance plays a role in the real economy.

Another major change is commercialization. Three decades ago, the field was dominated by nonprofits. Then there was an explicit attempt to move towards commercialization to scale. In recent years it feels like we’ve been far more successful here than we dared hope. However, our challenge is to bring the work back to the development objectives that underpinned the original policy interest in the space without losing the power of markets to create far-reaching change.
<h1>In one word, what is the current state of financial inclusion today?</h1>
DF: Exciting. The possibility of really impacting low-income people is better now than ever. Digital technology has the potential to enable a radical reduction in transaction costs and we can imagine the creation of much more sophisticated holistic financing solutions. There are many more possibilities. We do, however, need to be on our guard against the risks these changes bring. Finance is a powerful tool that can wreak havoc as well as enable constructive change, and we must effectively protect vulnerable consumers of financial services in the new digital world. Even as technology brings new risks, it also provides new ways to improve consumer protection.
<blockquote>Finance is a powerful tool that can wreak havoc as well as enable constructive change, and we must effectively protect vulnerable consumers of financial services in the new digital world.</blockquote>
<h1>From your early experience in the banking industry, do you think banks have become more inclusive?</h1>
DF: I think they have. Thirty years ago, banks did not see 90 percent of the population in Africa as a viable market; they were focused on the top 10 percent. The inherent conservatism of the banking industry has often prevented the industry from taking advantage of the potential that technology offers.

However, this has changed dramatically in the last few decades, and the extent to which mainstream commercial banks across Africa have adopted channels that effectively enable outreach to underserved communities is tremendous progress. I think the inclusive finance community can take some credit for demonstrating the market potential. More recently, fintech has started to provide a compelling threat to the status quo and banks realize that they need to adapt if they are to remain relevant in a digitally-transformed world. 
<h1>What lessons can be learned from the Kenyan inclusive finance ecosystem? </h1>
DF: A lot. I don't think there is necessarily a “Kenya model” but it is useful to reflect on elements of what happened in Kenya. For example, there was a dominant mobile phone provider in Kenya that helped enable mobile money to become ubiquitous. Critical mass must be reached for mobile money to take off and to encourage further rounds of innovation. While that was achieved in Kenya, it has also come at the cost of a highly concentrated market which also creates challenges.

Besides the digital financial revolution in Kenya, we also see some of the darker sides of digital finance and how there can be unanticipated outcomes. For example, the rise of overindebtedness has been exacerbated by the ready availability of digital credit. While it is important not to overstate the point, there are nevertheless significant and growing cases of real harm. It is important to harness the powerful tools that have been created to ensure they are applied in a constructive way and risks are controlled.
<h1>What are the most crucial issues in inclusive finance that we should prioritize over the next five years?</h1>
DF: I think the number one challenge is how to carry over innovations from finance into the real economy; how new forms of partnerships can enable funds to flow effectively to solve real-world issues. As we get into the new frontiers of finance and development, it's going to be difficult to find effective ways to take the capabilities of the private sector-driven finance industry and efficiently deliver, innovate, and address the needs of inclusive development. There has been increasing attention on blending finance – combining private, philanthropic, and public resources – but the experiences demonstrate how difficult it is to get right. It will continue to be challenging because it takes us into new organizational territory and causes us to reexamine our assumptions.
<blockquote class="pullquote--left">The tools we have been developing can and should play a role in increasing resilience, but they will be at best a modest supporting part if not allied with others.</blockquote>
Additionally, adaptation to climate change is critical and finance will play a central role in achieving a sustainable future. This requires thinking beyond yesterday’s conception of financial inclusion and instead thinking at a systems level. How is finance needed at various levels –global and national, sectors and communities, firms, and individuals – to increase resilience? The tools we have been developing can and should play a role, but they will be at best a modest supporting part if not allied with others.

