Myanmar: The final frontier

Accion clients in Myanmar.

You might also notice the heat, the dense traffic, and the stray dogs. Or you might not. But one thing you certainly won’t miss is the booming development throughout the city. From the airport under construction to the ditches alongside widening boulevards and the cranes hovering above soon-to-be skyscrapers, you understand that Myanmar is a country in rapid transition.

But driving through the streets of Yangon, you quickly realize that the promise of development belies the realities of life for the citizens of one of Southeast Asia’s poorest countries. More than a quarter of its 51 million people live in poverty. Of 187 countries in the 2014 UNDP Human Development Index, Myanmar ranked 150th. The problems extend beyond basic indicators of life expectancy, education, and per capita income: A stark 80 to 90 percent of the population lacks access to formal financial services. In a country that has recently resumed relations with the international community after 50 years of military rule and isolation, economic development cannot come fast enough.

But things are happening. A new government is helping Myanmar rejoin the rest of the world. The authorities have granted licenses to foreign banks, which are racing to open branches across the country. Big corporations are investing. Mobile-phone usage is rocketing, from 1 percent in 2009 to 13 percent in 2014 to an estimated 80 percent by 2016, according to the country’s Ministry of Telecommunications and Information Technology. Accion is playing a modest role in that transformation, channeling new investment and skills to help Myanmar’s small businesses and families save, borrow, and, ultimately, build better lives. New roads and buildings are high profile and important symbols of development; less obvious but perhaps far more critical is access to basic financial services.

Following almost two years of careful research, planning, and negotiations, Accion and partners FMO and Triodos invested in one of the earliest microfinance institutions established in the country: DAWN Microfinance, originally launched in 2002 as a program of Save the Children.

Accion staff have assumed key executive and governance positions at Dawn, including that of CEO and seats on the board. The plan is to build upon the team already in place and significantly expand Dawn’s client outreach and its range of products and services. Accion believes that Dawn can serve as a model for the country’s nascent microfinance industry, influencing both the development of the sector and its regulation. Ultimately, the hope is that Accion’s success in Myanmar will inspire other financial inclusion players to invest in the country.

The daily catch

Morning in Mawlamyaing is hazy and sweltering, and it smells of fish. The capital city of Mon State, a six-hour drive southeast of Yangon through heavy, single-lane truck and motorcycle traffic, lies at the mouth of the Thanlwin River. Ma San Htwe sells fish at the Maung Ngan Market. She sits on a wooden fruit crate in one of the market’s many walkways. A makeshift counter of wood planks sits between us. Her product rests on display on metal trays, bloody water and silver scales covering every surface – the table, the ground, my shoes. The stench is initially hard to tolerate, but it becomes less noticeable as time passes.


She works while we talk, occasionally chopping fish with a cleaver on a wooden block beside her. She’s 39, has three children, and has been a fishmonger for 20 years. Her daily routine seems exhausting: she rises at 3:00 a.m., takes a horse-drawn carriage to the harbor for 1,000 kyat (about 80 cents), buys the fish, and transports it back to the market, where she sets up and starts selling by 6:00 a.m.

“You have to get there early if you want the best fish,” she says through my Burmese interpreter.

She works until 1:00 p.m. and then goes home to cook, clean, and iron clothes. She goes to bed at 9:00 p.m. Her husband is a carpenter, and only her youngest child is in school. The others dropped out of high school because they were not interested in getting an education.

She wants to open her own fish market one day and buy a fishing boat. She tells me she makes good money — about 20,000 kyat on a good day, or about $16 — but that wasn’t always the case.

Just a little over two years ago, loan officers from Dawn Microfinance came to Maung Ngan, fanning through the maze of tarp-covered walkways and passing out pamphlets to promote microloans. Dawn lends to women only, in solidarity groups – a common practice where borrowers form a group and act as each other’s guarantors. If someone defaults, the group collectively foots the bill. But defaulting is rare in these groups, given that peer encouragement and fear of shame play a big role in clients’ repayment behavior.

Ma San Htwe belongs to a group of 20 women. She has borrowed five times – and her current loan is for $350. She has used her loans to purchase larger quantities of fish in greater variety. She even sells prawns and river lobsters – items I did not see being offered by other fishmongers at the market. Her income has increased, as have her profits, and she’s been able to invest in some gold jewelry in lieu of a formal savings account. Despite her financial success, Ma San Htwe does not have a bank account. She does not have a safe place to keep her money or save her extra income. She does not have a cell phone. She does not keep track of her income and expenses. Her math skills are rudimentary. And her story is virtually that of every other client I spoke to during my time in Myanmar.

It’s Myanmar’s time


Naming the institution Dawn might be no accident. Microfinance in Myanmar is a fledgling industry. A report from the Consultative Group to Assist the Poor published in 2013 indicated that demand for microfinance in Myanmar exceeds supply by four times and that the banking sector has so far found it commercially challenging to extend financial access to the poor.

Despite the emerging democracy’s considerable growth in the past two years, the need for financial services for poor households remains acute. Today, there are about 150 microfinance institutions operating in the country, although few, if any of scale or positioned to scale. For most Burmese, microfinance institutions represent the only means of accessing affordable credit. Client after client told me that they had never been approached by any microfinance institution other than Dawn. Some had borrowed from loan sharks. I even met a woman who had been a loan shark herself but decided instead to take out a loan from Dawn to start her own food shop and family restaurant.

Clients want more. They want larger loans. They want individual loans. They want training.

Myanmar’s microfinance industry — including Dawn — is making advances and a more favorable regulatory environment is emerging, but the market needs time to mature.

Dawn currently serves more than 54,000 clients with loans ranging from $60 to $500. Its loan portfolio is just about $4.7 million. It employs almost 200 staff members across 16 branches in five states, with plans to add approximately 25 branches over the next three years — both to deepen its impact in currently covered areas and to expand to more remote and underserved areas of Myanmar.

The Accion-led partnership will be instrumental in driving that growth. In addition to strengthening Dawn’s operations by seconding more skilled senior staff, Dawn will implement new training and coaching programs, develop a wider range of products and services, establish new HR and IT systems and internal controls, and prioritize customer education and protection.

The people of Myanmar have been waiting half a century for such opportunities, and Accion is working hard to deliver.

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