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Author: Sam Mendelson, e-MFP. On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025  on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN). In this 4th piece in a series of blogs that we’ll be running throughout the year on this topic, e-MFP’s own Sam Mendelson explains the mental models that make insurance such a hard ‘sell’, and what behavioural insights teach us about how to increase access and uptake.   Insurance, at its core, is a promise. A promise that when things go wrong - when your house floods, your crops fail, your health collapses – someone, somewhere, has got your back . For low-income and vulnerable populations, who often live closest to those risks, the value proposition should be crystal clear. So why is insurance so hard to sell to the very people who need it most? Despite decades of innovation, inclusive insurance has yet to reach its transformative potential. Even where products are affordable , available , and well-designed , uptake remains puzzlingly low among low-income populations. Why? It’s not just a distribution problem. It’s a perception problem. It’s behavioural, emotional, and based on internal logic in ways that traditional economics - with its focus on rational actors – can fail to capture. Understanding the low uptake of insurance products among vulnerable groups requires diving into psychology, culture, and people’s lived experience. The answer lies not only in supply-side or economic constraints, but in the complex and in reality irrational  ways that people perceive risk, weigh decisions, and engage with unfamiliar financial tools. This blog explores the behavioural and perceptual barriers to inclusive insurance - and what can be done about them. The Limits of the ‘3 As’ Traditionally, poor uptake has been attributed to the classic trio: Affordability , Accessibility , and Awareness. These remain critical. But programmes that addressed all three have still faced lacklustre enrolment. A growing body of evidence suggests something deeper is at play. Inclusive insurance is, at its core, a behavioural product . It asks people to give up scarce resources now in exchange for uncertain future benefits . Understanding the psychology behind that decision is crucial to closing the protection gap. Five Behavioural Barriers to Uptake 1.   Present Bias: ‘Why Pay Now for a Maybe Later?’ People - especially those living in conditions of scarcity - tend to overvalue immediate needs and undervalue distant ones. This cognitive bias - present bias  - makes insurance a tough sell: paying premiums today doesn’t satisfy an immediate need, and the benefit may never materialise. A CGAP study in Kenya on mobile health insurance found that uptake increased when premiums were automatically deducted in small amounts  - effectively bypassing the friction of daily trade-off decisions and making enrolment feel painless. 2.   Trust and the ‘Payout Illusion’ Many people simply don’t believe that insurers will pay when the time comes. This isn’t unfounded: opaque terms, complex exclusions, and poor claims experiences have eroded trust. In some contexts, there's a widespread perception that insurance is a scam or a trap - the ‘ perceptual contagion effect’ . In India, studies from the ILO’s Impact Insurance Facility have shown that even rumours of denied claims in neighbouring areas can supress uptake in pilot schemes . 3.   Complexity and ‘Cognitive Load’ Insurance is conceptually difficult - especially when layered onto already-complex lives lived in conditions of high cognitive stress . Poor households are often juggling dozens of survival decisions daily. In that context, unfamiliar financial products demanding mental energy are likely to be ignored. The World Bank’s Mind, Society and Behavior Report emphasises how scarcity taxes the brain , reducing bandwidth for long-term planning or abstract risk-mitigation. 4.   Mental Models of Risk In many settings, people don’t think of risk in probabilistic terms. Instead, they may frame risk through a fatalistic lens  (“ If it’s going to happen, it will happen ”) or rely on community support systems . These mental models shape how people perceive the usefulness of insurance. A 2023 study in Ghana found that uptake increased when insurance was bundled with community-based saving schemes —essentially grafting the unfamiliar onto a familiar and trusted model. 5.   Loss Aversion: ‘If I Don’t Claim, I Lose’ Behavioural economics shows that people feel the pain of loss   more acutely than the pleasure of gain . Insurance premiums, especially if no claim is made, feel like money wasted. This is loss aversion at work—and it makes insurance seem like a bad deal. Interestingly, when schemes reframed premiums as contributions to a mutual support fund, uptake improved – as was the case in several cooperative schemes supported by the ILO’s Inclusive Insurance Initiative .  Breaking down behavioural barriers So what can be done? 1.   Design for behaviour, not just economics. Product design must start from how people actually think.  This includes incorporation of behavioural design principles, such as simplifying choices, pre-selecting beneficial defaults, and breaking costs into bite-sized contributions.   2.    Trust is built through experience—especially when it comes to claims. Claims processes must be fast, fair, and human-centred. Word-of-mouth is a powerful force, and a single good claim experience can unlock local markets. Conversely, a single denial (however justified) can poison the well. Claim visibility, such as letting communities witness payouts, can dramatically improve trust and future enrolment.   3.    Use trusted channels and familiar offerings. People are more likely to engage when insurance is distributed through trusted community leaders, farmer cooperatives, or savings groups. Packaging insurance as part of a familiar offering, like credit, farm inputs, or healthcare, makes it feel less alien. 4.    Bundling  is a powerful behavioural tool. This is especially true when it removes the need for a separate, deliberate decision to enrol.   5.    Communicate for comprehension, not compliance. Insurance jargon can sometimes seem defiantly opaque. Simple, visual, and narrative-based communication is vastly more effective. Testimonials, stories, and analogies resonate more than actuarial tables. Programmes using interactive tools, such as role-playing or radio dramas, have found significant improvements in understanding and uptake. If inclusive insurance is to meet its potential, the sector must stop designing for that most elusive of characters – the ‘rational economic agent’ – and start designing for real people. That means: Respecting the psychological context of poverty; Building trust through action, not promises; Communicating clearly and empathetically; and Embedding products into people’s lives, not asking them to step outside their reality to adopt them. In the end, the problem isn’t just that insurance doesn’t reach the poor; It’s that too often it doesn’t resonate – and so arguments around affordability and premiums-to-payout ratios will often not do the trick. Behavioural insights can help bridge that gap; not by manipulating people into buying insurance, but by making the purchase of suitable insurance a behaviour that is virtually second nature. About the Author: Sam Mendelson is Financial Inclusion Specialist at e-MFP, part of the European Microfinance Award design and evaluation team, and the lead author of the Financial Inclusion Compass. A long time ago, his first degree was in Psychology.

By Carmen Correa, CEO of Pro Mujer. e-MFP is pleased to be an Outreach Partner of the GLI Forum Latam, organised by our member Pro Mujer. #GLIForumLatAm2025 is the first event in Latin America entirely focused on promoting Gender Lens Investing as an effective way to drive equality and economic development in the region. In 2025, the GLI Forum Latam will explore how Gender Lens Investing can become a powerful catalyst to accelerate the achievement of the Sustainable Development Goals (SDGs). In this guest blog, Pro Mujer’s CEO Carmen Correa talks about how we’re falling short on progress to the SDGs, including and especially those relating to gender, and what the upcoming conference will offer for those working in this space. We are five years away from the 2030 deadline for the Sustainable Development Goals (SDGs). Yet, at our current pace, only 15% of these targets will be achieved. That figure should concern us all—but more importantly, it should move us to act. As the CEO of Pro Mujer, a social enterprise that has been working to advance gender equality in Latin America for over 35 years, I’ve seen both the urgency of the challenges we face and the extraordinary opportunity that lies in front of us by shifting how and where we allocate capital. We firmly believe that investing in women’s potential is not just about justice but also one of the smartest, most effective strategies to accelerate progress toward the SDGs. For instance, in Latin America, closing gender gaps in employment could increase GDP per capita by up to 20% (World Bank). However, only 6% of investment fund capital in the region goes to women-led businesses. The financing gap for women entrepreneurs currently stands at nearly $100 billion. If we’re serious about achieving the SDGs, we can’t leave half the population behind. That’s why we created the GLI Forum Latam —a space where decision-makers, investors, and innovators can come together to rethink how we shift narratives, reimagine systems, and align capital with the future we want to build. A Space to Connect, Collaborate, and Mobilize Since its first edition in 2020, the Forum has grown into a dynamic meeting point for the region’s gender lens investing (GLI) ecosystem. Each year, we bring together diverse voices across sectors—from finance and government to entrepreneurship and civil society—to move from ideas to action. Our 2024 edition in Buenos Aires welcomed over 900 participants from 23 countries , with more than 160 speakers across 40 panels, workshops, and sessions . But the real value of the Forum isn’t in the numbers—it’s in the depth of the dialogue, the serendipitous hallway conversations, and the rich, cross-sector exchange that takes place in every corner of the venue. At the 2024 GLI Forum, held in Buenos Aires, participants didn’t just come to talk—they came to co-create . The Forum served as a powerful learning platform where ideas turned into actionable strategies. The energy in the room was underpinned by five key takeaways: Act Locally, Think Systemically : There was broad consensus that translating global gender frameworks into local, context-specific action is critical—especially around policy, entrepreneurship, and caregiving systems. Unpack Biases : Conversations surfaced the invisible barriers that women face in accessing finance and leadership roles. Tackling unconscious bias—through product design, workplace policy, and leadership development—was a recurring theme. Data is Power : The lack of sex-disaggregated data continues to impede progress. Building robust information systems is a precondition for targeting resources effectively and avoiding “pink-washing.” Collaboration is Non-Negotiable : From venture capitalists to civil servants, nearly every speaker returned to one theme—no single actor can move the needle alone. The Forum made visible the growing alliances among funders, governments, and community leaders. Stories Matter : Beyond frameworks and metrics, the Forum uplifted stories of women breaking barriers. These narratives don’t just inspire—they shape policy and investment. This emphasis on shared reflection and concrete action makes the GLI Forum a unique space in the region —not just a conference, but a platform for shaping the future of gender-lens investing. Building on Momentum: What to Expect in 2025 This year’s edition—set in Mexico City at the historic Hacienda de los Morales—will take this momentum forward. With 2030 fast approaching, the Forum will be a space to reflect on what we’ve achieved, identify what remains to be done, and exchange ideas across sectors and lived experiences. The agenda will spotlight: Inclusive economic growth  and the policies needed to sustain it Innovative approaches to capital access  for women-led businesses Integrating gender equality into institutional priorities and investment frameworks These themes are urgent—and grounded in reality. Gender-based inequality continues to shape access, opportunity, and outcomes across our societies. And yet, even amid a global gender backlash, we double down. Because we know investing in women doesn’t displace anyone. It strengthens everyone. At Pro Mujer, we’ve seen this transformation firsthand. What began more than three decades ago as a microfinance initiative is now a broad, systemic push to embed gender into capital flows, product design, and public policy. Through our Gender Knowledge Lab , we work across sectors to bring a gender lens into decision-making. And through the GLI Forum, we build the coalitions needed to turn those ideas into reality. This sixth edition offers a timely opportunity to convene a global, diverse community of changemakers committed to advancing gender equality in all sectors. To ensure broad access, most sessions will offer Spanish-English interpretation. Join Us We invite you to join us at the GLI Forum Latam 2025  and be part of a growing movement that is putting gender equality at the heart of economic transformation. The future is not something we wait for—it’s something we build. And we build it together. Explore the agenda and secure your spot at GLI Forum Latam 2025 About the Author: Carmen Correa: With over three decades of experience in the development sector, Carmen has served as the CEO of Pro Mujer since 2022, driving the organization’s mission to create opportunities for women across Latin America. She first joined the organization as Director of Partnerships in 2017. Subsequently, she served as Senior Vice President and Chief Operations Officer, overseeing Pro Mujer’s transformative social impact programs in Latin America, including initiatives to expand financial inclusion, deliver essential health and well-being services, and empower women through skill-building initiatives.

