A household budget, saving for a business investment, or managing an unforeseen emergency can cause stress in the most adept household, let alone those experiencing the vulnerability and volatility of poverty. Learning to navigate financial systems and products is a long-term endeavor.

Building financial capability — that is, the knowledge, skills, attitudes, and behaviors needed to make sound financial decisions to support well-being — can take time and creativity. The ultimate goal is to equip all people with the skills to navigate financial services safely and effectively and allow them to accrue their benefits. For poor and rural communities, this can mean increasing resiliency and reducing exposure to economic shocks, improving income growth and investment, and promoting more sustainable and equitable development. And for women, in particular, the accrued benefits can mean navigating financial choices with confidence, seeing themselves — and being seen — as financial clients, and accessing and using technology with ease.

While overall progress has been made in advancing financial inclusion, progress for women continues to lag. Globally, <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">male ownership is likely to be higher than female ownership of accounts</a>, with a gap of nearly 7 percent, which has persisted despite the overall rise in account ownership. The gender gap is much worse in some countries, where <a href="https://www.cgap.org/blog/how-social-norms-men-restrict-womens-financial-inclusion" target="_blank" rel="noopener noreferrer">social norms govern financial access and decision-making</a>. For instance, in Pakistan, while account ownership doubled since 2011, most of the growth was driven by accounts owned by men. Similarly, in Ethiopia, account ownership by men increased by roughly twice the size of the increase among women since 2014.

We must invest in building women’s financial capability to close this gap and make meaningful progress in women’s access to and usage of financial services. Doing so will require a deeper understanding of the economic and social constraints women face in accessing financial services. Yet existing tools for building financial capability have a mixed track record and there is scarce evidence on which approaches and delivery channels are likely to produce lasting impact.

This publication examines how best to share information, build capability, and enable lasting behavior change in a context in which women may have limited say in their own economic choices or require additional support or flexibility to overcome trust and care responsibilities. We examine the characteristics and success of existing approaches to building women’s financial capability and find a gap in programming that sufficiently accounts for women’s preferences, which are largely influenced by gendered social norms.

Readers of this report will come away with:
<ul>
 	<li>a stronger understanding of the role of gender norms that constrain women's financial capability</li>
 	<li>an overview of current women's financial capability initiatives, including classroom-based initiatives, technology-led financial education, and high-touch financial capability approaches</li>
 	<li>recommendations on how to ensure women are meaningfully and successfully engaged with financial services.</li>
</ul>

Building Women’s Financial Capability: A Path Toward Transformation

As countries around the world grapple with the economic impact of the COVID pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income, mostly via digital payments.

Those countries with well-developed social protection systems, payments infrastructure, and wide access to digital financial services have fared much better in getting these payments out quickly, but even they have struggled to rapidly open accounts for their more vulnerable populations. Many of the people at risk fall outside the usual government welfare rolls and risk being overlooked -- especially informal workers, MSME owners/operators, and those working in hard-hit industries like tourism.

The COVID crisis forced policymakers to find innovative ways to deliver rapid support payments to those most in need. A critical aspect of getting this emergency aid out has been the ability to quickly identify and onboard eligible recipients who don’t already have transaction accounts and distribute the payments as soon as possible.
<blockquote class="pullquote--right">What are governments doing to enable rapid payments to those without existing accounts?</blockquote>
CFI’s latest <a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">policy brief</a>, part of our partnership with Mastercard Center for Inclusive Growth and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), explores what governments are doing to enable rapid payments to those without existing accounts. The paper reviews three types of measures being taken to speed up payment distribution. Not surprisingly, the common theme is the ability and willingness of policymakers to be nimble and innovative. Below are a few examples, organized by type of measure:
<h2>1. Rapid Identification of Eligible Recipients</h2>
To quickly determine who’s eligible for COVID support payments, governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.
<h3>Current Beneficiary and Employment Rolls</h3>
<strong>Bangladesh Bank</strong> allowed government disbursement program information to be used to open permanent accounts on behalf of customers. The central bank also permitted the creation of accounts for ready-made garment (RMG) workers based on their employment record, given the low rates of digital IDs or other means to confirm their identity among the predominantly female group.
<h3>Voter Rolls</h3>
The Government of <strong>Togo</strong> established the Novissi cash transfer scheme, to provide support during the pandemic. Because Togo does not have a strong national ID system, they took advantage of a recent voter registration campaign to verify the identity of eligible recipients. <strong>Timor-Leste</strong> was also able to take advantage of its voter registration system, which had high sign-up rates after a recent election.
<h3>Mobile SIM Data</h3>
<strong>Zimbabwe</strong> took advantage of its <a href="https://theconversation.com/zimbabwes-restrictions-on-mobile-money-transfers-are-a-blow-to-financial-inclusion-147109" target="_blank" rel="noopener noreferrer">90 percent mobile money penetration</a> to make payments directly to the e-wallets of all phone numbers mapped to areas targeted for support payments, while <strong>Nigeria</strong> partnered with mobile network operators to <a href="https://blogs.imf.org/2020/06/22/youve-got-money-mobile-payments-help-people-during-the-pandemic/" target="_blank" rel="noopener noreferrer">identify vulnerable informal workers in urban areas through airtime purchase patterns</a>.
<blockquote>Governments have had to be innovative in tapping into all available existing information, whether publicly or privately owned.</blockquote>
<h2>2. Simplified Due Diligence for Rapid Account Opening</h2>
During COVID-19, policymakers and FSPs, in cooperation with regulators, have had to apply simplified customer due diligence (SDD), to rapidly open accounts for newly vulnerable recipients. Some of the key ways they’ve done this include use of mobile SIM registration data, employment records and deferred KYC measures.
<h3>Mobile SIM as ID</h3>
The <strong>Bank of Ghana</strong> expanded its tiered KYC to allow mobile phone subscribers to reuse their SIM card registration to open the lowest tier of e-money accounts, called <a href="https://www.bog.gov.gh/wp-content/uploads/2020/03/MPC-Press-Release-March-2020-3.pdf" target="_blank" rel="noopener noreferrer">Minimum KYC Accounts</a>. In <strong>Egypt</strong>, the central bank’s eKYC program allows customers to <a href="https://www.fintechfutures.com/2020/01/central-bank-of-egypt-pilots-ekyc-solution-for-financial-inclusion/" target="_blank" rel="noopener noreferrer">open bank accounts electronically</a>, by submitting their national ID number along with their mobile phone number to the telecommunications authority, which then confirms to the bank the information match for the mobile SIM registration.
<h3>Remote and/or Deferred CDD</h3>
In <strong>Pakistan</strong>, the government suspended the need for biometric confirmation for its Ehsaas Emergency Cash transfers, opening a <a href="https://www.pass.gov.pk/Detailf90ce1f7-083a-4d85-b3e8-60f75ba0d788" target="_blank" rel="noopener noreferrer">web portal for residents to handle applications and resolve any issues</a>, while the Central Bank of West African States (BCEAO) allowed a three-month window following the COVID crisis for in-person due diligence verification for basic accounts.
<h2>3. Use of Alternative Channels for Delivering Payments</h2>
Several jurisdictions have looked to new channels to quickly onboard beneficiaries and distribute social transfers, from mobile apps and websites to postal networks and non-bank financial institutions (NBFIs).
<h3>Apps and Websites</h3>
<strong>Brazil</strong>’s social assistance program aimed at informal workers, the coronavoucher, is accessible through a free mobile app the bank created specifically for this purpose (those without a cellphone could apply via this <a href="http://auxilio.caixa.gov.br/" target="_blank" rel="noopener noreferrer">website</a>).
<h3>Post Offices</h3>
In <strong>Madagascar</strong>, the government’s COVID cash transfer program, called Tosika Fomena, is made via the Madagascar postal system’s (Paositra Malagasy) cash transfer service called Paositra Money, and <a href="http://www.mptdn.gov.mg/?p=1974" target="_blank" rel="noopener noreferrer">can be retrieved</a> at any PO upon <a href="https://fr.allafrica.com/stories/202005261023.html" target="_blank" rel="noopener noreferrer">presentation of a national ID</a>. The <strong>South African Post Office</strong> (SAPO) <a href="https://www.techfinancials.co.za/2020/05/04/south-africa-post-office-unveils-cashless-atm-for-sassa-social-grants/" target="_blank" rel="noopener noreferrer">rolled out 10,000 cashless ATMS in rural shops</a> to allow users to access payments without having to travel to urban centers.

