27 Apr.

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How long can microfinance institutions last the liquidity crunch? An analysis of the data

Author: Daniel Rozas
Liquidity has been foremost on the minds of just about everyone in the financial inclusion sector. Several essays on this site have delved into the topic. The first article in our liquidity series outlined three drivers for illiquidity: deposit withdrawals, operating costs, and maturing debt, and argues that maturing debt presents the greatest risk. But what does the data say? Here we will dig into that, and investigate just how severe the different elements of the liquidity crunch are to different categories of MFI around the world. We don't have access to sector-wide data reflecting the situation right now. Nobody does. But we can get a good view of what may be happening from historical data collected by MIX Market over many years. Let's start with the most basic question. Assume an MFI is operating under complete shutdown, with no repayments, no new disbursements, and no other inflow or outflow of funds - it's operating entirely from cash reserves. How many months would it be able to survive before the money runs out?
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21 Apr.

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Keeping the Blood Flowing: Managing Liquidity When Clients Need Deposits

Author: Daniel Rozas - Sam Mendelson
In our first piece in this series "Keeping the Patient Alive - Adapting Crisis Rubrics for a Covid World", we introduced the analogy of the emergency room doctors trying to treat a critically ill patient - a financial services provider (FSP), its staff and clients in lockdown or socially distancing, unable to travel and with incomes collapsing, health expenditures increasing, and some sick or dying. Repayments are close to impossible, and new loan applications are flat. But operational expenses continue, and it’s a race against the clock. In short, this patient is critical. To continue the analogy, ensuring the reciprocal trust and confidence of staff and clients and investors is like treating a patient’s organs, with interventions from pharmacology to surgery to transplant. We’ll get to that, though. For now, the challenges need triage. The patient can’t breathe, so she cannot oxygenate and circulate her blood. This, to come back to our institution, is the critical need for liquidity.
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01 Apr.

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e-MFP’s role during the COVID-19 pandemic & lessons from the European Microfinance Award on crisis contexts

Author: e-MFP
These are frightening and unprecedented days. In response, many are looking for ways to provide relevant, actionable support. News, blogs, and webinars - well-intentioned as they may be - feel like they’re creating information overload. Yet it’s clear that in a rapidly evolving situation, information is critical. At e-MFP, we want to add value and support where we can, especially to our members, and avoid adding to the noise when what everyone needs is focus, clarity and purpose. We’d like to use our core strengths - facilitating exchange, connecting stakeholders and being a clearing-house for discussion - to help the sector (and especially our members) prepare, weather this crisis, and eventually recover and rebuild. In the coming weeks and months, e-MFP will be re-focusing several work streams towards the COVID-19 response. The Financial Inclusion Compass sector-wide survey will be brought forward, and will be specifically focused on how stakeholders are triaging their challenges and what they see as the most critical interventions needed - and by whom. European Microfinance Week will be significantly adapted to focus on this topic. The current European Microfinance Award on Encouraging Effective and Inclusive Savings will collect examples of how savings can increase resilience to the kind of health and financial shocks that microfinance clients and SMEs are about to face. We would like to hear from our members what e-MFP can do to support them, and we stand ready to offer that support where we can.
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16 Mar.

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A Spotlight on Effective and Inclusive Savings

Author: e-MFP
“Save money – and money will save you” goes a Jamaican proverb. Variations of this adage exist in countless languages, lauding preparedness, prudence and forethought when managing one’s finances. But the notion goes even further than money. Benjamin Franklin said as much – “By failing to prepare, you are preparing to fail.” It is probably one of the few genuinely universal life tenets. It’s also intuitive. We all have a basic understanding of what savings – or the act of saving – are. You hold back some of what you earn, sacrificing immediate pleasures or opportunities for some future benefit. This benefit can vary from coping with the unknown and unplanned shocks that can throw one’s life into disarray, to more highly planned savings for high-cost but predictable future expenses – a wedding, pregnancy, a deposit for a house, or retirement. Extending these benefits to more of the people who need them most is the topic of the European Microfinance Award 2020 – “Encouraging Effective & Inclusive Savings” – which is now open for applications until April 15. In over 10 editions to date, the €100,000 award has sought to shine the spotlight on organisations innovating in a particular area of inclusive finance. It’s open to providers of all categories and sizes that have demonstrated excellence, creativity and rigour in their initiatives for the vulnerable and financially excluded.
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28 Jan.