Finally, we should prioritize achieving more effective forms of market conduct. This will require getting away from today’s largely rules-based regulation, which is frequently costly and practically ineffective. Politically challenging as it may be, an outcomes-driven approach is essential to successfully navigate the complexities of creating a genuinely inclusive financial system. This matters to directly protect consumers and ensure that markets are open and competitive.
<h1>What unique expertise and experience do you bring to the Advisory Council?</h1>
DF: As CFI seeks to influence systems change at a global level, I bring many years of experience wrestling with the practical challenges and opportunities of supporting change in what proved to be quite a dynamic system. There is a lot to be drawn from the Kenyan market – both good and bad – and there are many competing narratives of Kenya’s financial system development over the last 30 years. I hope I can bring at least one of those perspectives to bear as a member of CFI’s Advisory Council.
<h1>What advice would you give to young people in the banking industry today regarding financial inclusion?</h1>
DF: It is an exciting, but turbulent, place. The industry needs to change and I hope young people who have a long-term vision of what banking should become are attracted to the space. With respect to inclusive finance, banks are at the heart of where it needs to change. For too long, the primary attraction of a career in finance has been the considerable financial gain. This has fueled an approach to finance which has destroyed, rather than created, value. Financial inclusion clearly has not been immune to this. We need young people who are visionary and value-driven and who understand that finance has a key role to play in creating a better future.
<h1>Any final thoughts for our readers?</h1>
<blockquote>We must go beyond the idea of financial inclusion as a narrow concept and instead look at how we can re-engineer our financial systems to be more inclusive.</blockquote>
DF: It's a time to be brave and bold. We face huge challenges, but these are surmountable. CFI is in a great position to play a catalytic role in influencing the emergence of the new paradigm. We must go beyond the idea of financial inclusion as a narrow concept and instead look at how we can re-engineer our financial systems to be more inclusive.

It’s a Time to Be Brave and Bold: Q & A with David Ferrand, CFI Advisory Council Member

Hanh Nguyen is thrilled! Recently, an international organization introduced a new climate-smart seeder technology for rice production in his village. The seeder is less resource-intensive and will improve yields while allowing farmers to plant rice more quickly. While Hanh and the other men farmers in the village are celebrating their good fortune, his neighbor, Linh Bui — an agricultural laborer and single mother of four, is extremely worried. Cultural restrictions and childcare responsibilities restrict her from venturing out of the village seeking work, and she relies on the income she makes working in the rice fields. The new technology will reduce the need for wage laborers in rice transplanting, and Linh will no longer have an income. How will she now provide for her family?

As the story above illustrates, <a href="https://agrilinks.org/post/lessons-farming-households-agricultural-decision-making-and-shifting-social-norms-womens" target="_blank" rel="noopener noreferrer">development programs and processes often impact men and women differently.</a> Social and cultural norms negatively impact women smallholder farmers, but there are numerous ways that organizations can design programs to work for both low-income men and women. Integrating <a href="https://www.cgap.org/research/publication/social-norms-change-womens-financial-inclusion" target="_blank" rel="noopener noreferrer">norms-aware and norms-transformative approaches</a> in climate and agriculture programs can shift existing power dynamics and ensure equitable developmental outcomes for low-income men and women.

We highlight innovative approaches that organizations are taking to address norms barriers, reach smallholder women, and provide them with information and capital – two critical impediments that prevent them from adopting climate-smart productive agricultural investments. Funders, policymakers, and providers can consider these insights as they invest in and design policies and solutions that integrate women smallholders in climate-smart agriculture.