In <strong>India</strong>, the post office enabled people to get their funds delivered to their homes during the COVID crisis, whether they have a postal bank account or not. By downloading the India Post Payment Bank app, the user is able to withdraw funds from any bank account and <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/india-post-delivers-rs-412-cr-cash-in-doorstep-banking-revolution/articleshow/75369897.cms" target="_blank" rel="noopener noreferrer">have it delivered</a> either to the post office branch or to their home.
<h3>NBFIs</h3>
In <strong>Bangladesh</strong>, BRAC turned to the use of the country’s most prominent mobile money wallet, bKash, as a means of delivering aid to their clients. They opened mobile wallet accounts for <a href="http://blog.brac.net/cash-transfers-to-support-families-during-the-covid-19-pandemic/" target="_blank" rel="noopener noreferrer">all the clients who had their own mobile numbers</a> and, for those that didn’t, especially the women, they allowed the use of a trusted family member’s wallet.

In <strong>Ecuador</strong>, the government <a href="http://pubdocs.worldbank.org/en/129771593464547099/World-Bank-G2Px-COVID19-Ecuador-Brief.pdf" target="_blank" rel="noopener noreferrer">implemented a social transfer program</a> aimed at vulnerable households, utilizing cooperatives as well as banks to distribute the funds. Unlike cooperatives in most countries, many of Ecuador’s cooperatives are connected to the national payment system.
<h2>The Path Forward</h2>
While countries have made impressive progress over the last decade in broadening the reach of digital financial services, the COVID pandemic has magnified the remaining gaps and weaknesses in helping the most vulnerable. As governments continue with national infrastructure programs, especially around ID and payments, we offer the following crucial considerations for national governments:
<h3><strong>Value of Universal Access to Basic Accounts Opened Under SDD</strong></h3>
This pandemic has demonstrated the potential value of universal access to basic accounts that can be opened under SDD (simplified customer due diligence) measures and at no initial cost to the customer. Should all members of society, as a matter of course, be able to open accounts – immediately and remotely -- for receipt of government emergency payments?
<h3>Importance of Whole of Government Communication and Policy Responses</h3>
Like many aspects of the COVID crisis, communications have been a critical aspect of program success and/or failure. In some countries, for example, unclear messaging on how to apply for or access funds has led to overcrowding at government offices or state banks, forcing those offices to close and leading to public turmoil.
<h3>Clear, Ongoing Dialogue and Interactive Decision-making</h3>
Clear, ongoing dialogue and interactive decision-making between government ministries, regulators and FSPs -- especially payment service providers -- has proven vital to ensuring quick action on rapid onboarding programs. Governments already have established emergency protocols with telecommunications and power companies. How can governments put in place formal emergency mechanisms to engage all relevant ministries and private-sector actors, especially payment service providers, for any future crisis situations?
<h3>How can countries put in place mechanisms to address identification and verification for future crises?</h3>
One approach is to loosen impediments to the sharing of various government beneficiary databases, but there is much to understand around data privacy and security and it is unclear whether this approach is the answer. Given the likelihood of future crises, it is prudent that governments begin the longer-term dialogue and investment needed to address governance of data sharing.
<h3>What are the mechanisms that governments can use to expedite digital infrastructure partnerships with the private sector?</h3>
Where government doesn’t yet have the necessary infrastructure -- including, among others, digital payments, identification, and government databases -- partnerships with industry allow them to leverage existing capabilities and information sharing. The use of mobile SIM registration is a prime example of collaboration to address shortcomings in existing ID infrastructure. Rather than treating each situation as a one-off event, one approach is for governments to institute ongoing cooperation agreements with MNOs and other private/public sector actors to react quickly to events as necessary.
<h3>Governments must consider how they reach beneficiaries that are not digitally connected and may never be.</h3>
The cases in our report highlighted usage of alternative distribution channels through institutions such as post offices and NBFIs. These players already serve low-income people, often via some combination of cash and digital means. Those beneficiaries that only want to deal in cash must continue to be accommodated. But that doesn’t mean that the institutions they use must also deal only in cash. The further that governments can push out the digitization of payments, especially to the “last mile,” the more efficient and expedient the delivery system can be made before it’s transferred back to cash for final delivery.

<a href="https://centerforfinancialinclusion.org/rapid-response-for-social-payments-during-covid-19/" target="_blank" rel="noopener noreferrer">Find out more</a> about these policy considerations, and about how countries have innovated and operationalized social payments for the underserved during this difficult time.

Three Ways Governments Expedited Social Payments During COVID

As countries around the world grapple with the economic impact of the COVID-19 pandemic, governments have turned to supplemental cash transfers as a key policy instrument to offset the loss of income of their citizens.

This policy brief explores what national governments are doing to enable rapid payments to those without existing accounts. The swift measures governments took to speed up payments to citizens during the pandemic include:
<ul>
 	<li>Quick identification of eligible recipients</li>
 	<li>Simplification of customer due diligence for rapid account opening</li>
 	<li>Greater use of alternative channels such as mobile apps, post offices, and non-bank financial institutions (NBFIs) such as microfinance providers.</li>
</ul>
Each section of this brief includes country-specific examples and key takeaways. Efforts by 19 countries to facilitate cash transfers, both digital and non-digital, are discussed.

This publication is the second in a <a href="https://www.centerforfinancialinclusion.org/series/policy-responses-to-covid-19-their-impacts-on-low-income-customers">series</a> of policy briefs on COVID-19 economic policy responses and their impact on low-income customers.

Rapid Response for Social Payments During COVID-19

In June, CFI published a blog post asking whether repayment <a href="https://centerforfinancialinclusion.org/are-moratoriums-good-for-clients/" target="_blank" rel="noopener noreferrer">moratoriums are good for clients</a>. As one of the <a href="https://centerforfinancialinclusion.org/preserving-liquidity-policymaker-responses-to-covid-19-and-the-impact-on-low-income-customers/" target="_blank" rel="noopener noreferrer">key tools being used by policymakers</a> to mitigate the consequences of COVID-19 on microfinance clients, moratoriums have provided vital relief to people at a time of unprecedented need.

But when we assess the value of moratoriums, we must also carefully consider what impacts they are having on the financial institutions that serve low-income and underserved segments. From confusion caused by moratoriums announcements to the liquidity impacts for financial institutions serving the BOP, the implications of loan moratoriums are proving to be very mixed.
<h2>COVID-era Moratoriums: Confusion and Rumors</h2>
Moratoriums for loan payments was one of the first measures taken by policymakers around the world when the pandemic shut down businesses. Consumer and MSME borrowers were told they could hold off on repaying their debts, usually for a few months. While this measure seems straightforward, the way in which it was implemented and communicated has varied widely across markets – and often within markets – leading to significant confusion.
<blockquote>While a moratorium seems straightforward, implementation and communication varied widely across markets.</blockquote>
Some moratoriums were mandatory, others were offered as recommendations. The timeframes varied, anywhere from one through six months. Some financial institutions implemented them with an “opt in” approach for customers, while others in the same market took an “opt out” approach. Some regulators said customers needed to request deferments in writing, then later said they could do so via phone, SMS, or email, adding further challenges to financial institutions. In some cases, financial institutions told their clients they could hold off on principal payments but not interest payments. Others said clients would need to pay the combined principal and interest in one balloon payment at the end of the period. And in many markets, it was not clear which borrowers and institutions the moratoriums would apply to, leading to false rumors and public turmoil.

