We’re proud to announce that Kiva lenders can now support our high-impact Community Knowledge Worker (CKW) program!
Through our AppLab initiative, we’ve spent more than a decade successfully exploring ways to use mobile phones to improve people’s lives through information sharing about such areas as healthcare, business opportunities, finances and agriculture. In Uganda, where we’re focusing on agriculture, we do this through a network of “farmer leaders” nominated by their local communities to become Community Knowledge Workers. (more…)
A simple and widely available tool – the mobile phone – is creating substantial impact in the developing world, changing the lives of low-income individuals, especially in rural communities. Today, 6 billion mobile phones are being used throughout the world, with approximately 75 percent of users living in developing countries.
In Indonesia, “mobile microentrepreneurs” are already helping other poor people in their community find jobs and get information on market prices for their goods.
Recognizing the opportunity offered by this technology, Grameen Foundation and eBay Foundation began working together this summer to build solutions that address market challenges facing microentrepreneurs in Indonesia. Our joint effort will support Grameen Foundation’s Mobile Microfranchise initiative, which currently works with a network of more than 10,000 women microentrepreneurs, heavily concentrated in the West Java region.
This network, which is managed by Ruma – a social enterprise that Grameen Foundation helped to incubate and grow – currently reaches more than 1 million customers.
In this piece on The Huffington Post, Alex Counts, President and CEO of Grameen Foundation, and Lauren Moore, Head of Global Social Innovation for eBay Inc., and President of eBay Foundation, discuss our new collaboration.
I was invited to give one of the closing keynote addresses to the Sa-Dhan conference, something I had been preparing for at least since I travelled to India in early July to work on an upcoming book about the latest trends in microfinance. I had intended to arrive in time for the inaugural session on August 7, but travel delays prevented that. (Word to the wise: when travelling to India on the non-stop flights from Newark, plan to arrive in Newark long before your onward flight is due to depart.)
Upon arrival, I was told that the conference’s mood on the first day alternated between “somber” and “angry.” Just a few days earlier, the Reserve Bank of India (RBI) had announced new regulations affecting microfinance. Though these policies rolled back some harmful policies announced a few months back and helpfully clarified others, they also introduced a controversial new rule saying that microfinance institutions over a certain size would be subject to smaller margins than they were currently allowed between the rates they borrowed and lent at. The whipsaw nature of Indian microfinance policy at the national level, coming on the heels of the debilitating and draconian law passed in the state of Andhra Pradesh in late 2010, had justifiably enraged many of the practitioners in attendance – particularly as there had been no warning or explanation for many of the policies announced over the last 12 months.
Grameen Foundation President and CEO Alex Counts (left) speaks about the Indian microfinance sector at the Sa-Dhan Conference held earlier this month in that country. With him on stage are Jayshree Vyas (center), Managing Director of SEWA Bank, who served as the moderator, and Sujata Lamba of the World Bank.
The second day did not get off to a good start. Sa-Dhan executive director Mathew Titus announced that a senior government official had canceled his opening address. However, as the day got going, the overall mood improved. Royston Braganza, CEO of Grameen Capital India, organized and moderated an excellent panel on “Overcoming the Barriers to Resource Flows” to the sector. (Grameen Capital India is a joint venture between Grameen Foundation and affiliates of two major banks operating in India.)
I attended Royston’s panel and then caught the end of a concurrent panel on “business correspondent” (BC) models for MFIs working in partnership with, and essentially as agents of, fully licensed banks. Though some recent policies about the BC model have cast doubt on the viability of MFIs being able to work effectively with banks, it was an invigorating discussion. Mukul Jaisal, Managing Director of Indian microfinance institution (MFI) Cashpor, talked about his experience pioneering this model for providing savings services (which the MFI has been able to implement with support from Grameen Foundation).