<img class="alignnone size-full wp-image-44432" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/05/Screen-Shot-2022-05-04-at-2.38.29-PM.png" alt="" width="2520" height="1476" />
<h1>Despite the Feminization of Agriculture, Norms Interfere with Women’s Adoption of Climate-Smart Agriculture</h1>
Evidence from the <a href="https://www.gfdrr.org/sites/default/files/publication/gender-equality-disaster-recovery.PDF" target="_blank" rel="noopener noreferrer">World Bank</a>, <a href="https://www.fao.org/climate-smart-agriculture-sourcebook/enabling-frameworks/module-c6-gender/chapter-c6-1/en/" target="_blank" rel="noopener noreferrer">Intergovernmental Panel on Climate Change</a>, and others suggest that men and women experience the ramifications of climate change hazards differently due to their socially constructed roles and responsibilities. As Joanna Ledgerwood and Mayada El-Zoghbi pointed out in a <a href="https://www.centerforfinancialinclusion.org/the-pandemic-wake-up-call-gender-norms-matter-in-financial-inclusion/" rel="noopener noreferrer">recent blog post</a>, gendered roles — and the underlying social norms that influence them — are the <a href="https://www.centerforfinancialinclusion.org/normative-constraints-to-womens-financial-inclusion-what-we-know-and-what-we-need-to-know">invisible guardrails</a> dictating acceptable behavior, the division of labor, allocation of resources, and decisions about adopting new technologies, including climate-smart agricultural practices that can help low-income households build resilience against climate extremes.

Because of cultural and social norms, men and women smallholders have different roles and responsibilities, which in turn impact decisions related to agricultural investments and crop selection. For example, men typically prioritize cash crops for commercial gains, while women, who are likely to be <a href="https://link.springer.com/chapter/10.1007/978-3-319-25718-1_11" target="_blank" rel="noopener noreferrer">subsistence farmers</a>, tend to pay more attention to crop’s cooking time and potential for consumption, food security, and cattle feed. Furthermore, due to normative roles, women farmers tend to be the ones who consider potential water contamination risks from herbicides, as it is their responsibility to fetch freshwater (often needing to travel long distances to find safe water) and care for sick family members.
<blockquote class="pullquote--right">Women’s role in agriculture is significantly undervalued and women smallholders have limited access to land, assets, inputs, advisory services, and post-harvest technologies.</blockquote>
While these norms have been in place for years, increasingly, men <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/9104/WDR2008_0020.pdf?sequence=1&amp;isAllowed=y" target="_blank" rel="noopener noreferrer">are migrating for extended periods to seek off-farm opportunities</a> and women are playing a larger role in both on-and off-farm activities. However, despite accounting for <a href="https://documents1.worldbank.org/curated/en/855471513670397514/pdf/Mobile-technologies-and-digitized-data-to-promote-access-to-finance-for-women-in-agriculture.pdf" target="_blank" rel="noopener noreferrer">approximately 43 percent of agricultural labor in the developing world</a>, women’s role in agriculture is significantly undervalued. Women smallholders have limited access to land, assets, inputs, advisory services, and post-harvest technologies. They are also less likely to be <a href="https://www.researchgate.net/publication/237415255_Investing_in_Women_as_Drivers_of_Agricultural_Growth" target="_blank" rel="noopener noreferrer">connected to commercial agribusiness supply chains</a>. Gendered differences in <a href="https://cgspace.cgiar.org/bitstream/handle/10568/65680/Gender%20and%20Institutions%20Working%20Paper%2079.pdf?sequence=1&amp;isAllowed=y" target="_blank" rel="noopener noreferrer">awareness of the effects of climate change and adoption of climate-smart agriculture practices</a> to mitigate such risks further leave women behind. According to <a href="https://news.un.org/en/story/2011/03/368252-women-could-feed-millions-more-people-if-given-access-means-production-un" target="_blank" rel="noopener noreferrer">FAO’s estimates</a>, if men and women had equal access to productive resources, total agricultural productivity would rise by 20 to 30 percent and reduce global hunger by at least 12 to 17 percent.

Norms change is a complex and dynamic process that requires unlearning and relearning at the household, community, and national levels. To begin changing norms, programs must be designed with a gender lens. Solutions that focus only on access, delivery, or technological innovations – without explicitly accounting for the socio-economic and institutional contexts and gender disparities – can fail to achieve desired outcomes. For example, providing women with land tenure – often considered one of the biggest barriers for women smallholders – is insufficient by itself. Even if women smallholders are given <a href="https://link.springer.com/article/10.1007/s10460-021-10277-z" target="_blank" rel="noopener noreferrer">property rights</a>, they will need access to information, finance, markets, and decision-making powers to be able to leverage these rights into economic benefits. Even when women have property rights, traditional and cultural practices often require them to forfeit their rights to male relatives. Given these risks, women smallholders often lack the incentive to invest in improved climate-smart farming practices or commercially lucrative crops.

