COVID-19 is pushing more than 100 million people back into poverty.

Only half of people worldwide have any savings.

Climate change affects the poorest households most.

Low-income farmers are vulnerable to extreme weather conditions.

The world’s entrepreneurs face a $5 trillion financing gap.

We focus on global challenges

How we work

Michael Schlein

Farmers and agribusinesses face major challenges today, but innovative fintech can help them build resilience.

Article

As the pandemic continues to move businesses online, making digital tools more <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery">vital</a> for the survival of families and small businesses, some might overlook the importance of the thousand-year-old agricultural sector in building an inclusive and effective economic recovery. Farming and agriculture have long played major roles in reducing poverty and creating economic opportunities, and new technologies are revolutionizing the industry, empowering farmers and agribusinesses to build their financial resilience.

<a href="https://www.worldbank.org/en/topic/agriculture/overview">Two thirds</a> of the world’s working poor make a living through agriculture, and smallholder farmers produce around <a href="https://www.sciencedirect.com/science/article/abs/pii/S0305750X2100067X?via%3Dihub">a third</a> of the world's food. But <a href="https://globalfindex.worldbank.org/">235 million</a> farmers, including 115 million women, are unbanked and receive payments in cash, keeping them invisible to financial institutions. And despite the valuable income, food, and economic stability that farmers provide, they face more challenges today than ever.

The pandemic created many <a href="https://www.globalcitizen.org/en/content/ifad-food-security-during-covid-19/">obstacles</a> for farmers and agribusinesses, including disrupted supply chains and difficulties storing excess crops, causing them to spoil. Stifled economies and social unrest have further destabilized the already fragmented agricultural value chain.

Climate change poses many <a href="https://www.ucsusa.org/resources/climate-change-and-agriculture">threats to farmers</a> and those who depend on them, including increasing rates of floods, droughts, monsoons, and hurricanes, which disrupt supply chains, destroy crops, and destabilize farmers’ way of life. New <a href="https://www.centerforfinancialinclusion.org/climate-change-is-exacerbating-covid-19-recovery-for-msmes-in-nigeria">data</a> from the Center for Financial Inclusion illuminate the impact of climate change on small businesses: a quarter of entrepreneurs in Nigeria experienced a climate shock in the last five years—and those who did took longer to recover from the effects of COVID-19.

Women make up <a href="http://www.fao.org/gender/background/en/">nearly half</a> of farmers but often face discrimination that limits their ability to earn a living and provide for their families. For example, <a href="https://foodtank.com/news/2021/06/research-in-malawi-shows-how-access-impacts-female-farmers/">a recent study</a> in Malawi found that social norms and customs constrained female farmers to areas with less fertile soil, leading to lower crop yields.
<h2><strong>Advancements in agritech can build an inclusive recovery</strong></h2>
The agricultural sector will play a central role in our global recovery from the pandemic, and advancements in agritech can help farmers and other related businesses boost their profits, start participating in the digital economy, and build their financial resilience against future challenges, especially those brought by <a href="https://www.accion.org/opening-opportunities-for-smallholder-farmers-in-a-changing-climate">climate change.</a>

Innovative fintech companies are helping farmers around the world—many of them <a href="https://www.accion.org/for-rose-in-kenya-crop-insurance-is-a-game-changer">women</a>—access digital and financial tools that traditional institutions have been unable or unwilling to provide. Accion Venture Lab portfolio company <a href="https://www.pula-advisors.com/">Pula</a> has provided more than 4.5 million traditionally excluded farmers in Africa and Asia with agricultural insurance and data-driven insights to help them sustainably increase crop yields. <a href="https://www.apolloagriculture.com/">Apollo Agriculture</a>, based in Kenya, also takes <a href="https://www.accion.org/tech-gives-farmers-in-east-africa-a-boost">a tech-based approached</a> to help farmers maximize their profits through mobile money accounts, financing, optimized advice, farming products, and insurance.

Agritech innovation is also strengthening the agricultural value chain, benefitting everyone from small farmers to local distributors. In Latin America, Accion Venture Lab has invested in <a href="https://terramagna.com.br/">TerraMagna</a>, a Brazilian company that <a href="https://www.accion.org/how-one-company-uses-tech-to-support-brazilian-farmers">leverages satellite imaging</a> to lower the cost of underwriting and help more farmers access credit. Small farms are often located in remote areas where traditional banks can’t reach, so they seek credit from local agri-retailers that sell seeds and fertilizer. TerraMagna uses their tech-based approach to assess collateral with more precision, lowering agri-retailers’ credit risk and enabling them to provide lower-cost loans.

Similarly, Accion Venture Lab portfolio company <a href="https://agrim.app/">AGRIM</a> provides <a href="https://www.accion.org/agri-inputs-b2b-marketplace-agrim-emerges-from-stealth-mode-with-2m-in-seed-funding-from-omnivore-india-quotient-and-accion-venture-lab">an e-commerce platform</a> for agri-retailers in India. India’s agri-retailers provide more than 120 million smallholder farmers with essential supplies and informal credit. AGRIM connects these retailers directly to manufacturers, allowing access to a wider range of products that can be delivered to their doorsteps at transparent prices. AGRIM also aims to embed affordable lending products for their clients by leveraging unique data from the platform. Since its founding in April 2020, more than 1,000 manufacturers and 100,000 retailers have joined AGRIM’s platform.

Established microfinance institutions are also leveraging new technologies to respond to the effects of the pandemic. Supported by our global partnership with Mastercard, our partner Annapurna Finance in India <a href="https://www.accion.org/women-entrepreneurs-get-back-to-business-in-india">developed</a> an SMS-based emergency loan product to help rural microentrepreneurs like Papina Das adapt and rebuild. Within three days of applying, Papina received a loan of just 20,000 INR, or $274 USD, which she used to rehire her assistant and restart her dairy farm—and now her sales have nearly fully recovered.
<h2><strong>Supporting the most effective innovations</strong></h2>
We must continue to <a href="https://www.inclusivefintech50.com/">support and elevate innovators</a> who are finding new ways to answer the financial needs of underserved farmers and agribusinesses. The potential of innovation is limitless, and underserved small businesses of all kinds need digital and financial tools to recover and grow. Working together, investors, policymakers, and development finance institutions should foster advancements in fintech that are helping farmers, agribusinesses, and other underserved entrepreneurs open economic opportunities in their communities.

With support from fintech, farmers can grow an inclusive global recovery

Paolo Limcaoco

Why Accion Venture Lab invested in Fairbanc, a digital platform in Indonesia helping small merchants grow with a seamless inventory financing solution

Mom-and-pop stores are pillars of neighborhoods in lower-to-middle income communities. These family-owned retail shops — called <em>warungs</em> in Indonesia, <em>sari-sari</em> stores in the Philippines, or <em>kirana</em> shops in India — serve as the place where people gather, catch up with friends, and purchase daily essentials like food, mobile phone reloads, sachets of shampoo and soap, and even cigarettes by the stick. Often called “the community pantry,” these small shops play a crucial role in meeting the everyday needs of their neighbors.

Despite the important role they play in their communities, these small businesses can rarely access any form of formal financial support. Even as online payments and other digital financial services gain traction, these small businesses have remained largely unchanged, cash-based, lacking formal record-keeping, and therefore left out of the financial system. Without access to financial products, especially the credit needed to purchase inventory, these small merchants are constrained by the cash they have on hand and can’t properly grow their business or meet increasing demand from their customers.

With this in mind, we are excited to <a href="/fairbanc-secures-funding-from-adb-ventures-accion-venture-lab-east-ventures-and-sampoerna-to-scale-indonesians-micro-merchants-access-to-embedded-credit-products" target="_blank" rel="noopener noreferrer">announce our investment in Fairbanc</a>. Fairbanc is a tech platform in Indonesia that enables inventory financing for small retail shops with a buy now, pay later product that is integrated in the ordering apps of large FMCGs (fast-moving consumer goods) and other retail partners. Fairbanc uses partnerships, technology, and integration with retailers to increase the access to financing for small merchants in Indonesia, 70 percent of which are owned and managed by women.

