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Author: Laura Cordero. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. In the fourth of e-MFP’s annual series of guest blogs on this topic, Laura Cordero presents the history of displacement within and to Colombia, and how that country has put public processes in place and mobilised its financial inclusion actors  to address this challenge  - with valuable lessons for others. Colombia has a long history of forced displacement. The internal conflict has lasted almost 80 years and resulted in one of the largest internally displaced population in the world: more than 8.6 million people. It is also the number one destination of migrants from Venezuela: 2.8 million as of 2023. Totally combined, they represent around one fifth of the Colombian population. Few other countries in the world have had to face a displacement challenge paramount to this in terms of volume, share of the population and diversity. And unfortunately, both types of forced displacement continue to grow. As in most countries, issues affecting those that have been internally displaced are handled by public and private actors separately from those regarding foreign immigrants. Yet, many of the challenges that both populations face are similar, and a significant proportion of them end up joining the ranks of the most vulnerable groups, posing similar pressures to the national health, education, and social protection systems. Over the last twenty years the Colombian government has put in place several measures to tackle the complex and multi-faceted problem of forced displacement. The Victim’s Law, issued in 2011, kickstarted a comprehensive reparation program for the victims of the armed conflict and strengthened humanitarian attention to those forcibly displaced (around 90% of the registered victims). Now Colombia is currently in the process of approving a new law related to climate-related forced displacement, an increasing cause of internal population movements. Migration from Venezuela is not new to Colombia, but since 2018 the migrant population has more than tripled, requiring new targeted policies being implemented. Among other important measures, the creation in 2021 of the Temporary Protection Statute for Venezuelan Migrants has allowed  almost 2 million migrants to acquire legal status in the country. Public efforts to financially include forcibly displaced populations n terms of financial inclusion, both groups – IDPs and migrants from Venezuela – have been targeted by public policies, often using similar instruments but via different programs and entities. While the 2020 national financial inclusion policy provides the general framework to support financial inclusion in the country, targeted strategies such as the National Strategy to Promote the Integration of Venezuelan Migrants have specific financial inclusion targets. In practice, examples of public sector support measures to both target groups include the following: Issuing financial norms and legislations aimed at facilitating access to financial products, such as the first simplified savings accounts, or providing guidance to financial institutions on Know Your Clients (KYC) processes for the case of Venezuelan migrants; Including financial inclusion-related measures within the humanitarian and reparation programs to those displaced by the conflict; Linking social protection and financial inclusion efforts via the conditional cash transfer programs. These programs have often resulted in massive opening of deposit and transactional accounts thanks to Government agreements with banks and e-wallet operators; Issuing targeted credit lines to financial institutions via Bancoldex and FINAGRO (apex institutions) or providing guarantees via the National Guarantee Fund (FNG) to finance these specific groups; and Partnering with international development organizations to fund and implement financial inclusion programs, such as UNHCR, USAID, or the International Finance Corporation. The role of financial service providers But beyond public and international cooperation actors, how is the financial sector in Colombia including forcibly displaced populations? The answer is not so straightforward. To start, there is a big information asymmetry: we have good information on financial inclusion of Venezuelan migrants, not so much regarding internally displaced population. We know, for example, that approximately 27% of Venezuelan migrants in Colombia have a deposit product in a financial institution: a big improvement over the last few years. The Temporary Residence Permit (PPT) is increasingly accepted by financial sector providers, yet there are still obstacles related to validation, documents equivalence and internal systems adaptation that still need to be surmounted. According to Fundación Capital, Fintechs are currently playing a leading role in the financial inclusion of migrants in Colombia, offering digital wallets associated with an increasing variety of financial services. These products respond to migrants' immediate need to be able to send and receive money, make payments, send remittances. Also, some of this often digitally-savvy population prefers this channel that reduces the (conscious or unconscious) biases that they sometimes encounter in the face-to-face service. Transactions with some of these wallets are used by credit bureaus and there are even digital platforms that offer ‘nano-credits’ based on scoring systems. There are also a few microfinance banks and cooperatives that also target this segment, some in partnership with cooperation agencies such as the German Savings Bank’s Foundation to provide a more comprehensive support to the migrants. Yet, the perceived high risk and operating costs hinder traditional (micro)credit supply: latest available figures indicate that only 1.3% of this population have access to formal credit. There are however no disaggregated data on financial inclusion of internally displaced population. The latest financial inclusion figures in the country – with 91% of adult Colombian population with access to an account or digital wallet in 2022 - indicate that most internally displaced probably are financially included. However, scarce data are available regarding access to credit or other financial services, since financial service providers do not normally collect displacement related information in their systems. Many financial institutions have made use of the public specialized credit lines mentioned above, funding at least 165,000 credit operations to victim owned businesses since 2012 (Bancoldex, 2024). Different but similar market segments Therefore, with available data we cannot draw a global picture on financial inclusion levels of all forcibly displaced population in Colombia. Financial institutions view these two groups as different market segments and each of them pose distinctive challenges. The Venezuelan migrant population is very heterogeneous. Yet, data show that Venezuelan migrants have a harder time finding a job, when they find it is often not related to their education or prior experience, and they are offered worse conditions than to their Colombian counterparts. Credit histories from Venezuela are incomplete or inaccessible, and most have no records in Colombian credit bureaus. Language and cultural differences are not significant, yet the relationship between the financial system and its clients differs in both countries, so cultural awareness is needed from clients and financial service providers. But most importantly, migrants are considered as a high-risk market due mainly to the real or perceived “flight risk”. Internally displaced population do not present the same challenges in terms of access to the financial system: most have Colombian nationality (although some ID documents may have been lost during displacement). Many were suddenly -and violently- displaced, leaving with nothing but the clothes on their back. Some resettled in rural areas, but most went to the informal settlements around bigger cities. Their poverty levels are also higher than the Colombian average. Their credit histories have also suffered, despite the issuance of specific regulations creating a “special risk category” for loans affected by the displacement and other violent events. Overtime, many have integrated in their host communities and are no longer seen as “displaced”. There are important similarities among these two -yet very heterogeneous- population groups. And these similarities revolve around the displacement itself and its consequences: the loss of assets and livelihoods; the need to rebuild their life and perhaps start a new economic activity; the traumas associated to the forced displacement; the reliance on personal networks in the host community. From a financial institutions’ perspective, these two population groups present distinct challenges in terms of KYC compliance, but credit risk analysis may not – in principle - differ too much. After all, Colombian financial institutions have a long experience attending forcibly displaced populations: but do they know to what extent are they serving them? Are there any good practices or lessons learned? Can the experience with one group be useful to serve the other? Further research would be needed to answer these questions. What lessons can we draw? Colombian public and private institutions have a long experience supporting the financial inclusion of forcibly displaced population. While most internally displaced have access to the financial system, more needs to be known regarding the depth and effectiveness of that inclusion. With regards to Venezuelan migrants, it seems a matter of time that their ID documents are widely accepted, and a majority can access a deposit product. Access to a wider range of products and particularly credit remains low and calls for further innovation in de-risking strategies. Financial service providers in Colombia may have some interesting practice in client screening and segmentation (for example, assessing recovery from displacement and integration in the host community), risk appraisal adaptations, or portfolio metrics that could be applied to Venezuelan migrants. Further evaluating the results of public policy investment in supporting the victims of the armed conflict can also shed light on how to further support the Venezuelan population. There are certainly lessons to be learned, such as the type and duration of support needed for the socioeconomic stabilization and recovery. An important one is that “rebuilding their life project”, a central idea around the comprehensive support provided to the victims, is a pre-condition to positive socio-economic outcomes. In summary: without forgetting the important differences, let’s focus on the experience and learnings from the impressive effort that Colombia has already made and can be applied to financially include all those forcibly displaced in a meaningful and sustainable way. Special thanks to: Aida Solano, Alicia Rueda, Daniela Pradilla, Diego Andrés Rueda, Liliana Cortés, María Fernanda Manrique, Meik Proescher and Veruschka Zilveti for their invaluable contributions. About the Author: Laura Cordero is an independent consultant with more than 15 years of professional experience supporting financial inclusion of vulnerable population in Africa, Latin America, Asia and Europe. She has worked on Colombian internally displaced and migrant population topics since 2013, collaborating with Fundación Capital and the German Savings Banks Foundation, among others. She holds a BSc. in Economics from the Complutense University of Madrid, and a MSc. in Foreign Service from Georgetown University.