Gender-neutral or gender-blind solutions, such as the rice seeder example, often have unintended negative ramifications on the livelihoods of women like Linh because they fail to consider women’s role as caregivers and the unique contexts in which they live. So how do we address these norms barriers and support women smallholder farmers?
<h1>Delivering Training and Information to Reach Women Farmers</h1>
To begin with, we must focus on ensuring that women have equal access to information so they can make agricultural investments, access markets, and improve their wellbeing. Access to information is one of the biggest constraints women smallholders face. Traditional extension and advisory services often follow established practices that reinforce existing gender biases related to knowledge sharing and distribution of labor. Women smallholders with low literacy levels are therefore excluded from technical training covering seed variants, fertilizer use, feedstock, or new machinery and mechanized systems. On the rare occasion when women participate, they often need more time to learn and adapt because they are beginning from a lower baseline capability. This added cost of learning and adaptation can be a major deterrent that is often overlooked by development programs.
<blockquote class="pullquote--left">Access to information is one of the biggest constraints women smallholders face.</blockquote>
Furthermore, women face mobility restrictions and gender norms often dictate that women can’t attend male-led trainings in public spaces. Equipped with this understanding of gendered differences in mobility, information, and capabilities, under MEDA’s INNOVATE program, <a href="https://www.meda.org/document/lessons-from-farming-households-agricultural-decision-making-and-shifting-social-norms-for-womens-economic-empowerment/" target="_blank" rel="noopener noreferrer">Krishi Utsho</a> – a social enterprise operated by CARE Bangladesh – offered home-based training to rural women who were unable to participate in the programs conducted in the Krishi Utsho shops.

Additionally, while many organizations are leveraging smartphones to offer training, extension services, and real-time weather and price information at scale, women risk being left behind. Women are <a href="https://www.centerforfinancialinclusion.org/workarounds-dont-work-gender-aware-financial-services-must-help-address-discriminatory-norms">8 percent</a> less likely than men to own a phone (the gap is even larger for smartphone ownership) and <a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2020/05/GSMA-The-Mobile-Gender-Gap-Report-2020.pdf" target="_blank" rel="noopener noreferrer">20 percent less</a> likely to use mobile internet than men. Development organization programs such as Mercy Corps AgriFin (through its <a href="https://www.mercycorpsagrifin.org/2021/05/27/sprout-open-content-agriculture-platform-learning-launching-soon/" target="_blank" rel="noopener noreferrer">Sprout</a> platform) and <a href="https://m-shamba.net/" target="_blank" rel="noopener noreferrer">M-Shamba</a> are trying to address this barrier through one-stop content platforms on feature phones that produce audio content that mimics the format of radio shows popular among rural women.

Recognizing that trust is key for adoption, Amplio involved rural women from North Ghana in the design of its <a href="https://digitalprinciples.org/wp-content/uploads/PDD_CaseStudy-Amplio-v2-1.pdf" target="_blank" rel="noopener noreferrer">Talking Book</a> — a rugged, battery-powered device with pre-programmed infotainment content in local dialects that health and agricultural extension agents use to deliver information in hard-to-reach communities with limited electricity. Since the content is available offline, it is well-suited for women without a phone, allowing them to listen and learn together at their convenience and record their feedback. Amplio also collects usage statistics to understand user engagement and concerns and continually improve the content.
<h1>Embedding Norms Change Programming in the Delivery of Financial Services Can Improve Outcomes for Women</h1>
Group lending models promoted by the microfinance sector sought to address demand-side barriers women face, including mobility and collateral constraints. However, they failed to uproot the discriminatory gender norms at the source. As a result, low-income women became a vehicle for receiving and repaying loans with little or no control over their use. To get to the root causes of women’s exclusion, we must address the underlying power dynamics at the household and community level, and increase women’s control of resources.
<blockquote class="pullquote--right">Low-income women became a vehicle for receiving and repaying loans with little or no control over their use.</blockquote>
There are some promising approaches to embedding norms change programming to get to the root cause of women’s exclusion from the financial system. In Nepal, many men are migrating, leaving women in rural communities to fend for themselves. Under the prevailing social norms, women lack the knowledge, capabilities, or networks to partake in climate-smart agricultural investments, and their social networks are limited to include only other women with similar backgrounds. To address these barriers, <a href="https://www.meda.org/document/lessons-from-farming-households-agricultural-decision-making-and-shifting-social-norms-for-womens-economic-empowerment/?wpdmdl=4237&amp;refresh=6256d21127f2f1649857041" target="_blank" rel="noopener noreferrer">International Development Enterprises (iDE)</a> trained and engaged women community agents to help women-headed households access information and financial services that would enable them to invest in climate-smart technologies. These networks and agents were trusted intermediaries, allowing women and men in the community to support the initiative. The program offered bundled agricultural credit, insurance, and inputs to help women invest in climate-smart technologies.

