As a means of reaching underserved customers at low cost, financial institutions have designated authority and responsibility to banking agents to deliver financial products and services. Agent banking is a model for delivering financial services whereby an institution — be it a financial service provider or a mobile network operator — partners with a retail agent to extend services in remote or hard-to-reach areas.
<blockquote>Innovative financial institutions are streamlining and digitizing their processes, and utilizing real-time data and analytics to increase both the efficiency and effectiveness of agent networks.</blockquote>
Despite the growing volume of agents, the agent network model is rife with utilization and operational challenges. The good news is that technology offers financial institutions an opportunity to make agent models more efficient and productive for themselves and their customers. Based on in-depth interviews with industry experts and senior bank officers, and supplemented by a review of the literature, this brief examines the role of technological innovation as a potential driver for improving the quality and maximizing the productivity of agent models.

We found it useful to study this topic across two time-horizons: the short-and long-term; and from the perspectives of the main stakeholders in the agent network triad: the financial institution, the agent, and the customer. This structure allows us to account for two key trends: 1) the diminishing role of cash as a payment form, and 2) an increasing readiness of institutions to embrace digital transformation. It also allows us to explore commonly-cited challenges with agent networks through an illustrative, hypothetical narrative lens, giving voice to each stakeholder group. The narratives are accompanied by real-world examples of how technological integration and innovation has helped to improve and streamline processes within agent networks. Finally, we anticipate that in a future financial services ecosystem that is digital and cashless or cash-lite, we will see the role of the agent evolving from transaction processors to solution providers.

Leveraging Technologies to Improve the Quality and Maximize the Productivity of Agent Models

Institute of International Finance

MetLife Foundation

Mainstreaming Financial Inclusion: Best Practices

Agent Banking

Banks

Data Analytics

Delivery Channels

Financial Service Providers

Financial Technology

Fintechs

Partnerships

Rural Populations

Telcos

Underserved Groups

Report

One of the most stubborn challenges in financial inclusion has been getting past the famed “last mile” that stands between a well-designed service and the customer, particularly customers in tough-to-reach areas or who have traditionally been excluded from formal services. This is the case in much of China, where there are many remote, rural communities with people who have long been denied access to financial services that promise to boost household resilience and welfare.

But China is also home to solutions that, if pushed to a far greater scale, could get financial services to travel that last mile and generate the “first touch” on a smartphone screen that today represents the new age of products and services.

A wide range of approaches to solving the last-mile problem has been tried around the world. The most common has been the establishment of agents or shared service centers located within shops, employers, or even government agencies.

China is no exception. Regulators and local agencies have encouraged the deployment of shared service centers to augment the agency network established through the Postal Savings Bank. They have even provided subsidies to local businesses to provide these financial services. The effect is that, by 2018, the People’s Bank of China reported the existence of 914,000 rural service centers, covering 99.7 percent of China’s administrative sub-regions. Little wonder, then, that the World Bank’s Global Findex 2017 survey showed that just over 80 percent of China’s adults have a bank account, categorizing them as “included” by the most basic measure.
<h3>Explosion of Internet Access Offers New Access to the Excluded</h3>
Today, most last mile solutions target the 42 percent of Chinese who are not yet using internet or mobile payments. However, that proportion has already shrunk from more than two-thirds only seven years ago, while the share of people using mobile payments has more than tripled to 41 percent. For this large and fast-growing group, “first touch” solutions are required; that is, solutions provided on their mobile phones, bridging the tiny gap between the users’ fingers and their smartphone screens.
The question now is whether these solutions cut out the aggregators; the intermediaries that close the last-mile gap for traditional financial services.

A new <a href="http://bfaglobal.com/projects/the-changing-role-of-aggregators-in-digital-finance-ecosystems/">white paper</a> we’ve just released suggests that this is not the case: in fact, powerful new models of aggregation are emerging in the forms of mobile, app-based financial marketplaces. Created by large techfin companies like Ant Financial and Tencent Holdings, these marketplaces offer customers an expanding range of financial services—digital credit, mutual funds and insurance—offered by third-party providers. Customers can seamlessly transfer funds to providers in these growing ecosystems, and it’s far easier to choose and pay for additional services. It seems likely that these techfins—as new types of digital aggregators—will curate and recommend bespoke financial service solutions using artificial intelligence applied to the wide array of financial data collected, as clients browse and build their financial portfolios (see image above).
<h3>The Rise of the Digital Aggregator</h3>
These new digital aggregators hold great potential to advance financial inclusion by linking clients effectively to financial services that were out of reach before. By reducing the costs of distribution and administration from collecting even small savings, repayments, or premiums, they may make it cost-effective for financial providers to reach people with far lower incomes.

However, will greater choice necessarily improve a customer’s financial health? Hard to say. Financial health is a relatively new term, <a href="https://cfsinnovation.org/research/financial-health/">introduced</a> by the Center for the Study of Financial Innovation (CFSI), and now widely used in the U.S. but less so in other parts. Financial health measures not just whether people have and are using a particular category of product, but whether they can achieve certain outcomes that are considered indicators of financial health; for example, can they meet daily expenses and save a lump sum that is large enough to cover an unexpected expense? Do they undertake longer-term planning of their finances? Do they feel anxiety about their finances? Research in the U.S. has shown that while most Americans today are financially included, a majority are not financially healthy by these measures.

The concept has not been measured or tested yet in China but it seems equally applicable in an environment with high levels of financial inclusion. In particular, as the use of digital aggregation grows, China has the opportunity to research the financial health outcomes from bundling different products for different segments of people. Given that they are now digitally connected and using apps and smart phones, the costs of experimenting with and measuring financial health is much lower than before.
<h3>Delivering (Financial Services) to the Deliverymen</h3>
In our white paper, we cite the example of urban deliverymen who work on a casual basis for e-commerce platforms like Meituan Dianping, typically receiving US $0.20 to $0.50 for each completed delivery. There are now millions of people across China performing similar “gig” work, and their incomes are relatively low (by urban standards) and volatile. Such workers can see their incomes dented at any time by change in their health, by the weather, or even by the day of the week. Many come from rural areas and often leave behind dependent family members. Without a residence permit in urban areas (<em>hukao</em>), these workers lack access to welfare services like health care. They are part share of China’s urban working low-income group. However, aggregated by employment platforms, these deliverymen offer an opportunity for a set of natural experiments; what financial products could they take up and use that would smooth their consumption, reduce their risk exposures, and perhaps even unlock loan or equity capital to start their own businesses at home if they establish a good track record.

Gig workers like these can now be found in most parts of the world. But in China the size of the group, and their existing use of digital platforms for their livelihoods, opens great opportunities to discover whether digital aggregation can travel that last mile to the first touch on an app that could deliver financial health on an epic scale.

Financial Services in China: Crossing the Last Mile to Reach the First Touch

China

Blog Post

<i>This post was originally published on the <a href="http://www.cgap.org/blog/financial-inclusion-glass-half-empty-or-half-full?utm_source=CGAP+Reader+%2808.06.18%29&amp;utm_campaign=CGAP+Reader+%2808.06.18%29&amp;utm_medium=email">CGAP Blog</a> and is re-published here with permission.</i>

We can choose to see a glass as half empty or half full. And our perspective often has a lot to do with our initial assumptions.

Beth Rhyne and Sonja Kelly of the Center for Financial Inclusion (CFI) have generated discussion in the financial inclusion community with their paper exploring the latest <a href="https://globalfindex.worldbank.org/">Findex </a>data, titled “<a href="https://www.centerforfinancialinclusion.org/financial-inclusion-hype-vs-reality-deconstructing-the-2017-findex-results-2">Financial Inclusion Hype Versus Reality</a>.” In the paper, Rhyne and Kelly express concern that the rate of access to new accounts slowed between 2014 and 2017 and that the usage gap for those accounts appears to be growing. They also highlight stagnation in the growth of credit and a decline in savings, but an increase in the use of payments. While I have very little to disagree with in their paper, I think the financial inclusion community has a lot more cause for optimism than it makes out.

Let me state up front that it has never been my expectation that we would reach full financial inclusion by 2020. Or even that 79 percent of adults in developing countries would have an account by 2020, a prediction made by Rhyne and Kelly in their previous paper, “<a href="http://www.centerforfinancialinclusion.org/fi2020/mapping-the-invisible-market/by-the-numbers">By the Numbers: Benchmarking Progress Toward Financial Inclusion</a>,” published after the release of the last Findex data set in 2015. The World Bank’s access goal is aspirational and meant to inspire action, which it clearly has. But as Rhyne and Kelly quite correctly point out, accounts are largely meaningless if people are not using them. The point of the Findex data is to help us measure progress against the overall access goal and to understand the levers that will take us to the next level. And there is plenty of food for thought on what the key levers might be in this year’s Findex.

Over the course of two blogs, I would like to offer a few reasons why I believe we have done better than Beth and Sonja think, starting with access.

While I would describe this year’s CFI report as overly pessimistic, I would say the 2015 paper was overly optimistic. The 2015 report assumed straight line increases in access, based on the rate of growth achieved between only two data points: the 2011 and 2014 Findex. While the report acknowledges that this was done to present a scenario for discussion, the net effect was to create an overly optimistic strawman. It seems obvious in hindsight that the pace of change achieved between 2011 and 2014 was not likely to be repeated. Why? Because progress doesn’t move in straight lines. New gains at the margin will be harder to reach than previous gains. This holds true at the country level and for important segments within countries.

At the country level, there is an implicit assumption in “By the Numbers” that all countries have equivalent regulations and providers willing to serve the poor. But all regulatory frameworks are not created equal, and not every provider has the same ability to serve the poor. One has only to look at the data for Sub-Saharan Africa to see this at work. Countries like Kenya, Ghana, Uganda, Tanzania and the West African Economic and Monetary Union (WAEMU) region put enabling regulatory frameworks in place and on average enjoyed a 2.5x increase in the rate of account access between 2011 and 2017, far outstripping the 43 percent increase for developing markets as a whole.

<img class=" size-full wp-image-25811 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2018/08/graph-greta-bull-cgap.png" alt="graph Greta Bull CGAP" width="624" height="245" />

Africa also demonstrates that providers and regulations matter. The continent is full of mobile network operators (MNOs) trying to mimic the success of M-PESA in Kenya. Although this did not happen overnight, MNOs have by now clearly demonstrated that they are making a measurable difference in multiple African markets. In the 2014 Findex, there were only 11 countries globally that had more than a 5 percentage point differential between access to any account (including mobile money) and access to a financial institution account only. And the gap between these two numbers in Sub-Saharan Africa was 5 percentage points. By this year’s Findex, this had grown to 28 markets, all but two of which were in Sub-Saharan Africa, and the gap grew to 10 percentage points. This differential is almost entirely attributable to the work of MNOs. According to GSMA's 2017 <a href="https://www.gsma.com/mobilefordevelopment/sotir/">State of the Industry Report on Mobile Money</a>, MNOs have added 338 million accounts in Sub-Saharan Africa, of which 122 million are active (this is corroborated by the Findex estimate of 124 million active mobile money accounts in the region). It is safe to say that MNOs have been responsible for adding the better part of 141 million accounts in Sub-Saharan Africa since 2011, representing 10 percent of new accounts globally. Given that Findex counts only active mobile money accounts, this quite significantly understates the level of new account addition in Africa compared to other regions.

But restrictive regulatory and competitive frameworks meant MNOs did not have the same opportunity everywhere. Nigeria, the continent’s largest market, has been a subject of great interest from MNOs for the past 10 years. But Nigeria has a regulatory framework that restricts the ability of MNOs to operate independently of banks, and this has had an impact on access. In contrast to the 2.5x growth in account access in the cohort of countries above, Nigeria experienced growth of only 33 percent in access to accounts from 2011 to 2017, and there is no appreciable difference between access to a financial institution account and access to any account. In the 10-country cohort, the average delta between any account and a financial institution account had grown from zero in 2011 to 21 percentage points in 2017. What’s more, the increasingly visible success of mobile money encouraged banks to expand their service offerings to the mass market. In these 10 countries, access to accounts in a financial institution grew by 52 percent, outperforming Nigeria, which grew financial institution accounts by only 30 percent. Providers and regulations clearly matter.

An additional challenge as we add accounts at the margin is delivering financial services to difficult segments. Women and rural households are particularly challenging, albeit for different reasons: women because of cultural and legal norms inhibiting access, and rural households because they are difficult and expensive for commercial providers to reach.