Author: Sam Mendelson. Kicking off a new blog series to celebrate the International Year of Cooperatives, e-MFP’s Sam Mendelson introduces the history and rationale of the cooperative movement, cooperatives’ role in inclusive finance today, and what e-MFP has planned for 2025.   In a world facing overlapping crises — economic inequality, climate disruption, democratic erosion — how we organise ourselves to meet shared challenges has never mattered more. In 2025, the United Nations invites us to recognise and strengthen one of the most quietly powerful tools we have: the cooperative model. This year marks the International Year of Cooperatives (IYC), under the theme “Cooperatives Build a Better World.” It is at the same time a celebration and a challenge — to spotlight cooperatives as vital actors in sustainable development, and to mobilise support to expand their reach and impact. At e-MFP, we are proud to be part of this global effort, and want to spotlight our members, help people better understand the cooperative model, champion its role in financial inclusion, and learn from the extraordinary diversity of cooperative actors working across our field. So let’s begin there: what are cooperatives, and why do they matter?   What Are Cooperatives? Cooperatives are businesses owned and democratically governed by their members — who may be workers, consumers, producers, or residents. Unlike investor-owned firms, cooperatives operate on the principle of one member, one vote , and exist to meet the shared needs of their members, not to maximise profit. They take many forms . Agricultural cooperatives help smallholder farmers pool resources, access markets, and manage price risks. Credit unions provide savings and loans to people otherwise excluded from formal financial systems. Worker co-ops are owned and operated by their employees. Consumer co-ops deliver essential services, from electricity to healthcare to retail. Housing cooperatives offer affordable, secure shelter. And hybrid models blend these approaches in response to local realities. What unites them is their commitment to equity, participation, and long-term value. Cooperatives embody a different kind of business logic — one grounded in mutual support, democratic control, and reinvestment in the community . This makes them particularly well-suited to contexts where trust in institutions is low, access to capital is limited, and social ties are strong. A Brief History of the Cooperative Movement The cooperative movement has its roots in 19th-century Europe, emerging as a grassroots response to the upheavals of industrialisation. One of the earliest examples is the Rochdale Society of Equitable Pioneers, founded in 1844 in northern England by a group of weavers and artisans. Facing exploitation and economic exclusion, they banded together to open a cooperative store based on democratic governance, transparent accounting, and fair prices. Their “Rochdale Principles” — including voluntary membership, democratic control, and member economic participation — went on to form the philosophical backbone of the global cooperative movement. From those humble beginnings, cooperatives spread rapidly. By the late 19th and early 20th centuries, they were taking hold across Europe, North America, and eventually in colonial and post-colonial contexts throughout Africa, Asia, and Latin America — often supported by social reformers, religious organisations, and later, governments. Cooperatives became essential in rural credit, agricultural production, mutual insurance, housing, and utilities — offering a counterweight to both unregulated capitalism and centralised state control. Today, the International Cooperative Alliance (ICA) represents a global sector of more than three million cooperatives with over one billion members worldwide — testament to a model that has endured, adapted, and proven its value across radically different economic systems and cultures. In the Global South, cooperatives have played a pivotal role in economic development, often emerging in contexts where formal institutions were weak, markets fragmented, or colonial legacies left deep structural gaps. During the mid-20th century, newly independent nations in Africa, Asia, and Latin America embraced the cooperative model as a tool for rural development, food security, and financial access — frequently with state backing. While some top-down efforts struggled with politicisation or bureaucratic inefficiencies, many grassroots cooperatives flourished, rooted in local solidarity and mutual aid traditions. In more recent decades, liberalisation and decentralisation have led to a resurgence of interest in member-driven cooperative models — especially in agriculture, savings and credit, housing, and renewable energy. Today, cooperatives across the Global South are increasingly recognised not only as service providers, but also as vehicles of empowerment, enabling communities to pool risk, build assets, and exercise economic agency on their own terms. Cooperatives and Inclusive Finance: A Natural Fit In the financial inclusion sector, cooperatives are not peripheral players. They are core to how millions of people save, borrow, invest, and manage risk — often through structures that have evolved over decades to suit the needs of underserved communities. Consider rural savings and credit cooperatives, sometimes called SACCOs. These offer low-cost, locally governed alternatives to commercial banks in areas where banking infrastructure is sparse. Producer cooperatives often serve as the entry point for bundled financial services, such as group lending or warehouse receipt finance. In conflict-affected or marginalised communities, cooperative models build resilience and help rebuild trust — a prerequisite for any lasting financial system. Cooperatives also play a crucial role in addressing systemic market failures . By aggregating demand or supply, they overcome scale barriers. By reinvesting surplus revenues, they improve member outcomes. And by anchoring value in local communities, they promote shared prosperity rather than extractive growth. Yet, despite their proven value, cooperatives are often overlooked by funders, regulators, and mainstream institutions. They may be perceived as too small, too informal, or too complicated to support. This is not just short-sighted — it’s a missed opportunity.   International Year of Cooperatives — and e-MFP’s plan The United Nations declared 2025 the International Year of Cooperatives  to draw attention to the role of cooperatives in achieving the Sustainable Development Goals. It follows the success of the first IYC in 2012 and builds on over a decade of global momentum. The 2025 theme — “Cooperatives Build a Better World”  — is more than a slogan. It signals a call to governments, investors, NGOs, development institutions and civil society to: Recognise the unique contributions of cooperatives to poverty reduction, employment, and social cohesion; Support enabling policies and frameworks for cooperative growth; Invest in cooperative capacity-building, especially in governance, finance, and digital tools; Share evidence and innovations across geographies and sectors. 2025 is moment of global alignment — a chance to raise the visibility of cooperative models, challenge outdated assumptions, and mobilise new energy and resources behind what works. At e-MFP, we see this year as a strategic opportunity to: Amplify member voices  — particularly those working with, for, or as cooperatives; Encourage candid reflection  on the real-world challenges cooperatives face — from governance bottlenecks to capital constraints; Bridge sectors  — connecting inclusive finance to broader cooperative movements in agriculture, housing, energy, and more; and Host honest, forward-looking conversations  about what needs to change — in policy, funding, and practice — to help cooperatives thrive. Over the course of 2025, e-MFP will be running a campaign to spotlight cooperatives  and their role in inclusive finance. This will include: A guest blog/essay series  featuring stories, insights, and reflections from across our membership — from agricultural supply chains to conflict zones, from women-led co-ops to digital-first savings groups; and A dedicated stream at European Microfinance Week 2025 , in November, where cooperatives will take centre stage — with a plenary sessions, workshops, and peer exchange formats. Get Involved We are open to other ideas too, such as webinars or other events. If your organisation is a cooperative, supports them, researches them, or wants to learn more — we want to hear from you. We want to make sure members’ work is seen, supported, and learned from. The world’s politics and civic tone feels particularly un cooperative right now. But cooperatives do indeed ‘build a better world’. Let’s shine a light on them. About the Author: Sam Mendelson is Financial Inclusion Specialist at e-MFP and is the e-MFP lead for the Gender Lens Investing and WASH Action Groups. He is also the lead author of the Financial Inclusion Compass .

Author: Richard Leftley. On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025  on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN). In this third piece in a series of guest blogs that we’ll be running throughout the year on this topic, we hear first-hand the journey of Richard Leftley – a true ‘founding father’ of modern microinsurance. In this piece, he talks about how a week in a Zambian village hut, with a once-middle-class family, crystallised a question that would capture him for the next 20 years: How do I provide an insurance safety net to low income people? We’re delighted to have this contribution (adapted from an interview with VisionFund) from a true microinsurance pioneer as he reflects on what he’s learned at the genesis of the industry – and what it tells us today.     It began in 2001. My journey into micro insurance. If I knew then what I know now, I can categorically say I would never have set out on this journey. I had no idea of the level of risk I was placing myself and my family in. I was 29 and blissfully unaware – which turned out to be a real benefit. I didn’t know how thin the line was. It was a knife edge. I didn’t know how close I was to disaster. I just put left foot in front of right – a very intentional, constant, determined path, in which I took whatever relationship was immediately accessible to me, and used it. I knew insurance and I started to tweak it in incremental ways. I kept going, not randomly, but with one focus: how do I provide that insurance safety net to low income people? I did that little by little. Until one day we had 60 million customers.   The Cost in Dollars and Lives As a London reinsurance broker, in 2001, I was dealing with insurance companies in Africa. One defining document was a report into the impact of natural disasters which laid out the cost in dollars and the cost in human lives. The dollar measurement was for the US, Japan, the UK. The measurement in lives was Bangladesh and India – emerging markets. Only one or two percent of the population in Africa or in Asia had insurance. And they were the people who had a car, a bank account and were employed – so might have some embedded insurance. While in developed markets there is a safety net – so when bad things happen, individuals, corporations and society don’t just slip back into poverty – that safety net doesn’t exist in emerging markets. I wanted to understand why people in emerging markets did not buy insurance. So, I went to Northern Zambia to find out.   Snakes & Ladders I joined a two-week school-building trip to Zambia, but I was there to find out why rural Zambians didn’t buy insurance. I came away with a very clear understanding. I was fascinated with the life-story of the single-parent family I was living with: a single mum and her kids. She’d been born in the village and had progressed to become middle class. They had moved from the village to the Capital city where they had an apartment and a motorbike. She was a schoolteacher, and her husband was a security guard. They’d progressed economically; they’d become middle class. Yet here they were back in the village – with one set of clothes, and no shoes. She explained that her husband got sick. They spent their money on doctors, and when he died, she spent the remaining money on his funeral. They had no safety net – so came back in the village. She told me her life was like a game of snakes (or chutes, in the US) and ladders. She actually showed me the snakes and ladders board. She explained her challenge: “ I am trying to work my way up, and from time to time – thanks to a micro finance loan – I go up a ladder. That accelerates my move towards being wealthier. But my experience is that when I hit these snakes, or chutes, there is nothing to stop me sliding all the way back down to the bottom ”. And she challenged me: “ I am happy to work my way out of poverty – I have done it once, and I’ll do it again. But what I need is a safety net that moves up underneath me. So that when bad things happen I don’t go all the way back down to the bottom in the way that I did”. To me this was the challenge, the signal I needed.   The Genesis of an Industry I started by working out what stopped people buying insurance. The complicated process excluded people who were not financially literate: a 20-page document; a visit to an office; the need for a bank account; the payment of a year’s premium up front. I knew we had to simplify the products. We had to be able to explain the product in a single text message: If you die for any reason, we’ll give your dependant $1,000. If you go to hospital for any reason for two nights or more, we’ll give you $100 . To sign up, clients didn’t have to go to an office – they could send a text. They didn’t have to sign a form. They could pay the premium weekly, alongside their loan payment at the bank. Our clients didn’t have cash flow, so we worked on how to get claims paid quickly – on the same day, or next day, and certainly in the same week. That was the focus to begin with and that was where the industry started off. And, in the first five years we developed simple products - working mainly with the microfinance sector. Then the challenge shifted to how do we reach massive scale?     From Scale to Sustainability – And Profit The second phase was scale, reaching beyond the microfinance community (which then had around 150m borrowers globally) to access more of the four billion people without insurance. We explored working with telecoms providers; money transfer companies; ride hailing, to understand who made a good partner. And the chapter we are now entering was: how do we make this sustainable and (dare I use the word) profitable ? How do we make this into a commercially viable venture? The microfinance community has always found profit to be a difficult word, because you are making profit from poor people. Proxies like “sustainable” are more palatable. Offering microinsurance as a product through the microfinance community necessitated a lower return on our microinsurance. But Lloyds of London (who underwrote us) insures spaceships and ocean liners. We needed a version of ‘Lloyds’ where the capital could come from donors, and the expectation of return sat in line with a social business, rather than fully-for-profit business. That is starting to take shape in various ways around the world, but we’re not there yet. But I believe that is the direction the industry needs to go in. The model we tried was a ‘split double baseline’ (for profit in one area, sustaining loss making in a less profitable area). But there was inevitable pull to those programmes or employees generating the greatest return. However hard you try, resources and focus start moving that way. Its human nature – investors’ nature, to focus on what is profitable. It’s a very hard tension to hold. The answer lies, I believe, in the huge burgeoning middle-income market. India has 300 million people considered to be ‘middle income’. But they are not served with insurance. I believe the answer lies in a double bottom line. Instead of talking about micro or low-income insurance only, let’s talk about the mass market , which is everyone who doesn’t have insurance. In many of these countries that is 90% of the population, many of them ‘middle income’.   