The Water Dragon symbolizes new frontiers, changes and innovations. This could be good news for financial inclusion in China and the rest of the region.

East Asia and the Pacific host a variety of countries when it comes to financial inclusion. South Korea and Singapore boast excellent levels of financial inclusion whereas countries like Indonesia, the Philippines, or Vietnam still show limited access to the variety of services the poor need to manage their financial lives. I can see two challenges and opportunities in the region for the coming year. (more…)

Sub-Saharan Africa (SSA) continues to be a region plagued with challenges but ripe with opportunities in microfinance. Just one in five households has access to formal financial services, with high operating expenses as well as a general lack of financial infrastructure, supervisory frameworks or consumer protection plans being just a few of the stumbling blocks to greater financial inclusion. (more…)

Poor families in the informal economy need access to financial services as much as wealthier households, if not more so. Their income and expense streams are more irregular, and they have less of an economic cushion to begin with. Yet an estimated 2.7 billion working-age adults globally at the base of the economic pyramid have no access to formal financial services and, instead, have to rely on informal financial mechanisms that are typically incomplete, less reliable, and considerably more expensive. (more…)

The year 2011 was not particularly easy for microfinance institutions (MFIs) in Eastern Europe and Central Asia (ECA).  Though overall many managed to overcome crisis, many MFIs have not yet returned to their pre-crisis growth rates, and delinquency levels were still higher last year than in 2007. One of the issues commonly faced has been client over-indebtedness in the most saturated markets, such as Azerbaijan, (more…)

2011 was not a good year to be in the headlines in microfinance. So for Latin America flying under the radar last year was probably more good luck than bad publicity. However, in 2012 with the focus shifting away from “hot-spots” and yes/no debates on microfinance, and hopefully towards greater product diversity and complete financial ecosystems, Latin America is poised to assume a leadership role. Over the next year we hope to see three key developments within the region in financial inclusion.

A seat at the table for the non-banks
Latin America’s well-developed infrastructure, growing consumer base, and urban populations set a promising scenario for new financial services and products. And with millions of citizens leaving poverty en masse in countries like Brazil, Peru, and Mexico, the time is ripe for fresh innovations. Interesting and promising advances in markets such as Colombia, Peru, and Brazil showcase products that may reach the poor with new financial services. However, the financial sector in Latin America remains bank-heavy, and banks for the most part still find it hard to justify a move to serving mass markets, which has resulted in a slow start for most markets throughout the region. (more…)

Our field made good progress last year. Building on the success and the experience to date, and learning from new challenges and insights, we started executing against a broader vision of financial inclusion: A vision that reaffirms the basic tenet that the right access to the right formal financial service helps households, microbusinesses, and the economy as a whole and a vision that recognizes that financial services are not an end in and of themselves but ultimately must improve household welfare. Access to formal financial services needs to give poor families a broader range of choices to build assets, smooth consumption, manage risks, and as a result make them better off than when they have to use the traditional, informal alternatives that are often limited, unreliable, and costly. (more…)

2011 has been a good year for aid transparency. At the 4^th High Level Forum on Aid Effectiveness in Busan, Korea, the international development community endorsed “transparency and accountability” as one of the shared principles of international development cooperation. And on words followed actions: during and following the Busan High Level Forum Canadian CIDA, the Inter-American Development Bank, the United States, CDC and UN Capital Development Fund (UNCDF) joined the International Aid Transparency Initiative (IATI), a multi-stakeholder initiative that develops international standards and guidelines for publishing information about aid spending. (more…)

I have been working in the microfinance sector for about 15 years, with MFIs in institutional development and on the investor side, raising and placing a series of funds to invest equity in MFIs. I have also served on the boards and investment committees of MFIs and investment funds in various countries.  From these vantage points, I have been able to observe and participate in the struggles managers and funders face over the questions of maximizing impact, mission drift, balancing financial and social objectives, and appropriate rates of financial return:  in short, the promise and the risk of commercialization. (more…)

The sheer magnitude of the financial inclusion gap –70% of households in developing countries are unbanked— calls for pretty radical solutions. We need to overcome an access barrier (last mile infrastructure), a relevance barrier (right-sized products and services) and a usability barrier (friendly and intuitive customer experience). The problem is that we tend to think of these separately, or at least we think we can tackle them sequentially. (more…)

Every time I learn a new word, suddenly it is everywhere. On billboards, coming out of the TV anchor’s mouth, and sometimes even on the back of the box of my favorite cereal. This is exactly what is happening to me now with “clients.”  Of course, I’ve known what the word means for a long time.  But all of a sudden, everyone is talking about putting clients first, making sure we have client focus, and being client-centric. (more…)