In the 12-plus years CFI has worked on consumer protection, we’ve seen again and again the importance of sound regulation and market conduct. While it’s not the only tool in the consumer protection playbook, sound regulation is necessary because even when providers are well-intentioned, it’s extremely difficult for “responsible” players to take action in an unfavorable environment.

As readers of this blog know, working with regulators can be time and labor intensive, but when successful, the impact can be immense. This post focuses on <a href="https://centerforfinancialinclusion.org/the-smart-campaign-and-the-mastercard-foundation-team-up-to-tackle-the-next-wave-of-consumer-protection-challenges-in-financial-services/" target="_blank" rel="noopener noreferrer">CFI’s multi-year initiative</a> in several countries in the West Africa Economic and Monetary Union (WAEMU) – Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo – and draws lessons from our work in Benin, in particular, where CFI’s engagement was multi-faceted. In particular, we focus on the support provided to the national supervisory body of Benin, the <a href="https://www.anssfd.org/" target="_blank" rel="noopener noreferrer">Agence Nationale de Surveillance des Systèmes Financiers Décentralisés</a> (ANSSFD).
<h2>The Need to Strengthen Market Conduct Supervision: The Case of West Africa</h2>
WAEMU countries experience a relatively complex supervisory environment, with multiple entities sharing supervisory responsibilities. The microfinance sector is supervised by the Central Bank of the West African States (BCEAO), the Banking Commission of WAEMU (a specialized regional entity overseeing banking sector) at the regional level, and a specialized supervisory body under the ministry of finance in each WAEMU member country. The Banking Commission of WAEMU only oversees part of the microfinance sector (institutions whose total loans/deposits exceeds 2 billion CFA francs [about $3.3 million] for two consecutive years). Unlike the Banking Commission, specialized national supervisory bodies have the responsibility to supervise the whole microfinance sector in each country.

Supervision in the WAEMU region focuses on prudential regulation, ensuring the soundness and stability of the financial system. However, <a href="https://en.wikipedia.org/wiki/Prudential_regulation" target="_blank" rel="noopener noreferrer">prudential supervision</a> in itself is insufficient for detecting and addressing improper conduct of financial service providers vis-à-vis their clients. As such, market conduct supervision is an important complement to prudential regulation. Even globally, the interest for and proven practices around market conduct regulation and supervision are fairly recent, with the 2008 global financial crisis being a notable trigger. While there have been some recent efforts to incorporate aspects of market conduct supervision in the region – including the creation of local public ombudsman offices (the OQSF) in Senegal and Côte d’Ivoire and the verifications related to <a href="https://microdata.worldbank.org/index.php/catalog/2946/related-materials" target="_blank" rel="noopener noreferrer">disclosure practices and compliance with interest caps</a> – this type of supervision is relatively new to the WAEMU region.
<blockquote>Market conduct supervision is an important complement to prudential regulation.</blockquote>
Benin is no exception. The focus on prudential regulation opens the door for poor consumer protection practices and a weak culture of self-regulation among financial institutions, as evidenced by low levels of consumer protection diagnostics and implementation of codes of conduct. The context in Benin is further complicated by a high prevalence of non-regulated financial service providers (FSPs). A 2015 unpublished survey by the ANSSFD indicated that about two-thirds of microfinance institutions operating in Benin were not regulated and operating without a license. The situation is also exacerbated by <a href="https://data.worldbank.org/indicator/SE.ADT.LITR.ZS?locations=BJ" target="_blank" rel="noopener noreferrer">low literacy levels</a> in the country, putting microfinance customers at heightened risk for fraud and unfair practices by financial institutions.
<h2>CFI’s Approach Builds on Client Voices Research</h2>
CFI’s <a href="https://www.centerforfinancialinclusion.org/client-voices-benin-country-report" target="_blank" rel="noopener noreferrer">client voices research</a> in Benin indicated that about 17 percent of former microfinance clients surveyed were unable to withdraw part or all their savings. It also highlighted that late payers experienced a number of serious harms, such as shaming, confiscation of goods, requests for bribes, and involvement of police in debt collection as intimidation tactics. About one-third of respondents ignored how much they will pay in total for their loans and only 12 percent knew the interest rate. In addition, a vast majority of clients (86 percent) were not informed about where to complain.

