&gt; Posted by Hannah Sherman and Jeffrey Riecke, Project Associate and Communications Specialist, CFI

<a href="http://cfi-blog.org/category/financial-inclusion-2020/"><img class="alignright wp-image-8777" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2012/11/fi2020_antilogo1.jpg" alt="fi2020_antilogo1" width="326" height="72" /></a>In terms of financial inclusion, Haiti has much to be excited about. That might come as a surprise as it is considered to have among the worst environments for financial inclusion efforts, at least according to the <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">Global Microscope</a>. In the 2015 Microscope rankings, Haiti was at the very bottom of the list. Though this 2015 score reflected great progress compared to 2014. In fact, Haiti’s score improved year-on-year more than nearly any other country. This was due in large part to the development of a national financial inclusion strategy. However, Haiti’s path forward, including the implementation of this national strategy, is less than straightforward.

Haiti is still very poor. More than <a href="http://old.seattletimes.com/flatpages/local/haiti-part-1-earthquake-five-years-later-anniversary.html">three-quarters</a> of the population lives on less than $2 a day, and about two-thirds are unemployed. According to the <a href="http://www.worldbank.org/en/programs/globalfindex">Global Findex</a>, in 2014 only 19 percent of Haitians aged 15 or above had access to a bank account, compared with 51 percent across all of Latin America and the Caribbean. Nine percent of the adult population had formal savings in 2014 (compared with 14 percent regionally), and 5 percent were formal borrowers (compared with 11 percent in the region). Small and medium-sized businesses and microenterprises make up the <a href="http://ifcext.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/D5C7613FCED13DF185257D7A006B1088?OpenDocument">majority of the country’s jobs</a>, and their access to finance is extremely limited.

But in recent years, Haiti has achieved impressive advances in its policy, regulation, and enabling infrastructure. About a year ago the Banque de la République d’Haïti (BRH, the central bank) <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/12/eiu_microscope_2015_web.pdf">passed</a> the national financial inclusion strategy, which was supported by the World Bank and other international organizations. Among the strategy’s priority areas are financial education and consumer protection. In July of last year, USAID and Haiti’s Office of Economic Growth and Agricultural Development <a href="http://www.contractrandd.com/?p=964">announced plans</a> to work towards expanding financial access in support of this strategy. Their effort focuses on harnessing partnerships across stakeholder types to pilot and develop interventions.

A core component of the national strategy was the <a href="http://ifcext.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/D5C7613FCED13DF185257D7A006B1088?OpenDocument">creation</a> of the country’s first credit reporting system, the Bureau d’Information sur le Credit. The system is still in its early stages, but already banks and NBFIs are <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/12/eiu_microscope_2015_web.pdf">required</a> to report borrowing activity, and authorities are deciding whether or not to include data on other payments like utility bills. The creation of the credit bureau was a collaborative effort between the BRH and the World Bank, which helped develop the appropriate legal and regulatory framework to establish the system, as well as with the IFC and the Inter-American Development Bank.

In recent years Haiti’s central bank has improved its supervision capacity and monitoring of systemic risks and financial stability. An anti-money laundering and terrorism financing (AML/CFT) law was issued in late 2013.

Mobile money presents a huge opportunity in Haiti, as <a href="http://old.seattletimes.com/flatpages/nationworld/haiti-shaky-recovery-part-2-earthquake-five-years-later-annivers.html">60 percent</a> of the population owns a device. The country had a shaky start with e-money, but it appears to be moving towards solid footing. In 2010, the Gates Foundation and USAID launched a $10 million initiative to kick-start mobile money in the country. The initiative, called HIFIVE, initially included incentives for the country’s mobile network operators (MNOs) to acquire active subscribers. The two biggest MNOs in the country, Digicel and Voila, met the Gates Foundation’s targets, with nearly 1 million individuals signing up for and actively using the mobile money services. During this time the mobile money market was lauded by experts as among the fastest-growing in the world.

<a href="https://www.flickr.com/photos/30827726@N05/6505677551/"><img class="alignright wp-image-20875" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/03/6505677551_8176aede48_b.jpg" alt="" width="330" height="220" /></a>However, following the receipt of the Foundation’s monetary incentives for meeting their targets, the MNOs promoted their services less aggressively, the relatively inactive subscriber base made it difficult to support a widespread agent network, and the gains that had been achieved were largely undone. Today, only about <a href="http://old.seattletimes.com/flatpages/nationworld/haiti-shaky-recovery-part-2-earthquake-five-years-later-annivers.html">60,000 people</a>, or 0.6 percent of the population, are active mobile money users. Shortcomings cited for this result include cautious regulators (stemming in part from the country’s history with corruption and drug money laundering), inadequate market infrastructure, poorly-designed incentives for participating providers, and unnecessarily tough client screening rules.

Today, the mobile money market appears to be (however slowly) moving in the right direction. <a href="http://www.digicelhaiti.com/en/">Digicel</a>’s TchoTcho service makes opening an account extremely easy – just by dialing a code on one’s cellphone, one can activate a wallet that can hold up to $80. In September Digicel enjoyed a significant ramp-up in transactions when it set-up new incentives for its street vendors to join their mobile money system. The <a href="http://hifiveproject.org/">HIFIVE project</a> is targeting partnerships with textile factories and larger companies to use mobile wallets for their payroll. <a href="https://www.mercycorps.org/">Mercy Corps</a>, which delivered relief payments via e-money following the 2010 earthquake, is promoting neighborhood savings clubs to adopt mobile money accounts. Such highly-targeted client outreach approaches offer a cost-effective alternative to the mass marketing efforts of the market’s early days.

Complicating Haiti’s mobile money progress, and financial inclusion more broadly, is the dysfunction of the country’s political system. As has become <a href="http://www.reuters.com/article/us-haiti-election-postponed-idUSKCN0V02HF">headline news</a>, last October, an inconclusive presidential election created political uncertainty and sparked protests, demonstrations, and escalating violence, including attacks on elections offices. Encouragingly, last month, the Haitian Parliament <a href="http://www.cnn.com/2016/02/14/americas/haiti-interim-president-elected/">elected</a> a new interim president, one week after the previous president stepped down with no successor in place. And a new round of elections is slated to be held in April, with the winner taking office in May. Regardless of who wins the elections, the political transition that results could cause  further delays.

The Global Microscope reports that the national financial inclusion strategy and other inclusion efforts in Haiti have been limited by the country’s ongoing political and economic instability. The national financial inclusion strategy is well-defined, but it has encountered challenges due to the need to pass important regulations for the non-traditional banking segment, a lack of coordination among participating government institutions, and the need to appoint a financial inclusion council. The banking system is considered sound, but microfinance institutions are largely unsupervised, and important legislation, including draft laws on microfinance, insurance, and financial cooperatives has been delayed for years. The lack of regulation and reporting standards for NGOs, co-ops, and MFIs is a growing risk, given that they provide most of the financing in Haiti. For mobile and electronic money, regulations are insufficient.

Suffice it to say that the path ahead to advance financial inclusion will be difficult, but if progress in recent years is any indication of what’s to come, we’re cautiously optimistic.

For more on financial inclusion in Haiti, read the <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/global-microscope">Global Microscope</a>.

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. 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.

Image credit: <a href="https://www.flickr.com/photos/30827726@N05/6505677551/">uusc4all</a>

Have you read?

<a href="http://cfi-blog.org/2015/01/27/pathway-to-a-better-life-for-haitis-disabled/">Pathway to a Better Life for Haiti's Disabled</a>

<a href="http://cfi-blog.org/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%E2%80%98super-poor%E2%80%99/">On the Anniversary of the Haitian Earthquake: Fonkoze and the 'Super Poor'</a>

<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>

Financial Inclusion amid Haiti’s Political Crisis

Investors

Financial Inclusion 2020

Haiti

Global Microscope

Agent Banking

Credit

Financial Inclusion Strategy

Mobile Banking

Trends

Blog Post

&gt; Posted by Bobbi Gray, Research Director, Freedom from Hunger

<a href="https://www.freedomfromhunger.org/sites/default/files/documents/Deconstructing_Dropout_final_2015.pdf"><img class="alignright wp-image-19703" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/10/word-cloud1.png" alt="" width="375" height="168" /></a>

Known as the “hardest interview you’ll have with a client,” the interview you have with a client who is leaving is also, however, one of the most important interviews for a microfinance institution – and likely any organization or company concerned about the costs of client acquisition and retention.

The latest debates on the success of microfinance have encouraged Freedom from Hunger to dig deeper into our repertoire of “impact stories” and critically review the reasons why microfinance clients whose lives were not improving were dropping out, particularly since critics often suggest that microfinance tends to result in negative outcomes among participants.

Since 2007, Freedom from Hunger has been developing and testing an “impact story” methodology to discover client experiences that are representative of the entire clientele of an MFI or even multiple institutions, ranging from success to failure and whatever is happening in between.

Thus far, Freedom from Hunger has collected over 700 client impact stories from 25 local partners located in ten countries throughout Latin America, South Asia, and sub-Saharan Africa. Six countries were visited a second time after an interval of three or four years to re-interview the impact story participants. This is a significant effort to take qualitative interviews and conduct them with a small random selection of clients and use the information for fairly meticulous research purposes.

With these impact stories, we wanted to answer some basic questions. Why are some clients successful and why are some not? Why do some clients drop out? Are all the reasons for drop-out negative and does the drop-out result in a client being worse off than if they stayed a client? Can we tell if microfinance is to blame for their negative status? What can we do to improve?

The <a href="https://www.freedomfromhunger.org/deconstructing_drop-out">results of the assessment</a> revealed that often the cause of drop-out was a series of events—a spiraling down effect—where a health shock, for example, leads to business failure, which leads to group challenges, and institutional policies and procedures prove inadequately protective, and the client drops out.

And not all reasons for drop-out are equal. In fact, health shocks, business failure, and village-banking group issues (the impact story interviews were among village banking clients) were found to be both the top contributing factors and root causes of client exit.

<img class="alignright wp-image-19696" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/10/spiral.png" alt="" width="200" height="233" />When this paper was shared with Anne Hastings, who is the Executive Director of the Microfinance CEO Working Group, she shared that when she was leading Fonkoze in Haiti, they found that health reasons and business failure were also primary causes of drop-out and that the two were intimately linked. Soon after, those two reasons would lead to problems in the group and then to default. She shared, “In Haiti, the health issues were so deeply rooted, so complex, and so diverse that sessions on health promotion and disease prevention were rarely enough to stem the tide. And insurance was even more complicated because there were so few doctors or clinics except in a few regions that it was hard to design anything practical. We did do training on business skills to try to address the problem of failures but again the efforts never seemed to match the size of the problem.”

Caitlin Scott, Social Performance Manager from Friendship Bridge, shared that the client exit interview is the “hardest interview you’ll have with a client,” primarily because it’s a challenge to find people who often do not want to be found and because there is the question about how honest a person will be or how much they’ll reveal. Also, like Anne’s experience above, Caitlin said that even if the causes are understood, finding the right institutional response is a challenge.