The gender gap remains stubbornly persistent at 9 percent in developing countries and is particularly challenging in the Middle East and North Africa region and parts of Sub-Saharan Africa and South Asia. The World Bank calculates that, of the remaining 1.7 billion unbanked, nearly half come from just seven countries: Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan. Bangladesh, Pakistan and Nigeria all have substantial gender gaps: 29, 28 and 24 percentage points, respectively. If in these three markets alone, access for women had grown at a rate equivalent to that experienced by men, the access numbers for 2017 would have increased by nearly 50 million, representing a 9.5 percent boost on the 515 million new account holders added in the three previous years.

For rural populations, the picture is a bit brighter. Access for rural households grew from 44 percent to 66 percent globally from 2011 to 2017, largely driven by rapid change in China and India. But Africa has maintained a stubborn 4 percent gap between access for the rural population and access for the population at large. If we could lift the roughly 61 percent of Africans who live in rural areas up to just the regional average, it would add another 20 million new accounts. If we brought them to the same level as urban Africans, it would add roughly 50 million new accounts.

Regulatory change that opens markets to increased competition and a sustained focus on equal inclusion for women and rural communities would do a lot to move us in the direction of full financial access.

For me, the glass is still half full. Meaningful financial inclusion is hard, involving a complex interplay of factors: regulatory change, viable business models and significant behavior change by new account holders. And for certain segments, cultural and legal norms and distance represent significant barriers. We have to be realistic about how long this will take. When I read the CFI report, it took me back to a time when everyone was disappointed that a new M-PESA had not emerged overnight. It didn’t. But we now have a whole slew of providers that are beginning to look like M-PESA did five years ago, sometimes in surprising places. Progress happens, just not according to our wishful time frames. On access, we have already harvested the low-hanging fruit — now the hard work truly begins.

<em><strong>What do you think? Do the Findex data present an overly rosy picture of the state of financial inclusion, or should we remain optimistic? Leave your comments below. </strong></em>

&nbsp;

&nbsp;

Financial Inclusion: Is the Glass Half Empty or Half Full? (Part 1)

Sub-Saharan Africa

Global Findex

Digital Financial Services

Enabling Environment

Mobile Banking

Trends

Women

<em>&gt; Posted by Center Staff</em>

<a href="http://www.centerforfinancialinclusion.org/fi2020/global-forum" target="_blank" rel="attachment noopener wp-att-11854"><img class="alignright" style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/07/fi2020-date.jpg?w=490" alt="" width="310" height="121" /></a>The FI2020 Global Forum in London gets underway this Sunday with a pre-Forum side meeting on financial inclusion for persons with disabilities (PWDs). This client-centric start feels like a fitting precursor for an event to expand financial inclusion.

Financial inclusion requires that financial services meet the unique needs of all clients, especially the needs of the most underserved and vulnerable client groups. Sessions throughout the Forum reflect this key tenet. In addition, there are side meetings on the <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/financial-capability">Financial Capability Roadmap</a> and the <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/client-protection">Consumer Protection Roadmap</a>, focused on moving these roadmap principles and recommendations to action. These and the other three <a href="http://www.centerforfinancialinclusion.org/fi2020/roadmap-to-inclusion/">financial inclusion roadmaps</a> were developed through a consultative process that collected and incorporated the perspectives of specific client groups.

Among Forum participants are representatives of various client segments – such as PWDs, women, the elderly, youth, rural populations, and migrants – to help raise awareness of their unique needs and assets. Here’s a collection of pertinent statistics for financial inclusion on these client segments:

Youth:
<ul>
 	<li>1.8 billion of the world’s population is between the ages of 10 and 24</li>
 	<li>87 percent of youth are concentrated in the developing world</li>
 	<li>About half the world’s youth report being economically active</li>
 	<li>38 percent of young adults have an account compared to over 54 percent of older adults</li>
</ul>
The Elderly:
<ul>
 	<li>In 1950, globally, 1 in 20 people were elderly. By 2050, it will be 1 in 5.</li>
 	<li>In 2000, only 6 percent of people in less developed countries were over 65 years old. By 2050, that number will grow to 20 percent.</li>
</ul>
Women:
<ul>
 	<li>In all regions, women are less likely to have a bank account than men</li>
</ul>
[caption id="attachment_12936" align="aligncenter" width="600"]<a href="http://cfi-blog.org/2013/10/25/seeking-financial-inclusion-for-all-at-the-global-forum/women-chart/" target="_blank" rel="attachment noopener wp-att-12936"><img class=" wp-image-12936 " style="border: 0" src="http://centerforfinancialinclusionblog.files.wordpress.com/2013/10/women-chart.png" alt="" width="600" /></a> Source: World Bank, Global Findex (Washington, DC: World Bank, 2011)[/caption]
<p style="text-align: left">Persons With Disabilities:</p>

<ul>
 	<li>Over 15 percent of the world’s adult population, or 785 million people, live with a disability</li>
 	<li>Unemployment for persons with disabilities is as high as 90 percent in the developing world</li>
 	<li>In developing countries, 80 percent of persons with disabilities live in rural areas</li>
</ul>
Migrants:
<ul>
 	<li>There are an estimated 214 million international migrants around the globe, and over 700 million more people migrate within their own countries</li>
 	<li>Developing countries will receive over $410 billion in remittances in 2013</li>
 	<li>Cross-border remittances are a growing market</li>
 	<li>The top recipient countries of remittances include India, China, Mexico, the Philippines, and Bangladesh</li>
 	<li>For the Philippines and Bangladesh, more than 10 percent of their GDP comes from remittances</li>
</ul>
Rural Populations:
<ul>
 	<li>About 20 percent of the world is living in rural areas, compared to about 40 percent in 1950. This trend, however, does not mean a shrinking of all rural populations. <sup>                        </sup></li>
 	<li><span style="font-size: 13px;line-height: 19px">In low and middle income economies, those who live in rural areas are much less likely to have an account than those living in urban areas</span></li>
 	<li>An estimated 30 to 40 percent of remittances go to rural areas</li>
</ul>
<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2013/10/10/fi2020-global-forum-gearing-up-for-the-homestretch/" target="_blank" rel="noopener">FI2020 Global Forum: Gearing Up for the Homestretch</a>

<a href="http://cfi-blog.org/2013/10/22/combatting-exclusion-for-persons-with-disabilities-in-india-and-mexico/" target="_blank" rel="noopener">Combatting Exclusion for Persons With Disabilities in India and Mexico</a>

<a href="http://cfi-blog.org/2013/03/08/international-womens-day-2013-where-are-we-with-womens-access-to-financial-services/" target="_blank" rel="noopener">International Women's Day 2013: Where Are We With Women's Access to Financial Services?</a>

Seeking Financial Inclusion for All at the Global Forum

Financial Inclusion 2020

Consumer Protection

Financial Capability

Refugees and Migrants

Youth

<em><em>The Financial Behavior of Rural Residents: Findings from Five Latin American Countries</em>
</em>By Jacqueline Urquizo - Published: March 2012

&nbsp;

This report provides the financial industry with important recommendations for creating and improving services to rural residents in Latin America. The study – based on market research conducted in Colombia, Dominican Republic, Ecuador, Nicaragua and Peru – provides a detailed portrait of access, use and attitudes towards financial services by rural residents, both farmers and microentrepreneurs.  The study offers a unique opportunity to understand the financial choices rural residents make and the attitudes they bring when they interact with banks and microfinance institutions.

The study targeted heads of households who work in an independent activity, specifically entrepreneurs and small farmers.  The study describes the rural population according to socioeconomic and psychographic variables, social interactions and financial behavior, considering credit, savings, investment and risk management.  Financial education and awareness and use of formal financial services are discussed.
<h3></h3>
&nbsp;

The Financial Behavior of Rural Residents

Colombia

Dominican Republic

Ecuador

Latin America and The Caribbean

Nicaragua

Peru

Adelina Dasso

Investment Officer

Alex Qian

John Fischer

Chief Investment Officer

Radhika Shroff

Deputy Chief Investment Officer

Robert Ongodia

Senior Director

Abhishek Agrawal

Jim Rosenberg

Jordan Coriza

Jose Amaya

Leora Klapper

Michael Schlein

Rachel Morpeth

El Salvador

India

Paraguay

Uganda

Agricultural and Rural Finance

Customer Centricity

Digital Credit

Entrepreneurs of MSMEs

Financial Health

Financial Inclusion Strategy

Human Touch

Impact Investing

Insurtech

Microfinance

MSME/SME Finance

Persons With Disabilities

Policy, Regulation and Government Initiatives

Saving

Smallholder Farmers

Article

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

Today, India is the center of innovation in the global effort to create a financially inclusive world. India’s government, fintech sector, investors, and financial service providers are making remarkable progress: the country’s pro-financial inclusion policies and the growing use of <a href="https://www.gsma.com/newsroom/press-release/china-and-india-to-account-for-half-of-all-new-mobile-subscribers-added-by-2020/">mobile phones</a> have connected more people to inclusive financial services than ever before. According to the World Bank’s Global Findex, only 35 percent of India’s adults had access to an account in 2011. In 2017, 80 percent did. Access alone is just a start. It’s an important first step toward a world where everyone has the broad array of basic financial tools they need to help themselves.

I recently met with Accion staff, partners, and the clients who we serve in India to see the difference that inclusive financial services make and the ways that we can help more families and businesses there. By prioritizing the following four issues in India and working with local partners throughout the country, we aim to create a financial sector that works for everyone:
<h2>Inclusive fintech helps India’s micro, small, and medium enterprises thrive</h2>
India’s micro, small, and medium enterprises (MSMEs) employ roughly 120 million people, making them the second largest ‘sector’ in India’s economy by employment, following agriculture. But despite their importance, these businesses often struggle to obtain the financing they need to hire, expand, or purchase inventory.

[caption id="attachment_18098" align="alignleft" width="500"]<img class=" wp-image-18098" src="https://content.accion.org/wp-content/uploads/2019/04/India-Trends-Aye-Finance-1024x768.jpg" alt="" width="500" height="375" /> <em>Visiting Accion partner Aye Finance in the Shadhara area of Delhi to see how Aye is creating opportunity for cluster-based clothing and shoemaker businesses.</em>[/caption]

The Indian government is addressing this issue through its <a href="http://www.makeinindia.com/about">Make in India</a> program and by offering <a href="https://www.mudra.org.in/">MUDRA loans</a> to small businesses. Accion’s local partners are also supporting India’s MSMEs: <a href="https://www.accion.org/clients/aye-finance">Aye Finance</a> studies small business clusters like brass works and garment weavers to understand how these businesses work and their typical financial performance. This information helps Aye acquire, vet, and lend to underserved customers quickly: Aye has grown from a startup to serve more than 60,000 clients, most of whom would not have received formal credit from any other lender.

Likewise, Accion partner <a href="https://www.accion.org/these-women-leaders-show-that-balance-is-better-part-two">Northern Arc</a> lends to nearly 200 microfinance institutions and inclusive fintech startups that, in turn, help more than 30 million clients send their children to school, launch businesses, and more.
<h2>Financial services should work everywhere — not just major cities</h2>
In 2018, India had the world’s largest rural population: <a href="https://www.un.org/development/desa/publications/2018-revision-of-world-urbanization-prospects.html">893 million</a> people. In the past, it has been very challenging to reach rural communities and provide them with savings, credit, insurance, and payments. But financial services should work everywhere — not just in major cities.

That’s why we’re working with financial service providers to find new ways to help rural areas. For instance, Accion partner <a href="https://www.accion.org/instead-sending-people-bank-sub-k-brings-banking-people">Sub-K</a> uses a banking correspondent model to reach the last mile for extremely remote customers: correspondents are small shop owners and other retailers who work where financial service providers typically don’t. They can transfer money, take deposits, and accept documentation on behalf of a bank, ensuring that customers can use financial services anywhere. Sub-K has used this network and its relationships with third-party banks to provide more than 2.2 million rural customers with credit, savings, payments, and other financial services.

We also work with Dvara KGFS, which provides a wide range of wealth management services to meet more than 320,000 rural clients’ needs. It uses a combination of back-end technology and <a href="https://www.accion.org/does-human-touch-still-have-a-place-in-a-high-tech-world/">human touch</a> to reach out to clients and provide them with individual advice and assistance, no matter where they live or work.
<h2>Financial advisory services help build financial health</h2>
[caption id="attachment_18102" align="alignright" width="375"]<img class=" wp-image-18102" src="https://content.accion.org/wp-content/uploads/2019/04/India-Trends-B-768x1024.jpg" alt="" width="375" height="500" /> <em>India is a global role model in digital innovation and inclusion.</em>[/caption]

Financial advisory services help families plan ahead and develop the skills needed to develop their <a href="https://www.accion.org/topics/financial-health">financial health</a>. But these services typically aren’t affordable for underserved customers: it can cost too much to provide low-income people with personalized financial advice.