Responding to these realities, the Smart Campaign, a consumer protection initiative housed at CFI, began a targeted approach in 2016 to build a more effective client protection ecosystem in five African markets. CFI engaged with ANSSFD, the supervisory body with the broadest mandate and most in need of resources. The two-year initiative in Benin was targeted at identifying and addressing gaps in market conduct supervision and mainstreaming market conduct supervision into Benin’s supervision system. The new interventions aimed at, among other things, supporting financial regulators to strengthen their frameworks and increase their capacity to conduct sound supervision.
<blockquote>The initiative in Benin was targeted at identifying and addressing gaps in market conduct supervision and mainstreaming it.</blockquote>
The campaign also engaged with regulators in Nigeria, Ghana, Uganda, Benin and Rwanda. Each of these countries presented unique contexts with different consumer protection priorities, leading to bespoke interventions, including mystery shopping in Nigeria, digitization of complaint handling systems in Ghana and Uganda, and support for developing consumer protection regulations for tier IV institutions in Uganda.
<h2>Ingredients for a Successful Intervention: Lessons Learned</h2>
Though it’s too early to see the full benefits of this support, we learned several lessons from the implementation process in Benin. Overall, the success of such support depends largely on the capacity to change the behavior of supervisors and increase their ownership of the tools and approaches developed during the course of the program. Below we outline several factors that can help positively influence the behavior change and ownership necessary for success.
<h3>Learning by Doing</h3>
CFI’s approach involved trainings and post-training technical assistance on market conduct supervision. It was designed such that inspectors led the development of tools that they could integrate into their existing work. With some support from CFI, the inspectors developed a series of inspection sheets addressing each of the <a href="https://centerforfinancialinclusion.org/about/what-we-do/consumer-protection/" target="_blank" rel="noopener noreferrer">Client Protection Principles</a> to be used during their on-site visits. By doing so, they incorporated the new inspection sheets into their existing practices, reducing the extent of change management needed.
<h3>Leadership Engagement</h3>
Buy-in and active participation by leadership is key to gaining traction for change. In 2019, following the training and technical assistance activities, the general manager of ANSSFD issued a memorandum to make the new consumer protection inspection sheets mandatory for all inspection missions. The issuance of the memorandum addressed both resistance to change (on the part of a minority of inspectors) and inconsistent use of tools within ANSSFD (tools were partly used or not used at all in some inspection missions prior to the memorandum). The commitment of the general manager was essential to ensuring widespread use of the new inspection sheets and improving oversight of consumer protection practices.
<h3>Change Takes Time</h3>
The timeline for regulator or supervisor engagements must allow for multiple iterations. CFI’s engagements have found that behavior change and adoption of new techniques generally require multiple cycles of “test, learn, adjust.” In Benin, it took two years to see some tangible results.
<h3>Select Budget-Appropriate Supervisory Tools</h3>
Changing supervisory practices is likely to have significant budget implications, including costs associated with technical assistance or the adoption of new supervision tools, such as <a href="https://www.cgap.org/research/publication/mystery-shopping-financial-services" target="_blank" rel="noopener noreferrer">mystery shopping</a> and other survey methods. Tools and approaches should be proportionate with what fits for the supervisor, both technically and financially. Technical assistance providers should offer all necessary information on the costs and benefits of tools and make sure that the beneficiary agency makes informed decisions about the tools they choose to retain. In Benin, we did not recommend doing additional surveys or tools. Rather, we agreed to have an inspector that solely focuses on consumer protection and market conduct during routine inspection missions.
<h3>Progress, but the Journey is Not Yet Complete</h3>
As of today, all microfinance inspectors in Benin have been trained on market conduct supervision and the supervision tools are included in the inspection package of ANSSFD. All recent inspection reports include a market conduct section focused on consumer protection. This is tremendous progress and a great step forward.
<blockquote>All recent inspection reports include a market conduct section focused on consumer protection.</blockquote>
The promising results observed in Benin can serve as a model for other countries in the WAEMU region. The shared regulation among the countries should make it possible to leverage the process and tools developed for Benin to replicate this success in other countries. CFI held a workshop in October 2019 to share ANSSFD’s experience with sister supervisory agencies from Niger, Côte d’Ivoire, Guinea-Bissau, Mali, and Togo, which are facing similar gaps in market conduct supervision. Encouraging and guiding supervisory agencies to adopt market conduct supervision and the Client Protection Principles into their practices (as further outlined in CFI’s <a href="https://centerforfinancialinclusion.org/handbook-on-consumer-protection-for-inclusive-finance/" target="_blank" rel="noopener noreferrer">Handbook on Consumer Protection for Inclusive Finance</a>) would contribute to creating market conditions that are fair, protection regimes that are enforceable, and better outcomes for vulnerable customers.

