Over the years, there have been many efforts across a wide set of stakeholders in the inclusive finance field to support FSPs to prioritize disaster preparedness and response, including The SEEP Network’s <a href="https://seepnetwork.org/Initiatives-Post/disaster-risk-reduction">Disaster Risk Reduction training</a>, UNCDF’s <a href="https://www.preventionweb.net/publications/view/2064">publication on surviving disasters</a>, and World Vision’s <a href="http://visionfundmedia.org/DisasterResilience/Disaster-Resilience-full-report.pdf">guidance</a>.

But the impact of the COVID-19 pandemic is likely to require much more than any well laid out business continuity plan. Its systemic nature means that tools that extend beyond any individual FSP are needed for recovery.
<blockquote>The impact of the COVID-19 pandemic is likely to require much more than business continuity plans.</blockquote>
This post focuses on the role of FSPs as a key stakeholder in the response process, with the caveat that it will take action from others – governments, donors, investors, and the nonprofit sector – to deal with the ricochet of impacts that the pandemic is creating.
<h2>Start with Ensuring Safety and Security of FSP Staff</h2>
Safety videos on airlines tell us to prioritize our own oxygen masks before helping others. It is the same for the FSP response in the pandemic: FSPs must prioritize the safety and security of their staff. The number of CEO letters and statements that have been made on the topic of staff safety and security – by not only the corporate sector but also the inclusive finance industry – is impressive (here’s an example from <a href="https://www.equitybank.com/health">Equity Bank</a>). In China, microfinance institutions like Grassland have <a href="https://www.accion.org/five-crucial-insights-from-china-for-facing-the-pandemic">prioritized staff health</a> by providing information on how to protect themselves, enabling home-based work, and giving them tools for how to stay connected to their clients digitally. This McKinsey report offers suggestions for <a href="https://www.mckinsey.com/industries/financial-services/our-insights/leadership-in-the-time-of-coronavirus-covid-19-response-and-implications-for-banks">augmenting day-to-day business to add layers of safety</a>, and this Accion Venture Lab <a href="https://www.accion.org/coronavirus-response-recommendations-for-the-accion-venture-lab-portfolio">open letter to portfolio companies</a> offers some quick actions to take to improve safety for staff. What is unclear is how smaller institutions in other countries -- MFIs, cooperatives, postal networks or other providers -- are doing to protect their staff.
<h2>Advocate for Direct Assistance to Communities Served</h2>
<p style="text-align: left;">In my <a href="https://www.centerforfinancialinclusion.org/pandemics-and-natural-disasters-what-can-we-learn-from-past-disasters-to-help-with-todays-pandemic">earlier post</a>, I noted that the impacts on households and firms will be extensive and that the systemic nature of the pandemic means that these impacts are long term. This means that there is no reasonable response to the pandemic that does not involved direct support to individuals. Not only have there been well-documented direct assistance measures taken in the <a href="https://www.washingtonpost.com/business/2020/03/25/trump-senate-coronavirus-economic-stimulus-2-trillion/">U.S.</a> and <a href="https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Income_Support_for">Canada</a>, but also in developing economies, in the form of <a href="https://www.wfpusa.org/news-release/wfp-expands-food-assistance-in-egypt-to-include-refugees-from-multiple-countries/">food assistance in Egypt</a>, and <a href="https://www.aljazeera.com/ajimpact/india-unveils-23bn-package-poor-hit-covid-19-lockdown-200326140110407.html">cash assistance and food transfers</a> to the vulnerable in India.</p>
Financial institutions should encourage governments and humanitarian organization to provide this type of direct assistance. This is good for their customers and good for overall economic recovery. In fact, in other crisis situations FSPs that have assisted in direct humanitarian response have seen tangible benefits (see this <a href="https://gfdrr.org/sites/gfdrr/files/publication/Microfinance and Disasters-Preparing for the Worst.pdf">WBG case study</a> and this <a href="http://visionfundmedia.org/DisasterResilience/Disaster-Resilience-full-report.pdf">VisionFund report</a>) in the forms of increased trust, loyalty and improved reputation. In disaster situations, FSPs have served to quickly identify communities and clients who are in need of relief assistance and assisted with distribution.
<blockquote>Financial institutions should encourage governments and humanitarian organization to provide direct assistance.</blockquote>
However, when FSPs have distributed grants directly, this can lead to some confusion among clients about their debt obligations, and few FSPs are able to manage grant and loan initiatives simultaneously. Typically, some separation between these activities has proven to be more effective.

In the case of the pandemic, when help is coming in the form of cash assistance, infection testing, or health care, there may be more limited roles for FSPs to play, other than facilitating direct cash transfers from governments or humanitarian organizations. As in the case of the Ebola pandemic, the <a href="https://btca-prod.s3.amazonaws.com/documents/294/english_attachments/BTC-Ebola-Case-Study-ExecutiveSummary.pdf?1514360781">role of digital delivery channels</a> may be more relevant for cash transfers for markets where digital infrastructure is already available. Both <a href="https://www.findevgateway.org/paper/2017/05/landscape-report-mobile-money-humanitarian-cash-transfers-and-displaced-populations">GSMA</a> and the <a href="https://www.calpnetwork.org/">Cash Learning Partnership</a> (CaLP) have learned important lessons that can be brought into designing the right responses for this pandemic.
<h2>Restore (or Keep Up) Services Essential to Customers’ Coping Strategies and Rebuilding Efforts</h2>
Provided FSPs are able to remain open during the pandemic as providers of essential services, it is important that FSPs do not retrench their activities at this critical time. Deposit institutions are of critical importance during pandemics. People will need immediate access to their savings and FSPs must ensure that this critical lifeline is not disrupted. We are seeing some institutions taking incredible measures to keep operations open and safe for their customers. For example, the <a href="https://www.moroccoworldnews.com/2020/03/296438/covid-19-moroccos-banks-group-order-limit-on-client-numbers/">banking association of Morocco</a> issued new guidelines on the number of customers that can be in a branch at any one time and encourages customers to use digital channels, including ATMs.

Money transfer services are also of critical importance during this time. Time and time again, remittances have been the critical lifeline. While the global nature of this pandemic means that impacts are likely affecting both senders and receivers of money, impacts are nonetheless staggered across regions in a country and between countries. A recent webinar co-hosted by Cenfri and the Digital Frontiers Institute estimates that <a href="https://cenfri.org/articles/covid-19-and-remittances-to-africa-what-can-we-do/">remittance flows between Europe and Africa may decline between 5 to 25 percent</a> as a result of the pandemic. Keeping this important channel open will be an essential element of the coping strategies for people who are impacted. This means ensuring that agents have the right protective measures to stay healthy themselves and have sufficient liquidity to meet daily needs. It will be interesting to see what providers are doing to maintain their agent networks strong.
<blockquote>Remittance flows between Europe and Africa may decline between 5 to 25 percent.</blockquote>
One of the most sensitive financial products in crisis situations is credit services. Existing credit customers may not be able to repay on time given the pressures on their health, income sources, and overall economic contraction. How should FSP’s address this issue? Good practice from other crisis environments has been consistent and is likely to be applicable during this pandemic. These include:
<h3>1. Focus on understanding the impacts on different types of customers.</h3>
For example, farmers and market vendors may be impacted differently. Food businesses may be able to operate if they are able to deliver or can remain opened; whereas hair salons are likely to be severely impacted.
<h3>2. Tailor the response to the needs of the customers.</h3>
Determine which customers are likely able to recover quickly once economic activity resumes and which ones cannot and take the appropriate measures.
<ul>
 	<li><strong><em>Consider rescheduling for viable businesses.</em> </strong>For customers that have the ability to restart their businesses quickly, offer to reschedule their loans.</li>
 	<li><strong><em>Consider new loans for critically important or high-growth businesses.</em></strong> Certain small businesses may be vital and have the capacity to grow during the pandemic. Delivery services, groceries, health care businesses, and those that are selling on e-commerce platforms may be able to grow during this period with increased capital injections. FSPs should consider altering their policies to increase the available resources for these businesses.</li>
 	<li><strong><em>Consider forgiveness for nonviable businesses.</em> </strong>If customers are engaged in small businesses that are not viable, consider working with humanitarian assistance organizations to offer grants. Consider forgiveness of these loans without impacting the client’s credit history for future borrowing from the FSP.</li>
</ul>
<h3>3. Be careful with blanket responses for all customers.</h3>
Issuing blanket responses – on restructuring or forgiveness for all customers, for example – is typically not best practice. While it may seem to be the most humane response, it may also lead to the wrong consequences down the line. Humanity can be shown in other ways, including facilitating humanitarian assistance, canceling late fees, or not reporting late payments to credit bureaus given the extraordinary nature of this crisis.
<h2>Invest in Resiliency</h2>
The one silver lining of this pandemic is that there is no FSP today that does not see the importance of preparedness plans and business continuity measures. I anticipate that more FSPs will focus on improving their management information systems, their use of remote-work technologies and their cybersecurity measures to ensure that their systems are secure and accessible for extended periods of time off-site. I also anticipate that there will be more efforts by FSPs, their boards, and their investors to put in place liquidity facilities that could step up during future crises to address liquidity shortages. This has been a typical response in prior crises situations, such as the <a href="http://documents.worldbank.org/curated/en/877371468179638089/pdf/99061-BRI-IFC-27827-SMART-LESSONS-Box393181B-PUBLIC-20150507T121143-2015-The-Need-for-Speed.pdf">financial crisis in 2008</a>, but it is not clear how many FSPs will have access to them today.
<h2>Remain Optimistic: We Will Recover Stronger</h2>
I have been incredibly impressed with the many acts of kindness that people are exhibiting everywhere. From <a href="https://www.buzzfeednews.com/article/kenbensinger/amid-desperate-shortage-of-medical-supplies-to-fight">volunteers in New York</a> that are finding and donating medical supplies to hospitals; to <a href="https://www.wfaa.com/article/news/health/coronavirus/random-acts-of-kindness-going-viral-too/287-1db051a3-6e1f-47a5-982a-b84f386ae0ac">people helping deliver food</a> to the elderly; or to the new wave of ‘<a href="https://www.brookings.edu/blog/future-development/2020/03/19/caremongering-in-the-time-of-coronavirus-random-acts-of-kindness-and-online-enrichment/">caremongering</a>’ that is en vogue in Canada.
<blockquote>The donor community is stepping up like I have never seen before.</blockquote>
The donor community is stepping up like I have never seen before. In the US, many foundations are doing their part to support their partners through a recent <a href="https://www.cof.org/news/call-action-philanthropys-commitment-during-covid-19">call to action</a> organized by the Council on Foundations. International development donors and development finance institutions are also reaching out to their partners and looking for ways that they can contribute in this extraordinary time. <a href="https://www.omidyar.com/spotlight/how-were-supporting-our-network-during-covid-19-pandemic">Omidyar Network</a>, <a href="https://www.rockefellerfoundation.org/about-us/news-media/the-rockefeller-foundation-commits-20-million-in-covid-19-assistance-to-strengthen-global-pandemic-preparedness-and-support-vulnerable-communities/">Rockefeller Foundation</a>, <a href="https://www.citigroup.com/citi/news/2020/200319a.htm">Citi Foundation</a> and others have all announced special funding and measures to support the COVID-19 response. This gives me hope that we will get through this and be strengthened by this experience.

Our next blog posts in this series will focus on how donors and investors can best structure their support during this critical time.

<em><strong>In the comments below, let CFI know what your institution is doing, and stay healthy! </strong></em>

How Should FSPs Respond to the COVID-19 Pandemic?

Test of a Lifetime: COVID-19 and Financial Inclusion

Challenges and Crises

Enabling Environment

Blog Post

Everything has changed.

Over the past few weeks, despite trying to focus on business as usual, it’s apparent that the COVID-19 pandemic will affect every aspect of our lives, not just from where we work.