But by using technology, we can provide everyone with individual financial insights that promote their long-term financial health. Accion portfolio partner Fisdom assesses users’ information to deliver unique tax, investing, and savings recommendations that help customers make informed financial decisions. Fisdom also offers insurance and pension products to help its clients prepare for the future. Fisdom is reaching clients who have never invested before with initial investment amounts of just a few rupees.

Likewise, Accion’s <a href="https://www.accion.org/classroom-phone-new-digital-training-program-entrepreneurs">Dialogue on Business</a> program with Standard Chartered UK has trained thousands of entrepreneurs on business management skills. We’ve also worked with Axis Bank to offer our Money Plan program to 30,000 people, helping families budget and use financial services to reach their goals.
<h2>Insurtech protects the world’s most vulnerable people</h2>
In the past, it cost insurance providers too much to sell, collect payments for, and administer policies to the underserved. But without insurance, many families live one illness, injury, or natural disaster away from financial ruin.

Accion’s <a href="https://www.accion.org/how-can-we-bring-insurance-to-those-who-need-it-most">insurtech</a> partners are using technology to protect some of the world’s most vulnerable people. They’re also demonstrating that insurance has immediate value and application. For instance, our partner <a href="https://www.accion.org/four-innovations-making-insurtech-more-inclusive">Toffee Insurance</a> sells health, personal accident, and lifestyle policies targeted to specific customer needs, such as accident insurance for bicycle commuters or dengue or seasonal disease insurance. By making insurance affordable and relevant, Toffee provides the policies that help more people recover from hardships.
<h2>Looking ahead</h2>
Accion will continue contributing to India’s remarkable progress promoting financial inclusion. By prioritizing these four issues and working alongside our local partners, we’ll help more Indian families and businesses access, use, and benefit from the formal financial sector.

India, fintech, and new trends accelerating financial inclusion

For nearly a decade, the World Bank’s <a href="https://globalfindex.worldbank.org">Global Findex</a> has contributed to the growing understanding that inclusive financial services advance developmental goals. <a href="https://www.elgaronline.com/view/edcoll/9781785360503/9781785360503.xml">New research shows</a> that financial inclusion leads to more autonomy for women, better education for children, and more employment — it’s a crucial enabler for so many of the United Nation’s Sustainable Development Goals.

But the truth is that, up until very recently, we didn’t have nearly enough data about how people used financial services and how they contributed to social and economic progress. Back in the 1970s, when Accion began studying the economic lives of the poor, financial inclusion was a backwater of development research.

That started to change right around the time I joined the World Bank, in 1998. Believe it or not, it was our U.S.-focused work that pushed us to start looking around the world. Research showed that, even in the U.S., entrepreneurs and small businesses used their personal savings, home equity lines of credit, and other personal assets as collateral to grow their businesses.

Because personal and entrepreneurial financial activity were so tightly intertwined, it soon became clear that we couldn’t understand one without the other. We assumed that, because microenterprise and personal financial activity frequently overlapped, providing individuals with better financial services should ultimately support their businesses and, in turn, lead to increased economic development. The problem was that we didn’t know what personal financing decisions people were making, what financial services they had, or if they even used them.

By 2008, the International Monetary Fund had started collecting some of this personal financial information, including how much money was deposited at banks and how many bank accounts had ever been opened in, say, Turkey. But that information wasn’t enough – it was just too simplistic: we didn’t know how many wealthy adults had accounts as compared to poorer adults; how many young adults had accounts as compared to older people; and we certainly didn’t know that men in Turkey were almost <a href="https://globalfindex.worldbank.org/">30 percentage points</a> more likely than women to have an account.

Today, we have data to show how those rates differ. With funding from the Bill &amp; Melinda Gates Foundation, we founded the Global Findex database with a passionate belief that to solve a problem you first need to measure it. By surveying how people in more than 150 countries access and use financial services, we’ve learned that we’ve made significant strides promoting financial inclusion and that more than 1 billion people have opened an account and claimed a foothold in the formal economy in the last few years. We also know that 3 billion people are still left out of or poorly served by the formal financial sector — it’s only by first measuring the gaps in account ownership and usage by gender, income, age, education, labor force participation, and more that we can start to address this problem.

Over nearly a decade, I’ve been fortunate to watch the Findex take shape; in that time, I’ve also traveled around the world to talk to people about how digital financial services impact their lives.

The Findex’s findings and these individual conversations have helped me understand how essential inclusive financial services are. I think of the herders in Mongolia who used to spend time and money traveling to pay their bills. Now, thanks to mobile payments, they can do that from the comfort of their yurts.

I remember the women who live in a village in rural Rajasthan, India, at the end of the desert. They collectively borrow from a microfinance institution to purchase a new tool for grinding wheat; they soon started charging other villages to use that tool. Previously, these women had little to no opportunities to go to school, let alone start a business. This new tool gave them the money they needed to hire the first teacher for the village, who was teaching their daughters to read.

And I remember the Kenyan “dreadlock designer” who had just opened his own store. He told me that “cash burns my pocket,” and he could never save enough of it for a down payment. But when he started accepting payments to his mobile payment, he didn’t cash out. Instead, he saved up and opened his own business.

We now understand how vital financial services are to individuals like these and the wider communities that they represent. Because of nearly 10 years of Global Findex research, we can see a path forward to create a financially inclusive world and give people the tools and services they need to build better lives.

How the financial inclusion movement came together

Financial Inclusion Practitioner

Social Good

In the heart of Kampala, along the bustling Bombo Road, sits the headquarters of UGAFODE Microfinance Limited (MDI). UGAFODE is a small but progressive microfinance institution (MFI) focused on serving peri-urban and rural Uganda, mainly in the agricultural sector. Under the guidance of CEO Shafi Nambobi, who joined in May 2017, UGAFODE has made sweeping transformations. The institution has gone from a primarily manual operation with lengthy loan approval processes, to being a competitive tech-enabled institution with a focus on digital channels and serving microentrepreneurs and “last mile” clients in the Ugandan market.

We recently called Shafi, and even though it was 6 pm in Kampala and he was gathering his bags to head home, he took the time to share his insights on the strategies that have turned the company around. “UGAFODE has always upheld a client-centric focus, and the company maintained this approach while implementing their new strategies,” he said. One of the first changes was bolstering their call center, which has been instrumental in attracting both new and former clients. This has proven to be a key component in maintaining the balance between <a href="https://www.accion.org/the-tech-touch-balance/">digitization and human touch</a>, as it allows customers to engage with a real person without having to make long journeys from rural areas to bank branches.

Most of UGAFODE’s clients are farmers, working in crop and livestock production. More than 80 percent of their clients live in rural areas, and some are as far as 40 kilometers from the nearest UGAFODE branch. Clients often struggled to make the long trips out to the bank when all they needed were simple banking services. To bring banking services to the people, UGAFODE has incorporated more digital products into its business plan. These products include:
<ol>
 	<li>Digital field applications (DFAs), which allow remote approval of loans</li>
 	<li>UGAFODE mobile app, which allows customers to move cash from their mobile wallets to their savings accounts</li>
 	<li>Digital document management for digital verification</li>
 	<li>Digital delinquency management for timely follow up on late payments</li>
</ol>
These new channels have improved customer interaction with UGAFODE’s products, allowing microentrepreneurs to cut costs and time to travel to the bank and spend more time developing their businesses.

The company is also working to improve its loan processing and renewal system. UGAFODE reduced processing time from more than 21 days down to less than a week to ensure that their clients can get their funding when they need it. Another issue in their previous process was that their loan repayment system would automatically prevent clients with delayed payments from applying for another loan. Shafi knows that life can throw curve balls that prevent clients from making payments on time — a family member falls ill, a bicycle part needs to be replaced, a home needs repair. As such, the company changed this policy and adopted more flexible considerations for loan repayment timelines.

Shafi is excited to continue the turn around and watch the company grow, and sees many opportunities for the future. As UGAFODE continues to digitize and expand into rural areas, they expect to onboard more women — currently about 60 percent of their client base. Additionally, Shafi indicated that Uganda has become a home to more than <a href="https://www.unocha.org/southern-and-eastern-africa-rosea/uganda">1.4 million refugees</a> from nearby countries, including Somalia, South Sudan, Burundi, and the DRC. These refugees have been neglected and excluded from financial services, which they need to establish their livelihoods and send remittances to friends and family members. UGAFODE is currently seeking approval to include refugees in their outreach offering.

As UGAFODE continues to find ways to bring more underserved clients financial services that meet their needs, they know that staying customer-centric is crucial. “When we listen to our customers, we are able to make suggestions to the board of what needs to change, and create a better customer experience,” said Shafi. And as UGAFODE’s digital transformation has shown: keeping customer needs in mind is good for business and financial inclusion.

Going digital to serve customers in Uganda

Ugafode

Accion Global Investments

<p class="graf graf--p">When people ask me why I’ve worked for one organization for nearly 15 years, I usually give an answer about how great Accion is. But there’s more to the story.</p>


[caption id="" align="alignleft" width="503"]<img class="graf-image" src="https://cdn-images-1.medium.com/max/1080/1*kyDTTQfcq5T-9thcjnKlCg.jpeg" alt="Jose Amaya at 12, growing up in El Salvador" width="503" height="466" /> Me at 12, growing up in El Salvador[/caption]
<p class="graf graf--p">I come from a very poor family in El Salvador. I was born in 1981, at the beginning of a bloody civil war that lasted 12 years. Some days we had no food to eat, and my mother (God rest her soul) would walk long miles searching for food, sometimes with no luck. On those days, everybody would go to bed hungry, hoping the next day would bring better luck.</p>
<p class="graf graf--p">The small village where we lived had about 30 huts. The land was owned by one of the 14 families in the oligarchy that controlled most of El Salvador. When the war broke out, many of these landowners fled the country, and the land became a communal space for all the people who lived on it. A governing body was formed, and everybody worked the land together.</p>
<p class="graf graf--p">Then reforms came, and the land was divided equally among all the co-op members. My family got about 10 acres and a cow.</p>
<p class="graf graf--p">As new landowners and cattle raisers, my family’s biggest challenge was obtaining money to work the land on our own. That’s when we found out about agricultural microfinance.</p>


[caption id="" align="alignnone" width="640"]<img class="graf-image" src="https://cdn-images-1.medium.com/max/1080/1*Qu8hg-kW0AxIr3CrPaTPjg.png" alt="People from Jose's village planting maize. Agricultural microfinance brought opportunity to his village." width="640" height="320" /> People from my village planting maize.[/caption]
<p class="graf graf--p">My uncle was the first one to start “working with the bank.” He took out small loans to buy fertilizers, pesticides, and to pay his laborers. With the help of a technical assistant, he was able to expand his crops beyond maize, sorghum, and beans. He planted rice, sesame, and other, more profitable products.</p>
<p class="graf graf--p">In a few short years, my uncle went from living in a hut to living in a brick house. Everyone wanted to emulate him, including my father. And although we never got to the point of building a nice brick house, my family became self-sustaining. Our cows multiplied, and we worked our own land instead of laboring for somebody else.</p>
<p class="graf graf--p">I came to the United States when I was 16, and dazzled by this big city called Boston, I almost forgot about my little village. I started taking English classes, and the teacher helped me enroll in high school. Then someone gave me an old desktop computer as a present, and it became my object of fascination. I took it apart and put it back together many times. After finishing high school, I went to a vocational school for computer science.</p>
<p class="graf graf--p">I worked at a dry cleaner while I studied. Soon after I graduated, I came across an internship opportunity on the Accion website. So I called. A kind lady answered the phone, and after a short conversation in Spanish, I was invited for an in-person interview.</p>
<p class="graf graf--p">I arrived a few minutes early for the interview. While I waited at the reception desk, I started looking at the objects on the walls. It all came back to me. The Latin American decorations all over the office brought me back to my friends and neighbors in the village I had left behind. I realized right then that Accion was unique.</p>
<p class="graf graf--p">I ended up getting the internship. That was 2004, and here I am, still amazed by this place, and highly optimistic that we are making a difference in the world.</p>
<p class="graf graf--p">When the occasional drudgery of a busy day gets to me, and I start questioning my purpose, I reflect back on my little village, I feel nostalgic, and then I find my groove again.</p>
As our CEO Michael Schlein said in a recent meeting, “It's so rewarding to work for an organization where you can help make a <a href="http://www.accion.org/can-we-make-the-digital-revolution-work-for-everyone/">positive impact in people's lives</a>.” It means even more knowing that the lives we’re improving are people like my family and the neighbors in my village.