<em>We’d like to thank the <a href="https://mastercardfdn.org/" target="_blank" rel="noopener noreferrer">Mastercard Foundation</a> for partnering with us on this journey.</em>

Improving Consumer Protection Market Conduct: Lessons Learned in Benin

<em>&gt; Posted by Joy Kim, Financial Inclusion Analyst, MIX</em>

[caption id="attachment_20681" align="alignright" width="320"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-11.png"><img class="wp-image-20681" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-11.png" alt="" width="320" height="189" /></a> Figure 1 (click to enlarge)[/caption]

Today we launched the <a href="http://finclusionlab.org/country/Senegal/analytics">Senegal Financial Inclusion Workbook 2.0</a>. Since its first iteration in 2013, MIX added a significant number of additional datasets at a more granular level: The total number of financial access points amassed increased from 1,903 to 10,155. Most of the datasets can now be inspected at the commune level, an important change from the initial workbook where the datasets were only displayed at the region level. In addition, we were able to map microfinance correspondents that did not exist back in 2013.

<strong>Senegal Makes Significant Progress in a Few Short Years</strong>

Since March 2012, when Senegal’s Ministry of Economics and Finance signed the Maya Declaration, it has <a href="http://www.microfinancegateway.org/sites/default/files/publication_files/sos-15-zm43-uk-nu-final.pdf">introduced</a> greater regulatory oversight of the microfinance industry. At the same time, the agency has helped create an enabling environment for the provision of digital financial services. <a href="http://www.afi-global.org/sites/default/files/publications/2015_maya_report_rev.1_low_res.pdf">Efforts to improve</a> data and measurement, consumer protection, and implementation of a national financial inclusion strategy are ongoing. As a first step in implementing a national financial inclusion strategy, the Microfinance Branch (DMF) of the Senegalese Ministry in charge of Microfinance and Solidarity together with the National Agency of Statistics and Demography (ANSD) <a href="http://medafricatimes.com/4469-senegal-launch-of-a-national-survey-on-financial-inclusion.html">launched</a> a national survey on financial inclusion in January of 2015. The survey is intended to investigate physical access to financial services, users of formal and informal services, financial needs of households, and more.

<strong>New Workbook Highlights Key Aspects of Financial Inclusion Progress</strong>

<em><strong>-Is Mobile Money Changing the Financial Services Landscape? </strong></em>

Not surprisingly, almost half (47 percent) of all access points are concentrated in Dakar. Even when we exclude mobile money, 41 percent of all financial access points are in Dakar. The distribution is similar with or without mobile money, but the physical number of access points across the country tells us that all 14 regions are benefiting greatly from the addition of over 8,000 mobile money access points (see Figure 1). Using the workbook’s functionality, MIX was able to map the locations of the two biggest mobile money providers (Tigo and Orange). However, it’s important to note that this only paints part of the picture because the dataset does not include two large over-the-counter (OTC) providers, Wari and JoniJoni. Though we were not able to map agent locations for Wari and JoniJoni, we know from conversations with Wari that they have at least <a href="https://brandcommsgroup.com/case-study/wari/">10,000 agents</a> around the country, with approximately 1.5 million transactions a day.