Authors: Lene M. P. Hansen & Micol Pistelli. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs — Directorate for Development Cooperation and Humanitarian Affairs, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. In the fifth of e-MFP’s annual series of guest blogs on this topic, Lene Hansen and Micol Pistelli from UNHCR discuss the role of public-private partnerships between humanitarian actors, development agencies, host governments and the private sector,  and the factors that underpin their effectiveness. In recent years, the importance of partnerships between the humanitarian, development, and private sectors in protracted displacement contexts has become increasingly evident to enhance the socio-economic wellbeing of forcibly displaced and stateless persons. However, developing these partnerships to be effective, sustainable and impactful is not always easy, and guidance is scarce. How can solutions be co-created in partnerships between the humanitarian sector (with its focus on immediate aid through cash assistance), development agencies (with their focus on longer-term poverty alleviation), and the private sector )with its focus on profitability and value creation)? And how can this be done in ways that also engage host governments, focused on cost-effectively improving the lot for citizens? Bridging the gaps between differing terminology, priorities and systems for funding and measuring impact is a work in progress. But progress has been made. There is widespread recognition that working through markets as shared platforms can channel sustainable contributions to improving the wellbeing of People and the Planet while enabling business Profit. But working together to support – rather than distort - market systems and make them stronger, more inclusive, and more environmentally sustainable, is no small feat. For longer-term sustainable partnerships between public and private sector actors in displacement contexts to succeed, the business cases must be clearer. To broker better market-led partnerships, we propose focusing on at least four elements: A shared understanding of a contextual problem; Jointly defined common goals; Policy anchors and trust-building to enable flexible collaboration; and Capacity for sustainability and scale. But who takes on which roles in the partnership? How are comparative advantages and additionality applied? How can all actors work better together, given the constraints of each context of displacement? Let’s look at each of these elements in more detail. 1. Defining and Documenting a Shared Contextual Problem: Better Data Effective partnerships define a common problem and seek solutions together. In many markets, exclusion or restricted access to labour markets, formal employment and entrepreneurship remain a challenge for the forcibly displaced. This prevents them from contributing meaningfully to the local economies, building resilience, and be less aid-dependent. Humanitarian organizations with their field presence can bring in-depth knowledge of the needs and challenges faced by people who are forced to flee in accessing labour markets and financial services. When such insights and data are presented to provide evidence of benefits and value creation, collaborative solutions can more easily be designed. Importantly, humanitarian actors can leverage their networks to bring representatives of the forcibly displaced and their hosts, to the table through Refugee-led Organisations or other NGOs, to help clarify the challenges, based on their lived experiences. Development agencies can apply their analytical expertise to assess existing gaps,  and clarify the costs and net benefits of increased inclusion for host governments, providing evidence of the contributions and economic dividends of the forcibly displaced – and other migrants – to local economies, when their skills match the local labour market needs. As a source of expertise, innovation, and sustainable business models, the private sector is an integral part of any local economy, working to produce, exchange and distribute goods and services, while also serving as one of the main sources of employment and livelihoods, both locally and increasingly remotely. But for the private sector to engage, there must be win-wins. There must be additional value created, and there must be a use case. Private sector entities can help define how these use cases should look and what data is needed to demonstrate their viability. For this reason, they should be engaged from the very start of the process. Governments create the conditions under which effective participation in markets is possible. By limiting access to work, they inadvertently prevent the forcibly displaced from becoming self-reliant. This perpetuates their dependency on scarce aid budgets and overwhelmed social protection systems, while contributing to informality in the labour market. Prioritizing these - or other - problems can help pinpoint how market-led solutions may have the greatest impact. 2. Defining Common Goals: Diverse Contributions based on Comparative Strengths All stakeholders in a partnership need to understand each other’s realities, comparative advantages, and constraints to define common goals in their specific context. Partnerships should have clear, measurable objectives that focus on delivering positive change for local communities of forcibly displaced and their hosts, e.g., increased financial wellbeing for all through employment and entrepreneurship opportunities. Financial wellbeing goes beyond inclusion—access to income and financial products and their usage – to measure resilience and behaviours such as spending wisely, building reserves, and planning ahead. By leveraging the comparative strengths of all actors, stronger, more sustainable and more inclusive local economies can be built, improving the wellbeing for everyone. For humanitarian actors, it’s easy to get caught up in the immediate delivery of basic services to the forcibly displaced. To develop more effective partnerships, it helps to extend the outlook and clarify the outcomes to be achieved for the forcibly displaced – and their host communities. The aspirations  of the forcibly displaced for peace, stability and a more secure, resilient life where they can contribute meaningfully to their community, resonate better with other stakeholder groups. In their overall drive for poverty alleviation, development actors tend to focus on market failures, poor infrastructure, and weak governance, which can make both private and public investments costly and risky. Documenting how existing markets function can help more people better contribute to these markets and crowd-in more actors. Private sector partners can offer innovation, technology, and financial resources to help close the gaps identified and demonstrate use cases of inclusion in employment and entrepreneurship. Recognizing that inclusive local markets can offer employment and entrepreneurship opportunities that benefit both the forcibly displaced and their host communities and also reduce dependency on aid and eventually decrease budgetary pressures, governments can design and implement policies encouraging economic transformation and inclusive growth. This involves creating regulatory environments conducive to investment, productivity growth, business expansion, and employment. By creating incentives for the private sector to engage in displacement locations, which may otherwise be overlooked due to profitability considerations, public sector actors can foster inclusive markets growth, as the Shirika Plan in Kenya aims to do. 3. Building Trust with Policy Anchors and ‘Skin in the Game’ Actors have different takes on solutions for better socio-economic inclusion and financial wellbeing for all. Great partnerships are built on principles of equality, respect, and shared accountability. However, partners don’t have to agree on everything and do things in the same way – as long as everyone aligns their interests and works towards the common goal. Committing to core values such as inclusivity, transparency, and sustainability helps build trust and a common vision for positive change, serving as a frame of reference for the partnership even during difficult patches. International agreements and frameworks like the Kampala Declaration on Jobs, Livelihoods and Self-reliance in East Africa and its Roadmaps, aim to foster community resilience and economic participation. Linked to the Global Compact on Refugees and the Global Forum for Refugees, there are currently 86 pledges made by governments in the area of economic inclusion and social protection whose effects on the labor market participation of the displaced would multiply if matched by interventions sustained by the private sector – including investors and financial institutions. Private sector initiatives like IKEA Group's NESsT Refugee Employment Programme in Poland and Romania, and the pan-African Amahoro Coalition highlight the transformative potential of market-based solutions for economic inclusion. Key actions to strengthen the partnerships into alliances and crowd-in new actors include: Organizing policy dialogues, roundtables, and forums to enable direct engagement between policymakers, private sector entities, development actors, humanitarian partners, and the affected communities themselves to review progress on initiatives and suggest course-corrections; Conducting joint research on the impacts of inclusive policies, initiatives and pilots to identify remaining pain points, opportunities, and progress towards financial wellbeing for all; and Sharing learnings and case studies on both successes and lessons learned. Colombia's integration of Venezuelan refugees and migrants, for example, has boosted the economy by filling labour gaps and increasing consumer demand, despite ongoing challenges like credential recognition. Effective partnerships require willingness, capacity, and readiness to invest time and resources in relationship-building over time. Joint investment fosters a sense of shared ownership, as demonstrated by the Joint Initiative between IFC and UNHCR aimed at increasing private sector engagement in creating better markets in displacement contexts worldwide. Financial inclusion is also a key component of this initiative to enable access to finance for forcibly displaced people across Latin America and in Europe. All partners must be prepared to commit resources – whether financial or human – towards achieving the common goal, pilot the agreed use cases, share risks, and work towards scalable solutions. However, uncoordinated efforts and silos between stakeholders often prevents the right capital to get to where it’s needed most. Communication and building alliances with local partners can amplify the partnership and enhance sustainability. Local partners are often better at finding and selecting the right partners, and  including refugee-led and other local community organisations is especially important. The assumption that Refugee-Led Organizations are “too risky” is generally unfounded, and both humanitarian and development partners need to be better at engaging with them. 4. Capacity to Deliver Outcomes Sustainably and at Scale A good partnership needs the right mix of capacities, which may change over time. These capacities include: Physical Presence and Networks: On-the-ground presence is essential for reaching forcibly displaced people where they reside. Humanitarian organizations often have field offices and a broad supportive network of Refugee-Led Organizations  and other NGOs, which can provide private sector and development partners with real-life examples of challenges as well as logistical support to reach displacement settings. Technical Capacity: Relevant expertise in areas such as financial technology, mobile banking, data analytics, regulatory systems management, and convening power is crucial for designing and implementing effective inclusion programs. Complementary expertise in supportive areas such as financial education and technical support to financial service providers is important. An example of supportive non-financial service is provided by the ILO’s financial education program for refugees and host communities and their trainings addressed to FSPs. Financial Capacity: Adequate funding is necessary to support the scaling of inclusion initiatives. Impact investors, development financial institutions and FSPs can provide the resources needed to extend their services and pilot new approaches. Blending concessional capital, commercial capital, and grants is becoming increasingly popular in the development sector. Successful partnerships require a willingness to invest in the agreed use case, share risks, and work towards scalable solutions. Sharing the Perceived Risk: Partnerships should include mechanisms for sharing the perceived risks. Governments and development finance institutions can provide subsidies, concessional capital, and other mechanisms to mitigate risk for private sector entities and ensure profitability. The joint blended finance program launched by Swedish Sida, UNHCR and Grameen Credit Agricole Foundation in Uganda in 2019, comprised debt funding and technical assistance, as well as a lender’s guarantee and reached over 120,000 refugee and host entrepreneurs with credit and other financial and non-financial services. New initiatives, like the Refugee Development Impact Bond model in Jordan leverages the complementary resources of private and public actors on a ‘repayment for results’ basis, enabling the testing of solutions beyond the constraints of activity-based annual funding cycles. Scalability: The goal is to develop interventions that can be scaled to benefit a larger population of forcibly displaced and their hosts. Partners need to consider how their initiatives can grow beyond initial pilot projects to reach scale across different regions and contexts. For example, KIVA has a large and diverse network of FSPs and has demonstrated proof of concept with the most scalable initiative in the financial sector, additionally reporting a 96% client repayment rate among displaced customers. At the last Global Refugee Forum, Kiva pledged to scale their lending to displaced populations, and by the end of 2025 the organization aims to provide an additional $40m in loans to at least 65,000 people. Measuring outcomes: Without measuring outcomes, no partnership can know if objectives are being attained. The Global Partnership for Effective Development Cooperation has recently launched the Kampala Principles Assessment process in Burkina Faso to collect evidence on the challenges and opportunities to improve private sector engagement. Measuring financial wellbeing (or financial health) is still a work in progress, but indicators of the four aspects of financial health have been incorporated and benchmarked in the annual 60-decibel Microfinance Index. These indicators could be disaggregated by population segments, to enable tracking of progress towards better financial wellbeing in displacement contexts, as demonstrated by FIND research across markets. About the Authors: Lene M.P. Hansen has worked for 25 years as a field-based consultant in inclusive financial sector development and microfinance. Since 2005, she has specialised in expanding access to finance in fragile and conflict-affected environments. She has focused on financial inclusion of migrants and refugee populations since 2015, when she began the research resulting in the global Guidelines for FSPs, and has since worked with FSPs in Lebanon, Jordan, Iraq, Afghanistan, Mozambique, and Uganda to financially include foreign born and displaced residents. Lene has served in longer-term project management positions in Nepal (1995-99), Uganda (1999-2003) and Palestine (2007) and provides shorter-term technical assistance in ‘refugee-readiness’ for FSPs, project design and appraisals, portfolio reviews and evaluations for donor agencies, investors and central banks; as well as training, performance monitoring and industry building support to microfinance industries primarily in Africa and the MENA region. Based in South Africa, Lene holds a Master’s degree in Political Science from Copenhagen University and has been a visiting fellow at the Feinstein International Center of Tuft’s University, USA. She served on CGAP’s SmartAid Review Board in 2011 and is a member of the e-MFP Advancing Refugee Finance Action Group and the Danish Microfinance Forum. Micol Pistelli is a Senior Financial Inclusion Coordinator at UNHCR, where she provides technical support to country operations aimed at promoting initiatives and efforts to ensure that forcibly displaced persons can participate in and benefit from formal financial services. Before joining UNHCR, Micol was the Director of Social Performance at MIX, where she helped shaping the international standards of social performance management for financial service providers in the microfinance industry.  She has also been a board advisor of several initiatives in the financial inclusion sector, a lecturer at the Master in microfinance and entrepreneurship at the Universidad Autonoma in Madrid, and a consultant with the Italian Ministry of Foreign Affairs, and with microfinance institutions in Egypt and Paraguay. Micol  holds a Master’s Degree in International Economics and Development from the Johns Hopkins School of Advanced International Studies (SAIS) and a Bachelor’s degree in Political Science from the University of Bologna.