I know financial inclusion can change lives because it changed mine

Staff

<p class="graf graf--p">Banking is expensive. That’s one of the reasons why billions of people around the world still don’t have access to even the most basic financial services. Sub-K, which means “for everyone” in Hindi, is working to close the gap in India, and <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/basix-sub-k-raises-inr-350-million-equity-funding-from-accion-and-nordic-microfinance-initiative/" target="_blank" rel="noopener noreferrer">we’re excited to partner with them</a> in this effort.</p>

<h3 class="graf graf--p"><strong class="markup--strong markup--p-strong">Closing the financial services gap with business correspondents</strong></h3>
<p class="graf graf--p">Operating a bank branch is exponentially more expensive than employing an agent to offer payment services outside of a bank. But there’s more to financial inclusion than the ability to make payments. People need a full range of tools to support their families and businesses.</p>
<p class="graf graf--p">It’s not surprising that India, a country characterized by its openness to innovation and its focus on reaching underbanked and unbanked populations, has come up with many solutions. The Reserve Bank of India created business correspondents to offer accessible and affordable delivery channels for customers. These correspondents operate in partnership with financial service providers (banks and non-banking financial institutions), and they offer a broader range of products than just payment services — including money transfers, government subsidy payments, bill payment, international remittances, e-commerce, distribution of microinsurance, and even loan origination and servicing for financial service providers.</p>

<h3 class="graf graf--p"><strong class="markup--strong markup--p-strong">How Sub-K is addressing financial inclusion with innovation and partnerships</strong></h3>
<p class="graf graf--p"><a class="markup--anchor markup--p-anchor" href="https://www.subk.co.in/index.php" target="_blank" rel="noopener noreferrer">Sub-K</a> is a unique banking correspondent focused on people who cannot be reached by traditional financial service providers. Sub-K operates throughout India in 23 states with more than 100 cobranded branches and 13,000 agents — typically “mom and pop” shops or “kirana” stores. The company offers a broad range of financial services, including payments, saving accounts, and lending. So far, they’ve partnered with 14 banks to serve about 2 million clients and distribute more than US$100 million in loans.</p>
<p class="graf graf--p">As India shifts from cash to digital, Sub-K is well-positioned to reach new customers and help them access financial tools. Sub-K brings to the table an in-depth understanding of clients and a focus on innovation. Sub-K has been able to integrate various electronic wallets with Aadhaar, India’s unique identity card for all adults. It has also leveraged other elements of <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/game-changing-innovation-bring-financial-services-millions-india/" target="_blank" rel="noopener noreferrer">IndiaStack, the government’s digital infrastructure that’s revolutionizing financial services</a>.</p>
<p class="graf graf--p">Sub-K is part of the BASIX Group, which has a long history on financial inclusion in India with partners such as <a class="markup--anchor markup--p-anchor" href="https://www.rblbank.com/" target="_blank" rel="noopener noreferrer">RBL Bank</a>, <a class="markup--anchor markup--p-anchor" href="https://www.syndicatebank.in/english/home.aspx" target="_blank" rel="noopener noreferrer">Syndicate Bank</a>, <a class="markup--anchor markup--p-anchor" href="https://bankofbaroda.co.in/" target="_blank" rel="noopener noreferrer">Bank of Baroda</a>, <a class="markup--anchor markup--p-anchor" href="http://www.unitedbankofindia.com/" target="_blank" rel="noopener noreferrer">United Bank of India</a>, <a class="markup--anchor markup--p-anchor" href="http://www.reliancecapital.co.in/" target="_blank" rel="noopener noreferrer">Reliance Capital</a>, and other financial institutions committed to reaching the unbanked. This focus on financial inclusion extends to Sub-K’s management and our co-investors (Nordic Microfinance Initiative and the Michael and Susan Dell Foundation). Our alignment on this crucial cause was vital for our partnership. In addition to investing funds in Sub-K, we’re also providing advisory services to enable Sub-K to continue expanding to more clients throughout India and focus on improving its technology, optimizing its use of data analytics tools, and launching innovative financial products.</p>
<p class="graf graf--p">Sub-K’s understanding of client needs and digital infrastructure along with its network of agents and bank partnerships make for a potent combination. We’re eager for this opportunity to help provide families in India with the financial services they need to build better lives.</p>

Instead of sending people to a bank, Sub-K brings banking to the people

Sub-K

China’s economy has experienced tremendous growth in recent years, with a booming micro, small, and medium enterprise (MSME) market. There are over 50 million MSMEs in China that collectively account for over 60% of China’s GDP and over 50% of the government’s tax income. These businesses create 80% of total employment in China’s urban areas.

Despite China’s overall economic growth, the need to foster full financial inclusion is still imperative. In 2010, 38 million MSMEs lacked access to formal financial services, forcing them to borrow informally from friends, family, and moneylenders.

<p class="graf graf--p">With nearly 5 million residents, Chifeng isn’t a small city. But as it sprawls across the vast prairie of Inner Mongolia, an autonomous region in northern China, some parts of the city feel almost rural. This combination of rural and urban create a diverse mix of clients for <a class="markup--anchor markup--p-anchor" href="http://chifeng.gaoxinlong.com/">Grassland Inner Mongolia</a>.</p>
<p class="graf graf--p">Initially launched as Accion Microcredit China in 2009, Grassland Inner Mongolia remains a locally registered microcredit company (MCC) but is now part of the Pan-China operation, <a class="markup--anchor markup--p-anchor" href="http://grassfin.com/en/home">Grassland Finance Ltd</a>. <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/grassland-filling-gap-chinas-microcredit-industry/">Accion partners with Grassland</a> to help deliver financial services to China’s underserved businesses using in-person, mobile, and digital platforms. Over the years, Grassland Inner Mongolia has provided more than RMB 1.7 billion (USD 261 million) in loans to over 16,000 customers, with the average loan amount under RMB 105,000 (USD 16,100).</p>
<p class="graf graf--p">On a recent trip to China, I spoke with Zhu Yanyan, the general manager of Grassland Inner Mongolia, about how the company has developed since its founding, and her vision for its future.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: Tell me a little bit about the clients you serve.</strong></p>
<p class="graf graf--p"><strong>A:</strong> We provide microloans to farmers, herdsmen, commercial households, and microenterprises. Most are in the trade, services, agriculture, and manufacturing industries. They are diligent and honest entrepreneurs, yet they aren’t targeted by banks since most of them cannot provide the kind of collateral required. However, unsecured loans are our primary product so we can enable access to financial services for such clients.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: You’ve been here since the beginning in 2009. How has your job changed over that time?</strong></p>
<p class="graf graf--p"><strong>A:</strong> I’ve had the honor of witnessing the transformation of the firm over the past eight years, in several areas.</p>
<p class="graf graf--p">With the formation of Grassland Group, the company’s geographic coverage grew rapidly, now covering Pan-China, from here in Inner Mongolia, to Chongqing, Hunan, Shandong, Sichuan, Xinjiang, Hubei and Shanxi provinces.</p>
<p class="graf graf--p">Grassland’s Head Office team is familiar with best practices in Chinese microfinance and has good insight into the Chinese microcredit industry. They’ve been very effective in bringing about new corporate best practices, so we’ve been able to standardize processes and policies across the group, helping us work better with faraway colleagues.</p>
<p class="graf graf--p">At the same time, the company embraces the principle of “local people managing local affairs,” trusting our local talent and investing in training to help local employees with potential become good microfinance professionals.</p>
<p class="graf graf--p">I’m proud of our social impact, as well. Through our continuous effort in promoting inclusive finance in Chifeng, Grassland Inner Mongolia has been widely recognized within the microcredit company (MCC) industry as a forefront contributor in promoting financial inclusion. Each year, we’ve won awards from the China Association of Microfinance and from the Finance office at the city and provincial government levels.</p>

<h4 class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: How are you using new technology to support your work?</strong></h4>
<p class="graf graf--p"><strong>A:</strong> We feel we’re at the forefront of technology and innovation among MCC industry players. Grassland has built public websites for both investors and customers. In 2016, we also introduced a digital field application tool called Keystone, which is an end-to-end platform loan officers and credit managers use to process loan applications via tablet.</p>

<h4 class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: What do you enjoy most about your work?
</strong></h4>
<p class="graf graf--p"><strong>A:</strong> My three favorite things are:</p>
<p class="graf graf--p">First, taking on the challenge of expanding Grassland Inner Mongolia’s operations. As I explore the market, I seek to identify the best areas for lending, forecast the market potential for growing our loan portfolio and number of clients, and learn how to control risk effectively.</p>
<p class="graf graf--p">Second, the opportunity for constant learning and self-improvement. Through this job, I continue to work toward being a well-rounded leader, not just in terms of new business development and credit risk management, but also in areas such as operations, finance, and HR, therefore becoming a true General Manager.</p>
<p class="graf graf--p">And last but not least, I like to see our clients expand their businesses and improve their lives through the services we offer.</p>

<h4 class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: What’s next for Grassland Inner Mongolia?
</strong></h4>
<p class="graf graf--p"><strong>A:</strong> I am determined to continue expanding our business operations to other parts of the region and making sure that we continue to be a critical player in the overall Grassland organization as we look ahead to a prospective IPO in Hong Kong in a few years.</p>

Q&amp;A: Entrepreneurs in China  —  A perspective from Chifeng, Inner Mongolia

Grassland

<p class="graf graf--p">Far from the bustling financial centers of the city, people in rural areas have long been underserved by traditional financial institutions. While this is a problem for all rural residents, the lack of access to financial services is particularly difficult for farmers since it bars them from growing their agricultural businesses. We talked to Jonathan Agwe of the <a class="markup--anchor markup--p-anchor" href="https://www.ifad.org/home" target="_blank" rel="noopener noreferrer">International Fund for Agricultural Development (IFAD)</a> to get his opinions on the challenges that rural clients face in accessing financial services, as well as the solutions to help reach them.</p>
<p class="graf graf--p">Mr. Agwe will be part of a panel discussing rural youth and agriculture during <a class="markup--anchor markup--p-anchor" href="http://www.e-mfp.eu/" target="_blank" rel="noopener noreferrer">European Microfinance Week</a>. From November 29 through December 1, professionals from dozens of countries will converge in Luxembourg to discuss the most recent innovations, trends, and opportunities in the inclusive finance sector. If you’re interested in attending, you can find more information <a class="markup--anchor markup--p-anchor" href="https://registration.european-microfinance-week.eu/ehome/index.php?eventid=279965&amp;" target="_blank" rel="noopener noreferrer">here</a>.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: What role do financial services play for farmers?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A:</strong> Although the question is short, it is also very challenging — challenging because farmers need financial services for both farm and non-farm use. If the question were specifically about agricultural finance, then the here answer would be more direct. Let’s answer the more generic financial services for farmers:</p>
<p class="graf graf--p">On the one hand, one needs to take a holistic look at the demand side by conducting a thorough demand analysis on the financial needs of the farmers (tripling up as economic investors, social entrepreneurs, and consumers) and then categorize such needs into:</p>

<ul class="postList">
 	<li class="graf graf--li">consumption needs</li>
 	<li class="graf graf--li">investment needs</li>
 	<li class="graf graf--li">needs for inputs, including for technical services and hired labour</li>
 	<li class="graf graf--li">needs for running capital, as well as for other transaction costs</li>
 	<li class="graf graf--li">needs for assorted payments sent and/or received.</li>
</ul>
<p class="graf graf--p">On the other hand, one needs to look at the supply side by unbundling financial services into:</p>

<ul class="postList">
 	<li class="graf graf--li">financial products (loans, grants, savings/remittances)</li>
 	<li class="graf graf--li">non-financial products (financial literacy, capacity development/business development services, technology-enhanced delivery systems/digital financial services/assorted payment systems)</li>
</ul>
<p class="graf graf--p">The next thing to do is to match the financial demands of the farmers with supply of tailored/appropriate/adapted financial services. Sometimes, tailoring or adaptation of existing traditional financial services to meet the needs of smallholder farmers is the real hurdle. So, the role financial services on the supply side play for farmers is to respond to the specific financial needs of the farmers.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: Where have you seen a gap in reaching rural populations?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A: </strong>Let me be more specific by narrowing the gap you are referring to, to ‘financial services gap’. With this refocusing then, one sees a gap in almost all of the supply-side traditional financial services listed above reaching rural populations. Such gaps exist due to several factors, some of which include but not limited to:</p>