<em><strong style="line-height:1.5">-Urban, Yet Underserved</strong></em>

[caption id="attachment_20688" align="alignright" width="319"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-21.png"><img class="wp-image-20688" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-21.png" alt="Figure 2a (click to enlarge)" width="319" height="205" /></a> Figure 2a (click to enlarge)[/caption]

[caption id="attachment_20687" align="alignright" width="320"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-2-b.png"><img class="wp-image-20687" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/02/figure-2-b.png" alt="" width="320" height="206" /></a> Figure 2b (click to enlarge)[/caption]

It is natural to focus on the relatively underserved rural areas that are significantly lacking in access points. Yet, what often goes overlooked is the underserved population within the urban areas. A lack of financial access and coverage in urban areas is also a serious issue, but it is often masked by the abundance of financial access points in a few major cities. Even in Dakar, when drilled down to the commune level, we can see that almost half of the communes fall below the median in terms of supply (financial access points) and demand (population) (see Figure 2). Financial service providers could benefit from focusing on these areas with proven demand. One caveat is that this graph includes commercial banks, MFIs, and PosteFinances but not mobile money or OTC agents and microfinance correspondents because datasets at the commune level were not available for these access types. We hope to update the workbook in the future with granular datasets on mobile money, allowing for a more complete analysis at the commune level.

<strong>What’s Next: A Robust Market for Digital Financial Services </strong>

Senegal's financial inclusion landscape continues to evolve. Benefiting from hosting the regional regulator BCEAO (Banque Centrale des Etats de l'Afrique de l'Ouest), and the West African headquarters of multiple stakeholders, Senegal has <a href="http://www.uncdf.org/sites/default/files/Documents/bn_senegal.pdf">served</a> as an entry point for many digital financial services providers in the region, and this competitive environment can benefit end users. Stay tuned as MIX plans to update the workbook with increasingly granular data in the future.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/08/29/the-formula-for-mobile-microinsurance-success-in-senegal-and-pakistan/">The Formula for Mobile Money Success in Senegal and Pakistan</a>

<a href="http://cfi-blog.org/2016/01/27/the-impact-investing-landscape-in-west-africa/">The Impact Investing Landscape in West Africa</a>

<a href="http://cfi-blog.org/2015/10/14/cfi-and-mix-launch-the-fi2020-inclusion-visualizer/">CFI and MIX Launch the FI2020 Inclusion Visualizer</a>

10,000 Datapoints: Exploring Senegal’s Financial Access at the Commune Level

<em>&gt; Posted by Saran Sidime, Operations Assistant, the Smart Campaign</em>

<img class="alignright wp-image-20527" style="border:0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/01/thumb_993c458bde6d47cab5c0387550231235.jpg" alt="" width="351" height="234" />West Africa is the second-fastest growing regional economy in Africa. Its GDP is more than double that of East Africa. However, its impact investing landscape doesn’t reflect this.

There are currently 45 impact investors active in the region, including 14 development finance institutions (DFIs) and 31 non-DFIs. Direct impact investments deployed in the region totaled $6.8 billion between 2005 and 2015. This is small relative to East Africa, which has over 150 investors and $9.3 billion in deployments on the books for roughly that same time period. Nevertheless, the investing trends in West Africa are encouraging, according to <em><a href="https://thegiin.org/assets/upload/West%20Africa/01%20West%20Africa%20Regional%20Chapter.pdf">The Landscape for Impact Investing in West Africa</a></em>, the third in a series of regional market landscaping studies published by the Global Impact Investing Network (GIIN).

The main barriers to impact investment in the region, according to the GIIN, include a lack of investment readiness among entrepreneurs and investees (in part due to difficulty obtaining bank financing), unpredictable policy environments, difficulty raising capital locally (among fund managers) compared to global standards, few exit examples, and macroeconomic and political instability. That is a truly daunting array of challenges. While in recent years there has been strong growth and investment in ecosystem actors such as incubators, accelerators, associations, and technical assistance providers, the ecosystem is not at sufficient scale to service the needs of the region.