In another case, <a href="https://www.meda.org/document/lessons-from-farming-households-agricultural-decision-making-and-shifting-social-norms-for-womens-economic-empowerment/" target="_blank" rel="noopener noreferrer">Bidhaa Sasa</a>, a last-mile finance and distribution company in Kenya, researched the household decision-making process, needs, and constraints of women smallholders. They learned that rural women in Kenya prioritized items that met their household needs and agricultural tools. Using these learnings, Bidhaa Sasa chose to leverage the group lending model to disseminate information and sell essential goods and agricultural innovations. Because top-performing women customers gave the product demonstrations, Bidhaa Sasa circumvented norms barriers and earned the trust of women smallholders.

These examples suggest that models that consider community and household dynamics and the needs and constraints of women smallholders during product design can increase relevancy and improve livelihood outcomes. However, more rigorous evaluations are needed to generate evidence on the long-term outcomes of these innovations.
<h1>Where We Go From Here</h1>
Unless we address the norms that limit women’s ability to benefit from the same tools and climate-smart agriculture practices that are available to men, women farmers will fall further behind. Norms-aware and norms-transformative approaches must be incorporated into climate-smart agriculture programs to ensure equitable developmental outcomes for low-income men and women. Stakeholder and gender analyses and customer research can shed light on local contexts and power structures, help us evaluate potential scenarios and tradeoffs, and support corrective measures to ensure that women and other marginalized segments are not harmed.
<blockquote>Unless we address the norms that limit women’s ability to benefit from the same tools and climate-smart agriculture practices that are available to men, women farmers will fall further behind.</blockquote>
Program designers, providers, and policymakers should critically examine who will be the direct user of the technology, who makes labor and resource allocation decisions, and who benefits from using the technology during the project conceptualization stage. And funders and researchers must support the testing of gender-transformative approaches in inclusive finance and incentivize providers to consider women and their contexts in the design and delivery of financial services. Only then will the inclusive finance sector live up to its promise of equitable outcomes for all.

For more background on existing literature, see CFI's report <a href="https://www.centerforfinancialinclusion.org/normative-constraints-to-womens-financial-inclusion-what-we-know-and-what-we-need-to-know">Normative Constraints to Women’s Financial Inclusion: What We Know and What We Need to Know</a> (2021).

Gender Norms On and Off the Farm: Engaging Smallholder Women in Finance and Climate-Smart Agriculture

With more than 30 years of financial experience, CFI Advisory Council Member, <a href="https://www.centerforfinancialinclusion.org/bio/joanna-ledgerwood">Joanna Ledgerwood</a>, has witnessed dramatic changes in the inclusive finance space. Originally a banker interested in women’s studies, she entered the field hoping to contribute to improving women’s lives and alleviating poverty. After working at various organizations, including the World Bank and the Aga Khan Foundation, and eventually establishing and managing <a href="https://www.fsdzambia.org/" target="_blank" rel="noopener noreferrer">Financial Sector Deepening (FSD) Zambia</a>, Joanna now focuses primarily on women’s financial inclusion and economic empowerment.