Daniella Hawkins, Social Performance Manager of Microloan Foundation, found that when conducting exit interviews, “The first ‘reason’ given is usually just the tip of the iceberg and delving deeper we realize that there are usually many interconnected issues that contributed.” The data in our paper basically confirmed these reviewers’ own findings, as well as many other practitioners’ findings

Finally, two additional reviewers, Frances Sinha, Managing Director of EDA Rural Systems, and Anton Simanowitz, who is an independent consultant and author, shared with us some technical insights into understanding drop-out. Frances first pointed out that because microfinance clients are primarily borrowers, client drop-out essentially translates to clients not being able to borrow again, which points to the general inflexibility of village banking and credit-led strategies. Additionally, she noted that often, through standard MIS data, MFIs can compare the differences among reasons for drop-out by urban and rural clients, age, and economic status. In her experience, “The clients who exit are often the more vulnerable clients, and therefore, a concern to understand and address reasons for exit is integral to a commitment to work effectively with the poor. Ultimately, what I see emerging is a 'theory of exit', along the lines of a theory of change, i.e. figuring out what leads to what as a chain of events and assumptions.”

When Anton worked with the Small Enterprise Foundation (SEF), “We saw drop-out as a pretty insensitive lag indicator, and looked at things earlier in the client journey such as missing meetings, late attendance, decline in savings (regularity/amount) as earlier indicators of stress.” SEF also monitored the drop-out rate per field officer in order to understand what percentage of the drop-out rate was due to unavoidable issues that clients faced and what percentage was due to things that SEF had control over or impact on. Anne similarly shared that Fonkoze took a similar approach: they based the entire credit officer bonus system on the success of the credit officer’s ability to retain clients and the delinquency rate among the clients they were serving. These were the best indicators for ensuring clients were not becoming over-indebted and that they were able to make repayments on time.

In conclusion, our findings are not particularly new, yet they may provide validation for individual institutions that monitor their drop-out rates and reasons behind drop-out. What does seem important, going forward, is a more intentional debate about where the responsibilities lie for drop-out, how far institutions can and do go to prevent drop-out, and what tools and processes are the most effective at unveiling the root and contributing factors for drop-out. Personally, I would love for client drop-out to be picked up as an agenda item for the global industry–even if the primary result would be in sharing best practices for measuring and understanding drop-out as well as the trade-offs that exist for preventing drop-out.

There are many opportunities to prevent drop-out, but there are as many challenges at making interventions financially sustainable. Not every financial institution can directly address a health shock, for example, but knowing where they can is an opportunity for not just client retention, but also for protecting livelihoods and lives of our current and future clients.

*Word cloud created using words from impact story interviews conducted with ex-microfinance clients

Have you read?

<a href="http://cfi-blog.org/2015/06/26/the-business-of-doing-good-a-chat-with-anton-simanowitz/">The Business of Doing Good: A Chat with Anton Simanowitz</a>

<a href="http://cfi-blog.org/2015/04/15/measuring-transformation/">Measuring Transformation</a>

<a href="http://cfi-blog.org/2015/02/06/betterment-is-a-perpetual-labor/">'Betterment Is a Perpetual Labor'</a>

Deconstructing Drop-Out

&gt; Posted by Larry Reed, Director, the Microcredit Summit Campaign, and Jesse Marsden, Research and Operations Manager, the Microcredit Summit Campaign

<a href="https://www.flickr.com/photos/106853342@N04/10666354605/"><img class="alignright wp-image-19542" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/09/10666354605_d44199b1de_z.jpg" alt="" width="315" height="210" /></a>

In collaboration with the CFI’s process to develop the <a href="http://www.fi2020progressreport.org/">Financial Inclusion 2020 Progress Report</a>, the Microcredit Summit Campaign recently conducted interviews with microfinance leaders* around the world committed to reaching the most excluded. In this post, we share some of the insights from these conversations about how to ensure that the most invisible clients are financially included, directly drawn from the experiences of those who are doing it.

To set the stage, Luis Fernando Sanabria, General Manager of Fundación Paraguaya, made this central point: "Our clients need to be the protagonists of their own development stories. Our products should be the tools they use to meet their needs and empower their aspirations." With that reminder of the purpose of financial inclusion, we begin the discussion by asking who are the most excluded.

In each country, people living in extreme poverty (below US$1.25 a day) make up the largest segment of those excluded from the financial system. We spoke with leaders from organizations that make intentional efforts to reach this large excluded market: Fundación Paraguaya; Pro Mujer; Fonkoze; Plan Paraguay; Equitas; Grama Vidiyal; and TMSS. These organizations not only address poverty, but also a host of other dimensions that lead to exclusion, including literacy, race, gender, physical disabilities, and age. Less frequently-discussed reasons for exclusion include sexual orientation, language barriers (especially among indigenous populations), and mental or emotional health issues. In India and Bangladesh, for example, those interviewed noted that the lack of personal identification often drove exclusion, especially among women, persons with disabilities, and the socially excluded, such as transgender individuals.

In order to reach the most excluded, you have to know who they are. “Often the poorest families are invisible in their own communities,” said Steve Werlin of Fonkoze in Haiti. “When we do the wealth rankings in a community, they aren’t even mentioned.” Fonkoze takes steps to make sure that all households get included in their surveys so that the community can see who they have left out. Creating this visibility is essential. On a wider scale, in government statistics on economic activity, data on people over 65 is simply discarded or never collected.

Everyone, and every client, is unique. One of the messages of the FI2020 Progress Report is that the base of the pyramid (BoP) is not a monolithic bloc. Arjun Muralidharan of Grama Vidiyal in India noted that “You need to have a particular and unique strategy to seek out and serve these groups. This begins with deciding who you are going after. Different populations have very different problems.”

Two key elements for including the most excluded populations are building trust and overcoming prejudice. Not only do the financially excluded need to become confident in their services providers’ ability to responsibly manage their money, but they often have to become comfortable participating in a society that has regularly closed its doors to them. “Working with disenfranchised groups is hard. We need to provide extra training and services to help overcome their self-exclusion,” said Muralidharan. Grama Vidiyal provides health services and legal rights training to members of the Dalit group (formerly known as untouchables) before including them in savings and lending groups. On the other side of the equation are financial services staff attitudes. “In order to include people with disabilities, we need to train our staff first, to get them to overcome their prejudice,” said John Alex of Equitas in India. Equitas provides disability awareness training for its staff and clients and encourages them to find people with disabilities in their communities to include in the institution’s borrowing groups. Equitas also adapted its training and application systems to be accessible for people who are blind, deaf, mute, or face other physical limitations.

Excluded groups may have financial needs that do not fit the typical cash flows of other clients. TMSS asked rural farmers in northern Bangladesh what programs the farmers felt would be best to introduce. This client-first approach led to new programs that combined loans and savings in sync with the growing season. TMSS also changed its policies and products to meet the needs of an aging population - eliminating its age limit for borrowers. The institution also provides savings services for these clients and training for the next generation of family members to make sure they will be cared for as they age.

Those excluded from financial services often face many other types of exclusion as well, leaving them with a range of constraints that they need to address:
<ul>
 	<li>Both Fonkoze and Plan Paraguay employ the <a href="http://tup.brac.net/">Ultra Poor Graduation Model</a> developed by BRAC that provides a combination of cash transfers, training, savings, an asset, mentoring, and access to credit.</li>
 	<li>Equitas works with homeless people and provides housing and financial capacity training before providing loans.</li>
 	<li>TMSS provides health services, financial capability training, and vocational training.</li>
</ul>
These organizations often partner with the government and others to make sure their clients have access to the range of services they need. Fundación Paraguaya uses its <a href="http://www.fundacionparaguaya.org.py/?page_id=490">Poverty Stoplight</a> monitoring system to assess its clients on a checklist of 50 items related to poverty, health, education, and employment. It uses this data to bring in government services for common areas of need. Equitas partners with local hospitals, and Grama Vidiyal works with the government health insurance system to provide for the health needs of clients.

Achieving financial inclusion requires consistent energy to attain, maintain, and measure progress. Fundación Paraguaya uses its Stoplight system to enable clients to define and measure their own achievements over time, and provides incentives to its staff based on these clients’ achievements. Equitas provides incentives to its account officers for including persons with disabilities and measures the progress of its clients along consumption and health indicators. Plan Paraguay and Fonkoze measure the success of their Ultra Poor Graduation programs based on the numbers of clients who “graduate,” having met a comprehensive set of indicators related to food security, income security, asset ownership, school enrollment, housing quality, etc. and having reached a level at which they can use unsubsidized financial services.

Financial inclusion has always been about going where others wouldn’t go, addressing the needs of people who were excluded because it was too hard to serve them, or too risky, or too unsustainable. The people we spoke with represent the many financial pioneers who use innovation to expand the boundaries of inclusion, reaching those assumed to be impossible to reach.

For more on addressing client needs, check out the interactive <a href="http://www.fi2020progressreport.org/">FI2020 Progress Report</a>.

Persons interviewed for this post: Luis Fernando Sanabria, Fundación Paraguaya; Carmen Velasco, co-founder of Pro Mujer; Steve Werlin, Fonkoze, Haiti; Mariella Greco, Plan Paraguay; John Alex, Equitas, India; Arjun Muralidharan, Grama Vidiyal, India; Munnawar Reza, TMSS, Bangladesh.

Image credit: <a href="https://www.flickr.com/photos/106853342@N04/10666354605/">Department of Foreign Affairs and Trade</a>; Anowara Begoum (pictured) lives in Kazipara village in Bangladesh, and is a participant in BRAC's Special Targeting Ultra Poor Program.

Have you read?

<a href="http://cfi-blog.org/2015/09/28/fi2020-progress-report-launches-in-three-days/">FI2020 Progress Report Launches in Three Days!</a>

<a href="http://cfi-blog.org/2015/07/21/the-supply-centricity-of-customer-centricity/">The Supply-Centricity of Customer-Centricity</a>

<a href="http://cfi-blog.org/2015/08/19/the-ebb-and-flow-of-customer-centricity-in-financial-inclusion-part-one/">The Ebb and Flow of Customer-Centricity in Financial Inclusion - Part One</a>

Addressing the Financial Needs of the Most Excluded

Bangladesh

Peru

Aging and Older Adults

Customer Centricity

Microfinance Institutions

Persons With Disabilities

&gt; Posted by Anne H. Hastings, Manager, Microfinance CEO Working Group

[getty src="165290027?et=QjzN8v2pS9xjJ97nhN4pJA&amp;viewMoreLink=off&amp;sig=TVc520TQ3jkLcODOcxJxSj1m9EUG67jq-0Mh_eWZOA4=" width="594" height="395"]

A few weeks ago, I attended the Global Forum on Remittances and Development sponsored by the International Fund for Agricultural Development (IFAD), the European Commission, and the World Bank. Much of the meeting was focused on two critically important questions:
<ol>
	<li>Are or could remittances be a major driver of financial inclusion?</li>
	<li>Is it possible (and desirable) for a greater percentage of remittances to be put to productive use as opposed to consumption once the funds arrive in the hands of the recipient?</li>
</ol>
First, a few facts to underscore why these discussions are so important:
<ul>
	<li>In 2014 there were at least <a href="http://www.remittancesgateway.org/doc/Provisional_Agenda_GFRD_2015.pdf">240 million international migrants</a>. That is a BIG number – bigger than the populations of all the countries of the world except China, India, the U.S., and Indonesia.</li>
	<li>This year these migrants will send back to their countries of origin more than 440 billion U.S. dollars! This amount is more than three times the amount of foreign aid. It is estimated that <a href="http://www.ifad.org/remittances/pub/fiveyears.pdf">$200 billion</a> of this amount goes directly to rural areas in developing countries where the most poverty is.</li>
	<li>Remittances can constitute up to <a href="http://www.migrationpolicy.org/programs/data-hub/global-remittances-guide">40 percent of GDP</a> or more in some countries, often the most fragile, most conflict-ridden countries in the world.</li>
	<li>Some 750 million people are estimated to receive remittances, the vast majority in developing countries. Forty percent live in rural areas.</li>
	<li>The global average cost of sending this money home is 8.6 percent of the amount sent, so the potential customer benefits to cost reduction are very important. (In July 2009 the G20 set a goal of reducing the average cost from 10 percent to five percent in five years. Despite failing to achieve the objective, it recently established a new goal of three percent by 2030!)</li>
</ul>
Are remittances a driver for financial inclusion? Could they be? In a moment of frustration, Fernando Jimenez-Ontiveros, the Acting General Manager of the Multilateral Investment Fund said at the conference, “We’ve been working on these issues for some 15 years, and estimates are that 60 percent of senders and recipients still don’t even have an account! We’ve got to do better!”