A key issue contributing to the confusion is that the FSPs that serve the poor are made up of many types of entities, typically licensed and supervised by different regulators, with moratorium parameters often differing between them. So consumers and MSMEs were hearing mixed messages and weren’t sure which ones applied to them.

So far, it’s small and mid-size non-bank financial institutions (NBFIs) that are finding themselves most negatively impacted by the moratoriums in their markets, both by the liquidity implications as well as the confusion over how to implement the moratoriums and who it applies to. Many of their clients are no longer able to repay their loans, and even those who can pay are refusing to because they believe the moratoriums apply to them.
<blockquote>Moratorium parameters often differ between types of entities which serve the poor.</blockquote>
In some countries, such as India, the Reserve Bank of India (RBI) stated that <a href="https://economictimes.indiatimes.com/wealth/borrow/lending-institutions-to-allow-3-month-moratorium-on-all-term-loans/articleshow/74840850.cms#:~:text=The%20Reserve%20Bank%20of%20India%20(RBI)%20in%20a%20press%20conference,outstanding%20on%20March%201%2C%202020.&amp;text=Normally%2C%20simple%20interest%20is%20payable,loan%20during%20a%20moratorium%20period." target="_blank" rel="noopener noreferrer">banks and NBFCs are “allowed” to provide moratoriums</a> to their borrowers, but didn’t specify the conditions around how the moratorium should be carried out.

In discussions with the Central Bank of Egypt, they said that the moratorium announced by the central bank applied only to bank loans, but somehow got miscommunicated, leading many MFI customers to initially believe it applied to them as well. At that point, the regulator responsible for non-bank financial institutions in Egypt, the Egyptian Financial Regulatory Authority (FRA), announced its own moratorium. FRA took a more nuanced approach to a moratorium for microfinance clients, in coordination with the MFIs themselves and the Egyptian Microfinance Federation. The mid-March moratorium stated that MFI clients could repay a portion of their loans, down to 50 percent, for a period of two months (March and April), with extensions allowed on an as-needed basis. FRA’s view was that MFIs could not afford a sudden and complete stop in repayments, especially as they don’t have deposits to fall back on, nor would it be a good precedent in terms of microfinance borrower culture. The Bank of Zambia told us they chose to not impose any moratorium, leaving it to individual financial institutions to decide how to address the issue with their clients.

In Peru, MFIs were struggling even before COVID, and there’s now a debate about a proposed law that would forgive all interest charges for six months. It’s still under discussion but industry observers estimate that the law would force at least 26 MFIs into <a href="https://gestion.pe/economia/sbs-26-entidades-financieras-quebrarian-si-aprueban-condonacion-de-intereses-noticia/" target="_blank" rel="noopener noreferrer">serious solvency problems</a>.

Most moratorium announcements have overlooked the loan repayments that MFIs themselves must pay to their bank lenders. Many central banks have urged the banks under their supervision to extend the moratoriums to their MFI/NBFI clients but have not mandated it. And, according to one observer in India, there are banks who fear that extending moratoriums to MFIs will affect their own bank’s credit rating, so are reluctant to do so. MFIs and NBFIs thus find themselves caught in the middle between client moratoriums and their own creditors. Not only are MFIs struggling to meet their current loans in this environment, but their banks and investors are hesitant to issue new loans to them, further exacerbating the situation.
<h2>FSPs: Caught in the Middle and Facing a Liquidity Crisis</h2>
In this pandemic environment, with no loan repayments coming in, deposits being drawn down, and maturing debt commitments coming due with little sign of being renewed or rescheduled, many MFIs are facing the possibility of a serious liquidity crisis. Many industry observers suggest that MFIs won’t get back to their normal repayment rates until 2022. The reduction in cash reserves means shortages in their operational budgets, including their ability to pay staff costs, which also exacerbates their ability to collect repayments. One recent analysis shows that a slip in client repayment rates from 95 to just 85 percent would render most MFIs <a href="http://cgap.org/blog/covid-19-how-does-microfinance-weather-coming-storm" target="_blank" rel="noopener noreferrer">insolvent in less than a year</a>. In a June 2020 survey in Rwanda, 95 percent of the microfinance banks and limited liability microfinance institutions reported <a href="http://afr.rw/IMG/pdf/focus_note_-_covid-19_survey_12.06.20_.pdf" target="_blank" rel="noopener noreferrer">emergency need for liquidity support</a> in the next three months.

Allowing a collapse in the microfinance sector could very well end up negating overall COVID economic relief measures. So far, most MFIs are continuing to operate and few have indicated that they are struggling from serious liquidity shortages, particularly the larger players. According to a recent <a href="https://www.cgap.org/pulse" target="_blank" rel="noopener noreferrer">CGAP survey</a> of MFIs, only 14 percent of respondents reported having less than three months of liquidity on hand (as of April 2020). This figure jumps to 25 percent when operating expenses and debt repayments are factored in. What concerns observers, though, is what happens when the moratoriums end and borrowers are still unable to repay. When the lockdowns and moratoriums end, many microfinance clients will need additional credit to resume business activities, not to mention repay other liabilities accrued to meet their household needs during lockdown.
<blockquote>Allowing a collapse in the microfinance sector could negate overall COVID economic relief measures.</blockquote>
MFIs that are in a precarious position because of the liquidity squeeze described above won’t be in a position to provide this critical credit. This will be compounded by MFIs being unable to access further credit from wholesale lenders such as banks as their collection efficiency will plummet during and after lockdown. In financial situations like this, where there is considerable reduction in consumer demand and a broader economic slowdown, banks become risk averse – even more so when dealing with the poorest segments of society and the institutions that serve them.
<h2>Recommendations for Policymakers and Regulators</h2>
Going forward, we’d make the following recommendations, which can also be found in the recent CFI policy brief:
<h3>Authorities must carefully consider the appropriateness of blanket moratoriums for all institutions and build some flexibility into the policy.</h3>
As we’ve seen so far in Egypt, offering only a partial moratorium to MFI clients has so far proven successful and has eased the impact on the MFIs. The risks of poorly-thought out moratoriums don’t just apply to MFIs, either: a recent stress test by the Bank of Uganda showed that more than half of Uganda’s commercial banks <a href="https://www.theeastafrican.co.ke/business/Half-Ugandan-banks-fail-pandemic-liquidity-test/2560-5584762-ji0t3c/index.html?utm_source=newzmate&amp;utm_medium=email&amp;utm_campaign=2318&amp;tqid=3fGufmcvDU4BEZgeQv5CBIR5.HzSy386xe.6Ebixzw" target="_blank" rel="noopener noreferrer">would have collapsed</a> if the central bank had enforced a three-month customer loans repayments holiday at the onset of the COVID-19 pandemic. In India, industry experts are starting to worry about the impact that twice-extended moratoriums will have on the banks. As The Economist <a href="https://www.economist.com/finance-and-economics/2020/08/01/has-indias-moratorium-on-loan-payments-delayed-the-pain-for-banks" target="_blank" rel="noopener noreferrer">notes</a>, "Much of the RBI's early response to the pandemic involved protecting borrowers. It may yet find itself being forced to step in to save some lenders."
<h3>Moratorium mandates must be clearly thought out and communicated uniformly across all institutions.</h3>
Moratorium announcements can be very confusing to consumers and financial institutions alike. Regulators and policymakers must articulate clearly who the moratoriums apply to, and announcements affecting different groups should occur at the same time to avoid confusion. If moratoriums are to be made optional, say by letting customers opt in, the procedures should be simple, straightforward and clearly communicated. There should also be a clear understanding between the regulator and financial institutions on how they wish to see the moratoriums carried out, with measures in place to ensure that instructions are carried out accordingly. For example, merely recommending that banks extend moratoriums to their MFI clients without following up to ensure this is happening will probably not deliver the results that central banks want to see.

