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Author: Sam Mendelson. From NextBillion and re-posted with permission. European Microfinance Week is the biggest thing the European Microfinance Platform (e-MFP) does each year. The 2020 event encapsulated much about the financial inclusion sector – the good, the bad and the simply confusing – as it navigated the historic challenges of the past year. For starters, there’s the event itself. By last summer, it was already clear that EMW2020 would have to be entirely online. This meant a daunting array of new problems to solve and platforms and possibilities to grasp – along with real opportunities for this to be a blueprint for the future. At the same time, the digital nature of the event has enabled far deeper insights into attendees’ real interests based on the sessions they actually chose to attend – insights that are harder to generate solely from post-conference surveys. Held from November 18-20, EMW2020 set multiple records: It drew the largest number of participants (over 500) from the most countries (61), and it featured the largest number of speakers (over 130) taking part in 55 sessions – twice the number of sessions of in-person EMWs. These sessions ran the gamut of important issues in contemporary inclusive finance, including several on the impact of COVID-19, four sessions on savings (the topic of the 2020 European Microfinance Award), along with discussions of digitisation, climate change resilience, client protection, WASH, remittances, finance for displaced persons, agri-finance and housing. These sessions were not only more numerous and diverse than in previous years, but they introduced many new formats better suited for an online conference, from topic lounges and fire-side chats to working sessions, case studies and interviews – all available live and recorded for viewing afterwards. While we hope to return to an in-person conference in the future, many of these innovations in structure, session formats and outreach to new audiences will undoubtedly be retained. We’ll release a full conference report in the coming weeks – with extended summaries of all sessions and links to videos where relevant. But in advance of that, there are three broad takeaways from EMW2020 that we wanted to share with NextBillion’s readers, representing three key priorities for the inclusive finance sector. 1. ADAPT OR DIE Adaptation was a defining theme of this conference. On the format side, it meant experimenting with the capabilities of new platforms that didn’t even exist a year ago, helping speakers get comfortable outside of a Zoom or WebEx webinar ecosystem, and introducing a whole range of new session formats – to name just a few. On the subject matter side, adaptation was everywhere you looked, addressing a number of key questions. What can investors do to protect investees and adapt to a context of low repayment capacities and liquidity challenges at microfinance institutions (MFIs)? What can providers do to protect the financial and actual health of clients and staff? What have regulators and policymakers done to adapt to this new context? What is the role for networks, associations, technical assistance providers and others in the financial inclusion support ecosystem – all of whom are striving for a positive role, but want to avoid the “too many cooks in the kitchen” issue? The conference report will outline some of the answers to these questions. But it’s clear that those who realised the unprecedented nature of this crisis early in the pandemic and adapted quickly have been the most successful at mitigating losses – and even finding opportunities in the chaos. 2. COVID, COVID, COVID As we solicited members’ ideas for EMW2020 content, it quickly became apparent that while COVID-19 would necessarily dominate debate, it must not monopolise it. We worked to maintain this balance by dedicating a full stream of sessions to examining the impact the pandemic has had on clients, businesses, providers and the broader ecosystem. The theme was set appropriately by a keynote address entitled “Microfinance in 2021: Past Imperfect; Future Tense.” In it, Ela Bhatt, founder of the Self-Employed Women’s Association argued that the sector must focus on “helping low-income households to enhance their incomes, investing in skills, productive assets and working capital” to ensure that “all financial tools serve clients, and not the other way around.” The opening plenary, entitled “Institutional Resilience in Focus: What is the Current State of the Sector?” shifted the focus to the institutions, examining the emerging data on which categories of institutions are struggling, surviving or thriving – and why. Several other sessions looked at the many impacts and challenges posed by the pandemic on poor households, examining remittances and several other areas. But one session that deserves to be singled out was a fascinating fireside chat between CGAP’s Antonique Koning and Women’s World Banking’s Mary Ellen Iskenderian, discussing the particular impact of COVID-19 on women. Even so, the majority of the conference was devoted to topics other than the pandemic – too many to exhaustively list here. But none were impervious to the impact of the crisis. Like water on pavement, COVID seeps into every crack and crevice. It has implications for client protection, and has catalysed certain trends in digitalisation. It has upended the provision of technical assistance and conducting research; it has forced investors to adjust their relationships with investees and with their erstwhile competitors; and of course it has adversely impacted the lives of tens or hundreds of millions of low-income households. So while this was not a COVID-19 conference per se, there is virtually no area of work in financial inclusion that has not been affected by what happened in 2020. 3. KEEPING AN EYE ON THE HORIZON All that said, there was considerable interest and engagement in topics that look beyond the short and medium-term consequences of the pandemic. Attendance was highest at EMW’s sessions dedicated to digitalisation and its long-term trends. Not far behind were sessions devoted to climate change and the preeminent threat it poses to millions of low-income households long after COVID-19 is a bad memory. It is key, as the saying goes, not to let the “urgent” crowd out the “important.” Climate change is both – and was treated as such at EMW2020. As mentioned above, a major stream of the conference was savings, the topic of the European Microfinance Award 2020 on “Encouraging Effective and Inclusive Savings.” The award drew a diverse field of applicants (70 – another record broken in 2020), along with high attendance at the virtual ceremony in which the winner, Muktinath Bikas Bank Ltd of Nepal, was announced. Indeed, despite multiple sessions dedicated to the subject – including a plenary on how to create a conducive regulatory environment for effective and inclusive savings, a debate on investors’ roles in encouraging deposits, and the launch of the new e-MFP paper “Encouraging Effective & Inclusive Savings” – attendees maintained high attendance throughout them all. Equally prominent and well-attended were sessions focused on social performance and client protection, chief among them a session exploring where the sector is heading following the closure of the Smart Campaign, announced earlier in the year. Though narrower in scope, other topics garnered plenty of attention too. Sessions on refugees and internally displaced persons were well-attended by a dedicated group of participants, reflecting both recent trends as well as the consequences that the pandemic and climate change are expected to have on migration in the coming years. Designing financial products and services suited for their specific needs will remain one of the enduring challenges for the sector for years to come. But alongside these headline-dominating issues, it is important to maintain a focus on subjects that are clearly important – but not so clearly urgent. To that end, EMW2020 saw the launch of e-MFP’s new multi-author book, published by Practical Action, entitled “Taking Shelter: Housing Finance for the World’s Poor.” Housing finance has been the sector’s proverbial forgotten middle child for many years, and the book is intended to shine a spotlight on the topic. Housing is after all one of the core human needs, and it is the area where finance has the largest role to play. But despite bringing together the world’s top experts on the topic, the housing sessions were the least attended of all. At e-MFP, we believe that while attention may be elsewhere right now due to the stress and uncertainty of the pandemic, it’s imperative to look beyond just putting out today’s fires, and to continue building for a longer-term future. Without denying the importance of digitalisation to the future of inclusive finance, it should be obvious to all that having a decent home is a fundamental human need, and one to which the sector must start paying more attention. We’ll be releasing detailed summaries of the sessions mentioned above – as well as dozens of others – in the conference report that will be published in the coming weeks. In content as well as format, EMW2020 made clear the staggering changes that the COVID-19 crisis has brought – on top of a range of developments, both positive and negative, that were already transforming a dynamic financial inclusion sector. Overall, 2020 really was a year defined by adaptation through cooperation and engagement. And that work has only just begun. As e-MFP’s chairwoman Laura Hemrika observed in her closing remarks, while some of the most pessimistic forecasts on the liquidity challenges facing MFIs may have receded, there remains enduring uncertainty over the impact of the COVID-19 crisis on clients. There is a real and growing need to overcome the challenges of providing technical assistance and conducting research in this new context, made easier by an evident desire for new linkages between stakeholders that for too long have remained siloed. There is also a renewed appreciation of the particular importance of savings in increasing client resilience, and a welcome realisation that the debate over the digitalisation of financial inclusion continues to move beyond binary “good vs. bad” arguments to a much more nuanced discussion of how digitalisation can be made to work for the benefit of everyone. We are immensely grateful to all the speakers and participants who joined us on an accelerated learning curve to take part in an entirely new kind of conference, and for everyone who attended, engaged and debated at the event. And we’re grateful to Charles Maes’ Good Vibes team for their round-the-clock efforts to get EMW2020 up and running in a way we could never have foreseen. Whatever the situation may be by late 2021, without doubt the insights and innovations from EMW2020 will endure. As we bid a not-overly fond farewell to 2020, e-MFP wishes all its members, friends and everyone in the financial inclusion sector a positive beginning to a fresh new year. Visit the EMW 2020 conference report here

Authors: Daniel Rozas & Sam Mendelson Published by NextBillion and re-posted with permission. “The first wealth is health,” wrote Ralph Waldo Emerson. How particularly true this is for the global poor, for whom health is often the dividing line between the path to prosperity or a slide into destitution. To make matters worse, the combination of typically volatile and precarious incomes and the absence of high-quality universal health care where they live means low-income communities not only need access to health care, but also the ability to pay for it. For these households, paying for health care is a two-fold problem: First, accessing and affording quality health care may often be insurmountable challenges. And second, even for those who are successfully treated and fully recover from an illness or injury, the financial burden of the health shock can cast a shadow for years after. This is why “Inclusive Finance and Health Care” is the topic of the €100,000 European Microfinance Award 2021, which seeks to highlight initiatives that facilitate access to quality and affordable health care for low-income communities. The health and poverty trap The problem is enormous. The WHO estimates that in 2015, over 926 million people incurred catastrophic out-of-pocket health spending exceeding 10% of their household budget, with over 208 million people spending over 25% of their budget on health expenses. The severe financial hardship caused by these expenses pushes 100 million people into poverty each year. This challenge has grown considerably in the last year, and the consequences of the pandemic on the world’s most vulnerable may take years or decades to undo. The problem is also fundamentally a human one. When facing the emotional stress of a health emergency, people often seek out any options, no matter how costly, to access treatment. For poor households, this can mean taking on debt, selling income-generating assets — or even selling their own homes. And when the health shock prevents an income earner from working, the loss of assets to pay for treatment is magnified by the loss of income. This risks a negative feedback loop: Poverty leads to bad health, which generates further poverty. To break this loop, low-income populations need the means to access and pay for day-to-day “maintenance” health care (dentistry, optometry or prescriptions, for example), while also being protected from the devastating financial consequences of high-cost health emergencies — as well as chronic conditions that require treatment that’s unaffordable to all but the wealthiest of families. These needs follow a continuum, which can be subdivided into four levels based on an individual’s health situation and the financial pressures it entails. At one end is regular and preventative maintenance: the small but regular expenditures for vaccines, insecticide-treated nets (ITNs) to guard against malaria and other miscellaneous needs, including investments in hygiene. Some, like ITNs, are very cheap, while others, such as installing plumbing, may be more costly. But the majority are typically affordable to most households. As a result, these preventative needs can usually be met with existing savings, small and short-term credit, and non-financial services such as health camps. Level two includes the majority of health ailments: influenza, minor wounds, snake bites, many digestive disorders and even recurrent bouts of malaria. Most of these require medical (possibly urgent) care, but the cost is typically modest and affordable to most people. However, the challenge for these situations is that, even when predictable, they are still unplanned, meaning that cash-strapped households don’t have the funds at hand to address them on short notice. On the other hand, most of these needs can be met effectively by savings and short-term credit. Level three includes serious chronic diseases: diabetes, certain disabilities, HIV and other long-term conditions. Most can be managed for years with modest costs, but they require continuous expenditures and can be a challenge to solve through financial services alone. In some cases, a combination of health insurance, savings and credit may meet the need. However, many chronic conditions may require expensive drugs that cannot be sustainably met without outside support. Finally, at level four are serious and often sudden episodes of ill health such as severe accidents, heart attacks and other emergency situations requiring costly in-patient care. These typically impose the biggest financial costs, with potentially catastrophic effects on low-income households. On the other hand, most individuals will only rarely experience level four episodes, which is what makes them perfectly suited to insurance that spreads the risk — and cost — across a large group of clients. Needs also vary depending on the person and their context, as well as the illness. Some people may miss out on preventative care because of the costs of taking time away from work. For others, volatile incomes may mean delays in the treatment of fairly minor illnesses, turning treatable conditions into major or chronic problems. Rural and remote communities may not have certain medical services available at all. The poor and vulnerable can also be intimidated by health care professionals and may be reluctant to seek advice, or even embarrassed to reveal poor literacy or numeracy. And the needs and role of women in household health, both as child-bearers and as primary caregivers, are especially important. Understanding these complex needs is crucial for financial service providers (FSPs) looking to help their clients access health care. The role of the financial inclusion sector - and the European Microfinance Award 2021 Those FSPs that serve poor households are well-positioned to facilitate health care access for their clients. The universe of potential interventions is wide. FSPs can provide services like dedicated credit, savings and (especially) insurance products to meet the broad spectrum of health needs described above. They can offer other financial products too, from pre-paid medicine to vouchers. Moreover, FSPs’ strong and frequently high-touch relationships with clients (often mostly women) create an invaluable opportunity to offer a whole range of non-financial and value-added services. These could include bulk purchase discounts on pharmaceuticals, diagnostics and medical supplies; telemedicine consultations, health camps, check‑ups and screenings; health advice and information materials; and guidance on care providers and their respective specializations. This opportunity is enhanced by the fact that FSPs sometimes connect with these clients through group models that link members together with high social cohesion, making it easier to reach more people with these useful services. All these financial and non-financial initiatives can be delivered across new digital platforms and incentivized with loyalty schemes. Meanwhile, the specialization needed for health care delivery means that many programs are designed to operate in partnership with a broad array of stakeholders in the health care sector, such as local clinics, pharmacies, NGOs or hospitals. The role of the financial inclusion sector in innovating in this area has never been more relevant, so we are especially pleased that this year’s European Microfinance Award is focusing on the role of inclusive finance in health care. The net for applicants is being cast wide: Applications are welcome from any organization in eligible countries that facilitate access to health care among low-income populations through financial inclusion. This includes many different types of financial service providers that directly provide and/or facilitate access to health care. It also includes non-financial organizations that facilitate health care access, via partnerships or other relationships with FSPs. The call for applications closes on April 13th and the evaluation process will culminate in the fall, with the winner of the €100,000 prize announced on November 18th during European Microfinance Week. We look forward to applications from a diverse field of organizations in the financial inclusion sector that are pioneering ways to increase access to quality and affordable health care for low-income communities. Additional information on the topic, eligibility requirements, and application and evaluation processes can be found on the European Microfinance Award website. About the Authors: Daniel Rozas is Senior Microfinance Expert at the European Microfinance Platform (e-MFP) and co-founder of the MIMOSA Project. Sam Mendelson is Financial Inclusion Specialist at the European Microfinance Platform (e-MFP) overseeing various research, knowledge, communications and sector-building across e-MFP’s different financial inclusion research streams, and supporting coordination of the annual European Microfinance Award, including as continued lead author of the European Dialogue