In fact, the senders of remittances are most often people who are excluded not only from the financial sector, they are also excluded from employment and economic opportunities in their countries, which is why they leave in the first place. IFAD, through its Financing Facility for Remittances (FFR) program, has been supporting pilots around the world to test different approaches for transitioning migrants and their families back home from financial exclusion to financial inclusion. A good number of these pilots have worked – when all the conditions are right.

I can help to enumerate these conditions based on 17 years of experience as CEO of Fonkoze, Haiti’s largest microfinance institution (MFI). In 1995, when I first met Fonkoze’s founder, Fr. Joseph Philippe, he explained his vision – he wanted to build a bank the poor could call their own. This wasn’t a project or a program – he was trying to build a national institution. However, he cautioned, success will be elusive unless we engage the Haitian Diaspora.

Once I figured out what a Diaspora was (the dispersion of people from their original homeland), I asked whether the Haitian Diaspora would be able to finance this start-up. He explained that that was naive – most of the Diaspora were poor Haitians sending money home to even poorer family members. So I asked how we could gain their support. He said, “We have to offer a reasonably priced, convenient, and secure service for them to get their money home.” This was in 1995 when microcredit supporters weren’t even thinking about remittances.

So from the first day, the idea was that this bank for the poor would offer both credit and money transfer services – but even that wasn’t enough. It also needed to offer savings and currency exchange (since so many U.S. dollars were circulating through the economy) and ultimately insurance. The founder was clear that Haitians needed a full range of financial services at their disposal.

So as we were building this institution, which today has 46 branches, over 200,000 savings accounts, and more than 60,000 borrowers (mostly women), we had to develop a money transfer service, along with all the other financial services. We succeeded in offering our own remittance service through an informal partnership with a bank in the U.S., but it wasn’t a perfect offering, and we wanted our clients to have a full range of options. So we also became agents for MoneyGram and other money transfer operators (MTOs), putting up their signs at all our locations and maintaining the liquidity needed to pay out transfers to any recipient.

Our own service required the recipient in Haiti who wanted to receive transfers to open savings accounts with us. The transfer was automatically deposited into their account when senders deposited it in our bank in the U.S. This had the added advantage of encouraging our clients to open and use savings accounts. On the other hand, for MTO transactions, we had to pay out in cash, and that had to be in U.S. dollars as required by Haitian law, unless the client specifically asked to exchange the money with us.

It quickly became clear that offering the service was not enough. We also needed to find mechanisms for helping our clients learn to use these services. We implemented a version of Paolo Freire’s theory of education as explained in Pedagogy of the Oppressed – a form of peer learning where we would train those clients who knew how to read and write to teach the other clients who didn’t. Included were basic literacy training, business skills, women’s health, children’s rights, and environmental protection.

All of this was designed to bring our clients in Haiti toward <a href="http://www.centerforfinancialinclusion.org/about">full financial inclusion</a>. I would say that the services we had designed accomplished that reasonably well. People coming to pick up their remittance would learn about the loan or savings program while standing in line and, when the cross-selling was done well, they would take up the additional service.

Pretty soon, we had women who had moved from using the money received from relatives abroad purely for consumption <a href="https://www.youtube.com/watch?v=ggDk3irXuf0">to using some of it to start a little business</a>. Then they would learn that they could get a loan to manage the expansion of their business and save the better part of the money transfer in a Fonkoze savings accounts. They became quite skilled at figuring out which service would work best for each need they had.

Of course, not everyone is a “natural entrepreneur.” So, again with the MIF’s support, we launched an educational program for individuals using the remittances purely for consumption to encourage them to consider alternatives. We listened to their reasons for not investing the money, and it became clear that they wanted to figure out a way to set up a business, but they simply didn’t know how. We went to rural branches, recruited clients directly from the lines of people waiting to receive remittances, and then brought them into a class to talk about how to set up a little business. The most successful part of this training program was identifying “businesses in a box” or “micro-franchising” opportunities that would allow the participant to easily launch a simple business. For example, one was to sell solar lighting where someone else was taking care of importing, distribution, and ensuring quality of the product.

But what about the members of the Diaspora? IFAD and the MIF ultimately helped us to demonstrate how we could organize them as well. We hired Katleen Felix, a woman with Haitian roots living in the U.S., to be our Diaspora Liaison. She was a godsend. We organized meetings in Boston, New York, Miami, and even Port-au-Prince to discuss the power of the remittances they were sending home and their potential as engines of development. We discovered that migrants did want to help in the development of their native countries.

It turns out that many of them wanted to invest a portion of the earnings in businesses, schools, or health care clinics in their home communities. So they asked Fonkoze to help them by “vetting” the businesses in the rural areas of Haiti that were “investment ready”. Ultimately, we set up one of the first Diaspora crowd-funding sites with the assistance of DePaul University and the Vincentian Family and hired business analysts in Haiti to identify enterprises that needed loans and were likely to be able and willing to repay.

Suddenly, the Haitian living abroad who wanted to do something for Haitians at home could make a loan of $25, that when combined with 100 other loans of $25, would allow a small honey producer in Haiti to receive a loan of $2,500. Ultimately we negotiated a partnership with Kiva that guaranteed virtually every loan request put up on the website would be fully funded. For Fonkoze, crowd funding through the website <a href="https://www.youtube.com/watch?v=vHPOucbJ918">Zafen</a> (Creole for “It’s our business”) and Kiva has offered a tremendous opportunity for migrants to have the satisfaction of helping in the development of their country without incurring too much risk.

All of this suggests that MFIs are, in many ways, ideally suited to making remittances on-ramps to financial inclusion if they indeed offer a range of services and if they are willing to take the time to help clients understand how to use them. In contrast to traditional financial institutions, MFIs often have a deep understanding of and interest in serving the excluded. The revenue they earn from facilitating remittances can contribute to their bottom line, and in the event that they can convert some of those remittances into savings, they can increase their capital for lending.

So why this isn’t occurring more often? Here are a few of the challenges:
<ul>
	<li>National regulators must allow MFIs to become payers of remittances, accept deposits, and provide loans. Not all countries do.</li>
	<li>MFIs must have the financial, technological, and human resources to offer these services.</li>
	<li>MFIs must be large enough and have the geographical coverage to make a real business out of remittances.</li>
	<li>They must be able to negotiate effectively with money transfer operators (MTOs) in order to ensure they receive enough fee to make the business sustainable.</li>
</ul>
The majority of MFIs are not able to effectively address these challenges. So why was Fonkoze able to do it? First, there was no regulation of MFIs in Haiti (not something we would recommend). Second, we probably didn’t have the capacity to offer these services at scale, though we could make a good point about their promise. We met the geographic coverage challenge above, but it took several years to get the reach and coverage needed. Finally, we were also able to negotiate reasonably well with the MTOs. We had a lot of help, of course, from our donors, investors, and a terrific board of directors always willing to assist in the negotiations. As Don Terry said at the Milan conference, “Fonkoze is a symbol of what is possible!”

What we never accomplished, however, was the scale needed to generate a sufficient return on investment. This has proven to be a challenge for most MFIs, which helps to explain why more MFIs have not entered this market.

Still, projects like Fonkoze’s have learned a lot. Let me summarize the lessons we took away:
<ul>
	<li>Remittances can be an on-ramp to financial inclusion, but it doesn’t happen automatically.</li>
	<li>The financially excluded do not suddenly become the financially included by taking a loan. They need access to a full range of financial services.</li>
	<li>The services will only be of benefit if the person fully understands how and when to use them. This is not something that can be easily taught in a classroom. The best learning is “in the moment” when the need becomes apparent. For example, when the person comes to pick up their transfer is the time to explain to them the options for their money: Wouldn’t they like to save a portion of it in a savings accounts? Is it a good time to exchange into the local currency or would it be better to save in USD? Would they be interested in learning how they might use a portion of it to set up an enterprise of their own?</li>
	<li>Once they’ve made their way onto the “on-ramp”, clients still need close support through continuing education and coaching.</li>
	<li>Development professionals spend a lot of effort trying to turn remittances used for consumption into remittances for productive use. But let’s remember that it’s THEIR money – and they have the right to spend it as they see fit and not as the development professional prefers. If it’s needed for consumption, let it be spent on consumption.</li>
	<li>That said, there are many in the Diaspora who want to invest in their home country but they need:
<ul>
	<li>Easy-to-use and safe investment vehicles</li>
	<li>Access to market information about investment-ready enterprises</li>
	<li>Management support and monitoring of the business they invest in</li>
	<li>Education on risks in the investments and how to mitigate them</li>
</ul>
</li>
</ul>
At the end of the conference, the conclusion was that we still have a long way to go to make remittances a major driver of financial inclusion and to turn remittances into a tool for development in the countries of origin. As Pedro Tigre De Vasconcelos remarked, “There are no silver bullets here, but there sure is a golden opportunity!” For all of us in the microfinance sector, let’s deliver on the promise. Let’s convince more MFIs of the opportunity that this rapidly growing segment of migrants and their families back home represent.

Have you read?

<a href="http://cfi-blog.org/2014/06/03/a-money-transfer-duopoly-that-fails-to-protect-clients/">Do African Remittances Services Providers Properly Protect Clients?</a>

<a href="http://cfi-blog.org/2014/05/07/walmart-joins-the-list-of-non-traditional-players-offering-remittances/">Walmart Joins the List of Non-Traditional Players Offering Remittances</a>

<a href="http://cfi-blog.org/2015/01/27/pathway-to-a-better-life-for-haitis-disabled/">Pathway to a Better Life for Haiti's Disabled</a>

Remittances as an On-Ramp to Financial Inclusion: Let’s Deliver on the Promise!

Financial Capability

Payments

Remittances

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.

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.

Have you read?

<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

Compartamos Banco

Egypt, Arab Rep.

Policy, Regulation and Government Initiatives

&gt; Posted by Steven Werlin, Communications and Learning Officer, Chemen Lavi Miyò Program, Fonkoze

[getty src="149132707?et=MLFVhilGQI1VDeO5nFHK_Q&amp;sig=KD6OIWzzswV6mF9eMcb5ID7C_OVKwfyOikDlHh5w7Fc=" width="594" height="396"]

A new initiative of Haiti’s Secretary of State for the Integration of Persons with Disabilities (PwDs) promises to push financial inclusion for some of the country’s most vulnerable citizens. Prior to Haiti’s catastrophic earthquake in 2010, roughly 800,000 Haitians had disabilities. An estimated 300,000 more were injured in the earthquake. The Secretary’s office is facilitating a partnership between <a href="http://fonkoze.org/">Fonkoze</a>, Haiti’s largest MFI, and <a href="http://www.tcu.edu/">Texas Christian University</a> (TCU), with additional support from the <a href="http://digicelfoundation.org/" target="_blank">Digicel Foundation</a>, to carry out a program that offers financial and livelihood empowerment services for PwDs.

