Michelle Romeu

Blog Post

&gt; Posted by Michelle Romeu
<img class="alignright size-medium wp-image-2392" title="La Paz" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2010/12/la-paz.jpg?w=300" alt="" width="300" height="225" />Beth Rhyne's latest Huffington Post blog puts Bolivia's microfinance crisis of 1999-2000 side by side with the current crisis in Andhra Pradesh. In the late 1990s, Bolivia suffered the adverse effects of a microfinance bubble; now, ten years later, the affected institutions have recovered and Bolivia's microfinance sector is looking much healthier due to several adjustments that pushed it in the right direction. Despite the innate differences between the two countries' situation, perhaps India can look to Bolivia for a "recipe for reform," or at the very least, hope for the future.
Microfinance in India is undergoing a crisis caused by a toxic mix of mushrooming growth and political volatility. As they ponder their next steps, participants in the Indian microfinance sector would do well to examine another crisis that touched microfinance, in Bolivia in the years 1999 and 2000. Hyderabad, meet La Paz.
Arid, high-altitude La Paz may not share much physical resemblance with steamy Hyderabad, but like Hyderabad, it had a population in need and social entrepreneurs who created a successful microfinance sector. In the late 1990s, Bolivia had the most developed microfinance market in Latin America, with several mature lenders serving Bolivia's many informal microenterprises.
A Bubble in Bolivia
The sector began to tilt into crisis with the entry of consumer lenders from Chile and other countries in the late 1990s. The consumer lenders brought techniques from developed economies aimed at the middle class. They pushed out loans very fast. But Bolivia's middle class was tiny, and so the consumer lenders found a new customer base among the microenterprise owners who were already clients of microfinance institutions. Their pitch said, "If you're a good microfinance client, come to us. We'll give you a bigger loan and you'll get it faster." This appeal allowed them to double the total number of small loans outstanding in the market within a year. Debt stress rose among inexperienced clients... <a href="http://www.huffingtonpost.com/elisabeth-rhyne/a-tale-of-microfinance-in_b_795840.html" target="_blank" rel="noopener">Read more &gt;</a>
For more information, <a href="http://bit.ly/FI2020signup">sign up for updates</a> from the Financial Inclusion 2020 campaign.

A Tale of Microfinance in Two Cities

&gt; Posted by Michelle Romeu
<img class="alignright size-full wp-image-2236" title="WID logo" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2010/11/wid-logo.jpg" alt="" width="180" height="113" />When we think of people with disabilities, our minds may not jump straight to financial inclusion. And despite the fact that over 80 percent of people with disabilities live in developing countries, it’s estimated that they account for less than half a percent of all microfinance clients.
The idea of providing financial services to poor people with disabilities today can be compared with the concept of microfinance itself in the 1970s. Providers are skeptical because of misconceptions and a lack of knowledge about how to serve people with disabilities.
But this analogy has a bright side too. As Josh Goldstein, Principal Director for Economic Citizenship &amp; Disability Inclusion, points out in this month’s Equity E-Newsletter feature, “The lessons from the early days of microfinance...are both instructive and a cause for optimism.”
Just as the success of microfinance demonstrated to the world that the poor can use and need financial services, so, too, we need to make the business case for financial inclusion of people with disabilities.  Where do we start? Learn more about this call to action by reading (<a href="http://www.wid.org/programs/access-to-assets/equity/equity-e-newsletter-november-2010/feature/" target="_blank" rel="noopener">"Making International Microfinance Institutions Disability Inclusive: A Call to Action"</a>).
It is indisputable that commercial microfinance institutions (MFI) have largely failed to reach a significant segment of the poor: persons with disabilities (PWD). With the clearly stated mission of providing the self employed poor in the informal sector with small loans and other financial products, this market failure is unacceptable and one that the Center for Financial Inclusion at ACCION  International (CFI), in partnership with disability organizations worldwide,  are committed to remedy. Not doing so would make a mockery of the Millennium Development goals since disability is so heavily concentrated among the poor. Indeed, of the estimated 650 million persons with disability, 525 million are in developing countries. The legal and moral obligation to address this market failure is clear but that business case is less certain.
Last June, the CFI (with the support of the Disability and Development team at the World Bank) , held a “summit”  at the World Bank  bringing together leaders of the microfinance industry and disability organizations to see if we could coalesce around some common objectives to jumpstart this initiative. A springboard to action was the 2006 Convention on the Rights of Persons with Disabilities, the first great human rights treaty of the 21st century. Framing the discussion was a concept paper that CFI prepared, “A New Financial Access Frontier: Persons with Disabilities,”  (<a href="http://www.centerforfinancialinclusion.org/Document.Doc?id=830" target="_blank" rel="noopener">http://www.centerforfinancialinclusion.org/Document.Doc?id=830</a>) based on a year of research and informational interviews.  Its conclusions, as discussed below, were widely endorsed by meeting participants. <a href="http://www.wid.org/programs/access-to-assets/equity/equity-e-newsletter-november-2010/feature/" target="_blank" rel="noopener">Read more &gt;</a>
For more information, <a href="http://bit.ly/FI2020signup">sign up for updates</a> from the Financial Inclusion 2020 campaign.