Here is why we are excited to welcome <a href="https://fairbanc.app/" target="_blank" rel="noopener noreferrer">Fairbanc</a> to the Accion Venture Lab portfolio:
<h3>Seamless user experience for small mom-and-pop shops increases adoption and usage</h3>
As we have worked with more and more small businesses, we have come to understand the importance of providing these microentrepreneurs with a solution that is as seamless an experience as possible. We are excited by Fairbanc’s approach, as the team has been very thoughtful about their design to make sure their pay-later solution is as frictionless as possible for small mom-and-pop shops. There is no need to download an application, buy a device, or complete complicated loan application forms. As most microentrepreneurs aren’t tech savvy and don’t possess sophisticated devices, Fairbanc’s approach is critical in increasing usage and adoption, creating a more impactful solution for this underserved population.
<h3>Closed-loop inventory financing helps businesses grow</h3>
For these small shops, cash continues to be king, especially when it comes to procurement. Unable to access credit from formal sources, inventory is typically purchased through cash at hand (sometimes, they resort to informal lenders) which is a major barrier to buying more goods. Through its pay later solution, Fairbanc removes this constraint and allows the mom-and-pop stores to buy more stock, which they can pay for after they have sold to their customers. The increase in inventory leads to growth in sales, which then starts a positive reinforcing loop through an increased credit line and more purchases. In addition, Fairbanc’s provides closed-loop financing, which means that no cash is exchanged. Instead, the credit provided is used only to purchase inventory, ensuring that the financing they receive is always productive and reinvested into their business.
<h3>Integration with corporate partners creates efficiency</h3>
We have recently seen several successful B2B2C models (or B2B2B in Fairbanc’s case) that acquire end-customers through corporate partnerships. While these initial B2B relationships can have longer sales cycles, they can acquire end customers at scale and efficiently. In Fairbanc’s case, the company works with Unilever, Danone, and other FMCG partners to reach and connect with the small merchants that sell their merchandise. These FMCGs allow access to their merchants because they understand the value proposition – integrating Fairbanc’s the pay-later solution increases inventory purchases of merchants, which in turn leads to top line growth. This win-win collaboration between Fairbanc and their corporate partners allows the company to acquire merchants efficiently and serve the microentrepreneurs in a scalable way. Partnerships are always key when serving the underbanked and underserved, and we can see how Fairbanc has made it a major focus of their business.
<h3>Data-driven approach leads to smart lending decisions</h3>
The integration with FMCGs also gives Fairbanc access to a wealth of historical data on the merchants. By utilizing AI and machine learning, Fairbanc analyzes the data and determines which merchants would benefit from credit – shops that are seeing increased demand but lack the ability to purchase more inventory to meet it. Fairbanc also relies on data analysis to offer a dynamic credit line that is updated each week based on merchants’ weekly performance. This data-driven approach ensures that the credit provided is utilized well and that those shops that are experiencing increases in sales and demand have the opportunity to continue to grow their business with a larger line.
<h3>The pandemic proved how critical this product is for small merchants</h3>
Most of Fairbanc’s pilots took place during the pandemic when small merchants desperately needed credit to keep their stores stocked and businesses operating. Across the different pilots of their product, and especially in the rural areas, Fairbanc saw a substantial increase in usage during the pandemic, indicating the additional funding needs of merchants during this time. The additional credit helped merchants keep doors open and even grow their businesses. It is clear from this experience that Fairbanc’s product is highly relevant, especially now as we continue to support small businesses and help entrepreneurs to remain resilient during this challenging time.

Fairbanc marks our fourth investment in Southeast Asia, alongside <a href="/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">specialized education lender Pintek</a> in Indonesia and <a href="/innovation-msme-finance-philippines" target="_blank" rel="noopener noreferrer">digital B2B SME lender First Circle</a> and <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">earned-wage-access (EWA) platform Advance</a> in the Philippines. We continue to be excited about supporting innovative and impactful founders and startups that bring greater financial inclusion to the region. We believe that Fairbanc’s platform can have a tremendous positive impact, and we are excited to support the team as they reach more small retailers across Indonesia.

An embedded finance platform helps mom-and-pop shops grow in Indonesia

Priya Punatar

Combatting the digital divide on multiple fronts is crucial to scaling financial inclusion

<em>This article is the first of a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion">digital transformation guide</a>.</em>

During India’s first strict COVID-19 lockdown, <a href="/women-entrepreneurs-get-back-to-business-in-india">Papina Das, a dairy business owner in Odisha</a>, faced plummeting sales and an unstable income when people in her village avoided visiting the local market and stopped buying her cows’ milk. In the face of unpredictable challenges, digital financial tools can help micro, small, and medium enterprises (MSMEs) owners like Papina build resilience by giving them access to credit, payments, insurance, and business management advice. However, low-income individuals and small business owners don’t always have the digital skills, attitudes, and behaviors they need to use such tools. While some people are comfortable using technology in their daily lives, many lack access to smartphones or stable internet connections, and others simply do not trust or feel comfortable using unfamiliar digital financial services. With customers spanning many different levels of digital awareness, how do financial service providers effectively bridge the <a href="https://stats.oecd.org/glossary/detail.asp?ID=4719" target="_blank" rel="noopener noreferrer">digital divide</a> to support their clients and reach the most vulnerable?

<a href="/institutional_partnerships/mastercard-center-for-inclusive-growth" target="_blank" rel="noopener noreferrer">In partnership with the Mastercard Center for Inclusive Growth</a>, Accion recently published a guide to help financial providers (FSPs) navigate the complexities of <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion">digital transformation</a>. We uncovered three key strategies to combat the digital divide that prevents FSPs from reaching clients in need of financial services.
<h3>1. Communicate how digital products help customers improve their businesses</h3>
<blockquote class="pullquote--right">“Our digital transformation goes hand-in-hand with our clients’ digital transformation.” - Verónica Gavilanes, General Manager, Microfinance, Banco Pichincha in Ecuador</blockquote>
For small business customers accustomed to using cash, the value proposition of switching to digital payments can be difficult to understand — particularly when customers perceive cash to be free and more secure. Communicating the benefits of digital products by using clear messages that resonate with small merchants can help them overcome their initial hesitation.

<a href="/helping-small-businesses-build-resilience-in-ecuador" target="_blank" rel="noopener noreferrer">Banco Pichincha</a> is the largest financial institution in Ecuador. As the bank undergoes a complete, large-scale digital transformation, they recently launched <a href="https://www.pichincha.com/portal/canales-de-atencion/deuna" target="_blank" rel="noopener noreferrer">Billetera deUna!</a>, a mobile wallet that supports secure, real-time payments for their customers. While the application has been downloaded more than 118,000 times, this is concentrated among high-income segments, with much lower uptake at the base of the pyramid.

<a href="https://datatopics.worldbank.org/g20fidata/country/ecuador" target="_blank" rel="noopener noreferrer">Nearly eight in 10 Ecuadorians have mobile phones</a>, but only <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/countrybook/Ecuador.pdf" target="_blank" rel="noopener noreferrer">32 percent of those with phones are currently using them to make digital payments</a>. Cash still accounts for about <a href="https://blogs.worldbank.org/jobs/why-digital-payments-are-key-entrepreneurs-success" target="_blank" rel="noopener noreferrer">40 percent of payments</a>, with cash being particularly prevalent in rural communities. Using insights into their customers’ adoption barriers, Banco Pichincha has redesigned the user experience for underserved microbusinesses with a clear and compelling value proposition. In parallel, the bank is using Accion’s edtech platform, <a href="/clients/ovante" target="_blank" rel="noopener noreferrer">Ovante</a>, to help their microfinance customers gain the digital literacy and skills they need to use the platform.
<h3>2. Design for both sides of the digital divide</h3>
FSPs that serve low-income people and businesses face the challenging reality that some of their customers do not yet have access to digital devices and will continue to depend on high-touch services offered through the traditional microfinance model. At the same time, they have client segments that prefer the accessibility, convenience, and speed that digital financial services can provide.

<img class="aligncenter size-full wp-image-24060" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_3-Digital-divide.png" alt="The digital divide" width="2000" height="1000" />

India’s <a href="/expanding-the-benefits-of-a-growing-digital-economy-in-indonesia-and-india" target="_blank" rel="noopener noreferrer">Annapurna Finance Limited</a> serves 1.9 million group lending customers who would otherwise lack access to high-quality, affordable financial services. When pandemic-induced lockdowns effectively ended group meetings, members found themselves without much-needed finance at a time when economic vulnerability skyrocketed.

While only 10 percent of Annapurna’s group lending customers currently own a smartphone, a greater percentage has access to less advanced feature phones. To address the digital divide, Accion worked with Annapurna to create an SMS-based, digitally accessible emergency loan product that incorporates both tech and touch. For example, interested customers can provide details directly to their loan officer for their application and receive an emergency loan limit if qualified. Once deployed, a customer can access the funds at any time without interacting with a person by sending a simple SMS to a dedicated phone number, which then disburses the money to the customer’s loan account.