The pilot for the project will test a combination of Fonkoze’s <a href="http://www.fonkoze.org/what-we-do/step-1-clm/">Chemen Lavi Miyò</a> (CLM) program, which translates as the pathway to a better life, and TCU professor Dawn Elliott’s More than Budgets (MTB) program. CLM is a comprehensive graduation program for the ultra poor, based on the approach developed by BRAC. It is a tailored, sequenced program that provides participants with cash installments to build businesses, productive assets (such as goats, chickens, and merchandise to sell), a savings account at Fonkoze, and regular training and confidence-building support in areas of enterprise management, health and nutrition, and life skills. Most importantly, CLM offers weekly one-on-one meetings with trained case managers. It targets the poorest families – those too poor to use traditional microfinance services. Many participants graduate from the 18 month program and go on to join a group credit program to further support their business efforts. MTB, employing a combination of education and incentives, is a personal financial training program that was developed to help poor, unbanked Texans build up savings, gain access to financial resources, and reduce financial vulnerabilities. The program has been applied in homeless shelters and with people recently released from prison.

Thirty disabled Haitians from Lascahobas, in the Central Plateau, will participate in the PwD program. Like members of the CLM program, they will receive enterprise training and the assets they need to start their businesses, along with weekly visits from a case manager. Like MTB participants, they will receive training that highlights the value of savings and tools, as well as incentives that facilitate savings. Participant selection will be completed in February, and launch of the yearlong pilot is scheduled to start in March.

The CLM team was excited to learn from MTB because it offers a way to encourage savings even in remoter areas, where formal banking can be hard to access. Fonkoze sent staff, including myself, to Fort Worth, Texas, to study the MTB approach. We were especially interested in the way MTB is able to open up savings to those who may not yet be ready for a formal bank.

Up until now, the CLM program had to exclude the disabled poor because it lacked the tools to work with them. Gauthier Dieudonné, the Program Director for CLM, has asserted the importance of the experiment saying, “We need to make sure this pilot succeeds so that we never again have to leave a disabled person in our fight to eliminate extreme poverty.”

Have you read?

<a href="http://cfi-blog.org/2014/01/23/barriers-persist/" target="_blank">Barriers Persist in Financial Inclusion for PwDs</a>

<a href="http://cfi-blog.org/2011/11/29/fonkoze-the-global-microcredit-summit-alex-counts-book-project/" target="_blank">Fonkoze &amp; the Global Microcredit Summit - Alex Counts Book Project</a>

<a href="http://cfi-blog.org/2014/06/26/to-end-extreme-poverty-focus-on-integrated-services/" target="_blank">To End Extreme Poverty? Focus on Integrated Services</a>

Pathway to a Better Life for Haiti's Disabled

<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">Global Microscope 2014: The Enabling Environment for Financial Inclusion</a>. The Microscope 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 Microscope 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 Microscope 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).
1) Peru -- 87
2) Colombia -- 85
3) Philippines -- 79
4) Chile -- 66
5) Mexico and India (tie) -- 61
7) Bolivia and Pakistan (tie) -- 58
9) Cambodia and Tanzania (tie) -- 56
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 Microscope 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 Microscope 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>.

Graphic credits: <a href="http://bit.ly/1s9k6T0">'Global Microscope 2014'</a>

Have you read?

<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

Bolivia

Cambodia

Chile

Congo, Dem. Rep.

Kenya

Madagascar

Pakistan

Philippines

Sri Lanka

Yemen, Rep.

&gt; Posted by Jamie M. Zimmerman, Senior Associate, Bankable Frontier Associates 

There is abundant enthusiasm for the promise of shifting social benefit payments from “cash transfers” to “e-payments for the poor.” E-payments are heralded as having great potential for advancing the effectiveness of social transfers via increased efficiency, more transparency, reduced leakage, and faster payments to recipients than antiquated cash-based options. Perhaps most significantly, electronic social transfers to the poor offer <a href="http://www.cgap.org/sites/default/files/Focus-Note-Social-Cash-Transfers-and-Financial-Inclusion-Evidence-from-Four-Countries-Feb-2012.pdf">a gateway to financial inclusion</a> for the poor. Indeed, as cash transfer social protection (G2P) and aid (D2P) programs <a href="http://www.nextbillion.net/blogpost.aspx?blogid=3896">proliferate globally,</a> digitizing those transfers may offer the missing link to the bottom billion, the world’s poorest, most vulnerable, and most excluded populations.

However, while <a href="http://assets.newamerica.net/sites/newamerica.net/files/policydocs/NAF_GSSP_Opportunities_New.pdf">theory and some evidence</a> strongly suggest that e-payments are a high leverage tool to reach the poor, <a href="http://www.cgap.org/publications/electronic-g2p-payments-evidence-four-lower-income-countries">new research recently released by CGAP</a>, on behalf of the Better Than Cash Alliance, on the experiences of electronic G2P programs in low-infrastructure and low-income settings reveals that e-payments can also pose a series of risks to recipients. These risks include: loss due to agent or staff misconduct; lack of transparency and disclosure of terms and fees; lack of adequate or effective avenues for recourse and redress, and; data privacy and protection challenges.

For example, a core component of the new research – detailed in case studies written on programs in <a href="http://betterthancash.org/wp-content/uploads/2013/12/UNCDF-BTCA-Highlights-Haiti-EN-20140317.pdf">Haiti</a>, <a href="http://betterthancash.org/wp-content/uploads/2014/03/UNCDF-BTCA-Highlights-Kenya-CFA-EN-20140317.pdf">Kenya</a>, <a href="http://betterthancash.org/wp-content/uploads/2013/12/UNCDF-BTCA-Highlights-Philippines-EN-20140317.pdf">the Philippines</a>, and <a href="http://betterthancash.org/wp-content/uploads/2013/12/UNCDF-BTCA-Highlights-Uganda-EN-20140317.pdf">Uganda</a> and summarized in the CGAP Focus Note <a href="http://www.cgap.org/publications/electronic-g2p-payments-evidence-four-lower-income-countries" target="_blank">Electronic G2P Payments: Evidence from Four Lower-Income Countries</a> – explored the recipient experience in interacting with electronic payments platforms to receive their cash transfers. It is important to keep in mind that the vast majority of recipients had no prior experience with digital financial services, and, in some cases, formal financial services at all. Here are some common quotes from recipient focus groups and interviews:

“I don’t understand the fees the agent charges me when I pick up my grant.”
“I don’t know who to call when I don’t receive my full payment.”
“I don’t want to complain because they will take away my stipend.”
“I don’t need to know my PIN. The agent puts it in for me.”
“He says I have to pick up the rest of the payment tomorrow. But next time I have to pay a fee.”
Our research did not reveal how common these challenges are in practice across the four programs. And to be sure, in some cases these quotes indicate the potential for risk more than they reveal staunch evidence of the incidence of consumer loss or risk in practice.

Regardless, the experiences of the poor in these programs certainly raises several critical and so far unasked questions.

First, as we leverage digital financial services for G2P payments, how do we ensure that recipients are adequately protected from any potential risks related to the use of those services? Our research revealed that demand-side assessments, to the extent they were performed, did not thoroughly consider whether there were specific consumer risks related to the payment system design.

Second, are G2P and D2P recipients, by their very nature, more vulnerable to consumer risks related to digital payment products and delivery models? If so, how does that change the way we assess and mitigate risks, and protect the recipients when designing and implementing social protection schemes?

Third, who is responsible for mitigating risks of electronic social payment products and delivery channels? These schemes are often dynamic and complex, with many actors in the “value chain.” Consistently across the four case studies highlighted here, confusion on roles and responsibilities caused challenges for the program and payment service providers, which then trickled down to the recipients in the form of confusion and lack of confidence that their problems would be resolved when something goes wrong.

<a href="http://www.cgap.org/publications/electronic-g2p-payments-evidence-four-lower-income-countries">The Focus Note</a> offers some initial ideas for improving implementation and communication systems in e-G2P for the poor, including: more thorough recipient risk assessment and mitigation planning up front; better channels for recipient communication, recourse and redress, and; clarity around roles and responsibilities between the social protection program and the payment service provider. But it exposes more questions than answers, and finding solutions is indeed mission critical. If those who have the most to gain from “better, cheaper, faster, and more convenient” digital financial services are more vulnerable to potential risks associated with them, then the occurrence of these challenges may have a sobering, unintended consequence: they may lose or fail to develop trust or confidence in the new system they now have to navigate, and the products, services, and providers they now have access to.

If we envision using e-G2P as a financial inclusion gateway for the poor, then we need to make sure recipients are able to start off on the right foot when they step over that threshold.

For more information on the new research, visit the Better Than Cash Alliance <a href="http://betterthancash.org/better-than-cash-alliance-case-studies/" target="_blank">website</a> and <a href="https://www.youtube.com/channel/UCKVGhd3xSOf_40APRx_RraA" target="_blank">YouTube channel</a>, and the <a href="http://www.cgap.org/blog/don%E2%80%99t-forget-value-proposition-g2p-e-payment-recipients" target="_blank">CGAP Blog</a>.

Jamie M. Zimmerman is a senior associate at <a href="http://bankablefrontier.com/" target="_blank">Bankable Frontier Associates</a> and co-author of the focus note and related case studies for the recent research on electronic G2P payments in low-income settings. She is also a senior policy consultant at <a href="http://www.cgap.org/" target="_blank">CGAP</a>, contributing to the newly-launched Responsible Digital Finance Initiative. She can be reached on twitter at <a href="https://twitter.com/jamiemzimmerman" target="_blank">@jamiemzimmerman</a>.

Have you read?

<a href="http://cfi-blog.org/2013/10/09/g2p-electronic-payments-leading-to-increased-aid-and-inclusion-in-lac/" target="_blank">G2P Electronic Payments Leading to Increased Aid and Inclusion in LAC</a>

<a href="http://cfi-blog.org/2014/01/16/global-progress-in-electronic-payment-systems/" target="_blank">Global Progress in Electronic Payment Systems</a>

<a href="http://cfi-blog.org/2012/12/12/are-e-payments-a-boost-or-bane-to-fi2020/">Are E-Payments a Boost or Bane to Financial Inclusion?</a>

Electronic G2P for the Poor: Does Electronic Social Protection Need Better Consumer Protection?

Uganda

Complaint Resolution

Digital Financial Services

Privacy

Social Performance

Transparency

&gt; Posted by Deborah Drake and Andrea Horak, Vice President/Program Manager and Program Coordinator, Investing in Inclusive Finance, CFI

<a href="http://cfi-blog.org/category/investing-in-inclusive-finance/" target="_blank" rel="attachment wp-att-9676"><img class="alignright wp-image-9676" style="border:0;margin-top:5px;margin-bottom:5px" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/untitled2.jpg" width="310" height="54" /></a>The <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/investing-in-inclusive-finance" target="_blank">Investing in Inclusive Finance</a> program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.