Policymakers and regulators were caught off guard by the pandemic, and are struggling to do everything they can to alleviate the suffering people are facing. While moratoriums were implemented with good intentions, the effects may end up being detrimental in the long run.

Are Moratoriums Good Policy and Good for FSPs?

This paper examines how COVID-era economic policy measures – specifically those addressing liquidity – are directly affecting low-income segments and the financial institutions that serve them. In particular, the paper reviews the liquidity needs of financial institutions serving low-income customers in light of COVID-19, provides examples of policy measures being taken around the world to address concerns over liquidity, and addresses how these measures are affecting the financial institutions that serve low-income customers in emerging markets, especially MFIs and other related non-bank financial institutions (NBFIs). This is the first in a series of policy papers on COVID-19 economic policy responses and their impact on low-income customers.

Preserving Liquidity: Policymaker Responses to COVID-19 and the Impact on Low-Income Customers

<a href="http://www.fi2020week.org/toolkit/"><img class="aligncenter wp-image-22350" style="border: .5px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/11/financial-inclusion-week-graphic.png" width="616" height="392" /></a>It has been two weeks since Financial Inclusion Week 2016 came to a close and we are excited to share a new <a href="http://www.fi2020week.org/toolkit/">Financial Inclusion Week Recap webpage</a> which captures events, blogs, and insights from this year’s global conversation.

By the numbers, Financial Inclusion Week 2016 was a success. We had over 40 partner organizations in 19 countries hold events focused on the theme of <em>keeping clients first in a digital world.</em> Over 1,200 participants were engaged in these events worldwide. Beyond the in-person and online events, there were vibrant conversations on social media. Twenty-three #FinclusionWeek blog posts were shared by a variety of leaders in the industry and hundreds of tweets were exchanged with the week's hashtag. We were thrilled by the breadth of the participants this year. Regulators such as the Egyptian Financial Supervisory Authority, fintech startups such as Artoo, research organizations such as Innovations for Poverty Action, development agencies such as ADA – Appui au Developpement Autonome, MFIs such as BRAC, and many more got involved.

Financial Inclusion Week 2016 was perhaps an even greater success beyond the numbers. Thanks to the 40 partner and contributing organizations, the week served as a reminder that it is possible to advance financial inclusion while keeping clients first. Participating stakeholders discussed ways to protect and empower clients in an increasingly digital ecosystem and presented many opportunities for doing so, from utilizing digital media for <a href="http://www.fi2020week.org/janautthan-samadayic-laghubitta-bikash-bank-limited">building financial literacy and capability</a> in Nepal, to <a href="http://www.fi2020week.org/financial-sector-deepening-mozambique-1-1">using data</a> to better lend to smallholder farmers, to <a href="http://www.fi2020week.org/financial-sector-deepening-mozambique-1">using digital products</a> as a way to overcome consumer behavioral barriers in Kenya. It is clear that the quickly-expanding financial inclusion community is also expanding its understanding of the end-user.

We encourage you to head to the <a href="http://www.fi2020week.org/toolkit/">Financial Inclusion Week website</a> to explore the insights, videos, photos, and blog posts coming out of the Financial Inclusion Week events. We hope that the conversation around <em>keeping clients first</em> does not stop here. Stay tuned for more event recap materials on the week's site as well as a Financial Inclusion Round-up Electronic Magazine to learn more about the global conversation.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/10/17/digital-financial-inclusion-seizing-a-3-7-trillion-opportunity/">Digital Financial Inclusion: Seizing a $3.7 Trillion Opportunity</a>

<a href="https://cfi-blog.org/2016/10/18/what-is-lost-in-a-digital-financial-world-and-how-to-get-it-back/">What Is Lost in a Digital Financial World - And How to Get It Back</a>

<a href="https://cfi-blog.org/2016/10/19/green-light-for-financial-inclusion/">Green Light for Financial Inclusion</a>

Financial Inclusion Week 2016 - Recap

<em><a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8773" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/11/fi2020_antilogo.jpg" alt="" width="321" height="71" /></a>&gt; Posted by Allyse McGrath, Senior Associate, CFI</em>

Readers of the <em><a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">2015 Global Microscope</a></em>, which spotlights the quality of the policy environment for financial inclusion, often focus on the countries at the top of the pack. However, some of the largest improvements in this year’s report are happening towards the bottom of the ranks. This trend appears on a regional scale, with the Middle East and North Africa, the region with the collective lowest scores, showing the most improved scores in this year’s issue of the <em>Global Microscope</em>. In this region, Egypt serves as an example of a country making huge strides even though it’s not among the top 10 countries. In fact, it scores among the very lowest handful of countries.

Up two spots from 53 to 51 out of 55 total markets this year, Egypt improved its score in 7 of the 12 Microscope indicators. The 8-point jump overall can be attributed to many factors, most notably the government’s introduction of a new regulation which broadens financial supervisory to a burgeoning microfinance sector and its welcoming of new electronic payments experiments.

In November 2014, the Egyptian Government <a href="http://www.efsa.gov.eg/content/efsa_en/efsa_news_en/efsa_202_en.htm">enacted</a>  Law no. 141, more commonly known as the “Microfinance Law”, which created provisions for regulating MFIs in the country, previously excluded from the legal framework. This law expanded the reach of the Egyptian Finance Supervisory Authority (EFSA) which now has control over issuing licenses to microfinance institutions in Egypt. After the law’s issuance in 2014, the number of MFIs in Egypt rose from 400 to 640. By the end of 2015, EFSA reported that it had issued 253 licenses. The law which is aimed at ensuring efficiency, transparency, and risk management also <a href="http://www.shandpartners.com/microfinance-law-egypt/">includes</a> a list of “Executive Decrees” by which licensed institutions must abide.

<a href="https://www.flickr.com/photos/29599398@N06/13114119293/"><img class="alignright wp-image-20774" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/03/13114119293_06a9a029f6_k.jpg?w=490" alt="" width="270" height="360" /></a>These regulations include certain levels of protecting debtor rights, creditworthiness checks, transparency, caps on microfinance loans for each customer, and regulations on how MFIs may advertise their products, among others. It is important to note that at this point, licensed institutions cannot receive any deposits. Their operations are, instead, restricted only to forms of financial leasing. EFSA has also focused recently on expanding and improving its regulation for insurance providers.

On the electronic payments front, in March 2015, the Ministry of Communications and Information Technology, the Ministry of Finance, the Egyptian Banking Corporation, and MasterCard <a href="http://newsroom.mastercard.com/press-releases/egyptian-government-and-mastercard-collaborate-to-extend-financial-inclusion-to-54-million-citizens-through-digital-national-id-program-2/">launched</a> a partnership aimed at broadening financial access to 54 million Egyptians through an interoperable national ID platform. As part of the agreement, MasterCard will work with the government and private sector agencies to link citizen’s national IDs to the existing mobile money platform. This system will allow the government to issue digital ID cards and move away from cash when disbursing salaries and social benefits. On the consumer-side, the IDs can be used to pay for government fees, mobile bills, merchant purchases, and domestic remittances.