<ol class="postList">
 	<li class="graf graf--li">lack of the analyses listed above, thereby resulting in mismatches between the demand from rural populations and the supply of non-pro farmer/non-tailored/inappropriate financial tools and services);</li>
 	<li class="graf graf--li">not meeting the demand due to unaffordable pricing of financial services — unaffordable pricing caused partially by high transaction costs to reach breakeven catchment volumes of rural populations, as these populations:
<ul>
 	<li class="graf graf--li">are so hard to reach because of bad or non-exiting infrastructure networks (access roads, telecommunication, electricity),</li>
 	<li class="graf graf--li">are so geographically dispersed, and/or</li>
 	<li class="graf graf--li">are so heterogeneous with diverse and non-standardized demand and risk profiles.</li>
</ul>
</li>
</ol>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: To feed a growing population worldwide, we need farmers. But not enough young people are becoming farmers. How do we encourage young people to pursue careers in farming?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A:</strong> Feeding a growing population is important and we need farmers and more young people (for that matter) to get engaged, so that they would stay longer in the farming business. Currently, in the world with alternative opportunities in the urban and semi urban conglomerates that trigger and/or encourage rural youth outmigration, farming is the income-generating activity (IGA) of last resort for their livelihood enhancement. Farming is comparatively less rewarding economically; it is not so esthetical; and it is arduous and labor-intensive. To make young people take up farming as a career, it is necessary to remove all the challenges and barriers inherent in farming; transforming farming from a mainstay/livelihood activity into a profitable business. Sustainable profitability (void of subsidies, if possible) is the main incentive young people would be looking for in a career in farming.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: In a changing climate, how can we make sure agriculture remains a sustainable career and that smallholder farms have the tools they need to be resilient?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A:</strong> For us (I am not sure who in particular) to make sure smallholder agriculture remains a sustainable career, is really a far-fetched and unrealistic objective because talking sustainability means talking full cost recovery pricing for smallholder products. But we know smallholders are generally price takers as they hardly ever get involved in the price setting for their own products. So, for smallholder agriculture to be sustainable, they must fetch and receive and be paid full-cost recovery prices. For smallholders to have the tools needed to be resilient to climate change, they will need to get trained and certified in environmentally-friendly GAPs (good agricultural practices), which hopefully will reduce their production and production-associated risks. On the marketing side, such certified smallholders can get organized into groups to deliver their aggregated products under contractual arrangements to niche market opportunities offered by certification schemes, where they can negotiate reasonable full cost recovery prices to raise their returns — the ultimate incentive for smallholder farmers to stay and practice climate change resilience. But what would be the economies of scale of such niche market opportunities?</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: What types of products (individual lending, input loans, etc.) have you seen making the most impact for smallholder farmers?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A:</strong> It is extremely difficult to answer this question with any reasonable degree of confidence because prioritizing financial demand needs vary for the heterogeneous community labelled smallholder farmers. However, what appears to have the most impact for smallholders across the board is business development services (BDSs). When smallholders have acquired skills that help them identify profitable business propositions, they usually generate business plans therefrom which would then naturally link them to all sorts of financing; potential financial service providers (if they are convinced), would consider the viable business propositions to be able to pay back any loan taken for that particular smallholder farm business. In some cases, especially in contract farming arrangements, verifiable viable smallholder business propositions have convinced lenders to wave collateral requirements. So, development of viable smallholder business plans makes the most impact on smallholder farmers.</p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">Q: What do you see as the most promising innovations for reaching rural populations with financial services?</strong></p>
<p class="graf graf--p"><strong class="markup--strong markup--p-strong">A:</strong> The most promising innovations would include but not limited to:</p>

<ol class="postList">
 	<li class="graf graf--li">business development services, which of course is an innovation that does not sound like a financial service but is unavoidable for the success of financial services for rural populations;</li>
 	<li class="graf graf--li"> digital financial services;</li>
 	<li class="graf graf--li">contract farming, especially contract farming with certification for environmental-friendliness for climate change resilience.</li>
</ol>

Q&amp;A: Bridging the financial services gap for rural and agricultural customers

<div class="byline"><em>By Jacqueline van Hartley in collaboration with David Muheirwe</em></div>
In 2011 only 20 percent of Uganda’s population was served by banks. By 2014, that figure rose to 44.4 percent.

What changed?

According to <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/12/eiu_microscope_2015_web.pdf">the Global Microscope</a>, a report produced by The Economist Intelligence Unit in partnership with Accion’s <a href="http://www.centerforfinancialinclusion.org/">Center for Financial Inclusion</a>, this was mainly due to mobile money platforms. Mobile technology is a <a href="http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/10/27/000456286_20141027124326/Rendered/PDF/903050WP0REPLACEMENT0Box385358B00PUBLIC0.pdf">major driver</a> behind financial inclusion, allowing individuals to deposit money or pay loans using an e-wallet tied to their phone’s SIM card. With cheap mobile phones in the hands of <a href="http://www.huffingtonpost.com/2015/04/20/africa-phone-study_n_7081868.html">80 percent of adults</a> across sub-Saharan African (for reference, 89 percent of adults in the United States own a mobile phone), financial service companies have the ability to go the last mile, often with local agents operating in lieu of bank branches.

However, despite these advances, a vast majority of rural populations are still unserved with 13.52 percent of the poorest 40 percent of the world’s population without access to a bank account.
<h2>An MFI launches mobile money</h2>
Accion’s partner, <a href="http://www.ugafode.co.ug/">UGAFODE Microfinance Limited</a> (UGAFODE), has been using the affordable <a href="http://www.gsmamobileeconomy.com/GSMA_Global_Mobile_Economy_Report_2015.pdf" target="_blank" rel="noopener noreferrer">mobile phone</a> infrastructure in order to provide easy access and convenient, more efficient delivery of savings services. 80 percent of UGAFODE's 16 branches are in rural areas with over 15,793 active borrowers and 45,944 active savers as of June 2016.

Between 2014 and 2016, 35 percent of women customers who participated in group savings programs also began to bank directly with UGAFODE. While many fintech players have been offering digital solutions to clients, UGAFODE’s experience shows how traditional microfinance institutions can use mobile platforms to great effect.

UGAFODE does this by using two products, GroupSave and AirSave, to combine traditional microfinance with fintech in order to bring their clients closer to full financial inclusion.

The UGAFODE GroupSave product is similar to traditional microfinance. It provides existing rural, informal savings groups with an opportunity to put their group’s surplus money (such as interest earned, social fund collections, and penalties) in a safe savings account. The account also includes access to credit directly through UGAFODE, allowing groups to not only save but build a viable credit history for future loans.

[caption id="attachment_7223" align="alignnone" width="800"]<img class="wp-image-7223 size-full" src="http://blogs.accion.org/wp-content/uploads/2016/09/IMG_0512.jpg" alt="UGAFODE savings group metal box before mobile money" width="800" height="533" /> A traditional UGAFODE savings group uses a locked metal box to store the majority of their savings, rather than keeping it all in the bank and accessing it via mobile money.[/caption]
<h2>How mobile money works</h2>
In order to understand AirSave, you first need to know how mobile money works. With the power of a small, plastic phone, clients in need of cash can worry less about the insecurity of carrying money and the distance, cost and time to travel to bank branches. Though utilizing a mobile account does not always equate to financial access, digital payment systems <a href="http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/10/27/000456286_20141027124326/Rendered/PDF/903050WP0REPLACEMENT0Box385358B00PUBLIC0.pdf">can create an opportunity</a> for financial institutions to embed a system (using reminders, automatic deposits, etc.) that encourages people to save.

UGAFODE is able to reach these underserved groups through <a href="http://www.ugafode.co.ug/?page_id=3717">AirSave</a>, their mobile money product and GroupSave, their group savings product, leveraging the personal touch of the existing mobile money agent networks with the text-to-mobile wallet function.

Mobile money agents are small shops that are authorized by mobile money providers sell scratch cards with specific monetary value to clients. The client then texts the card’s codes to the number provided and will be credited the value of the card.
<h2><img class="alignnone size-full wp-image-7229" src="http://blogs.accion.org/wp-content/uploads/2016/09/IMG_1888.jpg" alt="Mobile money" width="800" height="533" /></h2>
<h2>The low cost of mobile money</h2>
Before the implementation of their mobile channel, AirSave, UGAFODE’s clients would spend an average of 6% of their <a href="http://www.ubos.org/onlinefiles/uploads/ubos/UNHS_12_13/2012_13%20UNHS%20Final%20Report.pdf">monthly income</a> for transportation to and from a UGAFODE branch any time they wanted to make a deposit. This adds an extra financial burden to clients depositing small amounts and contributes to safety concerns about carrying cash, particularly for customers running a business. Now, clients spend just a few cents on the cost of the transaction, a convenience that has also triggered an incentive for women to become a more active part of financial management. Mobile phone channels <a href="https://www.womensworldbanking.org/wp-content/uploads/2015/08/Digital-Savings-The-Key-to-Women%E2%80%99s-Financial-Inclusion_WomensWorldBanking.pdf">reduce high participation barriers for women</a> such as less mobility and time constraints by alleviating not only the cost of the transactions but also the emotional and physical stress of traveling to a branch.

Both AirSave and GroupSave are a result of human-centered research funded by a grant from the MasterCard Foundation aimed at finding Ugandan-specific solutions to mobilizing deposits. AirSave focuses on the individual client experience through mobile money agents, and GroupSave accommodates village saving groups by creating a platform linked to all members in a designated savings group. Many financial institutions in Uganda provide mobile money options, however, the flexibility and convenience for rural community-based organizations to save within groups securely has largely been lacking from the market.

[caption id="attachment_7224" align="alignnone" width="800"]<img class="size-full wp-image-7224" src="http://blogs.accion.org/wp-content/uploads/2016/09/IMG_0540.jpg" alt="UGAFODE savings group counts their savings for deposit before mobile money" width="800" height="533" /> A UGAFODE savings group counts their money to deposit it, rather than keeping it in the metal lockbox.[/caption]
<h2>Opportunities and challenges for the future</h2>
One of the main challenges that UGAFODE continues to face in reaching more clients is low customer literacy. Many of UGAFODE’s customers take time to learn mobile platforms because a majority of them are either illiterate or semi-illiterate and many are accustomed to sending and receiving cash rather than saving. UGAFODE’s staff has been directly engaged with helping clients to navigate the platform, equipped with experience gained from quarterly staff training. Furthermore, UGAFODE will now be working directly with mobile money agents to train them to be the first point of knowledge and support for the customer.

At the forefront of digital savings, UGAFODE’s model makes a great case for the imperative of integrating mobile technology so MFIs can reach clients faster and safer. Driving forward financial inclusion the last mile beyond the branch is not only innovative, but necessary, and UGAFODE is already doing it.

Mobile money and savings: How UGAFODE reaches rural Uganda

Accion Global Advisory Solutions

<em>By Zach Weishar</em>

Measuring economic growth over time is one of the most valuable insights we have into our clients’ lives. It’s also one of the key ways we define our clients’ successes. The idea is to start small and grow steadily with the help of financial advice and small loans along the way. Isidro Medina, Peruvian craft maker and client of Accion partner <a href="https://www.credinka.com/">Credinka</a>, has followed this trajectory remarkably well.

His store and home sit atop the steep hill that marks the descent into the city of Puno, Peru. From his front porch, the city is laid out neatly below – everything seemingly within reach. Isidro sees his business in the same way: no goal seems too outlandish or difficult to achieve. He tackles each new challenge with the confidence that only comes to those who work toward a goal with single-minded determination.

He started in the craft business when he was nine years old, working for a family who taught him the basics of knitting, weaving, and embroidering. He stayed with them for 14 years while taking weaving classes in Cusco in his spare time. Eventually, he felt ready to strike out on his own and relocated from Cusco to Puno, where he saw more opportunity to start his business.