A Call to Action: Making International MFIs Disability Inclusive

&gt; Posted by Michelle Romeu
<img class="alignright size-medium wp-image-2011" title="Mobile money2" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2010/08/mobile-money2.jpg?w=300" alt="" width="300" height="199" />Is mobile banking the next step on the way to 21st century <a href="http://www.centerforfinancialinclusion.org/Document.Doc?id=778" target="_blank" rel="noopener">financial inclusion</a>? As someone new to the industry, I have spent much of this summer learning about microfinance; and for me, one of the most interesting developments in the industry is the use of mobile money to further financial inclusion. Earlier this month I made my way to the U.S. State Department to attend <a href="http://www.state.gov/statecraft/tech/money/index.htm" target="_blank" rel="noopener">Tech@State: Mobile Money</a>. The half-day event brought together U.S. government representatives with technology and microfinance experts to discuss mobile banking in the context of U.S. foreign policy.
Recognizing that mobile phones are altering the course of international development, the State Department is exploring new tools for 21st century statecraft and economic growth.  The event represented the State Department’s first foray into the mobile-banking space and as Under Secretary Maria Otero said, there is a hope that, “with the help of industry experts, we can help generate local political will in order to make financial inclusion a reality.”
Mobile banking is an attractive,scalable alternative channel for financial services; as Carol Realini, CEO of <a href="https://www.obopay.com/consumer/Welcome.do" target="_blank" rel="noopener">Obopay</a>, stated, 5 billion people in the world possess a mobile phone. Shainoor Khojam, Director of Corporate Affairs at <a href="http://www.roshan.af/web/" target="_blank" rel="noopener">Roshan</a>, spoke about financial services in Afghanistan and noted that the entire country has only 17 banks and 34 ATMs. Promoting mobile banking in Afghanistan has been <a href="http://technology.cgap.org/2010/01/19/in-afghanistan-going-where-no-bank-has-gone-before/" target="_blank" rel="noopener">noted</a> to help decrease official corruption in addition to the broad benefits of cheaper delivery and greater convenience and safety for clients.
But the world may not be ready to take advantage of mobile banking opportunities. Jan Chipchase of <a href="http://www.frogdesign.com/" target="_blank" rel="noopener">frog design</a> addressed bottlenecks to scaling mobile banking, including the importance of user literacy—both in terms of language and technological illiteracy—as a key challenge.
While mobile banking is sure to break some important ground on the way to financial inclusion, we must also be wary of putting all our eggs in one proverbial basket. Mobile banking can help bring us closer to full financial inclusion, as part of a bigger toolkit of solutions to financial exclusion.
For more information, <a href="http://bit.ly/FI2020signup">sign up for updates</a> from the Financial Inclusion 2020 campaign.
Flickr credit: <a href="http://www.flickr.com/photos/whiteafrican/" target="_blank" rel="noopener">whiteafrican</a>

Michelle Romeu

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