Partly because of my work on prior disasters – like the response to the 2004 tsunami in Indonesia, and the Pakistan earthquake in 2013 – I have received several requests from donors, colleagues and others to reflect on how the lessons from these natural disasters may or may not be relevant for the current pandemic.
<h2>Impact on Households: Severity and Duration</h2>
There is clearly a lot of similarities between a shock created by a natural disaster and one created by disease. In the paper <a href="https://www.cgap.org/research/publication/role-financial-services-humanitarian-crises">The Role of Financial Services in Humanitarian Crises</a>, which I cowrote with colleagues from the World Bank and CGAP in 2017, we opened with the following:

<em>“Whether caused by conflict, natural disaster, climate-related events, or some combination of the three, crises have been steadily increasing in frequency, severity, and complexity. While the nature and incidences of these crises vary significantly, they affect millions of people, particularly the most vulnerable….Poor people have fewer assets to support their livelihood, consume close to subsistence levels, and often cannot rely on savings to ensure health and education outcomes are maintained during periods of crisis.”</em>
<blockquote>Households experience shocks similarly, regardless of the cause.</blockquote>
While this paper did not specifically address pandemics as a shock, the message is the same: households experience shocks similarly, regardless of the cause. This experience often manifests as:
<ul>
 	<li>Loss of income</li>
 	<li>Depletion of savings</li>
 	<li>Negative coping strategies like reduction in food intake or sale of productive assets</li>
 	<li>Borrowing to support consumption as a result of job loss</li>
</ul>
What differentiates one crisis from another is the duration and severity of the shock. This influence’s people’s ability to withstand its effects on their livelihoods. In a natural disaster, the shock is often one-off and highly localized in a particular region or in specific sectors like agriculture. In a pandemic, where the shock is widespread, the duration is prolonged and systemic in nature and thus the impacts may look more like a financial crisis.
<h2>Systemic Shocks: The Real Economy and FSPs</h2>
The systemic nature of the shock means there are also severe impacts on firms, or what we often call the “real economy,” and the financial institutions that serve them.
<blockquote>The systemic nature of the shock means there are also severe impacts on firms and the financial institutions that serve them.</blockquote>
With regard to firms, social distancing and closures are having significant effects, both short and long term. While not all sectors will be affected equally, there is no question that travel, leisure, and service industries will be greatly impacted. Other sectors, like agriculture, may show delayed effects. My colleague Eric Noggle mentions in his latest blog post how some <a href="https://www.centerforfinancialinclusion.org/can-financial-inclusion-moderate-impacts-to-coronavirus">micro-entrepreneurs in countries affected by the Ebola crisis were impacted</a>. Firms without the cash flow to withstand long-term closures are likely to shutter their doors or their owners may be forced to find alternative livelihoods. At CFI, we are looking to expedite <a href="https://centerforfinancialinclusion.org/what-financial-health-means-for-small-business-owners/">research already planned</a> to understand the financial health of micro and small enterprises in developing countries. We are hoping to roll out this research and explicitly capture the effects of COVID-19 in several countries including Columbia, India, Indonesia, Mexico and Nigeria.

With regard to financial services providers, Tim Ogden’s latest <a href="https://www.financialaccess.org/faiv/2020/3/23/week-of-march-23-2020">Weekly FaiV</a> highlights how the institutions that serve the most vulnerable in the US, the Community Development Financial Institution (CDFI), are the most likely to be forgotten by stimulus packages and, like the people they serve, are already vulnerable to shocks.

The parallels are many in developing countries. The financial institutions that serve the BOP – microfinance institutions, cooperatives, some banks, even some fintechs – are all highly vulnerable to systemic shocks and are likely not to benefit from central bank stimuli. The effects of crisis manifest most immediately in:
<ul>
 	<li>Impacts on staffing and the ability of the institution to respond to the needs of their customers</li>
 	<li>A slowdown or halting of repayments and an increase in defaults for credit providers</li>
 	<li>Liquidity shortfalls</li>
</ul>
There has been a lot written on how providers are affected by crises and there have been numerous campaigns to support these institutions to put in place preparedness and response plans. <a href="https://63b1919e-e929-43c7-99cb-6b5402c996ea.usrfiles.com/ugd/63b191_12a8b1812a654c3b8fbd835c87b9f025.pdf">Here</a>, <a href="https://www.findevgateway.org/guide/2017/01/minimum-economic-recovery-standards-third-edition">here</a> and <a href="https://www.adb.org/sites/default/files/publication/183633/disaster-resilient-microfinance.pdf">here</a> are just a few of the resources on how institutions that serve the BOP should deal with crisis preparedness and response. In a nutshell, financial services providers should have business continuity plans in place. They should have pre-established access to liquidity facilities, backup IT systems, back up staffing plans for ill or otherwise impacted personnel, and so on.

But despite efforts to get providers prepared, sadly, many will not be. This means that many providers are learning about crisis response in real time and have to figure out what to do. A subsequent post will synthesize the lessons for FSPs that are in this learning-by-doing phase, while highlighting what may be different during a pandemic.
<h2>A Tipping Point for Platform Financial Service Provision?</h2>
In today’s world, the platform actors, whether e-commerce, social networks or gig marketplaces, that are already operating digitally and with minimal “touch” are well placed to seize the moment and expand their financial offerings, potentially accelerating their expansion into finance services to the BOP.

A <a href="https://bfaglobal.com/insight-type/blogs/gig-workers-have-powered-wuhans-response-to-covid-19/">recent article by BFA</a> noted that the gig workers in Wuhan operating on various delivery platforms, like Meituan, have seen marked increases in demand for their services. Amazon recently announced that it is <a href="https://www.reuters.com/article/us-health-coronavirus-amazon-com-exclusi/exclusive-amazon-raises-overtime-pay-for-warehouse-workers-idUSKBN2180Q1">hiring 100,000 warehouse and delivery workers</a>, in addition to increasing overtime pay and regular wages. While many of these platforms have been focusing on their ability to respond to the COVID-19 crisis by improving the safety protocols for their workers and meeting the growing demand for their services, it will be interesting to see whether and when they expand their role in supporting the many gig workers and merchants that operate on their platforms. As highlighted in a CFI blog post from February, many platforms are already <a href="https://centerforfinancialinclusion.org/financial-inclusion-and-future-jobs-what-the-market-in-indonesia-tells-us/">offering financial services</a> in some countries, notably Indonesia, but also in China and <a href="https://www.techiexpert.com/top-5-financing-platforms-for-msmes-smes-in-india/">India</a>.
<h2>This Time, It’s Different</h2>
The current COVID-19 situation is not just systemic at the country level: it is systemic at the global level. We are seeing contraction in both developed and developing countries simultaneously, something that has not been seen since the depression. This is presenting a new challenge for all of us: what is the right response for investors, for donors, for FSPs, and for other stakeholders that support these market actors? In coordination with our partners, CFI will share some emerging thinking on these issues in subsequent posts.

Pandemics and Natural Disasters: What Can We Learn from Past Disasters to Help with Today’s Pandemic?

As of March 19, the World Health Organization reported <a href="https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200316-sitrep-56-covid-19.pdf?sfvrsn=9fda7db2_6" target="_blank" rel="noopener noreferrer">191,000 confirmed cases</a> of coronavirus and an estimated 7,800 deaths globally. Most of these cases are concentrated in China, Italy, South Korea, and Spain with cases in Western Europe and United States growing exponentially. In the meantime, the virus is continuing its unstoppable spread across the globe into markets with more poverty and less developed public health infrastructure to respond to the challenge.

So far, the number of reported cases in these countries is low. In Sub-Saharan Africa, there are less than 250 confirmed cases. However, most experts agree that the <a href="https://www.sciencemag.org/news/2020/03/ticking-time-bomb-scientists-worry-about-coronavirus-spread-africa">number of actual cases is much higher</a> or will be very soon. Several African nations have <a href="https://www.nytimes.com/2020/03/17/world/africa/coronavirus-africa-burkina-faso.html" target="_blank" rel="noopener noreferrer">taken early steps to block the virus’s advance</a>, but given the limited public health infrastructure, there’s a pervasive fear that the effects of the virus will be crippling when they hit. The need to flatten the curve in Africa is arguably more pronounced than in Western nations, where the capacity of hospital systems is lower (Kenya, for instance, <a href="https://www.ajol.info/index.php/eamj/article/view/118829" target="_blank" rel="noopener noreferrer">only has 7,000 beds and 130 intensive care units</a> for a country of 50 million people) and there are almost <a href="https://www.afro.who.int/health-topics/hivaids" target="_blank" rel="noopener noreferrer">30 million people living with HIV/AIDs</a> (in addition to other high-risk segments).

As we’re seeing in Europe and North America, the virus is likely to have profound economic impacts as the health effects of the virus multiply and the movement of goods and people is increasingly constrained in response. If the evidence on natural disasters is any indication, <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/22787/9781464806735.pdf?sequence=13&amp;isAllowed=y" target="_blank" rel="noopener noreferrer">low-income households will be disproportionally affected</a> by this shock.
<blockquote>Low-income households will likely be disproportionally affected by the coronavirus shock.</blockquote>
Despite being less contagious but much more deadly, the 2014 Ebola outbreak in West Africa likely provides our best corollary for understanding the economic havoc coronavirus could wreak in developing countries. In a report examining Ebola’s impact on poverty, the UNDG noted that <a href="https://www.undp.org/content/dam/rba/docs/Reports/ebola-west-africa.pdf" target="_blank" rel="noopener noreferrer">food insecurity and undernourishment increased dramatically</a> as a result of the “restriction of movements of goods and services, the quarantine of communities that are food baskets of the affected countries, the fear of trading with affected areas, [and] the closure of borders and international stigmatization.” Sound familiar? The report noted Ebola significantly altered forecasts for changes in poverty levels, flipping them on their heads to projected increases in poverty by as much as 17 percent.

Ebola challenged the microfinance sector in Guinea, Liberia, and Sierra Leone. In Sierra Leone, <a href="https://www.findevgateway.org/sites/default/files/publications/files/sierra_leone_the_impact_of_ebola_crisis_on_the_microfinance_sector.pdf" target="_blank" rel="noopener noreferrer">one study of microentrepreneurs</a> suggested their revenues dropped by 35 percent and that their households had to cut consumption by just as much. MFIs lending to them decreased loan disbursements by 40 percent compared to the previous year, and portfolio at risk doubled in six months. <a href="http://www.globaldeliveryinitiative.org/sites/default/files/case-studies/rflessonslearned_10-25-17.pdf" target="_blank" rel="noopener noreferrer">BRAC suspended operations</a> in these countries completely for seven months.

However, there were some bright spots. The <a href="https://btca-prod.s3.amazonaws.com/documents/186/english_attachments/BTCA-Ebola-Case-Study.pdf?1502739794" target="_blank" rel="noopener noreferrer">digitization of payments to health care workers</a>, especially in rural areas, was a critical component in maintaining the public health infrastructure and <a href="https://centerforfinancialinclusion.org/learning-from-ebola-how-mobile-money-can-prevent-health-crises/" target="_blank" rel="noopener noreferrer">providing care</a> to afflicted communities. And when BRAC restarted operations, there was a large demand for credit and repayment rates were high.

Coronavirus is not Ebola and this pandemic is going to present unique challenges to the financial sector. It will likely go on longer and infect and kill more people than Ebola by several orders of magnitude. Hundreds of millions of people will face restricted movement and with them, commerce will—and is already—slowing. What is the role of financial inclusion in such times? The financial inclusion community needs to do two things: get money to the people who need it as fast as we can, and keep as much money in their hands as possible.
<blockquote>The financial inclusion community needs to do two things: get money to the people who need it as fast as we can, and keep as much money in their hands as possible.</blockquote>
Getting money to people quickly is critical. To the degree that government and private institutions are able, they should keep lending and processing insurance payouts. Banks and agent networks need to maintain liquidity throughout their networks so households can cash out when they need to, and more importantly, we need to continue to promote digital transfers and payments across ecosystems to lessen the need for physical cash. Unconditional, litmus test-free cash transfers should be sent early and often.

It’s also important that we reduce demands on low-income households’ cash by delaying and/or reducing repayments and fees. This will ensure that the cash these households have available can focus on smoothing consumption and supporting health care costs in the near term and not servicing debt. On this latter point, I’ve heard of many lenders in our industry discussing how they can do just that. In Kenya, Safaricom and other <a href="https://techcrunch.com/2020/03/16/kenya-turns-to-its-mobile-money-dominance-to-stem-the-spread-of-covid-19/" target="_blank" rel="noopener noreferrer">mobile money providers are waving fees and raising limits</a> on mobile money transactions, which is a prudent measure (also because it removes cash as a medium for transporting the virus).