Authors: Craig Churchill & Lisa Morgan. Kicking off a series of blog contributions throughout this year to complement the European Microfinance Award 2021 on ‘Inclusive Finance and Health Care’, Craig Churchill and Lisa Morgan from the International Labour Organization advocate not just a productive but a protective role of financial services, through increasing access to affordable and quality health care. Over the coming months, we’ll be publishing more in this series from our members and other experts in the field. We laud e-MFP and the other European Microfinance Award organisers for highlighting, via this year’s Award, the potential impact that financial inclusion can have on health care. This is indeed a critical issue. For low-income households and microentrepreneurs, ill health can be financially catastrophic – eroding savings, depleting working capital, causing loan repayment defaults and exacerbating indebtedness. Health related financial risks are a primary driver of impoverishment. The WHO estimates that about 150 million people around the world suffer financial catastrophe each year from out-of-pocket expenditure on health services, while 100 million people fall below the poverty line. It is also important to consider the gender dimension to the realms of wealth and health. Overall, women are more likely to be poor than men; less than half of all eligible women are able to participate in the labour force compared to 75% of men; and 56% of all those without a bank account are women. Discrimination, based on gender (or anything for that matter), has implications for the most basic aspects of self-determination, dignity and freedom, with serious implications for both financial inclusion and access to health care, amongst other things. While there is a tendency to think primarily about the role of financial services for productive purposes – such as to support the growth of microenterprises – we argue that the protective role of financial services should receive equal attention. For example, unless people can manage their health effectively, the impact promised by access to finance will be limited. For low-income households to avert poverty, they need family members who are healthy enough, for long enough, to be sufficiently economically active to accumulate wealth and thus financial resilience. The consequences for low-income households of not attaining financial resilience can be devastating, with long-term implications, for example where children fall out of the education system to contribute to family income. If the breadwinners run or work in small enterprises, those MSEs likewise need a healthy workforce to profit, remain sustainable and grow. From the viewpoint of financial service providers (FSPs), keeping clients healthy makes business sense. Healthy and economically active clients are less likely to default on loan repayments, and may earn and save more. In addition, they may have greater financial resources to consider purchasing other services, including risk management solutions. However, it is not easy to design and deliver financial services that can help to finance health care. To provide some insights and guidance on this issue, drawing on a Social Finance Working Paper we published a couple of years ago, we want to highlight five issues that financial service providers can consider when designing such products. 1. Understand all of the costs associated with a health event: When someone becomes ill, they incur a range of different expenses. Some are reasonably small, like transport to the clinic. Others might be quite expensive, such as surgeries. Some expenses are one-offs, while others are recurring. Government health care programmes might cover some costs. In fact, the pursuit of universal health coverage (UHC) is one the Sustainable Development Goals, and where possible, FSPs should endeavour to register their clients with the government schemes. Yet even the most generous programmes will have some gaps, and those gaps represent an opportunity for FSPs. What are the most significant health care costs not covered by other sources, and can the FSP finance and/or insure those costs? 2. Savings is the most versatile: Health savings accounts, which are semi-liquid and can be accessed when people have a health expense, are the most flexible option from the client’s perspective – and the most affordable. FSPs should consider offering a higher interest rate on this account to make it more attractive for clients to deposit funds in their health savings account. These accounts are particularly relevant for smaller expenses that occur more frequently. 3. Consider integrated solutions: When low-income households have savings, they often prefer not to deplete them because that would exhaust one of their last coping mechanisms. Consequently, they might prefer to borrow money, using the savings as collateral. Plus, for larger expenses that incur infrequently and are not covered by the government health scheme, insurance would be an appropriate solution. Clever FSPs are finding ways of combining all three – savings, credit and insurance. 4. Hospital cash: One of the most common insurance products is hospital cash, which pays a per diem for each day that the client is in the hospital. This is particularly relevant for workers in the informal economy, such as microentrepreneurs or day labourers, who do not get paid sick leave when they are away from their occupation. 5. Don’t forget about prevention: As Benjamin Franklin once said, an ounce of prevention is worth a pound of cure. In some environments, preventable illnesses are still quite common, so FSPs can consider providing basic health tips and guidance to encourage good hygiene and healthy behaviours. This approach can be positioned as a value-added service that is provided to clients who open health savings accounts, for example. Given the recent COVID-19 pandemic, this is an opportune time for FSPs to be thinking about embedding health solutions in their services. It is likely that there is an increase in the demand for health related services such as, but not limited to, telemedicine. FSPs not only stand to benefit from having healthy customers, but also, within limits, have an opportunity to contribute to better global health. Photo 1:Lord R. / ILO Photo 2: Marcel Crozet / ILO About the Authors: Craig Churchill, International Labour Organization, has more than two decades of microfinance experience in both developed and developing countries. In his current position as Chief of the ILO's Social Finance Programme, he focuses on the potential of financial services and policies to achieve social objectives. He serves on the governing board of the Access to Insurance Initiative and was the founding Chair of the Microinsurance Network. Craig holds an MA from Clark University and a BA from Williams College, both in Massachusetts, USA. Lisa Morgan, International Labour Organization, provides expertise on insurance and other risk management solutions in the public and private sectors. She has more than 20 years of actuarial and related experience in Europe, Africa and Asia. Her experience includes pricing, reserving and budgeting for private and national health insurance schemes, as well as developing and managing inclusive insurance projects. Lisa is a qualified health actuary and Fellow of the Institute and Faculty of Actuaries in the UK. She has a diploma in actuarial management from Cass Business School, London and a B.S. in actuarial science from the University of the Witwatersrand, South Africa.

Author: Gilles Renouil. The second in a series of blog contributions throughout this year to complement the European Microfinance Award 2021 on ‘Inclusive Finance and Health Care’, Gilles Renouil from Women’s World Banking presents the argument for a hospital cash and life insurance program and discusses the commercial viability of such a model. Over the coming months, we’ll be publishing more in this series from our members and other experts in the field. As leaders face the enormous challenge of reviving post-pandemic economies, financial inclusion plays a key role. But how do we ensure that incentives, tools and programs specifically designed for low income populations become commercially viable in their own right, and remain financially sustainable over the long term? In last month’s blog “Five to thrive Embedding health care in financial services”, Lisa Morgan and Craig Churchill from the International Labour Organization (ILO) highlighted that while the need is greater than ever, it’s not easy to design and deliver financial services that can help to finance health care for vulnerable groups. We at Women’s World Banking look back at 15 years of design and implementation of innovative health insurance programs for low-income populations and confirm that yes, it is not easy. Yet, Caregiver, our flagship insurance solution, provides a meaningful, affordable and sustainable life insurance and hospital cash solution to middle- and low income women (entrepreneurs) in developing countries, proving that with discipline and commitment it can be done. Insurance – why it is crucial to enabling financial inclusion Insurance protects hard earned assets and income from unexpected shocks and allows individuals and business owners to get back on their feet faster when disaster strikes. It is fundamental to the growth and development of any economy, and in particular to developing economies. Unfortunately the benefits of insurance are not as well understood as they should be in the quest to bring financial inclusion to scale. In this context it was recently established that insurance plays an important and direct role for achieving nine of the 17 Sustainable Development Goals (SDGs): No Poverty, Reduced Inequalities, Zero Hunger, Good Health and Well-being, Gender Equality, Decent Work and Economic Growth, Industry Innovation and Infrastructure, Climate Change and Partnerships for Goals. Caregiver – what it is, and what it does Caregiver is a hospital cash and life insurance program, primarily – but not solely - aimed at low- or middle-income women entrepreneurs. The program, established in 2006, is an income replacement tool addressing that need, complementary to the available government social security schemes, but it does not exist as a standard insurance offering. It has hitherto been successfully rolled out in 4 countries, serving 2 million customers, with flagship programs in Jordan and Egypt. Bundled with micro-credit loans at a nominal monthly premium of around US$1 (premiums vary from 45c to US$2) per customer, all health conditions are covered from day one, including maternity and pre-existing conditions. There are no waiting periods or exclusions. The insured is eligible to receive a cash amount (in general between $15-40 per night), making the program an attractive value proposition for low-income women. All the customer has to do is to show proof of hospitalisation. The benefits can be used to cover indirect expenses associated with illness or hospitalisation. The most critical of these allowed expenses is the lost income clients experience when they must suspend their business operations. But other indirect expenses covered by Caregiver include transportation to and from the hospital, meals, and other incidentals. Caregiver – barriers to the natural development of new, inclusive insurance markets: what we’ve learned Many low-income clients, and women in particular, have no previous relationship to insurance and don’t know how it works. While they relate to the notion of risk prevention, and coping mechanisms and services within their community, they have no concept of commercial financial risk management solutions. They trust only in personal relationships that are tried and tested. Persuading low-income customers to buy insurance is therefore an important barrier. Many microfinance institutions are ideal aggregators but lack sufficient understanding of insurance to make the case to clients - their core business is lending. Developing and selling inclusive insurance products is a second barrier. Finally, insurance companies are risk-averse and data-driven. They are interested in scale but rarely have sufficient data on the low-income segment to price the risks and hence do not regard this market as insurable. Ignoring the low-income segment and denying capacity to it is the ultimate barrier. Addressing these barriers So how can we remove those barriers? It is unfair and unproductive to solve the problem by asking our low income customers to make the first step. The financial sector needs to make it easy for them. But how? 1. Bundling a solution for a grouped portfolio to get economies of scale and remove all exclusions. Pilot thoroughly to create data and prove the case to the insurer. Insurance is a game of numbers. The more volume a program has, the more value it generates for the customers. Voluntary products bring customer choice and that should be the goal, but it bears two fundamental risks: anti-selection (customers with poorer health are more likely to enrol); and they are slow to scale. This threatens the sustainability of the program because, firstly, anti-selection drives price upwards and insurers add exclusions and waiting periods; and secondly, more exclusions take more time to explain or to settle claims. This makes the process more expensive and microfinance institutions wait for customers to opt in for insurance until they see its real value. By developing bundled products (for example with a loan) we can reach statistical numbers to confirm actuarial assumptions sooner. Bundling does not mean that one-size-fits-all or that we dilute the efforts on customer education. In fact, we need to double it up so that the customers can see that insurance works for them, and that they will want to renew the loan with that MFI because of insurance, not in spite of it. Financial Service Providers have a critical mass of customers, data and negotiating power and so can dilute risk more easily. Reservations against maternity cover on the grounds that it creates a moral hazard and should be excluded are irrelevant based on a portfolio of 100,000 clients because not all women will be pregnant at the same time. Maternity cases never represent more than a third of the cases in our schemes, even when 95% of the client base is women. Caregiver has no exclusions, no deductible, no waiting period. 