Archive for: access to financial services

This is the final post in the short series on microfinance in Russia. You can find the previous two posts here and here.

In the two previous blog posts on this topic, we wrote on the situation with exorbitant interest rates charged by a few Russian commercial lending companies calling themselves “microlenders” (though we prefer to label them “payday lenders”).  We also shared suggestions from the Russian MFI community to the Russian regulatory authorities, which have been favorably received.

Certainly, Russia is not alone facing this issue; there are many other countries struggling with the question whether it is possible to draw a meaningful line between “justifiable” and “exploitative” interest rates – in other words, trying to answer the question “how much is too much?” The question has enormous political as well as operational relevance.  In this final post of the series, we would like to explore the issue by going back to the basics of what can – and should – go into setting the price of a loan. Read the rest of this page »

Over the past 15 years, the field that CGAP aspires to advance has broadened from the initial focus on microcredit to microfinance, to access-to-finance, and most recently financial inclusion.  This evolution happened for good reasons as practitioners, donors, academics, and policymakers learned more about the financial needs of poor families in the informal economy, and success and scale in the early endeavors resulted in important learning and new frontiers.  As a public good at these frontiers of a collective market development effort, CGAP continuously and purposefully influenced, shaped, and adapted to this evolution. Read the rest of this page »

A Negros Women For Tomorrow (NWTF) business development officer demonstrates the features of a solar portable lighting device during a group meeting in Palawan, the Philippines.

Offering financial products that enable poor clients to purchase clean, low-carbon alternatives to kerosene, firewood and other conventional fuels is perhaps the most direct way in which microfinance can be mobilized to combat climate change and preserve ecological resources.

Of course, from the perspective of a client who lacks access to modern energy, the appeal of alternatives like small-scale solar charging devices and efficient cookstoves, is not, nor likely ever will be, about cutting carbon. Fortunately, it doesn’t have to be. Energy poor households and businesses aspire for access to solutions that save them money and time, deliver superior and higher levels of service, facilitate new forms of work and leisure, and maximize convenience. This means that clean energy end-user finance is rooted in the immediate needs and preferences of clients, and therefore driven by bottom-up consumer demands rather than top-down appeals to environmental stewardship. Read the rest of this page »

The exorbitant interest rates offered by so-called  “microlending” companies (who look much more like payday lenders or garden variety loan sharks) to clients of the Russian Post  recently gave rise to a wave of indignation on the part of the public, government, mass media and the responsible microfinance industry. 

Microlending has existed in Russia for 15 years but it was not until 2011 that special legislation came into force, providing for a clearer legal status of microlending MFIs. These institutions play an important role in the country, serving people who do not have access to bank loans.  Thus, last year about 70 percent of microloans were disbursed in small towns and rural areas; 60 percent of microborrowers were women and 10 percent – youth; and about 50 percent of all microloans were used to fund micro and small businesses.   The average annual interest rates charged by MFIs are about 28 percent per annum. Read the rest of this page »

When President Calderón of Mexico announced the creation of a National Council for Financial Inclusion, one of the first tasks he assigned was to ensure all financial data included statistics on financial inclusion:

“I would also like to urge the Minister of Treasury, in his capacity as Minister and as member of such Council, not to wait two or three years to conduct the financial inclusion surveys. … Every time the Minister receives financial information related to the country, there must be some financial inclusion data in it.”

We believe both policy making and private sector decision making is much improved when it is rooted in rigorous research and analysis. (In fact, rigor is one of the four values of The Bill & Melinda Gates Foundation). Better evidence can improve outcomes in a number of ways: Read the rest of this page »

This post kicks-off a three-part series on Russia’s financial inclusion space. This short series will feature prominent voices from Russia’s microfinance industry and discuss new developments and implications for the global industry as a whole.

Just as the dust settled after a controversial entrance of new players in the Russian microfinance sector about a year ago – those claiming themselves to be ”microfinance organizations”  and yet charging 730% interest per annum, another “innovative microfinance” product has totally shocked visitors of the Russian Post, as reflected in a multitude of blogs and in numerous media articles published in recent weeks.  Promotional booklets found in post offices in several major Russian cities were advertising microloans in the amounts starting from $100 that, if taken for one week, would cost 2772% p. a. (and a “special offer for low-income pensioners” – at 2598%).  The largest amount of 5000 rubles (about $167), for a one-month term, is offered at a “mere” 720%. Read the rest of this page »

The Findex project helps to correct a long-standing imbalance in evidence on global finance: an abundance of data on the supply of financial services but curiously little that’s systematic and comparative about global demand. Together with the IMF’s Financial Access Survey, we’re finally getting a clear picture of the holes in global financial access. 

There’s a lot to celebrate now that the Findex is here. So much so that it’s striking that it took so long to create a constituency for the efforts. Stanley Fischer had initiated the push in 2004 as head of the Advisors Group for the UN Year of Microcredit, and I joined Princess Maxima of the Netherlands in pushing the agenda forward in advisory roles with the UN in 2005. But it was the Bill and Melinda Gates Foundation’s support of the World Bank’s Development Economics Vice Presidency (DEC) in 2010 that ultimately got us here. Read the rest of this page »

What percentage of women in South Asia have a formal account compared to those in Latin America? What are the most common self-reported barriers to financial inclusion among women and rural residents worldwide? To what degree has mobile money reached the unbanked in Sub-Saharan Africa?
 For the first time, we have hard data to evaluate how women and rural residents around the world save, borrow, make payments and manage risk both inside and outside the formal financial sector. With the release of the Global Financial Inclusion (Global Findex) Database we now have a comprehensive, individual-level, and publicly-available database that allows for comparisons across 148 economies. Women and rural residents make up more than 75 percent of the sample of the first round of the Global Findex database, based on more than 150,000 nationally representative adults in 148 economies.

Gender and rural gaps are persistent in all developing economies

With over 40 indicators, and the ability to differentiate each one by gender and rural or urban residence as well as age, education, and income, one can easily get lost in the nuance. But let’s start with the broad strokes. According to the data, in developing economies, 37% of women versus 46% of men are banked. 

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Thanks to the launch of the Global Findex data set, based on nationally representative surveys of more than 150,000 adults in 148 economies, we have a fresh and robust answer to that question—approximately 2.5 billion adults lack a formal bank account. Most of these people are concentrated in developing economies.

Figure 1

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Better financial inclusion data is critical to inform financial inclusion policy making and advance financial inclusion, globally and nationally.  The G20 have shown commitment to the issue of financial inclusion by establishing Global Partnership for Financial Inclusion (the GPFI) and the importance of improving data through the Sub-Group on Data and Measurement, currently led by Mexico, South Africa, and Australia.

We hope that every country is eventually able to take responsibility for the collection and monitoring of their own comprehensive set of financial inclusion indicators, with key ones being reported in a globally consistent manner and complemented by international data efforts. Then we can track national, regional and global performance towards achieving full financial inclusion.

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