Climate Resilience The impact of insurance in these nations, is critical. On climate, historically, the model has seen the not-for-profit sector put out a TV advert when a disaster lands, and the general public give money. A disaster in East Africa or an earthquake in Nepal is, to some extent, an essential part of not-for-profits business model – it provides a percentage of the income to help cover overheads and operational costs. The alternative to that is insurance. So when there is an earthquake, or a flood, or famine, there is insurance. Instead of waiting for the disaster to strike and then raising money, you raise a little bit of money, ahead of disaster, which is spent on insurance premiums. But this is harder to sell to people. A TV advert asking people to contribute to pay for a climate insurance premium, ahead of the disaster doesn’t sell in the same way as a picture of a child in a disaster. I’d note that there is, therefore, a little bit of resistance from the not-for-profit sector about replacing the current model of “ a disaster happens; let’s raise some money ” to “ before the disaster happens, let’s buy some insurance ”. Therefore I wonder – is there a way of combining these two? It’s not feasible to replace all the potential scenarios that might happens and replace them with insurance. But would it be useful if, when a disaster does happen, we can say, with immediate effect, let’s dispatch these resources because we know the money will be coming to those who need it in the form of insurance. It’s been a challenge for the non-profit sector to work out how to combine these approaches. But the insurance industry is potentially very well set up for this scenario. It’s a perfect fit. All we have been talking about so far is very hard for the insurance industry to get their heads around. They’re very comfortable with those infrequent catastrophic events, but not with the frequent small events which is what microinsurance tried to deal with. So the industry doesn’t need any convincing that there is unlimited capital available for these kinds of products. There is a huge interest from the insurance market in doing this and we haven’t tapped into it in the way that we need to.  Now What? VisionFund [upon an interview with which this is based] is an example both of what’s being done well – but also how much more is needed. VisionFund is one of the leaders in insurance among the microfinance players, providing important products and strong value for money to borrowers, with ClimaCash+ (a new climate insurance product that offers a simple, fast, parametric payouts triggered by specific weather conditions) just one innovative solution. But the challenge is “now what?” – how can organisations like this extend to more people – both beyond borrowers (e.g. WorldVision Savings Groups) and beyond the organisation itself, to clients of other networks? It’s now about how do we maximise the impact. The question that hit me at the genesis of this industry was How do I provide an insurance safety net to low income people?  Today the question we face as a whole sector is slightly different: How do we create profitable solutions that solve the protection gap for the next billion people? About the Author: Richard Leftley pioneered micro insurance, starting in January 2002 when he founded MicroEnsure which became the global leading insurtech providing insurance to over 64 million people in 12 countries across Africa and Asia. In 2020 he co-founded MIC Global which became a leading reinsurer underwriting products globally via its Lloyds syndicate 5183 and via MIC Re in Anguilla. In 2022 Richard founded Wavu as an independent consultancy providing services to the World Bank Group, serving as a non-executive director for insurtechs and helping establish new ventures for large corporates. Richard helps companies understand how to reach scale via B2B(2C) partnerships, where best to be positioned in the insurance value chain and helps insurtechs raise capital. Main photo: VD Photography via Unsplash.

Authors: Matthew Genazzini and Asier Achutegui, Microinsurance Network. On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025  on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN), who have provided invaluable support in the design and development of the EMA 2025. It's appropriate therefore that MiN should be the organisation kicking off e-MFP’s annual series of guest blogs on this topic, and with a very timely announcement, too: MiN has just published (on March 6th) its latest Landscape of Microinsurance , the definitive annual look at the trends, challenges and future of the microinsurance sector.   In this first guest blog,   Matthew Genazzini and Asier Achutegui talking about the relationship between microinsurance and financial resilience, some trends underway in that sector, a few key findings from this new paper – and what they think it means for the future of microinsurance. In an increasingly uncertain world marked by climate shocks, economic volatility, and social vulnerabilities, microinsurance has emerged as a critical financial tool to protect low-income populations. Microinsurance (alternatively known as inclusive insurance  - although with some differences) provides coverage to individuals who would otherwise have limited or no access to conventional insurance, offering a chance for financial resilience in times of crisis . For the financial inclusion sector, integrating insurance into broader financial services is essential. While efforts have been made to expand access to savings, credit, and payment systems, insurance remains an often-overlooked component of financial well-being . Without adequate risk protection, low-income populations remain highly vulnerable, limiting the impact of financial inclusion initiatives. Insurance acts as a ‘safety net’, preventing financial setbacks from eroding progress made through other financial inclusion efforts. Ensuring that microinsurance is recognised as a core element of financial inclusion strategies can significantly enhance economic security for underserved communities. The Landscape of Microinsurance  study is an initiative conducted by the Microinsurance Network (MiN) to collect, analyse, and present data on the global microinsurance market, providing the only benchmark of this sector. The study provides a comprehensive overview of the sector, capturing insights from insurers, policymakers, and development institutions to assess market evolution, regulatory developments, and emerging trends. By examining the number of people covered, premium revenues, and innovations in microinsurance products, the study serves as a key reference point for stakeholders aiming to enhance financial protection for low-income populations. The findings help governments and insurers understand the challenges and opportunities in expanding microinsurance coverage, driving evidence-based policy decisions and industry strategies.   The Role of Microinsurance in Financial Resilience Microinsurance plays a pivotal role in mitigating financial risks for low-income households, smallholder farmers, and small businesses. With traditional humanitarian and government relief programmes struggling to keep pace with escalating risks, microinsurance provides a proactive solution by transferring risk before a crisis occurs . According to the 2024 Landscape report , 344 million people are covered by microinsurance across 37 countries, up from 331 million the previous year. Beyond providing immediate financial relief, microinsurance enhances economic stability by enabling policyholders to recover from setbacks more quickly . The World Bank  and CGAP have highlighted that financial resilience is critical to sustainable development, as unexpected financial shocks often push vulnerable communities deeper into poverty. According to CGAP , microinsurance complements microfinance  by protecting low-income individuals from financial ruin when facing sudden medical emergencies, crop failures, or income losses due to climate-related disasters. According to the International Labour Organisation’s (ILO) Impact Insurance Facility , microinsurance contributes to economic growth by fostering a more secure environment for entrepreneurship . Small business owners and farmers are more likely to invest in growth opportunities when they have access to insurance, knowing they have a safety net in case of unforeseen losses. For example, in agricultural economies, microinsurance products tailored to weather-related risks enable farmers to take calculated risks in adopting new farming techniques, leading to increased productivity and higher income levels. Similarly, the United Nations Development Programme (UNDP) underscores the importance of microinsurance in achieving the Sustainable Development Goals (SDGs ) , particularly SDG 1 (No Poverty), SDG 3 (Good Health and Well-being), and SDG 13 (Climate Action). Health microinsurance reduces the financial burden of medical expenses, ensuring that low-income families do not have to choose between paying for healthcare and meeting their basic needs. Climate-related microinsurance products provide financial protection against extreme weather events, preventing economic devastation in regions highly susceptible to climate change. Moreover, the Access to Insurance Initiative (A2ii) has emphasised that inclusive insurance, including microinsurance, should be integrated into national financial inclusion strategies  to enhance resilience at the household and community levels. Governments and regulators play a crucial role in fostering a supportive environment for microinsurance, ensuring that products are both accessible and affordable. Financial literacy programmes and public-private partnerships are essential to promoting insurance awareness and uptake among low-income populations. In essence, microinsurance serves as a  key instrument in building financial resilience, bridging the gap between financial inclusion and risk management . By enhancing the ability of low-income populations to cope with uncertainties without falling into deeper poverty, microinsurance not only provides immediate security but also fosters long-term economic stability and growth. The increasing recognition of its role by global institutions underscores the need for continued investment in microinsurance infrastructure, regulatory frameworks, and consumer education. Tracking microinsurance: Why it matters The systematic tracking of microinsurance is essential for multiple reasons: Closing the protection gap : Despite growth, only 11.5% of the estimated market for microinsurance is currently covered, leaving nearly 3 billion people without adequate financial protection. Identifying trends and challenges : Monitoring microinsurance data helps identify emerging risks, regulatory challenges, and market dynamics, ensuring timely interventions. Policy and regulatory development: Governments and regulators can use data insights to create favourable microinsurance regulations, leading to increased financial inclusion. Encouraging innovation: Tracking enables insurers to innovate by developing products tailored to customer needs, such as digital insurance solutions and climate risk products. Key Findings from the 2024 Landscape of Microinsurance Growth in coverage : Microinsurance continues to expand, with coverage increasing from 331 million people in 2023 to 344 million in 2024 across 37 countries. This 4% growth reflects the sector’s steady progress in addressing financial resilience for low-income populations. Alongside this expansion, premium revenues grew from USD 5.8 billion to USD 6.2 billion, highlighting the increasing scale of microinsurance markets. While life and funeral insurance remain dominant, newer product lines such as climate risk, property, and income protection are expanding, with 112 climate-related products now covering over 42 million people. Increased donor and government support: Governments and multilateral organisations are increasingly recognising the role of microinsurance in building resilience and are backing it with financial and policy support. In 2024, the Global Shield against Climate Risks expanded its reach, offering pre-arranged protection for climate and disaster-related risks in more countries. Similarly, the United Nations Environment Programme Finance Initiative (UNEP FI) launched the Bogota Declaration on Sustainable Insurance, strengthening the commitment of insurers in Latin America and the Caribbean to support the Sustainable Development Goals (SDGs). Likewise, the Nairobi Declaration on Sustainable Insurance was introduced with similar ambitions for the African insurance sector. In addition, government and donor subsidies are playing a vital role, particularly in agriculture microinsurance, where 58% of products included in the study receive some sort of financial support, collectively covering more than 54.5 million people. Diversification of products: New microinsurance products are emerging to cover previously uninsured risks, particularly in agriculture, climate risk, and small business resilience. In 2023 alone, 55 new products were launched, with a majority concentrated in personal accident, agriculture, and property product lines – as Figure 1 shows. Figure 1 Distribution of insurance product types by year Long-term approach/strategy needed : Insurers, distribution channels and other stakeholders must have a longer-term approach and provide enough time to reach scale . From the data collected in the Landscape, it appears that products need at least 4 years in the market to reach to scale – as seen in Figure 2. Figure 2 Increase in gross insurance premiums and coverage by age of product Challenges in innovation and data collection : While innovation is on the rise, insurers face constraints such as limited investment, regulatory barriers, and inadequate gender-disaggregated data. Out of the 985 products featured in the study, insurers could only provide gender disaggregated data for less than half. To overcome these challenges, microinsurance stakeholders must prioritise better data collection and product innovation. The Future of Microinsurance To maximise the impact of microinsurance, stakeholders—including insurers, governments, donors, and development organisations—must collaborate to expand coverage to underserved populations by investing in outreach and financial literacy programmes . Improving data collection and tracking mechanisms  will enhance decision-making and regulatory effectiveness, ensuring that microinsurance remains a viable and effective financial tool. Promoting public-private partnerships  will be essential in scaling microinsurance initiatives, particularly in climate and health risk insurance, where collaborative efforts can amplify impact. Governments and development organisations are increasingly advocating for public-private programmes to address the risk management needs of vulnerable populations, with a particular focus on health and climate risks​. Additionally, supporting the responsible scaling of subsidies will help maintain affordability while ensuring long-term sustainability. Data from the report shows that 58% of agriculture microinsurance products receive subsidies, covering 54.5 million people, highlighting the importance of structured and sustainable financial support​. The report also underscores the need for a long-term strategy in subsidy implementation to avoid sudden disruptions that could undermine microinsurance initiatives​. The microinsurance sector must continue innovating, leveraging technology, and tailoring products to address the evolving risks faced by vulnerable communities, thereby reinforcing financial resilience at a broader scale. Microinsurance is an essential tool for building financial resilience among vulnerable populations. The 2024 Landscape of Microinsurance underscores the importance of continuous tracking, innovation, and regulatory support to bridge the protection gap . As the sector evolves, leveraging data and market insights will be crucial in ensuring that microinsurance reaches its full potential in safeguarding the livelihoods of millions worldwide. We at MiN are pleased not only to present this new Landscape, but to leverage its findings as part of the European Microfinance Award 2025 , which launched on March 12th. About the Authors: Matthew Genazzini has 15 years of experience in development finance and inclusive insurance and is the Executive Director of the Microinsurance Network. He has a BA in Contemporary History from the University of Sussex and an MA in Latin American Studies from the University of London. He has significant experience in the inclusive finance sector with ADA – Appui au Développement Autonome, managing capacity building and product diversification projects for financial institutions, with a particular focus on microinsurance. In 2017, Matthew managed the Technical Support for MFI’s unit in ADA, which aimed to strengthen financial institutions through the provision of financial and technical assistance services, and in 2020, he changed position and launched the Smallholder Safety Net Up-scaling Programme (SSNUP), a public private development partnership aiming to strengthen the resilience of smallholder farmers by promoting investments in the agricultural sector. In parallel, Matthew joined the board of the Microinsurance Network in 2019 and later, in October 2024, become the director. Asier Achutegui - With nearly 20 years of experience in development, Asier has worked in evaluating, developing, and designing public policies for social inclusion in Latin America and the Caribbean. He has travelled extensively in search of global development solutions and has been involved in budgeting for projects aimed at improving the quality of life for the most vulnerable segments of the population. Asier has also played a key role in establishing and securing funding for multi-stakeholder institutions and nonprofit organisations. Since 2020, Asier has been a member of the Microinsurance Network Team, where he is responsible for a variety of programmes, including regionalisation, Best Practice Groups (working groups), organising global events, and managing relationships with members.