2. Taking ownership of product development and of the delivery process. Banks and microfinance institutions must understand that coping with the cost of health emergencies is a significant barrier that women entrepreneurs face to growing their livelihoods, and they should not have to make a choice between health and economic prosperity. Otherwise it will also ultimately impact their bottom line, as financial and physical health are closely related. Caregiver is an income replacement tool addressing that need, complementary to the available government social security schemes, but it does not exist as a standard insurance offering. Instead, MFIs play the most critical role to build awareness and trust among the customers, which requires MFIs to depart from their default position to buy and plug a service from insurers. Data and clients without analysis and research are like fallow land. MFIs must leverage the knowledge of clients and their trust to drive product development, delivery and claims process as much as possible. Only this way can they reduce insurance high operating costs. This is where technical assistance is most useful. When designing a family coverage for Lead Foundation in Egypt (85% women customers), we found that for a woman micro-entrepreneur to give birth and not get coverage for her child was extremely stressful because she would have to prioritize caring for her child and reduce the effort to run her business, thereby losing revenue. Our insurance partner was originally reluctant to cover new-borns, but we were able to provide data patterns from a similar scheme and agreed to proceed with an estimated number of new-borns and a few indicators to monitor for the pilot. Piloting is the best moment to learn as you start small in a protected environment. 3. Listening to your customers at every step of the process and measuring the risks you take. Understanding your customers’ needs are key to developing not only the right product, but also the right process. In terms of products, when we designed our first with our partner Microfund for Women in Jordan (93% women), we proposed to give women customers a benefit in case of death. During the prototype testing, most women said that the product would be less useful because if they were to die, their husbands would not invest it in the children. Instead, he would use the money to get married again. But if he were to die, she would lose his contribution to the household. In fact, data showed that husbands were 9 years older than their wives on average, which made the risk that she would become a widow higher. Based on these insights, we designed a product to cover the life of the husband. And in terms of process, microfinance firms are very close to their customers, and they generally know when clients face health emergencies and can support them during claims filing. Loan Officers are the most important stakeholders when servicing the women’s market. From Lead Foundation’s experience, we know that women know their loan officers, but they don’t know Lead as a brand (“I took the loan from Mr. Mahmoud”). Women ask for more information and personalized advice from people they can trust, and loan officers fulfil that need very well. They can also help the customer to navigate the process when they hear their customer has been sick. Women’s financial behaviours have a positive multiplying effect on the finances of the household, and offering a good product allows them to realise that potential. According to the UN, women reinvest 90% of their earnings back into their families and communities while men invest 35%. Women have been particularly affected by this COVID crisis and as leaders face the enormous challenge of reviving post-pandemic economies, it is logical that women and their resilience must have a prominent place in their strategies. Looking at the Financial Services market opportunity, well implemented hospital cash programs have the potential to serve a high-volume market at low cost, and at the same time build financial services and insurance literacy amongst the customers, as well as generating trust in the concept of insurance. Simple, affordable, needs-based products like Caregiver can play an important role in helping low-income populations to stay afloat and thrive in the post-covid economy. But it will require all hands on deck to bring such products to meaningful scale. It is no longer sufficient for donors, insurers and MFIs to act in isolation - we need to partner with all parts of the financial services ecosystem to attain sufficient volume to make financial inclusion commercially viable, impactful, and sustainable over the long term. About the Author: Gilles Renouil is the global head of insurance programs at Women's World Banking. He has more than 20 years of experience in the insurance industry and in the non-profit sector. In this role, he is responsible for managing all insurance related engagements, replicating existing products with financial service institutions, developing new services and providing strategic direction in the insurance area. His areas of expertise include product design, pricing, underwriting, control frameworks, financial performance and process improvement. He holds a MSc from École des Ponts ParisTech, France.

Authors: Shams Azad and Rubait-E-Jannat. The third in a series of blog contributions throughout this year to complement the European Microfinance Award 2021 on ‘Inclusive Finance and Health Care’, Shams Azad and Rubait Jannat from BRAC Microfinance examine the rationale for medical loans, with a particular focus on BRAC’s MTL+ product. Over the coming months, we’ll be publishing more in this series from our members and other experts in the field. Watch this space! The need for client-centric financing during an emergency Bangladesh has recorded notable achievements in the healthcare sector in the last few decades. Reforms and a drive to develop an extensive healthcare infrastructure have led to reduced child and maternal mortality rates, increased immunisation, and progress in combating infectious diseases like malaria and tuberculosis. All of these achievements are remarkable among south Asian nations. But still, an all-inclusive health care system is a far-reaching goal. An estimated 67% of total healthcare expenditure is met from households’ out-of-pocket (OOP) expenses, one of the highest in the South-East Asia region. Out of this OOP expenditure, 69.4% goes on medicines, exacerbated by the absence of a national health insurance system. So low-income households experience different and serious vulnerabilities during health emergencies. Nearly 5 million people are pushed below the poverty line due to health-related catastrophes every year. Institutional financing options are limited. Accessing a regular microfinance loan also takes 3 to 4 days. And so in most cases, borrowing from friends or relatives or informal sources at higher rates or selling assets are the natural response to a unforeseen health expenses. Because of these factors, there is a real need to create a client-centric financing option for low-income families to tackle a medical emergency. In response to this need, BRAC Microfinance in Bangladesh launched "Medical Treatment Loan (MTL)" back in 2013. Shielding people from health shocks: Medical treatment loans The MTL helps families to respond to unprecedented medical expenditures and provides linkages with hospitals and clinics. The core initial consideration was: how can a field officer be involved in the household's decision-making process in a time of medical emergency to ensure there is no ‘purpose drift’ and the intervention does not lead to over-indebtedness. Clients were matched with a BRAC-doctor, and the loan amount considered per the doctor's recommendation, within a range from USD50 to 600, parameters decided based on market experience. If the required amount was more than USD 235, disbursement was in two phases. As the MTL was offered only to existing borrowers and/or savings, it was expected that the MTL would be taken as a top-up to an existing loan. Relaunching MTL as MTL+ After several years of improvements and insights from the MTL programme, there was a product re-design. Endorsement from the BRAC-assigned doctor was not always convenient. Travelling long distances to reach the doctor's clinic, especially in rural areas, and the lack of availability of the doctor or appointment clashes led to requests from clients’ families that they could choose the health provider themselves. Furthermore, the loan cap and two-stage disbursement was not flexible enough for most families. In the three stages of medical recovery - diagnosis, treatment and post-treatment recovery - financing needs might arise anytime. Some treatments, like surgery or childbirth, required money all at once. So fragmented disbursement in those cases was not suitable. And lastly, the restriction of the loan to existing clients was withdrawn, because a family should be able to start building a financial journey with BRAC even in a time of emergency. BRAC sees this as ‘staying close’ to the people it serves, and for all these reasons, MTL+ was launched in a completely different set of branch offices in 2019. New lessons learned After a year of observations of the new programme, we saw that loan uptake was 10% higher in MTL+ than its predecessor. 75% of the clients were between 31 to 50 years old (chart-1), and by profession, most of the recipient households were in the lower-income bracket – daily earners (chart-2). These households' average per capita income was around the international poverty line of USD1.90 per day, indicating impressive equitable access among the client groups, and that field officers were not just focusing on higher-income households for better repayement. These MTL+ borrowers comprised 3.7% of the total client base, and the average loan amount was USD 150, while the maximum was USD 950. 66% of loans were given for 12 months, 20% for 18 months, and 14% for 24 months. Lack of awareness or access to finance undoubtedly leads many families to reach out to informal service providers in a country like Bangladesh. Here at BRAC we wanted to learn if an affordable financing option would increase access and uptake of better, formal health care services. From BRAC’s perspective this means visiting a registered physician at any public or private healthcare facility. Our research involved 531 households which had taken the MTL+ loan and 531 households which had not, for similar health cases, and we found that access to such a treatment loan increased the probability of visiting a formal health care service provider by 41%. About 97% of the households from MTL+ clients went to formal healthcare providers for their illnesses, compared to only 61% of non-MTL+ households. MTL+ households also had higher OOP expenditure (USD225) versus non-MTL_ households (USD76), due to the removal of liquidity constraints. We also observed that MTL+ clients spent about USD 93 more on average for their treatment than they did on previous similar health incidents before the loan uptake, however their net expenditure decreased by USD 35.5 on average. These data suggest that MTL+ relaxes the burden on their regular income and household cash savings. Shahina used to run a small grocery store adjacent to her house, and her husband was a person with a disability. The family expenses were on Shahina's income. When she was once diagnosed with stones in her gallbladder, she was at a loss. Then she availed of BRAC's MTL+, an amount of USD 175 and successfully went through her surgery. The intervention also has a considerable benefit for women. The MTL+ loan was offered to female client groups and in almost 60% of cases (chart-3) the clients used the loan for their own treatment purpose, with a further 35% of spending on immediate family members, husband or children. The types of illnesses being treated also varied widely (chart-4). Full recovery from the illness was observed in 58.7% of the cases. In 34.8% of the cases, it was partial. Of course, an affordable financing option might solve some of issues for low-income households in case of medical emergencies, and MFIs can design an emergency loan, with quick disbursement, without burdensome assessment criteria. However, there are areas of concern. In many cases, clients ask for a grace period on repayment because of the main income earner requires the health treatment, the the monthly repayment load may become unmanageable – especially as 87% of the clients in the BRAC pilot already had a loan before they required the MTL+ top-up. Sultana and her husband, a small business holder, struggled with their son Samiul since his birth due to an "Atrial Septal" defect (a congenital disability of the heart in which there is a hole in the wall divides the upper chambers of the heart). Taking an MTL+ loan of USD 590, the family went through a bypass surgery for Samiul. Today Samiul, aged 7, is fully cured. Does this mean a medical loan should be offered at a subsidised rate? The portfolio quality ratio was higher in MTL+ in comparison to a regular microloan portfolio, but this may not always tell the full story of how families cope, and for an MFI like BRAC it’s a question of balancing repayment ratios with the social mession to ‘stand by’ the households they serve. A simple instrument of loan calculation that uses variables like household income, expenses, debt and savings outstanding, the amount asked for the treatment and proposed loan tenure, can help field officers to take faster decision, and this was implemented in BRAC’s case. The idea is that the field officer can work with the household to evaluate and adjust the variables to create a more bespoke loan that provides a manageable repayment schedule that genuinely helps rather than hurts a family. Scaling up such a financing option needs more study. What does a low-income household need more- a medical loan or a low cost and effective insurance coverage? Does a financing option make the families incline more towards commercial health care options, thus ending up in higher OOP expenditure? Does the quality of the services worth spending the money on? Moreover, the COVID-19 pandemic has put experimentation at an unprecedented standstill. However, at BRAC we are hopeful of being an important part of the discussion on affordable health care services for low-income households with the experience we are gathering from this medical treatment loan. About the Authors: Shams Azad is Chief Operating Officer, BRAC Microfinance Programme, LinkedIn, e-mail: sahed.azad@brac.net Co-author: Rubait – E – Jannat is Manager, Product Development, BRAC Microfinance Programme, LinkedIn, e-mail: rubait.j@brac.net

Authors: Bobbi Gray & Amelia Kuklewicz. Health shocks can lead to failures of businesses, clients leaving their financial service providers, repayment problems and even destitution and poverty. In this fourth in e-MFP’s blog series to complement the European Microfinance Award 2021 on ‘Inclusive Finance and Health Care’, Bobbi Gray and Amelia Kuklewicz from Grameen Foundation’s RICHES Program describe the demand for health financing support, the models for meeting that demand, and lessons learned for FSPs considering getting into health finance. We met Teresa in El Salvador in the winter of 2019. She was a participant in a focus group discussion in which we sought to understand the relationship between women’s involvement in microfinance and the impact of income shocks on their families. She was emotional, sharing her anguish over her husband’s illness and how she took the risk of taking out a loan to manage his medical care. Along with the other women in her group, when they discussed income, they had a well-worn phrase to hand - “Coyol quebrado, coyol comido” – which alludes to a particular fruit with a hard shell, that when broken, is eaten right away and nothing is saved. This is their cash flow and expenses; earned income is always fully accounted for and used immediately, leaving no room for emergencies. In English, this might be called ‘hand-to-mouth’. In 2019, with a grant from the US Department of Labor’s Bureau of International Labor Affairs, Grameen Foundation and the American Bar Association Rule of Law Initiative joined forces for the Reducing Incidence of Child labor and Harmful conditions of work in Economic Strengthening initiatives (RICHES) project, with the goal to develop a toolkit for women’s economic empowerment actors such as financial services providers (FSPs) to integrate child labor and business safety into FSP products, services and programming. RICHES started out with a year-long pre-situational analysis, which consisted of a robust global desk review and field research in the Philippines and El Salvador. The evidence was growing that, as women start or grow a business, they will turn to their children for help—either to work in the business as a trusted and unpaid “employee”, or to offset the caretaking and household chores at home. But what also became clear was the primary reason most households resort to child labor - health shocks. Health shocks are also a key contributor to business failure as well as FSP client drop-out or repayment problems. When Teresa and her group members were asked about what products they needed, microinsurance and other health financing products were mentioned, along with the basic need for more flexibility in existing products. Why? So that when household stresses or shocks occur, they don’t doubly suffer from the consequences of responding to the shock and keeping up with financial obligations such as loan repayment. This is of course compounded by the additional stress, pressure and worry that one missed loan repayment might permanently affect their access to future loans. Demand for health financing support is often higher than any other financial risk management solution, and demand far exceeds supply. Health and accident/disability microinsurance are two of the most needed insurance tools. While hospitalization insurance is the most available, out-patient care can be just as financially catastrophic for a household; day-to-day ailments and chronic illnesses can quickly push a vulnerable household towards destitution. Children are pulled out of