However, DFI investment in the region has increased at a compound annual growth rate of 18 percent, from $190 million in 2005 to $852 million in 2014. DFIs have deployed about 97 percent of West Africa’s total impact investing capital. Nigeria and Ghana dominate impact investing in the region, with Nigeria, which accounts for 80 percent of the region’s GDP, accounting for 29 percent and Ghana 25 percent. Investment in Nigeria may be held back in part because of security concerns surrounding the country’s ongoing conflict with the terrorist group Boko Haram. Cote d’Ivoire and Senegal, thanks to greater political stability and economic growth, are likely to be bigger recipients of investment attention in the near future.

The challenges facing impact investing in West Africa aren’t unique to the region, and resemble those of an industry in its early days. In East Africa, some of the biggest barriers are also insufficient investment-ready opportunities, difficulty of entrepreneurs accessing bank financing, and few exit examples. An additional hindrance to investing in West Africa is perception. Among investors in the region there is skepticism currently surrounding new investment platforms. Driven by a lack of understanding and trust in its potential and aims, impact investing is struggling to gain credibility.

Impact investing, by the numbers, doesn’t appear to be going away anytime soon. According to a <a href="http://www.fa-mag.com/news/surge-in-new-impact-investing-funds--study-says-21020.html">separate GIIN study</a>, 69 percent of impact investing funds were launched after 2009, while just 13 percent were launched before 2006. It’s a young movement. For Africa’s part, direct foreign investment in the continent is <a href="http://www.out-law.com/en/articles/2014/may/africas-rising-trend-of-foreign-direct-investment-to-continue-says-report/">dramatically increasing</a>.

As for West Africa, only time will tell if it is able to harness its strong economic growth rate and continue to build the impact investing industry in the region.

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/03/20/four-challenges-for-impact-investing/" target="_blank">Four Challenges for Impact Investing</a>

<a href="http://cfi-blog.org/2015/03/03/what-impact-investors-could-learn-from-microfinance/">What Impact Investors Could Learn from Microfinance</a>

<a href="http://cfi-blog.org/2014/06/18/impact-investing-landscape-trends-to-watch/">Impact Investing Landscape: Trends to Watch</a>

The Impact Investing Landscape in West Africa

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

[getty src="455324220?et=Qud1rCWvTjFNhUhWUyjO0Q&amp;sig=ql5pQHr08az6-Sn7Mmq53kb6P6N8QlAYS5Kzggkdmek=" width="594" height="396"]

New World Bank <a href="http://www.nytimes.com/2014/09/18/world/africa/ebola-world-bank-west-africa-economy.html">analysis</a> indicates that along with the already devastating loss of life, the Ebola outbreak could cause “potentially catastrophic” economic effects on West African countries, especially in the three hardest hit. According to the analysis, Liberia’s GDP could fall by 12 percent, Sierra Leone’s by 9 percent, and Guinea’s by 2 percent.

Efforts to contain the epidemic are fueling much of the economic slowdown, like the closings of businesses, transportation infrastructure, and critical air and sea links with other nations. As mentioned in a <a href="http://cfi-blog.org/2014/09/05/17th-microcredit-summit-ebola-crisis-mobile-money-update-top-picks-of-the-microfinance-blogosphere/">post</a> on this site a few weeks ago, microfinance institutions are being affected, too.

Between 80 and 90 percent of the economic losses suffered from Ebola are related to containment behavior, a dynamic consistent with recent SARS and H1N1 outbreaks. A lower supply of available workers – due to employee illness, death, and caregiving – is a smaller factor. At the same time, health systems are collapsing under the onslaught of the epidemic, leaving those with other serious illnesses unable to receive treatment. These conditions cause shortages, panicked buying, and speculation, which lead to rises in food prices and inflation. Economic life in the affected areas was already extremely tough to begin with. In Liberia, Sierra Leone, and Guinea, more than 50 percent of the population lives below the poverty line.

The World Bank analysis was based on World Health Organization (WHO) findings released several weeks ago. This week, WHO shared an updated, more severe report as the number of Ebola cases has doubled in the past three weeks. Liberia, Sierra Leone, and Guinea contribute a relatively small portion of the economic activity in West Africa. If the virus is not contained, the economic impact will be much larger, as it moves beyond those three countries, the World Bank stated. Still, President Kim indicated yesterday that 80 to 90 percent of the epidemic’s economic impact could be mitigated “if we get an effective response on the ground in the next few months.”