We designed the solution to easily upgrade to a smartphone version so that customers can grow with the platform as they gain digital skills. For the more digitally savvy segment of Annapurna’s MSME clients, we are supporting the bank in developing an end-to-end digital loan that allows clients to apply without needing to speak directly to a loan officer and make all repayments remotely.
<h3>3. Balance tech and touch strategies</h3>
Human interaction continues to be critical in delivering financial services to the poor as personal interactions <a href="/the-tech-touch-balance" target="_blank" rel="noopener noreferrer">build trust, establish relationships, and engage customers</a>. For customers with low digital maturity, FSPs should think strategically about hybrid models that leverage digital to automate manual processes while still maintaining the human touch that customers value.
<blockquote class="pullquote--right">“Our approach is to first understand our customers, understand the segment that we want to serve, understand how digitally mature they are, and then reach out to them [in a way that is uniquely suited to the circumstances].” - Taiwo Joda, Managing Director and CEO, Accion Microfinance Bank in Nigeria</blockquote>
<a href="https://www.accionmfb.com/" target="_blank" rel="noopener noreferrer">Accion Microfinance Bank</a> (Accion MfB), one of Nigeria’s most successful microfinance institutions, aims to make digital their new norm and encourages digital behaviors in their client base. As part of this goal, they made the end-to-end application process for their new digital loan accessible only through a mobile app or web portal. But Accion MfB knew that not all their customers are ready for a fully digital process, so they designed the product to allow customers to initiate the digital loan application process through several different channels. Using USSD mobile codes, customers can submit a request for digital assistance, which prompts the call center to reach out to the client and understand their characteristics and comfort level with digital applications. The call center agent may then direct applicants to one of the self-service channels to complete an application online or may refer applicants to a branch where a staff member can assist with a loan application.

Finally, after noticing discrepancies between customers who were initially denied online but later approved after visiting a physical branch, Accion MfB also made several changes to the digital loan application to more closely resemble how an account officer would ask questions. They also integrated more customer support, examples, and tips.

To bring useful financial tools to underserved MSMEs in a way that promotes trust and comfort, financial providers need to tailor their digital approach to their customers’ varying levels of digital skill and access. FSPs should be deliberate and thoughtful about how they reach clients on both sides of the digital divide: leaning into digital channels, while continuing to leverage physical networks like branches, loan officers, and groups. Meeting clients where they are will promote greater digital adoption and <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">ultimately fuels the digital transformation of low-income individuals and small businesses.</a>

<em>Malavika Krishnan contributed to this article. </em>

Three ways to bridge disparities and close digital gaps for MSMEs

Federico  Gomez Romero

Dinie partners with online platforms already used by small businesses to seamlessly provide affordable lending products to Brazilian MSMEs

The way we work is going through one of the most profound evolutions in decades, but it’s not the changes themselves that impress me most, it’s the speed at which they are happening. In 2020, companies reacted and adapted to the challenges of COVID-19 up to <a href="https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever" target="_blank" rel="noopener noreferrer">20 times faster than they would have in a pre-pandemic world</a>. Years of innovation are happening at once. In Brazil, <a href="https://a16z.com/2021/04/13/latin-america-fintech/" target="_blank" rel="noopener noreferrer">where the share of e-commerce in retail grew from 7 percent to 12 percent</a> (more than it grew in the previous 10 years!), the need for MSMEs to digitize their businesses is vital. From restaurants switching to delivery platforms to small entrepreneurs selling their products through Mercado Libre to tech startups doing cross-border operations, companies are embracing the new reality.

Just as the traditional financial sector was trying to catch up with fintechs, COVID-19 arrived and accelerated digital transformation at a rate we had not seen before. Unable to respond as fast as they needed to, banks lagged once again, and a new breed of financial service providers became necessary. Dinie was born out of this moment and has become one of the first Brazilian embedded MSME lenders. Partnering with platforms of all sizes — ranging from small e-commerce sites to prominent players like <a href="https://dlocal.com/press-release/dlocal-partners-with-dinie-for-paylater-to-brazilian-smes/" target="_blank" rel="noopener noreferrer">Dlocal, the latest Latin American company to go public</a>, or the <a href="https://www.dinie.com/ifood" target="_blank" rel="noopener noreferrer">leading delivery platform iFood</a> —Dinie seamlessly provides lending products to help companies meet their short-term capital needs in the same digital environments where they already do business.

Like our recently added portfolio companies <a href="https://www.accion.org/a-fintech-cultivates-tech-talent-in-latin-america" target="_blank" rel="noopener noreferrer">Henry</a>, which provides financing through an Income Sharing Agreement (“ISA”) scheme to its students, and <a href="https://www.accion.org/lami-technologies-closes-1-8-million-seed-funding-to-accelerate-growth-of-digital-insurance-in-africa" target="_blank" rel="noopener noreferrer">Lami</a>, which offers bespoke insurance through businesses customers know and trust, Dinie’s approach is emblematic of how embedded finance is a more scalable, secure, and cost-effective way of lending. In one of the most active startup markets in the world, Dinie is:
<h2>Helping reduce the affordable financing gap for MSMEs</h2>
Despite Brazil’s position as a regional hub of fintech innovation, in-market financial services providers have yet to effectively serve MSMEs with the short-term, affordable products they need. Dinie’s flexible, revolving credit lines allow customers to get the capital they need on-demand without having to complete a new loan application every time they experience cashflow challenges. These MSMEs can use extra working capital in numerous ways to help them grow, including marketing, expense payments, and inventory purchasing. Additionally, by partnering with platforms to offer credit, Dinie can locate the MSMEs on the platforms they are already active on and provide products in a contextualized way.
<h2>Leveraging data to efficiently underwrite and collect loans</h2>
By embedding within partner platforms, Dinie can leverage MSMEs’ data throughout its entire process, from underwriting to repayments. With these insights into its MSME clients’ cashflows and repayment behaviors, Dinie can monitor and adjust credit lines as needed to avoid customers becoming over-indebted. Over time, this data will allow Dinie to evolve and expand its product suite, give partner platforms insights into how to serve their end customers better, and ultimately drive loyalty.
<h2>Proving that embedded finance is a better way of lending</h2>
Dinie’s embedded finance solution and B2B2C acquisition strategy give the company several advantages over direct lenders. For underwriting, Dinie uses MSME customer data from its platform partners to pre-approve clients and assign limits. Once MSMEs accept their pre-approved credit — offered to them within the platform interface — Dinie collects external data via its API to complete customer KYC and onboarding. Regarding collections, Dinie sits directly in the payment flow between the platforms and their customers and automatically deducts repayments from MSME cashflows. These innovations, which the company developed over the last year, are resulting in a more scalable and responsible way of lending.
<h2>Empowering startups to thrive while helping their clients</h2>
For platforms in their early stages, helping their MSME customers with credit both provides a new revenue source and boosts their core business. <a href="https://scifivc.substack.com/p/embedded-lending" target="_blank" rel="noopener noreferrer">Lending could be the ultimate economy of scale for companies with high startup costs, initially negative unit economics, and massive scale requirements to reach profitability.</a> But developing an in-house lending business requires unique capabilities, access to capital, and years of data to build robust underwriting models. Embedded lenders like Dinie split the infrastructure costs across multiple partners, driving down unit costs with scale and providing access to these unique capabilities from day one.

<a href="/dinie-brazils-pioneer-api-first-embedded-lending-fintech-raises-usd-3-8-million-seed-round" target="_blank" rel="noopener noreferrer">Accion Venture Lab is proud to join Dinie</a> in its mission to help Brazilian MSMEs not only to survive, but to thrive during this challenging and pivotal moment in history. As impact investors, we work hard to promote financial inclusion. We’re excited to support a company that serves its clients in their own environment, understanding their needs and developing unique products to fulfill them.

Embedded finance meets small business lending in Latin America

R5’s innovative approach to offering affordable financial services helps more Colombians gain financial security

While the entrepreneurship and fintech scene has grown in Colombia in recent years, most adults there still don’t have a bank account. The lack of affordable, high-quality financial services has left many Colombians — especially those working in the informal sector — without a safety net for challenging times or a way to strengthen their financial health and seize new opportunities. The COVID-19 pandemic further exposed the vulnerabilities of Colombia’s financially underserved. Many people have lost their livelihoods and during lockdowns and economic struggles, and don’t have the financial services they need to stay resilient through challenging times.

[caption id="attachment_24561" align="alignleft" width="400"]<img class="wp-image-24561" src="https://content.accion.org/wp-content/uploads/2021/07/r5-client-nicolas-colombia.png" alt="Nicolas, a client of R5 in Colombia" width="400" height="348" /> <em>Nicolas Cairasco Parra, a civil engineer in Bogotá, relies on R5’s financial services to build financial stability in an uncertain time.</em>[/caption]

Twenty-five-year-old Nicolas Cairasco Parra was born and raised in Bogotá, Colombia. He’s a self-employed civil engineer who works as an independent contractor in both the public and private sectors in Bogotá. The COVID-19 pandemic disrupted nearly all industries in Colombia, and public infrastructure was no exception. “The pandemic has modified not all, but a significant part of my income. In the last year, my main challenge has been to generate an innovation in the services I was offering as a civil engineer,” said Nicolas. Before the pandemic, he made multiple in-person field visits while designing infrastructure projects, plus frequent one-on-one meetings with his clients throughout his contracts. “But clearly having to go virtual has brought a lot of challenges for continuing to offer civil engineering services virtually,” he says.