Author: Weselina Angelow. A basic account is a secure entry point for previously unbanked people to become more resilient. It also opens a wealth of opportunities – for investing in education, or growing their businesses. Programme background A six-year partnership with the Mastercard Foundation and WSBI, Scale2Save is a programme to establish the viability of low–balance savings accounts and to understand the extent to which savings allow vulnerable people to boost their financial resilience and wellbeing. The programme’s work is anchored by developing viable business models with a broad mix of financial service providers that create high-usage cases that widen financial inclusion. This occurs by improving the quality of savings, alternative distribution channels and the financial service offer in general. Scale2Save balances project work with research conducted and shared among partner banks and the wider sector. Scale2Save in a nutshell Between 2016 and 2022, Scale2Save financially included more than 1.3 million women, young people and farmers in Kenya, Uganda, Nigeria, Morocco, Senegal and Côte d’Ivoire that helped us better understand how, when and why savings contribute to household wellbeing, financial resilience or (creating) business opportunities of or for the people served. Gender and age aspects mattered hugely, but also location and income levels for driving inclusive savings. Scale2Save customer research observed differences between ways in which young female customers and young male and elderly customers used their savings. While young females more often use savings for consumption smoothing and for other household-related expenses, young males and older women of the age of 35+ more frequently used their savings for business-related purposes. Given that Scale2Save happened in the midst of a pandemic, in locations where weather shocks are rather frequent, and where partner FSPs were targeting some of the most vulnerable income groups, we were pleased to see that more than 65% of customers who reported experiencing one or multiple shocks indicated that they were able to use some of their savings to cope with these emergencies. Since most customers are low-income, investments in expanding, restarting, or opening a business can increase income quickly, thereby improving customers’ economic status and financial stability. On average, about 49% used their savings for investment purposes, and most of the time for business-related investments. Almost all financial service providers recorded use of savings for businesses with 50% of them being male adults. Business investment was also quite common among adult women. This largely stems from the fact that partner FSPs purposely targeted female micro-entrepreneurs and encouraged them to save toward the purchase of a productive asset or another business-related goal. In our smallholder farmer portfolio we saw that savings allow producers to more easily access quality inputs on credit that subsequently lead to greater productivity gains but also higher resilience. Further, increased access to credit for other income generating activities as well as access to skillset-building offers and agric platforms pushed up farm productivity overall. Beyond business investments, approximately 20% of customers used their savings to cover daily household needs or to finance educational needs. In the words of one of the customers of a Scale2Save initiative, implemented in partnership with Centenary Bank: “I got to know about CenteXpress account from my friend who helped me open the account. I learned about its benefits from my friend and I also started opening accounts for other students (through the digital link feature) I have greatly benefited from CenteXpress through the commissions that I have received for opening accounts for others. Further, my parents send me school tuition digitally via CenteXpress. I also use it to buy airtime. More importantly, it helps me save the little amounts that I can set aside from my tailoring business.” - Nakayima Magret, Student and tailor. Kikuubo, Masaka, Uganda During the implementation of the project, 12 unique business models were tested Scale2Save tested and explored 12 unique business models with a broad range of financial services partners to prove the viability of low balance savings and understand how the institutional model affects the ability to serve the low-income market. Business models were tested with Advans Cote D’Ivoire, Al Barid Banque and Barid Cash Morocco, BRAC Uganda Bank Limited, Centenary Bank Uganda, Cofina Senegal, FINCA Uganda and FINCA International, First City Monument Bank Nigeria, Kenya Post Office Savings Bank, LAPO Microfinance Bank Nigeria, Postbank Uganda. The variety of institutions created a whole world of experience that all worked towards the same goal: build partnerships and solutions that are intentional and simple but meet the needs of the specific customer segments they are serving. Digitalisation has been a game changer throughout and not just during COVID but needs to be handled with a gender lens and accompanied by human touch if it is to be successful. If a product worked for women, it equally tended to work for men. The local sales forces, roving agents, field officers, family & friends equipped with digital devices were instrumental for creating the volumes of transactions and deposits needed for making the business case for small balance savings work. Financial education – in particular, personal ‘nudges’ – that take women’s needs and the digital gender gap into account are considered key for improving digital account usage. Research Scale2Save became a strong brand and a community of practice that conducted useful sector research, collaborated with a wide array of sector players and that facilitates disseminating the learnings amongst our members and strategic partners. Our sector research For four years in a row, The State of Savings and Retail Banking Sector Series that we put out in partnership with FinMark Trust shed light on innovative models, applied by the now 27 WSBI member institutions in 20 countries on the African continent, sometimes enriched with insights from other sector players such as MNOs, Fintechs, the national Financial Sector Deepening units, the most recent on the state of SME Finance and separately on Innovative Agric Platform models on the African continent. Collaboration with sector players Jointly with Efina (the lead Financial Sector Development Organization in Nigeria) we piloted a customer segmentation tool that creates evidence-based customer personas and allows Nigerian financial sector players to define their pro-women, pro-youth financial or green pro-farm outreach strategies. The tool is a powerful data marketplace that combines demographic and livelihood data hosted on and AI platform with financial inclusion data and has already generated interest from other financial markets. Together with the Bank of Uganda (BoU) – the Central Bank – we tested the CGAP customer outcome framework in Uganda. This framework could help Ugandan FSPs to assess how they meet customer needs around safety, convenience, fairness, voice and choice of services. It can also help the Ugandan and other central banks to assess how the sector meets the goals of its financial inclusion strategy and could thus be taken to other countries. Insights from Scale2Save also allowed us to participate in the European Microfinance Platform’s Action Group on better metrics for savings. The way ahead We now have a better understanding of the metrics that track high-level outcomes. This will help WSBI to leverage on the impact its network of 6400 savings and retails banks globally makes to develop people, businesses, and communities. It has also enabled us to position ourselves for the climate resilience and adaptation agenda that lays ahead of us and the upcoming COP 28 in UAE to make sure that financial services offered through the network of WSBI members continue to be an enabler helping address global shocks, inequalities, and underdevelopment. For more resources from Scale2Save on: Women & Youth: click here MSMEs, Agents And Agriculture Value Chain Suppliers: click here Business Models: click here Côte d’Ivoire: click here Kenya: click here Morocco: click here Nigeria: click here Senegal: click here Uganda: click here About the Author: Weselina Angelow leads WSBI’s Scale2Save initiative in partnership with Mastercard Foundation. She has managed and implemented large-scale financial inclusion and financial sector development programmes with WSBI for more than a decade across the globe. Part of WSBI worldwide efforts to provide an account for everyone and making a contribution to universal financial access, Weselina manages the institute’s learning agenda on small-scale savings where she places focus on understanding the viability of low-balance accounts, the drivers of account usage and factors that improve the financial health of underserved and low-income people. Prior to joining WSBI, she worked with pixell, an Amadeus Leisure Group company in Germany, and in private sector development with GIZ – Germany's Agency for International Cooperation – in Chile. Weselina holds a Master in Economics and Social Sciences from Bonn University and an Executive Master in Responsible Banking from Instituto de Estudios Bursatiles in partnership with London School of Economics and WSBI. weselina.angelow@wsbi-esbg.org

Author: Anne Marie van Swinderen. e-MFP is delighted to welcome Low-Income Financial Transformation – L-IFT – as one of its newest members. L-IFT is a research organisation committed to empowering communities through data. L-IFT strives to make anonymised data accessible to all as a utility service, continuously building evidence to support the work of the financial inclusion and other sectors. L-IFT’s mission is to help communities take ownership of their data, learn from this data and to train youth to be customer-centric. Its motto is “listening to the unheard”. We at e-MFP invited L-IFT’s managing director Anne Marie van Swinderen to submit a guest blog telling the rest of the global e-MFP member base about an aspect of L-IFT’s work. In the following blog, she introduces Business Diaries (BuD) as the successor to the Small Firm Diaries, outlines the differences and future plans, and the role of the Android app and data portal FINBIT in the project. Welcome to the e-MFP network! Many of you will already be aware of the Small Firm Diaries, an initiative of the FAI at New York University, led by Jonathan Morduch and Tim Ogden. The Small Firm Diaries was done in partnership with L-IFT, the main research implementation partner. The goal of this study is to understand why small firms seldom grow. For the purposes of this study, "small" refers to all firms with two to twenty non-household employees. Since small firms provide employment to many, including people living below the poverty line, their growth in size would not only contribute to growing the economy, but also expand the number of people small firms employ. The original Small Firm Diaries (SFD) studied around 130 small firms each in Ethiopia, Colombia, Nigeria, Kenya, and Indonesia. In Fiji the study is still ongoing and includes a smaller sample, 50 firms. The study tracked these firms for an entire twelve months with Field Researchers visiting each firm weekly, interviewing them, and taking copies of their records. The diaries recorded the small firms’ daily transactions for income, expenses, savings, and loans as well as hours worked (by owner and workers), salaries, and what owners paid themselves. It also tracked their assets and how much the assets were used. Besides the diaries, the study included some 25 surveys to better understand the firms and their owners with modules on record keeping, firm history, financial services, employee management, and aspirations & strategy. The study shows in great detail the dynamics of a small firm over a period of a year. This gives uniquely detailed and sophisticated data that can show like no other study how complex the financial and business management of a small firm is. The FAI team is analysing the data and sharing important findings from the study across the different countries. To read about the learnings visit the Small Firm Diaries website. L-IFT is now setting up BuD: Business Diaries, which is the successor to the Small Firm Diaries. The BuD will be more action oriented, and not purely a study. The BuD will be a combination of learning, designing, testing, and improving and the participants themselves will be stakeholders that benefit from the process. During the BuD we will have lively and continuous communications with multiple organisations who need the data: financial inclusion actors (banks, MFIs, government agencies, international NGOs) and business development organisations (incubators, government departments in charge of SME development, etc). These partner organisations can be involved from the start if they like. They can receive the data on a continuous basis, with results accessible for them soon after collecting each round, allowing them to start reflecting on what story the data is telling. As the learning progresses, they can explore further and add surveys or individual questions and potentially get into a dialogue with (groups of) respondents. From the start partners will be invited to contribute questions or hypotheses to the BuD. For instance, to find out whether available training for businesses address their needs, and if the trained businesses implement what they learned. We also expect to explore the dynamics of employees and workers. Why do firms have trouble finding and keeping staff while there is such high unemployment? What skills do they need for recruitment and employee management? We also want to dive deep into the new digital options, particularly marketing via social media. How effective is this and could all businesses learn to use social media for sales? We also have great interest to learn more about collaborations between businesses and how useful business associations can be? Secondly, L-IFT proposes that the BuD also serves the participating small- and micro-businesses. They benefit from the diaries process, the resulting data, the analysis, and, ultimately, the BuD data may contribute to them accessing finance. In other studies, we have learned that diaries participants appreciate the time spent on diaries and that the intense repeated interviews help them get a better grip on their financial lives. Through the data analysis the project offers, the participating businesses learn more about the specifics of their own financial and business situation and the analysis helps them make informed decisions and focus more on those parts of their business that are more lucrative. The BuD will actively support the businesses to benefit from the data they report themselves. The BuD participants can access their financial history in FINBIT and use that information to convince a financial service provider to offer a loan or other financial services. The BuD can also be used for collecting ideas for improving businesses. Each BuD participant will be able to make suggestions for small interventions that they expect could strengthen their businesses. The study can then roll out some of these ideas, and the diaries data collection can measure the success of the experiment. The study will work with the BuD participants using a participatory process to gradually identify and design the intervention pilots. After designing the pilots, they can be rolled out with a sub-group of BuD participants to track in detail the changes (if any) that emerge in the pilot participants as compared to BuD participants who are not in the pilot. Finally, the BuD can include many participants making it possible to study more detailed segments, such as rural and agri-processing businesses per region, more women-owned businesses, and more youth-owned businesses. While it would be important that some proportion of the small- and micro-businesses in each country would be interviewed weekly by a trained field-researcher, we could have contingents of additional BuD participants who report their data themselves, with the help of a coach and some distance support. This approach will help reduce the cost per participant and expand the potential benefit of the study to hundreds of businesses. We are having conversations with many stakeholders from a number of countries. We hear what potential partners want to learn about these businesses, what experiments they want to run, and which interventions they want to test. If you want to be involved in this conversation, please get in touch with aswinderen@l-ift.com You can also attend a video-conference in which we present you more about BuD and how you may be able to get involved in Business Diaries. To receive information about the video-conference, reach out to Adonay Kebedom on adonayn@l-ift.com . About the Author: Anne Marie van Swinderen has been active in financial inclusion for three decades, living and working in three continents. She founded L-IFT in 2015 in order to focus on financial diaries and data empowerment of disadvantaged people. She is still fascinated by the complexity of people’s financial lives and their pandora’s box of tricks for solving challenges. Soon after founding L-IFT it became clear that participants of diaries studies appreciate the process and find they benefit from the approach and the data. L-IFT’s goal is now to assist large groups of under-served people to be able to build their financial history and use their data for decision making. L-IFT started building its technology FINBIT in 2018. FINBIT has now been used by about 10,000 people from 17 countries. She holds an MPhil from the Open University and a Bsc(ECON) from the London School of Economics.

Author: Sam Mendelson. First published by NextBillion on 28 November 2018 and reproduced with permission. 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. Technology's double-edged sword 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. He opened on a positive note. “The digital revolution offers us the chance to deliver rapid, responsive and differentiated financial services to low-income people in a way the industry has never been able to do in the past,” he said. He cited Equity Bank’s staggering level of technology integration: More than 97 percent of Equity Bank transactions in Kenya are conducted outside their branches, and more than 70 percent are self-initiated by clients on their mobile phones. This has had an amazing impact on the cost structure of transactions; IFC calculates that digitization reduces the costs to customers by 80 percent. There are powerful opportunities associated with this digital transformation in microfinance, Wright argued. It can significantly increase revenues and reduce costs; MFIs can leverage a long history of relationship banking to create real competitive advantage; it creates an opportunity for MFIs to provide a personalized user experiences; and it links microfinance services to the real-world economy. But he then cautioned attendees about the three existential threats this transformation can pose to microfinance providers: 1) out-dated and inflexible microfinance models; 2) emerging digital credit models that offer immediacy and convenience but risk a contagion of blacklisting clients; and 3) an emerging “digital divide” caused by the demise of MFIs that are unable to adapt. This latter risk threatens to result in fintechs serving (peri-) urban, high-value customers while leaving MFIs with low-value, rural areas, preventing cross-subsidisation by MFIs, and keeping low-income groups excluded from the latest technology innovations. To avoid this fate, he said, MFIs should not be complacent with the digital transformation in microfinance, and must implement actions which help them adapt to it, according to their structure and capacities, while remaining focused on what is best for their clients. Looking backwards and forwards The technology theme was also central to the new e-MFP publication, the Financial Inclusion Compass, launched during the conference. Derived from the mixed-methodology, inaugural e-MFP survey of financial inclusion trends conducted this summer, the Compass asked e-MFP members and other industry stakeholders to rate and speak to the importance (and direction) of various trends, to assess future “areas of focus,” and to provide open responses on the financial providers of the future, current challenges and opportunities, and their own forecasts and hopes in the medium-to-long term. The Compass is designed to look backwards as well as forwards, extrapolating from past experience, and providing an annual, longitudinal resource for comparison of how perceptions evolve. EMW’s Friday morning plenary also looked back as well as ahead. Entitled “Where next for microfinance: a view from The Founders,” it was moderated by Bernd Balkenhol from the University of Geneva. It brought together two practitioners who were pioneers in microfinance in their respective countries: Essma Ben Hamida, co-founder of Enda Tamweel in Tunisia, and Carmen Velasco, founder of Promujer in Bolivia; as well as one of the giants of microfinance academia, Hans Dieter Seibel, co-founder of e-MFP and Professor Emeritus from the University of Cologne. They explored the major landmarks and disappointments over their 30+ year careers and agreed that regulation – and the related issue of political interference – remains something they wish they could overcome. Regulation has constrained MFIs’ original role as disruptors, stymied innovation and limited the benefit that institutions can give to clients – such as taking deposits. The panellists agreed that the sector must continue to link financial inclusion to wellbeing, and not just access to financial services – and that the biggest impact of microfinance over the decades has been how it has enabled women to change their families and communities for the better, giving girls in particular new opportunities that their mothers lacked. The founders concluded with a discussion of technology – including a caution against the cheerleaders who advocate the full digitization of all microfinance services. Technological innovation is a great way to reach out to people where MFIs cannot go, they said, but the future will not be technology only – the human touch is crucial in serving low-income and vulnerable segments. Microfinance must find a way to integrate technology to reduce costs, improve efficiencies and provide opportunities for customers, while keeping client protection at the forefront. The panel agreed that client protection is more important than ever – indeed, this year the customary EMW stream on the topic involved a new focus on client protection and technology. Alongside this stream and the other 20+ sessions, the conference also focused, for at least the third straight year, on advancing access to financial services for refugees. Microfinance for refugees A two-part session stream presented the latest field research in servicing refugees and internally displaced persons. These communities face bottlenecks when accessing financial services, which extend to many fronts, including: bureaucratic and legal issues, often closely related to language; scepticism as to whether they are bankable and whether entrepreneurship is a suitable route to self-sufficiency for them; and a lack of a business models for MFIs, related to refugees’ lack of credit history or collateral and a fear they will move on. Moreover, refugee opportunities for entrepreneurship can be limited due to the economic situation in the host country. Yet research shows that refugees and wider migrant populations are bankable – they’re willing to pay for the financial services offered to them. A financial access eco-system for refugees has emerged in the last decade, but implementation in the field is limited to a few countries with large refugee populations, a favourable legal environment for service delivery and strong donor attention. From the financial service provider (FSP) perspective, serving refugees is complicated because of three constrains: reputation, legal and economic issues (e.g. in terms of public data), and a clear business case. Best practices to overcome these issues include: working with regulators and authorities on the business enabling environment, providing technical assistance to break through prejudices, getting buy-in at all levels of the FSP, offering de-risking products to FSPs initially, arranging meetings between FSPs and refugees, and compiling peer examples and data on refugee populations to demonstrate the business case. A final debate The conference ended with a new and unusual format, an “Oxford-style” plenary debate on the future relevance of smaller Tier 2 and 3 MFIs, which was streamed live and can be watched here. With Maria-Teresa Zappia from BlueOrchard Finance and Alex Silva from OMTRIX taking the Affirmative side, and Kaspar Wansleben from Luxembourg Microfinance Development Fund and consultant Maude Massu on the Negative, the teams debated the motion “This House Believes There’s No Room Left for the Little Guy.” In a lively, fun and unusually rule-based and competitive format, moderated by e-MFP’s Sam Mendelson and scored by a panel of judges, the two sides addressed issues such as the commercial viability of smaller institutions, the key elements of economies of scale and cheaper cost of capital that Tier 1 MFIs can offer and access, the key role smaller MFIs can play in offering non-financial services and supporting the lower-income segments, and their unique role in preparing clients for access to the mainstream financial services via Tier 1 MFIs and commercial banks. As “Team Negative” argued, the most important advantage of smaller MFIs is the fact that their social mission makes them ideally suited to ensure the inclusion of otherwise excluded populations, be they rural or remote, handicapped, migrants/refugees – or facing other impediments in accessing the financial products of larger institutions. In the end, the judges decided that the motion was rejected and the Negative team won – in other words, they agreed that there’s still room for smaller MFIs in the sector. Laura Hemrika, e-MFP’s chairwoman, closed the conference with a return to the central theme of technology, imploring MFIs to not be afraid of incoming fintechs, to partner and share knowledge, and to see technology as more than just a way to increase the efficiency of existing processes, but as an opportunity to re-make the financial experience for low-income clients.

