<img class="alignright wp-image-40142 size-thumbnail" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/grateful-emoji-283-150x150.jpg" alt="grateful " width="150" height="150" />
<h2>Grateful</h2>
I am feeling an incredible level of gratitude to all the people who participated in Financial Inclusion Week last week. We had more than 1,200 people register for FIW’s various events. The agenda featured more than 40 sessions covering a broad spectrum of topics, time zones, and regions. Each and every session required planning and coordination. A huge thanks goes to all of our partners who chose to participate and share their learning and experiences during FIW.
<h2><img class="alignleft size-thumbnail wp-image-40143" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/monocle-5-150x150.png" alt="" width="150" height="150" />Curious</h2>
I am already a major advocate for women’s financial inclusion and believe the inclusive finance industry needs to get more sophisticated on this topic. The CFI <a href="https://youtu.be/MxXWHaNhYcY" target="_blank" rel="noopener noreferrer">podcast on social norms</a>, the Caribou Digital session on <a href="https://www.youtube.com/watch?v=SbIBJO_7cJs&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">features that drive women’s usage of DFS</a>, and the Pinbox session, "<a href="https://youtu.be/b2ulPv9INEA" target="_blank" rel="noopener noreferrer">Saving the Next Generation from Old Age Poverty</a>" (especially women, who live longer) were eye-opening. I am curious to see where our collective focus on this topic will take us.
<h2><img class="alignright size-thumbnail wp-image-40144" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/tempted-heart-eyes-emoji-150x150.png" alt="heart eyes emoji " width="150" height="150" />Tempted</h2>
There were so many sessions to choose from that there were moments I felt like a kid in a candy store. Fortunately, the sessions have all been recorded and I can go back to the ones I missed and catch up on them (and I will have a full year to do that). I’ve even mapped out a plan of action for when I’ll get up to speed on what I missed. This week, I plan on listening to the Inclusive Finance India <a href="https://youtu.be/E0Snagg7TYM" target="_blank" rel="noopener noreferrer">session on remittances</a> and GSMA’s session, "<a href="https://www.youtube.com/watch?v=B3Khho7Bgac&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">Beyond One Billion: Exploring the State of Mobile Money in Africa</a>."
<h2><img class="alignleft wp-image-40145" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/connected-emoji-300x268.png" alt="connected emoji" width="184" height="164" /></h2>
<h2>Connected</h2>
We have all been struggling to adjust to our new, social-distanced and Zoom-based world, and I was worried that more virtual events might be difficult. I was surprised at how connected I felt to the inclusive finance industry. I learned so much from the various panelists, whether it was the elaborate -- yet achievable -- <a href="https://www.youtube.com/watch?v=FLWs9JMdj7M&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">ideas posed by Sarah Gammage</a> on the role of financial services in mitigating climate risk and supporting livelihood adaptation, or <a href="https://www.youtube.com/watch?v=qjVT1EaN3QE&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">David Medine’s insightful explanation</a> as to why consent-based systems are no longer relevant for addressing data usage and data privacy concerns. There’s been a lot of talk that this industry has become more fragmented as we each dig deeper into specific silos, but this week showed me the power of coming together. It takes some effort, but the results are evident.
<h2><img class="alignright size-thumbnail wp-image-40146" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/tired-emoji-150x150.png" alt="tired emoji" width="150" height="150" />Tired</h2>
But, alas, I am human and not a complaints bot or <a href="https://www.youtube.com/watch?v=9tXAN0oicVE&amp;feature=youtu.be" target="_blank" rel="noopener noreferrer">algorithm</a>, like the ones covered in some sessions. This means by the end of the week I was tired after an incredibly packed agenda and so many interactive sessions.
<h2><img class="alignleft size-thumbnail wp-image-40149" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/cry-emoji-4-150x150.png" alt="cry emoji" width="150" height="150" />Sad</h2>
That’s why my next emoji is complex. Despite my tiredness, I am sad to see FIW 2020 come to an end. I hope that this community that has come together to share and learn from one another can somehow keep the momentum going. At CFI, we will certainly do our best to engage and learn from our partners.
<h2></h2>
<h2><img class="alignright wp-image-40150" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/10/lightbulb-emoji-2-300x292.png" alt="inspired lightbulb emoji " width="161" height="157" />Inspired</h2>
My final emoji is my overwhelming sense of inspiration. I hope you found FIW as inspiring a learning event as I did. From our first day with the panel, "<a href="https://www.youtube.com/watch?v=im7EP5TtGdA" target="_blank" rel="noopener noreferrer">Serving Low Income Households Impacted by Climate Change</a>," to the last day with Aspen Institute’s session, "The Road to 2030: An Action Agenda for Inclusive Financial Systems," I am inspired that so many organizations are already thinking about and taking action on some of the toughest challenges that poor people face during this extraordinary time in history.

&nbsp;

Financial Inclusion Week and My Emoji Roller Coaster Ride

On January 18th CFI hosted a webinar to discuss “Financial Inclusion and Pension Inclusion: Lessons learned on access, usage and financial capability”— a chapter from the recent publication Saving the Next Billion from Old Age Poverty: Global Lessons for Local Action. This webinar explores the innovations in pension inclusion, including strategies to reduce costs, build financial capability, and protect consumers.

Webinar panelists include:
- Elisabeth Rhyne, Managing Director, CFI
- Susy Cheston, Financial Inclusion Consultant
- William Price, Senior Financial Sector Specialist, World Bank Group
- Gautam Bhardwaj, Co-Founder and Director, pinBox Solutions
- Parul Seth Khanna, Co-Founder and Director, pinBox Solutions

Webinar: Financial Inclusion and Pension Inclusion

<em> </em>

<img class="aligncenter wp-image-24227" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2017/10/fi-week_cropped.png" alt="" width="616" height="273" />With Financial Inclusion Week 2017 less than two weeks away, we’re excited to share a full <a href="http://financialinclusionweek.org/calendar17/">calendar of events</a> and specifically, 11 webinars or online events that you can join from wherever you are. Topics include micro pensions, IndiaStack, interactive voice response technology, and more. Don’t pass up an opportunity to hear from organizations and experts from around the world – register today!
<h4><span style="color: #ff6600"><strong>Monday, October 30</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/5232828010844793347">Digital Fireside Chat: How Are New Products and New Partnerships Unlocking Access to Insurance?</a></strong>
<em>Hosting Organizations: <a href="https://us.axa.com/home.html">AXA</a>, <a href="http://www.centerforfinancialinclusion.org/">Center for Financial Inclusion at Accion</a></em>
To kick of Financial Inclusion Week 2017, Elisabeth Rhyne, Managing Director of the Center for Financial Inclusion at Accion will join Garance Wattez-Richard, Head of AXA Emerging Customers for a digital fireside chat. During the webinar, Rhyne and Wattez-Richard will discuss how new products and partnerships are opening up new potential in the inclusive insurance space. They will take a specific look at how AXA is working to reach emerging customers.

<strong><a href="https://www.facebook.com/Thitsaworks/">Technology-Enabled Financial Inclusion in Myanmar</a></strong>
<em>Hosting Organizations: <a href="https://www.thitsaworks.com/">ThitsaWorks</a>, <a href="https://www.magzter.com/MM/Information-Matrix/Myanmar-Internet-Journal/Computer-&amp;-Mobile/">Internet Journal</a>
</em>ThitsaWorks and Internet Journal will host a Facebook Live conversation on the impact of digital services on financial inclusion in Myanmar, where mobile phone ownership has grown rapidly from 5 to 90 percent between 2011 and 2017.


<h4><span style="color: #ff6600"><strong>Tuesday, October 31</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/8455245903222706945">The Digital Landscape of Financial Inclusion: Trends, Challenges and Opportunities</a></strong>
<em>Hosting Organization: <a href="https://responsiblefinancialinclusion.org/">The Partnership for Responsible Financial Inclusion</a> (formerly MCWG)
</em>The Partnership for Responsible Financial Inclusion (formerly the Microfinance CEO Working Group) and their senior staff who work in digital financial services and fintech will present on the trends, challenges, and opportunities for sector-wide collaboration in digital financial inclusion. Join the discussion and share your thoughts on the technology and innovations that are shaping the inclusive finance landscape.
<h4><span style="color: #ff6600"><strong>Wednesday, November 1</strong></span></h4>
<strong><a href="https://mix.webex.com/mw3200/mywebex/default.do?nomenu=true&amp;siteurl=mix&amp;service=6&amp;rnd=0.9052351292117116&amp;main_url=https://mix.webex.com/ec3200/eventcenter/event/eventAction.do%3FtheAction%3Ddetail%26%26%26EMK%3D4832534b00000004931da127582115b1d0736ecfcb3b55bac591f4f402a78992b74709dd5584d48a%26siteurl%3Dmix%26confViewID%3D75612919730059323%26encryptTicket%3DSDJTSwAAAAR8kbqDsowOMB0HcHiCIxdYCb3-Oq_N6uyieiCBtymWFA2%26">Voice of the Client: Using Mobile Phones and IVR Technology to Understand Client Satisfaction in Cambodia</a></strong>
<em>Hosting Organization: <a href="https://www.themix.org/">MIX</a></em>
MIX’s webinar is focused on their <a href="http://www.themix.org/mixmarket/publications/voice-client-cambodia">Voice of the Client</a> project, a pilot developed for financial services providers (FSPs) to leverage mobile technologies as a means to analyze client satisfaction. MIX will share research findings from Cambodia and offer insight on how to best use interactive voice response (IVR) technology to gather client-level data for decision-making.