As an independent contractor, Nicolas doesn’t have the financial security that permanent employees enjoy. With some uncertainty in his career — and unexpected changes to his income because of the pandemic — Nicolas needed a solution to help build his financial health and gain some peace of mind. He started working with <a href="https://www.grupor5.com/" target="_blank" rel="noopener noreferrer">R5</a>, an Accion Venture Lab portfolio company, in December 2020. R5 aims to <a href="/fintech-makes-financial-stability-attainable-for-low-income-colombians" target="_blank" rel="noopener noreferrer">make financial stability attainable for lower-income Colombians</a> through innovative financial products and services offered through a digital platform.

Because traditional banks and financial providers often overlook low-income Colombians, R5 has focused on finding new ways to provide responsible funding and affordable financial products. Through asset-backed loans and online insurance products, they’re allowing people to leverage cars and motorcycles as collateral so they can extend affordable loans to customers who might otherwise turn to costly credit cards or informal lenders to make ends meet.

Nicolas had difficulty finding providers that would extend loan products to independent contractors like him, saying, “Financial institutions restrict many products [because] I work as an independent professional. Usually, financial institutions classify one as higher risk, but R5 had an alternative. Having this [product] in the middle of the pandemic was great,” says Nicolas. “The majority of companies offer a product where they make you a loan with a vehicle pledge, but the vehicle is consigned. The car is parked in a parking lot under their disposition and surveillance. The vehicle is locked. But with R5, it has been a very good experience because finally, my vehicle is at my entire disposal in Colombia.” R5 also offers vehicle insurance through a seamless digital process that uses a unique machine learning risk model to offer low-income clients better coverage at a lower price.

Nicolas hopes that accessible financial services can pave the way for other young Colombians to seize new opportunities, like starting their own businesses and finding employment. “I hope that this pandemic allows for innovation and finding new alternatives that will give room to new investments. For example, creating a business requires starting capital and there’s nothing better than being able to count on loans that have accessible rates. This also gives you security and inner peace, allowing you to perform better.” With their accessible and affordable loan and insurance products, R5 is helping build more Colombians get what they need to improve their financial health, secure safety nets, and build better futures.

A safety net helps Colombians through unstable times

Laura Glenny

How to get started building the culture of innovation needed for digital transformation success

In 1889, George Eastman wanted to make photography accessible to everyone, which inspired him to invent rolled film and the first user-friendly camera called Kodak. He started the Eastman Kodak Company and created a culture that mirrored his own drive for creativity and innovation. In the early years, this emphasis on innovation led to risky ventures like investing in color film. Decades later, in 1977, an engineer came to the Kodak leadership team with another innovative idea — the digital camera. But the Kodak leadership team could not imagine a future where consumers preferred the immediate gratification of seeing a photo on a screen over having photos developed on paper and decided not to invest in the technology. As we now know, that was a mistake and digital cameras eventually took over the photography industry. While Kodak tried to reverse course by <a href="https://hbr.org/2002/05/disruptive-change-when-trying-harder-is-part-of-the-problem" target="_blank" rel="noopener noreferrer">spending billions in technology</a>, it never recovered its culture of innovation. As a result, Kodak filed for bankruptcy in 2012 and became a cautionary tale: it is not technology that makes an organization successful; <em>it is the ability of the organization to continuously transform itself</em>.

For over six decades, Accion has supported numerous financial service providers as they’ve transformed their organizations so that they can better meet the needs of the financially vulnerable people and businesses they serve. For organizations focused on improving the lives of low-income populations, adopting technology to digitally transform their business and services can feel risky. These digital transformations are complex and require investments in resources and time, a vision for the future, and behavior change.

To help organizations pinpoint the key areas of focus for driving successful and continuous transformation, Accion created an <a href="https://dtsurvey.accion.org/people-culture" target="_blank" rel="noopener noreferrer">assessment tool for financial service providers to evaluate their people and culture capabilities</a>. The diagnostic determines how prepared institutions are to undertake a digital transformation. It also offers practical steps for creating the work environment needed to succeed in a digital-first business landscape. The assessment focuses on the four areas that are crucial for any transformation:
<ul>
 	<li><strong>Values and culture.</strong> When there is a culture of trust, employees work collaboratively, keep each other accountable, focus on the customer, and take ownership of their work — all essential ingredients for a successful digital transformation. In this diagnostic, we evaluate the behaviors that support continuous learning, the value of openness, and experiential learning. We assess how employees’ actions align with their organization’s values and how the current environment supports innovation.</li>
 	<li><strong>Organizational design.</strong> An institution’s organization can determine its business model’s flexibility and if there is space to learn and grow. This diagnostic will assess how decisions are made within the organization and whether existing structures and teams are creating roadblocks or positioning the organization to pivot quickly.</li>
 	<li><strong>Talent.</strong> An organization’s workforce must have the right skill sets, behaviors, and mindsets to drive its evolution to the desired state. This diagnostic assesses how your organization is currently utilizing talent, cultivating an agile mindset, and providing opportunities for continuous learning and experimentation.</li>
 	<li><strong>Leadership.</strong> Leaders create the vision and set the tone for digital transformation within an organization. Good leadership should analyze data and take calculated risks, reward creativity in the face of an ever-changing market, and most importantly, obsess over the customer experience. In this diagnostic, we offer key recommendations for how your leadership can ensure the organization thrives through its digital transformation.</li>
</ul>
As Kodak’s leadership team learned, technology is solely an enabler for an adaptable business. The real keys to building a culture of innovation that will sustain disruption and constant change are an organization’s <em>people and culture</em>. To digitally transform, an organization must codify innovation into its DNA. For mission-driven organizations, a focused approach to creating an innovative culture is particularly crucial not only to create a sustainable business model, but also to ensure the businesses and people served are able to evolve and thrive through this digital era.

Take our <a href="https://dtsurvey.accion.org/people-culture" target="_blank" rel="noopener noreferrer">people and culture assessment</a>, also <a href="https://dtsurvey.accion.org/gente-cultura" target="_blank" rel="noopener noreferrer">available in Spanish</a>, to see where your organization is on its journey toward a culture of innovation.

<em>This assessment was developed as part of an <a href="https://www.accion.org/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer">ambitious program with the Mastercard Center for Inclusive Growth</a> to help millions of underserved microbusinesses successfully operate in — and benefit from — the digital economy.</em>

Create the culture of innovation needed for digital transformation

Companies in Brazil are facing a tech hiring crunch as competition and demand for talent rises

Among the many different impacts of the COVID-19 crisis, there has been an undeniable spike in the amount of digital transformation occurring across almost every industry as organizations adapt their businesses to a more digital world. In one year, companies of all regions and sizes have accelerated the digitalization of their internal operations and customer interactions to levels they expected to reach in three or four years. The <a href="https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever" target="_blank" rel="noopener noreferrer">share of digitally enabled products offered in their portfolios has also accelerated by up to seven years</a>. The speed with which companies reacted to COVID-19-related changes is even more impressive as many businesses moved to adapt to these changes 20 times more quickly than they had thought possible before the pandemic. The backbone responsible for these astonishing transformations is the same worldwide: the companies’ tech teams.
<h2>Hiring tech talent has never been easy, and it’s about to get harder</h2>
From full-stack developers to data scientists to security specialists, recruiting high-quality tech teams has always been a major challenge for organizations. Qualified candidates can be difficult to find, expensive to hire, and accustomed to working remotely, creating a perfect combination for a competitive hiring environment among employers. And now, the race to recruit tech workers is only get fiercer.

Despite the increase in global unemployment in the last year — <a href="https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/briefingnote/wcms_767028.pdf" target="_blank" rel="noopener noreferrer">nine percent of working hours were lost compared to 2019, equaling more than 250 million jobs</a> — the demand for digital skills continues to grow. The total number of technology-oriented jobs may increase <a href="https://news.microsoft.com/apac/2020/12/15/re-envisioning-the-workforce-skilling-today-to-thrive-tomorrow/" target="_blank" rel="noopener noreferrer">nearly five-fold by 2025, rising from 41 million in 2020 to 190 million in 2025</a>.

