Blogs

It hardly needs saying that Climate Change represents the greatest issue we face today. Slowly – excruciatingly so – action is being taken at the macro level, reining in carbon emissions to attempt to keep global temperature increases within manageable levels. However, tacking Climate Change requires battles on many fronts, and not just on the mitigation side (minimising the actual Climate Change that takes place) but on the adaptation side too: how can we live in a world with a climate different to that we’ve had before? This is the challenge selected as the theme of the €100,000 European Microfinance Award 2019, which launches mid-March. Entitled “Strengthening Resilience to Climate Change”, it highlights the important role of the financial inclusion sector in increasing the resilience of low-income and financially excluded populations vulnerable to the effects of Climate Change.

There were two topics that dominated debate at the recent European Microfinance Week (EMW) conference: the threats and opportunities brought about by the fintech revolution in inclusive finance, and the issue of financial inclusion for refugees and internally displaced persons. The event, organized by the European Microfinance Platform (e-MFP), provided the venue for a discussion of these issues that ranged from hopeful to surprisingly cautionary. EMW 2018 focused heavily on the spectre – or, depending on your perspective, the promise – of technology. The theme was approached from many angles, as panelists explored the opportunities and risks of digital financial services, Big Data and new fintech entrants into the sector. It was even the focus of the 2018 European Microfinance Award, Financial Inclusion through Technology. The opening plenary captured both sides of the issue, with a keynote speech from Graham Wright of MicroSave – who played the Cassandra role that suits him so well to implore the inclusive finance sector to pay attention to the risks that technology can pose to clients and institutions.

This is the final in a publication series of three interview pieces with the three finalists for the European Microfinance Award on "Financial Inclusion through Technology". KMF is an NBFI in Kazakhstan that operates in one of the most sparsely population regions of the world, beset by unstable telecommunications networks in the remote areas where almost half the population lives. To reach clients and improve efficiencies in this challenging context, KMF uses in-house developed tablet software – called Mobile Expert – that communicates remotely with its core banking system to ensure that loan officers, management, loan recovery and internal control teams can schedule loan officers’ work, capture loan applications, make loan approval decisions, monitor and recover late loans, and conduct internal control visits in the field. Crucially in this context, this software can be used both on- and offline, allowing management to monitor field activities in close to real time even over long distances. KMF was noted for its development of its software in-house, and its response to the exceptional challenges of serving remote clients over such distances.

This is the first in a publication series of three interview pieces with the three finalists for the European Microfinance Award on "Financial Inclusion through Technology". Advans Côte d'Ivoire (Advans CI) is a NBFI in the Ivory Coast which offers payment, saving and credit services enabled by an Advans account linked to a MTN mobile money account. Advans CI has responded 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 its digital savings and payment solution, with wallet-to-bank and bank-to-wallet transfer services, enabling producers’ cooperatives to make digital payments to farmers for their crop revenue. Since 2017, Advans CI has been also providing small digital school loans, based on an algorithm reflecting farmers’ cashflows. Advans CI also successfully negotiated free MTN transfers between mobile wallets and Advans accounts for their farmer clients.

Since the dawn of the commercialization of microfinance nearly two decades ago, investment in microfinance has been made on a widely-accepted premise: investors will receive a ‘market rate’ financial return, while pursuing a socially-motivated strategy. This premise is so widespread that it has taken on the allure of all groupthink – becoming an accepted truism, without necessarily being true. The double-bottom line – the equal focus on financial and social return – can be deceptive. The dilemma is that while financial return has a clear target, social return is more nebulous. What social return is really being promised? Is serving a certain segment of clients enough? Do additional products need to be offered? What about financial education?