school temporarily, or permanently, to help fill the financial gap, especially if it is an income earner who has fallen ill. Microinsurance is one of the only financial tools that has been shown to mitigate the risk of a household turning to child labor when a shock occurs. However, microinsurance, when available, seldom covers all out-of-pocket expenses, such as transportation or medicines. While microfinance clients will often use microenterprise loans to cover health expenses, these are not shown to positively impact health outcomes. And all other financial tools have shown a relationship, under certain circumstances, to an increased prevalence of child labor. Yet, the more financial tools a household has in their financial portfolio and the more flexible those financial tools are, the less likely a household will resort to child labor. This means the role of health financing can protect households in more ways than one: microenterprise loans are not being diverted to cover health expenses, households are able to seek health services without delay, and children are not pulled out of school to financially support the household in times of crisis. Building on a paper we produced a few years ago that reflected on lessons learned from developing health savings, and amplified by the research we’ve conducted to develop the RICHES toolkit, we propose the following recommendations for those considering health financing: If an FSP cannot immediately offer products that assist households in managing health costs, they can start by ensuring that existing products (whether these are savings, loans, etc.) and processes: Allow for restructuring in times of crisis, such as a health shock; Are better designed to respond to common cash-flow constraints that push households in making trade-offs. If there are well-known times of the year when households are low on income but have high expenses, these are common triggers for causing negative coping strategies, such as using child labor to support loan repayment, generating income to cover schooling costs, etc.; Don’t rely on aggressive payment recovery techniques. To avoid shame and ensure continued access to future financing, households may rely on children to assist in short-term income generation for loan payments; and Monitor for negative coping strategies and sacrifices that households may adopt or experience when using a financial tool, in addition to the intended positive impacts. This evaluation should be conducted at the product or program design stage, through program monitoring (such as during client satisfaction surveys), as well as when evaluating program outcomes. If an FSP can offer health financing products, our experience shows an FSP should: Conduct market research to understand the types and amounts of out-of-pocket health expenses, women’s decision-making power related to their ability to decide when, where, and how they will seek treatment, and what health providers are most used; Design health financing products that are superior to borrowing from friends and family and other informal lenders since these are the frontline resources most often used due to being easily accessible and providing more flexibility in repayment; Keep red tape to a minimum, since even well-intentioned paperwork can create barriers to use. Focus on speed as health issues are often perceived as an emergency, even for planned medical events, such as childbirth; Consider how to meet different health costs. Different or integrated products should address preventive care (e.g. annual check-ups) and curative care (e.g. illness or injury) as well as financing that responds to small-impact (e.g. cough or cold) and large-impact (catastrophic illness or accident, disability) health issues; Cover the entire family, not just the client; and Evaluate client satisfaction with these financial tools as well as the care received from the health providers, since satisfaction is interlinked between the two. More research is clearly needed to understand the overall impact health financing products (especially those designed to complement microinsurance such as health savings and loans) have on health behaviour, and even more so on the impact they can have on mitigating the risk of child labor. The 2021 European Microfinance Award highlighting advances in health financing is a welcomed acknowledgement of both the progress made in the field, and its potential to encourage replication of good practice. Many FSPs might question the relevance of child labor to their work, but women female entrepreneurs were asked in the focus groups whether they wished their FSP could know and better understand the tradeoffs they often make, and in doing so to be more involved in their lives. One woman in El Salvador put it clearly: “Al menos que sepan que estamos jodidos” (‘at the least, they should know that we’re screwed’). This reveals how significant the challenge for FSPs is. They must see themselves as part of a larger solution, starting with what they do best, which is making well-designed, evidence-driven financial tools readily available. For more on the RICHES toolkit and how the tools can help your organization mitigate the risk of child labor and harmful working conditions through better designed products, services, and processes, please explore the RICHES toolkit here or contact us at riches@grameenfoundation.org. Please note that the tools are currently in the final editing stage, but we are happy to share them prior to finalization for review. A Financial Services Brief, which is where much of the content used for this blog is derived, and which covers more than health financing, is also available. Funding for the RICHES project is provided by the United States Department of Labor under cooperative agreement number IL-31469. 100% percentage of the total costs of the project or program is financed with federal funds, for a total of $1,872,000 dollars. This material does not necessarily reflect the views or policies of the United States Department of Labor, nor does mention of trade names, commercial products, or organizations imply endorsement by the United States Government. PHOTO 1: Antonio Gallegos for Grameen Foundation PHOTO 2: Jim Cline for Grameen Foundation About the Authors: Bobbi Gray is Research Director and Amelia Kuklewicz is Regional Director, Latin America, and Caribbean & Asia, both of Grameen Foundation. Both support Grameen’s Reducing Incidence of Child Labor and Harmful Conditions of Work in Economic Strengthening Initiatives (RICHES) program which works to integrate child labor and harmful business practices within women’s economic empowerment (WEE) initiatives and the Women and Girls Empowered (WAGE) program which focuses on the integration of gender-based violence, women’s peace and security, and WEE. Both also have had extensive experience working on health financing products and education across the globe.

Author: e-MFP. e-MFP is a member-led platform, and we always want to hear what our members are doing in different fields, to increase linkages and knowledge sharing both across the platform and with other stakeholders. Over 2021, e-MFP reached out to its members to see who was doing what in the area of this year’s European Microfinance Award theme – 'Inclusive Finance and Health Care'. We asked them five questions, and we’re very grateful to the following members for their contributions, which are reproduced (and edited for clarity and length) here: 1. How is your organisation working to increase access to affordable, quality health care for low-income populations? Microsave Consulting (MSC) MSC works with governments, think tanks, academic institutions, development agencies and others to address policy and last-mile healthcare delivery challenges. Our recent work on healthcare includes: assessment of the impact of COVID-19 on routine healthcare services and frontline health care workers (ASHAs); assessment of the health service delivery challenges and enhance the efficiency of the largest publicly funded health insurance program for the poor; and working with the state government of Uttar Pradesh to create a model block for healthcare service delivery to low-income segments. VisionFund International (VFI) We survey clients to understand the risks they face, how they cope, and how they plan. Additionally, we inquire about their health habits and current gaps in coverage. This year we conducted surveys in eight countries and based on those results we are working with insurance providers to design products that will meet clients’ expectations, coverage needs, and are affordable. We believe that to best serve our clients’ health, services should be incorporated into our financial products. Lastly, for easy access and convenience our disbursements to clients are paperless and cashless, reducing operational risks and expenses allowing us to keep premiums low. Women’s World Banking (WWB) In response to the gaps in health financing experienced by low-income women, Women's World Banking developed Caregiver, a microinsurance solution, providing a per night cash benefit after hospitalization that policyholders can use for a range of related needs (transportation, replacement of lost revenue, etc.) Since its launch in 2009 in partnership with Microfund for Women (MFW) in Jordan, we have worked with financial service providers in Egypt, Morocco, and Uganda to roll-out products. To date, Caregiver has reached more than 2,000,000 beneficiaries, more than half of which are women and girls. 2. What do you see as the most significant health care needs of the low-income populations you or your partners work with? What are some of the most significant barriers to access and affordability that they face? MSC From our view, the key healthcare needs of the poor are: pregnancy care including ante-natal care, postnatal care, and delivery services; preventive and primary healthcare specifically targeting non-communicable diseases; and nutritional care for malnourished children and women. In terms of the key barriers in healthcare access: there are supply-side barriers, including inadequate human resources, capacity and training of the human resources, infrastructure and supply issues, quality of healthcare services, etc.; and demand-side barriers, including awareness regarding the health services, distance of health centers, out-of-pocket expenses on healthcare, previous experiences with the health systems, etc. VFI A significant burden on low-income populations is paying for health care expenses out of their own pocket. Each year, 100 million people are pushed into extreme poverty because of health expenses for themselves, a child or family member, according to the WHO. Universal Health Coverage is improving but in many countries the journey is still long. And even in countries where UHC is more advanced, people are still ranking health expenses as a major financial risk for their families. However, there are multiple barriers for insurance: knowledge about insurance coverage, lack of providers, complexity of products designed, and quality of care and service. WWB Access to insurance that meets the unique needs of low-income women is vital. Many women tend to work in the informal economy, with limited access to health financing from government or employer schemes. As a result, paying for a health emergency is the most common reason women must decapitalize their businesses. Typically, during hospitalization, healthcare costs include indirect out-of-pocket expenses, coupled with loss of income. Many families are then forced to deplete their savings, pledge assets, or rely on informal lending options. Women also face additional risks due to pregnancy and childbirth, with greater difficulty accessing healthcare due to gender-based inequalities. 3. What are some of the most innovative financial or non-financial products, services and solutions available to increase health care access and affordability? MSC Some key innovative financial and non-financial solutions are: Bringing healthcare services near the community. This can involve establishing and strengthening the primary healthcare service delivery through health and wellness centers (HWCs). Building the capacity of community health officers and establishing a robust supply chain for these centers is important – as is the use of teleconsultation at HWCs to improve access; Improving the quality of services, including establishing an effective quality assurance program to assess the quality of services; and Improving beneficiary identification and targeting, including enhancing awareness and outreach regarding government healthcare programs. VFI Our solutions focus on education and access. We have developed health and insurance education modules that are provided to our clients by a facilitator. We also encourage our insurance partners to offer health services such as telemedicine and health check-ups. Microinsurance products are too often designed as a low-cost insurance. We believe that it should be a simpler product, adapted to the population we serve and their education and understanding. That means ensuring clear benefits (instead of several lines of benefits with specific conditions for each), a limited list of exclusions, and easy operational procedures for access. WWB Due to Covid-19, there has been exponential growth in telemedicine and digital health solutions. New analysis indicates telehealth has increased 38 times from the pre-Covid-19 baseline. In Africa, for example, there are over 61 healthcare tech providers offering various, affordable digital services. But to deploy these solutions to the underserved, organizations must invest in customer experience and channels such as mobile, SMS and USSD. These channels are trusted by the target population, which makes adoption easier but requires a gender mainstream approach to avoid excluding women who, for instance, have a 15% phone ownership gap in Sub-Saharan Africa. 4. To what extent has the pandemic changed the health care needs of low-income populations – or the ways those needs can be met? MSC The healthcare needs of the poor have not changed much. The issues around access to healthcare persist because: the human and financial resources were diverted during the COVID-19 pandemic, leading to a lack of services at healthcare delivery centers; the primary health system is overburdened with the COVID-19 vaccination work; and there is fear of contracting Covid-19 from health centers. The health system needs to balance both the COVID-19 and routine work so that the regular services can reach the low-income population. VFI The pandemic is not only a global health crisis but also a financial one, as people’s livelihoods have been impacted making is difficult to pay for additional expense such as health care. A loss of income, in the case of hospitalization, is a realistic concern expressed by more clients and is rarely covered by any health scheme. As a result, microfinance institutions are beginning to provide insurance services to clients, helping them build financial resiliency. Lastly, insurance providers have adapted their way of working and are now providing more products that integrate telemedicine solution to serve beneficiaries better. WWB Covid-19 has deeply affected the healthcare behaviour of low-income populations. Based on our 2020 study, the number of non-Covid hospitalisations - for women in particular - dropped over the previous year. Understandably, women fear going to hospital owing to associated direct and indirect costs - especially as many women work in the informal sector and face significant income loss during the lockdowns. Developing both digitized healthcare and health insurance solutions that cover direct and indirect costs can help meet low-income women’s healthcare needs. 5. What are your organisation’s future plans to seek to improve health outcomes among low-income populations? MSC Moving forward, we plan to undertake: research & analysis to understand the needs, challenges, and behaviors of communities; Knowledge, Attitudes, and Practices (KAP) studies for health and nutrition using the principles of Social and Behaviour Change Communication (SBCC); strategic guidance and technical assistance to implementing agencies, government bodies, and donors; implementation and design innovations through the application of behavioral science and systems thinking to develop beneficiary-centric interventions; and exploration of platform and channel innovations with a focus on beneficiary needs. VFI VisionFund International’s focus is on providing financial solutions to people living in vulnerable, rural communities, most of which are low-income population. We will continue to ensure that our clients are protected and able to recover from shocks they might encounter by designing, negotiating, and implementing health insurance solutions that meet the needs of our borrowers and their families. And as a World Vision partner, we will continue to work closely with them to assess and implement such solutions for their beneficiaries as well. WWB At Women’s World Banking we are planning to further leverage our partnerships with financial service providers in Africa and Southeast Asia to design new versions of our Caregiver solution for local markets. One example is expanding Caregiver to credit customers as well as low-income savers, allowing it to broaden to women micro-entrepreneurs, who face difficulties accessing and repaying credit, but who regularly save. We are also working with a tech company on developing health insurance solutions for low-income women through a global wallet.