<strong><a href="https://www.eventbrite.co.uk/e/uncdf-and-visionfund-present-whats-next-for-microfinance-in-myanmar-tickets-39003624892">UNCDF and VisionFund Present: What's Next for Microfinance in Myanmar?</a></strong>
<em>Hosting Organizations: <a href="http://www.uncdf.org/">UNCDF</a>, <a href="http://www.visionfund.org/">VisionFund</a></em>
Isolated for decades, Myanmar has only recently opened up to the global economy. This has brought a lot of discussion about the Southeast Asian country being the 'last frontier' of financial inclusion. Microfinance legislation was passed in late 2011, but what has happened since? And what does the future look like?
<h4><span style="color: #ff6600"><strong>Thursday, November 2</strong></span></h4>
<strong><a href="https://bfaglobal.zoom.us/webinar/register/WN_pQVJ6I9gTOOpO2ylEI5gBA">A Fintech Approach to Financial Inclusion</a></strong>
<em>Hosting Organization: <a href="http://bfaglobal.com/">BFA</a></em>
BFA will host a webinar focused on the benefits and challenges of fintech approaches to financial inclusion. The webinar will highlight key findings from three of BFA’s global programs: Catalyst Fund, FIBR and OPTIX.

<strong><a href="http://bit.ly/MIXvoc2">Voice of the Client: Using Mobile Phones and IVR Technology to Understand Client Satisfaction in Peru (Spanish)</a></strong>
<em>Hosting Organization: <a href="https://www.themix.org/">MIX</a></em>
This webinar presentation will be the same as the preceding Voice of the Client webinar, expect it will be in Spanish and it will share project research findings from Peru instead of Cambodia.

<strong><a href="https://successfulmicropensiondesign.clickmeeting.com/financial-inclusion-week-webinar-bpps">Successful Micro Pension Design</a></strong>
<em>Hosting Organization: <a href="http://www.blueprintpensionservices.com/">BluePrint Pension Services</a></em>
BluePrint Pension Services is hosting a webinar on designing successful micro pension schemes as a solution to mitigate the risk of old age poverty for men and women working in the informal sector.

<strong><a href="https://attendee.gotowebinar.com/register/1959278429738133251">What We Learned from Micro Pensions So Far: Case Studies from India and Ghana</a></strong>
<em>Hosting Organization: <a href="http://www.enviu.org/">Enviu</a></em>
In this one-hour interactive discussion, Ashish Aggarwal of Invest India Micro Pension Services and Samuel Waterberg of People’s Pension Trust Ghana will share their experiences and perspectives on setting up micro pension products in India and Ghana.

<strong><a href="https://attendee.gotowebinar.com/register/4179631111385479170">IndiaStack - The Change Catalyst</a></strong>
<em>Hosting Organization: <a href="http://www.accion.org/">Accion</a></em>
Accion will be hosting a webinar to discuss the ways that IndiaStack – a combination of complimentary financial technologies – is catalyzing change in financial inclusion in India. The webinar will highlight the risks and rewards of IndiaStack and the considerations FSPs should take before integrating with this system of APIs.
<h4><span style="color: #ff6600"><strong>Friday, November 3</strong></span></h4>
<strong><a href="https://attendee.gotowebinar.com/register/845125705152860161">How Financial Institutions and Fintechs Are Partnering for Inclusion</a></strong>
<em>Hosting Organizations: Center for Financial Inclusion at Accion, <a href="https://www.iif.com/">Institute of International Finance</a>
</em>Contrary to the popular narrative, financial institutions view fintechs as partners in innovation, not threats to their core business. By offering better, less expensive, and more innovative products, financial institutions can assert their continued relevance as customer-facing institutions with help from fintech partnerships. This webinar will explore how partnerships between mainstream financial institutions (e.g., banks, insurers, and payment companies) and fintechs are addressing financial inclusion challenges and expanding access to the formal financial economy for underserved segments of the global population, particularly in emerging markets.

<em>For more on Financial inclusion Week 2017, head to <a href="http://financialinclusionweek.org/">the Financial Inclusion Week website</a>.</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2016/11/17/financial-inclusion-week-roundup-e-magazine-keeping-clients-first-in-a-digital-world/">Financial Inclusion Week Roundup E-Magazine: Keeping Clients First in a Digital World</a>

<a href="https://cfi-blog.org/2017/04/11/save-the-date-financial-inclusion-week-2017/">Save the Date: Financial Inclusion Week 2017</a>

<a href="https://cfi-blog.org/2017/10/12/have-you-marked-your-calendars-for-financial-inclusion-week-2017/">Have You Marked Your Calendars for Financial Inclusion Week 2017?</a>

Webinars for #FinclusionWeek -- Register Today

<em>&gt; Posted by Christy Stickney, Independent Consultant</em>

<img class="alignright wp-image-21603" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/07/thumb_4663dca026224cdc9e1d988473581c36.jpg" width="330" height="220" />"Como tengo ya 57 años, ya no quiero más fuerte." (<em>Since I’</em><em>m already 57, I don’t want [to work] any harder.</em>) – A market vendor in Lima, commenting on her vision for her business’ growth.

“Tengo tantos planes, pero ya me siento cansado."  <em>(I have so many plans, but I already feel tired.</em>)  --  A 42-year-old owner of a bakery in Guayaquil.

“Después de pagar todo y sacar las hijas de la escuela puedo descansar." (<em>After paying off everything and getting my daughters through school I can rest.</em>)  -- A 37-year-old paint store owner in Lima.

Entrepreneurs work hard—and when it comes to envisioning their older age they want to be able to have the luxury of slowing down. The above were common themes expressed by entrepreneurs in the three countries where I conducted my research as part of a <a href="http://www.centerforfinancialinclusion.org/programs-a-projects/cfi-and-accion-research-fellows">CFI fellowship</a>. “I’m tired.”  “I never rest.”  “We don’t take time off.” These are sacrifices associated with running one’s own business, especially among those who have grown their firms from a truly micro size, rising up from poverty and informality into what could be labeled as a “small enterprise” or SME (typically classified as those employing between 5 and 250 workers).

Throughout the developing world, active saving for retirement and participation in formal financial services for older age, like pensions, are minimal. Entrepreneurs of micro-businesses and SMEs face even fewer options than the formally employed, as they tend to operate outside the scope of either private or state-sponsored pension plans. The intention of my research was to learn about the nature of the micro-to-SME entrepreneurs and their businesses, as well as their experiences in growing their enterprises, overcoming hurdles, and utilizing available resources to their benefit. The goal of the research is to inform how to tailor financial services, which are key to enterprise growth, to this client niche. However, in studying these entrepreneurs and their businesses, I also encountered a pervasive alternative being pursued for the financing of one’s later years...

But my first step to finding these entrepreneurs was to identify MFIs’ borrowers with steadily increasing business loan sizes, expecting to expose entrepreneurs with vibrant businesses that were poised for growth. However, the “growth entrepreneurs,” as I’ve named them, represent only about a quarter of the clients I interviewed in low-income neighborhoods of Lima, Quito, Guayaquil, and Santo Domingo. Among the remaining three quarters, there emerged many entrepreneurs that spoke of fatigue and of their desire to slow down and eventually stop working. Clearly, they had worked hard to build up their businesses from scratch, requiring long hours and few breaks. Most of them have raised a family, and along with growing their enterprises have put their kids through school, built a house, and even created jobs or homes for their adult children. Nevertheless, for many of them, their economic futures feel uncertain. Their cash savings are insignificant. As entrepreneurs, they have not invested in a pension, and the majority has not contributed to social security.

Thus, I was both surprised and relieved to discover that among the entrepreneurs that were slowing down, many had invested in rental units as a source of future income. Almost half of the clients interviewed had bought and built rental properties, and quite a few were using their loans to purchase land and build more rentals, repaying these with income from their relatively stable microenterprises. One example is Claude, a Haitian migrant living in Santo Domingo, who has slowly built his second story home and two rental apartments below through microfinance loans that he repays with the meager income from his door-to-door sales business. As in Claude’s case, apartments are often built above or below the microfinance client’s own residence, comprising incremental construction projects that may reach up to four or five stories. Other clients I visited had bought empty lots, after catching wind of a good deal, with future plans of developing these into rental spaces. Former homes and business sites were also rented as owners moved to better locations.

"Tengo que pensar en mi vejez, la enfermedad.... Pensar a tiempo." (<em>I need to think about my [future] old age, and infirmities.... To think in time.</em>) -- A small day-care owner in Santo Domingo, reflecting on her reasons for building rental apartments behind her home.

What I observed is that rental properties are not only an attractive investment strategy for successful microenterprise owners in the cities I visited; rental income has become the de facto pension for much of this population. Undoubtedly, steady urban growth is fueling domestic rental markets, making this a very profitable venture and relatively stable source of future income.