Under these circumstances, emerging markets will face an even bigger hiring challenge, as they must compete with tech giants like the US and Europe for scarce talent. Geographical boundaries continue to be torn down as remote work allows big tech companies to hire foreign talent. Unable to match their capacity to pay high salaries, companies in regions like Latin America — especially small and medium-sized companies — will need to find creative ways to source and retain IT workers.
<h2>Brazil is in the middle of a perfect storm</h2>
On top of the acceleration of digital transformation and the global competition for tech talent, Brazil has another problem as the local startup scene gains momentum. Though this is a positive trend, it is a challenge that threatens to make the gap between supply and demand for talent even larger. The local startup ecosystem has been growing at impressive rates in recent years, and the funding from venture capital firms to local tech startups has reached all-time highs. <a href="https://www.forbes.com/sites/angelicamarideoliveira/2021/04/03/brazil-tech-round-up-unicorn-hotmart-closes-new-round-vc-activity-in-brazil-digital-government-online-stalking/?sh=c0f5b113df4c" target="_blank" rel="noopener noreferrer">In Q1 2021 alone, almost $2 billion was invested into the sector</a>, more than half of what was invested during all of 2020. For small startups trying to source IT workers, this means that they must fight their way through international players, large corporations, and well-funded local tech companies.

This sudden increase in demand didn’t take long to shake the market. <a href="https://blog.revelo.com.br/salarios-da-area-de-tecnologia/" target="_blank" rel="noopener noreferrer">In 2020, the average salaries for the IT sector went up around 30 percent</a>, with developers being the most sought-after workers, accounting for almost 70 percent of the open positions. With <a href="https://cio.com.br/carreira/qual-e-o-perfil-dos-desenvolvedores-no-brasil-e-quanto-ganham-em-media/" target="_blank" rel="noopener noreferrer">more than 75 percent of companies looking for senior and semi-senior developers</a>, two big questions arise: How does the country attract more Brazilians to become junior developers? How can they quickly enable those workers to become senior developers? The answers won’t come from traditional education models. It is expected that an additional 420,000 IT professionals will be needed by 2024. However, <a href="https://economia.uol.com.br/reportagens-especiais/mercado-de-trabalho-busca-desenvolvedores-ti/#page5" target="_blank" rel="noopener noreferrer">the current education system is only graduating 46,000 students per year</a>.
<h2>Seeking creative solutions for hiring</h2>
Tech companies have different approaches to hiring talent: they leverage head-hunters, rely on in-house scouting teams, reach out to their networks, and partner with entrepreneurship hubs. No matter how many strategies these companies may have to recruit new employees, their efforts will be useless unless more developers are trained every year. With a traditional education sector that has not been able yet to evolve and meet the needs of the market, new models have appeared to try to solve the shortage of tech talent. From online course platforms like Udemy or Codeacademy to coding academies like Digital House to intense coding bootcamps like Brazilian Trybe or <a href="/a-fintech-cultivates-tech-talent-in-latin-america" target="_blank" rel="noopener noreferrer">Accion Venture Lab’s portfolio company Henry</a>, many startups are working towards the same goal: training better developers in a more efficient way.

As employers realize that some of these emerging models are not only providing fast education but also equipping their graduates with the latest tech tools, improving their much-needed soft skills, and putting them to the test under a true work environment, we might see the talent gap start to close while digital transformation continues to move full steam ahead. Ultimately, these solutions will help more people find employment while helping more businesses succeed in a more digital world.
<h2>Join us for our next webinar</h2>
This blog is part of a <a href="/now-is-the-time-for-fintech-entrepreneurs-in-brazil" target="_blank" rel="noopener noreferrer">series of articles</a> and webinars Accion Venture Lab has launched with the support of FedEx to help Brazilian SMEs overcome some of the challenges they are facing during the COVID-19 crisis. In our upcoming webinar on July 14, startups will share how they source and retain the best tech talent in Brazil and discuss with other players in the industry how they are helping to solve the need for developers with innovative education models.

Hiring tech talent is becoming an odyssey in Brazil

Debdoot Banerjee

Elizabeth Winters

When Sadashiva had to close his food stall business during the pandemic, a digital loan provided relief

Twenty years ago, Sadashiva Das started cooking and selling panipuri, a popular street food made of fried flatbread and flavorful fillings. It took several years for him to build his reputation in the bustling market area of Khurda, located in the Odisha province of eastern India. As his panipuri business took off, Sadashiva was able to feed and provide for his family. The income he earned from his business also allowed him to send his son and daughter to college.

Like other street vendors across India, Sadashiva had to close his panipuri business — the only source of income for his family — when the COVID-19 pandemic began. Because coronavirus is highly contagious, he was unsure when he would be able to restart his business, if at all. Without the income from his food stall, the lack of cash became a major problem for him, and he recalled that he nearly slipped into a depression. He didn’t have enough savings to last for another few months, so he picked up a job as a daily wage worker to make ends meet.

After six very challenging months, Sadashiva learned that he could apply online for a loan to give his business some relief during this crisis. Although the online registration process is fairly easy, Sadashiva struggled because he doesn’t have much experience using technology. As a client of <a href="https://annapurnafinance.in/" target="_blank" rel="noopener noreferrer">Annapurna Finance Ltd.</a>, a microfinance institution and Accion partner in India, he received support through the loan process and Annapurna’s staff walked him through the online registration process.

Annapurna recognizes that technology can help their team to reach more clients, provide better customer support, improve the efficiency of their operations, and launch digital products that help microentrepreneurs stay in business. The pandemic has accelerated their focus on digitization. But many of their clients — especially those living in rural areas — need extra support to learn how to use digital tools. To build digital products that work for Annapurna’s clients, we surveyed Annapurna’s small business owner customers to understand <a href="https://www.accion.org/critical-lessons-from-a-survey-of-small-businesses-in-india" target="_blank" rel="noopener noreferrer">their experience and confidence using technology, how gender gaps affect digital access, the role of misinformation, and more</a>. Through <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion’s partnership</a>, we're working with Annapurna to develop new digital loan products for the micro, small, and medium enterprises they serve.

One month after he applied for the street vendor loan, Sadashiva received the disbursement he needed to restart his business. He reopened his panipuri stall while following the government’s pandemic safety measures, and his sales slowly returned. But while vaccines have rolled out and infections have dropped in countries like the United States, India is still facing devastating COVID-19 outbreaks. Skyrocketing cases have overloaded India’s health system and new lockdowns have left small business owners out of work again. Digital financial tools can help small business owners to weather this crisis, find a way to reopen their businesses safely, and help us to <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery" target="_blank" rel="noopener noreferrer">create a more inclusive recovery for all</a>.