Author: Cheryl Frankiewicz. In September of this year, e-MFP published the results of a survey that mapped Human Resource Development (HRD) Practices in the Microfinance Sector and highlighted opportunities for acting on those results. This blog is the first in a series of thematic case studies which explore the actions that some survey participants have taken to address each area. The profiled institutions were selected based on the quality of their HR practices and their willingness to share experiences. We are extremely grateful for their time and effort to contribute to this important research. The first opportunity for action identified in the e-MFP HR Action Group paper was the importance of alignment between human resource development (HRD) and business strategy. What does this mean? That the HR department should not be just thought of as a support and administrative department but an important player in defining and implementing the institution’s business strategy. Aligning HRD and strategy In 88% of the organizations surveyed, the most senior HR representative reports directly to the Board of Directors, CEO, or most senior management executive. Yet, a lack of alignment between HRD and business strategy emerged from the survey as one of the top three factors hindering performance. In the words of Nancy Camey, People and Culture Manager at VisionFund Guatemala, “Having a seat at the decision-making table is important, but it’s not enough. Once you’re there, you have to contribute to the business. You have to make investments in HR worthwhile.” Teshome Dayesso, General Manager of Buusaa Gonofaa in Ethiopia, highlights another aspect of the challenge, “You have to align HR processes for tomorrow’s strength instead of today’s dominant product.” It’s not easy. Buusaa Gonofaa has tried delivering new products through specialized staff and infrastructure as well as through existing staff with a diversified portfolio and it has struggled to achieve scale under both approaches despite strong market demand. This year, Mr. Dayesso is responding with changes in the way people are managed. He’s not alone. HRD is evolving in all of the case study institutions to better align with business strategy. Described below are some of the actions being taken. Minding the gap One of the most common ways to contribute to the business is for the HR team to focus on the key performance indicators (KPIs) or milestones that the organization wants to achieve during a specific period, find the performance gap (what is missing to be able to achieve that target), and then recruit or develop talent to close that gap. According to Salome Kvakhadze, Head of Talent Development and Management at Crystal in Georgia, this approach works even during a crisis like the COVID-19 pandemic. “We shortened our planning cycle from five years to one, and we’re setting KPIs quarterly instead of annually, but the basic process is the same.” Ms. Kvakhadze makes another good point about gaps. Typically, HR is expected to address gaps in knowledge, skills, and attitudes among employees. But if the business strategy is to digitalize, then the HR function (like every other function or department in the organization) must ask itself, “What processes can we digitalize?” It needs to look for gaps between its own performance and the aspirations of the business. Becoming a strategic advisor and a business partner A less common but no less strategic way to contribute to the business is to prepare and support managers throughout the organization to carry out their HR role. In the words of Joy Santos, Vice President of Operations at ASKI in the Philippines, “The HR role is not just the role of the HR department. Line managers have a crucial role to perform…we provided training to our managers especially on crucial decision points in managing Human capital.” VisionFund Guatemala’s Nancy Camey expands on this: “Before, [the People and Culture Department] was just a traditional administrative department, dealing with contracts, disciplinary processes, the dissemination of information, but now we are advisors to the areas – to the CEOs, to the business managers, to the COOs,” she says. “Now we have become a business partner. They take us into account for the important decisions, and that’s where it makes a difference.” Julissa Castillo, HR Manager at FINCA Guatemala puts it yet another way, “Human resources is in the middle. On the one hand, we have to understand the objectives of each of the business areas, and on the other hand, we have to understand employees’ needs and feelings, so that we can help the two mix together in a way that produces results for the areas and also loyalty from our employees.” Developing HR roles from within Having the most senior HR representative at the decision-making table helps keep the HR team well-informed about business priorities but having HR professionals with operational experience helps the HR department to understand the business and employees’ needs. Fermin Sanchez, CEO of FINCA Guatemala, thinks this is critical: “Julissa has been with us for 14 years. She came from being a cashier at the branch and is now our Human Resources Manager, so she has a lot of knowledge. In the microfinance sector, you don’t always have to hire a corporate HR representative. What you need is someone who really understands the requirements in the field.” All but one of the MFIs interviewed has a management development program that aims, in part, to increase awareness of managers’ HR roles and to strengthen their capacity to carry out those functions. Linking rewards and remuneration to business priorities The adage, “What gets measured gets done,” doesn’t always hold true, but tying rewards – be they financial or non-financial – to the achievement of business objectives is a strategy that all case study institutions pursue. Five out of the seven have created tools to guide managers in the performance evaluation process so that it’s easier to stay focused on business priorities. The process seems straightforward for financial goals, but institutions struggle when it comes to social goals. Survey respondents with a double bottom line (i.e., those pursuing financial and social objectives) incentivize financial goals much more often (82%) than social goals (48%). Even among organizations that are committed to achieving social goals only, financial goals are incentivized twice as often (77%) as social goals (38%). The percentages among case study MFIs follow a similar pattern, suggesting that more can be done to strengthen alignment in this area. Segmentation The MFIs interviewed use segmentation in a variety of ways, one of which is to differentiate between those parts of the organization that are delivering well against business priorities and those that are not. At Buusaa Gonofaa, branches were recently divided into three categories according to their performance against business objectives (above average, average, and below average). The branches in each category were then brought together to discuss what is working, what is not, and what can be done in response. As will be covered in the fourth piece in this series, this way of splitting the discussions by branch category played an important role in enabling branches to take ownership of their situation and to contribute more proactively to plans for the coming period. FINCA Guatemala segments in a similar fashion, but at an individual level. All managers are asked to conduct a quarterly talent review during which they divide the people they supervise into categories by performance (high, middle, low) and how critical their work is to the business. For critical employees, managers are asked to develop a succession plan. The review facilitates a more targeted approach to performance management, and it helped the organization make strategic and timely HR decisions during the COVID-19 crisis. Knowing the cost of turnover Many would argue that employee retention is HR’s most important function, but not all employee turnover is bad. Ms. Kvakhadze notes that Crystal periodically goes through a transformation process and does what it can to prepare employees for inevitable changes. But there are, of course, some who are not happy with the changes and decide to leave. VisionFund Guatemala sets a target retention rate that is above the global average, but slightly below the local market norm. It can do this because it knows that beyond a certain point, spending additional resources to retain employees is counter productive, and valuing employees’ experiences within the organisation at all levels, including development, growth, and benefits, is just as important. The cost of turnover varies, of course, depending on the position being vacated and the amount that has been invested in employees relative to the value they have created. In Benin, Mutuelle pour le Développement à la Base (MDB) adjusted its recruitment and onboarding processes after it measured the cost of turnover and saw that it was investing too much in new recruits early on, before they had decided that the job was a good fit, and before they started generating value for the organization. Its new approach uses internships to screen employee candidates before providing higher compensation and greater development opportunities. Defining alignment Connecting HR functions and business strategy in clear and visible ways can also help strengthen alignment. Crystal did this by creating what it refers to as “regulations” that describe the role, objectives, and job descriptions for each department, including HR. Among other things, these regulations articulate how HR is expected to contribute to the business. At VisionFund Guatemala, HR’s contribution to business strategy is made visible in the organization’s objectives. In its current strategic plan, two objectives speak directly to the role of HR. One of these reads, "To develop, in a phased manner, distinctive capabilities in all areas and collaborators to implement the culture strategy focused on agility and change management.” Providing cultural stewardship At VisionFund Guatemala, the HR department is called “People and Culture,” reflecting the organization’s belief that culture is important and is shaped by its people. Ms. Camey explains, “You have to be incredibly intentional about creating the culture you want. Having the support and buy-in of everyone truly thinking about it, talking about it, and making sure everyone is taking concrete steps to live it is key.” This approach to doing business helps differentiate VisionFund Guatemala in the market and makes it easier to attract and retain people who share its priorities. When people in an organization communicate easily and effectively, plans are easier to implement, and problems are more likely to be identified as they arise. When people trust each other, they’re more likely to collaborate to find solutions. When they don’t, the resulting friction can hinder both the design and implementation of business strategy. Ms. Camey identified communication and trust as being critical to the success of HR’s relationships with other parts of the business, but cultural elements such as these can impact every function in an organization. Perhaps for this reason, more than half of the case study institutions have overtly tasked the HR function with nurturing and protecting their culture. At Bank Arvand in Tajikistan, it all starts with recruiting people who share the organization’s values. Situational questions are asked during the screening process to gauge the values that guide people’s behavior; recruiters don’t just listen to what candidates say they value. Controlling the focus of outsourced initiatives Two-thirds of survey respondents do not outsource HR activities because they believe it is important to carry out all HR functions internally. Several of the case study MFIs do outsource, and they claim the key to success is getting and keeping the external parties focused on the MFI’s goals. The purpose of a training initiative, for example, shouldn’t be simply to transfer knowledge in a particular area. It should enable the people involved to use that knowledge to tackle a particular problem or achieve a target. This year, FINCA Guatemala worked with an external company to develop a new leadership program for middle management. Its first step was to meet with several providers, explain its goals, compare their responses, and then select one company with which to work. After selection, the HR team held a kickoff meeting with the external team to restate the organization’s goals and needs. The external team returned later with recommendations for ten different abilities that could be developed during the program, and FINCA Guatemala chose the four that it thought would yield the results it needed. The program is now being evaluated based on the extent to which those four abilities are actually developed. This relevance of measuring the results of HRD investments will be further explored in the second part of this case study series, Is HRD worth it? How seven MFIs are measuring the cost-effectiveness of their HR investments. Photos: Buusaa Gonofaa About the Author: Cheryl Frankiewicz has more than 20 years of experience building human and organisational capacity for greater financial inclusion, being specialised in diagnostic and design services, training and workshop facilitation, training-of-trainers, and coaching. She holds a master’s degree on Economic and Political Development from the University of Columbia - School of International and Public Affairs, US, and an MBA (Finance) from the University of Ottawa, Canada. Cheryl has been working with the e-MFP Human Resources Action Group (AG) since 2018. She was involved in the design and implementation of the worldwide HR survey among financial services providers conducted by the AG, as well as in the analysis of survey data and preparation of the report “Human Resource Development practices in the microfinance sector”. She is also the lead consultant in the preparation of thematic case studies based on the report recommendations.