[caption id="attachment_6467" align="alignnone" width="796"]<img class="wp-image-6467 size-full" src="https://content.accion.org/wp-content/uploads/2016/02/Isidro_Medina_microfinance_client_of_Credinka_and_Accion_Peru_crafts-e1536447996927.jpg" alt="Isidro's crafts" width="796" height="376" /> Some of Isidro's wares.[/caption]

Fast-forward 36 years and Isidro sits proudly atop a small empire. He owns a store in Cusco and two in Puno, and is represented at all the major craft fairs around the country. He’s even won several national awards for the quality of his work. In addition to making his own crafts, he buys from other artisans around the country and also owns a large collection of antique Incan artifacts. Isidro works every single day, and when large orders come in, he gets up at 4 in the morning and works as late as 11 p.m. He runs his business with the help of his wife and several of their children, as well as two full-time employees from the local community. This is one of the compelling and enduring things about microfinance: one client’s success tends to touch many lives within the community. Whether it’s providing much-needed opportunities for employment or creating a convenient wholesale network that allows local artisans to get their precious goods to market easily, Isidro’s effect on the local economy extends far beyond his own household.

At 59, Isidro has ambitious plans for the future. He wants to build a hotel next door to his home, open a new store dedicated to selling his collection of antique artifacts, and create a demonstration area where he can show tourists how his crafts are made. Although he’s already a successful businessman, he’ll need access to capital to get these projects underway.

That’s where our partner Credinka comes into play. They’ll provide him with business advice and access to affordable capital for as long as he needs it. It’s this type of individualized support that empowers businesses like Isidro’s around the world to build financially stable futures.

Isidro Medina and Credinka: Crafting a financial future in Peru

Credinka

The real impact of financial inclusion

Every business begins with a vision. But Francisca Romero’s idea of a vocational school was more than a business; it was a social enterprise. She wanted to provide career options, empowering young women in her impoverished rural community who had little prospects beyond peasant life.
<h2>A vision of opportunity</h2>
&nbsp;

[caption id="attachment_5962" align="aligncenter" width="800"]<img class="size-full wp-image-5962" src="http://blogs.accion.org/wp-content/uploads/2016/02/empowering-young-women-in-rural-Paraguay-Asuncion-Accion-client-Francisca_Romero-runs-girls-vocational-school.jpg" alt="empowering-young-women-in-rural-Paraguay-Asuncion-Accion-client-Francisca_Romero-runs-girls-vocational-school" width="800" height="534" /> Francisca Romero García, client of Fundacion Paraguaya owns a teaching institute in Concepcion, Paraguaya.[/caption]

&nbsp;

But starting a school is hard work, and doing it without capital in a remote rural settlement seemed impossible. So Francisca did it the only way she could: under a tree behind her parents’ house. In 1973, she started teaching young girls the skills she’d learned in church – sewing, knitting, embroidery.

Forty years later, Francisca’s professional institute occupies a building adjacent to her house in the city of Concepcion, some 250 miles north of Asuncion, Paraguay. Similar in scale to her first class under the tree, the school building started out as one room.

Without access to any formal financial services, Francisca slowly expanded that one room with money she borrowed from family members. It was a tedious process, requiring enormous patience and determination. In 2010, however, Francisca learned about Accion partner <a href="http://www.fundacionparaguaya.org.py/?lang=en" target="_blank" rel="noopener">Fundación Paraguaya</a> from one of her students. She applied and got her first loan, which she used to build more classrooms.

Today she employs five part-time teachers, many of whom are graduates of the school themselves. The institute offers no less than 13 different courses of study, from esthetics — hair styling, manicures, and pedicures — to electricity, cooking, decorating, and more. Most take one to two years to complete.
<h2>Empowering young women</h2>
A sturdy woman in her mid-sixties with a pleasant voice, Francisca gives us a tour of the facility. We pass by student manicurists, who have to learn 100 different nail styles and rehearse them on one another. She pauses to correct one of them, indicating how to position the client’s hand properly and grip the brush more steadily.

Though her school is successful — no doubt due to Francisca’s personal touch — it is still very much a small enterprise. Francisca does everything from enrollment to payroll, teaching, and advertising.

“Girls start knocking on my door as early as 5 a.m.,” Francisca says. “They want their lessons before catching the 8 a.m. bus back out of town to attend to their daily responsibilities.”

Francisca’s steadfast commitment to education has earned her recognition. In 2000, Paraguay’s Ministry of Culture and Education granted Francisca’s school official status, meaning that Francisca can issue diplomas, which, in turn, can help her students access jobs more easily.

“My dream is to get a government salary, so I can lower my fees,” Francisca explains, referring to the potential but challenging process of obtaining a teacher’s salary from the government to run the school. “It’s important to note that I serve very low-income people from the surrounding villages. My students are very poor, and it’s hard for them to pay for both the classes and the school supplies they need.” Her school currently has 270 students enrolled in classes.

Later that afternoon we visit a young mother running a bodega out of her home in the vicinity. When asked about her aspirations for her business, she tells us she wants to enroll in Francisca’s school because, in her own words, getting an education is the only real chance to ensure a more promising future for herself and her family.

Whether the coursework was conducted under a tree or in one of several classrooms, the success and impact of Francisca’s school are undeniable — something of which we were privileged to have been a small part.

Empowering young women in rural Paraguay

Just after lunch on a recent afternoon in Piñipampa, a rural village 22 miles outside of Cusco, Peru, Fausta Challco joins me as I enter the home of an artisan tile maker. She’s wearing a uniform: leather shoes, skirt, sweater, and jacket. She shakes my hand and introduces herself, panting, her brow glistening with sweat despite the crisp mountain breeze. She then turns to the tile maker and his wife and says something in Quechua. They pull up a few chairs and invite me to sit down. I’m here to interview clients of Accion microfinance partner <a href="http://www.credinka.com/" target="_blank" rel="noopener">Credinka</a> and learn about their experience using formal financial services. Fausta is a savings promoter who will take me to meet a few clients in the afternoon. When we finish the conversation and get back in our car, I ask Fausta how she got into this line of business.

She looks at me straight in the eye and answers: “Disobedience.”

As we drive up a bumpy dirt road on the side of a hill, we leave behind a cluster of houses, their terra-cotta tile roofs ablaze in the afternoon sun. Fausta points out the car window and says, “I’m 46 and this is where I’ve spent my whole life. Almost every family here makes a living producing tiles. And that’s what my husband and I did until a few years ago, when I became a Credinka employee.”

“Doña Fausta,” her colleague says, tapping her shoulder, “tell him how you went from Credinka client to Credinka employee.”

She holds onto the front seat as the car jostles over a pothole. “All right,” she says. “We have some time.”

Her trajectory starts in November of 2005, with the arrival in Piñipampa of a man who invited Fausta to a “cup of milk” meeting — a meeting of mothers at teatime — to discuss family finances and the importance of savings. The man was a representative of the Cusco-Puno Corridor, a government-run, $30 million (USD) project funded primarily by the International Fund for Agricultural Development, with the objective of raising the incomes of the rural poor in the main road network between the cities of Cusco and Puno. A specific goal of the project was to promote savings among rural women. This took the form of incentives for opening and maintaining personal accounts at formal financial institutions in the region (Credinka in Cusco and Caja Los Andes in Puno).
<h2>Learning about savings</h2>
Fausta attended the meeting and was asked to gather a group of mothers who would commit to taking financial education classes and then opening savings accounts. When Fausta went home after that meeting, she told her husband all about the project. She was excited by the idea of learning money management skills and financial planning. She wanted to save to purchase a car. She had dreams. But he was dismissive, claiming that those meetings were scams to take people’s money. He cited the example of a bank that had gone bankrupt in the ’90s and in the process had taken away people’s money. “Plus,” he said, “those town gatherings are a breeding ground for gossip.”

Fausta pushed back. She had learned that banks were required to carry deposit insurance, so her money would be safe even if the institution went under. He did not budge. “You can go ahead,” she recounts him saying, “but if you lose the money, you’ll have to find a way to pay us back.”

<img class="aligncenter size-full wp-image-357" src="http://blogs.accion.org/wp-content/uploads/2015/01/Fausta-village-savings-promoter-for-Credinka-Accion-partner-in-Peru.jpeg" alt="Fausta-village-savings-promoter-for-Credinka-Accion-partner-in-Peru" width="800" height="533" />

Within a few days, Fausta mobilized 35 women to form a savings group. In the end, only 22 participated, many discouraged by husbands who were either jealous or skeptical about the project.

Public mistrust of banks is widespread in Peru and across Latin America, whose unstable economies have had disastrous consequences for the financial systems over the past few decades, often causing great damage to people’s financial situations.

Like many Peruvians, Fausta remembers September 6, 1988, with a mix of disbelief and sadness. On that day, at the height of an economic crisis, Economy Minister Abel Salinas addressed the nation to announce a tough anti-inflation program that doubled basic food prices and devalued the national currency. The package went into effect immediately after Salinas’s announcement. That month’s inflation rate reached 114 percent. By year-end, it soared to more than 1,000 percent. Fausta’s mother, who kept her savings inside corn sacks and under her mattress, lost everything. In a matter of days, if not hours, her hard-earned money was as good as nothing.

So when Fausta was presented with the opportunity to learn about financial education and the promise of safe savings, her heart leaped. She wasn’t going to let her husband stop her. A few short weeks after that first “cup of milk” meeting, Fausta and the 22 women formed a group and she was elected group leader. She attended the meetings religiously — often rushing to complete all of her chores and helping her husband with their tile-making activities in order to assuage his discontent with her involvement.

“Working with the group gave me confidence,” Fausta explains. “I learned to administer money and not always rely on my husband’s pocket.”

Part of her role as leader was to collect each member’s monthly contributions and travel to Credinka’s branch in Cusco to make the deposits. “I would take two buses to reach the bank, fill out slips, wait in line, and talk to the teller. It occurred to me that many of the women in my group had never seen the inside of a bank. From then on, I started bringing them every month, one by one, and showing them how to do the transactions by themselves.”

<img class="aligncenter size-full wp-image-358" src="http://blogs.accion.org/wp-content/uploads/2015/01/Fausta-and-client-portrait-of-savings-promoter-for-Credinka-Accion-partner-in-Peru.jpeg" alt="Fausta-and-client-portrait-of-savings-promoter-for-Credinka-Accion-partner-in-Peru" width="800" height="533" />
<h2>This money is mine</h2>
But after saving for several months, Fausta realized that her balance remained very small. “At the time I wanted to buy a car,” she says. “The interest I earned was barely enough to buy a loaf of bread.”

So she decided to put her money into a fixed-rate savings account for six months. She told her husband that she wanted to pool her cash with his in order to earn a higher return, but he said no. She did it anyway.

“I took the money he had at home and hopped on the bus to Cusco. When I got to the bank, I hesitated. I couldn’t believe I had just disobeyed my husband. It was already bad enough that I’d been participating in these meetings against his will, but now I might be crossing the line. But I thought and thought and then stepped into the bank and did it.”

At this point, Fausta’s eyes widen. She covers her mouth. “I was so terrified that he would find out. Every month that went by I felt a little more relieved, but I always feared, what if he asked me about his money?”

At the end of the six months, Fausta invited her husband to go to Cusco on a date. When they got there, she asked him to make a quick stop by the bank.

“What are we doing here?” he asked. “Just give me a few minutes,” she answered. “I want to show you something.” She withdrew the balance on the savings account and divided it into three piles: his initial sum, hers, and the interest earnings. “This money is yours,” she said, handing him back his original amount. “This money is mine,” she added, pointing to her initial contribution. Then, she pointed at the interest pile and said, “And this money is mine, too.”

<img class="aligncenter wp-image-360 size-large" src="http://blogs.accion.org/wp-content/uploads/2015/01/Fausta-savings-promoter-and-client-in-rural-Peru-Credinka-Accion-partner-1024x683.jpeg" alt="Fausta-savings-promoter-and-client-in-rural-Peru-Credinka-Accion-partner" width="1024" height="683" />
<h2>No Faustian bargain</h2>
Unlike the medieval legend of Faust, who makes a contract with the devil in return for worldly gains, Fausta’s goals were much humbler: she wanted to improve her life and those of her children. And she thought that prudent financial management, combined with hard work and savings, could get her family there. Her husband had been a heavy drinker and sometimes was not around to help with some of the hardest tasks of their tile-making business, such as when a delivery of firewood arrived once and she had to unload the whole truck by herself. If she could purchase a vehicle, she thought, their business and quality of life would improve.

In the few years since forming that first savings group, Fausta continued to enroll women from her village and from surrounding ones into the Cusco-Puno Corridor savings project.

By 2008, Fausta heard that the project was coming to an end. She contacted the government representative who had recruited her years earlier to tell him how much she had enjoyed the experience and how important she thought that projects like these remained active.

He asked her for a phone number and told her to give him a couple of days. Eventually, she received a call from someone at Credinka inviting her to a meeting in Cusco. When she arrived at the meeting, she was presented with an employment contract.