Even with the great potential of both the Microfinance Law and ambitious electronic payments initiatives, the government will continue facing challenges as it (hopefully) continues to move up in the <em>Global Microscope</em> ranks. While the Microfinance Law is a big step, it is far from a national financial inclusion strategy. Additionally, the full effect of the law is still unknown. Specifically, there are concerns surrounding the capacities of smaller microfinance institutions that are, for the first time, regulated, while larger MFIs could be maturing to begin taking deposits. By boxing MFIs into a credit-only box with size limits, the law also cuts off the path that the better MFIs could use to develop into full service financial institutions, including taking deposits. The result can be a microfinance sector that is populated by relatively weak institutions that do not offer a wide range of services.

<em>For more on Egypt’s recent progress and the country’s environment for financial inclusion, read the <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">2015 Global Microscope</a>.</em>

<i>Financial Inclusion 2020 (<a href="http://www.centerforfinancialinclusion.org/fi2020" target="_blank" rel="noopener">FI2020</a>) is a global multi-stakeholder movement to achieve full financial inclusion, using the year 2020 as a focal point for action.</i> <i>This blog series will spotlight financial inclusion efforts around the globe and share insights from key thought leaders in financial inclusion, with a specific focus on quality beyond access.</i>

<em>Image credit: <a href="https://www.flickr.com/photos/29599398@N06/13114119293/">Laura Cuttier</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/06/30/political-risk-is-keeping-microfinance-ceos-up-at-night/">Political Risk Is Keeping Microfinance CEOs Up at Night</a>

<a href="http://cfi-blog.org/2015/09/16/sizing-up-credit-reporting-in-the-arab-region/">Sizing-Up Credit Reporting in the Arab Region</a>

<a href="http://cfi-blog.org/2015/12/09/where-the-best-place-is-to-be-an-insurance-providerand-other-insights-from-the-microscope/">Where the Best Place Is to Be an Insurance Provider... and Other Insights from the 'Microscope'</a>

Egypt Records Huge Progress in Policy Environment for Financial Inclusion

<em>I recently attended the annual meeting of the Microfinance Network (MFN), which was hosted by the Alexandria Business Association in Alexandria, Egypt. MFN is a global network of some of the largest and leading microfinance institutions, and its annual meeting has long been known for candid and in-depth sharing of experience among the leaders of these institutions, as this post demonstrates.</em>

Ask a microfinance CEO what’s making his or her life hard these days, and the answer is likely to be politics.

That’s hardly surprising when the speaker is Motaz Tabaa, CEO of the Alexandria Business Association (ABA), one of the largest microfinance institutions (MFIs) in Egypt. On January 28, 2011, when the occupation of Tahrir Square in Cairo held the world’s attention and led to the resignation of then-President Mubarak, it became impossible for ABA to operate. But before the week was over, staff were back on the streets, collecting and disbursing loans, and sleeping at the office to guard the cash that couldn’t be deposited in banks, which remained still closed.

Nearly every MFI in the group had a similar encounter with crisis – consider the political violence (and/or natural disaster) that has touched Uganda, Nigeria, Armenia, Mexico, Haiti, and Bangladesh in recent years. Today, Al Majmoua in Lebanon and Tamweelcom in Jordan are overwhelmed with the attempt to serve the Syrian refugees that have crossed their borders. The CEOs who have experienced such upheaval agreed about the role of MFIs in responding quickly to help clients obtain cash, keep their businesses open, and then rebuild. Given how prevalent political and natural crises are, organizations have developed protocols for responding quickly. Even while we met, Enrique Majos of Compartamos received news of a tornado in Mexico, and sent the Compartamos natural disaster team into action.

There was another kind of political issue worrying many of the MFN member CEOs – political actions directed specifically at the microfinance sector. As they see it, politicians seeking votes from the poor too often see advantages in demonstrating their engagement with or control over microfinance. They over-regulate, compete unfairly through state-subsidized lending, give preference to more mainstream banks, or all of the above.

In Egypt, for example, a new law is being introduced to regulate MFIs. Although the sector has advocated for a regulatory framework for microfinance for a long time, this new law does not appear to recognize microfinance as part of financial inclusion for low income families. It fails to provide a path for MFIs to qualify to take savings, while it pigeonholes microfinance into a restrictive lending range. For example, DBACD, which works in the Nile Delta, has recently introduced a home improvement portfolio. But the new law defines housing as outside the bounds of microfinance, so DBACD will have to drop the product. New regulation is also coming in Jordan, and there are signals that it, too, will be overly restrictive. Similar concerns were shared by representatives from Lebanon and Armenia.

Responses to political risk depend on a reading of the situation and the players involved. In one country it may be important to engage directly (though not publicly) with an antagonistic political figure, but in another case that would backfire. For Sogesol in Haiti, it has been important to cultivate a public image that emphasizes its leadership as a provider of important services for the poor. However, the group warned against counting too much on support from the public. Clients, even relatively satisfied ones, are unlikely to organize energetically to protect an institution.

For Compartamos, the non-political, technocratic approach of Mexican and Peruvian banking regulators has been a bulwark for stable and predictable policy in the face of popularity-seeking actions by various politicians, and so Compartamos seeks to maintain frequent contact and exchanges of views and information with regulators. By contrast, for BRAC in Bangladesh, where the political scene is dominated by two warring political parties, regulators are under a large degree of political control. BRAC’s response, which has served it well for many years, is to stay resolutely unaligned and maintain a low-key public posture.

The members agreed that while global best practices and international experts can be helpful in providing a counterweight to populist proposals, the international card must be played with great discretion so as not to provoke a hardening of the stance of the very people the MFI would most like to influence.

Finally, members agreed that maintaining institutional health is an essential political risk mitigation strategy, including adequate capital cushions, to enable an institution to weather the turns of political fortune sure to come its way.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/11/08/the-risk-management-initiative-in-microfinance-rim-mapping-the-road-to-risk-management/">The Risk Management Initiative in Microfinance (RIM): Mapping the Road to Risk Management</a>

<a href="http://cfi-blog.org/2013/04/23/how-can-mfi-boards-be-explicit-about-risk-strategy-and-appetite/">How Can MFI Boards Be Explicit about Risk Strategy and Appetite?</a>

<a href="http://cfi-blog.org/2014/07/11/brac-microfinance-director-shameran-abed-on-client-protection-balancing-credit-and-savings-and-the-evolving-financial-inclusion-landscape/">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

Political Risk Is Keeping Microfinance CEOs Up at Night

<em>&gt; Posted by Center Staff</em>

[getty src="542571629?et=Huo755fiR5Rb_e2CnXH30w&amp;viewMoreLink=on&amp;sig=srJfCk0jO48ZTQ4mRuS3ZDhPgrEJ9-x1PTf2oSEzVyI=" width="508" height="339"]

A new paper from MasterCard corroborates recent findings on persistent gaps in the financial inclusion of women, indicating that in India <a href="http://insights.mastercard.com/theconnectorsproject/assets/documents/RegionalReport-India-English.pdf">58 percent</a> of women report difficulty accessing credit, savings, or jobs because of their gender. The paper is part of MasterCard’s <a href="http://insights.mastercard.com/theconnectorsproject/">Connectors Project</a>, which examines the migration of excluded populations into progressive economic inclusion. The recently-released Global Findex data found that between 2011 and 2014, the gender gap in access to financial services remained steady at 9 percent in developing countries.