Through reflecting on these observations, which are but a corollary to my study focus, I’m left with more questions than answers.
<ul>
 	<li>How common is this strategy of investing in rental properties to finance retirement among microfinance clients in other contexts?</li>
 	<li>How can financial service providers and the broader microfinance industry better support clients in planning for retirement, whether investing in rentals or other options?</li>
 	<li>And what <strong><em>are</em></strong> lower-income clients’ other options for financing later life? How about offering them alternative investment products, micro-pensions, or specialized savings plans?</li>
</ul>
Perhaps these underscore a next frontier for not only aging micro-entrepreneurs, but also for the maturing microfinance institutions that have been serving them for the past several decades.

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

<a href="https://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank">Microfinance as a Tool for Active Aging</a>

<a href="https://cfi-blog.org/2015/09/21/announcing-cfi-and-accions-research-fellows/">Announcing... CFI and Accion's Research Fellows</a>

<a href="https://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/">The Opportunity in Pensions Expanding With Life Expectancy</a>

Rental Properties: A Popular Pension Plan for Aging Entrepreneurs?

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

<img class="alignright wp-image-21236" src="https://centerforfinancialinclusionblog.files.wordpress.com/2016/04/thumb_b16dd4e1ca264d1f808145b85aed7c8c.jpg" width="315" height="210" />Despite – or because of – economic growth, booming exports, and increased foreign investments in many African countries, income inequality on the continent, by many accounts, is increasing. As a region, sub-Saharan Africa has a <a href="http://www.brookings.edu/blogs/africa-in-focus/posts/2015/09/22-inequality-africa-sustainable-development-goals-bhorat">higher level of inequality</a> than the rest of the developing world. Globally, <a href="http://www.worldbank.org/en/region/afr/publication/poverty-rising-africa-poverty-report">seven of the top 10 countries</a> in terms of inequality are in Africa.

Contributing to the discrepancy is the lack of formal financial services within the region, according to <a href="http://app-cdn.acwupload.co.uk/wp-content/uploads/2016/03/APP_AR2014_EXTRACT2016_PRINT.pdf"><em>Shaking up Finance and Banking in Africa</em></a>, a policy brief produced by the Africa Progress Panel, which draws its analysis from the <a href="http://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Africa_Progress_Report_2014.PDF">2014 Africa Progress Report</a>. Only one in five Africans have any form of account at a formal financial institution. Like most parts of the world, the poor, rural dwellers, and women are particularly excluded. The strategic deployment of sustainable and inclusive finance is a vital ingredient to ensuring that Africa’s long-term growth encompasses all individuals equitably.

Between 1990 and 2012, the proportion of Africans who were poor fell from <a href="http://www.worldbank.org/en/region/afr/publication/poverty-rising-africa-poverty-report">56 percent to 43 percent</a>, according to the World Bank. However, when you account for population growth, the total number of individuals living in poverty increased. The most optimistic scenario, calculated by the World Bank, indicates that across this 22 year window, the number of Africans living in poverty increased from 280 million to 330 million. On the other side of the spectrum, Africa is now home to over <a href="http://www.theguardian.com/global-development/datablog/2015/jul/31/africa-wealth-report-2015-rich-get-richer-poverty-grows-and-inequality-deepens-new-world-wealth">160,000 people</a> whose personal fortunes exceed USD 1 million, which represents a doubling in the number of individuals of such wealth since the turn of the century.

Haroon Bhorat, Senior Fellow at Brookings’ Africa Growth Initiative described the problem, <a href="http://www.brookings.edu/blogs/africa-in-focus/posts/2015/09/22-inequality-africa-sustainable-development-goals-bhorat">saying</a>: “Simply put, income inequality is the thief of the poverty-reducing effect of growth.”

The agriculture sector is a key priority area for expanding financial inclusion to combat income inequality. Rural dwellers are the most financially excluded people on the continent. Overwhelmingly, farmers lack access to all formal financial products – credit, savings, and insurance. Farmers need to both insure themselves against environmental risks, and make investments in seeds and other productive inputs to boost their productivity. Without insurance, they have to invest their earnings into dealing with emergencies like poor harvests, droughts/floods, and illness, rather than investing in boosting productivity. Their lack of access to loans and savings make them unable to respond to market opportunities, like buying fertilizers, pest control, and new equipment.

A transformed financing environment will allow the continent to tap into the vast potential of its domestic resources. Supporting farmers associations and the integration of financial services access therein can bring a wealth of benefits, including: increased access to financing via transactions records kept within associations; increased market access; and increased access to informational services and skills-building opportunities. Inclusive finance can also yield less intuitive benefits that boost productivity systemically. Kofi Annan, Chair of the Africa Progress Panel, asserts the potential for pension funds to – along with their imperative role in supporting aging - finance energy proliferation. In Ghana, Mozambique, and Nigeria, for example, pension funds have allowed governments to tap into deeper pools of savings that exist to actively finance the energy sector. Annan said: “One of the greatest barriers to the transformation of the power sector is the low level of tax collection and the failure of governments to build credible tax systems. Domestic taxes can cover almost half the financing gap in Sub-Saharan Africa.”

Financial services also present huge opportunities for supporting education – one of the biggest factors to boosting equality. For every 100 African children that enter the school system, only four will make it to a tertiary institution. This is the lowest rate in the world. Savings and loans can offer families the support they need to ensure that their children are empowered to live productive lives.

The good news is that, along with the gradual expansion of traditional banking systems, peer-to-peer banking and mobile banking have increasingly taken root to further address the needs of those excluded from the financial system, democratize the financial playing field, and boost growth that benefits all. Among developing regions, mobile money is <a href="http://www.forbes.com/sites/danielrunde/2015/08/12/m-pesa-and-the-rise-of-the-global-mobile-money-market/#17edf1c723f5">most widespread</a> in sub-Saharan Africa, followed by Southeast Asia and Latin America. Constantinos Kypreos, Vice President &amp; Senior Credit Officer at Moody’s and co-author of the report <a href="https://www.moodys.com/research/Moodys-Africas-mobile-phone-banking-boom-to-support-economic-growth--PR_343501"><em>Mobile Banking Supportive of Economic Growth and Banking Sector Prospects</em></a>, stated in an <a href="https://audioboom.com/boos/4160830-driving-financial-inclusion-for-sub-saharan-africa-constantinos-kypreos-of-moodysratings-on-mobilephonebanking">interview</a> that with time, mobile phone banking will boost economic growth and create opportunities for banks to expand across the continent.

Developing the financial sector is one of the most urgent challenges facing the region. As the governor of Ghana’s central bank put it, “An efficient financial sector provides the rudiments for income growth and job creation [and]…financial development contributes to the reduction of poverty and inequality.” The <em>Shaking up Finance and Banking in Africa</em> brief concludes that inclusive financial systems serve as the bridge that connects economic growth to the wellbeing of people. We at the Center for Financial Inclusion agree.

<em>Image credit: Accion</em>

<strong>Have you read?</strong>

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

<a href="https://cfi-blog.org/2015/11/12/why-does-consumer-protection-lag-in-africa/">Why Does Consumer Protection Lag in Africa?</a>

<a href="https://cfi-blog.org/2015/03/11/miv-governance-the-case-of-africap/">MIV Governance: The Case of AfriCap</a>

Sustainable and Inclusive Finance Is Key to Africa’s (Equitable) Economic Transformation

<em>&gt; Posted by ideas42</em>

<em>The following post was <a href="http://www.ideas42.org/tackling-low-retirement-savings-in-mexico/" target="_blank" rel="noopener">originally published</a> on the ideas42 blog.</em>

<a href="https://www.flickr.com/photos/worldbank/2658281883/in/album-72157606068898904/"><img class="aligncenter wp-image-18347" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/06/2658281883_53c42dc85e_b.jpg" alt="" width="620" height="398" /></a>For many of us, saving enough for retirement remains a murky, unrealized goal. <a href="http://www.ideas42.org/publication/view/freedom-and-choice-in-pensions-a-behavioral-perspective/">Behavioral science has already proven useful in some ways</a>, but there are still many opportunities to apply a behavioral lens to better preparing for the future.

In Mexico, not putting aside enough for retirement is a persistent problem for many people. As a result, 27 percent of the nation’s elderly live in poverty. While recent reforms to the retirement system have provided more Mexicans with individual retirement accounts than ever before, mandatory contribution rates remain too low to provide for post-retirement living expenses. To cover the rest, the system currently allows people to make voluntary contributions to their individual accounts. The problem is that they don’t: currently, less than 1 percent of the 50 million account holders make at least one contribution each year.

In an attempt to increase contributions, <a href="http://cfi-blog.org/2015/05/27/would-you-like-a-pension-with-that/">the Mexican government has recently changed the system so that people can make deposits at 7-Eleven® stores and Telecomm® branches</a>. The ubiquity of these two outlets across the country has reduced hassles and simplified the deposit process – and yet voluntary contributions still remain low.

So what’s going on? To try and answer this question, and find ways to overcome the problem, ideas42 is partnering with The MetLife Foundation to design behavioral solutions aimed at increasing voluntary retirement contributions made through 7-Eleven and Telecomm locations.