1

Urgent action on climate change must go beyond microfinance “business as usual”

Author: Johan Bastiaensen - Frédéric Huybrechs
Over the last decade, one of the key rising topics in microfinance has been the sector’s response to environmental challenges, and this will continue to take centre stage. In the recently released Financial Inclusion Compass 2019, ‘Climate Change Adaptation and Mitigation’ is only second to Agri-finance in the New Areas of Focus Index, which asks respondents across the sector to look 5-10 years ahead. In recognition of these rising environmental concerns, the European Microfinance Award 2019 sought to highlight outstanding innovations in Strengthening Resilience to Climate Change. The last press release of European Microfinance Week, and the keynote address from the Award ceremony also called for urgent action on climate change. In this blogpost, we reflect on this timely call for action and question how transformative the financial inclusion sector is when it comes to responding to climate change. We do this on the basis of our past research on this topic and build on some of the messages put forward during the European Microfinance Award 2019 Ceremony.
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17 Dec.

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A Stirring Call to Action on Climate Change

Author: Sunita Narain - Centre for Science and Environment India
Climate change could not happen at a worse time in human history. It is clear that things are now spiraling out of control. Every year we are told is the hottest year, till the next year comes around. Then a new record is broken. It is getting worse. From forest fires, to increasing frequency and intensity of storms, to blistering cold waves and spiraling heat. We know something is wrong. Very wrong. But we are so distracted – from trade wars, to Brexit, to immigration, to economic crisis and skirmishes that are raging across our countries – that climate change is not a priority. We simply don’t seem to have the bandwidth to handle it. But we must.
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19 Sep.

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The New Smart Campaign Digital Standards: From Codes of Conduct to Protection by Design

Author: Elisabeth Rhyne
How should financial institutions approach consumer protection differently when they offer services through smartphones rather than humans? This was the question we posed when the Smart Campaign team first started revising the standards to be applied to digital financial services, especially digital credit. We are very pleased to have launched the new Standards, their accompanying Guidance Document, and the companion Handbook for Regulators. What we didn’t expect, however, was quite how profound the differences would turn out to be. We made significant changes to the standards for all seven Client Protection Principles (the principles themselves remain the same). I want to focus here on the most fundamental: Appropriate Product and Delivery Design.
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13 Sep.

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Ten editions of the European Microfinance Award: 2018 Winner - Advans Côte d’Ivoire (Advans CI)

Author: e-MFP
2019 marks ten editions of the European Microfinance Award and to celebrate, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2018, the theme of the Award was 'Financial Inclusion through Technology'. Advans Côte d’Ivoire, part of the Advans Group, is a non-bank financial institution in the Ivory Coast which won for its response to traceability and safety issues faced by cooperatives paying cocoa farmers, as well as low school enrolment due to lack of regular cashflow among farmers, by offering a digital savings and payment solution, with wallet-to-bank and bank-to-wallet transfer services that enable producers’ cooperatives to make digital payments to farmers for their crop revenue. We’re delighted to catch up with them in this interview.
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02 Aug.

1

Ten editions of the European Microfinance Award: 2010 Winner - Harbu Microfinance Institution

Author: e-MFP
2019 marks ten editions of the European Microfinance Award and to celebrate, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2010, the theme of the Award was 'Value Chain Finance', focusing on stimulating and promoting inclusive financial schemes that contribute to the evolution of value chains in developing countries. A value chain is a vertical alliance between different independent enterprises, collaborating to achieve a more rewarding position in the market. Harbu of Ethiopia won for its initiative to finance the soy bean value chain as a response to market demand generated by a shortage of cow milk in Jimma city, in Oromia state. The initiative sought to strengthen horizontal linkages with farmer marketing organisations and vertical linkages with retailers and women's associations that are processing and producing soy milk. The initiative created market opportunities for producer-farmers and employment opportunities for urban women and youth. At the same time, it improved families’ nutrition, especially for children and women. Harbu provided financial services to most of the actors across the value chain, from the individual producers all the way to retailers.
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25 Jun.

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Ten editions of the European Microfinance Award: 2017 Winner - Cooperativa de Ahorro y Préstamo Tosepantomin

Author: e-MFP
2019 marks ten editions of the European Microfinance Award and to celebrate, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2017, the theme of the Award was 'Microfinance for Housing' which sought to highlight the role of microfinance in supporting access to better quality residential housing for low income, vulnerable and excluded groups, with no or limited access to housing finance in the mainstream sector. Cooperativa de Ahorro y Préstamo Tosepantomin won for its programme targeting rural communities living in marginalised areas, to which it offers savings and loans for housing improvement and house building. The cooperative mainly applies the solidarity group methodology and uses a holistic approach to its housing programme, with technical support that includes architectural planning, elaboration of housing project budgets, and oversight of the construction processes. The programme also promotes ecological and sustainable housing through eco-friendly building techniques, recycling, renewable energy and energy efficiency. We’re delighted to catch up with them in the fifth of our interviews.
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