Author: e-MFP. The Luxembourg microfinance community has just added a new member – the Social Performance Task Force (SPTF) launched its European presence, headed by Jurgen Hammer in the House of Microfinance, Luxembourg. For us at e-MFP, this is a very welcome step! The Social Performance Task Force is a major force in the financial inclusion sector, having spent the past decade developing a range of standards and tools to measure the too-often overlooked second part of the double bottom line – standards and tools based on long-running consultations and input from practitioners, investors, and assessors. What SPTF has been doing is no less than developing the social equivalent of the accounting standards that emerged a century ago. But SPTF’s work goes further still. After all, while good accounting standards are aimed to accurately reflect an organisation’s assets, revenues and cash flow, they say relatively little, if anything, about its operations, let alone the client experience – a far greater challenge. The simultaneously meticulous and broad-based approach that SPTF has deployed over the years in developing its suite of social performance monitoring tools with its partners should be the standard for social investors generally, and not solely in financial inclusion. After all, regardless of intentions or motivations, it’s metrics that ultimately drive decisions. When investments are made on the basis of robust financial metrics and little more than feel-good social statements of intent, there should be little surprise that the resulting outcomes of such an ostensibly social investment strategy differ little from what a traditional investing strategy would produce. To be truly social, investors must be assured that the metrics used for both parts of the double-bottom line are equally consistent and robust. Luxembourg is a global center for impact and socially responsible investing, including in financial inclusion. SPTF opening its doors here will help greatly raise awareness of its work and the importance of robust social metrics among a far greater community of investors than has been possible to date. We welcome this development with open arms and look forward to taking our long-running collaboration with SPTF to new heights. And as we welcome SPTF, we raise our hats in appreciation to those who have made this important step possible – in particular the Luxembourg Ministry of Finance and Ministry of Foreign and European Affairs. Wilkommen! Bienvenue! Welcome! Wëllkomm!

Author: e-MFP. 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. Being resilient is especially critical for these groups, which not only disproportionately earn livelihoods from activities most affected by Climate Change (especially agriculture, forestry and fisheries) but the countries and regions in which they live are also those which will be most affected, by flooding, drought, extreme storms, erosion, and pestilence. And many live in countries whose limited economic and institutional capacities already curb their ability to cope in the face of existing weather-related challenges, which Climate Change exacerbates. All these adverse effects may be multiplied by the growing risk of climate migration, displacing people to urban areas and across borders as refugees. Already, these climatic changes are occurring with greater frequency and intensity, increasing risks to health, livelihoods, food security, water supply and economic growth. Climate change impacts and responses are closely linked to both human rights and sustainable development, which balances social wellbeing, economic prosperity and environmental protection. The Sustainable Development Goals (SDGs) provide an established framework for assessing the links between global warming and development goals that include poverty eradication, reducing inequalities, and climate action. SDG13 explicitly mandates “urgent action to address climate change and its impacts,” including strengthening resilience and adaptive capacity to climate-related hazards; improving education, and human and institutional capacity. Although the challenge is daunting, there is an abundance of reasons to be positive. Within the agricultural, livestock, forestry and fisheries sectors, there is a broad range of emerging solutions, matched to the needs of vulnerable and low-income and financially excluded groups. What these solutions share is strengthening resilience. Resilient households adopt risk-reducing measures that help mitigate the catastrophic consequences of shocks; they demonstrate preparedness for future economic shocks; and they are able to smooth consumption without resorting to costly coping strategies, such as taking on unsustainable levels of debt or selling productive assets. But resilience to Climate Change goes beyond managing shocks. It also entails adapting to permanently changed environments, for example a reduction in rainwater, a shift in the seasons, or higher temperature extremes. In both cases, access to financial services can help households to adapt. Financial inclusion and climate change The financial inclusion sector has a hugely important role to play in addressing these challenges. In many cases, that means providing loans for working capital or investment in fixed assets; in other cases it is to support greater resilience to shocks, through products such as insurance; still more, it is to facilitate the long-term financial planning, including via savings products, needed to build more adaptable economic activities. Moreover, because institutions in this sector are embedded in the communities they serve, they too are often vulnerable to the effects of Climate Change. To build resilience among their clients, these institutions must also become resilient themselves. That means adapting to the changing economic situations of their clients (including their debt-repayment capacity), as well as building systems that allow for rapid and effective responses following weather disasters, such as floods or hurricanes. It may also mean integrating climate monitoring and forecasting technologies into both strategic and operational decision making. Finally, resilience may be pursued by complementing financial services with non-financial products and services, to fill capacity gaps through awareness-raising and capacity building concerning climate risks, such as technical assistance and training; developing standards that strengthen vulnerable populations’ resilience to Climate Change, and leveraging the opportunities of technology to lower costs, identifying and addressing sector-specific risks and barriers, forecasting extreme weather events and trends, conducting climate risk assessments, and providing information tools for climate risk screenings. Eligibility for The European Microfinance Award 2019 “Strengthening Resilience to Climate Change” The European Microfinance Award 2019 seeks to highlight organisations active in the financial inclusion sector that provide financial and non-financial products and services aimed at strengthening the resilience of vulnerable communities to the effects of Climate Change. The Award will look for initiatives that clearly respond to the problems caused by Climate Change, and demonstrate a proven or potential positive impact on the lives and livelihood of target groups. To be eligible, applicants are organisations active in the financial inclusion sector that play an integral role in the provision of financial (and, where relevant, also non-financial) products and services focused on strengthening Climate Change resilience within low income, vulnerable and excluded groups. While many applicants will directly provide financial products and services, those that do not directly provide them must play an integral and ongoing operational role in the project to be eligible. As always, eligible institutions have to be based and operate in a Least Developed Country, Low Income Country, Lower Middle Income Country or an Upper Middle Income Country as defined by the Development Assistance Committee (DAC) for ODA Recipients. Relevant products and services must be fully operational for at least one year, and eligible institutions must be able to provide audited financial statements. The application timeline, details of eligibility and more about the scope of the award can be found in the Explanatory Note that is published on the Award website in English, French and Spanish. European Microfinance Award 2019 Selection Process This year, and in response to feedback to a survey conducted by e-MFP last year, the selection process has changed a bit. There will be two application rounds: the first, which launches mid-March and closes on 9th April 2019, involves only a short application form and the provision of the audited financial statements, and will determine eligibility, innovation and relevance. Successful applicants will be invited to submit a more extensive application form by the end of May 2019 – with the exact date TBC. Both rounds will be evaluated by a Preselection Committee, before going to a larger Selection Committee of financial inclusion and Climate Change experts who will choose 7-10 semi-finalists and three finalists. A High Jury will choose the winner and the €100,000 prize will be presented on 21st November 2019 in the framework of the European Microfinance Week in Luxembourg. We’re very pleased and excited to be launching the 2019 Award, and we invite all organisations working to increase the resilience of low-income groups to climate change to apply. We also ask and encourage any e-MFP members or other sector stakeholders to share this with your contacts and draw the attention of this Award to potential applicants. Keep a close eye on the e-MFP and Award website, and good luck! Pour des informations sur le Prix et la procédure de présentation des candidatures en français, consultez le site du Prix Consulte el sitio web del Premio para la versión española de la información sobre el Premio y el proceso de presentación de candidaturas Photo: ©IFAD/Amadou Keita