The reported difficulty faced by women in India was higher than that of the paper’s other surveyed countries: Indonesia, Egypt, and Mexico. Across all four countries, 33 percent of women expressed these challenges. Across all genders, in India, 67 percent of respondents reported worrying about money they owe to others and 82 percent worry about their future prospects. Along with women, ethnic and religious minorities in India reported additional challenges in economic participation. Fifty-eight percent said it was difficult to get jobs or credit because of their ethnicity or religion – compared with 28 percent across the surveyed countries. Whether or not these women and ethnic/religious minorities do in fact face discriminatory treatment, awareness of their perception is critical. In accessing banking services for the first time, or pursuing economic opportunities, trust and confidence can be a make-or-break.

The new Global Findex data indicated that between 2011 and 2014, 700 million people gained access to accounts, but the discrepancy between access for men and women didn’t improve. However, there were some bright spots. On the whole, in 2011 more than half of the world’s women didn’t have financial access, whereas by 2014 58 percent of women globally had an account in a formal financial institution. In high-income OECD economies, the gender gap is nonexistent. In the Philippines, women are more likely to have a formal account than men.

Leora Klapper, the Findex’s chief architect, <a href="http://www.trust.org/item/20150421184902-4usvh/">points</a> to mobile money, digitizing transfers and payments, and formalizing savings as avenues to improve gender parity. In Kenya, for example, women are less likely to have a traditional account at a formal financial institution but more likely than men to have a mobile money account. Eighty million women worldwide receive government social benefits or wages in cash, creating a huge opportunity for digitizing transfers as an on-ramp to financial inclusion. Similarly, 210 million women in developing countries are paid for their agricultural work in cash, and 175 million women in developing countries don’t save through formal means but through a savings club or person outside the family.

Tandem to increased outreach, to improve perceptions of financial services, treatment of clients needs to improve. Not exclusive to women and ethnic/religious minorities, a recent “mystery shopping” <a href="http://www.nseindia.com/research/content/NSE-IFMR_Paper_5.pdf">study by NSE and IFMR</a> in Chennai, India found that attempts to open BSBDAs (Basic Savings Bank Deposit Accounts) and low-cost accounts were almost always met with staff refusing to offer the BSBDA, and vehement discouragement from opening other lower-cost accounts. The research team cautions against driving G2P transfers until banks demonstrate willingness and ability to meet the necessary standards.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/03/09/every-day-working-towards-financial-inclusion-for-women/">Every Day, Working Towards Financial Inclusion for Women</a>

<a href="http://cfi-blog.org/2014/09/15/savings-groups-mobile-phones-and-a-new-solution-for-rural-women/" target="_blank">Savings Groups, Mobile Phones, and a New Solution for Rural Women</a>

<a href="http://cfi-blog.org/2015/02/26/customer-service-at-brac-empowering-women-through-empowered-women/">Customer Service at BRAC: Empowering Women Through Empowered Women</a>

Fifty-Eight Percent of Women in India Report Difficulty Accessing Credit, Savings, or Jobs Because of their Gender

<a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/534-2013-global-microscope"><img class="alignright wp-image-16543" style="border: 2px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/microscope.png" alt="" width="280" height="353" /></a>If there’s one thing we’ve learned in taking a close look at financial inclusion efforts around the world, it’s that context matters. That’s why we are excited to be part of the team releasing the <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/534-global-microscope"><em>Global Microscope 2014: The Enabling Environment for Financial Inclusion</em></a>. The <em>Microscope</em> is carried out by the Economist Intelligence Unit (EIU) with sponsorship and guidance from the Multilateral Investment Fund of the IDB, CAF, and Citi. The <em>Microscope</em> evaluates the environment for financial inclusion in 55 different countries and provides powerful signals to policymakers in each country on their progress. Which countries topped the list and which have the most room to grow?

We’ll tell you, but first, it’s important to know what the results mean. Each country inspected in the <em>Microscope</em> is assessed on 12 indicators that consider best practices in national regulatory environments and institutional support for providers serving clients at the base of the pyramid. Indicators range from government support for financial inclusion, to supervision of microfinance and other financial products, the status of credit reporting, regulations governing mobile banking and, last but not least, consumer protection.

This year is an important one in the publication’s eight year history because the focus shifted from microfinance to the environment for financial inclusion, a process that involved adapting the framework to account for today’s diversity of providers and products. What we were surprised by, however, was just how little a difference this made in the rankings. We charted last year’s results on the microfinance environment against this year’s results on the financial inclusion environment and we found a very high correlation between the two (see figure below). Environments that are enabling for microfinance are often environments that are enabling for financial inclusion. Six countries from last year’s top 10 were in this year’s top ten.

<a href="http://bit.ly/1s9k6T0"><img class="aligncenter wp-image-16546" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/microscope-figure.png" alt="" width="600" height="290" /></a>

So, who leads the pack? Here’s the list of the top 10 countries and their scores (on a scale of 0 to 100).
<p style="padding-left: 30px">1) Peru -- 87</p>
<p style="padding-left: 30px">2) Colombia -- 85</p>
<p style="padding-left: 30px">3) Philippines -- 79</p>
<p style="padding-left: 30px">4) Chile -- 66</p>
<p style="padding-left: 30px">5) Mexico and India (tie) -- 61</p>
<p style="padding-left: 30px">7) Bolivia and Pakistan (tie) -- 58</p>
<p style="padding-left: 30px">9) Cambodia and Tanzania (tie) -- 56</p>
There were three very clear champions: Peru, Colombia, and the Philippines, whose scores are well above the next-ranked country, Chile. Peru and Colombia performed strongly across the board, scoring in the top five on nearly all indicators. The Philippines’ inclusion environment ranked well in part due to its capable regulator, optimal credit regulation, and effective dispute-resolution mechanisms.

The wide range of performance is notable. Top-scoring Peru secured 87 out of a possible 100 points, while lowest-ranked Haiti only managed 16, and there are countries spread rather evenly throughout the whole scoring distribution. This reveals a very wide range of attention to and progress on financial inclusion across the world. This range is borne out by the finding that a third of countries have active national financial inclusion strategies with targets, a third have strategies that remain vague or patchy, and a third have not made any formal commitment to financial inclusion.

Regionally, both Latin America and the Caribbean and East and South Asia score well. While the Middle East and North Africa region had the lowest regional average score, low scores are present among countries in several regions: Democratic Republic of the Congo, Madagascar, Egypt, Yemen, and Haiti.

East and South Asia and Sub-Saharan Africa are the leading regions in regulation for electronic payments. Kenya and Tanzania in particular stand out for their strong regulation conducive to the growth of mobile payments, and Bangladesh, Pakistan, and Sri Lanka for their effective e-pay infrastructure.

The <em>Microscope</em> found that countries that had strong institutional support – credit reporting, client protection, accounting standards – often performed very well overall, and countries that had weak institutional support performed poorly. Countries at the bottom of the rankings performed especially poorly on measures of institutional support.

The <em>Microscope</em> report, with its country profiles, provides a rich source of information for further research. It also provides a stimulus for policymakers to focus on areas for improvement and to look to the leaders for inspiration and example.

For more detail, including country breakdowns and rankings, you can download the report <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/534-global-microscope">here</a>.