With good governance a top priority for investors, donors, and regulators, it’s time to ask exactly what good governance looks like. A recent debate about the Anglo-American (shareholder) versus the European (stakeholder) models of governance set out to answer that question. The <a href="http://www.centerforfinancialinclusion.org/collaborators-a-sponsors/governance-working-group" target="_blank">Governance Working Group</a> (GWG), a 25-member group of microfinance professionals focused on governance, hosted by CFI, sponsored a <a href="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/us_and_european_governance_model_presentation.pdf" target="_blank">webinar</a> to discuss the characteristics of the two models and their implications for microfinance institutions, equity funds, and clients.

Lauren Burnhill of <a href="http://www.oneplanet.org/" target="_blank">One Planet Ventures</a> started off the debate by describing the model of single tier governance commonly used in the U.K. and U.S. In this model, each company has a single board that includes both executive directors, who are employed by the company or have significant ties to its corporate management, and non-executive directors who have no direct relationship with the company or its management. The company CEO may serve as chair of the corporate board, in which case a great deal of power is invested in that board position. The overarching duty of the board is to protect the interests of shareholders. In this model, particular importance is given to the protection of minority shareholder rights.

Judith Mayer of the Technische Universität München described the European (stakeholder) model. It is a two-tier model, with both a management board and a supervisory board, and it focuses not only on the interests of shareholders, but also of employees and clients. The management board is comprised of the executive committee of an organization that manages the day-to-day affairs and represents the organization. The supervisory board is not involved in day-to-day management, but instead shapes strategy, oversees the management team, and safeguards the institution overall. Underpinning the European model is the view that management should make decisions for the benefit of all stakeholders.

<a href="http://mainelaw.maine.edu/news/conferences/ethics/" target="_blank" rel="attachment wp-att-9935"><img class="alignright wp-image-9935" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/governance_board2.jpg" width="375" /></a>Both models have their advantages. A single tier board is more cost-effective, and its significant disclosure requirements provide transparency. In the European model, diverse groups have a stake in the functioning of the firm, and employees often participate on supervisory boards. During the debate it was evident that the members of the Governance Working Group generally preferred the European stakeholder model due to its inclusive nature. The Anglo-American model, with its singular focus on shareholders, places a large emphasis on profit with little attention to the role of the corporation in modern society. As a result, there is less emphasis on the social or environmental impact of corporate decisions.

The GWG members strongly agreed that a profit-maximizing lens should not be the only view represented within the boardroom and considered how best to ensure that governance practices reflect the values and principles inherent in their mission statements, including the voice of the client. To date, few MFI boards count clients as board members. Fonkoze in Haiti and CARD in the Philippines are noteworthy exceptions. Bringing the client voice to the boardroom remains an important challenge for both models.

One possible approach is a hybrid governance structure for microfinance. Lauren Burnhill challenged the GWG to follow global corporate governance trends and engage in the broader dialogue about “good practices.” For instance, Norges Bank Investment Management (NBIM), the arm of the Norwegian central bank that runs the Government Pension Fund, has put forward an “applied ownership” model as the next phase of corporate governance. This approach moves away from a rigid and detailed rules-based approach to governance and stresses a relationship of trust and accountability between shareholders and company boards, featuring high-level principles.

Is it possible to integrate shareholder and stakeholder-focused governance models or is there a need for a broader multiple bottom-line framework of some kind?

Image credit: <a href="http://mainelaw.maine.edu/news/conferences/ethics/" target="_blank">University of Maine</a><a href="http://yourteenmag.com/2011/01/teens-and-stress-professional-advice/" target="_blank">
</a>

Have you read? 

<a href="http://cfi-blog.org/2013/02/05/what-do-governance-and-parenting-have-in-common/" target="_blank">What Do Governance and Parenting Have in Common?</a>

<a href="http://cfi-blog.org/2012/09/17/banana-skins-2012-improving-mfi-governance/" target="_blank">Banana Skins 2012: Improving MFI Governance</a>

<a href="http://cfi-blog.org/2012/08/14/a-core-reference-tool-updated-cmefs-governance-guidelines/" target="_blank">A Core Reference Tool Updated: CMEF’s Governance Guidelines</a>

Stakeholders vs. Shareholders: Which Side Are You On?

Norway

&gt; Posted by Larry Reed, Director, Microcredit Summit Campaign

<a href="http://stateofthecampaign.org/the-report/reaching-fewer/" target="_blank" rel="attachment wp-att-9806"><img class=" wp-image-9806 alignright" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/dsc0149.jpg" width="350" /></a>On February 5, the Microcredit Summit Campaign released <a href="http://www.stateofthecampaign.org/" target="_blank">Vulnerability: The State of the Microcredit Summit Campaign Report, 2013</a> by announcing that in 2011, 13 million fewer of the world’s poorest families received access to microcredit and other financial services than in 2010. This is the first time since 1998, when the Campaign began tracking this data, that the total number of clients and the number of poorest families reached have declined. We found in our data that the total number of clients fell from 205 million to 195 million and the sub-set of families living in extreme poverty, defined as less than $1.25 a day, fell from 137 million to 124 million. (Visit the <a href="http://stateofthecampaign.org/the-report/reaching-fewer/" target="_blank">report website</a> to learn more.)

I presented the report at a <a href="http://youtu.be/_jSEa5Y_pTA" target="_blank">launch event</a> at Busboys and Poets in Washington, D.C., and <a href="http://www.centerforfinancialinclusion.org/about/staff/119-susy-cheston" target="_blank">Susy Cheston</a> (Senior Advisor at the Center for Financial Inclusion at Accion) moderated a lively discussion with my co-panelists <a href="http://www.usaid.gov/who-we-are/organization/wendy-peter-abt" target="_blank">Wendy Abt</a> (Deputy Assistant Administrator, USAID), <a href="http://blogs.cgdev.org/open_book/" target="_blank">David Roodman</a> (Senior Fellow, Center for Global Development), and <a href="http://www.cgap.org/about/people/alexia-latortue" target="_blank">Alexia Latortue</a> (Deputy CEO, CGAP). Not surprisingly, the most salient exchange of the panel arose with David in the role of provocateur.

Challenging the Campaign, he contrasted simple but powerful messages that communicate well to the mass public—“microcredit can help people lift themselves out of poverty”—to more nuanced messages that better communicate reality but are harder to condense into a soundbite. Many of us are trying to figure out how to convey the nuanced message that “a range of financial services, when combined with other important development services, may provide tools that people can use to move away from poverty.” David asked whether, after seeing the results of unchecked growth in Andhra Pradesh, the Campaign wanted to rethink its goal-setting role.

Wendy spoke up in favor of facing difficult realities—even when this caused problems in communicating to the public. In her experience, asking the hard questions has led to a much richer set of answers, and then to real progress on the problems we seek to address. She said that this is the approach that USAID is now taking as it examines the results its programs achieve over time.

My own response to David's question was that the Campaign has been shifting priorities from an emphasis on total numbers (our first goal of reaching 175 million clients) to outcomes (our second goal of helping 100 million clients and their families lift themselves out of severe poverty). We find that those microfinance providers that track their clients’ poverty levels over time soon develop a robust set of products and services that help clients address the vulnerabilities they face, and <a href="http://stateofthecampaign.org/the-report/developing-appropriate-products/" target="_blank">we highlight some of these in the report</a>.

David prodded one more time. He noted our report's discussion of the promise of mobile technology to reduce the costs of financial transactions for the poor, as well as our coverage of <a href="http://stateofthecampaign.org/2013/01/16/building-a-pathway-fonkoze/" target="_blank">Fonkoze</a> in Haiti and <a href="http://stateofthecampaign.org/2013/01/16/building-a-pathway-bandhan/" target="_blank">Bandhan</a> in India, two of the programs in the <a href="http://graduation.cgap.org/" target="_blank">CGAP-Ford Graduation Program</a> research on working with the ultra poor. He posed these two examples as alternative ways of reaching the goals of the Campaign and thought he detected a subtle bias in the report in favor of the graduation programs. He argued in favor of mobile technology being the true heir to microfinance and the means by which we realize the vision of microfinance's founders. (David recently wrote a blog post on the report, <a href="http://blogs.cgdev.org/open_book/2013/02/the-state-of-microcredit.php" target="_blank">here</a>.)

[youtube http://www.youtube.com/watch?v=_jSEa5Y_pTA?rel=0&amp;w=420&amp;h=315]Alexia quickly jumped in to challenge what she saw as a completely false dichotomy. Graduation programs and mobile technology are simply two very different things that cannot be usefully compared. She thought that if governments were to take and scale up graduation programs, spending more up front than they are presently with social protection programs, maybe some of the most difficult to reach 5-8 percent of the population would actually graduate from extreme poverty and no longer need permanent government transfer payments. At the same time, mobile phones could help lower the costs of these programs if people could, for example, save using the mobile phone. There is no reason that we cannot not use both methods together to accomplish our goals.

The conversation served as a reminder of where we stand now as an industry: acknowledging the limits and dangers of growing too far and too fast with traditional products but anticipating breakthroughs with new technologies and targeted products that help those in poverty to build resilience against the vulnerabilities they face.

The Microcredit Summit Campaign will continue this dialogue about resiliency with a webinar February 27, 2013 on vulnerability and social capital, organized with the Sustainable Microenterprise and Development Program, a professional training program at the University of New Hampshire. <a href="http://www.carseyinstitute.unh.edu/smdp/2013-webinar-series" target="_blank">Click here</a> to learn more about the webinar, or contact Sabina Rogers (rogers@microcreditsummit.org).

<img class="size-full wp-image-9787 alignleft" style="border:0" alt="" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/larry_reed.jpg" width="100" height="116" />Larry Reed is the director of the Microcredit Summit Campaign. He has worked for more than 25 years in designing, supporting and leading activities and organizations that empower poor people to transform their lives and their communities. For most of that time Reed worked with Opportunity International, including five years as their Africa Regional Director and eight years as the first CEO of the Opportunity International Network. Reed has taught at the Boulder Institute of Microfinance for 15 years, served as the chair of the SEEP Network, and consulted with industry-wide initiatives like the Smart Campaign for Client Protection and MicroFinance Transparency.

Image credit: <a href="http://stateofthecampaign.org/the-report/reaching-fewer/" target="_blank">Microcredit Summit Campaign</a><a href="https://openknowledge.worldbank.org/bitstream/handle/10986/11858/9780821396346.pdf?sequence=5" target="_blank">
</a>

Have you read?

<a href="http://cfi-blog.org/2012/08/24/indian-microfinance-leaders-talk-about-poverty/" target="_blank">Indian Microfinance Leaders Talk About Poverty</a>

<a href="http://cfi-blog.org/2012/05/23/measuring-success-microcredit-in-perspective/" target="_blank">Measuring Success: Microcredit in Perspective</a>

<a href="http://cfi-blog.org/2012/02/14/who-needs-to-be-educated-for-us-to-achieve-financial-inclusion/" target="_blank">Who Needs Financial Education?</a>

Building Resilience Against Vulnerability

Microfinance

Elisabeth Rhyne

Leonardo Tibaquir

Sonja Kelly

Consumer Protection

Report

David Tuesta

Apis Partners

Steven Werlin

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.