Author: Solène Favre, VisionFund International. On March 12th, e-MFP was pleased to launch the European Microfinance Award (EMA) 2025  on ‘Building Resilience through Inclusive Insurance’. This is the 16th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in cooperation with the European Investment Bank. This year, e-MFP is also delighted to welcome as a strategic partner our friends at Microinsurance Network (MiN). In this second piece in a series of guest blogs that we’ll be running throughout the year on this topic, Solène Favre, Global Director of Insurance for VisionFund International (VFI) argues, through the case example of one of World Vision’s savings group clients in Rwanda, that MFIs are a natural fit as distribution channels for microinsurance – yet misconceptions and challenges stymie growth of this model. There is a profound link between microfinance institutions and microinsurance. As Muhammad Yunus once said, “ When microfinance institutions step up to offer such solutions [microinsurance], they hold the power to change lives and empower communities, providing not just financial services but the security that every individual deserves ”. The Story of Venuste Venuste, a member of World Vision’s savings group in Rwanda, endured immense hardships that tested his resilience and ability to provide for his family. Venuste’s story demonstrates the transformative role of microfinance institutions (MFIs) in helping individuals overcome financial shocks. After losing his wife, Clarisse, and later his leg due to a severe infection, Venuste faced immense challenges. At a crucial time, VisionFund Rwanda provided him with the needed financial support through a loan bundled with insurance products. This safety net covered funeral costs, hospital bills, workers’ wages, and his children’s school fees, preventing him from falling into poverty. The insurance benefits allowed Venuste to focus on recovery and adapt to his new circumstances. Unable to continue vegetable farming due to his disability, he transitioned to pig breeding—a venture better suited to his physical condition. This shift not only ensured a stable livelihood but also marked a fresh start for Venuste as an entrepreneur. Microinsurance made the vital, life changing difference for Venuste. How prescient those words were. MFIs such as VisionFund play a vital role in offering accessible financial tools tailored to vulnerable populations. By bundling loans with microinsurance, they provide both short-term relief and long-term stability, enabling clients to navigate crises and rebuild their lives. Venuste’s journey highlights how these institutions empower individuals to not just survive adversity, but also to thrive by turning challenges into opportunities for reinvention and resilience. The Natural Fit of MFIs Providing Microinsurance Microinsurance has grown rapidly in recent years- we saw that again recently with the release of the Landscape of Microinsurance  from the Microinsurance Network (MiN), offering simplified procedures, lower premiums, and accessible claims processes to meet the needs of low-income communities. However, its penetration remains low, highlighting the critical role of MFIs in bridging this gap. MFIs are uniquely positioned to develop and distribute microinsurance due to several advantages. Firstly, MFIs have established trust with underserved populations , fostering confidence in financial products like insurance. Their clients, often hesitant to engage with unfamiliar institutions, are more likely to adopt microinsurance when introduced by trusted MFIs. Secondly, MFIs possess local infrastructure , including field agents, mobile platforms and client data systems that efficiently reach remote populations. Thirdly, their expertise in managing financial transactions  ensures effective implementation of insurance products. MFIs also understand the needs of low-income clients through extensive networks and needs assessments. This knowledge enables them to design tailored products while educating clients on financial concepts . Microinsurance fits seamlessly into MFIs’ holistic approach to improving financial well-being by providing protection against unexpected events that can derail stability. For MFIs, microinsurance complements their core activities, generating additional revenue while improving social impact. By empowering clients to handle life’s shocks and climb the economic ladder, MFIs can become one-stop shops for financial solutions . Ultimately, microinsurance enhances resilience and transforms lives by turning crises into opportunities for growth. Misconceptions Remain Despite the advantages of MFIs in distributing microinsurance, several misconceptions hinder its full potential. These misconceptions exist at both the insurer and MFI levels: Low client education : Some insurers believe low-income populations lack knowledge or interest in insurance products. However, MFIs are well-equipped to educate clients about insurance concepts due to their close community relationships. Profitability concerns : There is a perception that microinsurance premiums are too low for insurers to profit or too high for clients to afford. In reality, administrative costs are minimized when MFIs handle customer acquisition, enrolment and claims processes. MFIs' understanding of client needs and existing processes for data collection and loan management make premium integration easier. Low MFI expertise:  While MFIs primarily focus on credit and savings, insurance can be easily introduced and implemented. MFIs' expertise helps insurers avoid one-size-fits-all approaches, recognizing that products successful in one context may not work in another. To overcome these challenges, collaboration between insurers and MFIs – as distribution channels - is crucial . By working together, they can design affordable, tailored products for specific markets while educating clients about their value. This partnership can unlock the full potential of microinsurance, making it more accessible and ensuring relevant and accessible products for vulnerable populations. Innovation and partnerships are key, particularly in seeking solutions for where MFIs serve communities more prone to weather related disasters and the impacts of climate change. As VisionFund we have worked together with Ibisa, an insurtech to develop the ClimaCash+ product. The idea is to adapt the successful principle of hospicash to climate risks. ClimaCash+ is a suite of parametric coverages such as RainCash, DroughtCash, HeatCash… simple to understand, simple to use and to claim (automatically loss assessment and payment when the trigger is reached). The Transformative Power of MFIs MFIs face challenges in actively engaging with microinsurance, despite its benefits. Although MFIs generate income from microinsurance, that income often covers only the operational costs of training and services, requiring negotiation for higher commissions to generate profits. Network headquarters with dedicated teams can help, but covering expert costs poses a challenge. VisionFund International addresses this by offering operational support to other MFIs or other partner organisations, helping them determine suitable products, collaborate with local insurers, and implement solutions through training and practical support. This work is important given the low penetration rates of insurance across low-income communities and has enabled VisionFund to grow to now offer insurance products from credit life, health, hospicash, asset, livestock, crop, climate and more, to over 2.3m clients globally, through its network MFIs and through technical support to partners. Today, Venuste’s story has taken a hopeful turn. His pig farming business has grown steadily, providing him with a stable income that supports both his family’s needs and his aspirations for the future. His children remain in school, continuing their education uninterrupted—a testament to how financial safety nets can preserve opportunities even during crises. Venuste’s journey exemplifies resilience in action: not merely surviving hardship but using microinsurance to adapt creatively and finding new paths forward. The combination of VisionFund’s support and bundled insurance products empowered him to rebuild after devastating losses—proving that even in the face of overwhelming adversity, recovery is possible with the right tools. Venuste's experience highlights how MFIs like VisionFund foster resilience through microinsurance. By bundling loans with tailored insurance products, MFIs provide safety nets that protect against shocks and enable stability. In a world where families increasingly face health emergencies and natural disasters, MFIs play a crucial role. They empower individuals like Venuste to overcome challenges and seize opportunities, transforming despair into hope. His journey shows that resilience is built through communities uniting with compassion and support. As MiN’s latest Landscape shows, the opportunities for growth in microinsurance are enormous – and so too is the role that MFIs can play in helping it. As Joachim von Amsberg, Vice President of Development Policy and Partnerships at the World Bank, says: “ In the world of microinsurance, MFIs are more than just distributors – they are enablers. They are uniquely positioned to bridge the gap between traditional insurance providers and the world’s most underserved populations, helping to create a more equitable system of risk-sharing ”.  Let’s grasp this immense opportunity, and ensure that insurers, MFIs and other key stakeholders see themselves as partners, all pursuing a common goal. About the Author: Solène Favre has been Global Director of Insurance for VisionFund International (VFI) since February 2019. With her team, she supports MFIs in setting up insurance operations for their borrowers and their families. More recently, VFI's insurance team has expanded its technical assistance for WV National Offices and other MFIs & organisations to protect more families and more children among WV beneficiaries. Currently, she is also a board member of the Microinsurance Network. Before joining VisionFund International, Solène created and managed the Cambodian subsidiary of the French insurance group Prévoir, the first microinsurance company in Cambodia for almost 7 years, reaching 300,000 insurance policies with a team of 147 people. She also worked on a pilot project to set up Cambodia's National Social Security before it was handed over and launched by the Ministry of Labor in 2012. She also ran a micro-insurance program in India for 2 years providing a health and life community-based insurance for slum dwellers in Maharashtra. She started her career in France working for a mutual insurance company for 10 years.