Author: Cheryl Frankiewicz. In September of this year, the European Microfinance Platform published the results of a survey that mapped Human Resource Development (HRD) Practices in the Microfinance Sector and highlighted opportunities for acting on those results. This blog is the second in a series of thematic case studies which explore the actions that some survey participants have taken to address each area. The profiled institutions were selected based on the quality of their HR practices and their willingness to share experiences. We are extremely grateful for their time and effort to contribute to this important research. Not long ago, when an MFI was asked how it evaluates the cost-effectiveness of its HR investments, there was a pretty good chance that it would reply by describing its process for assessing participant satisfaction with its training courses. Much has changed in the last few years. There is greater awareness of the multiple channels through which capacity can be built. There is increasing desire to compare the costs and benefits of different options. And there’s more understanding of the range of investments that can support effective talent management – from recruitment tools to retention systems. There is so much more measurement that could be done, but what do MFIs find worthwhile? What are they actually measuring – and how are they measuring it? How much does HRD cost? Working out the cost of HRD initiatives used to be the easy part. When HRD meant training, MFIs could easily see and calculate the direct costs of curriculum development or purchase, the salary or consulting fee of the facilitators, logistics like food, transport, and facility rental, etc. Sometimes, the opportunity cost of having employees in the training room instead of at their desk or in the field was also considered. Today, the costs of an HRD initiative are much more likely to be hidden, hard to quantify, or difficult to attribute to a specific event. For example, how much of the cost of a Microsoft Teams license should be included in the budget for a new coaching program? For the most part, the MFIs in these case studies are not trying to calculate the costs of individual HRD initiatives. They’re looking at the gaps in expertise or performance that need to be filled to implement their business strategy and they’re making plans to fill those gaps with existing resources (typically, the labor of existing staff and the digital tools that are being shared across operational and administrative functions). If new investments are needed (in additional tools or people), they are financed by a budget that is designed to produce a level of performance that can support that expenditure. MFIs measure whether their budget achieves its goals, and they measure variances in actual vs. planned expenditure, but they don’t try to measure the contribution of each budget component unless the plan fails to achieve its objectives. Within HRD initiatives, however, two costs are commonly measured. One is the cost of comparative inputs (for example, the licence fee for different brands of software that meet the same need, the salary demands of two candidates for an open IT position, or the time required). The other is the cost of comparative processes (for example, using electronic versus paper contracts, or recruiting new employees through referrals versus educational institutions). Turnover and retention As mentioned in the first blog in this series, case study MFIs are measuring the cost of turnover together with the frequency of turnover to determine appropriate levels of investment in HRD. Typically, the cost savings from a reduction in turnover (or an increase in retention) is compared to the cost of an HRD initiative to determine if it was worthwhile. All but one of the case study MFIs measures the rate of employee turnover at least once per year. Typically, turnover is highest during the initial period of employment, so the interviewed MFIs focused on how they have used these indicators to develop more cost-effective recruitment and onboarding processes. FINCA Guatemala used to invest heavily in new recruits, bringing them to the main office for weeks of training and introduction to the organization’s policies and culture, but over the last two years, it moved most of its onboarding to the branch level, taking advantage of e-learning and virtual meetings to connect new recruits to the organization in the early stages. It also introduced a two-month certification program, at the end of which participants must pass a test before they can be hired permanently. Mutuelle pour le Développement à la Base (MDB) in Benin created a multiple-stage recruitment process that pays candidates a flat rate to cover travel and other expenses during the initial training period. Then, when there’s a need for new employees, it offers the best performing trainees a six-month work placement with remuneration that is somewhat less than that of a full-fledged employee. Interns that meet MBD’s requirements by the end of the placement are offered a fixed-term contract and a full salary. Bank Arvand in Tajikistan recruits new employees from its pool of agents, who are responsible for recruiting new customers and are paid on a commission basis. Crystal in Georgia has introduced an internship process that is focused on rural areas, where unemployment is higher and where the institution can contribute to Sustainable Development Goal #4. Interns that don’t get hired still benefit from the knowledge and skills developed during the period. Engagement Although turnover and retention rates are easy to measure and are commonly used, an increasing number of MFIs prefer to measure the effectiveness of HRD initiatives using employee satisfaction or engagement indicators. There seem to be two main reasons for this. First, turnover and retention rates don’t measure how committed people are, why they are loyal, or what motivates and demotivates them in their relationship with an MFI. Engagement indicators allow MFIs to assess how an HRD investment affects the degree of commitment or motivation, and not just the decision to stay or go. Second, when they’re monitored regularly, engagement indicators can help MFIs identify when commitment or motivation is weakening and respond proactively – before turnover increases. Four of the seven case study MFIs regularly conduct employee surveys. Bank Arvand follows an approach that is similar to the Gallup Q. The MFI used to have a much longer survey but found it difficult to complete and to analyze. VisionFund International (VFI)’s annual employee survey (known internally as OurVoice) evaluates satisfaction across 10 categories, including alignment and understanding of the strategy and perception of local leadership, staff care and engagement. It is anonymous and confidential and allows for open questions, the responses to which can be organized by keyword and topic for easier analysis and the definition of action plans. Both Bank Arvand and VFI segment their survey results (e.g., by functional area, gender, tenure), which helps them to understand the needs of different employee groups, identify root causes, and respond. Performance and behavior Among case study MFIs, the most common way to measure the effectiveness of an HR investment is to assess whether people achieved the goal or target that the HR initiative was designed to facilitate. MDB provided the quintessential example: it wanted to lower the delinquency of its loan portfolio to a specific level, so it designed a training to achieve that goal and measured whether or not delinquency fell to that level. Typically, there are macro-level goals that HR investments are expected to contribute to, and there are project-specific goals that gauge whether an HR investment accomplishes what it is supposed to influence macro-level performance. For example, the effectiveness of a leadership development project at FINCA Guatemala was measured by the extent to which scores on specific questions of the semi-annual climate survey improved, and by whether the organization met its goals for increasing portfolio size and decreasing turnover. Sometimes it makes more sense to measure the change in an attitude or behavior rather than a key performance indicator because the attitude or behavior is affecting performance in multiple areas. One of the indicators FINCA Guatemala measured, for instance, was employees’ response to the question, “Do you trust your manager?” Influence Sometimes, what drives the cost-effectiveness of an HR initiative is not the content or the cost, but rather, the influence of the person or organization delivering the content. This is something that some MFIs measure before embarking on an HRD initiative – or before contracting someone to implement it – to increase the likelihood that it will be worthwhile. FINCA Guatemala’s CEO, Fermin Sanchez, made this point when discussing how his organization chooses between internal and external service providers. “We first look internally to see if there is someone who not only has the ability but will also have the influence for others to follow. Sometimes there are people who have the knowledge, but they don't connect to the personnel, and that is not good enough.” The role of technology Technology is playing an increasingly important role in helping MFIs measure both costs and effectiveness. It is also helping organizations improve the cost-effectiveness of their HR processes. MFIs gave dozens of examples of digitalization initiatives that have reduced costs and/or made HR functions easier. Employee self-service apps are making it easy for employees to request leave and track their compensation. Electronic signing is reducing the use of paper and express mail services. Less time is spent on reporting. Responses are sent and received more quickly. Fewer mistakes are being made. Online learning platforms make training cheaper and more flexible. As more information is collected electronically, there are more opportunities to use that data to monitor performance in real time, to analyze that performance against business priorities, to identify gaps in individual and team capabilities, to assess strengths and weaknesses in workplace learning tools, to find and reengineer time-consuming HR processes, to understand what is motivating and demotivating engagement – and to make decisions that are informed by that data. Momentum is building among decision-makers in the interviewed MFIs. “We need to take more decisions based on data” says Mr. Sanchez. “It’s not enough to have a feeling that something needs attention,” echoes Salome Kvakhadze, Head of Talent Development and Management at Crystal. “We need to know what it is that needs attention, so we can design a relevant intervention and measure its effectiveness.” She believes digitalization is a critical tool: “Manual data is past data. That’s why we were more reactive rather than proactive. We want to be proactive.” Of course, the gains that technology facilitates come at a cost. Often, but not always, that cost is considerable. Case study MFIs are meeting many of their communication and collaboration needs through platforms and apps that are not fee-based: for example, Zoom, Google Meet, WhatsApp, SurveyMonkey, and Google Forms. Holding companies like ASKI and networks like FINCA and VisionFund are building technology infrastructure for the benefit of all members. There are tremendous economies of scale and expertise in this approach. Organizations that cannot leverage the IT infrastructure or talent of an association may find it more cost-effective to purchase licenses to use existing technology solutions rather than try to develop solutions in-house. Bank Arvand uses a licensed program for its appraisal system. ASKI in the Philippines pays a subscription for their employee mobile app (Elstaff), and also for Google Classroom and Zoom based on how many people need to be trained. Several of the interviewed MFIs pay for a commercial Microsoft Teams license because of the confidentiality it provides. Case study MFIs recognized that major HR investments, such as an internal learning management system (LMS) or the integration of administrative, learning, and performance management systems, only make sense if they’re integral to an organization’s business strategy. They also warn that the return will not be immediate. “It takes time,” says Nancy Camey, People and Culture Manager at VisionFund Guatemala. Photos 2 and 3 above: Bank Arvand, Tajikistan About the Author: Cheryl Frankiewicz has more than 20 years of experience building human and organisational capacity for greater financial inclusion, being specialised in diagnostic and design services, training and workshop facilitation, training-of-trainers, and coaching. She holds a master’s degree on Economic and Political Development from the University of Columbia - School of International and Public Affairs, US, and an MBA (Finance) from the University of Ottawa, Canada. Cheryl has been working with the e-MFP Human Resources Action Group (AG) since 2018. She was involved in the design and implementation of the worldwide HR survey among financial services providers conducted by the AG, as well as in the analysis of survey data and preparation of the report “Human Resource Development practices in the microfinance sector”. She is also the lead consultant in the preparation of thematic case studies based on the report recommendations.