A crucial part of this work is building a deeper understanding of the context and key behavioral factors involved in Mexican retirement contributions, which is why we’re collaborating with a number of organizations with a vast expertise in this area, including <a href="http://www.consar.gob.mx/">CONSAR (Mexico’s commission of the retirement system)</a>, the <a href="http://www.amafore.org/">12 Afores (nationally approved retirement fund administrators) and Amafore (their national association)</a>.

After conducting in-depth interviews with over 50 account holders and surveying over 100 7-Eleven and Telecomm customers across three cities in Mexico, we’ve identified several initial behavioral insights. These include:
<ul>
 	<li>People often choose savings methods that allow instant access, rather than the delayed gratification of long-term investments. As a result, many favor keeping their savings in the form of physical goods, such as inventory for their small businesses, or cash. When they do formally save, they opt for more liquid savings accounts.</li>
 	<li>Similarly, short-term savings goals (and their more immediate rewards) trump long-term ones. This is partly because most people have trouble imagining what their lives will look like once they’ve stopped working. With only abstract notions and ideas, we might become apprehensive about our futures, which can lead to feelings of hopelessness. Alternatively, we might be over-optimistic, leading us to think that things will simply work themselves out when the time comes instead of spurring us to take real action.</li>
 	<li>Individual concerns regarding retirement are kept private, while friends’ and family’s short-term spending and consumption habits are highly visible. This creates a false perception that others are not worried about or planning for their futures.</li>
 	<li>Finally, people are rarely prompted to think about or actively engage with their retirement accounts. They don’t know how the retirement system works, or what it does specifically with their money. Therefore, if they do think about long-term savings, many don’t think of these accounts as viable options.</li>
</ul>
Inspired by these insights and others, in the coming months we’ll be focusing on generating design recommendations for the Mexican retirement system. Through this partnership, ideas42 will pilot multiple behavioral interventions that we hope will ultimately lead to improving the long-term financial health of millions of people in Mexico.

<em>Image credit: <a href="https://www.flickr.com/photos/worldbank/2658281883/in/album-72157606068898904/" target="_blank" rel="noopener">World Bank</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/05/27/would-you-like-a-pension-with-that/">"Would you like a pension with that?"</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank" rel="noopener">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

<a href="http://cfi-blog.org/2014/10/28/new-platform-to-gift-a-pension-in-india/" target="_blank" rel="noopener">New Platform to Gift a Pension in India</a>

Tackling Low Retirement Savings in Mexico

Last year, to increase voluntary savings in Mexico’s pension system, the pension regulator teamed up with 7/11 retail stores and <a href="http://www.telecomm.net.mx/">Telecomm</a> to create channels for people to contribute to pensions, whether they receive an income within the formal labor market or not. The system added about 3,600 new contribution locations for the 53 million people in Mexico who have a public pension.

Imagine walking into your local convenience store to buy a pack of gum (or chips, or beer, or a newspaper) and deciding to contribute as little as $3 to your pension, just like you would top-up your mobile phone or buy a lottery ticket. You would give the cashier your citizen ID number (twice, just to make sure), and the cashier would give you a receipt for the transaction. The funds would travel to a centralized switch which holds the national database called Procesar and then be directed to one of 11 pension fund administrators. The funds would enjoy a 10 percent return over three years—a higher rate than savings accounts in Mexico offer—enabling them to double within 20 years.

The new system was created by the pensions regulator, CONSAR, in response to the problem of low contribution rates among existing accounts and the recognition that many, if not most people in Mexico are financially unprepared for later life. Anyone who has ever been a part of the formal labor system has a pension in Mexico (even, say, those with a short-term construction job), though many people are unaware of it. Currently, the system includes 53 million people, slightly under half of Mexico’s total population. However, an estimated 58 percent of Mexicans are informally employed and therefore without a constant connection to the pension system. CONSAR’s goal is to increase the number enrolled in the system, the number who make voluntary contributions, and the frequency with which they make them in order to provide a dignified pension to all Mexican citizens. The scale of the problem is enormous. Of the 53 million contributory pension accounts, only 58,000 received voluntary accounts in 2014 (less than 1 percent).

While pension reform to increase automatic contributions for the formally employed is being considered in Mexico’s Congress, such a bill would not cover the informally employed labor force, and would help very little of those who either have infrequent and intermittent work or workers who are paid in part through cash and under-declare their income.

CONSAR’s policy designers are betting that they can increase both enrollment and participation by creating convenient channels to contribute to pensions. There are two major challenges. The first is the complexity of the pension system. The pension funds in Mexico are held in 11 privately operated funds. They pass through a switch between the retail contribution collector and Telecomm that allows the individuals’ money to be directed to the correct fund. Procesar plays a big role in streamlining contributions to ensure that despite a complex system money is properly directed and can be confirmed. This challenge has already been addressed.

The second challenge remains outstanding, and it is that people are not yet participating in the system in a way that will make a major dent in their preparedness for later life. CONSAR is considering ways to analyze the behavior of clients as they interact with their long-term savings to create better incentives, ways to diversify the channels for contributions, ways to educate people on their pensions, and ways to nudge people to contribute, like having cashiers ask customers if they would like to contribute to their pension when they pay. This challenge is much more daunting than the first, although initial results show promise, as 88 percent of contributions through these retail chains were done by people who had not made voluntary contributions towards their pension before.

CONSAR is looking forward to keeping those interested in financial inclusion updated on their progress—so if you have any comments or questions please comment on this post below. And if you know someone who has ever worked in Mexico, make sure you tell them they can make a contribution to their pension through their local 7/11!

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank" rel="noopener">The Opportunity in Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank" rel="noopener">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

<a href="http://cfi-blog.org/2014/10/28/new-platform-to-gift-a-pension-in-india/" target="_blank" rel="noopener">New Platform to Gift a Pension in India</a>

“Would you like a pension with that?”

The scale of the unmet financing needs of older adults around the world – and especially in lower and middle-income countries – is so significant that if unaddressed, it won’t just be each generation as it enters the later years that pays the price. It’ll be their families, healthcare systems, governments, and societies writ large, too. In India, for example, only <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">12 percent</a> of the population has any sort of pension. A rapidly growing demographic, within 25 years, the percent of the world’s population over 60 will nearly double.

Recent progress does deserve mention. Just a few days ago, on the heels of last year's launch of the Jan Dhan Yojana national financial inclusion strategy, India's central government <a href="http://indianexpress.com/article/opinion/columns/narendra-modi-social-security-schemes-working-for-welfare/">unveiled</a> three new contributory social security schemes for pensions, life insurance, and disability insurance. Our hope is that these new programs are hugely successful and prove demonstrative for other countries to follow.

Since 1990, in Latin America and the Caribbean, 13 countries <a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/">implemented programs</a> to expand non-contributory pension schemes, and there have also been significant reforms to contributory schemes. Though benefits and scale are still inadequate. In Latin America, non-contributory pensions usually pay-out less than US$10 per day, and fewer than two of ten independent workers are contributing to pensions.

Why has financial inclusion of older adults been so difficult, and what’s the path forward?

A new <a href="http://www.centerforfinancialinclusion.org/fi2020/">Financial Inclusion 2020 (FI2020)</a> video explores these questions, spanning topics of age caps for loan recipients, addressing older client needs, and mobilizing the public and private sectors.

The video features the following individuals:
<ul>
 	<li>Yves Moury, Fundación Capital</li>
 	<li>Rosario Perez, Pro Mujer</li>
 	<li>Elizabeth Loewy, EverSafe</li>
 	<li>Harsha Rodrigues, Women's World Banking</li>
 	<li>Parul Khanna, MicroPension Lab</li>
</ul>
To watch the video, press play on the embedded video above or head to our CFI YouTube page, <a href="https://www.youtube.com/watch?v=CnWTaoNAGKU">here</a>.

For more on aging and financial inclusion, read the HelpAge and FI2020 report, <em>Aging and Financial Inclusion: An Opportunity</em>, <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/aging-financial-inclusion">here</a>.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/10/28/new-platform-to-gift-a-pension-in-india/" target="_blank" rel="noopener">New Platform to Gift a Pension in India</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/" target="_blank" rel="noopener">Aging in Latin America: Challenge Meets Opportunity</a>

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/" target="_blank" rel="noopener">Moving to Action on Aging and Financial Inclusion</a>

Safeguarding the Financial Futures of Older Adults, and Societies

<em>&gt; Posted by the Access to Finance Unit, Multilateral Investment Fund, Inter-American Development Bank</em>

<a href="https://www.flickr.com/photos/worldbank/4680565800/in/set-72157601463875207"><img class="aligncenter wp-image-18068" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/04/4680565800_aaa2dc3c73_b.jpg" alt="" width="610" height="407" /></a>With fertility rates falling and life expectancy on the rise, the world’s population is aging rapidly. And though increasing longevity can be considered a triumph of development, for Latin America and the Caribbean, this rapid aging presents a serious challenge: the population is not financially prepared to support itself during old age.

According to the <a href="http://www.iadb.org">Inter-American Development Bank</a>’s (IDB’s) book <a href="http://publications.iadb.org/handle/11319/462?locale-attribute=en"><em>Better Pensions, Better Jobs</em></a>, by the year 2050 there will be three times as many people over the age of 65 as there are today in the region. However, if trends continue, by this date only one in two seniors will have saved for a pension. This means that about 130 million workers are not saving for their pension.