These are critical steps and financial service providers (FSPs) who are on the frontlines of serving clients will need support from governments, development finance institutions, investors, and donors. FSPs committed to getting money to low-income households and keeping it there need the same consideration.

We also need to begin preparing now for when restrictions on movement will ease and commerce starts functioning more normally to maintain the poverty-alleviation gains the globe has achieved. After Ebola, MSMEs were eager to borrow to jumpstart their livelihoods when the crisis was over. And more generally, the evidence shows that a real strength of financial services is in <a href="http://documents.worldbank.org/curated/en/687701493270597254/pdf/114634-WP-P162629-PUBLIC-ForumTheRoleofFinancialServicesinHumanitarianCrises.pdf" target="_blank" rel="noopener noreferrer">helping households be resilient in the aftermath of disasters and humanitarian crises</a>. Cash transfers, credit, insurance, and savings all have high degrees of efficacy in helping households restore their well-being. Low-income households with access to these tools tend to outperform households that do not on revenue generation, consumption, and health measures.

This is going to be a major stress test for financial inclusion, but we mustn’t delay: the time to act is now. It’s only a matter of days until these markets face this unprecedented economic, social, and public health crisis.

&nbsp;

&nbsp;

&nbsp;

Can Financial Inclusion Moderate Impacts of Coronavirus?

Sub-Saharan Africa

As readers of CFI reports and blog posts, you’ve probably noticed that we’ve been paying a lot of attention to “<a href="https://www.centerforfinancialinclusion.org/getting-data-right">getting data right</a>” over the last few months. We aren’t just hitching our wagons to the latest tech news trends. Data breaches can and do have negative impacts for vulnerable, underserved populations in developing countries. Those seeking access to financial tools and products to improve their lives, whether it’s starting a family business or sending their children to school, need safe and reliable digital financial services, and many financial inclusion practitioners would greatly prefer to focus on growing their markets and not have to worry about cyberthreats.

In January, our Managing Director, <a href="https://www.centerforfinancialinclusion.org/bio/elisabeth-rhyne">Elisabeth Rhyne</a>, wrote about how <a href="https://www.centerforfinancialinclusion.org/consumer-harm-from-data-breaches-is-a-black-box">hard it is to find public information</a> documenting the consequences of data protection shortcomings, their frequency or severity.

Following up on that post, Andriana Moskovska, a tech blogger and contributor, sent us a detailed infographic that can help non-expert readers wrap their heads around the ways data breaches work and how many people they affect. The infographic documents the <a href="https://hostingtribunal.com/blog/biggest-data-breach-statistics/">biggest breaches</a> over the past few years – the tip of the iceberg in terms of the absolute number of incidents.

What does this mean for the future financial inclusion? Are laws and technologies adequate to contain the threats? How can we protect both financial service providers and their customers?

Check out the infographic below, which <a href="https://hostingtribunal.com/blog/biggest-data-breach-statistics/">originally appeared</a> on <a href="https://hostingtribunal.com/">Hosting Tribunal</a>, a website that reviews and ranks hosting sites and receives support from affiliate marketing. Let us know what you think!

<img class="wp-image-35345 size-full aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2019/05/infographic-data-breaches-1.png" alt="" width="990" height="24754" />

Infographic: “75 Records Compromised Every Second”

Fraud

This virtual dialogue provides an opportunity for the <a href="/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship</a> (ABF) network and <a href="/about/what-we-do/fiec/">Financial Inclusion Equity Council</a> (FIEC) members to discuss the role disruptive technologies play in advancing financial inclusion. This dialogue will also provide opportunities for peer exchange on investment evaluation and which technology solutions have the potential to be the most disruptive.

<strong>Discussion Topics:</strong>
<ul>
 	<li>The theme of financial inclusion week is “getting inclusion right”. What role do disruptive technologies have in advancing that agenda?</li>
 	<li>What are the most innovative and disruptive technologies that you are seeing in the FI sector?</li>
 	<li>Are there technologies from other sector that we should be watching/following?</li>
 	<li>How can investors evaluate different technologies for financial inclusion? What criteria to you use to assess which technology solutions have the potential to be the most disruptive?</li>
</ul>
<strong>Featuring:</strong>
<ul>
 	<li>Wayne Hennessy-Barrett, CEO, 4G Capital, ABF Fellow</li>
 	<li>Ami Dalal, Managing Director, FINCA Ventures, FIEC Member</li>
</ul>
<strong>Moderator:</strong>
<ul>
 	<li><a href="/bio/danielle-piskadlo">Danielle Piskadlo</a>, Director, Investing in Inclusive Finance, CFI</li>
</ul>
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Webinar: Disruptive Technologies Advancing Financial Inclusion

Africa Board Fellowship Program

Financial Inclusion Equity Council

Financial Inclusion Week

Equity Investing

Financial Service Providers

Financial Technology

Impact Investing

Trends

Webinar

The Smart Campaign is participating in the 2018 Microfinance Centre European Microfinance Week Annual Conference 2018 in Bilbao, Spain. Check out Leah Wardle, accreditation manager, The Smart Campaign, is speaking on the panel below:

<strong>Maintaining the Social Promise of Financial Inclusion in a Competitive Marketplace</strong>

<strong>October 4th, 4:15pm</strong>

Speakers:
<ul>
 	<li>Leah Wardle, <a href="https://content.centerforfinancialinclusion.org/about/what-we-do/the-smart-campaign/">The Smart Campaign</a></li>
 	<li>Cameron Goldie-Scot, Musoni Systems</li>
 	<li style="text-align: left;">Joris Crisa, MicroFinanza Rating</li>
</ul>
Description: How can existing microfinance providers best compete in the digital era? How will the social promise of microfinance continue to thrive as the industry digitizes? This workshop will explore the important roles for traditional players in the digital area—namely, to stay relevant by reaching financially excluded people with a mix of “tech and touch.” Participants will discuss how to blend customer-centricity with technology in order to reach excluded clients and maintain a strong market position.

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MCF-EMN Annual Conference

The Smart Campaign

Banks

Consumer Protection

Customer Centricity

Microfinance Institutions

Partnerships

Telcos

Event

<h1>Challenge</h1>
In emerging markets across Africa, microfinance institutions (MFIs) and other financial service providers (FSPs) play a critical role providing financial services to people who are unable to obtain traditional finance. Despite its important role, this sector in Africa faces enormous challenges. In 2013, our <a href="https://www.centerforfinancialinclusion.org/microfinance-banana-skins-2014-the-csfi-survey-of-microfinance-risk/">survey of African FSPs</a> revealed governance and risk management as the primary vulnerabilities in the sector. Weak governance and risky behavior also <a href="http://www.cgap.org/publications/growth-and-vulnerabilities-microfinance">played a role in microfinance crises</a> in Nicaragua, Morocco, Bosnia-Herzegovina, and Pakistan. CFI decided to commit to helping African FSPs focus on governance and risk—and not just individually, but at a sectoral level—to avoid this fate.
<h1>Navigating Obstacles</h1>
We quickly realized we would be starting nearly from scratch. The handful of existing governance resources on the market at the time comprised generic, one-off trainings or were geared to corporate participants. We knew that this kind of classroom-based, lecture-heavy, training was not an effective strategy for senior board members, whose time was valuable and who were often in positions of authority in other walks of life.

We wanted to create something meaningful and effective, tailor-made for FSPs, and delivered in a manner that would stick with participants so that they could lead their organizations and their industry to grow and prosper.

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Governance Peer Learning and Exchange Program Strengthens Financial Institutions in Africa

Mastercard Foundation

Governance

Risk Management

Case Study

<img class=" wp-image-25789 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/30784872334_b499dfc281_m.jpg" alt="30784872334_b499dfc281_m" width="88" height="109" /><em>The following is part of an Africa Board Fellowship </em><a href="/series/abf-spotlight/">blog series</a><em> spotlighting the experiences of participants and reflections from industry experts.</em>

In the previous blog in this series, we reframed external challenges as a “normal” part of doing business for financial service providers (FSPs) targeting the base of the pyramid. And based on insights from Africa Board Fellows, we looked at <a href="http://cfi-blog.org/2018/08/09/navigating-challenges-is-what-boards-are-all-about-part-1-anticipating-challenges/">specific ways board members can anticipate and even shape the challenging aspects of their operating environment</a>. However, while most boards have more potential for external influence than they often exercise, there are always external factors that cannot be controlled. Boards must also continually focus on reducing the FSP’s vulnerability and enhancing its resilience<img class=" wp-image-25794 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/31479737602_1ed7a2ba32_k.jpg" alt="31479737602_1ed7a2ba32_k" width="638" height="93" />
<h2>Reducing Vulnerability</h2>
Beyond external awareness and efforts to shape the operating environment, boards can direct their institutions to take internal steps to minimize exposure to external shocks and increase the FSP’s ability to withstand changes in the operating environment. These steps aim to secure adequate financial cushions and human resources to cope with shocks.
<ul>
 	<li><strong>Strategic Planning</strong>: As part of strategic planning<strong>, </strong>the board should review external factors, including client demand, current and future market penetration of its own institution and competitors, and market saturation by area. The strategic plan should include multiple scenarios (e.g., conservative, base case, and optimistic) as well as short, medium and long-term targets. The plan should be reviewed and revised on a regular basis.</li>
 	<li><strong>Capital Adequacy</strong>: Board members bear ultimate responsibility for ensuring that the institution’s capital and liquidity are adequate to surmount whatever disruptions can reasonably be anticipated, and – just as important – ensuring that management takes quick action to cut costs if capital starts eroding. Improvement in the economic environment is often just around the corner, but it can remain around the corner just long enough for the institution to become insolvent and fail. For regulated institutions, regulators set minimum capital adequacy and liquidity ratios, but this does not absolve directors from the responsibility to determine whether additional capital and liquidity would be prudent. Directors can work with management to evaluate how capital and liquidity will be affected in various scenarios.</li>
 	<li><strong>Asset–Liability Management</strong>: Like any financial institution, FSPs are exposed to balance sheet mismatches, such as currency mismatches when borrowing in dollars or euros. While avoiding hard currency loans may not always be feasible, CEOs and board members should scrutinize foreign currency exposure carefully and limit it to levels that the institution can absorb if currency devaluation does occur. To prepare for currency fluctuations, Vision Fund Zambia’s board instituted a policy against foreign currency denominated borrowing, as CEO Nkosilathi Moyo describes in <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/nkosilathi-_moyo_visionfund_final.pdf">this interview</a>. Passing foreign exchange risk on to clients by denominating loans in foreign currency is usually not an effective risk management technique, as most clients are even less able to absorb such risk than the FSP lender.</li>
 	<li><strong>Staff Training and Incentives</strong>: As part of their fundamental responsibility for the viability of their institution, directors must closely scrutinize how management proposes to train and incentivize staff to ensure that they support strong operational procedures that appropriately retain and encourage staff. Staff knowledge and loyalty can be essential in a crisis situation.</li>
</ul>
<h2>Enhancing Resilience</h2>
[caption id="attachment_25799" align="alignright" width="226"]<img class="alignnone size-full wp-image-25799" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/paul-dileo.jpg" alt="Paul DiLeo" width="226" height="250" /> Paul DiLeo[/caption]

Inevitably, with all the best efforts and preparation, some external events cannot be avoided. But this doesn’t mean they cannot be planned for, even if they may take very different forms. Boards can be better prepared to recover from shocks if they take the following steps:
<ul>
 	<li><strong>Board Composition and Training</strong>: Board self-evaluations should be performed on at least an annual basis to ensure the right skills are represented and to identify gaps. Any areas of improvement should be addressed by training, bringing in experts, and field visits to other institutions that have successfully dealt with relevant challenges and opportunities. Proactively taking these steps can help directors be more prepared for the unexpected.</li>
 	<li><strong>Executive Committee of the Board</strong>: The ability to act quickly can be crucial to responding successfully to external shocks. Many boards have directors in far-flung locations, and it may be hard to assemble a quorum. Even when formal decisions are not required, the CEO and senior management will benefit from the counsel and insights of board members. Many boards designate a small executive committee, usually drawn from in-country directors, authorized to take decisions and provide counsel to management between meetings of the full board.\</li>
 	<li><strong>Disaster Planning and Recovery</strong>: Board directors should ensure that contingency plans addressing a variety of common challenges are prepared and kept up to date. These will cover matters ranging from “phone trees” indicating who calls who to confirm staff safety and whereabouts in the event of a natural disaster or security threat, to secure offsite data backup and recovery to succession planning in the event of loss of a key manager. As Resi Janssen of FFSL South Sudan <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/resi_janssen_fssl.pdf">notes</a>, the first priority in a serious crisis is to ensure that staff are safe.</li>
</ul>
FSPs operate in dynamic environments where challenges and opportunities are constantly changing. Board directors with a good understanding of the institution’s strengths and weaknesses and a grasp on the operating environment play a crucial role in helping shape the environment over the medium term, and ensuring that the FSP and its management are resilient and prepared.