Joanna is a member of CGAP’s gender team, contributing most recently to understanding how gender norms affect women’s financial inclusion and building gender-transformative solutions. She also advises several organizations within the FSD Network in Sub-Saharan Africa. Joanna joined CFI’s Advisory Council in July 2020.

As she reflects on lessons learned and progress made, Joanna emphasizes the need to clearly define what success means for inclusive finance, and the importance of moving beyond access and use to actively assess and measure impact.
<h3>How did you get involved in inclusive finance and what are you working on now?</h3>
JL: After completing my MBA in the late 1980s, I found myself working as a private banker while taking women’s studies classes in the evenings. Quite a contrast! I had always been very interested in women’s empowerment and found it increasingly difficult to separate what I was doing in my career with what I really cared about. I decided to give up banking and joined <a href="https://www.centerforfinancialinclusion.org/institutional_partnerships/calmeadow">Calmeadow</a>, a Canadian NGO and forerunner in microcredit.

About 15 years ago, I met Alan Gibson and learned about Making Markets Work for the Poor (M4P). This approach, which I ended up writing a <a href="https://www.amazon.com/Making-Market-Systems-Work-Poor/dp/1788531418" target="_blank" rel="noopener noreferrer">book</a> about, changed my entire perspective on development. Now, working almost exclusively in women’s financial inclusion and empowerment, I use the M4P approach – now referred to as market systems development –in everything I do; I believe it is the only way to make progress in development.
<h3>How did you find yourself working on women’s financial inclusion?</h3>
JL: The genesis of my getting into microcredit was joining Calmeadow. However, for most of my development career, I didn’t focus on gender because I assumed that if the poor were benefiting, then women must be benefiting. It wasn’t until FSD Zambia that I became more involved in gender after securing funding from Sida for a women’s inclusion program. A couple of years after I left FSD Zambia, I spent about a year in an advisory role at the Bill and Melinda Gates Foundation, focused on their gender and policy work. There, I gained an understanding of what various funders and others were working on with regard to women. A few months later, I joined the CGAP gender team, where I focus on gender and market systems development.
<h3>How has inclusive finance changed since you first became interested in the subject?</h3>
JL: For one, the name and focus have changed. When I first joined Calmeadow, it was all about microcredit – the idea being if you provide a small amount of credit to (primarily) poor women, they could start a business that would reduce their poverty. After a decade or so of microcredit, we realized that savings were also important and shifted to microfinance. However, we were still very much centered around supply, and to some extent, I think we still are.

At the time this shift was taking place, I was working with the World Bank and wrote “<a href="https://www.amazon.com/New-Microfinance-Handbook-Financial-Perspective/dp/0821389270/ref=asc_df_0821389270/?tag=hyprod-20&amp;linkCode=df0&amp;hvadid=266118767273&amp;hvpos=&amp;hvnetw=g&amp;hvrand=8536880947652654858&amp;hvpone=&amp;hvptwo=&amp;hvqmt=&amp;hvdev=c&amp;hvdvcmdl=&amp;hvlocint=&amp;hvlocphy=9061285&amp;hvtargid=pla-613592886641&amp;psc=1" target="_blank" rel="noopener noreferrer">The Microfinance Handbook</a>” in 1998. The field has continued to evolve and eventually the term “financial inclusion” made more sense as (micro)insurance and payments were recognized as important financial services for the poor. Now, you often hear the term ‘inclusive finance’, indicating a shift in emphasis and a deeper focus on inclusivity.

I’ve also seen a big movement towards adopting a market systems development approach: recognizing how the various functions and actors necessary in financial market systems must work together to include those underserved and excluded and, ultimately, benefit the real economy.