Like all else in the region, microfinance institutions have taken precautionary measures. BRAC Liberia, one of the country’s biggest MFIs, has reportedly suspended loan operations for at least a month. The case is the same for BRAC Sierra Leone. CARE Liberia has <a href="http://www.care.org/newsroom/press/press-releases/ebola-outbreak-care-enacts-preventative-measures-sierra-leone-liberia">limited</a> group meetings. Some lenders in the region who are continuing operations are easing repayment structures and granting forgiveness to clients when deemed necessary. The Liberian microfinance market has roughly 53,000 borrowers, Sierra Leone 110,000 and Guinea 117,000.

In the face of the devastation and the inability to fully continue financing efforts, many MFIs are leveraging their <a href="http://blog.brac.net/tag/liberia/">non-lending capacities</a> to help stop the virus’ spread and support community resilience. BRAC Liberia and Sierra Leone have offered health awareness communication through one-on-ones, group meetings, and even street theatre performances. <a href="http://sierraleone.brac.net/index.php?option=com_content&amp;view=article&amp;id=197:brac-responds-to-the-ebola-outbreak-in-sierra-leone&amp;catid=78:news&amp;Itemid=681">Hundreds</a> of community health workers have engaged in the effort. Posters, flyers, and hygiene kits have been distributed throughout communities.

More recently, as direct contact is no longer advisable, the BRAC MFIs are getting involved in other ways. Awareness campaigns are continuing using alternative means, such as over the radio. Some core staff at country offices have remained stationed, supporting the prevention efforts of authorities. Institutions have donated prevention supplies to ministries of health and sanitation.

In Liberia, the MFI Foundation for Women (FFW) is <a href="http://www.liberianobserver.com/business/dont-let-ebola-get-you-business">advising</a> the community to be smart in the fight against the virus, but to also properly manage their businesses. Charles Naiwah, Program Manager of FFW urged, “Don’t let Ebola put you out of business.” His MFI has disseminated core messaging and awareness materials to the community as well as preventative gear to combat the virus.

On Tuesday U.S. President Obama announced a “major increase” in the U.S. response to the epidemic. The U.S. could send up to 3,000 additional American troops to support civilian aims and build field hospitals with up to 1,700 total beds. In a recent statement, Margaret Chan, the World Health Organization's Director General said, "Today, there is not one single bed available for the treatment of an Ebola patient in the entire country of Liberia." The U.S. will also send 400,000 treatment kits for families and create a new training facility to train up to 500 health workers per week. The move by the United States is with the hope that it will trigger greater global action. Next week the U.N. Security Council will hold an emergency meeting to discuss a response to the crisis.

At least 2,400 people have died from the virus, and cases are now appearing in Nigeria and Senegal.

To support the continuing efforts of BRAC, CARE, and the Foundation for Women in West Africa, click <a href="http://www.brac.net/donate">here</a>, <a href="http://www.care.org/country/liberia">here</a>, and <a href="http://www.foundationforwomen.org/index.php">here</a>.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/04/09/microfinance-does-health-care/" target="_blank">Microfinance Does Health Care</a>

<a href="http://cfi-blog.org/2014/08/04/integrating-health-and-microfinance-in-india/" target="_blank">Integrating Health and Microfinance in India</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/" target="_blank">BRAC Microfinance Director Shameran Abed on Client Protection, Balancing Credit and Savings, and the Evolving Financial Inclusion Landscape</a>

Microfinance and the Economic Toll of Ebola

<em>&gt; Posted by Juan Blanco, Associate, Financial Inclusion 2020, CFI</em>

In 2012, developed countries spent <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/Promising-Starts-in-Mobile-Microinsurance.pdf">8.6 percent</a> of GDP on insurance, while developing countries spent only 2.7 percent. Traditional insurance providers face difficulties when serving low-income and unbanked customers with traditional insurance products in areas like transaction size, client education, and outreach, among others. However, mobile technologies have disrupted the way insurance is delivered and in the last two years a new array of mobile microinsurance services have popped up. Earlier this year <a href="https://www.cgap.org/sites/default/files/Brief-The-Emerging-Global-Landscape-of-Mobile-Microinsurance-Jan-2014.pdf" target="_blank" rel="noopener">CGAP identified 74 operators</a> with live mobile microinsurance services, making up an increasingly diverse space that is active in more countries, offering a wider range of products, and using different business models.