<strong>CFI is currently recruiting fellows for the next cohort of the <a href="https://content.centerforfinancialinclusion.org/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship Program</a>. If you or someone you know is a board member or executive at an Africa-based MFI or financial service provider, we recommend considering this opportunity.</strong>

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Navigating Challenges Is What Boards Are All About – Part 2: Vulnerability and Resilience

Zambia

Africa Board Fellowship Spotlight

Microfinance

Resilience

<em><img class=" wp-image-25789 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/30784872334_b499dfc281_m.jpg" alt="30784872334_b499dfc281_m" width="88" height="109" />The following is part of a <a href="https://cfi-blog.org/tag/abf-blog-series/">blog series</a> spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> program.</em>

Far from being “extraordinary and rare,” challenging environments are a “normal” part of business for financial service providers (FSPs) targeting low-income populations. We tend to think that external environment challenges are extraordinary events that cannot be predicted or are too varied and diverse to prepare for—and therefore are best confronted as they arise. What do currency devaluations, deteriorating security, political interference or regulatory upheavals have in common? Can we can plan for them all and prepare effective responses in advance? Do responses need to be tailored to each circumstance?

Through the <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellows program</a>, we have reviewed a wide sample of the external threats faced by the boards of FSPs in recent years in Africa and globally: economic fluctuations, currency devaluations, violence and instability, abruptly announced interest rate caps and capital requirements, natural disasters, terrorism—it’s a long and heterogeneous list.

<img class=" size-full wp-image-25776 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/31589334426_3111c44396_z.jpg" alt="31589334426_3111c44396_z" width="640" height="377" />

Despite this diversity, an engaged FSP – led by an active board – can often do quite a bit to shape and influence the operating environment or ready the institution to survive shocks. Preparing for and responding to crises, threats and opportunities is, in fact, a core responsibility of senior executives and board directors. Conversations with Africa Board Fellows demonstrate that boards <em>can</em> prepare by:
<ul>
 	<li>Anticipating and minimizing the likelihood of adverse external developments</li>
 	<li>Reducing the vulnerability of the institution to such shocks</li>
 	<li>Enhancing the resilience (ability to recover) of the institution to the situations it will inevitably face</li>
</ul>
We’ll tackle the first point on anticipating and minimizing shocks here. We’ll cover the last two points in our next post in this <a href="https://cfi-blog.org/tag/abf-blog-series/">series</a>.
<h3>Anticipating Challenges with an Ear to the Ground</h3>
<img class=" wp-image-25790 alignright" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/how-to-anticipate-changes-as-a-board-member.png" alt="how to anticipate changes as a board member" width="196" height="330" />The first step is to anticipate – and hence be prepared to mitigate – challenges. To do this, board directors must keep abreast of new entrants, potential disruptions, and promising opportunities in the marketplace. Directors cannot rely solely on management for this information. Instead, they should develop their own sources to supplement and confirm management’s view, such as by networking with industry observers and analysts–with management’s knowledge, of course. Locally based board members have an advantage in developing and maintaining such networks, which is one reason it is important to recruit qualified local directors. For example, finding and retaining qualified local directors has been a priority for FSSL South Sudan, given the ongoing political disturbances in the country that make it difficult to maintain continuity of leadership.
<p style="text-align: left">Talking frequently with FSP staff and clients is another way board directors can anticipate challenges. Frontline staff are in a position to report on competition, clients and local happenings. And it should go without saying – but always bears repeating – that clients can provide ground-level insight. Clients may reveal such things as their vulnerability to displacement in government raids on the informal sector or the inability to import goods. When ABF fellows from the Ivory Coast conducted client visits, these were some of the specific challenges about which they learned.</p>

<h3>Getting Ahead of Operating Challenges with Active Participation</h3>
While they can never control the external environment, board members can help shape it to some degree through the following:
<ul>
 	<li><strong><em>Create and participate in industry associations; promote and follow codes of conduct</em></strong>. Industry associations establish frameworks for fair practices and client protection and help facilitate self-regulation and compliance with governance and transparency requirements. An active industry association can also work closely with regulators and other government actors to help shape legislation, regulation and perceptions of the industry, which are all key features of the operating environment. Board directors should support and encourage management to devote time to nurturing strong associations – a medium term project – and engage directly with other FSP board directors to make this an industry priority. As one example, Barnabe Francois, CEO of Microcred Ivory Coast, <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/barnabe_francois_microcred.pdf">has been an active member of banking associations</a>, first in Madagascar and subsequently in Ivory Coast.</li>
 	<li><strong><em>Develop relationships with regulators and government officials. </em></strong>To reinforce the efforts of industry associations, FSP management can also cultivate relationships with government officials to advocate and educate them (and the media) on operating environment challenges. Board directors, particularly well-regarded locally-based directors, can greatly enhance the effectiveness of such engagement. Or, like MicroCred Zimbabwe, the FSP can appoint an experienced bank regulator to the board (perhaps, a retired official or someone who worked in another country) who understands how regulatory bodies work and can connect on a peer-to-peer basis with regulators.</li>
 	<li><strong><em>Build clients’ financial capability</em></strong>. An important aspect of an FSP’s risk management responsibilities is ensuring that clients use financial services responsibly and productively. Misunderstanding how financial services work can lead to multiple borrowing, or mismatched cash flows which often threaten clients’ ability to repay their loans. To ensure good value to clients and the long-term viability of the FSP, board directors should encourage management to include initiatives in strategic plans to help clients build their financial skills and practice good habits.</li>
</ul>
<ol>
 	<li style="list-style-type: none"></li>
</ol>
Such efforts can, over the medium term, reduce the likelihood that an FSP or the entire sector will face certain types of challenges and will help position providers to take advantage of new opportunities.

<em>Stay tuned for the next blog in this series</em><em>, which will highlight reducing an FSP’s vulnerability to external shocks, as well as enhancing resilience.</em>
<h4><strong><i><span style="margin: 0;font-family: 'Calibri', sans-serif"><span style="color: #000000">CFI is currently recruiting fellows for the next cohort of the </span><a href="https://content.centerforfinancialinclusion.org/about/what-we-do/africa-board-fellowship-program/">Africa Board Fellowship Program</a><span style="color: #000000">. If you or someone you know is a board member or executive at an Africa-based MFI or financial service provider, we recommend considering this opportunity.</span></span></i></strong></h4>
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&nbsp;

Navigating Challenges Is What Boards Are All About – Part 1: Anticipating Challenges

South Sudan

Zimbabwe

<img class=" wp-image-25789 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/30784872334_b499dfc281_m.jpg" alt="30784872334_b499dfc281_m" width="88" height="109" /><em>The following is part of a <a href="https://cfi-blog.org/tag/abf-blog-series/">blog series</a> spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> program.</em>

In recent years, some African countries have experienced slower economic growth and less stability in their currencies. This deterioration in macroeconomic conditions has presented challenges for financial service providers (FSPs) seeking to serve the base of the pyramid and improve financial inclusion. Some ways macroeconomic conditions impact FSPs include:
<ul>
 	<li>Higher operational expenses (e.g., imported IT equipment and software; office leases and technical services invoiced in foreign currency)</li>
 	<li>Increase in non-performing loans as small businesses have had fewer growth opportunities</li>
 	<li>Higher cost of funds (both deposits and debt)</li>
 	<li>Reduced access to debt from international and local providers</li>
 	<li>Decrease in revenue or tighter margins</li>
</ul>
We're talking to <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> (ABF) alumni to share their experiences dealing with deteriorating macroeconomic conditions.

ABF alumnus Deji Fisho, Board Member of Fortis Microfinance Bank in Nigeria, provides insights into the implications for FSPs on the 2016 decision by the Central Bank of Nigeria to allow the exchange rate for the Naira to be market driven.

<em>It affects a microfinance bank’s exposure to dollar loans. When the currency devalues, MFIs have to spend three times more Naira to keep money in dollars. But with the oil market crash, there weren’t even enough dollars coming in for repayments, so people have to go outside the bank to the black market to get dollars. In a currency devaluation situation like this, MFIs won’t have money to lend. The bigger banks borrow from the government and the smaller banks borrow from the bigger banks. So there is no trickle down to MFIs if the larger banks don’t have the cash.</em>

Learn more in <a title="Deji_Fisho_Fortis MF Bank" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/deji_fisho_fortis-mf-bank.pdf">Deji's full interview</a>.

ABF Fellow Nkosilathi Moyo, CEO of VisionFund in Zambia, comments on how currency devaluations impact clients:

<em>Some of our clients are traders, so they buy goods from Democratic Republic of Congo, South Africa and Tanzania. Devaluation meant that our clients had limited foreign currency to meet their business needs, resulting in default.</em>

<em>After the fluctuations, we revised our risk appetite statement to ensure that it is aligned with prevailing market conditions. For instance, the board made a decision that we should not contract any foreign currency denominated loans. Additionally, we reviewed our risk concentration to ensure we do not have too much focus on any one region or industry. For example, we are shifting some of our focus away from traders in the mine areas to smallholder farmers.</em>

Read more in <a title="Nkosilathi _Moyo_VisionFund_Final" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/nkosilathi-_moyo_visionfund_final.pdf">Nkosilathi's full interview</a>.

Regulators can sometimes respond to macroeconomic problems by imposing regulations designed to keep risks out of the financial sector. One response is to impose higher minimum capital requirements or higher reserve requirements. These may sometimes be imposed directly after a collapse of a similar type of financial entity due to a sudden bank run. Such restrictions can be debilitating for financial institutions, especially when they are imposed suddenly. Although meant to protect depositors, this type of regulation can push smaller FSPs out of the market.

In 2017, Mozambique recently faced challenges arising from multiple factors: political tensions and violent clashes, a debt scandal that resulted in the suspension of aid from key donors and endemic corruption. This affected macroeconomic variables, with a significant currency devaluation in 2016 and high inflation (15 percent) in 2017. These tough macroeconomic conditions led regulators to impose a higher minimum capital requirement on financial institutions. ABF Fellow Titos Macie, Socremo Board Chair, discusses the impact of that increase on the institution.

<em>The deteriorating macroeconomic fundamentals, along with the non-performance of two major banks (one liquidated and one placed under the central bank administration), caused the central bank to increase minimum capital requirements. Initially, the central bank had indicated that the new capitalization requirements would be 500 million meticais, an increase from MZM 70 million, so the board made plans to meet that requirement within three years by not paying out shareholder dividends [and using] share premium and retained earnings to capitalize the bank. When the official decree was actually issued by the central bank, the capitalization requirement was much higher: MZM 1.7 billion (US $26 million). Facing this requirement, the board had little room for maneuver. It took a decision to downgrade Socremo from a full commercial banking license to a micro bank license. Socremo can still do almost all financial services, except for forex business.</em>

<a title="Titos_Macie_Socremo" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/titos_macie_socremo.pdf">Titos' full interview</a> includes a discussion of the impact of currency devaluation on its clients. Accion discusses its recent investment in Socremo <a href="http://blogs.accion.org/features/plan-bring-small-businesses-in-mozambique-support/">here</a>.