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them 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 2012, the theme of the Award was Microfinance for Food Security, focusing on microfinance initiatives that contribute to improving food production and distribution conditions in developing countries. Alalay Sa Kaunlaran Inc. (ASKI) of The Philippines won for serving smallholder farmers and fostering effective market linkages. Its initiative presented for the 4th European Microfinance Award focused on increasing the small farmers' productivity through financing, market linkages and capacity building program. It consisted of providing microcredit, technical assistance and insurance to small farmers, and sustained market linkages to private sector enterprises. The initiative enhanced knowledge and productivity of small farmers and helped beneficiaries increase their yield, produce good quality harvests, and reduce postharvest losses because of adequate infrastructure and proper use of adapted techniques. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? ASKI: Since we won the Award in 2012, ASKI continued and further strengthened our efforts to reach poor communities and bring programs and projects with genuine impact to the underserved agriculture sector in the Philippines. As we’ve developed our initiatives that increase food security since winning the Award, ASKI’s networks, stakeholders and partners have entrusted different community development programs through the ASKI Foundation. It has also bolstered its expansion program that made the delivery of its services more efficient and accessible to clients. As of the end of 2018, ASKI Microfinance is serving more than 113,000 clients providing about P1.8 billion (USD 34.5 million) in livelihood development loans. Alongside this is a microinsurance program that reaches almost 250,000 households, covering 700,000 people. Our agricultural loan program supports around 19,000 farmers via a P524 million (USD 9.8 million) portfolio. Aside from our existing loan products and services, ASKI also offers a Water, Sanitation and Hygiene (WASH) Program with loans to help poor households access modern toilets and clean water, and Green Energy Loans to buy solar-powered lighting products that cater for communities without grid electricity. So far, the GEL program has more than 1,300 clients benefitting 7,000 individuals and is now being rolled-out in 78 ASKI offices in Central and Northern Philippines as part of our commitment to provide affordable and clean energy. Winning the Award had immediate direct benefits for our clients. With the prize money, more than 7,000 individuals benefitted from different products, including multi-commodity solar drying pavements, dual threshing machines for rice and corn, hand tractor threshing machines, a farmer entrepreneurship program, a farmers’ field school, community health sessions for TB prevention, tree planting, and various other smaller projects to benefit poor rural clients. e-MFP: What did winning the Award mean to your organization? Did anything change as a result of winning, both within the specific initiative for which you won and in the organisation more broadly? ASKI: Winning the Award has inspired ASKI to carry out more initiatives that will help poor families improve their lives and livelihoods. ASKI considered the award a privilege but also a responsibility, to promote social change to neglected communities under the spotlight of many observers in the financial inclusion sector. The Award also helped ASKI’s initiatives gain recognition not just locally but also internationally, which has really helped us solidify our partnerships with different networks and stakeholders. Since then, ASKI has been implementing WASH and Men at Work programs in partnership with Wholistic Transformation and Resource Center and the Livelihood for Extreme Poor Program and Community Impact Fund for Community Development Projects, funded by Opportunity International (Australia). ASKI has also strengthened its partnership with the Technical Education and Skills Development Authority (TESDA), a government agency certifying technical-vocational courses among the youth, and the agriculture and livestock program at the ASKI Training Institute is now awaiting approval from TESDA. Having the accreditation will enable us to become a certified training center not only in the local province but nationally. Finally, to empower SMEs, ASKI is now working with Lanka Orix Leasing Corporation based in Sri Lanka to invest in our SME operation, known as the ASKI-LOLC Finance, Inc. With the enactment of the Microfinance NGO Act, all loans above P300,000 (USD 5,800) will be transferred to this new SME entity, which focuses on the particular needs of these clients that have graduated from microfinance and are expanding their businesses. e-MFP: Are you aware of any impact your initiative has had on other organisations? ASKI: ASKI’s value chain program for farmer-beneficiaries has become one of the models in the agriculture sector. In various local and international conferences, ASKI has been invited to present the best practices of our initiative. Similarly, we have become one of the institutions regularly considered for exposure visits by international organisations. Our program has also been noted by Agricultural Credit Policy Council and has introduced it to its agriculture projects in the country. So we are pleased that the exposure from winning the Award has meant the lessons we have learned can be absorbed for replication elsewhere. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? ASKI: ASKI will continue bringing its initiatives that improve food security to its farmer clients. ASKI is hoping to build more formal farmers’ cooperatives to maximize their capacity to produce and prosper as well – which have already been done for farmer groups involved in rice, onion, ginger, and cassava production. ASKI is looking forward to new partners and funders to support its programs to help the agriculture sector of the country. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change" , visit the Award website (closing date is 9th April).

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them 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 2016, the theme of the Award was Microfinance & Access to Education. Kashf Foundation of Pakistan won for Kashf School Sarmaya, or Kashf Education Financial Program (KEFP), a holistically designed credit facility providing access to finance to Low Cost Private Schools as well as a capacity building and training for teachers and school owners, and a training of trainers on Financial Education for Youth. The following is an edited interview with Kashf Foundation. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? Kashf: In November 2016, Kashf Foundation was recognised for its pioneering efforts in the education sector by the European Microfinance Award (EMA). The award was an acknowledgement of the unique and innovative work Kashf is doing in the low-income education sector in Pakistan. It is the only MFI in the country to offer an education finance product that actually twins access to finance with capacity building trainings for teachers and school owners. The initiative looks at education and supply side gaps holistically and is a customisable solution for a broad range of Low Cost Private Schools (LCPS). With the support of the EMA, Kashf has been able to train 6,786 teachers and 2,122 schools owners on improving the overall pedagogy of learning through better teaching styles, classroom and school management and tools to develop student centered classrooms for provision of 21st century education. Through this award, Kashf has also managed to deliver child safety and well-being trainings to 745 teachers and schools owners in the areas of Lahore and Kasur in order to equip children with the knowledge of preventive measures against child sexual abuse. The distinct program efforts have translated into impactful outcomes with teachers and school owners immediately implementing their learnings from the trainings. Improved management and quality of education have led to increased enrolment at these schools, resulting in improved business incomes for the school entrepreneurs. Development of enabling classroom environments, adoption of interactive teaching methodologies and increased awareness among children and parents on social issues such as child sexual abuse have been some of the substantial results of these capacity building trainings. e-MFP: What did winning the EMA mean to your organistion? Did anything change as a result of winning, both within the specific initiative for which you won and in the organisation more broadly? Kashf: In order to better map the baseline data of the clients, Kashf revised its business appraisal forms for the Education Finance Program in 2017 to better gauge a client’s profile prior to disbursement. The assessment process of the entire school was previously done on a two-page document but with the support of the European Microfinance Award the appraisal form and data is now being collected digitally through tablets by business development officers. Furthermore, the earlier format assessed the school’s profile, student numbers, revenue, expenses, availability of resources etc.; with more focus on the income and expenditure of the client. However the revised process now contains detailed information on other factors such as grade level student enrollment and attendance, grade level fee acquisition, list of school’s asset and quality and comprehensive details of loan utilisation. Such extensive appraisal creates a transparent and efficient system, which ensures that every loan is disbursed to the deserved beneficiary. Effectiveness is a vital component of Kashf Education Finance Program (KEFP) in order to ensure its progress towards achieving its objectives. The entire school assessment process conducted by Kashf is endorsed by the school owners and they often report that on many occasions these assessment results have proven to be more informative, relevant and effective for them to understand the current position of their schools and to develop new strategies on that basis. After the revision of the business appraisal process, Kashf Foundation has also conducted a Training of Trainers (TOT) of its existing field based operational staff, i.e. the Business Development Officers (BDOs), who are responsible for loan mobilization and disbursement, in order to train them on the digital procedure. A total of 1,210 BDOs have been provided such trainings. The capacity building training modules for teacher and school owner training have been reviewed and updated by an independent education expert in the sector in order to ensure latest training techniques and styles have become part of the capacity building sessions. All the School Development Associates (SDAs) have then been trained on these training modules, through a Training of Trainers and then with additional regular refresher sessions in order to keep the trainers afresh on the training content. The revised module focuses on new 21st century teaching activities and methodologies in order to make the classroom environment more interactive and student friendly. It also aims to equip the teachers with new learning styles and effective strategies for classroom and student management. With the support of the European Microfinance Award, Kashf has developed a teacher and school owner training on child safeguarding and well-being with the objective to provide them effective preventive strategies for child sexual abuse and know-how of building a safer environment for the children within schools and in their homes. Kashf considered it imperative to provide education to children on protecting themselves, engaging in safer a manner with strangers, distinguishing between good and bad touch and reacting to situations of abuse. This is a very sensitive and important topic especially in line with the rising number of child abuse cases in Pakistan; last year alone child sexual abuse cases have increased by over 20% and it is estimated that at least 10 children are sexually abused every day. It is of utmost importance to educate children from primary age on preventive measures of sexual harassment. Kashf’s capacity building trainings have been focusing on educating teachers and school owners on how to make the children more aware about their relationships with their environment, at school and at home. The Financial Education for Youth curriculum also focuses on developing skills among children which help create empathy, enhance imagination and creativity and boost their confidence and independence. e-MFP: Are you aware of any impact your initiative has had on other organisations? Kashf: The European Microfinance Award 2016 significantly increased the credibility of the program. Kashf Foundation has been provided grant assistance by Pakistan Microfinance Investment Company (PMIC) to train 850 schools across Pakistan on the current and improved staff training program Kashf has been implementing under its Education Finance Program. Kashf has also been invited by the Global Schools Forum to be a member of its platform. Global Schools Forum is a community of education entrepreneurs who are running and supporting innovative and inclusive schools in underserved markets. They have two types of members: Non-state schools and school networks serving low and middle-income families and organisations that support these schools to scale their impact. The vision of Global Schools Forum is a world where all children have access to quality education. The mission is to strengthen the non-state education sector in developing countries serving children from low-income backgrounds. They aim to do this by equipping the members to support and run quality non-state schools and by creating a more favourable policy and funding environment for non-state organisations to engage in education. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? Kashf: Our goals for the period up to June 2022 are: 7,000 active loans to schools worth PKR 1,053,399,375 (USD 7.5m); providing school owner and teacher training to 22,500 additional participants; and providing child sexual abuse training to a further 11,200 participants. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu).

