Archive for: Branchless Banking

CGAP and the Alliance for Financial Inclusion (AFI) just cosponsored the first branchless banking seminar for Francophone Africa in Dakar. The seminar was for high-level policymakers, and featured delegations from Burundi, Cameroun, Côte d’Ivoire, Democratic Republic of Congo, Madagascar, Mali, Mauritania, Niger, and Sénégal. The first day of the two-day seminar was also open to the private sector and included representatives from mobile network operators, banks, MFIs and technology providers.
 
This seminar was a timely one given the flurry of activity going on in the region. Orange Money is now active in Côte d’Ivoire, Sénégal and Mali. MTN Mobile Money is available in Côte d’Ivoire and Benin. Société Générale is on the verge of offering some type of branchless banking service in Sénégal. Zain is preparing to launch Zap in Burundi.  All three mobile operators are knocking on the central bank’s door in Madagascar. And there are three technology companies (in Sénégal, Côte d’Ivoire and Burkina Faso) that have been given the approval of the regional central bank (the BCEAO) to function as electronic money issuers. It is clear that the subject of branchless banking is on the minds of policymakers in Francophone Africa.
 
The last session of the seminar was a forum for debate among policymakers regarding specific issues of branchless banking which had been discussed and presented over the course of the seminar. The questions guiding the debate were:

• Does financial regulation and financial inclusion always go together?
• Should regulators be one step behind market innovators?
• Are the objectives of AML-CFT and branchless banking always compatible?
• Are non-bank based regulatory models more advantageous to clients than bank-based regulatory models?

For most of the questions, the policymakers were somewhat divided. Some people saw a conflict between financial regulation and financial inclusion, while others were convinced that the two always went hand in hand. Some participants eloquently argued that policymakers should not “regulate simply for the sake of regulating” and therefore should respond to innovations in the market.  But others argued that there was danger in trailing the market. Most participants were confident that the objectives of AML-CFT were compatible with branchless banking, but doubt remained in a few specific cases. Finally, while some policymakers were willing to argue that non-bank based regulatory models may be more advantageous for clients (in terms of ease of access and use), many were not comfortable with the model unless a bank had a stronger presence.
 
The regulatory questions around branchless banking are often not black and white, but usually gray. What is quite clear, however, is that the private sector is raring to go in many Francophone African markets, and policymakers need to be informed now more than ever on the appropriate ways to respond. The recent seminar in Dakar was hopefully one step closer to getting there.

Once a year, CGAP’s membership and governance body, the Council of Governors, meets to set CGAP’s broad policies and strategic directions, provide inputs to our annual workplan and budget, and debrief one another on the latest trends in financial inclusion. That meeting is underway this week in Nairobi, Kenya. In addition to a special focus on microfinance in Africa and branchless banking, there’s discussion around different ways to foster innovation.

Contrary to common belief, grants are a scarce resource in microfinance. Only 17% of all funding committed to microfinance as of December 2008 came in the form of grants, mostly from bilateral donors and foundations. While grant funding is in short supply, the need for grants for capacity building and other purposes has become all the more apparent, especially with the global crisis.  What is the role of grant funding in the fast-changing microfinance industry?

The goal of fostering sustainable institutions may at times be at odds with the desire to drive innovation. Strong microfinance institutions may have a base on which to build experimental or risky business lines, but emerging organizations may need to consolidate and strengthen core business functions rather than focus on new activities. Read the rest of this page »

Once a year, CGAP’s membership and governance body, the Council of Governors, meets to set CGAP’s broad policies and strategic directions, provide inputs to our annual workplan and budget, and debrief one another on the latest trends in financial inclusion. That meeting is underway this week in Nairobi, Kenya. In addition to a special focus on microfinance in Africa and branchless banking, we’re hearing the latest thinking around responsible finance.

Earlier this week, New York Times columnist Tom Friedman suggested that the increasing interconnectedness of the economic, financial and environmental crises points to the need for new perspectives on ethics:

…in a world where our demand for Chinese-made sneakers produces pollution that melts South America’s glaciers, in a world where Greek tax-evasion can weaken the euro, threaten the stability of Spanish banks and tank the Dow, our values and ethical systems eventually have to be harmonized as much as our markets. To put it differently, as it becomes harder to shield yourself from the other guy’s irresponsibility, both he and you had better become more responsible.

Read the rest of this page »

Once a year, CGAP’s membership and governance body, the Council of Governors, meets to set CGAP’s broad policies and strategic direction, provide inputs to our annual workplan and budget, and debrief one another on the latest trends in financial inclusion. That meeting is underway this week in Nairobi, Kenya, and began with remarks from acting CEO Alexia Latortue on the state of the industry and how CGAP has changed since its inception in 1995.

2010 marks CGAP’s 15th anniversary, providing an opportunity to reflect on the state of microfinance today and CGAP’s role within it. Is microfinance a mature industry, or one still experiencing growing pains? Are the ripples of the financial crisis still spreading, and what new forces are shaping the direction of microfinance in years to come?

Today, there are many more microfinance clients than there were in 1995.  Between 2004 – 2008, the average compounded growth rate of microfinance institutions (MFIs) reporting to the MIX was 43%.  There are now between 100 and 150 million clients. What breakthroughs will help us reach much more massive scale responsibly?  How can providers be ambitious about growth objectives while staying focused on the quality of client services?

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The promise of mobile banking is well known; harder to find are examples of solid implementation and mass roll out beyond payments and transfers. In Banking on Mobiles: Why, How, for Whom? CGAP examines the business case and deployment options for smaller banks and microfinance institutions. With effective partnerships and technical choices (which affect customer uptake), we believe there is a strong market opportunity to reach poor people with a broad range of financial services.

Today, CGAP’s Technology Program Kabir Kumar and Ignacio Mas will lead a discussion based on their recent paper: Banking on Mobiles: Why, How, for Whom?

You can also watch the webcast here.