In 2010, Omtrix, a microfinance fund manager based in Costa Rica, saw that the greatest barriers to higher education for low-income youths was lack of access to financing. Omtrix wondered if this need could be met by microfinance institutions. Serving this sector would certainly meet their mandates, and MFIs already knew how to reach and serve low-income people. Omtrix hypothesized that under the right conditions, and with the right approach, student loans could be a viable product for MFIs. They decided to create a new fund to promote higher education. The new fund, called The Higher Education Finance Fund (HEFF), would lend to MFIs so that they could in turn on-lend to bright young people whose aspirations lay beyond their financial reach. HEFF’s funding would be accompanied by a technical assistance program to train MFI staff in how to appraise, monitor, and collect on student loans, as well as offer other tools to launch a new product. Additionally, HEFF would serve as a pilot program to be replicated by other MFIs or funds in the future and across the globe. Over the past six years, HEFF’s original assumptions have been tested, and the innovative program has experienced some growing pains. Omtrix has begun the process of capturing lessons learned and best practices to disseminate those lessons to anyone who may want to replicate or build on HEFF’s model.
European Microfinance Award
Earthquakes. Fire. Floods. Chemical spills. Conflict. Impacts of these disasters bring to mind loss of lives and livelihoods, disruption to communities and vulnerable populations struggling to recover and cope. The impact of disasters on financial inclusion and the role financial service providers play—or don’t play—in disaster risk reduction is not an immediate consideration when preparing for or responding to such emergencies. However, disaster preparedness and response is exceptionally important in the context of financial inclusion. Countries with higher concentrations of poverty, weak infrastructure and poor public services are more at risk. Experience has shown that financial institutions serving at-risk populations are as vulnerable as their clients to these disasters and crises. While the initial humanitarian and emergency response to crisis is crucial, there is a growing recognition of the value of disaster risk reduction (DRR) strategies in preparing for and thus reducing economic losses associated with disasters. In an effort to raise awareness around this important topic, the SEEP Network’s global Disaster Risk Reduction (DRR) Program, funded by the Citi Foundation, seeks to promote more resilient financial services markets in which financial service providers (FSPs) and their clients have the capacity to better anticipate, cope and recover from the negative impacts of disasters.
The second e-MFP ‘Offsite Session’ of the year took place in London on Monday 10th April, in partnership with the UK’s Financial Inclusion Forum – the leading British financial inclusion network. The session was entitled "The Role of MFIs in improving access to and quality of education: Perspectives on the 7th European Microfinance Award and the European Dialogue" and was timed to coincide both with the launch of "Investing in Tomorrow" (e-MFP’s latest Dialogue) and last week’s launch of the call for applications for the upcoming Award on Housing. The event brought together a panel including Arc Finance’s Sam Mendelson (who was the lead author of the paper, as well as a member of the Award Selection Committee), Kaspar Wansleben from Luxembourg Microfinance and Development Fund (a supporter of two of the 2016 Award finalists and key investor in education finance) and Nathan Byrd from Opportunity International’s Education Finance team, along with e-MFP’s Daniel Rozas. Katy Jones from Big Issue Invest and the Financial Inclusion Forum chaired the packed out event, generously hosted by Allen & Overy. Daniel opened the session by outlining the importance of education – its primary importance to households at all income levels and in all places, and the obstacles to universal access in low-income countries. The failure or inability of governments to provide free or affordable quality education to its people is a key reason for the emergence of low-cost private schools in many countries (and the channel for several of the Award semi-finalists’ initiatives).
We are delighted to announce the launch of the European Microfinance Award 2017 with its €100,000 prize, this year on Microfinance for Housing, all details of which can be found on the Award website. Each year, e-MFP launches the European Microfinance Award, in conjunction with the Luxembourg Ministry of Foreign and European Affairs and the Inclusive Finance Network Luxembourg (InFiNe.lu). And like previous years with their focus on agriculture, social performance management, the environment, post-disaster and crisis contexts, or last year’s edition on Education, this year’s Award is looking for applications from financial institutions that are innovating, exploring and testing new ideas, that go beyond their core financial services, and exemplify the evolution of the microfinance sector beyond boilerplate microenterprise credit. Housing is a great example of how to do this. After the health and safety of children, there’s probably nothing more important to people everywhere than adequate housing. It is a core human need and a top investment priority for families anywhere. But 1.6 billion people live without adequate shelter. By 2030 this will have doubled and the need will be mostly in urban areas, where more than half of the world population lives today and where it is estimated that 2 billion people will be living in slums, where, almost by definition, substandard and unsafe housing is the norm.
The European Microfinance Award 2016 addressed how the microfinance sector can increase access to education among children and young adults in low-income communities. Won by Kashf Foundation of Pakistan and presented at a ceremony in November during European Microfinance Week, the Award received applications from 19 countries, showing a broad range of interventions by MFIs to help increase access to education. As in previous years, all the semi-finalists’ outstanding interventions have been profiled in a European Dialogue publication, entitled "Investing in Tomorrow", written by Sam Mendelson, with support from Micol Guarneri, Francesca Agnello – the consultants who oversaw the Award application and analysis – and Gabriela Erice and Daniel Rozas from e-MFP. The European Microfinance Award is one of e-MFP’s most prominent activities. A prestigious annual €100,000 Award which attracts applications from financial institutions around the world, it serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. This second goal is where "Investing in Tomorrow" comes in – describing the challenges facing MFIs, the types of interventions that can increase access to education, practical case study examples of the finalists and semi-finalists – organisations which put these models into practice – and what these excellent initiatives have in common.
For its annual meeting in Luxembourg this year, CGAP asked e-MFP to organize a session for its members. This was our first opportunity to present some of the lessons being highlighted by the 7th European Microfinance Award “Microfinance and Access to Education”, especially the role that donors and investors can play to support the efforts of MFIs to promote access to quality education at the bottom of the pyramid.
We’re delighted to announce the release of the 9th edition of the European Dialogue, a periodic and in-depth analysis of a particular important area of innovation in microfinance. Since the first in 2008, several of the previous editions have paralleled the subjects of the now-annual European Microfinance Award. This year, too, the Dialogue is focused on the most recent Award, recognising excellence in microfinance in post-disaster/post-conflict areas & fragile states.
Each year, e-MFP launches the European Microfinance Award, in conjunction with the Luxembourg Ministry of Foreign and European Affairs and the Inclusive Finance Network Luxembourg (InFiNe.lu). The Award invites applications from financial institutions that are innovating, exploring and testing new ideas, that go beyond their core financial services, and exemplify the evolution of the microfinance sector beyond boilerplate microenterprise credit.
This week, e-MFP announced the launch of the 6th European Microfinance Award. This year, the Award will recognise one of most important challenges that some financial institutions face: providing financial services to vulnerable clients in post-conflict or post-crisis regions. As all e-MFP members well know, providing quality services to clients in stable markets poses many challenges – from managing portfolio risk, to expanding product offerings, hedging risk, understanding clients, adapting to regulatory changes, sourcing funds and innovating with new technologies.