<em>Graphic credits: <a href="http://bit.ly/1s9k6T0">'Global Microscope 2014'</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/12/17/defining-the-path-to-financial-inclusion-in-peru/" target="_blank" rel="noopener">Defining the Path to Financial Inclusion in Peru</a>

<a href="http://cfi-blog.org/2013/10/03/global-microscope-finds-the-world-getting-more-microfinance-friendly/" target="_blank" rel="noopener">Global Microscope Finds the World Getting More Microfinance-Friendly</a>

<a href="http://cfi-blog.org/2012/12/20/putting-a-microscope-on-client-protection-in-microfinance/" target="_blank" rel="noopener">Putting a Microscope on Client Protection in Microfinance</a>

&nbsp;

The 'Global Microscope 2014': Results and Surprises

Mayada El-Zoghbi

Managing Director

Julia Arnold

Jayshree Venkatesan

Loretta Michaels

Hema Bansal

Allyse McGrath

Elisabeth Rhyne

Sonja Kelly

Monique Cohen

Bangladesh

Brazil

Cambodia

Chile

Colombia

East Asia and Pacific

Egypt, Arab Rep.

Europe and Central Asia

Ghana

Kenya

Latin America and The Caribbean

Malawi

Mexico

Middle East and North Africa

Mozambique

Pakistan

Philippines

South Africa

South Asia

Spain

Sub-Saharan Africa

Tanzania

Ecuador

India

Madagascar

Nigeria

Timor-Leste

Togo

Zimbabwe

Jordan

Morocco

Myanmar

Thailand

Peru

Uganda

Zambia

Haiti

Indonesia

Bolivia

Congo, Dem. Rep.

Sri Lanka

Yemen, Rep.

Papua New Guinea

Paraguay

Appropriate Product Design and Delivery

Behavioral Insights

Consumer Protection

Delivery Channels

Digital Financial Services

Financial Capability

Financial Health

Financial Service Providers

Human Touch

Partnerships

Personal Financial Management

Resilience

Underserved Groups

Women

Enabling Environment

Mobile Banking

Payments

Policy, Regulation and Government Initiatives

Challenges and Crises

Banks

Microfinance Institutions

Microfinance

Trends

Agent Banking

Credit

Financial Inclusion Strategy

Youth

Report

Blog Post

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

South Africa is a global hub for fintech innovation. Accion supports and advises South African innovators using technology to help entrepreneurs expand their businesses and families protect their homes around the world.

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

<em>&gt; Posted by Monique Cohen, Ph.D., Founding-President, Microfinance Opportunities</em>

<em><a href="http://childfinanceinternational.org/blog/entry/young-people-access-to-finance-using-branchless-banking" target="_blank"><img class="alignright" style="border:0" alt="" src="http://childfinanceinternational.org/images/banners/new%20logo%20front%20page.jpg" width="330" height="57" /></a>The following post was originally published on the <a href="http://childfinanceinternational.org/blog/entry/young-people-access-to-finance-using-branchless-banking" target="_blank">Child and Youth Finance International Blog</a>.</em>

“I am not good at managing my money. I need some extra training so that I can know how to manage myself. Because you know money is like trouble. You get big money and it’s like big trouble, you know,” (<a href="http://www.youtube.com/watch?v=QI9lKC3CbnE" target="_blank">A young man living in Nairobi</a>, 2011).
<p dir="ltr">Walk down any street in Nairobi, Dar es Salam, or Cairo, or in a small African town and it seems everyone, including teenagers, has a phone to their ear. Indeed, for those 18 and under, few have known a world without mobiles. Not surprisingly, school-age boys and girls (5-14), teens (14-18), and young people entering the labor force or tertiary education (over 18) are seen as a potential new market for the provision of financial services. While recent experimentation in this space has focused on savings, there is growing consensus that young people should be able to access a full range of financial services, with the priorities changing as they advance in their life cycle (see <a href="http://www.youthsave.org/" target="_blank">YouthSave</a>, <a href="http://www.uncdf.org/en/youthstart" target="_blank">YouthStart</a>, and <a href="http://www.childfinanceinternational.org/" target="_blank">Child and Youth Finance International</a>). Not only are youth savings and youth financial education hot topics in the financial services space, but there is also a growing recognition that young people have money, and technology-based financial services offer a gateway for their financial inclusion.</p>
<p dir="ltr"><img class="alignright  wp-image-10950" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/04/table3.png" width="325" />For many young people, owning a phone is aspirational and closely tied to their self-esteem. The surge of young people with phones or phone access and the emergence of low cost mobile banking technology suggests that it may be timely to engage them in accessing digital financial services and building their financial capabilities. As one Filipino student pointed out, “I’d long waited to have my own bank account but I couldn’t meet the requirements of other banks. Good thing in <a href="http://www.banko.com.ph/page/about_us" target="_blank">BanKo</a> I can use my student ID to open an account." While the stars might seem aligned, the limited evidence reminds us that while the value proposition of branchless banking may resonate with young people, this market is still not well understood.</p>
<p dir="ltr">A fundamental question is what volume of transactions can young people be expected to generate. Yes, many young people do receive cash from work or family, but their transactions are small in value and irregular. In the new world of branchless banking where frequency of transactions is key to business sustainability, it is unclear whether the numbers work for youth. Would low fees attract this market segment or could they be a loss leader for building this market? Experience to date suggests that current pricing together with the volume of youth transactions is likely to constrain regular use of technology-based financial services.</p>
<p dir="ltr">There are many more assertions about the practice of mobile banking by young people but few, like the one above, are well grounded. Some of these assumptions are raised here and are proposed as areas of future research:</p>

<ul>
	<li>
<p dir="ltr">Young people own their own phones and use them exclusively and often. However, in most countries there are fairly strict regulatory restrictions limiting age of ownership of mobiles phones (and opening bank accounts). Also, we don’t know who, when, where, and why young people are using mobile phones in different contexts. While mobile data from young users could help the field understand and accelerate mobile money demand, usage, and capability among youth, this source of information poses challenges due to privacy protections and rights of the minor (policy), and proprietary data sharing issues (business) to gain access to mobile usage data.</p>
</li>
	<li>
<p dir="ltr">Young people can help their elders to use mobile money. Anecdotal evidence suggests this is both an asset and liability. Meanwhile financial service providers see youth relationships as offering opportunities for cross-selling to the adults. Among parents of adolescent girls in Kenya this was estimated at about <a href="http://microfinanceopportunities.org/wp-content/uploads/2011/08/Nike-Report-2011.pdf" target="_blank">10 to 15 percent</a>.</p>
</li>
	<li>
<p dir="ltr">Entry of 18 year olds into banking through mobiles and electronic cards only may lower pressure on the need for high touch banking in the future. A <a href="http://microfinanceopportunities.org/docs/FE_for_Branchless_Banking %28FINAL%29.pdf" target="_blank">2007 survey</a> observed that elders saw visiting the bank as a welcomed social event while young people, more comfortable with technology, appreciated speed and limited person-to-person engagement.</p>
</li>
	<li>
<p dir="ltr">Young people are highly responsive to text messaging, mobile gaming, and SMS. All have the potential to promote effective money management and build financial capabilities. However, many of the phones used by young people currently lack the bandwidth to support the software to help them to better manage their money.</p>
</li>
	<li>
<p dir="ltr">To attract young people, specially designed products with lower fees and barriers to entry are needed. This has been the working premise of many current youth savings initiatives, however, there is little rigorous research to support or refute this claim. Behavioral research has also shown that youth are highly unique in their cognitive growth and behavioral development, and from a financial access and capability standpoint, the lessons from mobile money with women and other low income populations may not lend themselves to the child/youth context.</p>
</li>
</ul>
<p dir="ltr">All of this suggests that the jury is out and points to priority areas of research. Neither mobiles nor mobile banking have been around long enough to give us the evidence that will permit us to estimate realistically the cost/benefit of developing this market for young people. Generating the evidence by testing some of these premises would seem a first step in understanding the potential of the youth branchless banking market. Hearing the voices of young people on this issue should be another early step. However, it is probably safe to say that for the moment young people may not be a short-term viable market. Meanwhile, we still feel safe hypothesizing that any investment made in young people needs to be assessed in terms of its likely medium to long term impact.</p>
<p dir="ltr"><em><a href="http://microfinanceopportunities.org/people/consultants-and-advisors/monique-cohen-ph-d/" target="_blank" rel="attachment wp-att-10930"><img class="alignleft  wp-image-10930" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/04/monique-150x150.jpg" width="110" height="110" /></a>Monique Cohen is <a href="http://microfinanceopportunities.org/people/consultants-and-advisors/monique-cohen-ph-d/" target="_blank">Founding-President</a> of Microfinance Opportunities and an independent consultant. She can be reached on <a href="mailto:Moniquec@outlook.com" target="_blank">Moniquec@outlook.com</a>.</em></p>
<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/04/18/can-mobile-enabled-savings-products-bridge-the-youth-financial-services-gap/" target="_blank">Can Mobile-Enabled Savings Products Bridge the Youth Financial Services Gap?</a>