Anna Koblanck

Deborah Drake

&gt; Posted by Center Staff
<img class="alignright size-medium wp-image-4904" title="TheBlueSweater_300_450" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/12/thebluesweater_300_450.jpg?w=200" alt="" width="200" height="300" />Book-writing is partly about voracious reading, Alex Counts reminds us on his <a href="http://alexcountshaitibook.wordpress.com/" target="_blank">blog,</a> which chronicles the process of penning a book about Haitian microfinance pioneer <a href="http://www.fonkoze.org/" target="_blank">Fonkoze</a>.
Counts, the CEO of <a href="http://www.grameenfoundation.org/" target="_blank">Grameen Foundation</a>,  most recently finished <a href="http://www.amazon.com/Blue-Sweater-Bridging-between-Interconnected/dp/B004NSVE82/ref=sr_1_1?ie=UTF8&amp;qid=1324201526&amp;sr=8-1" target="_blank">The Blue Sweater</a> by Jacqueline Novogratz (Rodale, 2009) and <a href="http://www.amazon.com/Social-Entrepreneurs-Handbook-Business-Improves/dp/0071750290/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1324201569&amp;sr=1-1" target="_blank">The Social Entrepreneur’s Handbook</a> by Rupert Scofield (McCraw Hill, 2011). (We previously <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/05/06/the-social-entrepreneurs-handbook-how-to-start-build-and-run-a-business-that-improves-the-world/" target="_blank">gave a nod to</a> Scofield's book here on this blog. )
Counts joined other friends of Grameen Bank to set up Grameen Foundation in 1997. He was <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">interviewed</a> for the Center's <a href="http://centerforfinancialinclusionblog.wordpress.com/?s=%22Microfinance+Matters%22" target="_blank">"Microfinance Matters"</a> series. During his trips to Haiti, he has been meeting with microfinance industry leaders in general, and in particular with Fonkoze staff.
<a href="http://alexcountshaitibook.wordpress.com/2011/12/18/two-memoirs-to-inspire-and-educate-social-entrepreneurs/" target="_blank">"Two Memoirs to Inspire and Educate Social Entrepreneurs," </a>his most recent post, begins:
I am returning from Istanbul, where I attended and spoke at a historic meeting of microfinance leaders from around the Arab World and from Turkey. A long layover in Amsterdam is giving me the opportunity to return to this blog while I prepare to head to Haiti via Washington and New York over the next two days. It has been a whirlwind fall for me, but my book on Fonkoze has never been far from my mind. <a href="http://www.muhammadyunus.org/" target="_blank">Professor Muhammad Yunus</a>, the founder of the <a href="http://www.grameen-info.org/" target="_blank">Grameen Bank</a> and my mentor, was the most recent person to ask me about it when we were driving to a university in Turkey where he gave a speech two days ago.
Loyal blog readers will recall that one of the things I have re-learned about book-writing is that part of the process is voracious reading. Not just about the subject matter of the book you are writing.  It is important to read books that can provide literary inspiration and/or a sense of what the reading public is responding to in terms of broadly similar titles (in my case, related to international social enterprise).
Please click the link to read the rest of <a href="http://alexcountshaitibook.wordpress.com/2011/12/18/two-memoirs-to-inspire-and-educate-social-entrepreneurs/" target="_blank">"Two Memoirs to Inspire and Educate Social Entrepreneurs,"</a> and remember that you can bookmark the blog or sign up for the feed to follow this book-writing endeavor more closely.
Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/11/29/fonkoze-the-global-microcredit-summit-alex-counts-book-project/" target="_blank">Fonkoze &amp; the Global Microcredit Summit – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/26/haiti-fonkoze-the-female-vision-alex-counts-book-project/" target="_blank">Haiti, Fonkoze, &amp; 'The Female Vision' - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/12/why-write-a-book-on-fonkoze-alex-counts-book-project/" target="_blank">Why Write a Book on Fonkoze? – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/31/11-surprises-from-fonkoze-alex-counts-book-project/" target="_blank">11 Surprises from Fonkoze – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/08/fonkoze-and-madame-saras-alex-counts-book-project/" target="_blank">Fonkoze and Madame Saras - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/25/an-avalanche-of-material-including-repressed-memories-alex-counts-book-project/" target="_blank">An Avalanche of Material (Including Repressed Memories) – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/06/haiti-fonkoze-in-10-memories-alex-counts-book-project/" target="_blank">Haiti &amp; Fonkoze in 10 Memories – Alex Counts Book Project </a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/22/haiti-in-the-spotlight-as-alex-counts-begins-book-on-fonkoze/" target="_blank">Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">Grameen Foundation CEO Alex Counts Tackles ‘Re-engineering’ Microfinance</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/09/yunus-grameen-bangladesh-what-are-the-facts/" target="_blank">Yunus, Grameen, &amp; Bangladesh - What Are the Facts?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/21/grameen-foundation-increases-support-for-strategic-human-capital-practices-at-indian-mfis/" target="_blank">Grameen Foundation Increases Support for Strategic Human Capital Practices at Indian MFIs</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%E2%80%98super-poor%E2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

Books for Inspiring and Educating Social Entrepreneurs - Alex Counts Book Project

&gt; Posted by Center Staff
<img class="alignright size-full wp-image-4795" title="Fonkoze_Logo-297x300" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/11/fonkoze_logo-297x300.jpg" alt="" width="297" height="300" />Alex Counts captures the excitement at the <a href="http://www.globalmicrocreditsummit2011.org/" target="_blank">Global Microcredit Summit</a> in the latest post on his <a href="http://alexcountshaitibook.wordpress.com/" target="_blank">blog,</a>  the cyberspace outpost where he describes the process of writing a book about Haitian microfinance pioneer <a href="http://www.fonkoze.org/" target="_blank">Fonkoze</a>.
Counts, the CEO of <a href="http://www.grameenfoundation.org/" target="_blank">Grameen Foundation</a>, notes that Fonkoze "was, among participating organizations working in a single country, the one that received the most exposure to tell its story."
Counts, who was <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">interviewed</a> for the Center's <a href="http://centerforfinancialinclusionblog.wordpress.com/?s=%22Microfinance+Matters%22" target="_blank">"Microfinance Matters"</a> series, joined other friends of Grameen Bank to set up Grameen Foundation in 1997. During his recent trips to Haiti, he has been meeting with microfinance industry leaders in general, and in particular with Fonkoze staff.
<a href="http://alexcountshaitibook.wordpress.com/2011/11/25/fonkoze-at-the-global-microcredit-summit/" target="_blank">"Fonkoze at the Global Microcredit Summit,"</a> his most recent post, begins:
The recent Global Microcredit Summit held in Valladolid, Spain brought significant new exposure to the innovations and accomplishments of Fonkoze.  Anne Hastings spoke at the first substantive plenary (right after the ceremonial opening session), and followed that up with presentations at several workshops and finally well-received remarks at the closing plenary.  Gauthier Dieudonne presented Fonkoze’s institutional action plan in a plenary alongside the head of CARE’s microfinance initiative, ACCESS Africa.  (CARE is one of the largest humanitarian organizations in the world.)  Finally, Fonkoze Diaspora liaison Katleen Felix chaired a workshop while CLM regional director Steve Werlin presented an important paper that he had co-authored with Anne.  
You can click the headline to read the rest of  <a href="http://alexcountshaitibook.wordpress.com/2011/11/25/fonkoze-at-the-global-microcredit-summit/" target="_blank">"Fonkoze at the Global Microcredit Summit,"</a> and don't miss the chance to bookmark the blog or sign up for the feed so that you can follow this project more closely.
Image credit:

Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/26/haiti-fonkoze-the-female-vision-alex-counts-book-project/" target="_blank">Haiti, Fonkoze, &amp; 'The Female Vision' - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/12/why-write-a-book-on-fonkoze-alex-counts-book-project/" target="_blank">Why Write a Book on Fonkoze? – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/31/11-surprises-from-fonkoze-alex-counts-book-project/" target="_blank">11 Surprises from Fonkoze – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/08/fonkoze-and-madame-saras-alex-counts-book-project/" target="_blank">Fonkoze and Madame Saras - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/25/an-avalanche-of-material-including-repressed-memories-alex-counts-book-project/" target="_blank">An Avalanche of Material (Including Repressed Memories) – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/06/haiti-fonkoze-in-10-memories-alex-counts-book-project/" target="_blank">Haiti &amp; Fonkoze in 10 Memories – Alex Counts Book Project </a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/22/haiti-in-the-spotlight-as-alex-counts-begins-book-on-fonkoze/" target="_blank">Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">Grameen Foundation CEO Alex Counts Tackles ‘Re-engineering’ Microfinance</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/09/yunus-grameen-bangladesh-what-are-the-facts/" target="_blank">Yunus, Grameen, &amp; Bangladesh - What Are the Facts?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/21/grameen-foundation-increases-support-for-strategic-human-capital-practices-at-indian-mfis/" target="_blank">Grameen Foundation Increases Support for Strategic Human Capital Practices at Indian MFIs</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%E2%80%98super-poor%E2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

Fonkoze &#038; the Global Microcredit Summit - Alex Counts Book Project

&gt; Posted by Steven Werlin
<img class="alignright size-full wp-image-4763" title="fonkoze logo" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/11/fonkoze-logo.png" alt="" width="294" height="58" />[The following post is Pt. II of a two-part series. In this post, Steven Werlin explains what his organization, <a href="http://www.fonkoze.org/" target="_blank">Fonkoze</a>, is trying to accomplish through group microfinance. The<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/11/17/whats-happening-with-group-microfinance/" target="_blank"> first part</a>, by Beth Rhyne, appeared on November 17, 2011.]
It is easy to imagine solidarity-group microcredit as a method that both minimizes the costs an MFI faces in making its loans and protects the institution from risk. It's easy to imagine both those things, because they are both true.
Using groups to makes loans means that the loans can be delivered and reimbursements collected at central locations without the borrowers' having to come in to a branch. The borrowers save much of the direct transportation cost they would otherwise be stuck with if they live far from a branch, and the branch saves mileage because its loan officer doesn't have to find each borrower individually. Borrowers and loan officers meet halfway, in a credit center.
The group also significantly reduces the lender's risk. Group members can be held responsible for one another's delinquent payments. Their need to vouch for one another means they are likely to choose fellow-members carefully, selecting friends whom they believe to be good risks. And making members agree on the size of each loan can protect against the over-indebtedness responsible for many write-offs.
But to imagine solidity-group microcredit merely as an effective way to lend money misses its essence. At their best, solidarity groups help poor women organize themselves to benefit from financial and other services they need, but also to build networks of mutual support and leadership development that can help them transform themselves into agents of progress for their families and their communities.
From the beginning, Fonkoze in Haiti has looked to the solidarity-group method as the key to its comprehensive approach to fighting poverty. We have invested in developing these centers in several significant ways. I'll mention two of them.
First, though our members make their repayments only once each month, their centers meet twice. We even send the credit agent to this second meeting to participate in the discussions, even though these extra meetings significantly decrease the number of members an agent can serve and, so, very much increase our costs.
These second meetings are important, because they provide our members, who are generally very busy, a great chance to talk about business, to ask one another for advice, and to discuss problems. We have even developed and published a book of stories that members can use as topics for discussion at these meetings. The stories give credit agents and the centers' elected chiefs a tool they can use as they learn to lead discussions, and they help ensure that these regular discussions touch on a range of important subjects. The books are not so much a fixed curriculum as they are a tool designed to help members use the time they spend together effectively by helping them structure their conversations.
Second, though our education programs were succeeding in some ways when we were hiring experienced educators as teachers, we felt that bringing these mostly male teachers was making it harder for our members to develop leadership themselves. So we stopped hiring outside educators and began to recruit borrowers willing to serve their fellow borrowers.
We made the decision to do so even though we knew it would make the task of preparing teachers of our programs much harder for us. Few of our members have teaching experience they can draw on. In many cases, the most educated center member we can recruit has no more than a primary school education. The simple approach to training we used with professional educators — reviewing the principles of adult education, familiarizing them with the module they were to teach, and explaining the paperwork they'd need to do —  would not be enough. We had to develop more supporting materials, such as simple lesson plans, and we had to rethink the way we spend our week of training.
But we felt that as some members discovered their own ability to teach, and others learned to look to their fellow members, rather than to male professionals, the members' solidarity and their sense of their own power would grow. This prospect seemed more than worth the trouble we anticipated as we looked to implement our decision.
The solidarity group is not a device that aims at efficient, low-risk lending, though it can have both these effects. It is, more fundamentally, a philosophy of development, one that starts from the assumption that poor women will make more – and more comprehensive – progress if they are helped to work together.
Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/26/haiti-fonkoze-the-female-vision-alex-counts-book-project/" target="_blank">Haiti, Fonkoze &amp; ‘The Female Vision’ – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/22/haiti-in-the-spotlight-as-alex-counts-begins-book-on-fonkoze/" target="_blank">Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%e2%80%98super-poor%e2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