Author: Cheryl Frankiewicz. In September of this year, e-MFP published the results of a survey that mapped Human Resource Development (HRD) Practices in the Microfinance Sector and highlighted opportunities for acting on those results. This is the first part of the third blog in a series of thematic case studies which explore the actions that some survey participants have taken to address each area. The profiled institutions were selected based on the quality of their HR practices and their willingness to share experiences. We are extremely grateful for their time and effort to contribute to this important research. All but one of the case study institutions in this series conduct interviews with employees when they leave the organization. The insights gathered during these interviews have helped the MFIs understand what can be improved, but they haven’t shed much light on what MFIs are doing right. Why do people engage and stay engaged? In the words of Salome Kvakhadze, Head of Talent Development and Management at Crystal in Georgia, “We need to find out what motivates them BEFORE they leave. We want to be more proactive.” The case study MFIs are using a variety of methods to better understand and influence employee engagement. Among these are climate and satisfaction surveys, focus groups, polls, complaint and suggestion systems, Q&A sessions with the CEO, informal conversations, and personal observation. What follows are their reflections on what works and why. A clear career growth path In interviews with the MFIs, a clear and credible career growth path was identified as the most important factor in staff retention. If employees see a way to grow within an organization, they are much more likely to stay than if they don’t. Promotion to a higher level of responsibility and compensation is attractive to most employees, even if it’s a goal that isn’t immediately attainable. What seems to matter is the visibility of the career ladder and the extent to which employees feel it is possible to climb. At Mutuelle pour le Développement à la Base (MDB) in Benin, the career ladder begins with a three-month internship, at the end of which participants are evaluated and the best performers are offered a six-month, renewable work placement. Additional training is provided and those who pass a subsequent evaluation are offered a longer-term contract when a position becomes available. Espérat Tossa, the Executive Director, explains how the promotion chain continues: “A successful savings collector may be promoted to become a loan officer, the loan officer becomes a branch manager, and so on.” Bank Arvand in Tajikistan follows a similar approach, drawing from a pool of agents who are responsible for client recruitment to fill vacancies in loan officer positions. The growth path doesn’t have to be constrained to an advancement in position. VisionFund Guatemala, for example, has categories within the loan officer position. Employees can move from the beginner to junior, senior, and master designations and see their salary and responsibility increase. Only after reaching the last category is a loan officer eligible for promotion to branch manager. In the meantime, all loan officers can grow, and all are eligible for variable remuneration based on the growth and quality of their portfolio. Part of what makes internal promotion effective in the case study institutions is that it’s the norm. Most positions are filled internally, so employees see the career ladder in action and have confidence in its effectiveness. Nancy Camey, People and Culture Manager at VisionFund Guatemala remarked, “They have an example that their boss grows with the organization and the organization grows with him.” Any act of promotion sends a message about what the organization values. If employees see that people with certain competencies are being promoted, that will encourage them to develop the same set of competencies. The more consistently the same competencies are promoted, the more naturally those competencies evolve within the organization. Every employee will have examples to learn from. VisionFund Guatemala has a competency management system that is linked to career paths. It clarifies what competencies are required to excel in a position, so people know what information and skills they need to acquire if they want to advance in a particular direction. Bank Arvand has a similar system of career maps for every position which accomplishes a similar purpose. With this kind of guidance, employees can proactively seek opportunities that help them develop in the direction they desire; they don’t have to wait for the organization to deem them eligible for development. Of course, growth doesn’t just mean promotion. Lateral career moves, stretch assignments, involvement as a coach or mentor, and participation on a task force, problem solving team, or product/market development team are all growth opportunities that could engage employees. Link HRD investments to career growth opportunities The more immediately an employee can use the knowledge or skills acquired in the workplace, the more likely it is that the HRD investment will generate value for the employee and the employer. As time passes, information will be forgotten, skills will get rusty, and motivation often wanes. Fermin Sanchez, CEO of FINCA Guatemala, believes that this is the main reason for which some MFIs see increased turnover when they invest in employee development. Employees don’t want to waste what they’ve gained any more than institutions do. “If you train someone, if you give them more knowledge, it must be hand in hand with growth, with additional responsibility, or the authority to take decisions. If people aren’t challenged, that's when they start thinking about going to the competition.” Help employees see the value they’re creating At Bank Arvand, each position’s job description includes KPIs as well as a definition of its “valuable end product” – the contribution that people in that position are expected to make to the business. This kind of clarity guides employee performance, but also makes it easy for people to see why their work is important. Twice a year, ASKI in the Philippines recognizes top performers on its social media page and profiles an employee-of-the-week in the live feed of its internal portal. The profile typically includes a photo, some information about the results achieved, comments from the employee on what makes them so effective, and at times, customer feedback. Besides this virtual recognition, ASKI also gives cash rewards to their employees. MDB provides its most efficient employees with performance certificates. To make employees’ contribution to the achievement of social goals more easily accessible and visible to all stakeholders, including themselves, was one of the main reasons for Buusaa Gonofaa to digitize its poverty scorecard. These different measures are complementary to the financial incentives provided by all the interviewed MFIs. Most commonly, these incentives reward loan quality, but all except one also reward employees for customer satisfaction and/or the achievement of social goals. Connect to shared values All the case study MFIs look for a set of core values in their new recruits. Many then invest in reinforcing those values during the onboarding process. Some make a continued effort to buttress those values throughout an employee’s relationship with the organization. ASKI, for example, asks all staff to begin their day with a devotion and recitation of the seven client protection principles. Shared values can create a strong bond between employer and employee, one that fuels the relationship and helps the parties overcome challenges along the way. They can also differentiate an MFI from other employers looking for people with similar talent. There is a direct relationship, however, between the strength of an MFI’s value system and its effectiveness as an engagement strategy. If an organization says that it values transparency, but then fails to share information with employees, or if it recruits empathic front-line workers and develops their skills on the job but hires highly skilled managers from the outside who fail to empathize with the frontline, the mismatch between what an organization says and does can become a reason for employee exit rather than retention. Case study MFIs that try to engage employees through values like ‘empathy’ and ‘respect’ have worked hard during the COVID-19 pandemic to act in ways that demonstrate these values. Some asked employees to work in shifts rather than reducing the number of staff. Others managed not to reduce salaries and provided e-learning offerings that gave people access to information about COVID-19 and how to stay safe. Crystal is one of the MFIs that is proud of the way it treated employees during the pandemic, but Ms. Kvakhadze says it’s not something to be advertised. “The actions have to speak for themselves.” Pay a competitive salary Several MFIs commented that the market has become competitive enough that the baseline salary for employees is a hygiene factor. They monitor market norms informally, and sometimes through salary surveys, to prevent non-competitive compensation policies from causing employee exit. Salaries have had to rise significantly for IT professionals who are in high demand worldwide in the wake of the COVID-19 pandemic. Make the job easier MFIs have had to make a lot of changes in the last few years, and it’s been challenging for all interviewed MFIs to manage those changes. One thing they’ve learned is that if change can make something about an employee’s job easier or more enjoyable, it’s more likely to be embraced. Both ASKI and Crystal began their digitalization journeys by streamlining internal processes. This brought quick wins for the organizations, but also saved employees significant time and energy. ASKI got its field staff on board by making the payment of allowances the first transaction conducted through their mobile devices. Next came iStaff, a system through which employees could much more easily access pay slips, record attendance, and request leave. Only after employees had embraced the digital transition did ASKI move forward with the changes to reporting systems and client service. Part two of this blog will continue examining what case study MFIs have learned about keeping employees engaged. Photo 2 above: Bank Arvand, Tajikistan About the Author: Cheryl Frankiewicz has more than 20 years of experience building human and organisational capacity for greater financial inclusion, being specialised in diagnostic and design services, training and workshop facilitation, training-of-trainers, and coaching. She holds a master’s degree on Economic and Political Development from the University of Columbia - School of International and Public Affairs, US, and an MBA (Finance) from the University of Ottawa, Canada. Cheryl has been working with the e-MFP Human Resources Action Group (AG) since 2018. She was involved in the design and implementation of the worldwide HR survey among financial services providers conducted by the AG, as well as in the analysis of survey data and preparation of the report “Human Resource Development practices in the microfinance sector”. She is also the lead consultant in the preparation of thematic case studies based on the report recommendations.

Author: Cheryl Frankiewicz. In September of this year, e-MFP published the results of a survey that mapped Human Resource Development (HRD) Practices in the Microfinance Sector and highlighted opportunities for acting on those results. This is the second part of the third blog in a series of thematic case studies which explore the actions that some survey participants have taken to address each area. The profiled institutions were selected based on the quality of their HR practices and their willingness to share experiences. We are extremely grateful for their time and effort to contribute to this important research. The case study MFIs are using a variety of methods to better understand and influence employee engagement. Among these are climate and satisfaction surveys, focus groups, polls, complaint and suggestion systems, Q&A sessions with the CEO, informal conversations, and personal observation. What follows are their reflections on what works and why. Get feedback, and get it often The mechanisms used to gather the feedback don’t seem to matter as much as the flow of communication itself. Most case study institutions are taking advantage of digital solutions to gather information often, at a low cost, and anonymously when that’s desirable. However, Buusaa Gonofaa is among those MFIs that are still in the process of digitizing, so it uses face-to-face methods and has come to the same conclusion. How frequent is frequent? FINCA Guatemala conducts a climate survey every six months, but it holds focus group discussions, and administers mini-surveys using Microsoft Teams, Survey Monkey or Google Forms more frequently. Sometimes it directs the mini-surveys to a limited group of people to probe a specific issue and sometimes to all employees, depending on where it identifies a problem or in which area it wants to grow. Mr. Sanchez explains, “We need a lot of surveys because the situation is always changing. HRD should be a moving part, not something static.” Teshome Dayesso, General Manager at Buusaa Gonofaa, holds ten-minute meetings with his management team on Mondays to discuss what they want to achieve for the week, and then another meeting on Fridays to reflect on what worked and what didn’t. He’s also experimenting with monthly one-on-one meetings with each team member to exchange more structured feedback against targets. If those meetings are effective at facilitating greater ownership and accountability, he plans to encourage his team to adopt a similar approach with the people they supervise. The feedback mechanism that works best for ASKI runs continuously via SMS. “It’s a way of listening,” says Joy Santos Vice President of Operations. “Employees, partners and clients can send recognition to a branch, complain, or just make a comment at any time through ‘Komento Mo I Text’ (send your comments thru text). The feedback mechanism is helping ASKI to continuously review, revise and adopt new initiatives that will really put our clients in the forefront of our services.” Case study MFIs all ask for feedback when a new HR program or tool is introduced. Typically, this is a one-time invitation, but FINCA Guatemala is asking for feedback every month on its transformational leadership program and is using the input to improve the program as it progresses. Do something with the feedback you get Frequent requests for feedback won’t be well-received by employees if they don’t believe anyone is listening to what they have to say. They may not respond at all, or if they respond, they’ll resent the time spent on it and put the least amount of effort into their reply as possible. The reverse is also true. When employees see actions being taken as a result of their feedback, it encourages them to participate more. It demonstrates that the organization is listening and values what they have to say. “I think that if we, as employees, feel that our ideas are being taken into account, that we feel of value for the company,” says Mr. Sanchez from FINCA Guatemala. “We are going to stay.” An easy way for MFIs to show that they’re listening is to share the results of surveys and polls conducted. Three out of the four case study MFIs that conduct employee satisfaction surveys share the results with every employee. All four systematically respond to the survey results and track the resolution of employee grievances. At VisionFund International (VFI), managers prepare action plans in response to their annual employee satisfaction survey and those action plans are followed closely each quarter by the Senior Leadership Team and the Board. Even Audit uses the results and analysis to identify risks and follow-up on corrective actions. “As people see action,” says Solymar Torres, VFI’s People and Culture Manager for Latin America and the Caribbean, “they are increasingly growing more confident and use the survey as a way to provide feedback for improvement.” The way you ask the question matters If you’re asking for feedback and your question is unclear, or you ask it in a way that leads employees to answer in a particular way, the results will be misleading. Case study MFIs have found it useful to get expert advice when designing an engagement or climate survey that they intend to use on an ongoing basis. However, institutions almost always design ad hoc and mini-surveys locally, since these tend to respond to specific, time-sensitive challenges or opportunities and the questions are only used once. MFIs that use these tools often may find it helpful to train the people who design the surveys in simple techniques for effective questioning. Segment the data Three out of seven case study MFIs segment their employees and define HR strategies for each employee segment. This increases the likelihood that their HRD investments will be relevant and attractive to each segment and result in greater engagement. To better understand the needs of its employees, Bank Arvand is among those institutions that segment its engagement survey results. It analyzes the data by branch (to help branch managers understand what is working well and what needs to be improved within their span of control), length of service (to see whether employees’ commitment and motivation is increasing or decreasing with time), and by position (managers versus others). This year, it is planning to analyze the results by gender as well to see if there are any signs of discrimination. Digitalization is affecting engagement in many ways. It’s making it easier to communicate across distance and enables teams to function even during a crisis like the COVID-19 pandemic, but there’s less in-person interaction, fewer spontaneous meetings, and hardly any large and energetic gatherings. Ms. Kvakhadze from Crystal noted, “Most MFIs are now facing a really big problem of corporate culture because without the face-to-face collaboration, communication and involvement, employees are not feeling attached, and when they don’t feel attached, it’s easier for them to leave.” She claims that many of those leaving the sector are going to the technological sector which has grown and became more attractive during the pandemic. Case study MFIs are reacting in varied ways. Crystal and MDB are choosing to recruit new employees with a different profile who are attracted by the work in its new context. Executives at Buusaa Gonofaa and FINCA Guatemala are convinced that finding ways to facilitate in-person interaction is more important now than ever. According to Mr. Sanchez, field visits are “still the only way to know what’s really happening on the ground.” Mr. Dayesso credits a two-day in-person workshop held earlier this year with branch managers taking ownership of their current situation, something he says could never have happened online. Bank Arvand is excited about the potential of its new learning management system (LMS) to optimize employee development. Employees will be able to see different career paths more clearly and monitor their progress towards goals more easily. Learning will be more self-driven and personalized. Employees will be able to learn when they want, access as few or as many resources as they want, and practise difficult material repeatedly until they feel comfortable with it. The HR team will be able to track who is learning what, identify areas where people are having trouble, and design new content with gamification, which it believes will be more engaging. All but one of the MFIs are investing in employees’ capacity to use digital collaboration tools, hoping that the relationships built through virtual collaboration will bind employees to each other and to the organization just as in-person tools used to do. Clearly, digital tools are making it possible to share a lot more information and train a lot more people than before, but that doesn’t mean the information and training are bringing value. People are increasingly overwhelmed with information, and they easily lose attention in a virtual training. When they watch a recording rather than participate in an event, they engage less, which usually means they learn less. According to Mr. Sanchez, it’s requiring HRD professionals to be more creative than ever. The boss factor The “boss factor” is what a 2020 McKinsey study referred to as impact that supervisor-employee relationships have on employee engagement. “Relationships with management are the top factor in employees’ job satisfaction, which in turn is the second most important determinant of employees’ overall well-being.” None of the case study MFIs referred to that study, but several came to the same conclusion of their own accord. At VisionFund Guatemala, exit interviews and an annual climate survey highlighted the issue. “We saw that many people left the organization because they did not receive support, or they did not feel developed, or they did not feel inspired,” says Nancy Camey, People and Culture Manager. “Statistics tell us that people leave organizations because of their leader, so we want our leaders to be transformational leaders.” Three case study institutions are investing in new leadership development programs that strengthen the skills and motivation of managers to support the growth of the people they supervise. The programs range from three weeks to nine months. Crystal and VisionFund Guatemala started with one-on-one coaching for the most senior leadership and plan to cascade down to all levels of management. FINCA Guatemala developed one program for branch managers and one for others. Three of the other MFIs interviewed already have some kind of management development program in place. Employees can grow every day, even within the same position, if they’re supported to make their own decisions, take ownership of those decisions, and learn from those decisions. The fourth blog in this series will explore how MFIs are trying to develop managers who can encourage this kind of HRD. Photo 1: Buusaa Gonofaa Photo 2: Bank Avrand Photo 3: ASKI About the Author: Cheryl Frankiewicz has more than 20 years of experience building human and organisational capacity for greater financial inclusion, being specialised in diagnostic and design services, training and workshop facilitation, training-of-trainers, and coaching. She holds a master’s degree on Economic and Political Development from the University of Columbia - School of International and Public Affairs, US, and an MBA (Finance) from the University of Ottawa, Canada. Cheryl has been working with the e-MFP Human Resources Action Group (AG) since 2018. She was involved in the design and implementation of the worldwide HR survey among financial services providers conducted by the AG, as well as in the analysis of survey data and preparation of the report “Human Resource Development practices in the microfinance sector”. She is also the lead consultant in the preparation of thematic case studies based on the report recommendations.