Author: Ian Radcliffe. When we at WSBI set out its Scale2Save Programme in 2016, we anticipated that customer centricity was a challenge for savings and retail banks in Africa. The programme’s first-ever study, State of savings and retail banking Africa, released earlier this year, has proven that to be true. Based on responses to a survey of 34 WSBI Africa member institutions, the study shows that making small-scale savings work requires both more thought on the supply side, and a better acknowledgement of the needs of people – the demand side – too. The 50-page report is part of the research component of Scale2Save – a partnership between WSBI and Mastercard Foundation – and reveals that member banks offer an array of transaction and savings accounts as part of their drive to attract and satisfy customers. The infographic below sheds some light on just how active banks are to push out products, but also the pitfalls and challenges when it comes to the four pillars that frame the report: usability, accessibility, affordability and sustainability. As the survey results focus on supply-side (that is to say, banks’) perceptions of customer centricity, it reveals that the product and service mix offered falls short. That shortfall can impair account activity and hamper take-up by potential customers. If this persists, these banks could see adverse effects on their financial performance, undermining what the Scale2Save programme seeks to achieve – increasing the viability of small balance savings in six African countries. WSBI banks offer a broad service, indeed, which shows a real commitment to widening financial access to low-income people, especially when it comes to women and those in rural areas. As we examined the data further, we found a persistent affordability gap, which makes it hard for low-income people to access financial services. Two in five people in Sub-Saharan Africa live on less than the internationally recognised poverty line of US$1.90 a day (in 2011 prices). Any business case that weaves in high account charges for maintenance of those accounts is bound to fail for this segment of the population. The chart below illustrates how banks view customer perception of what customers like most: low fees. That makes sense. We also see that a big proportion of targeted customers have no account because of insufficient funds. It seems customers have expressed some concern about financial services being too expensive. High-tech accessibility hampered by start-up costs; customer reach suffers Survey results show an appetite among respondents to scale-up alternative delivery channels for financial services, such as through ATMs, agents and mobile phones. Half of them use agents and mobile banking. Some 45% of respondents remain interested in investing in mobile banking. Designed to make it easier for customers to carry out banking, alternative channels have a costly price tag that weighs down on the already limited operating budgets of banks. Banks see upfront investment costs as an especially heavy burden, while there is neglect on outlays for continuous training and monitoring. As mobile banking continues to explode in Africa, WSBI member banks will need to spend more on digitally driven platforms. To keep costs in check and speed up service delivery, banks are considering partnering with mobile network operators or new entrants such as FinTech companies. Anecdotal information goes beyond data Results of the report echoed first-hand accounts by financial institutions at the Peer Review Workshop held in March. That gathering brought together people from the six Scale2Save projects in Kenya. Held with the help of Kenya Post Office Savings Bank (KPOSB), which is both a WSBI member and project partner, and with the support of its Managing Director Anne Karanja, the event was an opportunity to hear a wide variety of participants’ anecdotes via first-hand accounts of customer centricity struggles with the six Scale2Save projects. One account by a financial institution revealed the caution institutions must exercise in approaching customers around insurance, as they may wonder if you want them dead. Take-up of an account requires care on the supply side, indeed. Customer experience was also discussed during one panel. Experts advocated the need for investment in organisational structures and highlighted the need for putting internal structures in place to support customer centricity. Regulation was one report finding that echoed throughout the workshop sessions. The 40 attendees shared differing approaches to banking rules in the region. A lot of frustration bubbled up around regulation thwarting financial inclusion, especially when it comes to accessibility. One example was a rule requiring Interpol clearances in Uganda for thousands of agents there – no small task, indeed. In Kenya, it seems Tax ID, or tax registration rules, may hinder more account take-up as well. Searching the right role for government when it comes to digitisation is crucial. They have a role indeed, but how are they going to help drive digital-driven financial inclusion without hindering it? The chart below presents the 34 WSBI institutions’ response to question on regulatory barriers. One question that persists is: why isn’t anyone here talking about open banking? It’s coming, it’s already here. From M-PESA to M-KOPA, they have opened up. So much of the conversation in banking is about open banking and APIs, and regulators need to tackle the customer protection side. Questions around who is liable should also be addressed. As WSBI’s Weselina Angelow observed during the workshop, the move from cash to digital for customers is a challenge. Even in the host country Kenya, the birthplace of M-PESA, it’s clear how much of a lifeline it is for people throughout the country. It’s evident too that KPOSB taps into M-PESA to move money from village group savings boxes placed in member homes into POSTBANK accounts for safeguarding. What we learned so far Bank organisations must reform their business models. That means greater customer-focused bank leadership and culture to help improve the customer experience when opening an account and actually using it. Doing so would allow banks to satisfy customers more, which leads to more sustainable services from the banks themselves. Shying away from it ultimately drains the bottom line for banks, and the long-term prospects for bringing to market financial services for poorer people. That means coping with razor thin margins and cost-cutting moves on the bank operations side, balanced with the need on the demand side for convenient, secure, affordable and accessible products and services that deliver value for people. But if banks in Africa, like anywhere, maintain too much of a product-led focus, then expect slow take up of basic accounts, high account dormancy rates, and banks struggling to remain a sustainable business in this growing, vibrant and younger-aged marketplace. Photo: Ian Radcliffe (centre) discusses KPOSB’s Scale2Save project with workshop participants

Author: Mathilde Bauwin. In 2012, the Social Performance Task Force published the Universal Standards of Social Performance Management. Created both by, and for, practitioners in the sector, these Universal Standards gather together a collection of good management practices which should enable financial service providers to accomplish their social mission. Since then, how have microfinance institutions appropriated these standards? In 2014, the social audit tool, SPI4, developed by Cerise, was fully aligned with these standards so as to allow financial service providers to assess their social performance management practices, to identify their strengths and weaknesses and to target possible avenues for improvement. Accordingly, since 2014, Cerise has collected in a centralised database all of the SPI4 audits which have been performed and submitted. In 2018, ADA and Cerise joined forces to analyse this database and to carry out a study to review the current practices related to the assessment and management of social performance. The study places a particular focus on three questions: What are the profiles of the financial service providers that carry out a social audit? What are the main strengths and weaknesses of these actors in terms of social performance management? What are the potential synergies between social, financial and environmental performances? The main results of the study can be found below, while the full study is available here. Profiles of the institutions using the SPI4 tool Between March 2014 and August 2018, 435 audits were performed and submitted to Cerise by 368 microfinance institutions from 73 countries, with Latin America and the Caribbean and sub-Saharan African regions being highly represented. There are relatively few cooperatives amongst the institutions performing an audit, compared to the number of institutions reporting to the MIX Market. Furthermore, a majority of the institutions are large in terms of their portfolio size and there are as many for-profit as there are non-profit structures. Strengths and weaknesses in terms of social performance management In terms of the review of the practices related to social performance management, the institutions in the study sample produced an average score of 65.4%. Generally, the institutions with the lowest scores are: those located in Sub-Saharan Africa, cooperatives, institutions which have a small portfolio and those which target urban areas. This means that these are the types of institutions that have a particular need for support on these issues. Amongst the six dimensions of the Universal Standards of Social Performance Management, the dimension with the lowest score is that related to the procedures and processes implemented to ensure the commitment of all of the institution’s stakeholders to the social goals (dimension 2). The dimension with the highest score is balance between financial and social performance (dimension 6). Generally, the institutions that received the lowest global scores did not do so due to outlier low scores on one particular dimension, but were generally weaker across all of the dimensions. Social performance, transparency, environmental performance and financial performance In 2018, a Transparency Index was included in the SPI4 tool, which makes it possible to assess the seven main representative components of the integrity and transparency of the institutions. The global transparency score for the sample institutions is 69.7%. The scores are higher for the components related to the audit and the publication of accounts and human resource policy, whilst they are lower for the policy on aggressive sales technique and the mechanisms for complaints resolution, which once again highlights the practices which are the most difficult to implement and areas which require specific support. The SPI4 also includes an optional module, the Green Index, which was developed with support from the e-MFP Microfinance and Environment Action Group, which enables institutions to measure their environmental performance. Of the institutions included in the sample, 28% completed this module, demonstrating their interest and commitment in this area. Generally speaking, these institutions perform better than the others in terms of social performance management. This indicates that the institutions which are the most committed to the achievement of their social missions are those which are also the