Author: Tamsin Scurfield, Opportunity International. Opportunity Bank Uganda Limited was one of the semi-finalists of last year’s European Microfinance Award on Advancing Financial Inclusion for Refugees & Forcibly Displaced People . Continuing e-MFP’s focus on different approaches to this topic, this latest guest blog is by Tamsin Scurfield, the new Head of Refugee Finance for Opportunity International (OI), who explains OI’s work with  60 Decibels on a study on the impact of OI’s work on refugee finance – and the importance of a ‘human-centred design’ approach. Overseas aid budget cuts are expected to have devastating effects in the humanitarian sector, at the same time as the number of refugees has more than doubled in the last ten years - and trends suggest numbers will continue to rise. At the end of June 2024, 122.6 million people remained forcibly displaced globally due to persecution, conflict, and human rights violations. Of these, 38 million are refugees. Despite wishing to, many cannot return home. In 2024, only 1% returned to their countries of origin and less than 0.5% were resettled .  As humanitarian crises are predicted to continue, it is imperative we create solutions that mean refugees are able to overcome the many challenges they face in not only adapting to a new way of life in a new country, but also challenges such as access to markets, limited livelihood opportunities; and lack of documentation required to grow a business and become clients of a bank. Working together to overcome these challenges we have seen first-hand how refugees are able to support themselves and become less reliant on humanitarian aid.  Uganda is among several low- and middle-income countries that together host 71% of the global refugee population. It is in Uganda where Opportunity International first stepped into the refugee space . In 2018, we visited the Kiryandongo and Nakivale refugee settlements and met a refugee called Daniel Baptiste, a self-made entrepreneur who had recently arrived with his family fleeing conflict in South Sudan. He was a civil servant and former journalist who spoke four languages. What Daniel told us was that inside the Settlement he was welcomed, given an ID number and some food, but felt he was treated like a child. Daniel said he simply wanted to be able to work. He had managed to create for himself a small homestead, with goats and a few chickens. With his wife they baked and sold bread on food distribution days as the lines of refugees were waiting for their World Food Programme drop-off. However, there was no grinding mill in the Settlement, and he was frustrated by lack of capital to grow his small farming and business efforts. Fast forward to 2025 when, working with  Opportunity Bank of Uganda (OBUL)  and FINCA International  we have been able to serve over 40,000 refugees and host community members though training in finance and business, we’ve supported 18,500 to access savings and disbursed over 6,000 loans to a value of $2m, helping refugees grow and expand their small businesses. ‘Human-centred’ design   Using a human-centred design, our approach to evaluate the impact of this work started with financial diaries, which provides a systematic study of the financial lives of low-income people. We targeted 397 participants in Nakivale and Kiryandongo Settlements to better understand patterns in income and expenditure to be able to inform appropriate product development. We segmented potential clients into three categories: subsidence, resilient and independent. Using their income and profit margins we were able to test a minimum viable proposition for those suitable for savings and credit. We did this alongside stakeholder mapping of players in the sector to ensure any financial inclusion aligns and compliments the work of humanitarian, government, refugee and private sector actors within the ecosystem. Bank products and training typically target 70% refugees and 30% host community members and continue to be refined and improved based on performance and user feedback.   When we started, our objective was to test the business case for financing refugees, build their financial capabilities, help them save securely and grow their businesses. We learned that refugees were a viable client segment. They were as good (and sometimes better) at repaying loans than nationals and could be financed sustainably. What we came to learn is in order to achieve self-reliance and increase household income, we needed to go beyond just financial inclusion and create market-based solutions that are both inclusive and sustainable over time . Entrepreneurship support is one solution to create income opportunities, jobs and sustainable livelihoods. It is promoted as a key pillar in the refugee space by UNHCR, Governmental and NGO players and it is a complimentary activity, along with a microfinance offering. Typically entrepreneurs go through various stages in their journey, from ideation, to start-up; growth and scale. We partner directly with refugee-led organisations and enablers  such as Cohere and PHB - Scaling for Impact , so that alongside financial products and services, we can offer enterprise development support that includes access to targeted, scalable funds to strengthen businesses and organisational capacities. In this way we are creating skills, employment opportunities and sustainable outcomes for refugee communities within a broader ecosystem and market framework that should live on well beyond any external grant support.   Evaluating Impact  In 2024, with support from the Swiss Capacity Building Fund  and 60 Decibels , trained researchers conducted 275 phone interviews in local languages to existing OBUL clients inside of Nakivale Refugee Settlement, to collect insights into outcomes they have experienced as  a result of financial inclusion .   It was clear from the responses that OBUL is having a strong, positive impact on the life and businesses of its customers. Customers have been able to increase their income through investments in agriculture, expanding their inventory and increasing their daily earnings. Just under 25% also reported they were able to hire employees, averaging at least two employees more than before the loan. 91% confirm that their business exists 18 months after the loan ends, showing that refugees are investable and that they can become self-reliant when given the opportunity.    Most customers also reported improved financial wellbeing, which they attributed to OBUL, with 85% saying their ability to manage their finances has improved. In life, we all face unexpected challenges. The same is true of the refugees living in Nakivale, but from the interview feedback, OBUL customers also reported being more resilient financially, meaning they are better able to face emergencies. 79% of customers reported having increased savings.     Building Resilience  With the world experiencing increasing climate shocks, we are helping clients build resilience so they can face these potential challenges from the climate. Nearly half of customers affected by climate shocks say OBUL has strengthened their ability to recover. This was as a result of better financial planning, access to emergency loans, and business diversification. OBUL has also helped customers build financial safety nets and diversify income sources, helping protect them from future climate shocks and supporting them to rebuild their lives.   ‘My life has improved because of the good profit I’m making from the shop now. I can pay the school fees for two of our children, while my husband covers the others. I can also manage to meet my basic home needs.’ Female refugee in Nakivale, 39 years. As a global non-profit organisation, OI believes in the power of innovative financial solutions to help refugees build sustainable livelihoods. On the supply side, we support financial institutions with technical assistance, grants, and blended financial tools to deliver financial products and services that meet the needs of refugees. On the demand side, through enterprise development support building refugee capacity to manage investments, we create sustainable income generating activities and financial inclusion linkages. As we face the scale of global displacement, at Opportunity we will continue to support our clients with lasting solutions so that they can be self-reliant and be able to provide for themselves and their children. For more on OI’s work on this topic, see the recording of the ‘Deep Dive’ session at EMW2024  and the EMW2024 plenary on advancing financial inclusion for refugees & FDPs. See also recent blog post by the former Executive Director of Opportunity International Inc. Deborah Foy, entitled Climate Change is Massively Accelerating Forced Displacement. How Should the Financial Inclusion Sector Respond?  on how financial inclusion can be a tool for preventing climate-induced displacement,  helping communities to be more resilient, and in supporting forcibly displaced populations (FDPs) to rebuild their lives. About the Author: Tamsin Scurfield holds a newly created post of Head of Refugee Finance for Opportunity International where she provides leadership to ensure the program delivers scalable and inclusive financial services to Refugees and host communities.

Author: Dalia Ali. In this latest e-MFP guest blog, Dalia Ali, discusses trends and challenges of fintechs digitising the ROSCA model, and provides examples of how this is now happening. The case for Rotating Savings and Credit Associations ROSCAs The Rotating Savings and Credit Association (ROSCA) stands as one of the oldest and most popular informal financial institutions, that thrives on community-based pooling of resources and is driven by shared trust and mutual support of the group. A group of individuals, typically from a close-knit community, agree to contribute a fixed sum regularly, typically on monthly basis. The accumulated funds are then distributed to each group member in rotation. The order of this lump-sum distribution is either randomly assigned or based on financial need, as agreed upon by the group members. ROSCAs are an imperfect alternative to the mainstream banks that help participants save money and access credit, which otherwise might be difficult for them to obtain from the conventional financial market. ROSCAs are very prevalent among adults in developing countries, with membership rates reaching up to 95% in several African nations like the Republic of Congo, Cameroon, Gambia, Ivory Coast, Togo, and Nigeria. [1] They also have a different name in each country, such as Ajo in Nigeria, Susu in the Caribbean, Tanda in Mexico, pandeiros in Brazil, and Ekub in Ethiopia. An important foundation and prerequisite for the effective functioning of ROSCAs is the existence of social capital and strong mutual trust among the participants. People rely on social capital and local information to evaluate the reliability and creditworthiness of a borrower. The ease of information flow and circulation between people, particularly in rural communities, helps in establishing and sharing local information about the people who live in the same area. [2] The existence of mutual trust among the participants significantly limits the transaction costs, as monitoring is not required. [3] ROSCAs tend to be formed by a group of individuals of a cohesive community who are aware of the socio economic status, reliability, and social capital of each other. Thus, in the absence of legal enforcement mechanisms, peer pressure and the fear of being ostracized by the community will guarantee the continuation of payments. [4] Trends and innovations in digitising ROSCAs ROSCAs play a vital and instrumental role in the informal sector, helping their members, who are predominantly women, with accessing savings and interest-free loans. Over the past decade, numerous fintech start-ups have sought to harness the potential of ROSCAs by integrating the model into the mainstream financial landscape through digital transformation. Here are some examples of start-ups that are digitising ROSCAs: Oraan in Pakistan Oraan is Pakistan’s first woman-led fintech startup which was founded in 2018. Their digitised ROSCA focuses primarily on women. With only 13% of Pakistani women having access to financial services , Oraan’s mission is to make financial services accessible for every woman in the country . Upon registration, users can join one or multiple groups that align with their financial goals and preferences. Furthermore, they have launched "Oraan SNPL", a new product in collaboration with four Pakistani universities, specifically designed to finance students from these partner institutions . By November 2021, they announced reaching a milestone of growing their community to 2 million women. Equbs in Ethiopia In 2020, eQUB launched a digital savings platform that is based on the ROSCA model, locally known as Equb in Ethiopia. Users can filter and explore different Equbs and select one based on their preference in terms of location, amount deposit and frequency of contributions. In each sub-round, the Equb wheel is spun, randomly selecting a member to receive the lump-sum amount. In an effort to streamline the process of cash deposits on collection days for Equb members, they have collaborated with Hibret Bank in Ethiopia for the launch of a new product named ‘Equb Collection Deposit Account .’ Although having a similar name, Digital eQub is another fintech in Ethiopia that aims to enhance accessibility by enabling individuals to join an Equb group without physical meeting constraints. Members can make their contributions via mobile banking or Telebirr and can opt to collect their funds in cash. Despite members potentially being unfamiliar with each other, they are required to provide verifiable credentials like ID cards, income statements, and business licenses. To facilitate the fintech’s services, Digital eQub has partnered with the Commercial Bank of Ethiopia and with The Bank of Abysinnia. MoneyFellows in Egypt Founded in late 2016, MoneyFellows was launched also with the goal to digitise Gameeyas, which is the commonly known name of ROSCA in Egypt. To ensure security, every user is required to sign a legally binding contract following a thorough credit assessment. The process is fully digitised and offers multiple different options for online payment (including salary deduction for corporate employees). They serve more than 4 million users and have over 300 employees . Other fintechs There are several other fintechs that leverage ROSCAs, including Mapan, launched in Indonesia in 2011 and now having around 3 million users ; Sommos , founded in Bolivia in 2020 and expanded to Peru in 2023; and Tyms Africa ( formerly known as AjoMoney ), founded in Nigeria in 2021. The latter uses the ROSCA model to serve not only individuals but also micro-businesses, SMEs and Nigerians in the diaspora. The trend of digitising ROSCA extends beyond developing countries, with US-based fintech Money Pool distinguishing itself by adding a digital credit report to each member's profile to foster reliable online rotating pool funds . Potential challenges In recent years, there has been a growing trend of the emergence of fintech startups across various countries where their model is based on capitalizing ROSCAs’ potential by digitising the model, making financial services more accessible, convenient, and efficient. Except Sommos, most of these startups focus solely on the local market. Users can explore different groups and make selection based on their preferences for deposit amount frequency of contributions, and sometimes even location. These platforms offer group management tools, track payments, and record-keeping. Each fintech has a unique approach to ROSCA's digital transformation. Some offer a fully digitised experience, like Oraan in Pakistan. Others, like eQub and Digital eQub in Ethiopia, have partnered with banks to facilitate deposit collection. Moreover, some fintechs expand their products and offer financing to students and SMEs.    Currently, there is no available specific research on the challenges of digitising ROSCAs. However, enforcing payments in a digital setting can be challenging. Traditional ROSCAs are formed by close-knit community (group of friends, neighbours, relatives etc.) that rely on shared trust (as well as fear of reputational damage and being ostracized) to comply with regular payments, which might not translate seamlessly into a digital environment where the ROSCA members might be from different communities and locations. Fintechs mitigate this risk by requiring verification documents and income statements during registration like eQub in Ethiopia. MoneyFellows in Egypt takes it a step further and requires signing a legally binding contract, while the US-based Money Pool adds a digital credit report to each member's profile. Several of these fintechs have successfully established a solid ground and substantial user base, counting millions of users. The ongoing digital transformation of ROSCAs presents considerable market potential, suggesting the likelihood of more fintechs emerging in other countries to digitise ROSCAs. Thus, it unveils untapped resources and investment opportunities in these burgeoning local fintech start-ups. For any questions, please contact Dalia_ali1@outlook.com Photos: GOPA AFC About the Author Dalia Ali holds a Master's degree in International and Development Economics and is Certified Expert in Microfinance, as well as in ESG & Impact Investment. Over the past four years, Dalia has been involved in conducting extensive research on community-based traditional saving schemes. Additionally, she has been working with various consulting companies to drive the implementation of donor-funded financial inclusion initiatives across Sub-Saharan Africa and the Middle East. ________ [1] Anderson, S., & Baland, J. (2002). The economics of ROSCAs and intrahousehold resource allocation. The Quarterly Journal of Economics, 117(3). [2] Robinson, M. (2001). The microfinance revolution. Washington, D.C.: World Bank. [3] Habtom, G., & Ruys, P. (2006). Traditional risk-sharing arrangements and informal social insurance in Eritrea. Health Policy, 80(1), pp. 218-235. [4] Hevener, C. (2006). Alternative financial vehicles: rotating savings and credit associations (ROSCAs). Community Development Division of the Federal Reserve Bank of Philadelphia.