Author: Cheryl Frankiewicz. In September of this year, the European Microfinance Platform published the results of a survey that mapped Human Resource Development (HRD) Practices in the Microfinance Sector and highlighted opportunities for acting on those results. This blog is the fourth in a series of thematic case studies which explore the actions that some survey participants have taken to address each area. The profiled institutions were selected based on the quality of their HR practices and their willingness to share experiences. We are extremely grateful for their time and effort to contribute to this important research. As noted in the first and third (part 1 and part 2) blogs of this series, managers play a critical role in HR development. They establish expectations, identify needs, facilitate learning, nurture individual potential, and coordinate teamwork. They are expected to model preferred behaviors, motivate performance, and ensure discipline. It’s a daunting job description – and that’s only the HR part. To explore some of the ways that MFIs are supporting managers to carry out these functions, this blog uses the 9Buckets framework, which was inspired by research conducted with CGAP on employee and agent empowerment. Each of the buckets in the framework represents a type of resource that MFIs might provide to increase managers’ ability or willingness to carry out their HR role. Resource category #1: Information and knowledge There are many kinds of information that could prove useful to managers. Some of the examples mentioned by survey respondents include: a description of the HR functions that managers are expected to perform; job descriptions that clarify what each employee is expected to deliver; succession planning guidelines; data on the performance of individuals and teams; and results from employee and climate surveys. VisionFund Guatemala and Bank Arvand in Tajikistan both conduct regular engagement surveys. They share organization-wide results with all employees, but they also segment the data by branch and share that analysis with branch managers so they can see what is working well and what needs to be improved within their span of control. Resource category #2: Skills and habits The second way that MFIs can support managers in their HR role is to provide opportunities for them to strengthen their HRD practices. More than three-quarters of all survey respondents train managers to assess their employees’ technical and soft skills, provide professional feedback, or identify employees’ individual strengths and delegate tasks accordingly. 34% provide training in all these areas. At some MFIs, such as ASKI in the Philippines, HR training is a requirement for promotion to a supervisory position. Training isn’t the only type of opportunity being provided. Coaching is increasingly popular and is offered by 65% of survey respondents. MFIs like Crystal in Georgia and FINCA Guatemala have developed programs that combine training with practice and coaching to build HRD skills through a series of interactions – but with considerable differences: Crystal’s program lasts three weeks, while FINCA Guatemala’s lasts nine months. Managers are expected to practice what they learn in between training sessions and discuss the results each time they reconvene. Resilience training is an important part of the agenda, strengthening managers’ ability to respond to whatever circumstances may arise. Resource category #3: Values and attitudes Managers are more likely to fulfil their HRD role if they believe that doing so is important and feasible. MFIs can’t force managers to believe in HRD, but they can nurture that belief through their messages, targets, and culture. VisionFund Guatemala’s transformation leadership initiative started with a simple message, “You’re not just responsible for making sure employees stay with you forever; they’re supposed to grow.” That message is supported by the work of the People and Culture Department, which strives to get everyone in the organization thinking about the culture they want to work in and taking concrete steps to live it. At Buusaa Gonofaa in Ethiopia, General Manager Teshome Dayesso was able to guide his managers through a particularly difficult period during the COVID-19 pandemic by asking them to identify one thing that they could do something about. “As soon as that was clear,” he says, “everyone was relieved, and the mood went up [a lot].” Resource category #4: Dialogue and support In interviews with case study MFIs, this resource category was mentioned more often than any other. MFIs are providing managers with opportunities to access other people’s knowledge, skills, energy and influence through formal coaching and mentoring programs, participatory performance management processes, informal feedback sessions, discussion guidelines, periodic field visits, phone calls and WhatsApp chats. “Sometimes we just speak to our branch managers and say, ‘Okay, how is your team doing?’” Fermin Sanchez, CEO of FINCA Guatemala, asks members of his management team to visit branches regularly so that those in the field recognize that they are part of a bigger company. At Buusaa Gonofaa, company level joint feedback sessions allow branch managers to learn from each other’s success, failure, and challenges. At ASKI and VisionFund, regional representatives play an important role, providing HR guidance and one-on-one support on the ground in a relevant context. And at Bank Arvand, midterm reviews offer an opportunity to discuss whether managers have what they need to meet expectations. When a change affects all employees, having a dedicated person that supports managers with timely implementation can be helpful. One of the ways that ASKI overcame employee resistance to a new mobile app was to have a dedicated person communicating with employees, helping them register and login, and designing creative strategies to help people see the benefits of the new app. Resource category #5: Control and influence To play a productive role in HRD, managers need to be given responsibility for specific HR functions, have the authority to act within their span of control to fulfill those functions, and be held accountable for the results. Ideally, they would also have channels for influencing HR decisions outside their span of control, especially when those decisions impact their team. The case study MFIs seek to clarify managers’ HR responsibilities through job descriptions and annual performance agreements. They hold managers accountable for achieving specific HR results as part of their standard evaluation process. Most often, what gets measured is employee satisfaction and retention, but some MFIs measure whether the professional development plan for each employee has been met. All the case study MFIs that conduct regular employee surveys ask managers to develop action plans that address areas of weakness. At VisionFund, these action plans are followed closely each quarter by the Senior Leadership Team and the Board; even the Audit department uses survey results to identify risks and follow-up on corrective actions. MFIs are also finding opportunities for managers to influence HR decisions that are outside their span of control. 57% of survey respondents consult managers on the design of learning and development (L&D) programs to ensure they are practical. 46% ask managers to assess the impact of L&D measures on their employees’ performance. In many MFIs, managers do not control the hiring of new employees, but they influence hiring decisions by participating on selection committees. Resource category #6: Tools and infrastructure There are many types of tools that can make it easier for managers to fulfil their HR role, but interviews with case study MFIs highlighted three: tools for understanding employees, their performance, and their motivation; tools for communication and collaboration; and a coherent system of policies and procedures that create a safe and equitable work environment. The better managers can understand their employees’ knowledge, performance, and motivation, the more appropriately they can guide and support their employees’ development. Knowledge tests, competency management systems, scorecards and employee surveys make it easier for managers to identify what an MFI expects of each employee and the extent to which employees are meeting those expectations. Bank Arvand’s assessment system creates an automated report for each employee that summarizes input from the employee, supervisor, any tests or trainings taken during the evaluation period, quantitative and qualitative performance indicators, as well as contextual information such as the number of years the employee has been working with the company. The report provides the basis for discussions between the employee, their supervisor, and the HR department. Salome Kvakhadze, Head of Talent Development and Management at Crystal in Georgia, commented on how the digitization of performance data increases the speed with which managers can access information about employee performance and use it to improve results in the current period. “Manual data is past data and it’s more static,” she explained. “Digitalization helps us be more proactive.” For communication and collaboration, case study MFIs found platforms like WhatsApp, Zoom and Microsoft Teams to be game changers, particularly during the COVID-19 pandemic. Two organizations also mentioned using the DiSC® model to help managers understand team member personalities and improve working relationships. With respect to policies and procedures, interviewees spoke in general terms about the need for guidelines that would help to ensure fair treatment (such as protocol for resolving complaints), and structures that could help managers create better routine practices (such as quarterly performance reviews to encourage more regular feedback). Resource category #7: Rewards and penalties Even if managers know what their HR role is, and can perform it, they may not choose to do so if they don’t enjoy it or, as mentioned above, they don’t think it is important enough to warrant their attention. Rewards and penalties can motivate managers to take their HR role seriously, and guide, motivate or discourage specific actions. 42% of survey respondents incentivize HR goals (either employee retention or specific learning and development objectives). 9% reward managers when the employees they supervise are promoted. Among case study MFIs, ASKI makes a point of recognizing top performing managers on social media, something which is generally highly valued in the Philippines. Resource category #8: Time and energy Time and energy are finite resources. There are only 24 hours in anyone’s day and people have limited energy, so if MFIs want managers to spend more of their time and energy on HR functions, they have only three options: Help managers use their time and energy more efficiently by providing one or more of the resources described above; De-prioritize some of the tasks that currently consume managers’ time and energy so they can spend more on HR functions; or Bring in other people to help. Case study MFIs have used all three approaches, but primarily adopt the first. They are providing information, tools and skill building opportunities. They’re also engaging managers in conversations about the kind of support that would make it easier, or more enjoyable, to carry out their HR roles. Sometimes it is the existing tools and infrastructure that may make the job difficult or unappealing, and in these cases reengineering a process, rather than replacing an entire system, can have a significant impact. Resource category #9: Money The ninth type of resource that could be used to support managers in their HR role is financial. Interestingly, none of the MFIs interviewed mentioned money as a constraint or a lever for this purpose. That doesn’t mean it can’t be useful. Money is typically needed to acquire new tools and improve the infrastructure, for example, but MFIs usually find it more cost-effective to purchase or develop tools for all managers to access rather than give each manager money to buy tools themselves. The good news for HRD is that many of the resources discussed above can be provided without additional financial resources. It’s part of what makes this an exciting and promising area for action within the microfinance sector. Photo 1: Bank Arvand Photo 2: ASKI About the Author: Cheryl Frankiewicz has more than 20 years of experience building human and organisational capacity for greater financial inclusion, being specialised in diagnostic and design services, training and workshop facilitation, training-of-trainers, and coaching. She holds a master’s degree on Economic and Political Development from the University of Columbia - School of International and Public Affairs, US, and an MBA (Finance) from the University of Ottawa, Canada. Cheryl has been working with the e-MFP Human Resources Action Group (AG) since 2018. She was involved in the design and implementation of the worldwide HR survey among financial services providers conducted by the AG, as well as in the analysis of survey data and preparation of the report “Human Resource Development practices in the microfinance sector”. She is also the lead consultant in the preparation of thematic case studies based on the report recommendations.