In response, several countries have taken efforts towards increasing pension coverage to lower-income and vulnerable segments through non-contributory pension schemes. From 1990 to 2013, 13 countries in the region implemented programs aimed at expanding non-contributory pensions. Still, even those that receive pensions are finding their value, generally less than US$10 per day, insufficient to cover their basic needs. This means that current and future generations of seniors will have to rely on alternative sources of income to complement their pensions.

Now when it comes to contributory pension schemes, despite significant structural pension reforms during the early 1990’s, the level of contributions has not altered much. This is particularly true among people operating in the informal sector, in which less than two out of every ten independent workers are saving towards a pension. And if we consider that 47 percent of the region’s active population is informal, and that among the lowest-income quintile this figure climbs to 74 percent, one can grasp just how vulnerable this segment is to entering or returning to a state of poverty during old age.

For over 20 years the IDB’s Multilateral Investment Fund (MIF) has been committed to supporting economic growth and poverty reduction in the region through private sector-led development projects. In recent years the MIF has executed regional technical cooperation programs such as <a href="http://www.pro-savings.org">Prosavings</a> and <a href="http://www.remittancesandsavings.org">Remittances and Savings</a> in order to increase the access and use of adapted savings products that are tailored to the needs of the lower-income population in several countries throughout the region.

The MIF has also sought to promote a goal-oriented approach to savings in some of its projects, mainly through commitment savings products. These types of products allow clients to establish a savings goal and fix a regular savings amount that aligns with the client’s income reality and can be achieved in a set period of time. Several observations on commitment savings products point towards their capacity to reduce vulnerability and engage clients in financial planning. Similarly, we at the MIF believe that through further innovation, commitment savings can serve as the basis for adapted retirement savings products. Thus, the MIF is currently exploring new ways to further expand long-term savings among informal sector workers that can be used to support them during old age.

<em>Be sure to follow new developments in this field during the course of the year </em><a href="http://www.fomin.org"><em>here</em></a><em>.</em>

<em>Image credit: <a href="https://www.flickr.com/photos/worldbank/4680565800/in/set-72157601463875207" target="_blank" rel="noopener">Charlotte Kesl / World Bank</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/02/20/moving-to-action-on-aging-and-financial-inclusion/">Moving to Action on Aging and Financial Inclusion</a>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2015/01/05/five-lessons-for-building-savings-in-latin-american-microfinance/">Five Lessons for Building Savings in Latin American Microfinance</a>

Aging in Latin America and the Caribbean: Challenge Meets Opportunity

<em>&gt; Posted by Sonja Kelly, Fellow, CFI</em>

<a href="http://www.worldbank.org/en/programs/globalfindex/infographics#2"><img class="alignright wp-image-17975" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/04/shareable_01.png?w=490" alt="" width="376" height="188" /></a>In 2013, Elisabeth Rhyne was asked what she was particularly excited about as she looked forward to the future of financial inclusion. Her response? “A second data point.”

Well, now we have that second data point. The 2014 Global Findex reports that <a href="http://cfi-blog.org/2015/04/15/sixty-two-percent-of-the-world-is-banked-the-new-global-findex-finds/">62 percent</a> of people in the world have a bank or mobile money account, up from 51 percent in 2011, and those two points describe a line. Simply projecting that line forward takes the world to about 83 percent of people with accounts by the year 2020. But of course, that’s not the whole story…

The Global Findex encouragingly articulates some concrete steps that governments and providers can take to accelerate progress toward financial access. I would venture to guess that these steps would bridge the gap between the projected 83 percent and the full 100 percent by 2020 (you can read about the World Bank’s goal of universal access by 2020 <a href="http://www.worldbank.org/en/news/press-release/2013/10/11/universal-financial-access-vital-reducing-poverty-innovation-jim-yong-kim">here</a>).

So let’s just assume that universal access will be a reality by 2020. We can envision a world in the near future where people receive wages, government payments, and remittances into their bank accounts. Businesses spend less on payroll and have fewer risks than if they paid out in cash. Governments avoid corruption associated with social benefit payments by having a cheaper G2P system that entails fewer human intermediaries. Remittances are cheap—or even free—and go directly into the recipient’s bank account. Cause for celebration, right?

Well, yes, but not so fast.

What’s missing from this world is a description of the quality of financial services for the customer. Financial access will mean a lot of good things for a lot of stakeholders—reduced corruption, lower cost of employment, and massive savings for government, to name a few. But financial access does not necessarily mean improved lives for the two billion people around the world who may have a new account by 2020.

<a href="http://www.centerforfinancialinclusion.org/about" target="_blank" rel="noopener">Full financial inclusion</a> is a lot more than access to a transaction account. Services will have to come with quality in order to be relevant to consumers. If products are well-designed to meet the needs of consumers, then we will have a great deal to celebrate by 2020. But if customers receive wages, government payments, and remittances into a bank account and then withdraw them right away, financial inclusion will have just created a different (but only marginally better) way for people at the base of the economic pyramid to interact with their money.

At our <a href="http://www.centerforfinancialinclusion.org/fi2020">FI2020</a> roundtable co-hosted with the Institute for International Finance (<a href="https://www.iif.com/">IIF</a>) this week, one of the themes that emerged was this difference between access and quality. You can give a person an account, but if the account sits unused, or if it serves the same function that a cash payment would serve, or if the owner of the account doesn’t even remember they have it, its use is minimal or even nil.

Instead of trying to fit people to existing products, financial inclusion has a responsibility to fit products to people’s needs. We have the tools to create products for the mother who wants to pay her child’s school fees without carrying a pile of cash to the school on the first day of the term, for the family who wants to create a new floor in their house but needs a loan, or for the older person who needs to receive her pension but cannot walk all the way to the post office to collect it. Financial inclusion is a vision for improved lives—and financial services are just a means to an end.

Getting back to the Findex, I was most excited this year by the question that started to address this “so what” issue of financial services. The questionnaire asks respondents, “Could you come up with [insert 1/20 of GNI per capita here] in the next month if you had to?” (In the US, 1/20 of GNI per capita is about $2,600 just to provide some perspective.) In developing countries, 26 percent of people reported they would be able to come up with the money from their own savings. But more than half of this group said that they do not save in a formal financial institution—and if they had the right product it is possible their answer wouldn’t be “no”. Now that we are well on our way to addressing the problem of lack of access to financial services, let’s start to turn the conversation to quality so that we can achieve not just access but full financial inclusion.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/04/15/sixty-two-percent-of-the-world-is-banked-the-new-global-findex-finds/" target="_blank" rel="noopener">Sixty-Two Percent of the World Is Banked, the New Global Findex Finds</a>

<a href="http://cfi-blog.org/2015/04/21/global-leaders-issue-commitments-to-universal-financial-access-by-2020/">Global Leaders Issue Commitments to Universal Financial Access by 2020</a>

<a href="http://cfi-blog.org/2012/12/14/announcing-the-launch-of-the-global-financial-inclusion-global-findex-microdata/">Announcing the Launch of the Global Financial Inclusion (Global Findex) Microdata</a>

Financial Inclusion by 2020? It Depends.

Mayada El-Zoghbi

Elisabeth Rhyne

Susy Cheston

William Price

Gautam Bhardwaj

Parul Seth Khanna

Sonja Kelly

Christy Stickney

Saran Sidime

Apis Partners

IFMR LEAD

Eric Zuehlke

Cambodia

Myanmar

Mexico

Latin America and The Caribbean

Mongolia

Thailand

Alternative Data

Data Analytics

Financial Technology

Mobile Banking

Payments

Pensions and Retirement Saving

Saving

Underserved Groups

Women

Agent Banking

Digital Financial Services

Insurance

Insurance Companies

Policy, Regulation and Government Initiatives

Aging and Older Adults

MSME/SME Finance

Agricultural and Rural Finance

P2P Lending

Remittances

Trends

Credit

Financial Capability

Life Insurance

Blog Post

Webinar

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

<em>&gt; Posted by Center Staff</em>

[soundcloud url="https://api.soundcloud.com/tracks/190772440" params="auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;visual=true" width="100%" height="300" iframe="true" /]

Last week <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf"><em>Aging and Financial Inclusion: An Opportunity</em></a> was released, a new FI2020 report from CFI and HelpAge International supported by MetLife Foundation. The report examines the unmet financing needs of older adults, an area of increasing importance as global demographic shifts see the rapid expansion of this population segment. Within 25 years, the percent of the world’s population over age 60 will nearly double.

As part of the report’s launch, HelpAge International’s Head of Policy Eppu Mikkonen-Jeanneret, MetLife Foundation’s Financial Inclusion Lead Evelyn Stark, and CFI’s Managing Director Elisabeth Rhyne sat down to discuss the project and its findings. The conversation, among its topics, touched on the scale of the demographic shifts at hand, the opportunities in these changes, where we are with pension services, and action areas for policymakers, providers, and support organizations.