Chris Smith and Gillian Evans are a husband-and-wife team volunteering in Uganda with Grameen Foundation through our Bankers without Borders® volunteer initiative. As Strategy Manager, Chris is responsible for business planning and Grameen Foundation’s relationship with MTN Uganda. Gillian is an Education Specialist, responsible for developing and applying training best practices in the field and helping build the training center of excellence in Uganda. Chris and Gillian live in Kampala with their two children and will complete their one-year volunteer term on July 31. You can read about their experience as a family living and working for Grameen Foundation in Uganda on their blog at www.smithsinuganda.com.
It doesn’t matter where you live – people love to talk about the weather. You may think that citizens of a country like Uganda, which comfortably straddles the equator and where people are generally unfamiliar with terms like “zero visibility” and “whiteout conditions,” would not be fussed whether it is 25 or 28 degrees Celsius on any given day of the year. However, as we’ve found out, there is an unmet need for accurate and advanced forecasting of daily and seasonal weather, and extreme weather alerts.
It’s taken me the better part of 10 months to figure out that when you wake up, look out the window and see sunny, crystal-clear blue skies that this is a sure sign it will rain the rest of the day. If it starts off raining then it’s most likely going to be a beautiful day. I used to leave the house in the morning and ask Omara (our gardener, and a highly accurate weather forecaster) what the weather would be like. He would scan the clear blue horizon, think for a moment and forecast rain. And he was almost always right. No amount of searching the skies or wind direction would give me any indicator other than the obvious lack of clouds.
Every day, the independent newspaper, the Daily Monitor, runs a four-day weather forecast feature on page 2. In an attempt to understand the secret to Omara’s uncanny forecasting ability, I used to try to match the Monitor’s forecast to what would actually happen on a given day. There is no correlation – I might as well have been using a Magic 8 Ball. I now believe that the Monitor editor knows this and attempts to cover all weather eventualities by having no (or at least an indecipherable) relationship between the weather graphic and the text description of the weather that day. Here’s a pretty typical example:
The Daily Monitor, a newspaper in Kampala, has an interesting — and inconsistent — way of showing its predictions of the Ugandan weather.
Why does “Today” have a thunderstorm graphic and a text description of “Day partly cloudy and night clear,” yet Friday is the only graphic that looks like cloudy and no rain, yet says “Thunderstorms in the day, clear at night” – but then that exact same text description is used with the thunderstorm graphic for Saturday? Aaaaaaaaaaaaaah … I don’t understand!
Kimberly Davies is a program officer on Grameen Foundation’s Financial Services team.
Traveling to the field and talking with clients is the favorite part of my job. I’ve worked in microfinance for five years and think daily about the poor women and families whom we support. Working with partner organizations and meeting clients face-to-face not only reminds me of why I’m in this field – it also helps me better understand the poor’s demand for financial services and the many challenges involved in providing those services.
It has been really exciting to see the progress of our microsavings project in India. The first time I visited our partner organization Cashpor Micro Credit – a poverty-focused microfinance institution (MFI) in Varanasi, India – it was not yet offering savings products to its clients. This was partly due to complex Indian regulations requiring MFIs to work with banks to provide savings. Since then, Cashpor partnered with ICICI Bank and Eko Technologies (a tech provider that enables savings via the mobile phone) to launch a new savings product in the summer of 2011.
Microsavings accounts provide poor parents with a safe place to save for their children’s future.
Since the launch, Cashpor has added about 250 new savers every day, and currently has more than 60,000 savings accounts. Cashpor’s clients have spoken loud and clear about their desire to save. Clients told us during my last visit that they wanted their own safe savings accounts, but I wasn’t sure what the real demand truly was. It’s also challenging to offer convenient services to clients, because some do not have cell phones, most can’t read and many are even numerically illiterate. These challenges, on top of others, were things that I knew would take time to navigate.
However, the huge demand does make sense. A safe place to save is critical for families, because it helps them smooth consumption during times of sporadic income, or prepare for an emergency or a planned lifetime event. Of course, people want convenient tools to help them better manage their lives. In the United States, we have access to so many financial tools in our everyday life – various savings accounts we can access at any time, insurance, loans, locked CDs that yield a safe and consistent interest rate, etc. You name it, we have it. The poor want these same tools.