most concerned with their environmental performance. On the other hand, their environmental performance scores remain low in relative terms, which shows that they probably have a significant need for support and capacity building in this area. Finally, the SPI4 tool contains some data related to the institutions’ financial performances, which makes it possible to analyse links between good social performance management practices and the quality of the portfolio. Whilst the question of the links between financial and social performances is not new, this analysis is the first to be based on the Universal Standards to define social performance, which is considered here in terms of management, rather than results. The analysis shows that, all other things being equal, the link between good social performance management practices and the quality of the portfolio is positive and statistically significant: the higher the social performance management scores, the lower the portfolio at risk. This strong result should be one more reason to keep fostering the evaluation and the improvement of social performance management practices. While the usual caveats relating to representativeness and size of samples must be acknowledged, this study takes advantage of a valuable data set, built upon a standard-setting framework years in development, to reveals some very interesting results. These results are welcome not only in empirically supporting the much-argued claim that social performance and financial performance positively correlated, but perhaps even more so in identifying in which particular areas MFIs are succeeding in social performance, and where there remains much room for improvement. Photo credit: Anne Wangalachi

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them 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 2008, the theme of the Award was Socially Responsible Microfinance, which aimed to highlight and catalyse initiatives that represented a breakthrough in promoting social responsibility and performance in microfinance. Buusaa Gonofaa MFI, founded in 2000, provides micro-lending and saving services to resource-poor households in Ethiopia to improve their livelihood. Buusaa Gonofaa has a particular focus on women, landless youth and smallholder farmers. Buusaa Gonofaa’s initiative, the development of a Client Assessment and Monitoring System or Social Ledger, was presented for the European Microfinance Award 2008. Buusaa Gonofaa MFI had internally developed a scorecard including 20 indicators related to the poverty and progress of its clients’ wellbeing over time. Thanks to this initiative, Buusaa Gonofaa was able to develop a precise segmentation of its clients. In addition, it helped not only in modifying loan products features in order to fit the clients' needs, but also in managing the achievement of Buussa Gonofaa's social goals. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? Buusaa Gonofaa (BG): First, in the ten years since winning the Award, BG’s activities, supported by the client monitoring system, have greatly expanded. Branches have increased from 19 to 33, active borrowers from 39K to 85K, the loan portfolio from 2.3m to 12.4m euros, assets from 3.1m to 16.8m euros, and savings deposits from 534K to 5m euros. This growth has paralleled the expansion of BG’s use of the scorecard, which was given impetus by winning the 2008 Award. Initially, BG invested the Award money in the development of an automated data processing system for its scorecard on the Access platform; but when pilot tested, it was unsuccessful and was abandoned. After that, BG recruited an IT expert and another system was developed on the SQL platform. The poverty scoring data of a small sample of on average 600 active borrowers in 8 out of 30 branches is being processed every year on this system. The system generates basic reports that show the target groups that are being reached by BG, their poverty status (very poor, poor or not so poor), and their graduation patterns over time. The report gives important insights about our clients; it provides critical inputs for decisions on product improvement, new product development and strategic planning. However, this system also has serious limitations in generating the required reports. As a result, BG is currently implementing a new core banking software in which the scorecard data processing will become an integral part of the loan operation process. Such integrated data processing will streamline the reporting and allow regular deliberations at management and board level, something not possible so far due to the challenges of the manual data processing system. e-MFP: What did winning the Award mean to your organisation? Did anything change as a result of winning, both within the specific initiative for which you won and in the organization more broadly? BG: Winning the Award was a momentous achievement for the Ethiopian microfinance industry in general and BG in particular – it was official recognition of BG’s commitment and effort to remain true to its promises of improving the livelihood of its target groups. Since BG won the Award, there has been a growing commercial focus among MFIs and more questions are being asked on the efficacy of microfinance as a tool to fight poverty. It is within this context that the Award accorded more legitimacy to BG’s poverty tracking system. At the same time, the increased visibility put pressure on BG to stay on course with its initiative; this in turn helped BG to invest more in the development, improvement and institutionalisation of the scorecard. For sure, BG has been able to demonstrate to its internal and external stakeholders how it has been striving to translate its mission into day-to-day actions. Most importantly, integration of the scorecard system in the day-to-day operations of BG has provided valuable longitudinal data over typically 3-5 years for each of the sample clients. The insights from the scoring indicates who is being reached by BG, who is and is not succeeding, whether or not graduation out of poverty is occurring and if so, in what pathways. For example, BG has learned from the scoring data that over two thirds of the target clients are very poor and poor; that the very poor and poor are more likely to graduate from poverty as compared to the non-poor clients; that main pathways out of poverty is via assets, such as oxen, cows, sheep and goats, which is quite credible in view of the fact that over 65% of BG’s target clients are rural households whose main livelihood is smallholder subsistence farming. Another example of the important role of the scoring system is that it has helped BG to learn about the different trajectories of growth in the loan size and hence underlying economic activities of the different categories of the poor clients. Comparison of growth in loan size shows significant difference for urban poor compared to the rural poor. The loan size for the urban poor increases at a much faster rate when compared to that of the rural groups. The urban poor depend on micro enterprise activities where the micro loans are more likely to help them overcome liquidity constraints and grow their business. In comparison, the rural poor depend on smallholder subsistence farming which is known for very low level of productivity of average 2 tons and this is because farmers typically cultivate less than 2 hectares of land with very limited inputs of seeds and fertilizer and low farming skills. These insights from the scorecard were used by BG to revisit its strategies towards the rural poor and it introduced agricultural value chain financing thereby increasing the productivity of the smallholders from 22% up to 3 fold in some cases. Winning the Award and the actual implementation of the scoring system has helped BG to convince new social investors to provide foreign bank guarantee facilities in order to borrow from local banks to finance expansion and growth of BG. BG’s longtime partner ICCO Terrafina has used BG’s poverty scoring tool to write a winning proposal to donors and has been able to get multimillion dollars funding for a program that is now being implemented in four African countries, namely, Burkina Faso, Senegal, Rwanda and Ethiopia. This winning proposal, called STARS, (Strengthening African Smallholders) aims to offer more adapted financial products and services for those very poor and poor farmers that have graduated from the existing general purpose group loan as indicated by the scoring tool. Interestingly, this STARS program is a natural fit with BG’s new strategy of agricultural value chain financing for smallholder poor farmers. e-MFP: Are you aware of any impact your initiative has had on other organisations? BG: Following the winning of the Award in 2008, BG was invited to several forums to share its experience on this tool and how it has been working and its application in the management of BG’s micro credit operations. From 2009 to 2014, for example, BG made presentations at annual conferences of AEMFI, the national network of MFIs in Ethiopia. Many other presentations and experience sharing exchanges were also made in Mali, Uganda, Kenya, Italy, Luxembourg, Belgium, France and the European Microfinance Week. Several experience sharing and exchange events were organised at BG through the facilitation of the national network AEMFI in Ethiopia. It was also shared with members of the PAMIGA network as well. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? BG: There is no doubt that BG will further expand and strengthen the implementation of its poverty scoring tool. The poverty scoring data processing will be soon integrated into BG’s new core banking software so as to enable seamless operation of lending operation including the poverty scoring as one component and the scoring data will be processed for all 33 branches (currently only 8 branches’ data is processed). BG aims in the future to explore much deeper and get further insight about the factors that contribute to the different graduation pathways followed by the rural and urban poor clients. It needs to learn why the rural poor seem to follow asset based graduation pathways and learn whether or not there might be some optimal level of the rural poor’s investment in for example livestock assets or whether they have particular preference for certain types of key assets. Such deeper understanding of existing clients’ needs will require perhaps further refining of BG’s offerings of financial products and services. There are more reasons for MFIs in general to seriously revisit their current practices of focusing purely on the money side of their business; the bulk of recent empirical evidences suggest that MFIs should not take for granted that their loans will always bring enterprise growth and increased income, thereby improving the welfare of the poor households. MFIs need more systematic tools and mechanisms to get a much deeper understanding of the needs of poor people and the challenges they confront in their livelihoods, to understand how the financial services they access from the MFI help the poor in facing those challenges. For example, the growing evidence from financial diaries of the poor is already challenging our conventional wisdom and it is giving us a completely new perspective that was not in the conventional models of due diligence techniques of lending to the poor. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change" , visit the Award website .