To listen to the full conversation, press “play” on the embedded audio above. Here are a few quotes.
<p style="padding-left: 30px"> “Every cohort that we have coming through is healthier and better educated. So in terms of including them in financial services and generally in society itself, it gives access to a lot more talent that is currently being missed.” – Eppu Mikkonen-Jeanneret, HelpAge International</p>
<p style="padding-left: 30px"> “[Older adults] can borrow for productive enterprise. They still want to do savings. They may be supporting grandchildren or children in university or elementary school, and they need to be able to make payments as well.” – Evelyn Stark, MetLife Foundation</p>
<p style="padding-left: 30px">“One of the things that pops out is the need for collaboration between the public and private sectors. Solutions that are focused on one sector only, whether it’s the government or whether it’s the private sector, they’re not going to work.” – Elisabeth Rhyne, CFI</p>
For more on aging and financial inclusion, read the new FI2020 report, <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf">here</a>, or our key messages on the topic, <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_key_messages.pdf">here</a>. Join the conversation on Twitter using <a href="https://twitter.com/search?f=realtime&amp;q=%23agefinclusion&amp;src=typd">#AgeFinclusion</a>.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/02/10/aging-and-financial-inclusion-an-opportunity/" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank" rel="noopener">The Opportunity of Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2013/08/06/bank-accounts-whats-age-got-to-do-with-it/" target="_blank" rel="noopener">Bank Accounts: What's Age Got to Do with It?</a>

Talking #AgeFinclusion: Meeting the Financial Needs of the Rapidly Growing Older Demographic

<em>&gt; Posted by Sonja Kelly, Fellow, CFI</em>

<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf"><img class="alignright wp-image-17308" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/report-cover.png" alt="" width="285" height="369" /></a>Marisol is a 69-year-old woman in Aguablanca, a mid-sized community near the coast in Colombia. She hasn’t saved much for her older years. She receives a small social pension—about a dollar per day—from the public pension program, Colombia Mayor. While it provides an income floor for her, Marisol would like to be working as an entrepreneur. She even has a plan: “If I had a little capital, I could buy chicken legs, beef, and bananas here at a cheap price and then sell them in the Pacific towns at three or four times the price. And then I could bring back fish from the coast to sell here at the fairs.” But she cannot get a loan because of the age caps on credit at the financial institutions that operate in her area.

Marisol explains that it is not her lack of zeal or a declining health that is keeping her from increasing her income through this business dream of hers. “Strength and desire do not fail me,” she says. “It’s the money that I lack.”

Marisol was one of the people that we interviewed as part of the creation of an issue paper on <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf" target="_blank" rel="noopener">Aging and Financial Inclusion</a>, a project conducted by the Financial Inclusion 2020 campaign and in collaboration with HelpAge International. Her story is not unique—many older people report being denied access to credit and insurance in their later years. Most older people who had low or informal income when they were younger have not saved for their older years.

The new paper examines the unmet financing needs of older adults, a population segment growing rapidly in developing countries. With a focus on Latin America, the paper discusses the barriers to and market opportunities in expanding financial access to aging populations.

Some of the conclusions <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf" target="_blank" rel="noopener">in the paper</a> are intuitive. We expected, for example, that rapid aging in middle-income countries was a major societal challenge based on the research we conducted for our report, “<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2013/02/looking_through_the_demographic_window.pdf" target="_blank" rel="noopener">Looking Through the Demographic Window</a>”. We also expected that by and large people were not saving as much as they wanted to—indeed, while many people intend to save for older age, they often end up having to rely on government support and family and friends when they stop working.

Other conclusions, however, were surprising:
<ul>
 	<li>Many people at the base of the pyramid could make contributions to pensions over their lifetimes, but they have no means to pay into a pension system. Particularly in countries with populations largely working in the informal sector, major proportions of the labor force are outside the pension scheme. To date, convenient mechanisms for collective contributions have been cost prohibitive. This is changing, though. New technologies for P2G payments could provide convenient and inexpensive means, if pension providers and payment service providers collaborate.</li>
 	<li>Older people often lack access to the microfinance services that have been offered to people at the base of the economic pyramid. We found that in many markets, age caps exist on credit and insurance products. While we were unable to articulate exactly why this happens (whether it is because of retirement age, longevity, or concerns about disability), older people that were interviewed as a part of this project report that such restrictions cripple their ability to pursue self-employment and to mitigate financial shocks in their older years.</li>
 	<li>There is a great deal of room for financial institutions to improve their interactions with older people. Lack of trust is one of the primary barriers that financial institutions face when working with older customers. Earning trust is not an easy process, but tailoring customer service to the needs of older people and ensuring adequate client protection is a start. We spoke with institutions that intentionally train their staff to anticipate some of the physiological issues associated with aging. They reported success in increasing clients’ engagement with the financial institution.</li>
 	<li>Social pensions – pensions provided without prior contributions as part of social welfare – have dramatically increased in recent years, but there are large coverage gaps. Where they are offered, social pensions provided by governments create an income floor that assures recipients that they can regularly meet at least some of their basic needs. But they don’t cover everyone, and they are usually quite small compared to living costs.</li>
 	<li>Many experts believe that the existing network of social pensions is not adequately leveraged. Social pensions could be linked to other products—loans and insurance, for example, which could be paid back directly through the social pension system’s infrastructure. The prevailing attitude, however, is that social pensions are intended to bolster consumption, and therefore a means to save a portion of these amounts is not considered, which in turn means that connecting pensions to bank accounts is an untapped opportunity to build financial inclusion.</li>
</ul>
For more of our observations, read the full report, “<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_an_opportunity.pdf" target="_blank" rel="noopener">Aging and Financial Inclusion: An Opportunity</a>”, or our summary of <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/02/aging_and_financial_inclusion_key_messages.pdf" target="_blank" rel="noopener">key messages</a> on the topic.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank" rel="noopener">Aging and Financial Services: With and Without Employment</a>

<a href="http://cfi-blog.org/2013/03/28/adventurers-unite-voyaging-through-data-in-our-mapping-the-invisible-market-website/" target="_blank" rel="noopener">Adventurers, Unite: Voyaging Through Data in Our Mapping the Invisible Market Website</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

<em>*Name in client vignette has been changed to protect privacy.</em>

Aging and Financial Inclusion: An Opportunity

Financial inclusion stories and research are published daily, lauding various efforts to bring lower-income people into the formal banking fold. All progress deserves celebration, but also closer examination. When a new initiative takes effect, or a new service deployed, how does that advance us in achieving financial inclusion? A backdrop of sound measurement is critical. A BBVA research team, Noelia Cámara and David Tuesta, recently set out to construct an index that measures the extent of financial inclusion at the country or region level. The index is discussed and applied to 82 countries in the team’s new paper, <a href="https://www.bbvaresearch.com/en/publicaciones/measuring-financial-inclusion-a-multidimensional-index/"><em>Measuring Financial Inclusion: A Multidimensional Index</em></a>. We were especially intrigued to learn that this research incorporates both supply and demand-side data. I recently sat down with Cámara to talk about the project, from challenges in measuring financial inclusion to the implications of the newly-available index.
<h4>1. What are the challenges in measuring financial inclusion?</h4>
Many issues arise when it comes to measuring financial inclusion. First, there is no single definition for financial inclusion universally accepted in the literature. Most definitions include three dimensions: use, quality, and access. However, when it comes to defining these dimensions, no consensus is found. For instance, the use of financial services is part of the financial inclusion concept, but it is not clear what "use of financial services" really means. Thus, several questions come to the fore: Do we consider having a bank account in the formal financial system to be a necessary condition for financial inclusion? Is having a pre-paid card or microinsurance enough to classify an individual as included? Is using electronic payment intermediation (e.g. paying bills with a mobile phone) a sufficient condition?

Second, and this may be the most important challenge to be addressed in the near future, there is a lack of harmonized data. For example, measuring access can be approached by assessing the number of bank branches and ATMs, but there isn’t always information available about the number of banking correspondents’ outlets. There is also access to financial services through mobile phones and electronic devices like laptops and smartphones. However, having a mobile phone or a computer is not a sufficient condition for access to the financial system; in order to generate broader access and foster financial inclusion, many other things such as regulation, new financial digital channels, or infrastructure are necessary. Finding workable data and measuring these elements of access is difficult. These challenges very much apply to measuring the quality of financial services in a given market, as well.
<h4><strong>2. What dimensions do</strong> you<strong> use to measure financial inclusion? Which dimensions are more important than others?</strong></h4>
We postulate that the degree of financial inclusion is determined by the three dimensions of usage, barriers, and access. Barriers are used as a proxy for the quality dimension. We define an inclusive financial system as one that maximizes usage and access, while minimizing involuntary exclusion. Involuntary financial exclusion is measured by a set of barriers perceived by those individuals who do not participate in the formal financial system.