By Rory Bruce, VisionFund. e-MFP has always been pleased to publish guest blogs – from members, partners, those working on a particular topic (like that of the European Microfinance Award), and friends. Here, Rory Bruce - Global Resource Development & Management Director of VisionFund – observes a move among humanitarian agencies as they step into the financial inclusion space, reflects on his takeaways from EMW2024 and some of the innovations and changes within the sector that were discussed.   Although the provision of finance to refugees and migrants was the key theme at the November 2024 European Microfinance Week in Luxembourg, climate adaptation and climate finance were critical in almost every seminar. Critical to that conversation was the role that financial inclusion agencies like VisionFund play in supporting vulnerable people and their communities as they adapt to climate challenges.  A few selected trends that struck me from the event are:   From microfinance to financial inclusion?  There is an apparent broadening of the sector away from just solely microfinance players to a wider financial inclusion scope, propelled in part by the helpful contributions of humanitarian agencies into the financial inclusion space. This was particularly evident in the space of disaster response intervention, how we provide better financial services to enable the financial inclusion of vulnerable groups, especially in this case for refugees and migrants. Since 2019, VisionFund Uganda has developed and delivered access to finance for South Sudanese refugees in West Nile, Northern Uganda in partnership with Humanitarian actors, through a savings group linkage loan called Finance Accelerating Savings Group Transformation (FAST). I was proud to see VisionFund Uganda’s work with refugees recognised as a semi-finalist for the European Microfinance Award 2024 (on ‘ Advancing Financial Inclusion for Refugees and Forcibly Displaced People ’, with the ultimate winner being RUFI, an MFI also prioritising refugees in Northern Uganda.   Humanitarian agencies and financial inclusion For agencies like VisionFund, a move towards a broader financial inclusion in partnership with humanitarian and development agencies is welcome and underpins much of VisionFund’s current and future plans. I believe there is a growing recognition that with humanitarian needs increasing amidst a reduction in available humanitarian funds, that new solutions are needed to meet this gap  – and financial inclusion strategies are critical to that. This need and shift came across clearly during the week, seen through the lens of the theme of financial inclusion of refugees and migrants. Traditionally, working with refugees has been seen as a humanitarian function; it is clear that this is now a financial inclusion sector opportunity and responsibility, and we need to have solutions to bring into that. For VisionFund, this is being enabled by our position as part of World Vision. As a partnership, we represent a wide spectrum of solutions, from World Vision’s extensive life savings assistance work of cash and food distribution with key partners like the World Food Programme, all the way through to the insurance, savings, and credit that VisionFund brings to build household resilience. I saw a broadening of the players  at this year’s European Microfinance Week. This is good news – a wider variety of actors in that financial inclusion space, enables a wider assortment of products to support vulnerable people. For refugees, this broadening goes beyond just credit, to savings solutions and insurance solutions.   Climate adaptation cutting across everything The complexity of climate-related challenges facing VisionFund clients is considerable. The need for adaptation strategies in response and working with humanitarian actors is key, and this was clearly an area that many financial inclusion players discussed and wrestled with at European Microfinance week. VisionFund has partnered with the World Food Programme (WFP) in both Malawi and Zambia to deliver FAST loans to savings group members who are also WFP beneficiaries. This blended finance approach in regions that are under increasing pressure due to prolonged drought, is providing alternative tools for savings group members to build resiliency in a tough period. As VisionFund increases its focus on developing climate adaptation approaches, I was pleased to meet, face to face, the Just Institute  - who are supporting us on this journey.   Client voices in governance I was pleased to join a panel during the week in Luxembourg with our Impact Evaluation partner 60 Decibels, in which we focused on how financial institutions like VisionFund shape governance mechanisms through client voices. The client voices (survey insights) that VisionFund tracks through internal studies and through 60Db studies have a high level of visibility even up to Board Impact Committee level. They are analysed, tracked and translated into actionable insights which become part of the performance management system to KPI’s of VisionFund MFI leadership. We’re seeing a positive   feedback loop  there, where the qualitative comments from our clients in surveys are now influencing boards and then looping back down to MFIs in the form of performance management. This was a highly effective week with like-minded partners, with lots to learn, lots to share from our experience at VisionFund, and excitement on how we can contribute further in 2025 on our learnings and innovations around insurance solutions. About the Author: Rory Bruce is the Global Resource Development & Management Director of VisionFund , the f inancial empowerment and livelihoods arm of World Vision .

By Mariam Zahari, Alliance for Financial Inclusion. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg (InFiNe), in cooperation with the European Investment Bank. In the ninth in e-MFP’s annual series of guest blogs on this topic,   Mariam Zahari from the Alliance for Financial Inclusion (AFI) describes four ways that central banks and financial regulators can – and must – play a vital role in advancing the sustainable financial inclusion of Forcibly Displaced People (FDPs). Central banks and financial regulators have a critical role to play in advancing the financial inclusion of FDPs in a sustainable way. By ensuring their access to and usage of quality, affordable formal financial services, financial regulators can enhance the financial health of FDPs, empower them to live a dignified life, and enable their contribution to host economies. As the leaders of countries’ national financial inclusion policy agendas, central banks are perfectly positioned to promote a holistic, whole-of-government approach to addressing the barriers to FDPs’ long term financial inclusion. Central banks’ ability to convene government ministries, local and international humanitarian and development agencies, and the private sector, helps them drive these stakeholders’ mandates towards the development and implementation of evidence-based financial inclusion policies for FDPs. Based on AFI members’ experience from over the years, here's how financial policymakers and regulators can sustainably advance FDP financial inclusion: 1.     Drive multi-sector coordination Central banks can deliver the multi-stakeholder collaboration necessary for developing and implementing policies and regulations that sustainably advance FDP financial inclusion. They can convene multi-stakeholders that have never coordinated before – to better understand each other’s roles and mandates, to openly exchange knowledge on the barriers to FDP financial inclusion, to jointly identify opportunities and solutions, to establish a common goal for FDP financial inclusion, and to agree on a plan of action or roadmap that they can implement together. One way of doing this is through multistakeholder workshops. An AFI member, the National Bank of Rwanda, has been hosting national multi-stakeholder workshops that bring together the Ministry for Emergency Management (MINEMA), UNCDF, UNHCR, financial institutions, and other key stakeholders to better understand the country’s refugee population, develop FDP-centered policies, and design financial products tailored to FDP needs.   2.     Collect sex- and age-disaggregated data A serious lack of FDP financial inclusion data globally prevents the development of evidence-based policies and regulations. FDPs are a heterogenous group of people from a wide range of countries and communities, so policies and regulations must take this into account to ensure FDPs actually use formal financial services after gaining access. Without accurate data there’s no way of understanding the state of FDP financial inclusion in any given country, of setting realistic targets to boost it, or of monitoring and evaluating policy impact over time.   A number of AFI members have completed diagnostic studies  by leading the collection of sex- and age-disaggregated data on FDPs through demand-side and supply-side financial inclusion surveys. This is a good starting point for the policy process. There can also be more appreciation and measures for  forcibly displaced women and youth, who are particularly disadvantaged. Importantly, data helps build a business case for FDP financial inclusion among stakeholders, especially for the private sector.   3.     Develop FDP-sensitive financial inclusion policies and regulations Sex- and age-disaggregated data allows financial policymakers and regulators to design informed financial inclusion policies and regulations that address FDPs’ unique needs. This, in turn, mandates key implementers with advancing FDP financial inclusion alongside the country’s other target groups . Solid data makes it easier to include FDPs in, for example, national financial inclusion strategies (NFISs) - an effective policy tool to progress a country’s financial inclusion, financial stability, financial integrity, and consumer protection goals in parallel.   FDPs should also be explicitly addressed in: national payment and fintech strategies national strategies for financial literacy or education consumer protection regulatory frameworks anti-money laundering, countering the financing of terrorism, and countering proliferation financing  (AML/CFT/CPF) policies and regulations Working closely with their financial intelligence units, the Reserve Bank of Malawi, the Central Bank of Eswatini and the Eswatini Ministry of Finance have all used money laundering/terrorism financing/proliferation financing (ML/TF/PF) risk assessment data to include FDPs in their national AML/CFT/CPF policies and to help simplify complex Know-Your-Customer and Customer Due Diligence procedures for FDPs.   4.     Prepare for climate change impacts Climate change exacerbates social tensions, disorder and violence, and induces forced displacement. In a world increasingly confronted by climate change impacts, central banks  have a responsibility to ensure that FDPs are properly considered in national inclusive green finance frameworks and disaster risk reduction related policies so that they are not forgotten during, or after crises. There’s also an urgent need for multi-lateral cooperation and shared solutions, given the high potential for cross-border displacement due to climate change.   AFI members including the Bank of Tanzania and the Reserve Bank of Malawi are collaborating with relevant government offices and ministries to address climate-induced displacement. Specifically,  they have developed roadmaps to improve the financial inclusion of climate-induced internally displaced persons (IDPs) and to build the climate resilience of existing FDPs and FDP-led MSMEs .   Many AFI members in countries facing forced displacement have taken concrete steps to ensure that FDPs are not forgotten in their national financial inclusion policies and regulations. Encouragingly, this has resulted in better digital financial services and consumer protection for FDPs, regular inclusion of FDPs in national financial inclusion surveys, and a deeper understanding and empathy for FDPs by different stakeholders. About the Author: Mariam Jemila Zahari is a Policy Specialist at the Alliance for Financial Inclusion (AFI), a network of more than 80 central banks and ministries of finance, and other financial regulatory institutions from low- and middle-income countries who are advancing financial inclusion within their jurisdictions.   She is in charge of AFI’s workstream on the financial inclusion of forcibly displaced persons (FDPs), where she works with central banks and ministries of finance on their policies and strategies to financially include stateless persons, refugees, returnees, internally displaced persons and other FDPs. She also oversees AFI’s engagement with the global Standard Setting Bodies (SSBs), and AFI’s workstream on Inclusive Financial Integrity which is concerned with the proportionate application of global AML/CFT/CPF standards to advance financial inclusion.   Before joining AFI, Mariam worked in the humanitarian sector, managing disaster response and risk reduction country projects in Myanmar, Nepal, and the Philippines and driving global advocacy efforts on disaster risk reduction for the Asia-Pacific region. She holds a Bachelor of Arts Degree in Politics/International Studies and French from the University of Melbourne. Photos: AFI