“I thought I was going to be offered a loan to buy a car,” she says. “Never did I imagine that I would be offered a job. I got so nervous I didn’t know what to do, so I didn’t sign the contract.”

Instead, she went home and told her husband, who, to Fausta’s surprise, encouraged her to accept the offer. “Don’t be silly,” he said. “You like this so much and have put so much effort into it. Just take the job.”

So she did. “I was so proud of being offered a job,” she says. “I felt so important.”
<h2>From client to employee</h2>
Marina Orccohuarancca is Credinka’s head of microcredit and microsaving products, and Fausta’s boss. “Fausta was one of six women we hired in 2009 to raise awareness and teach rural women about the formal financial system. Until then, only small NGOs did this kind of work. It was the first time a formal, regulated financial institution reached out to this segment of the population.”

That was the case in part because those populations are geographically and culturally isolated. “Until 2002, only the security guards spoke Quechua,” Marina says. “Now, about 60 percent of the branch staff in rural areas speak Quechua.”

Credinka currently has a team of 14 women doing this work in a region that has expanded well beyond Cusco-Puno to include several more provinces in the southwestern part of the country, where development projects such as the Cusco-Puno Corridor had never reached.

<img class="aligncenter wp-image-361 size-large" src="http://blogs.accion.org/wp-content/uploads/2015/01/Fausta-savings-promoter-for-Credinka-Accion-partner-in-Peru-1024x683.jpeg" alt="Fausta-savings-promoter-for-Credinka-Accion-partner-in-Peru" width="1024" height="683" />

Not too long after accepting the job, Fausta took a loan from her employer and purchased a truck. Her husband uses it to provide transportation services among the surrounding villages. They’ve also opened a minimarket. Their tile business is still going strong. They have even hired employees to manage production, so Fausta’s husband no longer needs to spend so many hours doing the heavy work. He now does sales and deliveries.

Fausta has flourished at Credinka. Among a long list of accomplishments, was representing Credinka at a financial innovations competition in Lima and winning. The victory was memorable because she had helped the bank improve the savings product that earned the prize; it was also her first time on an airplane. The award consisted of a vacation for two anywhere in Peru. She chose the coastal town of Trujillo and took her husband there. It was their first vacation as a couple, and his first time on an airplane too. On that trip, Fausta’s husband apologized for not having been good to her. He also thanked her for changing his life. By then, he had stopped drinking.

She has since represented Credinka on a number of projects across Peru and even in Paraguay, where she was invited to speak about the financial education work being done with rural populations in her country.

In a <a href="https://www.youtube.com/watch?v=0RNRzdSM8go" target="_blank" rel="noopener">YouTube video posted by the Peruvian Ministry of Development and Social Inclusion</a>, Fausta’s story of success is used to illustrate the impact of the Cusco-Puno Corridor project. In the clip, Fausta is shown making tiles with her husband, tending their store, and teaching a group of women about the banking system. They gather in the common area among a few houses, sitting on wooden chairs as Fausta lectures them, pointing to a few laminated sheets hanging from a clothesline. The image is a stark difference from the idea of a formal lesson most of us would associate with education. But given the realities of rural communities like Piñipampa — which is so similar to other villages throughout the developing world — such rudimentary methods hold the promise of making an immense difference in the lives of people who would otherwise have no chance at economic opportunity.

By the end of the project in 2008, more than 7,400 women had opened savings accounts – an extraordinary number, considering the initial goal of just 2,000. Today, Fausta not only continues to mobilize women in rural villages in the area, but she also conducts financial-skills training classes, including how to open and maintain accounts and about savings, compounding interests, financial planning, how to interpret bank statements, and more. Her three children have gone to college.

“All the sacrifices I made,” she tells me as we arrive at the next client’s house, “were validated for me when my children once said, ‘Mom, if you’ve made it this far, we’re going to have to do better than you.’”

Disobedience and savings: How one woman changed an entire village in Peru

The weather app on my phone reads 40 degrees Celsius (104°F) when we arrive in Concepcion, a four-hour drive north of Asuncion, Paraguay’s capital. If Paraguay is “the heart of South America” — as locals refer to their country — we’re now standing somewhere in the left atrium. Crammed in Lilian Britez’s modest home, we wait as she manages her way onto a shiny blue wheelchair. Her crisp clothes, light makeup, and styled hair indicate that she’s prepared for our meeting. We cross the dirt road that divides her home from a small church and gather under the shadow of a large poplar to hear her story.

Now 45, Lilian became paraplegic at 16 when a stray bullet struck her spine. In spite of that, she lives an independent life, selling Avon products and, most recently, producing decorative flowers. She learned this new skill after joining a solidarity group of Fundación Paraguaya with 19 women in her community. This model, which Fundación Paraguaya calls <em>comité de mujeres emprendedoras</em> (committee of entrepreneurial women), allows women to acquire new skills, such as handicrafts and soap making, and get microloans to support or start new microenterprises.

Though she enjoys the extra income that’s resulted from her involvement with the Paraguayan nonprofit, Lilian has much higher aspirations: She wants to help bring electricity to families in her community. And she’s poised to do that through a partnership facilitated by Accion between <a href="http://www.fundacionparaguaya.org.py/?lang=en" target="_blank" rel="noopener">Fundación Paraguaya</a> and <a href="http://www.barefootcollege.org/" target="_blank" rel="noopener">Barefoot College</a>.
<h2>A barefoot movement</h2>
Founded by Indian social activist Bunker Roy in 1972, Barefoot College provides basic services and solutions to problems in rural communities, with the objective of making those communities self-sufficient. The organization focuses on five areas: the delivery of solar electrification, clean water, education, livelihood development, and activism. With a geographic focus on the least developed countries — including Paraguay — Barefoot College believes in empowering women as agents of sustainable change. In a TED talk filmed in 2011, Roy asks, “Who is a professional?” He then explains: “A professional is someone who has a combination of competence, confidence, and belief. A water diviner is a professional. A traditional midwife is a professional. A traditional bonesetter is a professional. These are professionals all over the world. You find them in any inaccessible village around the world. And we thought that these people should come into the mainstream and show that the knowledge and skills that they have are universal.”

Roy realized this decades ago, and over the last 40 years has been enabling the rural poor to use their creativity and intellect to solve some of the most intractable problems of their daily lives. Funded by the Indian government, philanthropic contributions, and revenue generated from the sales of products it produces, Barefoot College has improved the lives of thousands of adults and children through its myriad initiatives. The solar engineering program, launched in 2008, has trained more than 1,100 women from 64 countries. The result? More than 50,000 homes electrified – and counting.

Today, Barefoot College is going a step further and selecting women with disabilities to participate in its solar-engineering program. Surrounded by a crowd of family and friends, Lilian introduces herself to everyone under the tree: Fundación Paraguaya staff, Accion visitors, and Barefoot College’s Latin America director Rodrigo París, who flew in from his office in Colombia for the selection of Paraguayan candidates. Rodrigo describes the program: Lilian will travel to the village of Tilonia, India, at no cost to her to attend a five-month, six-days-a-week electrical skills training program with 50 other women from all over the world. She will live, eat, and learn with them for the duration of the course. There are no language requirements or academic prerequisites. Classes are taught in English with pictorial materials and lots of sign and body language. Rest assured, he says, she will be able to follow along. She will learn how to bring light to a house powered by solar panels. Though she won’t receive a college diploma, at the end of the program she’ll be considered a solar engineer. All Lilian needs now

Surrounded by a crowd of family and friends, Lilian introduces herself to everyone under the tree: Fundación Paraguaya staff, Accion visitors, and Barefoot College’s Latin America director Rodrigo París, who flew in from his office in Colombia for the selection of Paraguayan candidates.

Rodrigo describes the program: Lilian will travel to the village of Tilonia, India, at no cost to her to attend a five-month, six-days-a-week electrical skills training program with 50 other women from all over the world. She will live, eat, and learn with them for the duration of the course. There are no language requirements or academic prerequisites. Classes are taught in English with pictorial materials and lots of sign and body language. Rest assured, he says, she will be able to follow along. She will learn how to bring light to a house powered by solar panels. Though she won’t receive a college diploma, at the end of the program she’ll be considered a solar engineer.

All Lilian needs now is interest, and to be committed to completing the course and coming back to Concepcion to deliver solar power to her community. Upon her return, Fundación Paraguaya will help Lilian conduct a needs assessment to select the homes to be electrified using its “<a href="http://www.accion.org/poverty-stoplight-fundacion-paraguaya-putting-poverty-on-the-map/" target="_blank" rel="noopener">Poverty Stoplight</a>”, a 50-question visual survey instrument to measure poverty. One of the measurements includes access to electricity.

Then, Barefoot College will support Fundación Paraguaya in identifying donor funding for the purchase of the solar panels. A volunteer committee made up of community members will help manage the installation of the panels and provide ongoing maintenance for the newly electrified homes – an electrical company of sorts – under Lilian’s guidance and supervision. Each home will pay four to six dollars per month. The committee will establish the exact amount in consultation with community members, and 60 percent of the income will go into a savings account to purchase new solar panels (the lifespan of a typical panel is five years), with 40 percent for Lilian’s salary.

After Rodrigo’s comprehensive explanation, Lilian sits up on her chair and, with a meek look, says: “I feel healthy and motivated. I’m excited to travel to India and come back with knowledge that will benefit more than just me.”

[caption id="attachment_335" align="aligncenter" width="1382"]<img class="wp-image-335 size-full" src="http://blogs.accion.org/wp-content/uploads/2015/12/disability-inclusion-rodrigo-with-Lilian-Juliana-Britez-accion-barefoot-college-fundacion-paraguaya-solar-power-rural-paraguay.jpg" alt="disability-inclusion-rodrigo-with-Lilian-Juliana-Britez-accion-barefoot-college-fundacion-paraguaya-solar-power-rural-paraguay" width="1382" height="922" /> “Ideas conceived from a desk are usually poor. Ideas conceived in the field are often great.” Rodrigo Paris (left), Latin America Director, Barefoot College.[/caption]
<h2>Making the solar engineer</h2>
On April 10, 2014, Lilian boarded a plane for the first time in her life, bound for India. She and the two other Paraguayan women selected for the program had embarked on an experience that would forever change the course of their — and arguably other people’s — lives.

I caught up with her on the phone in late September, when she was back in Paraguay.

“How was India?” I asked.

“So many people,” she said. “So many strangers, everyone speaking languages I couldn’t understand. And the food was so hot! I survived on rice pudding and fruit.”

“And the college?”

“At first it was very hard. Nobody spoke Spanish, and we didn’t understand much. One day we cried. They spoke English and Hindi and the students spoke our languages. A lot of us broke into tears. But, eventually we learned to communicate and we became very close with each other. By the end of the semester, we were crying again, this time because of having to say goodbye.”

Classes ran from nine to five, with a one-hour break for lunch. Lilian learned the basic principles of electricity. She learned how to mount all the components of a solar panel, including soldering circuit boards, connecting inverters, testing, and the entire process of how to make a solar lantern.

Portable solar lanterns are an important part of electrifying a rural village. Think about their many uses: for fishing or farming before dawn, fetching water after dusk, tending to a sick animal through the night, gathering with family outside in the evenings.

The classroom had 10 teachers, mostly women, who spent time one on one with the students. Students were also encouraged to assist each other, which was especially important for Lilian as she had to ask for help in negotiating the campus’s sandy pathways, where her wheelchair would often sink.

There were extracurricular activities and road trips — including a few days in Agra, where Lilian visited the Taj Mahal. In July, former president Clinton visited Barefoot College and met with the class of solar engineers.

“That handsome blond with the great blue eyes,” Lilian said about meeting Clinton. “I remember seeing him on television in Paraguay.”

That day, she also had a chance to meet Paraguay’s ambassador to India. “I asked to have a word with him,” she continued. “I told him this program is fantastic and that he needed to make sure more Paraguayan women have a chance to attend.”
<h2>Disability inclusion</h2>
Two years ago, Fundación Paraguaya began working on financial inclusion for persons with disabilities (PWDs), a population vastly underrepresented and underserved by microfinance institutions. According to the World Health Organization, PWDs represent 15 percent of the world’s population, but some estimates indicate that they make up less than one percent of the world’s current microfinance clients. With Accion’s support, Fundación Paraguaya partnered with Nobel Peace Prize-winning Handicap International to take the first steps in becoming a fully accessible institution. Handicap International developed staff training and awareness-raising tools for Fundación Paraguaya. In addition, Accion supported Fundación Paraguaya in executing an initial assessment of physical accessibility (with Libre Acceso from Mexico) and analyzing how to use technology to facilitate disability access to financial and non-financial products.