The weights of the variables in our index are calculated endogenously, by applying a technique called Principal Component Analysis (PCA) in two stages. As shown by our estimates, access is the most important dimension for measuring the level of financial inclusion (0.42). Access represents a necessary but not sufficient condition for using formal financial services. The weight for the usage dimension is 0.29, and for barriers it is 0.28.
<h4>3. Which counties performed well and which performed poorly?</h4>
As expected, developed countries have the most inclusive financial systems, and the African countries are more financially excluded. There are some exceptions among developing countries, such as Mongolia and Thailand, which perform relatively well.
<h4>4. Your study is unique in that it combines both supply and demand-side data sets. What are the limitations of relying on supply-side data?</h4>
Supply-side data is only accurate in measuring some aspects of financial inclusion, such as access. These data are not conclusive in terms of measuring use of financial services. For instance, with number of bank accounts, we have no information about how these figures are distributed among the population. Supply-side data may overestimate the inclusiveness of financial systems, as one person can have more than one account or loan, which is a very common practice in developed countries. By contrast, having individual micro-data for the demand-side is desirable because it enables us to identify who is actually using the financial services.
<h4><strong>5. You write that "We find that the degree of financial inclusion is highly correlated with some macroeconomic variables such as GDP per capita, education, efficiency of</strong> a<strong> financial system, and financial stability." What do you think the policy implications are since financial inclusion is so intertwined with broader economic and social issues?</strong></h4>
Talking about policy implications from a macroeconomic perspective needs further analysis to check for causality. What we illustrate in our study is that some important macroeconomic variables such as GDP per capita, education, efficiency of a financial system, and financial stability perform similarly with financial inclusion, which then shows that a causal relationship <em>may</em> exist.
<h4>6. At CFI, we are very much focused on the quality of services provided to the base of the pyramid, and client protection in particular. Where do you see the role of more qualitative issues like client protection in measuring financial inclusion?</h4>
The quality dimension is, so far, the most difficult of financial inclusion to measure. As I mentioned earlier, in our index we try to approach quality of financial services by the perceptions of excluded people. Particularly, the variable trying to proxy the lack of trust in the financial system should capture part of this client protection information. We are aware that this is only a partial approach, particularly since only excluded people provide answers to this question. Our current research focuses on improving the measurement of the quality dimension.
<h4><strong>7. As you may know, the CFI has defined financial inclusion as a state in which "everyone who can use them has access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, with respect and dignity. Financial services are delivered by a range of providers, in a stable,</strong> competitive<strong> market to financially capable clients." How do you feel this definition corresponds to your index and research and in what ways do they diverge/differ?</strong></h4>
The CFI’s definition for financial inclusion includes the three dimensions that we use to define financial inclusion, with quality-related issues included only partially from the perception of excluded people. There are also some aspects such as “respect and dignity” that we are unable to measure with the available information.

The only divergence between the CFI’s definition and our index is the inclusion of the financial capability concept. This is a broad concept that is difficult to define. It includes financial literacy, learning by using financial services, having the money to use the services, and so forth. Financial capability is not only difficult to measure for all the countries in our sample, but we also consider financial capability as a variable related to financial inclusion, rather than one to be included in the financial inclusion measurement. We believe that financial capability could be either a cause or a consequence of financial inclusion.
<h4><strong>8. What about the</strong> role<strong> of insurance, pensions, and other financial services not accounted for in the index?</strong></h4>
There are different degrees of financial inclusion. Our index is a basic measure that can be interpreted as a lower bound. We consider a financially included individual as having one of the following financial products: a bank account, savings account, or loan. Although other financial products such as pensions and insurance are important, we do not consider an individual to be financially included if holding only insurance with none of the previous specific financial products.
<h4>9. Were there any surprises in your research?</h4>
Surprises are common when creating an index. One may have a general idea about the ranking of a group of countries, however, there are always surprises. In our case, Mongolia and Thailand rank much better than expected. These two low-income Asian countries outperform other low-to-middle income countries, their East Asian neighbors, and even some high-income countries. For Mongolia, the degree of financial inclusion in the country is even higher than developed countries such as Sweden, Ireland, and Austria. It may be due in large part to universal cash hand-outs from the government. Thailand, which is ranked higher than Greece, has a high position in the ranking mainly due to the large number of bank accounts and the insurance schemes offered by the government.
<h4>10. What gaps in research still remain and which do you think are the most important to address?</h4>
For measurement issues, the quality of the data is the most important challenge that we need to address. Working on improving quality and generating accurate data are key for improving the measurement of financial inclusion. Big data generated by financial institutions (provided in an aggregated manner) should substantially improve the measurement of the three inclusion dimensions. Examples of such provider-generated data might include information regarding the range of financial services used by income group and access to financial services by channel. On the other hand, information about the unbanked is only possible through surveys.

Theoretical research and industry alignment is important in terms of operationalizing and acceptance of a definition of financial inclusion. Identifying how mechanisms behind financial inclusion work may help to reach a single, commonly accepted definition.

<strong>Have You Read?</strong>

<a href="http://cfi-blog.org/2012/11/16/measuring-financial-inclusion-the-basic-set-solution/" target="_blank" rel="noopener">Measuring Financial Inclusion: The 'Basic Set' Solution</a>

<a href="http://cfi-blog.org/2014/08/11/lean-research-is-it-time-to-reimagine-the-study-of-financial-inclusion/" target="_blank" rel="noopener">Lean Research - Is It Time to Reimagine the Study of Financial Inclusion?</a>

<a href="http://cfi-blog.org/2014/08/06/reality-check-three-ways-we-hype-up-financial-inclusion-break-throughs/" target="_blank" rel="noopener">Reality Check: Three Ways We Hype Financial Inclusion Breakthroughs</a>

Measuring ‘Financial Inclusion’ with a Multidimensional Index: A Conversation with Noelia Cámara, BBVA

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

<a href="https://www.flickr.com/photos/56252733@N00/5838119371/"><img class="aligncenter wp-image-16425" style="margin-top:5px;margin-bottom:5px" src="https://centerforfinancialinclusionblog.files.wordpress.com/2014/10/5838119371_28fde3fda3_b.jpg" alt="" width="575" height="383" /></a>A new micro-pension platform targeting those working as domestic laborers, appropriately named <a href="http://giftapension.com/" target="_blank">Gift a Pension</a>, launched in India last month. The platform is run by the Micro Pension Foundation (MPF) nonprofit and gives employers of domestic laborers a convenient way to support their workers in enrolling for the National Pension Scheme (NPS) Lite government product, a smaller version of the NPS offering. Across the country an estimated 40 million work for households in roles including maids, guards, cooks, and drivers. In the weeks since the program opened, <a href="http://www.financialexpress.com/news/from-pensions-to-beauty-courses-click-to-revisit-art-of-giving/1301914">over 1,000</a> domestic employers have registered themselves and gifted pensions to their workers. The platform offers more than its name suggests, as gifting workers five-year term life insurance is also available.

Here’s how the service works. First, MPF encourages employers ensure that their workers understand the structure and benefits of any accounts before enrollment happens. The Gift a Pension site includes a collection of educational tools and videos for employers to use to aid their workers’ familiarity with products and with the importance of managing finances for the long-term. Once this initial learning phase is complete, the employer registers themselves with the Gift a Pension site and enrolls their worker using information from the various documents that satisfy the necessary know-your-customer requirements. To open the account, the employer pays a one-time servicing fee (Rs 300) as well as the first contribution into the account. The worker then receives in the mail a guide to go along with their new account and their personal prepaid pension card. In a few weeks’ time the worker will also receive a government-issued Permanent Retirement Account Number (PRAN).

The pension product is contribution-based, with the enroller having the ability to select their desired payment interval and amount. The card-holder is able to make payments online or through designated retail outlets. Account settings can be set so that SMS payment reminders are sent. If they so wish, the employer is able to continue making contributions, as well. Subscribers will receive an annual contribution of Rs 1,000 from the government so long as they satisfy the minimum requirement of adding an annual sum of Rs 1,000. The pensions account can carry over to new jobs.

The five-year term life insurance product offers Rs 30,000 in coverage for enrolled individuals, with annual premiums depending on the age of the account-holder.

Gift a Pension was developed by the Micro Pension Visa Inclusion Lab, a facility that develops technology-enabled solutions for micro-payments and financial inclusion. In its work the Lab is targeting the excluded client segments of domestic help, truck drivers, contract labor, those who belong to tribes, and youth. The International Finance Corporation (IFC), Visa, Grameen Foundation, and Invest India Micro Pension Services (IIMPS) are collaborators with the Lab.

In India, roughly <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">12 percent</a> of the population has a pension. In 2009, the National Pension System was <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">extended</a> beyond public employees to also include employees of private companies meeting certain size requirements. Lots of room for pension progress remains however. Statistics from the Indian Ministry of Labor and Employment indicated that, as of 2011, 26 million employees worked in the organized public and private sectors in India, while 433 million worked at small organizations or through informal means and so they are not covered by the National Pension System.

<em>Image credit: <a href="https://www.flickr.com/photos/56252733@N00/5838119371/" target="_blank">Meena Kadri</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank">The Opportunity in Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2014/10/01/commemorating-international-day-of-older-persons/" target="_blank">Commemorating International Day of Older Persons</a>

<a href="http://cfi-blog.org/2013/09/20/expanding-service-accessibility-for-older-persons-and-pwds/" target="_blank">Expanding Service Accessibility for Older Persons and PWDs</a>

New Platform to Gift a Pension in India

<strong><em><span style="color: #ff6600">CFI and HelpAge’s New Research Initiative Examines the Financial Needs of Older Persons </span></em></strong>

<em>&gt; Posted by Eric Zuehlke, Web and Communications Director, CFI</em>

[caption id="attachment_16248" align="alignright" width="337"]<a href="http://centerforfinancialinclusionblog.files.wordpress.com/2014/10/pop-fig.png"><img class="wp-image-16248" src="http://centerforfinancialinclusionblog.files.wordpress.com/2014/10/pop-fig.png" alt="" width="337" height="223" /></a> Proportion of the Population that is Elderly (click to enlarge)[/caption]

A few years ago, my 90-year-old grandfather moved from Japan, where he had lived his entire life, to live with my parents in Virginia. Although he was retired and living comfortably, the death of my grandmother left him without an adequate support system. With his healthy pension and public assistance from the Japanese government, mixed with the security of living with my parents, he is well cared for. I’d say he is financially included. But on a global scale, he’s one of the lucky ones. All his supports – close family, a pension, good health care, and insurance – are inadequate for many. And the need for appropriate services is growing.