The other big change has been the acknowledgment of the informal financial sector and its importance in providing financial services to the poor, particularly women and particularly in rural areas. Donor investments made to develop the savings groups sector have been transformational. I think we can learn from the informal sector how to make the formal financial sector work better for women.
<h3>What is your view on the current state of inclusive finance?</h3>
<blockquote class="pullquote--right">If we don’t proactively consider why these groups are underserved or excluded, and then do something about it, inclusive finance won’t be “inclusive”.</blockquote>
JL: What immediately comes to mind is “we’re getting there.” Although much progress has been made, there has recently been an acknowledgment that some marginalized groups are not as included as we assumed. If we don’t proactively consider why these groups are underserved or excluded, and then do something about it, inclusive finance won’t be “inclusive”.

Gender equity, for example, is at the core of development and therefore fundamental to our work in finance. Many people are now talking about a shift toward the “real economy” and how financial services can contribute to inclusive economic growth, access to basic services, and resilience. However, if we’re not intentional and don’t fully consider women and the need for gender equality, real economic impact will be less and will be inequitable.
<h3>What unique expertise do you bring to CFI’s Advisory Council?</h3>
JL: Probably my work in women’s financial inclusion, which is useful since it’s one of CFI’s key focus areas. I love the work CFI is doing on women’s financial inclusion and it’s great to be able to be more actively involved. Also, market systems development, because I believe it’s the only approach that will result in sustainable change that benefits the poor.
<h3>If you weren’t in your current professional role, what would you be doing right now? </h3>
JL: I love my work and the people I have met through it. So, fortunately, I’m doing exactly what I want to be doing. However, if I didn’t work in inclusive finance, I would do something to combat human trafficking. I actually retired about four years ago, but I somehow morphed back into working and got really into women’s financial inclusion and empowerment. I am probably the most inspired and passionate about my work now as I ever have been.
<h3>What lessons did you learn as the founding director of FSD Zambia?</h3>
JL: I learned that to effect market system change, you need to be close to market actors, and I don’t just mean in the private sector. Market actors also include the public sector and civil society. We must consider all the actors (and functions) that either contribute to or constrain the financial market system from working well for everyone – so policymakers, ministries, payment platforms, collateral registries, data management providers, and many others.

Facilitating change requires knowing what’s going on. You need to conduct the research, talk to people, have your ear to the ground. So, when the opportunity for change comes, you’re informed and can influence change in market actor behavior.
<h3>What are the most crucial issues in inclusive finance that we should prioritize over the next five years and why?</h3>
<blockquote class="pullquote--left">The end game is not just about closing the gender gap; it’s about identifying and measuring the benefits of financial services for women.</blockquote>
JL: We need to reach marginalized groups. I think it’s key that we figure out how to define success and how best to measure it. And in measuring it, we pay attention to what is and is not working and adapt what we are doing. The end game is not just about closing the gender gap; it’s about identifying and measuring the benefits of financial services for women. It’s not just about access and use. We need to understand what poor people use financial services for. Are their lives improving as a result? Is poverty being alleviated? That requires not only defining impact but also measuring it and developing an evidence base of what works. Inclusive finance must be inclusive.
<h3>In these recent times of uncertainty, what keeps you up at night and what keeps you inspired?</h3>
JL: A key development objective is poverty alleviation, and gender equality is right at the heart of it. Women simply do not have the same opportunities as men – they have less access to education, health services, finance, etc. ­­– and this inhibits their equal chances to succeed. Women are expected to provide the lion’s share of (unpaid) childcare and domestic work which in turn limits their mobility, their time, and access to market resources and information. They have limited ownership and control of assets, which limits their economic participation as producers. All of this results in income inequality. Therefore, gender inequality is not just a symptom but a cause of poverty. The more research I do, the more I realize that if we’re not making progress on gender equality, then we’re not making progress on the bigger development objectives.
<blockquote>If we’re not making progress on gender equality, then we’re not making progress on the bigger development objectives.</blockquote>
What keeps me inspired are the people. My colleagues, many of whom I consider friends, are really smart and really dedicated. I also think that COVID, despite all the harm it has done, presents an opportunity to ‘build back’ differently. In these uncertain times, I can’t emphasize enough how important it is to understand women’s experiences, needs, preferences, capabilities, and constraints and how they differ from men’s, and design interventions that will result in products, services, policies, and behavior change that work for women.