A digital loan helps a street vendor get back on his feet

Maria Camila Gomez Silva

Español

<p>Paula Coxaj Acabal nació en Momostenango, una población rural en el altiplano occidental de Guatemala donde la mayoría de la gente vive de la agricultura. Se casó y se mudó a La Gomera, una población más cercana a la costa del Pacífico. Cuando el marido de Paula, siendo aún joven, falleció ella se puso a buscar trabajo desesperadamente para mantener a sus hijos. “Yo era una madre soltera, una mujer viuda de 35 años con 7 hijos. Estaba sola, sin saber leer y con un gran compromiso de sacar adelante a mis hijos&#8221;.  Motivada por su familia y con pocas opciones para ganarse la vida, decidió abrir su propio negocio.</p>
<p>“Yo empecé vendiendo verduras, cargaba el producto en un costal, tenía miedo de ir a un banco por falta de confianza, no me atrevía, pero supe de Génesis y fui a pedir mi primer préstamo de mil quetzales. Así empecé a trabajar hace 30 años: me di cuenta de que podía salir adelante con el crédito y crecer en mi negocio y pronto me dieron un segundo crédito de 2 mil quetzales”, nos dice Paula sobre su experiencia como emprendedora.</p>
<p>Gracias a años de arduo trabajo y a la capacitación recibida de la Fundación Génesis Empresarial, que la ayudó a aprender cómo administrar su negocio y su crédito, Paula convirtió su primer negocio informal de productos agrícolas en un pequeño imperio de tiendas en su comunidad. &#8220;Agradezco a Dios porque me permitió tener el apoyo de Génesis para comprar mi primer local”, dice Paula al pensar en los 40.000 quetzales de préstamo que le permitieron adquirir su propia tienda física. <a href="https://www.genesisempresarial.org/" target="_blank" rel="noopener">La Fundación Génesis Empresarial</a>, socia de Acción desde hace mucho tiempo, es una organización microfinanciera que atiende a pequeñas empresas en Guatemala.</p>
<p>Los negocios de Paula le han permitido brindar una vida mejor a sus hijos, enviarlos a la escuela y darles trabajo para que a su vez puedan mantener a sus propios hijos. Treinta años después de ese primer préstamo, ha logrado superar todos los desafíos y seguir haciendo crecer sus negocios, incluso expandiéndose hacia la venta de otros productos como ropa. Ahora es propietaria de nueve locales, que dan trabajo a decenas de personas en su comunidad, incluyendo a sus hijos. Hasta el presente continúa trabajando con el apoyo de la Fundación Génesis Empresarial y considera al equipo de Génesis como parte de su familia.</p>
<h2><strong>Una enfermera brinda atención médica a su comunidad marginada</strong></h2>
<div id="attachment_24398" style="width: 345px" class="wp-caption alignright"><img aria-describedby="caption-attachment-24398" class="wp-image-24398" src="https://content.accion.org/wp-content/uploads/2021/06/Cliente-2.jpg" alt="Jovita stands in the health center that she opened in her rural community in northern Guatemala" width="335" height="573" /><p id="caption-attachment-24398" class="wp-caption-text"><em>Jovita stands in the health center that she opened in her rural community in northern Guatemala</em></p></div>
<p>En el norte de Guatemala, Jovita Ester Chub Prado vive en una comunidad rural donde la atención médica y los medicamentos son escasos. La mayoría de las personas no tiene acceso a un vehículo para movilizarse hasta el hospital más cercano, que se encuentra lejos de sus hogares. Debido a su experiencia en enfermería, Jovita entendió cómo ayudar a su comunidad a mantenerse saludable.</p>
<p>“Mi sueño comenzó al ver la necesidad de mi comunidad, sin acceso a asistencia médica ni medicinas: yo quería ayudar a mis vecinos, había mucha necesidad en salud y las personas me buscaban para pedir ayuda, por los conocimientos que adquirí cuando trabajé como enfermera profesional en el hospital.&#8221;  nos comenta.</p>
<p>Jovita decidió abrir una farmacia y un centro de salud en su comunidad ubicada cerca de Playa Grande, en El Quiché. Al igual que Paula, recibió un préstamo para pequeñas empresas de la Fundación Génesis Empresarial para adquirir equipos y disponer de un local para llevar a cabo sus actividades. En su farmacia ofrece medicamentos convencionales y remedios naturales, realiza pruebas básicas en su laboratorio y ofrece consultas médicas a sus vecinos en su idioma local, que es el Qʼeqchiʼ. Su negocio no solo le brinda la oportunidad de ganarse la vida en una región carente de oportunidades económicas sino también, como muchas otras pequeñas empresas, de servir a su comunidad. El centro de Jovita satisface una necesidad crítica de sus vecinos, quienes de otra manera no podrían obtener la atención médica que necesitan. En particular durante la pandemia por COVID-19, poder acceder a servicios de salud en la comunidad es invaluable.</p>
<h2><strong>Creando oportunidades económicas en el Triángulo Norte</strong></h2>
<p>Estamos orgullosos de trabajar con proveedores de servicios financieros como la Fundación Génesis Empresarial, que abren oportunidades económicas en Guatemala al apoyar a propietarios de pequeñas empresas como Paula y Jovita. Junto con otras once empresas y organizaciones líderes, nos unimos a la Asociación para Centroamérica de la vicepresidenta de los Estados Unidos, Kamala Harris, para abrir oportunidades económicas en el Triángulo Norte: Guatemala, Honduras y El Salvador. Nos hemos <a href="https://www.accion.org/accion-joins-white-house-call-to-action-to-support-economic-opportunity-in-the-northern-triangle" target="_blank" rel="noopener">comprometido a apoyar el crecimiento de las micro y pequeñas empresas en la región</a> durante los próximos tres años, lo que redundará en beneficio de más de 400.000 personas.</p>
<p>Además de la pobreza y la violencia persistentes que enfrentan muchas personas en el Triángulo Norte, se han perdido más de 300.000 puestos de trabajo en la región debido a la pandemia por COVID-19. Las micro y pequeñas empresas necesitan nuestro apoyo para mantenerse operativas y poder recuperarse, especialmente en <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery" target="_blank" rel="noopener">regiones del mundo que enfrentan crecientes disparidades</a>. Al trabajar con nuestros socios para incorporar a tiendas de víveres, talleres de costura y pequeños agricultores al ecosistema digital, podemos mejorar aún más la salud financiera y la resiliencia de los pequeños negocios.  Así como Paula ha creado empleos en su ciudad y Jovita ha brindado atención médica a sus vecinos, cuando los empresarios tienen éxito, este éxito se propaga a las familias y comunidades. Abrir oportunidades para que estos empresarios se adapten y crezcan es fundamental para lograr una recuperación inclusiva y un futuro mejor.</p>


How two women grew their businesses and created a positive ripple effect in their communities in Guatemala 

Paula Coxaj Acabal was born in Momostenango, a rural town in the western highlands of Guatemala where most people rely on farming to earn a living. She married and moved to La Gomera, a town closer to the Pacific coast. When Paula’s husband passed away at a young age, she found herself in desperate need of a job to provide for her children. “I was a single mother – a widow at 35 with 7 children. Alone with no help and unable to read, I was determined to give my children a chance at a better life,” she said. Motivated by her family and with few other options to earn a living, she decided her open her own business.

“I started selling vegetables. I loaded the produce in a sack. I was afraid to go to a bank [for a loan] due to my lack of confidence. I didn’t dare,” said Paula about her early days as an entrepreneur. “But I found out about Génesis, and I went to ask for my first loan of 1,000 quetzals. That’s how I started working 30 years ago: I realized that I could get ahead with credit and grow in my business, and soon they gave me a second loan of 2,000 quetzals.”

With years of hard work and training from Fundación Génesis Empresarial to help her learn to manage her business and credit, Paula turned her first informal produce business into a small empire of stores around her community. “I thank God because he allowed me to have the support of Génesis to buy my first store,” says Paula when reflecting on the 40,000 quetzals loan that allowed her to purchase her own brick and mortar store. <a href="https://www.genesisempresarial.org/" target="_blank" rel="noopener noreferrer">Fundación Génesis Empresarial</a>, Accion’s longtime partner, is a microfinance organization serving small businesses in Guatemala.

Paula’s businesses have allowed her to provide a better life for her children, send them to school, and give them jobs so they can support their own children. Thirty years after that first loan, she’s managed to weather every challenge and continue growing her businesses, even expanding into selling other products like clothing. She now owns nine businesses, providing jobs for dozens of people in her community, including her children. To this day, she continues working with the support of Fundación Génesis Empresarial and considers the Génesis team to be part of her family.
<h2><strong>A nurse brings health care to her underserved community</strong></h2>
[caption id="attachment_24398" align="alignright" width="335"]<img class="wp-image-24398" src="https://content.accion.org/wp-content/uploads/2021/06/Cliente-2.jpg" alt="Jovita stands in the health center that she opened in her rural community in northern Guatemala" width="335" height="573" /> <em>Jovita stands in the health center that she opened in her rural community in northern Guatemala</em>[/caption]

In northern Guatemala, Jovita Ester Chub Prado lives in a rural community where health care and medicine are scarce. Most people don’t have access to a car to drive to the nearest hospital, which is far from their homes. With her background in nursing, Jovita saw a way to help her community stay healthy.

“My dream began when I saw the needs of my community, who didn’t have access to medical assistance or medicine. I wanted to help my neighbors. There was a great need for health care, and people came to me for help because of the knowledge I acquired when I worked as a professional nurse in the hospital,” she says.

Jovita decided to open a pharmacy and health care center in her community, located near Playa Grande in El Quiché. Like Paula, she received a small business loan from Fundación Génesis Empresarial to purchase equipment and secure space to open her practice. She stocks her pharmacy with conventional medicines and natural remedies, runs basic health tests in her lab, and offers medical consultations to her neighbors in their local language of Qʼeqchiʼ. Her business gives Jovita a way to earn a living in a region that lacks economic opportunity, but like many other small businesses, it also serves her community. Jovita’s center fills a critical need for her neighbors, who are otherwise unable to get the medical attention they need. Particularly during the COVID-19 pandemic, having accessible health care in the community is invaluable.
<h2><strong>Creating economic opportunities in the Northern Triangle</strong></h2>
We are proud to partner with financial providers like Fundación Génesis Empresarial, who are opening economic opportunities in Guatemala by supporting small business owners like Paula and Jovita. With eleven other leading businesses and organizations, we joined US Vice President Kamala Harris’s Partnership for Central America to open economic opportunity in the Northern Triangle of Guatemala, Honduras, and El Salvador. We’ve <a href="https://www.accion.org/accion-joins-white-house-call-to-action-to-support-economic-opportunity-in-the-northern-triangle" target="_blank" rel="noopener noreferrer">committed to helping grow micro and small businesses in the region</a> over the next three years, ultimately benefitting more than 400,000 people.