<a href="http://cfi-blog.org/2013/03/27/are-youth-inclusive-financial-services-in-mena-a-driver-of-financial-inclusion/" target="_blank">Are Youth-Inclusive Financial Services in MENA a Driver of Financial Inclusion?</a>

<a href="http://cfi-blog.org/2013/02/22/when-demographics-shift-the-way-we-think-about-youth-finance/" target="_blank">When Demographics Shift the Way We Think about Youth Finance</a>

Young People: Access to Finance Using Branchless Banking

Jeffrey Riecke

<em>&gt; Posted by Jeffrey Riecke, Communications Assistant, CFI</em>

<a href="https://designchallenge.mwomen.org/" target="_blank" rel="attachment wp-att-9242"><img class="alignright  wp-image-9242" style="border:0 none" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/01/homepage-hero.jpg" width="315" /></a>Buzz about the promise of mobile money services has been around for some time now (see our previous blog posts on the subject <a href="http://cfi-blog.org/2012/04/11/mobile-money-as-a-payment-planning-tool/" target="_blank">here</a>, <a href="http://cfi-blog.org/2012/04/20/mobile-money-transfer-what-does-it-mean-for-financial-inclusion/" target="_blank">here</a>, and <a href="http://cfi-blog.org/2012/10/17/mobile-money-services-are-ripe-for-growth-in-uganda/" target="_blank">here</a>), but until coming across a recently released report from mWomen, I’d never found anything highlighting the especially big opportunity that mobile money presents for lower-income women.

mWomen’s report <em><a href="http://www.mwomen.org/Tools/striving-surviving-exploring-the-lives-of-women-at-the-base-of-the-pyramid" target="_blank">Striving and Surviving: Exploring the Lives of Women at the Base of the Pyramid</a></em> examines the relationship between mobile phones and women, and in doing so articulates how exceedingly well-positioned this client segment is to benefit from mobile money services. mWomen is a program of <a href="http://www.gsmworld.com/" target="_blank">GSMA</a> that brings together the worldwide mobile industry and the global development community to reduce the mobile phone gender gap by 50 percent by 2014, facilitating connectivity to more than 150 million women in emerging markets.

The researchers behind the mWomen report found that women in families at the base of the pyramid are largely responsible for managing their household’s finances (a collective 2,500+ women from Egypt, India, Papua New Guinea, and Uganda took part in the project’s research). And with low and often unpredictable incomes, this is no simple task. Household financial management strategies used by the women surveyed regularly include: hiding money within the home away from other family members (especially husbands); storing money at the homes of family or friends, enabling outside parties to act as “money guards;” borrowing from family or friends during emergencies; and accumulating savings in gold jewelry or coins.

Though more formal financial services do exist – some research respondents cited the possibility of participating in microfinance services – many of the women reported a lack of local banks as a major challenge. This infrastructural deficiency not only leads to increased time spent traveling to banks, but also higher safety risks. Crime is often high in areas of high unemployment and poverty, and women are often targets in the case of attacks. Of the research respondents, 8 percent listed safety and security as one of their life’s most pressing challenges.

The report doesn’t detail how mobile money services might be tailored to best fit the specific needs of BoP women, it suggests possible avenues for exploration only in general terms, like using the platform for simple budgeting, mobile banking, or access to microcredit. The report does, on the other hand, go into depth on how BoP women perceive mobile phone use and explore barriers to adoption, both of mobile phones and of mobile money. Here’s a look at some of the biggest barriers:
<ul>
	<li><b>Cost</b>: 81 percent of women who reported not wanting to own a mobile phone cited cost as a principle reason.</li>
	<li><b>Husband suspicion</b>: 64 percent of married respondents who did not want a mobile phone cited disapproval from their husbands. 82 percent of married respondents who own a mobile phone reported the ownership disadvantage of it making their husband suspicious.</li>
	<li><b>Family social dynamics</b>: In some of the surveyed markets, a family could need to have three or more mobile phones before it would be perceived as sensible for a woman in the family to have one. In India and Egypt, after the patriarch, sons, brothers, or brothers-in-law tend to be “next in line” to receive a phone before women.</li>
	<li><b>Technical literacy</b>: 22 percent of those who reported not wanting to own a mobile phone said the main reason was that they wouldn’t know how to use it.</li>
	<li><b>Perceived value of SMS messaging</b>: Respondents reported that they didn’t see SMS services as useful. Despite 77 percent of respondents having made a mobile phone call, only 37 percent had sent an SMS message.</li>
</ul>
However, these barriers aren’t insurmountable and the report outlines ways to overcome them and reach BoP women. Driving prices down surely will be important in encouraging sustainable adoption, but there are other areas that need to be explored as well.

The report emphasizes that working with the communication channels used by BoP women could be an effective way of combating unfamiliarity, misconceptions, and inequitable social dynamics. 53 percent of the women surveyed watch television, often daily, and 28 percent of respondents reported visiting women’s groups regularly. And if the producers of such pro-mobile messaging need compelling material, this very report from mWomen would be a good place to start. Here's a few of my favorite statistics from the report:
<ul>
	<li>“I wish I could save my own money” was the #1 ranked of 40 attitudinal statements in Uganda and Papua New Guinea</li>
	<li>41 percent of respondents reported that owning a mobile phone helped them increase their income or their professional prospects</li>
	<li>73 percent of BoP women expressed interest in entrepreneurship</li>
	<li>80 percent of respondents reporting being more connected to family and friends as a benefit of mobile phones</li>
	<li>93 percent of BoP women reported that mobile phones made them feel safer</li>
</ul>
<i>To access the full report, and to learn about the project’s research methods, visit the <a href="http://www.mwomen.org/Tools/striving-surviving-exploring-the-lives-of-women-at-the-base-of-the-pyramid" target="_blank">mWomen website</a>.</i>

<em>Image credit: <a href="https://designchallenge.mwomen.org/" target="_blank">mWomen</a><a href="http://www.transitionsabroad.com/listings/work/internships/articles/microfinance-internships-abroad.shtml">
</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2012/11/28/our-woman-in-milan-observations-on-the-intersection-of-mobile-money-and-regulation/" target="_blank">Our Woman in Milan: Observations on the Intersection of Mobile Money and Regulation </a>

<a href="http://cfi-blog.org/2012/07/11/theres-an-app-for-that-the-potential-and-pitfalls-of-mobile-phone-banking/" target="_blank">There's an App for That: The Potential and Pitfalls of Mobile Phone Banking</a>

<a href="http://cfi-blog.org/2011/04/15/protecting-mobile-money-against-financial-crimes/" target="_blank">Protecting Mobile Money Against Financial Crimes</a>

Mobile Money Could Mean Big Benefits for Lower-Income Women