Two of these services stand out, given their success, both with leading mobile network operators (MNOs). <a href="http://www.tigo.sn/particuliers/kiiray">Tigo Kiiray</a> in Senegal enrolled 13 percent of Tigo’s 3 million subscriber base during its first year and a half of its launch. <a href="http://www.telenor.com.pk/talkshawk-utility/talkshawk-mohafiz">Talkshawk Mohafiz</a> by Telenor Pakistan managed to issue 400,000 insurance policies within its first two months of operations. What have these models done to gain access to this historically difficult market segment?

Tigo partnered with Bima, a microinsurance specialist, to launch a “freemium” microinsurance service. Customers spending at least $3.13 per month on Tigo’s mobile phone services are eligible for life insurance coverage with a payout range of $125 to $630. Customers are also given the option to enroll in a premium service where $0.69 is deducted directly from their airtime account through small increments over the course of each month; in exchange they get twice as much coverage. Tigo has experienced better than expected direct revenue and brand strengthening. Though mobile microinsurance revenue is only fractional compared to other core business areas, it is comparable to revenue from ringtones or entertainment purchases. In fact, the microinsurance service has been so successful that Tigo is planning on expanding the insurance offering with a health insurance product.

Telenor Pakistan partnered with MicroEnsure to launch Talkshawk Mohafiz in 2013. Talkshawk’s model is similar to the freemium set-up of Tigo Kiiray. Mobile subscribers spending at least $1.90 per month on Telenor’s network are eligible to receive life insurance worth $190 or more. Also last year, Telenor launched Khushaal, a savings and insurance product, through its fast-growing Easypaisa mobile money service. Telenor launched Talkshawk as a mass market product for its phone user base and Khushaal as a reward product for the subset of its customers who actively use the mobile wallet service.

Tigo Kiiray and Talkshawk Mohafiz have a few crucial characteristics in common. Both services are driven by MNOs with extensive infrastructure and client bases, and both providers identified the need to partner with expert organizations in microinsurance. For the product, both started with very simple, inexpensive or free, easy to understand offerings, and they took action based on the premise that insurance doesn’t sell itself. Tigo Kiiray and Talkshawk both have highly trained, product-savvy frontline staff solely focused on insurance in order to achieve high levels of client product awareness and satisfaction. Bima, for example, allots the majority of its investment in Tigo Kiiray to dedicated roving and call center insurance staff. Bima’s CEO, Gustaf Agartson, estimates that, in his experience, all-purpose staff in other markets have been roughly 5 percent as productive as Bima’s dedicated insurance agents in Senegal.

Much of our work at the Financial Inclusion 2020 project focuses on widening the product offer so that customers have access to a full suite of quality products. It is encouraging to see cross-industry partnerships forge business models that side-step traditional providers’ cost-prohibitive practices while bringing value to customers.

<strong>Have you read?</strong>

<a href="https://www.centerforfinancialinclusion.org/the-formula-for-mobile-microinsurance-success-in-senegal-and-pakistan/">Mobile Microinsurance Products and Financial Capability</a>

Agriculture Microinsurance in Africa: To Subsidize or Not to Subsidize?

<a href="http://cfi-blog.org/2014/03/05/balancing-client-value-and-the-business-case-in-kenyan-health-microinsurance/" target="_blank" rel="noopener">Balancing Client Value and the Business Case in Kenyan Health Microinsurance</a>

The Formula for Mobile Microinsurance Success in Senegal and Pakistan

Boubacar Diallo

Joy Kim

Saran Sidime

Guy Stuart

Benin

Côte d'Ivoire

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Blog Post

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

Jeffrey Riecke