Titos sums up how many FSPs operating in challenging macroeconomic and regulatory environments feel: <em>We are surviving and looking at a better future.</em>

<em><strong>CFI is currently recruiting fellows for the next cohort of the <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship program</a>. If you or someone you know is a board member or executive at an Africa-based MFI or financial service provider, we recommend considering this opportunity.</strong></em>

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Dialogue With Africa Board Fellows: Navigating Challenging Macroeconomic Environments

Mozambique

Nigeria

Policy, Regulation and Government Initiatives

Deborah Drake

Vice President

Eric Noggle

Senior Research Director 

Mayada El-Zoghbi

Managing Director

Andriana Moskovska

Anna Kanze

Daniel Balson

Danielle Piskadlo

Elisabeth Rhyne

Ezra Mannix

Jeffrey Riecke

Lizzy Bolze

Paul DiLeo

Azerbaijan

Benin

Bolivia

Europe and Central Asia

India

Nicaragua

North America

Philippines

South Asia

Uganda

United States

Access Usage Gap

Agent Banking

Credit

Credit Provision

Digital Financial Services

Financial Capability

Financial Inclusion Strategy

Mobile Banking

Privacy

Refugees and Migrants

Smart Certification

Underserved Groups

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

<em><img class=" wp-image-25789 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/30784872334_b499dfc281_m.jpg" alt="30784872334_b499dfc281_m" width="78" height="97" />The following is part of a <a href="https://cfi-blog.org/tag/abf-blog-series/">blog series</a> spotlighting the perspectives and experiences of CEOs and board members of financial institutions, as well as industry experts, who have participated in CFI’s <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> program.</em>

&nbsp;

Few countries have escaped socio-political unrest, conflict or periods of crisis. As the consequences of such events can be severe for both financial service providers and their customers, it behooves every board and CEO to consider how they might prepare themselves to respond when the political environment around them deteriorates.

[caption id="attachment_25747" align="alignleft" width="169"]<img class=" size-full wp-image-25747 alignleft" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/barnabe_francois-headshot-e1532552860511.png" alt="Barnabe_Francois Headshot" width="169" height="215" /> Barnabe Francois, ABF Fellow. Copyright Accion[/caption]

<a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a> (ABF) alumnus Barnabe Francois, CEO of Microcred Ivory Coast, described a crisis his institution faced in early 2017 in which a range of events all struck at the same time:

<em>“In January 2017 former soldiers demanded money from the government and violence erupted. At the same time, there were strikes within the public administration that lingered for three weeks. The timing could not have been worse, since the government had recently kicked out as many as 500 of our customers who were selling on the streets. This affected us tremendously. We had been in the process of addressing issues related to repayment when the political unrest escalated.”</em>

The immediate effect was seen in Microcred’s portfolio at risk (PAR), which jumped from 3.8 percent in December 2016 to 5.1% in January 2017.Barnabe continues,<em> “Since then, we have struggled to get back to our target PAR of 3 percent. As for our clients, some of them are still facing problems. Many lost all their goods because they had to flee the area when the government kicked them off the streets. I should also mention that there were some who were not affected by the unrest, but took advantage of the situation by claiming they were impacted and refusing to pay.”</em>

The board was very concerned when this happened, and increased its attention to PAR targets. “<em>We had a high concentration of clients in one particular area. This prompted me to start an expansion plan and we have opened new branches in other areas in order to have a more diversified portfolio.” </em><a title="Barnabe_Francois_Microcred" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/barnabe_francois_microcred.pdf">Barnabe's full interview</a> goes into greater detail about lessons learned from ABF in navigating these challenges.

[caption id="attachment_25746" align="alignright" width="206"]<img class="alignnone size-full wp-image-25746" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/resi_janssen.png" alt="Resi Janssen Headshot" width="206" height="237" /> Resi Janssen, ABF Fellow. Copyright Accion[/caption]

ABF Fellow Resi Janssen, Board Chair of Finance, South Sudan Limited (FSSL) faced a more extreme situation due to political and economic chaos in South Sudan. Violence made it dangerous for many clients and staff, and at the same time South Sudan’s economy was hit with devaluation and inflation, making the currency nearly worthless. One predictable response was flight, as Resi explains:

<em>“In July 2016, some staff in one branch fled to Uganda and did not come back. Due to devaluation and inflation, the salaries of staff in terms of US dollars diminished some 25 times. We doubled the basic salary in January 2017, but this was still far from enough to earn a decent living…</em>

<em>Several clients lost properties. Businesses were looted (some tens, not hundreds). Because of the conflict, a few hundred clients fled to northern Uganda and DRC.”</em>

In her <a title="Resi_Janssen_FSSL" href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/07/resi_janssen_fssl.pdf">full interview</a>, Resi offers the following concrete advice for MFI board members on how to support staff and clients during periods of unrest:
<ul>
 	<li>Make sure staff is safe.</li>
 	<li>Have a contingency plan, and make sure everyone is aware of the content. Staff need to know it.</li>
 	<li>Have as few costs as possible in foreign currency. Conflicts always cause devaluation.</li>
 	<li>Have as few expatriate staff as possible. They evacuate in times of crises and are too expensive.</li>
 	<li>Have offices in relatively safe areas, although “safe” can change quickly.</li>
 	<li>Have savings insurance.</li>
 	<li>Ensure some local board members who are committed, qualified, have authority to make decisions, and are not likely to go abroad.</li>
 	<li>Be in close contact with staff—at least weekly visits or calls with the CEO and monthly board meetings.</li>
</ul>
The services of financial institutions can be especially important for clients during difficult times. A wide range of financial services can support people at the base of the pyramid and small businesses to weather shocks from deteriorating economic conditions and social unrest. This underlines the need for financial institutions and their boards to anticipate and prepare to navigate challenging contexts. With the <a href="https://www.centerforfinancialinclusion.org/programs-a-projects/abf">Africa Board Fellowship</a>, we strive to strengthen the capacity of financial institutions at the executive level so they can do just that.

&nbsp;

Financial Institutions in Times of Political and Social Unrest: Thoughts from Africa Board Fellows

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

The recent <a href="https://www.nbcnews.com/tech/security/massive-equifax-data-breach-could-impact-half-u-s-population-n799686">security breach of credit reporting agency Equifax</a> exposed birth dates, social security numbers and credit card information of up to 143 million consumers. The hackers will likely sell this personal information which could result in financial and medical identity left, and fraudulent credit card activity and tax reporting, along with a slew of other activities. Earlier this week <a href="https://www.nytimes.com/2017/09/26/business/equifax-ceo.html?mcubz=3">Equifax announced</a> their CEO, Richard Smith will be retiring and could walk away with $18 million in pension benefits. The Massachusetts Attorney General, Maura Healey <a href="http://www.npr.org/2017/09/14/550949718/after-equifax-data-breach-consumers-are-largely-on-their-own">called it</a> “the most brazen failure to protect consumer data we have ever seen.” As a result, the Federal Trade Commission, members of Congress and multiple states’ authorities are looking into criminal investigations. However, the burden of this breach will fall primarily on individual consumers to ensure they are protected, and only <a href="https://qz.com/1079138/whats-the-worst-that-can-happen-with-the-equifax-breach-a-lot-especially-if-youre-poor/">10 percent</a> of the potential 143 million affected have even checked the Equifax site to see if their information was compromised. (You can check to see if you may have been impacted <a href="https://www.equifaxsecurity2017.com/am-i-impacted/">here</a>.)

The precautionary recommendations put forth have been to: 1. Check your credit score regularly (which can only be done for free once a year); 2. Freeze your credit; and 3. Purchase credit monitoring services. (Freezing your credit means establishing a “lock” that prevents opening new forms of credit in your name, while monitoring your credit is the process of periodically reviewing your credit reports for accuracy and changes that might be the result of fraudulent activity.) The irony of these suggestions is that you have to rely on the three major credit bureaus (Equifax, Experian and TransUnion) to perform these consumer protection activities. How can we know we are safe from fraud when our recourse requires trusting the entities that have been compromised? What’s more, why should we pay additional fees to correct the credit bureau’s mistake?

The Equifax breach affects consumers at all levels of the socioeconomic landscape, and unfortunately those with fewer financial resources and capability will be affected the most. Correcting identity theft can be a time consuming and financially burdensome endeavor. For many it is challenging to come up with emergency cash to cover legal fees to prove identity theft or restore credit, recover stolen assets and pay for additional credit monitoring services. And sadly, we haven’t seen strong consumer protection support on behalf of the credit bureaus and formal financial service providers in the wake of this breach -- support like educating the public about monitoring credit, providing more than one free credit report annually or offering free/discounted credit monitoring for more than one year. Thomas Hinton, CEO of the consumer advocacy non-profit American Consumer Council, <a href="https://qz.com/1079138/whats-the-worst-that-can-happen-with-the-equifax-breach-a-lot-especially-if-youre-poor/">said</a> he “is deeply concerned that Equifax – and all credit reporting companies – are not doing enough in a timely manner to protect under-served consumers who have been victimized by this data breach and stand to suffer the most.”

Such massive security breaches erode the public’s trust in the financial system, particularly among the unbanked already skeptical of entering the formal financial fold. The <a href="http://www.usfinancialdiaries.org/issue">U.S. Financial Dairies</a> showed that many Americans don’t trust the financial system because of unexpected bank fees – like overdraft fees – and because banks provide little or no social support, which many people get with informal group lending and savings options.

This isn’t the first major data breach in U.S. history and it won’t be the last. Last year when Yahoo was in negotiations to be bought by Verizon, it came out that <a href="https://www.csoonline.com/article/2130877/data-breach/the-16-biggest-data-breaches-of-the-21st-century.html">1.5 billion</a> user accounts were compromised between 2013 and 2014. And we can’t forget the 2013 Target breach that compromised credit/debit card and contact information of up to <a href="https://www.csoonline.com/article/2130877/data-breach/the-16-biggest-data-breaches-of-the-21st-century.html">110 million</a> customers.

So, what can be done? How can anyone feel comfortable about the protection of personal information?

Financial service providers are looking to biometric data as a secure identification source for financial services. Over the past seven years, <a href="https://uidai.gov.in/about-uidai/about-uidai.html">the Unique Identification Authority of India (UIDAI)</a> has issued over <a href="https://uidai.gov.in/about-uidai/about-uidai.html">one billion</a> Unique Identification Numbers (UID), also known as Aadhaar numbers, which are verified and authenticated with biometric data via finger prints or iris scans. This identification system is a part of <a href="http://indiastack.org/about/">India Stack</a> that uses four distinct technology layers – including simplified payments addressing and interoperability – to provide digital financial services across governments and businesses in India.

The technology already exists to use finger print and facial scans to unlock our phones or log into personal banking apps, and there is even the potential of using <a href="https://www.wired.com/2016/03/biometrics-coming-along-serious-security-concerns/">ear scans and heart beat identification</a> as biometric identification sources. But so far biometric identification is fairly unregulated, some consider the security to not yet be airtight and there are additional privacy concerns with using bodily identifiers. Hackers are already finding ways to spoof biometric identification. Recently, the security firm Vkansee was able to <a href="https://www.wired.com/2016/03/biometrics-coming-along-serious-security-concerns/">break into Apple’s Touch ID system</a> with a small piece of play doh. But we will see rapid improvements in Apple’s security, particularly with the new iPhone X Face ID technology.

In the case of India’s Aadhaar scheme, there is robust opposition to the program, with concerns including the perceived ease of forging fingerprints, the program’s potentially inadequate digital security, and its ubiquity. Some opponents of the program believe that if the Aadhaar numbers are widely integrated and linked between previously-siloed databases, it expands the opportunity for citizen profiling and surveillance. In August, India’s Supreme Court <a href="https://www.theatlantic.com/technology/archive/2017/09/aadhaar-worlds-largest-biometric-database/538845/">issued a ruling</a> enshrining the fundamental right to privacy. The anti-Aadhaar movement in the country celebrated the ruling, asserting that the program is in conflict with this fundamental right. Soon the Supreme Court will indeed assess if Aadhaar does violate Indian citizen’s privacy rights.