Author: Daniel Rozas. Consider this remarkable chart . It’s a rare testament of human progress, showing a 10x decline in traffic deaths alongside a 10x increase in driving – one could be forgiven for thinking that the more people drive, the fewer traffic deaths they’re likely to cause! Of course, nothing can be further from the truth. Behind this chart lies 100 years of evolution in traffic safety. In 1900, you could drive a car the way you drive a bicycle today – assuming you could afford one, you got in and drove, using roads built for pedestrians and carriages. Road signs, speed limits, traffic signals – all arose during the next several decades. In UK, a system for testing and licensing drivers was put in place only in 1935 . Safety devices followed later still, with seatbelts becoming common (and eventually mandatory) only in the 1960s, and airbags only towards the end of the century. In short, it was a century of continuous evolution. There is an interesting pattern in this very brief history – the initial decades dealt mostly with prevention, with the goal of reducing traffic accidents themselves. Mitigation efforts like seatbelts and airbags – which explicitly accept that accidents will happen and focus on making them less deadly – these took decades longer. Perhaps this is the natural course of things: mitigation requires the years of experience and humility to accept that not everything is preventable. When it comes to overindebtedness, this is where our sector’s client protection practices are today – stuck in the era of prevention, with not even the bare minimum when it comes to mitigation. As credit continues to expand, the inadequacies of the current system will become ever starker, with the entire system of client protection losing credibility in the process. And the only way to preserve and rebuild that credibility is to develop serious and effective measures to mitigate overindebtedness. A brief history of client protection in financial inclusion Today’s client protection standards in the sector are administered by CERISE+SPTF , which picked up the work from the Smart Campaign  when it closed in 2020. The Smart Campaign first formulated the standards when it launched in 2009, but in fact their history goes back further still. The current client protection standards originated in a now-forgotten paper, lost to the dark ages of the digital era . For you won’t find this paper anywhere – I had to ask the author, Elisabeth Rhyne, who in Aug 2003 published “Taking Stock: Consumer Protection in Microfinance – A Non-Regulatory Approach.” The paper itself was in response to a then-new initiative by the SEEP Network to form a consumer protection task force . Hailing this effort, Rhyne proposed an interesting set of principles, presented below, alongside today’s client protection standards. Elisabeth Rhyne, 2003 CERISE+SPTF, 2024 1.      Transparent pricing .  This institution will give clients complete and understandable information about the true costs they are paying for loans and transaction services and how much they are receiving for savings. 2.      Over-indebtedness .  This institution will not lend any client more than the client can afford to repay.  To do so creates a debt trap for clients, ruins their credit history, or worse. 3.      Inappropriate collection practices .  In collecting debts, this institution will treat clients with dignity and will not deprive clients of their basic survival capacity as a result of loan repayment. 4.      Fair pricing .  This institution will price its services at a fair rates.  Its rates will not provide excessive profits, but will be sufficient to ensure that the business can survive and grow to reach more people. 5.      Privacy .  This institution will protect the private information of clients from reaching others who are not legally authorized to see it. 1.      Appropriate Product Design and Delivery. The provider's products, services, and channels benefit clients. 2.      Prevention of Over-indebtedness. The provider does not over-indebt clients. 3.      Transparency.  The provider gives clients clear and timely information to support client decision making. 4.      Responsible Pricing.  The provider sets prices responsibly. 5.      Fair and respectful treatment of clients. The provider enforces fair and respectful treatment of clients. 6.      Privacy of client data . The provider secures client data and informs clients about their data rights. 7.      Mechanisms for complaints resolution. The provider receives and resolves client complaints. 8.      Governance & HR. The governance and management are committed to Client Protection, and HR systems support its implementation. The order and wording are different, and the standards have grown to eight from the original five. Most notably, only one standard – Rhyne’s Inappropriate Collection Practices  – seems to have disappeared.  In fact it hasn’t, but has instead been subsumed into Fair and Respectful Treatment of Clients .  This is the first warning that something has gone deeply wrong. Protecting clients from overindebtedness: 2024 version Prevention of overindebtedness is self-evident – lenders are expected to exercise care when lending, making sure that their clients have the capacity to repay. This is the standard that’s worked remarkably well over the years, creating the expectation that all lending must be done on the basis of a full analysis of the client’s cashflows, and placing guarantees – whether through collateral, group liability or 3rd party guarantors – as a complementary risk mitigant, but never the primary one. Simply put, no matter what guarantee is provided, all lending must be predicated on first establishing the client’s income and ensuring that that income is sufficient to repay the loan. Moreover, the principle of overindebtedness prevention hasn’t stopped at assessing incomes, but assessing expenses too, which in turn has led the establishment or expansion of credit bureaus in dozens of countries – giving lenders the means of knowing what other debts (and hence repayment obligations) loan applicants already have. None of this is perfect, there are informal debts that don’t make it to the credit bureau, unrecorded expenses that are outside the norm, inflated incomes and much else. But when lenders take this process seriously, they absolutely can and do typically avoid lending to those who cannot afford it. And the fact that this is done for farmers, small traders and others in the informal economy is a remarkable achievement. We should, as a sector, take credit for building out the capability to prevent overindebtedness that largely didn’t exist 20 years ago – a capability that’s every bit as good as what banks in high-income countries do when reviewing prospective borrowers’ salaries and tax statements. But when it comes to mitigation, today’s client protection standards quickly fall short. Recall the one standard that seems to have gone missing? In Rhyne’s 2003 version one standard was clearly focused on mitigation: Inappropriate collection practices.   In collecting debts, this institution will treat clients with dignity and will not deprive clients of their basic survival capacity as a result of loan repayment. Here’s the full description of this standard today: CP5. Fair and respectful treatment of clients The provider enforces fair and respectful treatment of clients. Providers and their agents treat clients fairly and respectfully, as defined in the institution's code of conduct . They do not discriminate in either client selection or treatment. Providers ensure adequate safeguards to detect and correct corruption and aggressive or abusive treatment by staff and agents, particularly during sales and debt collection. Respectful treatment is particularly important to maintain during loan collection , when clients are sometimes perceived as no longer deserving of respectful behaviour. ESSENTIAL PRACTICES During the recruitment and hiring process, the provider assesses each candidate's commitment to achieving the provider's social goals and serving its target clients. The provider's code of conduct requires fair and respectful treatment of clients. The provider does not use aggressive sales techniques. The provider protects clients' rights to respectful treatment during the loan collection process. In the 2003 version, this standard had two parts: 1)      this institution will treat clients with dignity. 2)      the institution will not deprive clients of their basic survival capacity as a result of loan repayment . In the 2024 version, part one of the standard has been substantially expanded, adding admonitions against abuse, requirements for a code of conduct and much else – most of which can be summarized as don’t threaten  and d on’t be rude . But part two of the standard, the one that actually deals with mitigation (i.e. ensuring that clients won’t lose basic survival capacity) – this is gone. It’s true that in the full Client Protection Standards manual , you will find the following entry, listed as the very last indicator for this standard : 5.4.2. The provider restructures or writes off loans on an exceptional basis, based on a list of cases of specific distress.  But this is far narrower than the original wording and is missing its core mitigating element – that whatever else happens, clients should not be forced into destitution in order to repay their loans. And where has this brought us? The 2024 Financial Inclusion Compass  asked contributors to rank the three areas of client protection that have the biggest weaknesses and demand the highest priority from the sector. Responses from nearly 150 industry actors, many of them long-time leaders in the sector, perfectly illustrate the problem: Prevention of Overindebtedness is first – by a wide margin. Fair & Respectful Treatment of Clients is dead last. Mitigation is now at best an afterthought, a weakly worded idea within the last indicator of the least valued standard. This is where the evolution – or in this case, devolution – of client protection has led to. It’s as if we don’t believe in seatbelts. Why is mitigation last? To be clear, the lack of focus on mitigation is not a recent development. It had already been abandoned by the time of the 2011 version of the Smart Campaign Principles . And perhaps it’s not surprising – mitigation in our sector is so difficult that we’ve barely tried. First, because mitigation comes up against another core tenet in our sector – the idea of repayment culture , that borrowers should always honor their debts and that any loosening of those repayment expectations will undermine borrower behavior. Hence the intrinsic tension and reluctance to delve into mitigation strategies. Second, our social performance monitoring frameworks – which include client protection – are very data driven. Normally this is a strength, but in this case it’s a weakness. Whether drawn from surveys or administrative data, we measure everything in percentages. If some measure of client outcomes changes by less than 0.5%, it becomes a rounding error. To see why this is a problem, consider that the highest traffic fatality in the world is in Zimbabwe, at 41 per 100,000 inhabitants, or 0.041%. If Zimbabwe were to cut the rate in half, closer to the global average of 0.017%, it would be a spectacular achievement. But in our sector, it would be a change from one rounding error to another rounding error. Nobody would notice. We simply don’t have a reliable way to measure rare but severe bad outcomes in our sector – the very outcomes that would most benefit from mitigation. And as the dictum goes, what goes unmeasured gets ignored.  Finally, mitigation is inherently unattractive as an idea. Clients struggling with overindebtedness are usually dealing with financial hardships that go well beyond just their loans. Mitigating the debt stress faced by a client facing deep financial hardship should certainly increase resilience, but it doesn’t mean that they will spring right back to where they were. Oftentimes, all mitigation can do is help make a terrible situation slightly less bad – extremely valuable, but hardly inspiring. Nobody will ever put the face of a slightly less distraught client on the cover of a social performance report. Taking these three factors – tension with repayment culture, absence of relevant metrics, and no easy way to communicate success – it’s no surprise that mitigation goes so often ignored. It’s just that much easier to direct efforts to something else – like prevention. Is mitigation really needed? If you read any of the articles about overindebted clients selling their family homes, putting their kids to work, or the even more tragic cases of suicide – the question isn’t primarily about how or why they received their loans, but the distress they experience when finding themselves unable to repay. It’s true that some  of those cases involve clients who got loans that they couldn’t afford in the first place, which is to say, failures of prevention. However, most situations of overindebtedness happen after disbursement, sparked by health shocks, business setbacks, or other crises that are a constant threat to poor households. Simply put, not all overindebtedness can be prevented . Moreover, the most prominent critiques of microfinance focus on aggressive collections – whether through harassing clients, pushing them to sell their assets or threatening them with all kinds of consequences if they don’t repay. But in doing so, they miss the deeper problem – an overindebted client simply has very few options. A friendly and respectful field officer who regularly visits a struggling client is effectively presenting her with a dilemma:  make extreme sacrifices to repay or accept the shame of default. The power of this dilemma is hard to overstate – as one client put it during one of my recent assignments:  “ It is embarrassing. Death is better! ” Changing collections by focusing on staff behavior is a band-aid. What’s needed is a serious focus on mitigation. What might mitigating overindebtedness look like? Mitigation is very much possible. Nearly all high-income countries have some type of bankruptcy process that allows overindebted borrowers to find a path out. Such systems are possible in lower-income countries too. Indeed, back when SEEP was forming its consumer protection task force, South Africa was drafting legislation that explicitly focused on mitigating the effects of too much debt, passing the National Credit Act in 2005 that included not only a formal designation of over-indebtedness, but also established the function of debt counselling, through certified debt counsellors who can act on a borrower’s behalf in order to assess over-indebtedness and to renegotiate loan terms with lenders.   