Truly moving out of poverty is a huge task. Though tools like the Progress Out of Poverty Index® can measure the likelihood that an MFI’s client base is poor and track its movement out of poverty over time, this is a complex thing to measure, because forces such as natural disasters and family illnesses can prevent people from moving out of poverty or cause them to slip back into poverty. These uncontrollable forces make the use of easily accessible and affordable financial tools – such as savings accounts – all the more important to the poor.
Again and again, I’ve seen with my own eyes and heard with my own ears how access to financial services has improved the lives of poor people and their families. I look forward to seeing Cashpor’s savings program grow even more over the next year, as they help more women and families in need.
Michael Castellano is a graduate student at The George Washington University, studying International Affairs and Development. He interned with Bankers without Borders® at Grameen Foundation during the spring of 2012.
In the years following the global financial crisis, politicians and policymakers across the globe have harped on one cardinal goal: economic growth. Without a doubt, plans for growing the economy will dominate discussions in the upcoming U.S. presidential election. It seems as though we as a society have collectively determined that if only the economy would turn around, conditions would certainly improve across the board. If only we could enact legislation to spur economic growth, inevitably we would all be better off.
Fortunately, statistics show that the United States has seen steadily climbing annual growth rates since the nadir of the “Great Recession.” Developing countries and emerging economies have, on the whole, experienced average growth rates of more than 5 percent thus far in 2012 and will continue to propel the world’s progress, according to financial forecasts. So – this is good news for everyone, right?
Not necessarily.
Although a country’s national economy may grow, the poorest of the poor often remain completely disconnected from the financial, political and social systems in place. Without active bank accounts, the poor cannot easily save or access other financial services. In rural villages, people may not have easy access to healthcare and can quickly fall victim to external shocks such as disease or natural disaster. Without these services, poor people around the world cannot reap the benefits of overall economic growth.
During my time at Grameen Foundation and through my studies in International Development during this past year, one fundamental lesson has stood out: Though economic growth is certainly important, growth does little to reduce poverty if the poor lack access to essential services. This illustrates a key principle that development practitioners dub “pro-poor growth.”
Michael Castellano, shown here during a trip to Australia, served as an intern at Grameen Foundation this spring.
Pro-poor growth involves forming development policies and strategies that target the poorest of the poor and offer new ways of connecting them to financial markets. Professor Muhammad Yunus, Nobel Prize laureate and founder of Grameen Bank, stated, “The direct elimination of poverty should be the objective of all development aid. Development should be viewed as a human rights issue, not as a question of simply increasing the gross national product.”
I first met Isobel Coleman, Senior Fellow for U.S. Foreign Policy and Director of the Civil Society, Markets and Democracy Initiative at the Council on Foreign Relations, through one of our greatest Grameen Foundation Board members, Lucy Billingsley. When Isobel and I were introduced to each other, she was running a small program at the Council focused on women’s issues. She has since grown it into a flagship initiative of this prestigious institution, and her reputation as a researcher and thought-leader has naturally grown along the way.
I was therefore very pleased when she invited me to speak as part of her Women and Technology series last week, alongside Ann Mei Chang, senior adviser for women and technology, Office of Global Women’s Issues at the U.S. Department of State (and formerly with Google), and Scott Ratzen, Vice President for Global Health at Johnson & Johnson. The title of the session was “mDevelopment: Harnessing Mobile Technology for Global Economic Growth.” We had a planning call with Isobel, Scott and Ann Mei the week before and I realized I was joining some extremely knowledgeable and articulate people. To prepare, I read up on all of Grameen Foundation’s many programs that work to alleviate poverty by leveraging the mobile phone revolution, as well as some related research on inclusive business models.
Alex Counts makes a point while (from left) Isobel Coleman of the Council for Foreign Relations, Ann Mei Chang of the U.S. State Department and Scott Ratzan of Johnson & Johnson listen.