Regardless of how our information is authenticated, it is becoming increasingly important for consumers to protect and regularly track their financial information. Consumers should be concerned about the potential threats and take appropriate action by checking their credit score and monitoring credit card activity. But we can also realize that, at least as of now, security breaches are mostly out of our hands.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2017/05/01/how-secure-is-data-used-in-digital-credit/">How Secure Is Data Used in Digital Credit?</a>

<a href="https://cfi-blog.org/2017/05/05/demonetization-brought-out-the-best-in-indian-microfinance-clients/">Demonetization Brought Out the Best in Indian Microfinance Clients</a>

<a href="https://cfi-blog.org/2017/06/28/why-do-privacy-policies-matter-for-digital-credit/">Why Do Privacy Policies Matter for Digital Credit?</a>

&nbsp;

In the Wake of the Equifax Breach, Are Biometrics the Answer?

<em>&gt; Posted by Ira W. Lieberman, Todd A. Watkins, and Anna Kanze</em>

<img class="alignright wp-image-23576" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/05/eb-accion_march-2011_kiki-flavien_fisherman_72-1.jpg" alt="" width="330" height="220" />We’ve identified the problem: Microfinance is no longer sexy. It’s old news. It can’t deliver “impact,” and its effect on alleviating poverty was oversold and has underwhelmed. It’s well and good to offer working capital loans, but at the end of the day, the poor need education, health care, water for drinking and irrigation, roofs, and electricity together with a wide variety of financial services. It’s time for investors seeking real innovation to move on to the next big thing that will transform the lives of poor people and save our planet. Never mind microfinance’s decades-long track record of listening to the poor and underserved clients and effectively developing products and services based on their needs.

Of course, we issue these statements with considerable sarcasm. But, all joking aside, industry trends and shifting sentiments are presenting investors with a real question: Should they abandon the reliable and successful platforms and infrastructure that microfinance institutions (MFIs) have built? In turn, MFIs are saddled with the question of whether to stick to what they know best, or instead, to use their platforms to deliver expanded product offerings that increase access to other essential services.

These were among the questions regarding the future of microfinance addressed by 32 microfinance and impact investing participants and analysts from around the world who convened last month, hosted by <a href="http://cbe.lehigh.edu/martindale">Lehigh University’s Martindale Center</a>, and sponsored by the <a href="http://calmeadow.com/">Calmeadow Foundation</a> and the <a href="http://fiecouncil.com/">Financial Inclusion Equity Council</a> (of which CFI is the secretariat).

In those discussions, there was wide agreement that even as MFIs have commercialized and scaled, they've listened to their clients. MFIs have hard-earned advantages in accessing the poor, understanding their needs, and serving as distributors. The path forward is clear: a wider array of services is beneficial to clients, and product diversification remains the siren call of future growth and profitability.

But that widening diversification, while long anticipated, has for the most part been sluggish. Though product data is scarce, services beyond working capital loans and savings products remain a stubbornly small percent of portfolios of large MFIs – no more than 10 to 15 percent. Microinsurance also has enormous growth potential for MFIs, either in partnership or directly, to address the needs of the underserved: the demand is huge, as the vast majority of poor people still lacks access, and commercial insurers tend to be short of good delivery channels to reach most low-income informal sector markets. However, uptake of microinsurance still remains slow.

In short, the waves of diversification into multiple products notwithstanding, microfinance remains at core, credit. A key challenge for the industry, as the conversations at Lehigh highlighted, is that impact investors are gravitating to new opportunities well beyond financial services. They don’t necessarily see MFIs as key to impact investing, yet they struggle with scaling-up in other sectors (alternative energy is a notable exception), due to the lack of sustainable, i.e. investible, institutions. The opportunities are an appetizing smorgasbord: health care, education, affordable housing, solar energy, irrigation for small farmers, potable water, agricultural value chains, and so forth. But none of these match the financial intermediation skill sets of MFIs. What’s more, microfinance and the broader financial inclusion industry remain the largest target of impact investors, by assets under management, in annual investor surveys.

But can MFIs succeed as impact players outside of their core microlending and savings businesses? A few examples give hope.
<ul>
 	<li>Equity Bank in Kenya actively supports education, including through capital improvement and equipment loans for schools, handling payroll for teachers, and special savings accounts for paying school fees.</li>
 	<li>BRAC in Bangladesh offers a wide array of client services, run as separate businesses from their huge microfinance business. Among other services, BRAC operates thousands of primary schools for girls, a (stock-exchange listed) bank targeting small businesses, and advisory services for entrepreneurs.</li>
 	<li>Pro Mujer offers health care screening and other health care assistance, largely subsidized by their MFI operations.</li>
 	<li>Higher Education Finance Fund (HEFF), managed by OMTRIX, Inc. in Costa Rica, has financed MFIs throughout Central and South America to develop higher education loans for students. HEFF needed to provide significant technical assistance to its MFIs for product development and marketing to get education loans off the ground.</li>
 	<li>Caspian Impact Investment Advisers, a private impact fund manager focused on socially responsible businesses in India, helped develop the nascent affordable housing market in India by making investments in affordable housing providers as well as by supporting the microfinance institutions in their portfolio, like Equitas and Ujjivan, to expand into housing loans.</li>
 	<li>Pamiga Association, which provides technical assistance and financing to a network of 12 rural MFIs in East and West Africa, offers loans through its finance company to its network MFIs for solar energy and water for irrigation. Over the past few years, it has become clear that to do so successfully Pamiga will also need to offer financing to SMEs that can go the “last mile” and install, maintain, and offer installment payment systems (pay-go) to their clients.</li>
</ul>
There is clearly no one way to address product diversification. Subsidies, commonly seen as anathema to “investing”, may be necessary in the initial stages to incubate product offerings till they become sustainable. If investors and donors push to expand impact investing beyond alternative energy and microfinance, whether in education, health care, housing, or agricultural value chains, they will need viable institutions with adequate capacity to do so. A main lesson from microfinance is that targeted subsidies are a good way to build such institutional capacity. For those MFIs with the institutional capacity and financial sustainability to get there, targeted donor subsidies for technical assistance to build capacity for product diversification within the MFIs makes good sense. At the same time, there remains a need for like-minded investors to continue supporting successful microfinance business models because they have a proven track record and an unparalleled understanding of the needs of the poor and disenfranchised populations they serve.

The next post in this series will explore digital financial services.

<em>Dr. Ira Lieberman is President of LIPAM International. Todd A. Watkins is Professor of Economics, and Executive Director of the Martindale Center for the Study of Private Enterprise at Lehigh University</em>. <em>Anna Kanze is an Investment Manager at Grassroots Capital Management, PBC. </em>

<em>Also check out the other blogs in this series: </em><em>“</em><a href="https://cfi-blog.org/2017/04/20/microfinance-is-dead-long-live-microfinance/"><em>Microfinance Is Dead; Long Live Microfinance!</em></a><em>” and “</em><a href="https://cfi-blog.org/2017/04/27/time-to-ditch-impact-investings-unproductive-self-analysis/"><em>Time to Ditch Impact Investing’s Unproductive Self-Analysis</em></a><em>”</em>

<em>For video recordings of the Martindale Center event discussions,</em><em> </em><a href="https://www.youtube.com/playlist?list=PL30fMMRd3G_6gzZfFsSeOrSqntz90KSNR"><em>click here</em></a><em>.</em>

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2013/03/20/four-challenges-for-impact-investing/">Four Challenges for Impact Investing</a>

<a href="https://cfi-blog.org/2017/03/22/how-water-org-took-a-leap-of-faith-into-social-impact-investing/">How Water.org ‘Took a Leap of Faith’ into Social Impact Investing</a>

<a href="https://cfi-blog.org/2016/11/29/what-to-consider-when-investing-in-green-microfinance/">What to Consider When Investing in "Green" Microfinance</a>

&nbsp;

Can MFIs Deliver What Poor People Need?

Jami Solli

<em>&gt; Posted by Jami Solli, Independent Consultant and Founder of the Global Alliance for Legal Aid</em>

[caption id="attachment_23223" align="aligncenter" width="615"]<a href="http://www.consumersinternational.org/our-work/wcrd/wcrd-2017/"><img class="wp-image-23223" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/03/wcrd1.jpg" alt="" width="615" height="401" /></a> Click here for Consumer International's interactive map of global WCRD activities[/caption]

<em>Happy <a href="http://www.consumersinternational.org/our-work/wcrd/">World Consumer Rights Day</a> (WCRD)! Every year on March 15 WCRD serves as an opportunity to promote the basic rights of all consumers and as a chance to protest against the market abuses and social injustices which undermine those rights. The theme for this year is 'Building a Digital World Consumers Can Trust’. The following post spotlights the increasing need for regulatory attention on online financial frauds.</em>

No country in the world is free of financial fraud. And, every nation seems to have its own Bernie Madoff. Yet, Madoff’s $50 billion did not do systemic damage to the U.S. financial system, nor did it harm financial inclusion efforts in America. Unfortunately, when ponzis occur in developing countries, they do cause systemic risk and untold damage to financial inclusion efforts.

For example, Albania was plagued by ponzi schemes during the 1990s, and funds stolen were estimated to be worth <a href="https://www.imf.org/external/pubs/ft/wp/2009/wp0995.pdf">79 percent</a> of the country’s GDP. When these schemes in Albania collapsed, so did the existing government, causing civil unrest. Other regions have also experienced financial frauds worth significant portions of their countries’ GDPs. In 2008-09, an estimated 12-25 percent of Jamaica’s GDP was stolen, and in the little island nation of Grenada, the SGL Holdings scam netted 5 percent of the country’s GDP.

Often, these scams take the form of ponzi, pyramid, or even multi-level marketing frauds (MLM). Ponzi schemes are characterized by investors getting paid via new capital paid to the scheme's operators by new investors instead of from profit earned through legitimate sources. Pyramid schemes focus on payments to participants for recruiting others to join the scheme rather than for the sale of products or services. MLM frauds are a pyramid-shaped scheme, deemed in some cases as actual pyramid schemes, with this same emphasis on participant payment for recruitment rather than for sales. There are a variety of names and unique fraud ‘methodologies,’ but the common denominator in all of these scams is that there is no real, underlying business.

Largely speaking no one is selling a product or a service. If you ask to see the companies’ books, that reality may become clear immediately. Profits are generated only because new investors are continually lured into participating, such that the new investors’ money is used to pay off the earlier investors. These schemes always promise great and unrealistic returns. Often, the promoter of the scheme is a well-liked, prominent member of the community. His victims are made to feel that they would be stupid to not <em>get in on this deal early.  </em>

However, when the pyramid grows so large that too few new investors can be found to pay off the older investors, the pyramid always crumbles. And, rarely do the victims get any of their funds returned. In the worst cases, a few participants have <a href="https://www.imf.org/external/pubs/ft/wp/2009/wp0995.pdf">committed suicide</a> following severe losses.

These crimes are preventable and stoppable, but currently regulators are not putting forth the effort to do so. The scams are increasing in volume and scope, and thanks in part to the internet, social networking, and mobile technologies, they’re increasingly going digital and hopping borders. Ponzi schemes were at the center of Ghana’s presidential election campaign this year, and demonstrated this trend of schemes border hopping and venue shopping. For example, the Mavrodi Mondial Movement (MMM) scheme, which originated in Russia in 1994 has been in almost continuous existence, operating in Bangladesh, Ghana, India, Kenya, and Nigeria, among other countries. In fact, consumers in Ghana were <a href="https://www.naij.com/1089245-mmm-ghana-will-ghanaians-lose-money.html">still investing</a> in MMM shortly after its collapse in neighboring Nigeria.

Yet the regulatory mechanisms to prevent these frauds and monitor markets are not keeping pace. Instead, regulators simply advise consumers to ‘beware.’ Unfortunately, vulnerable financial consumers are paying the price, and national financial inclusion efforts are thwarted as well, as a major fraud scheme can undermine trust in fraudulent and legitimate financial service providers alike. Certainly, more can and should be done to protect consumers.

Financial sector regulators cannot say they have not been warned. These frauds have been with us for centuries. However, as digital schemes, they are becoming even more virulent with the power to harm more consumers. Therefore, regulators need to step up their digital market monitoring efforts.

Because fake investment opportunities are usually unlicensed by financial sector regulators, this presents a few straightforward opportunities for regulators to make a difference. One such opportunity is for regulators to create an online system where consumers can search to see if the company, or promoted investment opportunity does indeed have a license and publicize it widely so consumers can conduct at least minimal due diligence. If regulators do not have the bandwidth to perform these tasks themselves, then they should outsource the work to a consumer protection organization.