On top of the persistent poverty and violence that many people in the Northern Triangle face, more than 300,000 jobs have been lost in the region due to the COVID-19 pandemic. Micro and small businesses need our support to stay open and recover, especially in <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery" target="_blank" rel="noopener noreferrer">parts of the world facing growing disparities</a>. By working with our partners to bring grocery shops, tailors, and smallholder farmers into the digital ecosystem, we can further improve the financial health and resilience of small businesses. Just as Paula has created jobs in her town and Jovita has brough health care to her neighbors, when entrepreneurs succeed, their success ripples through families and communities. Opening opportunities for these business owners to adapt and grow is essential for an inclusive recovery and a better future.

Two women entrepreneurs carve out economic opportunity in Guatemala

Introduction

From our CEO and Board Chair

<p>Dear Friends,</p>
<p>The COVID-19 pandemic has forever changed our world. Millions have lost their loved ones, their livelihoods, or both. Decades of progress in reducing global poverty and expanding access to financial services have been put at risk. Lockdowns and social distancing have moved entire businesses online, threatening to leave behind those without the right skills and tools. Low-income people and small businesses are struggling to survive, and their road to recovery is more fraught than anyone else’s.</p>
<p>Accion is building an inclusive economic recovery by enabling people to access the financial products and services they need. Underserved people need savings, credit, and insurance, as well as digital skills and tools, to successfully pivot a business and build financial resilience for their families. During the crisis, inclusive financial service providers also have faced their own challenges, with potentially devastating consequences for millions of small businesses that depend on them for funding and growth.</p>
<p>Accion worked to ensure our partners around the world could continue supporting their vulnerable clients. With our partners, we provided entrepreneurs with forbearance and flexibility, so they had time to restart their businesses. We leveraged digital technologies to enable partners to stay in touch with clients and support those most in need. We quickly pivoted our research to understand the impact of the pandemic on small businesses. We also transformed how we work—strengthening our ability to provide all our support to partners and clients remotely.</p>
<blockquote><p>Families and small businesses have inspired us with their resilience and ability to adapt against overwhelming odds.</p></blockquote>
<p>Ultimately, our work has helped clients keep their businesses open, keep providing for their families, and gain the tools and skills they need to rebuild and grow.</p>
<p>As the recovery is picking up in wealthy countries, that’s not the case for low-income people in emerging markets, who are still dealing with extreme challenges. Yet families and small businesses have inspired us with their resilience and ability to adapt against overwhelming odds. With your support, we will continue enabling those most affected by the crisis to rebuild their livelihoods and participate in our increasingly digital economy—laying the groundwork for an inclusive recovery that opens opportunity for all.</p>
<p><img class="alignnone size-full wp-image-24349" src="https://content.accion.org/wp-content/uploads/2021/06/MESDianaSignature.png" alt="" width="117" height="57" /><img class="alignnone size-full wp-image-24350" src="https://content.accion.org/wp-content/uploads/2021/06/Dianasignature.png" alt="" width="129" height="52" /></p>
<p>Michael Schlein and Diana Taylor</p>
<p><img class="alignnone size-medium wp-image-24348" src="https://content.accion.org/wp-content/uploads/2021/06/MESDianapic-300x215.png" alt="" width="300" height="215" /></p>
<p>&nbsp;</p>
<h4>With access to simple financial tools like digital credit, crop insurance, and mobile payments, people around the world can build better futures. Watch the video to see how we connect people and small businesses to the tools they need to thrive.</h4>
<p><iframe src="https://player.vimeo.com/video/489464646" width="640" height="360" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p>


Global impact

<p>In 2020, Accion empowered vulnerable people and small businesses to access the financial tools, resources, skills, and knowledge they need to save money, start selling goods online, and recover from significant disruptions to daily life. Financial services like savings accounts, credit, insurance, and digital payments are critical to helping underserved groups build financial resilience and gain a foothold in our rapidly digitizing economy.</p>
<p>Accion supported underserved families and businesses facing unpredictable challenges—as well as the financial service providers striving to empower them—by:</p>
<ul>
<li>Investing in the entrepreneurs and companies that provide inclusive financial services.</li>
<li>Guiding and advising the management teams of these companies and others to ensure their success.</li>
<li>Studying and sharing successes, to export best practices to other companies and countries and overcome barriers to progress.</li>
<li>Conducting rigorous research and advocacy to advance inclusive financial systems for low-income people around the world.</li>
</ul>


Our teams

Our work around the world

The Center for Financial Inclusion

<p>The Center for Financial Inclusion (CFI) works to advance inclusive financial services for the billions of people who currently lack the financial tools needed to improve their lives and prosper. We leverage partnerships to conduct rigorous research and test promising solutions, and then advocate for evidence-based change. CFI was founded by Accion in 2008 as an independent think tank on inclusive finance.</p>
<p>The global pandemic energized CFI’s purpose and its efforts to support an inclusive economic recovery that uplifts the most vulnerable people around the world. In 2020, CFI launched a new strategy that focuses on addressing the most pressing challenges of today and those to come. CFI continues to conduct research and produce evidence-based insights that inform the work of investors, policymakers, donors, and financial service providers as they support vulnerable households and businesses in recovering from the crisis and building the financial resilience they need to grow and thrive.</p>


Client stories

<p>Pallavi is the co-owner of Navya Collections, a garment shop in Warangal, India that focuses on selling saris. Her mother started the store with a small investment, nearly her entire savings, which she used to make 50 to 100 saris. When Pallavi needed a loan to expand the business, other lenders turned her down, but Accion partner Sub-K provided the financial lifeline she needed.</p>
<p><iframe title="vimeo-player" src="https://player.vimeo.com/video/521035888" width="640" height="360" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p>


<div id="attachment_24345" style="width: 629px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-24345" class=" wp-image-24345" src="https://content.accion.org/wp-content/uploads/2021/06/Udodirim-300x207.png" alt="" width="619" height="427" srcset="https://content.accion.org/wp-content/uploads/2021/06/Udodirim-300x207.png 300w, https://content.accion.org/wp-content/uploads/2021/06/Udodirim.png 517w" sizes="(max-width: 619px) 100vw, 619px" /><p id="caption-attachment-24345" class="wp-caption-text">Udodirim Agwu | Field Intelligence client | Abuja, Nigeria</p></div>
<p>As hospitals reduced appointments during the pandemic and patients avoided clinics, more people across Sub-Saharan Africa relied on their neighborhood pharmacies for essential medications and basic health services. This includes Euness Pharmacy, owned and operated by Udodirim Agwu in Abuja, Nigeria.</p>
<p>On top of the challenges of running a small business, pharmacists like Udodirim struggle with the complexity of managing a supply chain upended by the pandemic. Field Intelligence, an Accion Venture Lab portfolio company, helps pharmacies in Kenya and Nigeria manage their inventory through their Shelf Life subscription service. Pharmacists order the medicine and products they need through the platform, and Shelf Life delivers it directly to them.</p>
<p>“They save us costs—big ones—because we don’t have to go and pay transport fees to come procure the goods,” says Udodirim. “They bring them right here to the shop. Secondly, they educate us about our drugs that are about to expire…which also gives us ease of doing business,” she added.</p>
<p>Michael Moreland, co-founder and CEO of Field Intelligence, says pharmacies like Udodirim’s are “the front line of the health system in their communities.” He explains, “In these markets where there is such a tremendous shortage of doctors and formal health care services, these local community pharmacies provide an enormous amount of basic primary and essential care to their communities.”</p>
<p>As the pandemic unfolded, supply chains were quickly turned upside down, and prices for routine medicines—especially vitamin C and acetaminophen—went through the roof. Using their data capabilities, Field Intelligence worked to stabilize prices for their pharmacy customers and continued supplying them with critical products that they couldn’t procure on their own.</p>
<p>For Udodirim, the costs, time, and headaches she’s saved thanks to Field Intelligence have made a world of difference for her business. “Shelf Life has been so tremendous,” she says. “It’s been my partner in progress.”</p>