What’s Happening with Group Microfinance? - Pt. II

Client Protection in Haiti

&gt; Posted by Center Staff
<img class="alignright size-medium wp-image-4335" title="disc female symbol" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/09/disc-female-symbol.jpg?w=186" alt="" width="186" height="300" />Alex Counts finds himself reflecting on patriarchy in the latest post on his <a href="http://alexcountshaitibook.wordpress.com/" target="_blank">blog,</a> where he chronicles writing a book about Haitian microfinance pioneer <a href="http://www.fonkoze.org/" target="_blank">Fonkoze</a>.
I sense that part of what feels liberating to work as a woman in Fonkoze is not getting ones strengths “stripped out” and seeing one’s ability to contribute “dry up” as often happens in patriarchal (i.e., “normal”) organizations.  (At the same time, I have been wondering how my own organization, Grameen Foundation, and others that I am associated with score on this spectrum, and on the experiences of women staff at all levels.)
Counts, the CEO of <a href="http://www.grameenfoundation.org/" target="_blank">Grameen Foundation</a>, notes Fonkoze's "culture rooted in strong female leadership."
Counts, who was <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">interviewed</a> for the Center's <a href="http://centerforfinancialinclusionblog.wordpress.com/?s=%22Microfinance+Matters%22" target="_blank">"Microfinance Matters"</a> series, joined other friends of Grameen Bank to set up Grameen Foundation in 1997. During his recent trips to Haiti, he has been meeting with microfinance industry leaders in general, and in particular with Fonkoze staff.
<a href="http://alexcountshaitibook.wordpress.com/2011/09/24/insights-from-the-female-vision-for-fonkoze-and-microfinance/" target="_blank">"Insights from 'The Female Vision' for Fonkoze and Microfinance,"</a> his most recent post, begins:
Despite my busy fall schedule working as CEO for Grameen Foundation, the book on Fonkoze is advancing in exciting ways.  I’ve written a draft of the first chapter and gotten helpful feedback from my writing guru Mark Levy.  I’ve talked to Jessica Papin, the woman who is likely to be my agent, and she had some great feedback on the overall project.
One of Jessica’s recommendations is that for the book to have the best chance of success, Fonkoze needs to become better known prior to publication.  So, she suggested that I first write a 10-15,000 word “long form article” for publication in something like Harpers or the New York Times magazine.  (This could push back publication of the book by a year while giving me more time to do research next summer.)  On first blush, I think this sequenced approach is a great idea and most of all, I like the energy and ideas she brings to the project.  It’s exciting to see the team of people who believe in this book and are helping it succeed grow each and every month!
One of the most important and enjoyable parts of writing a book is reading other books whose content and/or approach is helpful.  I recently finished The Female Vision by Sally Helgesen and Julie Johnson after someone who read <a href="http://alexcountshaitibook.wordpress.com/2011/08/16/update-and-the-gender-issue-part-one/" target="_blank">my earlier blog on Fonkoze as matriarchy</a>. 
You can click the headline to read the rest of <a href="http://alexcountshaitibook.wordpress.com/2011/09/24/insights-from-the-female-vision-for-fonkoze-and-microfinance/" target="_blank">"Insights from 'The Female Vision' for Fonkoze and Microfinance,"</a> and don't miss the chance to bookmark the blog or sign up for the feed so that you can follow this project more closely.
Image credit: <a href="http://commons.wikimedia.org/wiki/User:Rei-artur" target="_blank">Rei-artur</a>

Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/12/why-write-a-book-on-fonkoze-alex-counts-book-project/" target="_blank">Why Write a Book on Fonkoze? – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/31/11-surprises-from-fonkoze-alex-counts-book-project/" target="_blank">11 Surprises from Fonkoze – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/08/fonkoze-and-madame-saras-alex-counts-book-project/" target="_blank">Fonkoze and Madame Saras - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/25/an-avalanche-of-material-including-repressed-memories-alex-counts-book-project/" target="_blank">An Avalanche of Material (Including Repressed Memories) – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/06/haiti-fonkoze-in-10-memories-alex-counts-book-project/" target="_blank">Haiti &amp; Fonkoze in 10 Memories – Alex Counts Book Project </a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/22/haiti-in-the-spotlight-as-alex-counts-begins-book-on-fonkoze/" target="_blank">Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">Grameen Foundation CEO Alex Counts Tackles ‘Re-engineering’ Microfinance</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/09/yunus-grameen-bangladesh-what-are-the-facts/" target="_blank">Yunus, Grameen, &amp; Bangladesh - What Are the Facts?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/21/grameen-foundation-increases-support-for-strategic-human-capital-practices-at-indian-mfis/" target="_blank">Grameen Foundation Increases Support for Strategic Human Capital Practices at Indian MFIs</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%E2%80%98super-poor%E2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

Haiti, Fonkoze &#038; &#039;The Female Vision&#039; - Alex Counts Book Project

&gt; Posted by Center Staff
[caption id="attachment_547" align="alignright" width="300" caption="Haitian vendors at work in Port-au-Prince, Jan 20, 2010."]<img title="Counts" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/09/haiti-vendors1-e1316180699806.jpg" alt="Haitian vendors at work in Port-au-Prince, Jan 20, 2010" width="300" height="224" />[/caption]
Besides containing a nice nod to the <a href="http://www.smartcampaign.org/index.php" target="_blank">Smart Campaign</a>'s work on a process for <a href="http://www.smartcampaign.org/news-a-highlights/whats-happening/8-2010/529-client-protection-certification-program" target="_blank">certifying MFI client protection practices</a>, Daniel Rozas' post <a href="http://www.microfinancefocus.com/rethinking-multiple-borrowing" target="_blank"> "Rethinking Multiple Borrowing"</a> on <a href="http://www.microfinancefocus.com/" target="_blank">MF Focus</a> offers a fresh take on a much-mulled topic.
Rozas, who recently authored the report <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/07/center-releases-weathering-the-storm-white-paper-by-daniel-rozas/" target="_blank">"Weathering the Storm"</a>  for the Center for Financial Inclusion, argues that despite press reports to the contrary, multiple borrowing is not the result of "heavy market penetration, or even saturation."
Rozas looks at the phenomenon through the lens of Haiti, which he recently visited. (His post therefore brings to mind <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/09/12/why-write-a-book-on-fonkoze-alex-counts-book-project/" target="_blank">Alex Counts' book project on Fonkoze</a>, the Haitian MF pioneer.) Rozas begins his post: 
Some time ago, I had a conversation with a microfinance investor.  What is the greatest challenge facing the sector? – I asked.  His answer:  multiple borrowing – multiple borrowing getting people into too much debt; multiple borrowing transforming micro-enterprise lending into consumer finance; multiple borrowing rewriting the traditional relationship between MFIs and their clients.
Of course, multiple  borrowing is present in all of these cases.  But thinking about multiple borrowing along these lines misunderstands the basic situation. Multiple borrowing isn’t a reflection of some recent or extreme developments to be ascribed to runaway growth, greed, or willing ignorance.  Nor is it some foreign element to be excised from microfinance.  No, multiple borrowing is an intrinsic part of the practice, one that has been with us for years.  Nor, despite press articles to the contrary, is it a result of heavy market penetration, or even saturation.
This is a realization I came upon during a recent trip to Haiti.  Haiti, you see, is a relatively unpenetrated market, with peak numbers on MIX showing about 120,000 borrowers, or about 1.2% of the population.  And yet the feedback from loan officers on the ground was that multiple borrowing is widespread, some suggesting that as many as 50% of their clients have loans with other MFIs.  And this wasn’t a case of saturation in one place and nothing elsewhere – I heard similar stories both in the capital and in the regions.
Haiti is full of informal markets and businesses that make up the heart of a traditional microfinance portfolio.  Demand is clearly there.  But given the spread of multiple borrowing, the true penetration numbers suggest less than 1% of the population – far below the numbers of other (stable) microfinance markets.  This level of penetration is very low indeed.

You can click this link to head for MF Focus and read the rest of Rozas' <a href="http://www.microfinancefocus.com/rethinking-multiple-borrowing" target="_blank">"Rethinking Multiple Borrowing."</a>
Image credit: <a href="http://commons.wikimedia.org/wiki/File:Roadside_market_in_Port-au-Prince_2010-01-20_1.jpg" target="_blank">Fred W. Baker III</a>
Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/02/16/the-centers-best-kept-secret-the-country-by-country-client-protection-library/" target="_blank"> The Center’s Best-Kept Secret: The Country-by-Country Client Protection Library</a> (includes Haiti)
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/02/08/the-smart-campaign-to-launch-a-certification-program-for-client-protection-in-microfinance/" target="_blank">The Smart Campaign to Launch a Certification Program for Client Protection in Microfinance</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%e2%80%98super-poor%e2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