A new collaborative preventative strategy is needed, capitalizing on the internet and the many eyes of consumer advocacy organizations, working in partnership with public authorities, including financial and telecommunications regulators. Consumer organizations could be trained to monitor financial markets to identify potential frauds and warn regulators who have the mandate to investigate and shut down unlicensed investment opportunities.

Regulators also need to work with consumer organizations to conduct outreach campaigns to educate consumers. Regulators should take a page from the con artists’ play book. Criminals use social networks and social events like church gatherings to sell their scams. They fund sports events and donate to charities. Regulators need to be present online as well as at these same physical venues with their message of how to spot a fraud, how to verify that an investment offer is licensed, and how to get in touch with regulators. If regulators cannot or will not do this, then they should fund consumer organizations to do the job for them.

Simply telling consumers <em>caveat emptor</em> with no further outreach or enforcement is a not acceptable. Regulators can empower consumers to be a part of the solution to financial frauds, including digital fraud.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2014/03/12/helping-consumers-understand-their-digital-data-initial-experiences-from-tanzania/">Helping Consumers Understand Their Digital Data: Initial Experiences from Tanzania</a>

<a href="https://cfi-blog.org/2015/03/16/on-world-consumer-rights-day-the-right-to-financial-rehabilitation-for-the-over-indebted/">On World Consumer Rights Day: The Right to Financial Rehabilitation for the Over-Indebted</a>

<a href="https://cfi-blog.org/2016/09/28/fintechprotects-prioritizing-responsible-agent-management-at-oxigen/">#FintechProtects: Prioritizing Responsible Agent Management at Oxigen</a>

‘Buyer Beware’ Is Insufficient Fraud Protection

<em>&gt; Posted by Daniel Balson, Lead Specialist for Eurasia and MENA, The Smart Campaign</em>

<em>The following is the second post in a four-part blog series on the financial inclusion of refugees and the internally displaced. The first post can be found </em><a href="https://cfi-blog.org/2016/09/20/financial-inclusion-of-refugees-an-introduction/"><em>here</em></a><em>.</em>

In 1992, sporadic clashes between ethnic Armenians and Azerbaijanis in the mountainous region of Nagorno Karabakh erupted into full scale war. By the time a ceasefire was reached two years later, the territory lay under Armenian control, and between 800,000 and 1 million Azerbaijanis were displaced from their homes. Since the end of hostilities, ethnic Azerbaijani internally displaced persons (IDPs) who fled from Armenian-controlled to Azerbaijani-controlled territory have continued to face difficulties accessing economic opportunity. However, a financial sector inclusive to IDPs is emerging, lessening these difficulties and demonstrating that IDPs can be a bankable client segment. 

First, it’s important to distinguish IDPs from refugees. Unlike refugees, IDPs have not crossed an international border when fleeing violence or disaster; they are likely to remain in the same (or similar) cultural, linguistic, religious, and political milieu as the one they fled. It is likely that their documentation and identity is still recognized by the relevant local authorities. Nonetheless, IDPs form a specifically vulnerable population. Across the world, the majority of IDPs continue to lag the rest of the population on most economic indicators. Globally, IDPs are frequently forced to rely on services from informal actors in the grey economy, particularly when the government is the cause of their original displacement. In Azerbaijan and elsewhere, many IDPs <a href="http://www.unhcr.org/protection/convention/4bd7edbd9/azerbaijan-analysis-gaps-protection-internally-displaced-persons-idps.html">rely on government or international assistance</a> for basic provisions and are unable to secure property rights to their government-provided homes. Children of internally displaced persons typically find their schooling interrupted.

To address the financial difficulties faced by the IDP population, the government registers internally displaced Azerbaijanis and provides them with housing and a modest stipend. Additionally, it has put forward numerous schemes to promote IDPs’ self-reliance. While the housing assistance has proved successful in helping alleviate IDP poverty, the economic development schemes have yielded limited results. Because rural IDPs reside in areas far from major towns and near the conflict zone, they face limited opportunities to participate in commerce or trade. Moreover, Azerbaijani IDPs are unable to gain access to the country’s most fertile land, which was claimed and farmed long before they were displaced. As a result, many Azerbaijani IDPs are concentrated in urban and semi-urban areas where arable land is scarce and of poor quality.

While the details of their displacements vary, the vast majority of Azerbaijani IDPs have very limited access to financial services. For the most part, major financial institutions in Azerbaijan consider investing in internally displaced persons to be a risky proposition.

Major financial institutions shy away from providing IDPs with financial products because they require very small loans that have historically been expensive to administer. Often, IDPs lack a permanent or stable income as well as property in their name to use as collateral. Many IDPs suffer serious disabilities that prevent them from working, a legacy of the mine fields circling the conflict area. IDPs disproportionately live in or around the conflict zone, and violent incidents are not uncommon. Basic sanitation and access to energy are often substandard. These challenging conditions take a toll on the population’s health and circumscribe their ability to grow a business. Moreover, financial institutions fear their efforts to enforce collections actions against internally displaced families would die in the courts.

With major financial organizations refusing to provide credit, a number of internationally-funded boutique microlenders have stepped in to fill the gap. Today, 16 percent of IDPs bank with microcredit organizations, compared to 3 percent of the Azerbaijani population as a whole. Using seed capital provided by international non-governmental and development organizations, institutions including Eurasia Credit, Caspian Invest, Caucasus Credit, and Azeristar Microfinance focus on providing small loans for IDPs.

These small financial firms quickly found that IDPs were not as risky as many had suggested. Prior to the recent devaluation of Azerbaijan’s currency, internally displaced clients demonstrated an outstanding recovery percentage – with 98 percent of loans repaid on time. While financial over-indebtedness is a common problem across the country, IDP clients were no more susceptible than other Azerbaijanis. As the price of oil fell and Azerbaijan’s central bank devalued the manat, IDP clients proved that, in some ways, they are the less risky demographic. Since IDPs typically take on far smaller loans, their credit was less likely to be dollarized, leaving them less susceptible to currency fluctuations.

As this Azerbaijani IDP market segment became established, participating financial institutions found that to stay competitive, they had to differentiate themselves by providing exceptional customer service and client protection. Financial organizations began hiring IDPs and training them to serve as branch managers, thereby providing the firm with an internal perspective on the trials and opportunities IDPs faced. By hiring and training community members, financial institutions quickly learned that to succeed, they needed to cultivate the talents of people who culturally knew the communities in which they operated.

Financial institutions serving IDPs in Azerbaijan quickly identified several policies and practices that could be implemented to protect this population. Even more than ordinary Azerbaijanis, IDPs require flexible loans. Given their perceived riskiness, the precariousness of their economic situation, and their limited assets, IDPs face higher interest rates. To compensate, financial organizations offer refugees more flexible products with a variety of repayment schedules and conditions. Agriculture loans are developed with especially accommodating terms to ensure vulnerable farmers are able to meet their obligations. And branches serving IDPs are typically given a greater degree of decision-making autonomy, allowing them to modify and adjust products based on the feedback they receive. Some branches are even empowered to adjust financial products to a particular customer’s needs (within certain bounds).

Readers familiar with <a href="http://smartcampaign.org/">the Smart Campaign</a> will see that the above strategies are closely tied to the <a href="http://smartcampaign.org/about/smart-microfinance-and-the-client-protection-principles">client protection principles</a>. Appropriate Product Design and Delivery, for example, ensures that providers take adequate care to design products and delivery channels so as not to cause clients harm and to take into account clients' unique characteristics. Fair and Respectful Treatment mandates non-discrimination. Mechanisms for Problem Resolution requires recourse mechanisms so that clients who wish to complain can do so and will have their complaints taken seriously and handled responsibly.

While these positive client protection approaches ameliorate the harm caused to Azerbaijani IDPs by financial institutions, IDPs remain a particularly vulnerable client segment. Even though they are unlikely to borrow dollarized loans, the country’s economic downturn, precipitated by a currency devaluation and falling commodity prices, hits them hardest nonetheless. In regions with large refugee populations, Portfolio at Risk has risen to 30 percent. When quizzed about refugees’ unique economic vulnerability, a representative of Azerbaijan’s microfinance association said, “It’s really simple. When Azerbaijan sneezes, the IDPs catch pneumonia.”

Far from being unreliable borrowers, Azerbaijani IDPs have catalyzed a diverse and active industry of microfinance institutions catering to their needs. IDPs have shown themselves willing and able to help their institutions serve them better both by providing feedback to and working with their creditors. Nonetheless, they remain an economically disadvantaged population, highly vulnerable to economic downturns and shut out of the best economic opportunities their country has to offer. If special care is not taken to understand their needs and protect their rights, they risk being left substantially worse off than their neighbors during times of economic trouble.

&nbsp;

Financial Inclusion of Refugees: Azerbaijan Case Study

With their soaring ubiquity and utility, mobile phones are revolutionizing disaster and crisis relief, as recent experiences have shown. From Typhoon Haiyan in the Philippines to Ebola in West Africa, we’ve seen mobile networks help provide critical financial services, information, and communication – in every stage of a crisis. And all signs point to this support expanding.

A few weeks ago GSMA <a href="http://www.gsma.com/newsroom/press-release/leading-operators-across-asia-commit-gsma-humanitarian-connectivity-charter/?utm_campaign=DR_Newsletter_21Jul2016_Quarterly&amp;utm_medium=email&amp;utm_source=Eloqua">spotlighted</a> a growing collective of mobile network operators (MNOs) working together to aid those hit by crisis. <a href="http://www.gsma.com/mobilefordevelopment/programmes/disaster-response/humanitarian-connectivity-charter">The Humanitarian Connectivity Charter</a>, an initiative launched by GSMA in 2015, aims to unite the industry under a set of principles for harnessing mobile technology to support people affected by humanitarian emergencies. GSMA recognized <a href="http://www.gsma.com/mobilefordevelopment/programme/disaster-response/kddi-kt-corporation-ntt-docomo-inc-sk-telecom-become-latest-signatories-humanitarian-connectivity-charter">four new member MNOs</a> that signed onto the Charter, joining more than 60 other MNOs from around the world. By signing the Charter, MNOs commit to a common set of principles designed to enhance coordination, standardize preparedness and response activities, and strengthen partnerships between industry, government, and humanitarian organizations.

The four new member MNOs are from Asia and have already demonstrated leadership in disaster and crisis relief. KDDI of Japan has a range of measures associated with ensuring network reliability during disasters, such as back-up communication modes for the dissemination of warnings and other critical information. NTT Docomo of Japan hosts a message board service that allows friends and family to check the safety and status of one another following major events. Korean Telecom (KT) leads an integrated emergency notification network system across South Korea, merging 21 emergency hotlines from 15 government agencies. KT is also breaking ground in using LTE-based drones in rescue operations where cars and other vehicles can’t go. SK Telecom, also of South Korea, created a system that allows simultaneous voice calls and data transmission by hundreds of people in the event of a natural disaster - without overloading specific base stations.

In the mobile money space, Africell, Airtel, and iDT Labs were recently <a href="http://www.bitc.org.uk/our-resources/case-studies/idt-labs-automated-worker-registration-and-payroll-database-ebola">awarded</a> the UPS International Disaster Relief Award for their payment solution implemented in Sierra Leone during the Ebola crisis. Africell and Airtel are two of the country’s most prominent MNOs. The system helped prevent the collapse of the country’s healthcare system by enabling payments for emergency workers. During the crisis, emergency workers transported the sick, cared for patients, traced the exposed, attended to the deceased, and provided security and coordination. Funding was available to compensate these individuals, but doing so was challenging because many workers lacked national ID cards and were not enrolled in the national payroll or public sector registration systems. The disbursement of funds was disorganized and ineffective communication led workers to go months without pay.

Partnering with Splash, a mobile payment service, and UNDP, the team developed a system that used mobile wallets, cloud computing, and open source information management systems to create the hazard payment solution. To reach all relevant emergency workers, Africell sent out mass SMS alerts to spread awareness about the payment drive, iDT Labs worked with local radio stations to broadcast announcements, and Splash using its agent network helped register workers who didn’t have registered phones. Beyond the Ebola crisis, the service helped generate greater awareness and acceptance of mobile payment in the country and made the government more receptive to using open source technology.