<div id="attachment_24352" style="width: 645px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-24352" class=" wp-image-24352" src="https://content.accion.org/wp-content/uploads/2021/06/USATSI_16003529-300x221.jpg" alt="" width="635" height="468" srcset="https://content.accion.org/wp-content/uploads/2021/06/USATSI_16003529-300x221.jpg 300w, https://content.accion.org/wp-content/uploads/2021/06/USATSI_16003529-768x566.jpg 768w, https://content.accion.org/wp-content/uploads/2021/06/USATSI_16003529-1024x755.jpg 1024w" sizes="(max-width: 635px) 100vw, 635px" /><p id="caption-attachment-24352" class="wp-caption-text">Valonne Smith | Accion Opportunity Fun client | Stockton, California | photo by Clifford Otto, USA Today Network</p></div>
<p>Valonne Smith had long noticed that Black women like herself lack options to take care of their hair without harsh treatments and chemicals. That’s what initially inspired her to open her own salon called Natural Do in Stockton, California.</p>
<p>Valonne applied her previous experience in business management, as well as her sister’s experience as a cosmetologist, to get the business started. “The drive to be an entrepreneur was always in me—it was just about finding the right fit. And when I found it, I took the plunge,” she says.</p>
<p>Valonne’s clients enjoy the upbeat and happy atmosphere in her salon. “And our salon smells good, because we’re not frying hair with chemicals!” she says. “We teach people to love and care for their hair just the way it is, without the breakage from harsh treatments.”</p>
<p>In 2018, a couple years after starting Natural Do, Valonne needed a loan to grow her business and reach more customers, so she applied for working capital through Opportunity Fund, now part of Accion Opportunity Fund. “The process was simple, and I was able to get the working capital right away,” she says.</p>
<p>The pandemic forced Valonne to temporarily shut down her salon for months, threatening the survival of her business. She checked in with her two full-time employees every week, often sending them information on unemployment benefits and grants.</p>
<p>Valonne was very relieved to receive a $5,000 COVID-19 relief grant from Accion Opportunity Fund—the organization formed in 2020 when Accion U.S. Network united with Opportunity Fund. The grant was made possible by the Small Business Live virtual concert and fundraiser benefitting Accion Opportunity Fund in June 2020, featuring performances by superstars Ms. Lauryn Hill, Leon Bridges, Brittany Howard, and more.</p>
<p>Valonne immediately used her new funds to finish paying off her original loan from Opportunity Fund. Now, she has a brighter outlook for the future. As she starts safely reopening, she’s already formulating plans to expand her vision for black women’s hair care into the Bay Area.</p>


Accion Opportunity Fund

<p>U.S. small businesses anchor local economies while creating opportunities for their families, their employees, and their neighborhoods. Yet business owned by people of color, women, and immigrants often struggle to secure capital and resources, as they are systematically shut out from traditional financing.</p>
<p>In the U.S., Accion has worked for more than 25 years to create an inclusive and healthy financial system that supports the nation’s small businesses by connecting entrepreneurs to affordable capital, educational resources, coaching, and networks. We focus on underfunded entrepreneurs who often lack access to the financial services they need to build and grow their businesses. In 2020, Accion’s U.S. Network team joined forces with Opportunity Fund, a community development financial institution based in California, to form Accion Opportunity Fund. This furthered the organizations’ joint missions of scaling mission-based lending and business support services across the United States.</p>


Our impact in 2020

In memoriam

<p><img class="alignnone wp-image-22524" src="https://content.accion.org/wp-content/uploads/2020/10/joe-300x262.jpg" alt="" width="472" height="412" srcset="https://content.accion.org/wp-content/uploads/2020/10/joe-300x262.jpg 300w, https://content.accion.org/wp-content/uploads/2020/10/joe.jpg 322w" sizes="(max-width: 472px) 100vw, 472px" /></p>
<p>In October 2020, Accion’s founder and beloved member of the Accion family Joseph H. Blatchford passed away at the age of 86. Joe was a courageous and charismatic leader who overcame cultural and economic differences to help disadvantaged people around the world.</p>
<p>Joe founded Accion to recruit young Americans to build schools, drainage channels, and other infrastructure projects for low-income communities in Latin America. He wrote, “We believe that the collective initiative of hundreds of such communities can bring progress without bloodshed, and champion the most revolutionary idea of all—the dignity of the individual human being.” Joe’s vision was to provide vulnerable people with the tools they need to help themselves—and while the tools have changed, his vision remains.</p>
<p>The foundation Joe built positioned Accion to become a global leader in expanding financial inclusion to benefit underserved populations around the world. After Accion issued its first loans to small, informal enterprises in Brazil in 1973, Accion’s clients shattered the myth that the poor were bad credit risks. Given access to affordable capital, they could and would improve their lives. From that point on, Accion expanded a network of microfinance programs and partners across the world, and harnessed new technologies to meet the needs of low-income clients. Joe’s pioneering spirit lives in our work, and Accion’s staff continues to find inspiration in his legacy.</p>


<p><img class="alignnone wp-image-24359" src="https://content.accion.org/wp-content/uploads/2021/06/Delegation_Bolivia_BancoSol_2012_16-300x192.jpg" alt="" width="584" height="374" srcset="https://content.accion.org/wp-content/uploads/2021/06/Delegation_Bolivia_BancoSol_2012_16-300x192.jpg 300w, https://content.accion.org/wp-content/uploads/2021/06/Delegation_Bolivia_BancoSol_2012_16-768x491.jpg 768w, https://content.accion.org/wp-content/uploads/2021/06/Delegation_Bolivia_BancoSol_2012_16-1024x654.jpg 1024w, https://content.accion.org/wp-content/uploads/2021/06/Delegation_Bolivia_BancoSol_2012_16.jpg 1230w" sizes="(max-width: 584px) 100vw, 584px" /></p>
<p>In February 2021, Accion lost a dear friend and colleague: Kurt Koenigsfest, CEO of our longtime partner BancoSol in Bolivia. A champion for financial inclusion, Kurt led BancoSol since 2000, and his work pioneered the commercial model of microfinance that today is used across the world to enable millions of low-income people to access the basic financial tools they need to build better lives.</p>
<p>Under Kurt’s leadership, BancoSol provided more than 1.5 million low-income consumers and small businesses in Bolivia with the high-quality financial services they need to grow and thrive. And throughout the COVID-19 pandemic, Kurt oversaw the rollout of digital financial products that allowed customers to continue to access essential financial services during lockdowns and uncertain circumstances.</p>
<p>In Kurt’s memory, Accion and BancoSol partnered to create the Kurt Koenigsfest Memorial Scholarship Fund to help provide educational scholarships for the children of BancoSol’s hardworking clients, who mattered so much to Kurt. The field of financial inclusion lost a leader much too soon, but Kurt’s legacy lives on in the families, small businesses, and communities he helped support, and it will continue to inspire our work to build a financially inclusive world.</p>


Together, we can build a better future

<p>Our work remains more urgent than ever. We rely on the support of visionary individuals, and innovative global partnerships across the public and private sectors to enable and amplify our work. Together, we can create a more inclusive economic recovery—where every individual has access to resources and services to build resilience, seize opportunities, and reach their full potential.</p>
<p><a href="https://give.accion.org/page/contribute/"><strong>There are many ways you can support our work.</strong></a> To learn more about our innovative partnership opportunities, contact Nazanine Scheuer at nscheuer@accion.org</p>


Accion 2020 financials

<p>Accion’s most recent audited financial statements are available <a href="https://www.accion.org/financials">here</a>.</p>


Board of Directors

<p>You can view Accion’s Board of Directors <a href="https://www.accion.org/about/our-board-of-directors/">here</a>.</p>


In 2020, Accion provided critical financial tools for the people most affected by the global pandemic to build resilience and rebuild their livelihoods. Our work is laying the foundation for an inclusive recovery that opens opportunity for all. 

Report

<h1>Building a resilient and inclusive future</h1>
<h4>We open opportunity to rebuild, adapt, and thrive:</h4>
The COVID-19 pandemic is the most severe challenge to face low-income and underserved people in our lifetimes—threatening their survival and ability to provide for their families. In 2020, Accion worked to ensure vulnerable people can access the financial tools they need to safely save money, grow a business in our increasingly digital economy, or better protect themselves in a crisis.

The pandemic exacerbated economic inequalities that have made life harder for low-income people, women, and other underserved groups. Accion quickly pivoted to start bridging these divides and build the resilience of our partners and their vulnerable clients. We leveraged digital technology to expand access to financial tools that help people live healthier, safer, more prosperous lives—tools usually denied them. We invested in the entrepreneurs and companies that provide inclusive financial services. We guided and advised these companies and others to ensure their success. And we conducted rigorous research and advocacy to advance inclusive financial systems for low-income people around the world.

Accion 2020 Annual Report

Latest

We harness the power of digital technology to

A GLOBAL NONPROFIT

We harness the power of digital technology to create a financially inclusive world.

We focus on global challenges

Building resilience

Feeding Families

SAVING MONEY

Emergency insurance

BUILDING CREDIT

Reliable Food Supply

Economic Progress

How we work

Advise

Invest

Partner

Influence

With support from fintech, farmers can grow an inclusive global recovery

An embedded finance platform helps mom-and-pop shops grow in Indonesia

Three ways to bridge disparities and close digital gaps for MSMEs

Read more

Latest

Sign up to receive emails