Inclusive Finance Must Be Inclusive: Q & A with Joanna Ledgerwood, CFI Advisory Council Member

COVID-19 has reinforced the importance of financial services in helping people navigate the effects of the pandemic and lay the foundations for recovery. The rapidly changing context presents a unique opportunity for fintechs and other digitally driven business models to step in and onboard new customers to meet this evolving demand.

The 2020 iteration of the Inclusive Fintech 50 competition maintained the core value proposition of the 2019 initiative — a transparent methodology, independent judging panels comprised of industry experts, and a strong focus on inclusion — while iterating to ensure relevance in a particularly challenging year. The 2020 competition attracted 403 qualified applicants operating in 111 countries and reaching 116 million customers.

Drawing on the data submitted by the 2020 cohort of applicants, this paper provides insights as to how early-stage fintechs are adapting to the current economic uncertainty and continuing to advance financial inclusion and resilience for the estimated 3 billion financially underserved people worldwide.

Follow CFI and #InclusiveFintech50 for updates on Inclusive Fintech 50. For more information about the competition, insights from previous cohorts, and more, visit <a href="http://www.inclusivefintech50.com">InclusiveFintech50.com</a>.

Inclusive Fintech 50 White Paper [2020]

Fintech investment is booming. In 2018, a record USD 111.8 billion was invested in fintech, and the sector garnered extensive media coverage and interest. But despite fintech’s growing profile—and even though it can help unlock trillions of dollars in value by reaching financially underserved households and businesses—fintech solutions have yet to reach the majority of the financially excluded.
It is against this backdrop that we at MIX worked with MetLife Foundation, Visa Inc., Accion, and IFC to launch the Inclusive Fintech 50, the first global effort to spotlight early- stage fintechs driving financial inclusion. Four key findings emerged from our analysis of applicant data. We believe these findings can help funders, investors, and fintechs in their financial inclusion efforts. The Inclusive Fintech 50 applicant pool provides new insights into inclusion-focused fintech, itself a subset of the fintech universe. By highlighting these high-potential companies, we hope to support the efforts of investors, banking partners, and other fintechs working towards a financially inclusive world.

Inclusive Fintech 50 White Paper [2019]

Investment capital is flowing into fintech startups, yet it is still challenging to get capital to many fintechs addressing last-mile challenges. Evidence suggests this is driven in large part by a lack of information. Using data collected to test an initial set of Data Standards for Inclusive Fintech, this report presents insights into what we can learn about fintechs as businesses and how they address challenges of inclusion. This report was made possible by generous support from MetLife Foundation.

Results of the Fintech Benchmarks Proof-of-Concept

Data-Driven IF50 Insights

Recognizing Early-Stage Fintechs Driving Financial Inclusion

Shradha Modi

And as climate change makes the business models of some MSMEs no longer viable, financial services will be necessary to help business owners transition to new business models and livelihoods.
Forward-looking recommendations and actions should also consider that MSMEs are still struggling to recover from the COVID-19 crisis. There are lessons to learn about supporting MSMEs in preparing for the next crisis, and we must keep current struggles in mind while continuing to listen to their needs.

Anindita Chakraborty

Edi Bardhollari

CFI sat down with David Ferrand, whose extensive knowledge of the inclusive finance space over the last 30 years makes him an invaluable leader on what is needed to create real impact moving forward.

Mayada El-Zoghbi

This blog post is part of a series on how gender norms influence the behavior of different actors in the financial system. The series aims to promote solutions that shift norms and improve women’s financial inclusion and economic empowerment.

Rima Patel

CFI sat down with Joanna Ledgerwood, whose prolific achievements supporting the advancement of women’s financial inclusion make her a tremendous asset to the organization as it furthers its work on the topic.

Inclusive Fintech 50

What is IF50?

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IF50 leverages a competitive process to identify 50 early-stage fintechs driving financial inclusion and resilience.