In the aftermath of Typhoon Haiyan in the Philippines, Mercy Corps partnered with BPI Globe BanKO to <a href="https://www.mercycorps.org/press-room/releases/mobile-money-relief-effort-philippines-spurs-banking-access">provide mobile cash transfers</a> to those most impacted. BanKO is a mobile-based, lower-income-focused bank that was founded by Bank of the Philippines Islands, Ayla Corporation, and Globe Telecom, a leading MNO. Beneficiaries were able to receive cash transfers electronically through their BanKO savings accounts and cash them out via partner establishment locations. The digitization of the process helped ensure security, transparency, and rapid deployment of the cash transfers. The initiative was also seen as an on-ramp opportunity for recipients to gain access to and use financial services.

Microfinance organizations, harnessing their reach and client relationships, are also taking part. During the Ebola crisis, BRAC and CARE <a href="https://cfi-blog.org/2014/09/18/microfinance-and-the-economic-toll-of-ebola/">offered</a> health awareness communication through one-on-ones, group meetings, and street theater. Some BRAC staff also remained stationed at institutions to aid in prevention efforts and donated prevention supplies to ministries of health and sanitation. A day after Typhoon Haiyan, ASA Philippines <a href="https://cfi-blog.org/2016/01/28/responding-to-tragedy-asa-philippines-and-typhoon-haiyan/">sprang into action</a> visiting clients door-to-door, issuing the necessary insurance benefits, and offering a rehabilitation advance loan. Affected borrowers were also given a moratorium of two months on their loans – which later could be extended depending on the situation on the ground. Additionally, ASA Philippines gave institution members solar lamps, mosquito nets, fishing boots, and medical missions were carried out in collaboration with other MFIs and local institutions in the country.

Clearly, there is an opportunity for many players to leverage unique capabilities in combatting natural disasters and crises.

For more, check out a new study from Deutsche Post DHL Group and the United Nations Office for the Coordination of Humanitarian Affairs, <a href="http://www.dpdhl.com/en/media_relations/media_library/documents/ppp_study_combining_capabilities.html?utm_campaign=DR_Newsletter_21Jul2016_Quarterly&amp;utm_medium=email&amp;utm_source=Eloqua"><em>Combining Capabilities</em></a>, which showcases the growing importance of public-private-partnerships in humanitarian action.

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2015/10/27/aski-is-first-financial-institution-in-philippines-to-be-awarded-smart-certification/">ASKI Is First Financial Institution in Philippines to be Awarded Smart Certification</a>

<a href="https://cfi-blog.org/2015/02/12/picking-up-the-pieces-the-role-of-microfinance-institutions-in-post-ebola-recovery/">Picking Up the Pieces: The Role of Microfinance Institutions in Post-Ebola Recovery</a>

<a href="https://cfi-blog.org/2012/09/10/serving-persons-with-disabilities-in-the-philippines/">Serving Persons with Disabilities in the Philippines</a>

Mobile Network Operators on the Frontier of Disaster and Crisis Relief

Typhoon Haiyan, one of the strongest tropical cyclones ever recorded, struck Southeast Asia in early November 2013, creating unspeakable devastation. In the Philippines alone, where the typhoon’s wrath was concentrated, over six thousand people lost their lives. One microfinance institution, ASA Philippines, sprang into action only a day after the typhoon hit, demonstrating not just microfinance’s social mission, but also how providers in the industry are evolving to support their clients through more than just credit.

Typhoon Haiyan affected 16 provinces where ASA Philippines had operations, spanning 72 branches and 104,708 active borrowers amounting to a loan portfolio of roughly 365 million Philippine Pesos (~US$7.5 million). Fast forward to the present, about two years later, ASA Philippines has almost a 99 percent collections rate and the institution is thriving. How did the institution manage this crisis? Hint: It wasn’t because of merciless collections practices.

The day after Haiyan hit, ASA Philippines’ president traveled to Tacloban, a city that was largely destroyed by the typhoon, to visit the local ASA Philippines office. For the staff, the president’s presence underlined the ambitious and important relief work ahead of them. Under normal operating circumstances, ASA Philippines’ offices are open 24/7, reflecting the institution’s motto of <em>BWYC: Be with Your Clients. </em>ASA Philippines works towards a culture of immediate response, during the typical day-to-day operations, and during times of tragedy. I recently spoke with a few ASA Philippines staff members and they drew a link between support for clients and client trust. Clients will remember the first person that helps them, I was told. This connection fosters trust and connection, which in turn supports efforts to repay loans.

Step one for ASA Philippines in Tacloban was visiting clients. The city was awash; government offices were closed. Staff visited members’ homes and spoke with them about their conditions and family needs. In cases where a family member had died, ASA Philippines exercised trust. As long as family members vouched for the death, the necessary insurance benefit was provided, without a need for the standard documentation usually required for claims.

ASA Philippines’ door-to-door client visits were not a last-minute mandate – they were part of the institution’s pre-existing preparedness policy for typhoons and other calamities. According to the policy, borrowers were granted a rehabilitation advance loan if desired, half as a grant that clients didn’t have to pay back and half as an interest-free loan with a horizon of one year. Secondly, ASA Philippines gave borrowers affected by Haiyan a moratorium of two months – which could later be extended depending on the situation on the ground. In deciding who was to receive these moratoriums, the institution had clear approval guidelines involving multiple organizational levels. And ASA Philippines’ policy mandated that relief to clients be administered within 24 hours of acknowledging the incident.

In total, out of the 104,708 affected ASA Philippines borrowers, only 838 write-offs have been necessary, a total of about 2.31 million Philippine Pesos (~US$50,000). However, it was decided that, given the circumstances, if these borrowers later wanted to rejoin the institution, they would be able to do so. The same applied to members who had to move to different areas of the country and had their repayments/contact with the institution disrupted: as long as it was due to Haiyan, they were also permitted to come back to ASA Philippines.

In addition to financial measures, ASA Philippines members were given solar lamps, mosquito nets, and fishing boots. Medical missions were carried out in collaboration with other MFIs and local institutions in the country.

ASA Philippines was able to take-on these extensive relief operations in part due to a special fund the institution created for such calamities, amounting to 417 million Philippine Pesos (US$8.7 million). The fund covered all the losses due to Haiyan. In the end, the expenses attributed to Haiyan totaled 110 million pesos. Since about 35 million pesos of that was issued as interest-free loans, it eventually returned to ASA Philippines, resulting in a net expense to the institution of about 75 million pesos.

The relief efforts of ASA Philippines and other MFIs were streamlined thanks to the Microfinance Information Data Sharing System (MIDAS) in the Philippines. MIDAS, a private credit bureau, was created by ASA Philippines and six of the largest MFIs in the country to maintain comprehensive histories of clients. Unfortunately, typhoons and cyclones are relatively regular occurrences in the Philippines, so when tragedy strikes, MFIs can extract the names of affected members from the MIDAS system to ensure that they aren’t duplicating efforts.

As extreme weather <a href="http://www.theguardian.com/environment/2015/apr/27/extreme-weather-already-on-increase-due-to-climate-change-study-finds">increases</a>, it’s increasingly imperative that more MFIs and relief providers in the Philippines and elsewhere follow the lead of proactive institutions like ASA Philippines.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/10/27/aski-is-first-financial-institution-in-philippines-to-be-awarded-smart-certification/">ASKI Is First Financial Institution in Philippines to be Awarded Smart Certification</a>

<a href="http://cfi-blog.org/2015/12/04/global-microscope-2015-progress-on-the-financial-inclusion-front/">Global Microscope 2015: Progress on the Financial Inclusion Front</a>

<a href="http://cfi-blog.org/2012/09/10/serving-persons-with-disabilities-in-the-philippines/">Serving Persons with Disabilities in the Philippines</a>

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Responding to Tragedy: ASA Philippines and Typhoon Haiyan

Sub-Saharan African countries may be leading the world in mobile money and growth in access to accounts, but the state of financial consumer protection in Africa is in urgent need of attention.

In the <a href="http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/534-global-microscope">EIU Global Microscope’s</a> 2014 overall rating of the policy environment for financial inclusion, African countries scored very close to the global average (44 SSA vs. 46 Global out of a possible 100). However, these countries were substantially below the average on consumer protection indicators – market conduct (27 SSA vs. 43 Global) and grievance redress (35 SSA vs. 45 Global).

These numbers have human consequences. The Smart Campaign commissioned research in two African countries – Benin and Uganda – which revealed the frequently harsh environment in which microfinance is conducted. In Uganda, <a href="http://smartcampaign.org/tools-a-resources/1030">research on what happens to clients who default</a> showed that, lacking regulatory oversight and the calming influence of credit reference bureaus, lenders in Uganda feel compelled to resort to practices such as rapid confiscation of a borrower’s assets. They are afraid that if they do not act quickly, the borrower may flee. In the <a href="http://cfi-blog.org/2015/10/22/what-do-clients-care-about-results-from-benin/">research on client experiences from Benin</a>, clients reported major gaps in trust and transparency. For example, many reported being surprised by fees that were not explained or expected, having no place to turn when problems arose, or being publicly shamed for late payments.

The research pointed to very low trust on both sides between providers and customers. In fact, in Smart Campaign conversations with African microfinance institutions about consumer protection, one of the most frequently asked questions is, “Who will protect us (the lenders) from them (the borrowers)?”

Perhaps this problematic environment partly explains why of the 43 institutions certified for good client protection practices by the Smart Campaign, only one, <a href="http://smartcampaign.org/certification/certified-organizations#Bayport">Bayport Botswana</a>, is in Africa. Quite a number of African MFIs have expressed interest in Smart Certification, and several have gone through certification missions. However, most scored relatively poorly, with a daunting list of items to be upgraded in order to pass.

In analyzing the experience of certification among African financial institutions, several observations stand out.

Onsite certifiers often find significant gaps between adopted policies and their field implementation. Procedures, staff training and internal controls – the internal elements that move policies into action – are often lacking, reflecting the overall institutional weaknesses of small financial institutions in the region. In many cases, complaints and grievance redress processes are either missing or dormant. These are correctable issues, but they take work. Certified institutions tell the Smart Campaign that one of the benefits from undergoing the certification process is that the certification analysis provides a detailed diagnostic of gaps in their internal processes and the impetus to close them.

More challenging are the difficult issues that may bite into the business models of the MFIs. These cannot be so easily resolved. Among them are issues connected with preventing over-indebtedness and promoting transparency:
<ul>
 	<li>Business models that approve risky loans, such as automatic renewals, top-ups or step increases without repayment capacity review.</li>
 	<li>Staff incentives that do not weight portfolio quality, leading to aggressive sales and risky loans.</li>
 	<li>Non-transparent prices through practices such as bundling of credit life insurance or compulsory savings requirements.</li>
</ul>
In dialogue with the Smart Campaign, institutions assert that they cannot change such practices without losing customers or reducing revenue. This may or may not be true, but it’s hard to blame organizations for reluctance to try out changes that they fear risk significant hits to the business model.

One bright spot is the interest among regulators to improve the consumer protection environment. At the recent Alliance for Financial Inclusion (AFI) meeting in Mozambique, the Consumer Empowerment and Market Conduct Working Group was very active, with strong representation from eastern and southern Africa. However, given the pace of legal and regulatory change, jurisdictional gaps, and deficits in supervisory capacity throughout the region, it will be some time before effective consumer protection regulation is in place. Meanwhile, as credit and other services are added to expanding mobile money rails, new consumer risks are emerging, and African regulators will have even more on their plates.

As a movement grounded in the industry, the Smart Campaign will continue to work with African financial institutions, associations and regulators to highlight the urgency of the need and to strengthen practices.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/06/16/top-six-reasons-providers-dont-invest-in-client-protection/">Top Six Reasons Providers Don't Invest in Client Protection</a>

<a href="http://cfi-blog.org/2015/04/02/smart-campaign-announces-enhancements-to-client-protection-certification-program/">Smart Certification Announces Enhancements to Client Protection Certification Program</a>

<a href="http://cfi-blog.org/2015/08/06/three-cheers-for-the-smart-campaigns-certification-summit/">Three Cheers for the Smart Campaign’s Certification Summit</a>

Why Does Consumer Protection Lag in Africa?