&#039;Rethinking Multiple Borrowing&#039; - Daniel Rozas Blogs on MF Focus

The Smart Campaign

&gt; Posted by Center Staff
<img class="size-full wp-image-4133 alignright" title="disc-question-m" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/08/disc-question-m3.png" alt="" width="300" height="300" />
“Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?”
Alex Counts poses that question to himself on the <a href="http://alexcountshaitibook.wordpress.com/" target="_blank">blog</a> where he narrates his <a href="http://www.fonkoze.org/aboutfonkoze/whoweare/ourhistory.html" target="_blank">Fonkoze book project. </a>  It's a query someone might naturally make, Counts says, upon learning that he is chronicling the work of the Haitian MFI.
Counts, the CEO of <a href="http://www.grameenfoundation.org/" target="_blank">Grameen Foundation</a>, sketches out a number of answers to the question based on his recent travels around Haiti. There, he's been meeting with microfinance industry leaders, and in particular with Fonkoze's stalwarts and trailblazers.
Counts, who was <a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">interviewed</a> for the Center's <a href="http://centerforfinancialinclusionblog.wordpress.com/?s=%22Microfinance+Matters%22" target="_blank">"Microfinance Matters"</a> series, joined with other friends of Grameen Bank to set up Grameen Foundation in 1997.
His recent post <a href="http://alexcountshaitibook.wordpress.com/2011/09/09/microfinance-short-cuts-and-fonkoze/" target="_blank">"Microfinance, Short-Cuts, and Fonkoze"</a> begins:
A natural question people in or close to the microfinance movement could ask me is, “Why write a book on Fonkoze when there are so many outstanding microfinance institutions in the world?”  There are many plausible answers. 
It is operating, with considerable success, in a so-called “failed state” and working with very poor people – at a time when many question whether microfinance can be effective in either context, let alone both.  Furthermore, it is populated by some fascinating people and its history is punctuated by dramatic events.  And as noted in an earlier post, it is a women-led organization in a sense that goes far beyond who the CEO is, and extends to who occupies the vast majority of leadership posts and, not unrelated, who defines the cultural norms.
For me, the most interesting aspect from the perspective of a microfinance professional  is that Fonkoze has avoided most of the traps that I would broadly categorize as “taking organizational short-cuts” that stunt long-term performance, especially (but not only) social impact outcomes.
You can click the link to read the rest of   <a href="http://alexcountshaitibook.wordpress.com/2011/09/09/microfinance-short-cuts-and-fonkoze/" target="_blank">"Microfinance, Short-Cuts, and Fonkoze"</a>, and you'll have the chance to bookmark the blog in order to follow the progress of the book-writing project more closely.
Image credit: <a href="http://tango.freedesktop.org/Tango_Desktop_Project" target="_blank">Tango Desktop Project</a>
Have you read?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/31/11-surprises-from-fonkoze-alex-counts-book-project/" target="_blank">11 Surprises from Fonkoze – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/08/08/fonkoze-and-madame-saras-alex-counts-book-project/" target="_blank">Fonkoze and Madame Saras - Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/25/an-avalanche-of-material-including-repressed-memories-alex-counts-book-project/" target="_blank">An Avalanche of Material (Including Repressed Memories) – Alex Counts Book Project</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/06/haiti-fonkoze-in-10-memories-alex-counts-book-project/" target="_blank">Haiti &amp; Fonkoze in 10 Memories – Alex Counts Book Project </a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/22/haiti-in-the-spotlight-as-alex-counts-begins-book-on-fonkoze/" target="_blank">Haiti in the Spotlight as Alex Counts Begins Book on Fonkoze</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/17/grameen-foundation-ceo-alex-counts-tackles-re-engineering-microfinance/" target="_blank">Grameen Foundation CEO Alex Counts Tackles ‘Re-engineering’ Microfinance</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/06/09/yunus-grameen-bangladesh-what-are-the-facts/" target="_blank">Yunus, Grameen, &amp; Bangladesh - What Are the Facts?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/03/21/grameen-foundation-increases-support-for-strategic-human-capital-practices-at-indian-mfis/" target="_blank">Grameen Foundation Increases Support for Strategic Human Capital Practices at Indian MFIs</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/01/13/on-the-anniversary-of-the-haitian-earthquake-fonkoze-and-the-%E2%80%98super-poor%E2%80%99/" target="_blank">On the Anniversary of the Haitian Earthquake: Fonkoze and the ‘Super Poor’</a>

Why Write a Book on Fonkoze? - Alex Counts Book Project

Josh Goldstein

&gt; Posted by Josh Goldstein, aka Mr. Provocative
<img class="alignright size-medium wp-image-4155" title="disc cell phone" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/09/disc-cell-phone.jpg?w=192" alt="" width="192" height="300" />The proliferation of smart and cell phones in Haiti is nothing short of remarkable. Even people who seem to be among the poorest of the poor have them. When people at the so-called bottom of the pyramid truly desire a new technology and the price is not outlandish, they find a way to purchase it. Marchands (market women) peddle their wares on Port-au-Prince’s teeming streets under ubiquitous sun umbrellas that Digicel, the largest cell phone provider, has handed out by the tens of thousands.
And Haitians, as I recently learned, often use these phones to text, email, or call relatives in the diaspora to ask them to remit money. Remittance transfers from relatives in the US, Canada, and elsewhere is the one source of reliable income for many of Haiti’s poor. When I visited <a href="http://www.fonkoze.org/aboutfonkoze/whoweare/ourhistory.html" target="_blank">Fonkoze</a>’s bank in Port-au-Prince, every person in the waiting area was there to collect a remittance — not to save or borrow.
Visitors to the island with any kind of conscience struggle with the enormity of the suffering they encounter. Many provide cash gifts to Haitians they get to know, just to “do something,” hoping to make a small difference in a life or two. There is nothing new about this kind of direct philanthropy in the poorest country of the Western Hemisphere. But today, thanks to the communications revolution, that sense of responsibility for acquaintances (who are not relatives) can persist, and vividly so, after visitors leave the island.
Before departing from Boston for Haiti this spring, I hired a driver, based in Port-au-Prince, whom I will call Hector, to drive my daughter and me around the island.  We had “met” through email, connected by a friend who had used his services in the past. Hector and I exchanged a few courteous emails and telephone calls to take care of logistics (I assumed he was a man of some means because the Haiti I knew in the 1990s was a place where only the wealthy had phones.) Hector wrote me exactly as follows:
<img class="alignleft size-medium wp-image-4156" title="disc haiti" src="http://centerforfinancialinclusionblog.files.wordpress.com/2011/09/disc-haiti.png?w=279" alt="" width="279" height="300" />my dear friend Johs, the pleasure  is mine to get ur massage today, i think whenever you wanna come in haiti u will be welcome, and i will be glad to spend you my time.i will be happy to receive u may 18th,11 cause it's haitian's flag party,my phone number is:xxxxxxxxxxx available anytime
The Hector who met us at the airport was a very nice 28-year-old man, brimming with life and contagious bonhomie. He was available to chauffeur because he was unable to find any steady work — in spite of having some college education.
There are, of course, millions of poor Haitians like Hector, but they usually remain a bloodless, undifferentiated abstraction, and it is hard for most of us to stay emotionally connected to an abstraction for long. It was Hector I got to know as person, who took good care of me and my daughter. I learned about his evangelical minister father, his little brother (a part-time dispatcher for Handicap International), and his fiancée (a nursing student in New Orleans). I met a sister-in-law. Solidly lower-middle class, I suppose, but by Haitian standards. He did not shout his desperation — he had too much dignity for that. He had many dreams, but his frustrated ambition to do something with his life in Haiti was heartbreaking.
After a week of long days together, if not exactly a friend, he was far more than just an acquaintance, and I was happy to reach deep and pay him more for his services than I intended or he expected.  It felt good to be a good guy.
After we left, I expected that my ache for brother Hector would begin to dwindle a little bit each day until he merged back into that vague and easily compartmentalized abstraction we call “the poor,” and my heightened awareness of his individual struggle would be safely behind me. This had happened on earlier trips to Haiti and other desperately poor places with other Hectors whose names and stories were now mostly forgotten. Blessedly, for without the gift of forgetfulness one would never fully enjoy a meal again back in that other dimension, the United States of America, that I call home.
But it was different this time. There was no hiding. A steady stream of emails from Hector’s iPhone began to fill my inbox. The silos between our two worlds had broken down. At first they were love letters for all I had done. Grateful and nostalgic:
thank u sir , u are the best man i ever knew, i will pray to see u one day,i have no contact with didier since i have gonne.do u remember i tested u, u forgot ur VINGCARD IN THE VEHICUL. i love u sir
But then they changed to an almost daily recitation of his desperation and need. And despite myself, I quickly came to the point where I dreaded his next installment.  In short, I wanted Hector to go away. The raw transcript of some of this correspondence is the best way to tell the rest of the story. (I have put my thoughts about the exchange in parentheses)
Hector: sir how are u ? i am ok plz help me to look for a job by ur contacts in  aiti .god bless
Me: Hector, I wish I knew how to advise you. I just have no other contacts. Have you tried Didier again? I am so sorry that I can’t be of more help, my friend. You are in my thoughts and prayers. (How lame I sound, how insincere)
Hector: hi sir johs ,i prepare to applicate for a U S visa in august ,coz i think in the end of august that can run for me ,i wanna ask u to help me to pay the appointment  in sogebank plz. let  me  know when u receive my message have a good day
Me: Hector, how much do you need? Best, Josh
Hector: hi sir johs how are u ? i ‘m about to need four hundreds us dollars coz for application and others request papper by the U S Ambassy.thank u before sir
Me: (I hate this)
Hector:  hi sir .i have no news from u. how are u?let me know what is goin' on
Me: Hector, I will send you money for your application if you tell me which bank in Haiti to send it to. Also it is important for you to know that I cannot afford to send money again. (A lie, of course I could afford again. I just don’t want to make the sacrifice). I wish you: “bon chance” with your business. Please go to a bank like Sogesol or Fonkoze and ask them for the best way to send you the money.
Hector: ok sir, i can understand ur effort about what i'm lookin' for.so unitransfer. soge-express &amp; moneygram ,they can do that cause they are goin' to give u a number transfer .thank u so much sir josh
Eventually I figured out what to do. I downloaded a Western Union App on my phone and remitted the money.  It was easy. So easy that now the Western Union app stares at me reproachfully every time I open my iPhone, almost shouting “If you are a good man, empty out your bank account, save a life.”
I know that I would do exactly the same thing in Hector’s place — grovel, importune — anything to help my family and improve my life — the only honorable course to take, really.   In the greater scheme of things, the loss of the money to me was a mere inconvenience, while the extra money to him was, if not a matter of life or death, a possible entrée to a livable future.
So what if I had to make an adjustment in my monthly expenditures if I could give another human being a chance to grow and flourish? Such an inconvenience for one month was one thing— but every month into the indefinite future was another. I have a family, too. They have needs, too.
Surely, if I was a truly moral man wouldn’t I happily sacrifice on a long-term basis?  And yet I had drawn a line in the sand by telling him I could not afford to do this again. But of course I could afford it if I gave my daughter less allowance, ate out less, perhaps cut cable service and newspaper delivery— all luxuries  in the end— however customary in our  wealthy society.
We live in a new world of electronic money transfer. I had some understanding of that. But what I did not know, until my Haitian experience, was that in that transformed world the daily misery of the individual people among world’s poor can be made instantaneously real. In the days before cell phones, someone like Hector might stand in line at the phone company for hours to make an international telephone call which he could barely afford— or send the occasional letter if he was literate.  And that would be it for months.
Now tomorrow’s misery (and the day after’s) will be shouted immediately across the once nearly impermeable barrier that separates us. When Hector hits “send” with the latest trouble or even catastrophe, what will I do?  Most probably, I will turn away.
Image credit: <a href="http://commons.wikimedia.org/wiki/User:Jkr2255" target="_blank">Jkr2255,</a> <a href="https://www.cia.gov/library/publications/the-world-factbook/geos/ha.html" target="_blank">CIA World Factbook</a>
Have you read these articles by Mr. Provocative?
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/07/26/what-really-works-and-what-clearly-doesnt/" target="_blank">What Works (And What Clearly Doesn't)</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/02/14/the-bp-oil-spill-and-the-crisis-of-confidence-in-microfinance-in-andhra-pradesh-what-does-maximizing-shareholder-value-really-mean/" target="_blank">The BP Oil Spill and the Crisis of Confidence in Microfinance in Andhra Pradesh: What Does ‘Maximizing Shareholder Value’ Really Mean?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2011/02/01/remittances-a-key-driver-of-economic-reform-in-cuba/" target="_blank">Cuba &amp; Remittances: Can the ‘Money in the Mail’ Drive Reform?</a>
<a href="http://centerforfinancialinclusionblog.wordpress.com/2010/12/14/surprising-lessons-from-a-20th-century-encyclopedia-salesman-for-client-protection-today-a-holiday-parable/" target="_blank">Surprising Lessons from a 20th Century Encyclopedia Salesman for Client Protection Today: A Holiday Parable</a>
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