The system remains in effect to this day, and, while not perfect, acts as an important mitigant for overindebted borrowers. All this was done without undermining the credit market in South Africa, which remains very much alive and well.  South Africa is a rare case in the sector, since the entire mitigation system is enshrined in law. But mitigation can start much more simply – MFIs in Bolivia, Ecuador and other South American markets regularly offer struggling clients to reschedule or restructure their loans in response to specific individual circumstances. And this isn’t simply a holdover from the pandemic. Out of 30 Bolivian MFIs in 2019 (i.e. pre-COVID), all but two had restructured some of their loans, with the median of 4.5% of their total portfolio reported as restructured. And the restructurings appear to have been effective – the quality of this restructured portfolio was only slightly worse than other loans – a median PAR30 of 3.5% vs. 1.8% for the total portfolio. [1] The Bolivian MFIs give an idea of what can be implemented by a single institution and what metrics one could use to monitor both scale and effectiveness. But this is only a start – the data doesn’t distinguish between one-month extensions and long-term restructurings or between automatic postponements in response to natural disasters and responses tailored to specific client situations. Other questions arise also – how should rescheduled loans be reported to credit bureaus, and what sort of provisioning should they require? What about the role of collateral sales – when are these appropriate and how should they be monitored? And what about borrowers who have loans with multiple lenders at the same time? In truth, the degree of development and sophistication of mitigation techniques is at least a decade behind prevention ones. Call to action and the road ahead The time has come to rethink how the Client Protection Standards should approach overindebtedness. Mitigation cannot be consigned to its ignoble place as the last indicator of a broad standard dealing with entirely unrelated issues, such as non-discrimination. Instead, it needs to be raised to the level of full standard: Prevention and Mitigation of Overindebtedness. This would recognize the necessity and complementarity of the two approaches – as with cars, both speed limits and seatbelts are needed. Alongside this, new techniques and practices need to be developed to ensure effective mitigation, drawing on experiences in countries like South Africa and Bolivia – practices that should then be enshrined in a suite of indicators specifically focused on ensuring that mitigation is done properly. It’s not the place here to design and describe the entirety of what those practices and indicators ought to be. That will require a multi-year and multi-country effort of gathering existing practices, piloting new ones, and developing new tools for monitoring implementation and measuring effectiveness. However, in pursuing this, it’s worth keeping some guiding principles in mind, three ideas that, in a nod to the original Smart campaign, can be referred to as the SMA : S ustainability: a system of mitigation must be sustainable for all actors – the clients of course, but also financial providers, regulators, and others needed to sustain it for the long-term. M easurability: mitigation requires its own set of standardized metrics to both monitor its implementation and measure its effectiveness at reducing debt stress. A gency: any decision to request or accept a mitigation solution must be taken by a fully informed client. Like borrowing itself, mitigation may need approval (by the FSP or outside entity), but the decision to proceed should be left entirely up to the client. Client protection has come a long way in our sector, and the very real accomplishments in the prevention of overindebtedness warrant recognition and celebration. But this is no longer enough. Our sector stands at an inflection point – either we choose to recognize the glaring inadequacy in overindebtedness mitigation or we run the risk of losing the credibility of the entire client protection system. Let’s not be the car industry that refused to install seatbelts for decades, until it was finally forced to do so. We can and must do better. _______ [1]  Data from Atlas , filtering for high- and very high-quality sources only. About the Author: Daniel Rozas is a Senior Microfinance Expert at e-MFP and a consultant and researcher on a broad range of topics. Daniel is also co-founder of the MIMOSA project, which provides a methodological assessment of market saturation and risk of overindebtedness for leading microfinance markets. Prior to his microfinance career, Daniel worked for the US mortgage investment company Fannie Mae during 2001-08, where he had first-hand experience with the extraordinary boom-and-bust cycle that took place in the US mortgage market during this period.

Authors: Jacqueline Mbabazi and Flavia Bwire Nakabuye. On March 14, e-MFP was pleased to launch the European Microfinance Award (EMA) 2024, which is on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’. This is the 15th edition of the Award, which was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, Defence, Development Cooperation and Foreign Trade, and which is jointly organised by the Ministry, e-MFP, and the Inclusive Finance Network Luxembourg, in cooperation with the European Investment Bank.   In the eighth of e-MFP’s annual series of guest blogs on this topic,   The Association of Microfinance Institutions of Uganda (AMFIU) describes the challenges its member organisations face in serving forcibly displaced people and refugees, and some of the financial products and other services that can help mitigate the difficulties that displacement can bring.   AMFIU is an umbrella organisation, founded in 1996, of currently 172 microfinance institutions in Uganda, providing a common voice for these organisations, influencing government policy, sharing information and experiences between members, and forging links with other national and international actors. We at AMFIU operate in possibly the most active and dynamic market for financial inclusion of forcibly displace people and refugees in the world, and many of our members work to serve FDPs as well as the host communities around them. With this context comes unique needs and challenges – and they are not subject to ‘quick fixes’ . Being a refugee is generally perceived as a temporary or transient state. However, most causes of forced displacement do not dissipate within a short time, and many people end up being  refugees for prolonged periods – sometimes decades . Studies show that more than 77% of the refugees in Uganda have been resident there for more than a decade. Uganda is currently the largest-refugee hosting country in Africa, and the fifth largest  globally. More than 900,000 refugees have fled to Uganda from South Sudan; nearly 450,000 hail from the Democratic Republic of the Congo (DRC); 51,000 are from Burundi; and the rest are from Rwanda, Somalia, and other African countries. UNHRC data indicates  that as of March 31, 2024, the total number of refugees in the country is over 1.6 million, of which almost 50,000 are asylum seekers.   Uganda is also one of the countries with the most favourable refugee policies , making it a haven for many displaced people. However, FSD Uganda's endline report on the Financial Inclusion for Refugees project indicates that only two out of every ten refugees have access to formal financial services. The rest either keep their money at home or with village savings groups. Despite various efforts aimed at improving living conditions for refugees in Uganda, there are still barriers to integration , as evidenced by numerous anecdotal reports that suggest a large proportion of refugees are still highly dependent on the support of humanitarian agencies and have yet to be able to make progress towards self-reliance. Most refugees have no access to formal financial services, and this creates an enormous hurdle on their way to self-reliance and economic independence. They lack a safe place to save and receive money, have much fewer options to make payments or access loans and therefore cannot fully participate in a country’s economy or build a stable life for themselves and their families.   According to a study conducted by U-Learn, UK Aid and Cash Working Group (CWG ) financial services for refugees in Uganda, levels of literacy in the refugee and host communities are low . Nearly two- thirds of refugees (66%) and host community members (65%) reported not being literate. When disaggregated by gender, 51% of male refugees’ report being literate — compared to only 25% of female refugees — and 40% of male host community members — compared to 29% of female host community members. The same study further probed the business, financial and digital literacy skills of the refugees and host communities and the findings revealed that the majority of refugees and host community members do not have knowledge on personal financial management issues and business skills but report being able to use basic phone functions — including making and receiving calls and topping up airtime — this proportion decreases for more complicated tasks, with obvious implications for mobile money use.   In order to deepen financial inclusion for refugees and host communities to enhance economic empowerment and reduce reliance on unsustainable donations, AMFIU in collaboration with its members is employing various channels to reach this population  that include: conducting research to establish the financial needs of the communities; capacity building to help make the refugees attractive to the financial institutions; and provision of financial services by the members that are MFIs and savings and credit cooperatives. The financial institutions are reaching the refugee communities through establishing physical branches in the refugee camps, using digital platforms, establishing satellite offices and using agents.   Common financial products that are provided include money transfers, loans and savings. Access to loans however still faces challenges as it requires much more personal details about the applicants , compounded by the issue of lack of acceptable identification documentation for refugees, collateral requirements for the larger loans, and the broader uncertainty related to being a refugee, which is perceived as risky. To deal with these challenges, AMFIU works in collaboration with various stakeholders in the ecosystem including government, development partners and NGOs as a successful individual intervention is close to impossible. There is need for support that can prepare and enhance the status of refugees to be a more attractive target segment for financial institutions . Some interventions that AMFIU is implementing include ‘mindset change’ training, business skills and entrepreneurial skills training, and digital literacy and financial literacy, among others. The efforts of financial institutions need to be complemented by other stakeholders whose mandate may allow for more time and resources allowing the institutions to concentrate on their core business of providing financial services.   Evidence from the field indicates that providing financial literacy knowledge resulted in refugees opting for access to financial services after attending financial literacy training . AMFIU worked with one of its members to support knowledge building in financial literacy in the refugee settlements of Nakivale and Kyangwali. Of the 2,900 people trained in Kyangwali camp between March and June 2024, 14% opened savings accounts on the same day of the training to access formal financial services.   In a meeting held between AMFIU and the General Manager of another of its organisational members based in Koboko district in northern Uganda, with 78% of its customers as refugees, he emphasised the urgent need for capacity building  for their customers and potential customers in the refugee settlements and host communities in order for them to extend credit to them with comfort, well knowing that the credit risk levels have reduced because of the capacity built in handling credit and professionally managing a business. The need for more such collaborations and stakeholder synergies is paramount to expedite the refugee financial inclusion process, allowing for building resilient and self-sustaining communities for refugees making them less vulnerable. These concerted efforts can enable financial institutions to remain focused on supply of their core financial services, while other stakeholders support the demand – building a resilient and reliable base of informed customers. About the Authors: Jacqueline Mbabazi  is the Executive Director of the Association of Microfinance Institutions of Uganda (AMFIU). Her experience spans over 15 years in the areas of financial inclusion with specific focuses on microfinance, rural development, and support for small- and medium-sized enterprises. Flavia Bwire Nakabuye  is the Manager Membership and Financial Inclusion for the Association of Microfinance Institutions of Uganda (AMFIU). She has extensive experience that spans over 18 years implementing initiatives that aim at increased access to financial services for the underserved vulnerable sections of society. Photos: AMFIU