The facts speak for themselves. Between 2010-2020, the population of older persons will almost double in middle-income countries and increase by 40 percent worldwide. Yet despite this growing population, the provision of financial services is woefully inadequate. One in four older people in low and middle-income countries do not have a pension, and most pensions are inadequate to meet individual needs. Not only are financial services lacking, we don’t even fully understand financial inclusion in older age. The mismatch between the scale of the need and the attention devoted to it is staggering.

Older people in most of the world rely on a variety of income streams, mostly informal, work, family support, and assets already owned. Pensions and government assistance may also help, The varied income strategies that older people employ have implications for their financial services needs, especially since their expenses may be unpredictable.

And yet, providers often discriminate against older people through automatic age limits. Older people are also especially vulnerable to fraud and abuse. Meeting the needs of older people and protecting them requires a mix of financial service providers, regulators, NGOs, and more.

October 1 marks the 24th International Day of Older Persons. This year’s theme is “Leaving No One Behind: Promoting a Society for All,” a fitting message for a new research and thought leadership initiative CFI has launched with HelpAge and MetLife Foundation. To further understand the financial needs of older persons and the path to meet them, the project will raise awareness, increase knowledge, and promote action among financial service providers, sector regulators, policymakers, consumer organizations, and international development organizations who work on aging and/or financial inclusion.

CFI and HelpAge will conduct research to better understand the income streams and expenses of older adults and the obstacles older adults face in accessing and using the financial services that could help to improve their lives. The research will focus on Latin America and will include interviews with industry leaders and older adults in Colombia to get a first-hand look at the issues.

We will be preparing an issue paper on aging and financial services with action recommendations. We hope this paper will help to launch a global conversation. To kick-start the conversation, we will hold round-tables in Colombia on November 11 with a selected Latin American audience and in New York in early 2015 with a more global audience.

The challenges associated with an aging population will only become more prominent in the years ahead. Demographic trends – slowing birth rates and rising life expectancy – are a recipe for older people to soon become the fastest growing population segment in the world. The needs of an aging population will have to be addressed sooner or later. But taking action now can mitigate against future challenges. Stay tuned for more information and findings from this project here on this blog, or <a href="http://centerforfinancialinclusion.us5.list-manage.com/subscribe?u=394352ae963270aef6c51680d&amp;id=9df382106a">sign up</a> for our newsletter.

<em>For more, <a href="http://centerforfinancialinclusionblog.files.wordpress.com/2014/09/cfi_helpage_aging_financial_inclusion_press_release_9-22-14.pdf">read a press release</a> on the project’s launch along with an <a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/aging-financial-inclusion">accompanying backgrounde</a>r on older persons and financial inclusion.</em>

<em>Figure source: CFI publication <a href="http://centerforfinancialinclusionblog.files.wordpress.com/2013/02/looking_through_the_demographic_window.pdf" target="_blank" rel="noopener">Looking Through the Demographic Window: Implications for Financial Inclusion</a></em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/09/16/the-opportunity-in-pensions-expanding-with-life-expectancy/" target="_blank" rel="noopener">The Opportunity in Pensions Expanding with Life Expectancy</a>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank" rel="noopener">Aging and Financial Services: With and Without Employment</a>

Commemorating International Day of Older Persons

<em>&gt; Posted by Sonja E. Kelly, Fellow, CFI</em>

[getty src="506202603?et=mH9sg9SlTpdxbIfCuq86zg&amp;sig=ntKcr_sX0Ainwj50EDP6yrwD1c93zaupeeBbutIDxkA=" width="507" height="338"]

In most places around the world the subject of pensions is a sore one. In 2012, for example, in looking at arguably the crème of private employers, Fortune 100 companies, <a href="http://money.usnews.com/money/blogs/planning-to-retire/2012/10/26/top-companies-continue-to-drop-pensions">only 30</a> offered their U.S. new hires pension plans, down from 47 in 2008. For public sector employees in the U.S. in the same year, the pension plans of 26 states were less than <a href="http://www.forbes.com/sites/jeffreydorfman/2014/09/11/public-pensions-are-still-marching-to-their-death/">70 percent</a> funded. In lower and middle-income countries where financial security is weaker, the situation is even worse. In India, the pension system only covers roughly <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0">12 percent</a> of the population.

The severity of these figures is amplified when we look at demographic trends. Between 2010 and 2020, the population of older adults will almost double in middle-income countries. Worldwide over the decade, it will increase by 40 percent. By 2050, there will be roughly 1.5 billion older adults, 315 million of whom will be in India.

Aging presents unique challenges and opportunities to the financial inclusion industry. During a session at the <a href="http://17microcreditsummit.org/">Microcredit Summit</a> in Merida, Mexico a few weeks ago, five panelists met to discuss this topic. John Hatch (FINCA), Pilar Contreras (HelpAge), Caroline van Dullemen (World Granny), Reynold Walter (REDCAMIF), and myself all acknowledged the demographic reality—as populations age, if countries have not helped their societies and economies to prepare, they will face a global train wreck in the form of older people without adequate means of support and support systems that are overwhelmed. Financial inclusion can and should play a unique role in helping both individuals and whole countries mitigate risks.

Aging is an issue for everyone. We watch those in their older years – hoping to one day reach that life stage if we aren’t there already – as they manage their income and expenses, paying for health care, continued living expenses, and sometimes even supporting their families. As Hatch demonstrates in his own life, “retirement” doesn’t necessarily mean that older adults stop working, though even in the case where incomes continue, there are still barriers to their accessing financial services. Largely, financial services available to help people either in the aging process or in their older years are either inadequate or non-existent.

Globally, four out of five older adults lack any form of pension, especially if they are at the base of the pyramid. In most lower-income countries, public pension systems are inadequate to secure minimum financial security. Hatch, who has been in the financial inclusion space since its microfinance beginnings, lamented that he has seen only a handful of programs or initiatives that are specifically geared toward the needs of older adults.

In the case of India, there’s a clear opportunity in MFIs offering micropensions. In 2009, India’s National Pension System <a href="http://india.blogs.nytimes.com/2013/09/19/india-moves-to-transform-its-pension-system/?_php=true&amp;_type=blogs&amp;_r=0&amp;module=ArrowsNav&amp;contentCollection=World&amp;action=keypress&amp;region=FixedLeft&amp;pgtype=Blogs">extended</a> beyond public employees to also encompass private workers. The majority of companies in the private sector with at least 20 staff were then required by law to take part in an employee-contribution/employer-matching savings and investment plan. However, according to statistics from the Indian Ministry of Labor and Employment, as of 2011 only 26 million people worked in the organized public and private sectors in India. The 433 million Indians then working at small organizations or through informal means weren’t covered by the law.

Albeit few, there are micropension success stories. Walter celebrated the successful conclusion of a five-year pilot micropension program through REDCAMIF. Implemented across Latin America through a network of microfinance institutions, the pension program proved that there is a demand, a use, and feasibility for micropensions in Latin America. With the successful conclusion of this program, Walter is launching a formal program, building on the success he has found over the past five years. Most microfinance institutions and organizations around the world, van Dullemen noted, must undergo a paradigm shift, adopting views of older adults as wise, experienced, and still productive members of their families and communities.

Micropensions are critical to addressing the issue of income security. In most parts of the world, older adults are not likely to have the resources to stop working. The income streams that older adults rely on often come from a variety of places, including work, assets already owned, and family. These sources are often informal.

The varied income strategies that older adults employ have implications for their financial services needs, especially since their expenses may be unpredictable. Along with pensions, savings and credit may be important for making sure that there are not significant income gaps. Insurance is critical to mitigating financial shocks, especially those related to health.

I was encouraged to remember that as early as 60 years ago, the world was convinced that customers at the base of the pyramid were unworthy of or unable to use financial services. The very fact that over 900 people from 75 countries were gathered in Merida, Mexico to discuss microfinance is evidence that we have overcome this myth. Perhaps the Microcredit Summit can put its formidable awareness-raising strengths to work proving that older adults are also deserving of financial services and capable of using them.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/01/16/microfinance-as-a-tool-for-active-aging/" target="_blank" rel="noopener">Microfinance as a Tool for Active Aging</a>

<a href="http://cfi-blog.org/2013/03/26/aging-and-financial-services-with-and-without-employment/" target="_blank" rel="noopener">Aging and Financial Services: With and Without Employment</a>

<a href="http://cfi-blog.org/2014/07/29/the-microcredit-summits-commitment-to-improving-lives/" target="_blank" rel="noopener">The Microcredit Summits' Commitment to Improving Lives</a>