The event was kicked off with remarks by Suzanne McCarren of ExxonMobil, which sponsors this speaker series. Suzanne, whom I sat next to during lunch, explained why women’s economic development is a high priority for their company’s foundation, which has made more than $50 million in grants so far, according to my notes. Then Cherie Blair, the former first lady of the United Kingdom and the founder of a foundation that bears her name, spoke. She announced the release of an important new report titled, “Mobile Value-Added Services: A Business Opportunity for Women Entrepreneurs.” I had met Cherie several times through Meera Gandhi, whose book Giving Back features the Cherie Blair Foundation for Women, as well as Grameen Foundation.
Grameen Foundation’s Lisa Kienzle, Olga Morawczynski and Ali Ndiwalana recently co-authored a blog post with Ignacio Mas on the blog Mobile Active. Here they introduce and user-test one concept of savings: deferred payments over mobile money. Below is an excerpt, followed by a link to the full post.
Grameen Foundation’s AppLab Money believes that mobile money is essentially a liquidity-management platform. Put differently, it could be described as LiFi: Connecting people to an electronic payment system via their mobile phones that provides Liquidity with Fidelity. What does it take to turn mobile money systems into a full-fledged savings platform? A full savings proposition would address these additional key elements:
Mechanisms to help people link their savings vehicles to particular savings purposes or spending goals
Incentives and discipline mechanisms to help customers set money aside into their savings vehicle(s), or “discipline in”
Incentive and discipline mechanisms to help people keep money in their savings vehicle(s) once it is saved, or “discipline out.”
The challenge is how to optimize the mobile money environment by adding these sorts of features without making mobile money so complex and unwieldy that it is difficult or impossible to manage on simple mobile phones.
Our Applab Money initative focuses on researching, prototyping and testing innovative financial products to reach poor people who don’t typically have access to these resources. Project Manager Olga Morawczynski and Operations and Strategy Manager Lisa Kienzle recently wrote on the CGAP blog about the need to develop creative products that focus on existing customer desires, use patterns, and needs. One example: using the idea of gaming and gambling to create a helpful product for poor people.
Arthur plays a popular board game called Ludo.
What follows is one example of an interesting insight that emerged on a recent field visit that could be translated into a product that poor customers could find exciting: on our trip, we noticed that everyone loves gambling.
While visiting a village in East Africa, we met a farmer named Arthur who enjoyed gambling in his spare time. We watched him spend $2 as an entrance fee to join three other players in a popular board game called Ludo (see photo). Arthur lost this round, and the entire pot of $8 was handed over to his neighbor. When asked why he played if there was a risk of loss, Arthur explained that the potential returns were very high – in fact, it would take him one week of intensive labor (such as digging on his neighbor’s farm) to earn what he could win from one round of Ludo. If he won the pot, he would set aside half as an “emergency fund” for his family to protect against shocks – such as an unexpected illness – and reinvest the rest into the game.
Imagine, they said, what would happen if Arthur had access to a formal financial product that provided a safeguard against emergencies, but the sensation of a game.
The Mobile World Congress has ended, but the excitement generated by discussions of helping the poor through mobile phones remains high. For those of us working in international development, it was heartening to see this issue no longer relegated to “corner discussions” or side conversations in the hallways between sessions. As noted by Heather Thorne, Grameen Foundation’s Vice President for Information Solutions, this time the valuable role of mobile phones in global development was front and center. Telecom operators and others are now seeing the opportunities for developing products and services for the poor.
One highlight for Grameen Foundation was the announcement of our collaboration with MTN Uganda and CGAP to research and develop mobile financial products for the poor. The need is clear: 2.7 billion people – most of whom live in developing countries – still do not have a bank account. This is largely because many low-income communities are underserved by financial institutions, which typically offer products that are more suitable for higher-income clientele.
Though the growing number of mobile money services is helping to address the access issue, we still need products that are appropriate for low-income consumers. Our goal with this new initiative is to drive innovation that can yield a full array of services that are affordable and accessible for poor clients, while being commercially viable for the financial service providers involved.