“We had already been working for a number of years on the distribution of wheelchairs in partnership with the Wheelchair Foundation and the Mormon Church,” says Jimena Vallejos, project manager for disability inclusion at Fundación Paraguaya, “so working with Accion and Handicap International on a broader disability-inclusion initiative was a natural course of action.”

The partnership yielded another positive result: In January 2014, the Center for Financial Inclusion at Accion published a framework for microfinance institutions seeking to close the financial inclusion gap for PWDs. The reference publication, to which Fundación Paraguaya made significant contributions, covers six areas and includes implementation details to help financial institutions become more welcoming to PWDs. Fundación Paraguaya is implementing this framework.

This past June, Fundación Paraguaya received a grant from the United States Agency for International Development to develop a disability-inclusive program and business model for microfinance institutions — to show that serving PWDs is not only the right thing to do but also profitable. The grant will also support the implementation of the Roadmap to Financial Inclusion and Fundación Paraguaya’s Poverty Stoplight program among families who have members with disabilities.

“When Accion connected us with Barefoot College and suggested we select women with disabilities for the solar engineering program, we jumped at the idea,” says Jimena. “It’s been amazing to see the change in these women. The women that came through Asuncion en route to India six months ago were different. They were slightly frightened and a bit insecure. They returned from India empowered — excited to start their [solar] projects. The change is wonderful. And we are hoping to send another group next year, if Barefoot College will have us.”
<h2>Illuminating the future</h2>
But what happens after a solar engineer brings light to her village, her mini-“electric company” is underway, and Barefoot College has stepped aside?

“When we select a community for the program,” explains Rodrigo París, “we establish alliances with local universities to conduct impact assessments in the villages. We want to know what changed with the arrival of light at the family, community, and business levels.”

The results from these studies are used to suggest community improvements, such as building a library for children learning to read, or a workshop space for women to exchange handicraft skills.

Barefoot College’s five-year vision for Latin America is to build a campus in the region — as they have done in Sierra Leone and Zanzibar and will soon do in South Sudan — to train 100 to 200 women per semester rather than the two or three from each country who travel to India currently.

Rodrigo also wants to establish the first network of solar-engineer alumni in Latin America to foster communication, idea-exchange, and problem-solving.

But all of that needs financial support.

“Ideas conceived from a desk are usually poor,” says Rodrigo. “Ideas conceived in the field are often great. Come visit Barefoot College. Once you see the magic, once you meet these courageous women, you will want to support us.”

“Ultimately,” he continues, “what we are trying to do is to strengthen, educate, and empower women, and through them — because they are the core of a family and a community — to bring light. And the light will light ideas, give hope, and foster positive change.”

Disability inclusion and solar power in rural Paraguay

Fundación Paraguaya

Curuguaty is a Paraguayan town in the eastern department of Canindeyú. If you’ve heard of it – which you almost certainly haven’t – it’s probably because its population, which is poor and mostly rural, has been surveyed and plotted on a map using Accion partner <a class="markup--anchor markup--p-anchor" href="http://www.fundacionparaguaya.org.py/" target="_blank" rel="follow noopener noreferrer">Fundación Paraguaya</a>’s color-coded ‘Poverty Stoplight,’ an innovative poverty measurement tool that has helped over 18,000 families overcome economic poverty since the program began in 2010.
<p id="a392" class="graf--p graf-after--p">Fundación Paraguaya is a nonprofit social enterprise in Paraguay that is focused on using microfinance, education, and more innovative methods (including this Poverty Stoplight) to eliminate poverty in the country.</p>
<p id="6c72" class="graf--p graf-after--p">The Poverty Stoplight operates on the notion that, in order to truly make a difference in eliminating poverty, you have to first understand it. Fundación Paraguaya founder Martín Burt realized that every poor client he served was poor in his or her own way. The tricky part was to understand the ways in which each family is poor, define what it means for these individuals or families to be not poor, quantify all of that, qualify it, and then come up with an exit strategy.</p>
<p id="7130" class="graf--p graf-after--p">Burt and his team organized 50 poverty indicators, such as jobs and access to water, into six dimensions:</p>
<p id="53ef" class="graf--p graf-after--p">1) Income and employment
2) Health and environment
3) Housing and infrastructure
4) Education and culture
5) Organization and participation
6) Interiority and motivation</p>

<div class="section-inner u-sizeFullWidth">
<figure id="315b" class="graf--figure graf--layoutFillWidth graf-after--p">
<div class="aspectRatioPlaceholder is-locked">
<div class="progressiveMedia js-progressiveMedia graf-image is-canvasLoaded is-imageLoaded"><img class="alignnone wp-image-284 size-large" src="http://blogs.accion.org/wp-content/uploads/2015/12/Poverty-stoplight-fundacion-paraguaya-accion-blog-Cristina-Rios_Pacheco-client-loan-officer-Luque-Paraguay-1024x683.jpeg" alt="Poverty-Stoplight-fundacion-paraguaya-accion-blog-Cristina-Rios_Pacheco-client-loan-officer-Luque-Paraguay" width="1024" height="683" /></div>
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<figcaption class="imageCaption"><em>Cristina Ríos Pacheco takes Fundación Paraguaya’s Poverty Stoplight survey with her loan officer in Luque, Paraguay</em></figcaption></figure>
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<div class="section-inner layoutSingleColumn">
<p id="becb" class="graf--p graf-after--figure">They also identified three conditions for each poverty indicator (not poor, poor and extremely poor), and assigned to each the corresponding colors — green, yellow and red. A photograph was included to represent each condition in the local context, since many of those surveyed were functionally illiterate. For example, to represent the three possible conditions for access to water, the survey respondent could look at a picture of a woman carrying a bucket of water on her head (extremely poor), a well outside her house (poor) and a faucet at home (not poor), and quickly identify which photograph best represented the family’s situation.</p>
<p id="4d83" class="graf--p graf-after--p">Burt explains that the approach of his Poverty Stoplight incorporates the following four propositions:</p>

<ul>
 	<li id="d26b" class="graf--p graf-after--p"><strong class="markup--strong markup--p-strong">First, poverty has many more dimensions than insufficient income.</strong></li>
 	<li id="5866" class="graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Second, poverty doesn’t affect families uniformly; each family has a different set of poverty-related problems to resolve in order to overcome poverty.</strong></li>
 	<li id="ef7e" class="graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Third, the main protagonists in eliminating poverty must be the poor themselves. Institutions, however far-sighted or well-funded, do not have sufficient insight into the poverty-related problems of individual families or sufficient resources to permanently eliminate poverty on their behalf.</strong></li>
 	<li id="7d4b" class="graf--p graf-after--p"><strong class="markup--strong markup--p-strong">Fourth, a poverty-elimination strategy must be scalable, which means that it must cost very little to implement and, ultimately, must be financially self-sustaining.</strong></li>
</ul>
<p id="c59c" class="graf--p graf-after--p">After completing the 20-minute, 50-question pictorial survey on a touch-screen device (developed pro bono by Hewlett-Packard), clients receive a one-page report that summarizes in ‘heat map’ fashion the areas in which the family is extremely poor (red), poor (yellow) and not poor (green).</p>

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<div class="section-inner u-sizeFullWidth">
<figure id="17dd" class="graf--figure graf--layoutFillWidth graf-after--p">
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<div class="progressiveMedia js-progressiveMedia graf-image is-canvasLoaded is-imageLoaded"><img class="progressiveMedia-image js-progressiveMedia-image alignnone" src="https://cdn-images-1.medium.com/max/2000/1*YxMHdcn5JpOLC9mum4syrQ.jpeg" alt="Poverty-Stoplight-fundacion-paraguaya-accion-blog-cell-phones-paraguay" width="1221" height="381" /></div>
</div></figure>
</div>
<div class="section-inner layoutSingleColumn">
<p id="78d6" class="graf--p graf-after--figure">Fundación Paraguaya’s staff then works with the client’s family to develop a specialized package of services to address their specific poverty-related problems. Typically, the first task is to help the client develop a business plan to increase per-capita income above the national poverty line ($3.5 per day per member of a household in Paraguay). That might include a microloan for another family member or the option to become a microfranchise by selling certain products, such as reading glasses and over-the-counter pharmaceutical products, which Fundación Paraguaya is working to turn into client microfranchise opportunities.</p>
<p id="d14b" class="graf--p graf-after--p">The data from the survey also provides the baseline against which to measure each client’s progress in overcoming poverty. Finally, the data are geo-referenced on a Google map and made available to NGOs and government agencies to implement interventions such as vaccination events, blood pressure screenings, or getting a free wheelchair to a person in need.</p>
<p id="b8ee" class="graf--p graf-after--p">This level of coordination happened in Curuguaty.</p>
<img class="progressiveMedia-image js-progressiveMedia-image alignnone" src="https://cdn-images-1.medium.com/max/2000/1*22an4cpaFE-gUqHCNFarBA.png" alt="Poverty-Stoplight-fundacion-paraguaya-accion-blog-map-paraguay" width="1453" height="666" /><em>A screengrab of the Poverty Stoplight map developed by Fundación Paraguaya.</em>

</div>
<div class="section-inner layoutSingleColumn">
<h2 id="e810" class="graf--h4 graf-after--figure">Putting Curuguaty on the map</h2>
<p id="6b41" class="graf--p graf-after--h4">Tablets in hand, Fundación Paraguaya staff canvassed the outskirts of Curuguaty to administer the Poverty Stoplight to hundreds of residents. One of them was Benita Chaparro, who, along with her husband, was supporting their 13-year-old son on her small income as a housekeeper. Benita is a member of one of Fundación Paraguaya’s 2,600 all-women solidarity groups participating in a program called ‘Mujeres Emprendedoras’ (Entrepreneurial Women). The groups access small loans from Fundación Paraguaya and learn business and entrepreneurial skills such as self-management, budgeting, and leadership using <a href="https://www.juniorachievement.org" target="_blank" rel="noopener noreferrer">Junior Achievement’s model</a>.</p>

<figure id="1485" class="graf--figure graf--layoutInsetLeft graf-after--p">
<div class="aspectRatioPlaceholder is-locked"></div>
<figcaption class="imageCaption"><em><img class="wp-image-283 size-full alignnone" src="http://blogs.accion.org/wp-content/uploads/2015/12/Poverty-stoplight-fundacion-paraguaya-accion-blog-Benita-Chappara.jpeg" alt="Poverty-Stoplight-fundacion-paraguaya-accion-blog-Benita-Chaparro" width="640" height="480" />
Benita Chaparro, client of Fundación Paraguaya, procured a stove, a sink, and running water as a result of the Poverty Stoplight program.</em></figcaption></figure>
<p id="cc1c" class="graf--p graf-after--figure">When Benita took the survey in 2012, she fared poorly on indicators related to safe cooking and trash disposal, earning yellow and red respectively in those categories. She prepared meals using firewood in a pit and burned their trash in her yard. Fundación Paraguaya staff asked why that was the case and realized that part of the reason had to do with lack of motivation and insufficient knowledge about health hazards. They worked with her on that, eventually convincing Benita’s husband to use his construction skills to build an elevated stove. That was only the beginning.</p>
<p id="8ecc" class="graf--p graf-after--p">Today, Benita has a kitchen with a stove, a sink, and running water. “These changes have lifted my spirit,” she says. “When I go to bed I think about this accomplishment and feel happier and more rested because of the comfort these things have given me.” The family plans to put in cement floors and build a laundry room. Not only has Benita’s family moved from red and yellow to green on most of their indicators, but their achievements have helped motivate other women in her solidarity group. “It’s important to have goals,” she explains. “At first the work seemed daunting, but then we got motivated and now it’s a reality.”</p>
<p id="3514" class="graf--p graf-after--p">In 2011, Fundación Paraguaya’s Poverty Stoplight helped 6,400 families like Benita’s (an estimated 32,000 people) raise their income above the national poverty line. In 2012, they helped an additional 6,000, while enabling 600 of the 6,400 families from 2011 to transform all the indicators in their report from red or yellow to green, indicating that they had overcome poverty in all its dimensions. During 2013, 6,160 families overcame poverty with respect to income (totaling 18,590 families for the period 2011–2013) and 1,057 overcame poverty with respect to all 50 of Fundación Paraguaya’s indicators (totaling 1,662 families for the period 2012–2013.)</p>
<p id="bab3" class="graf--p graf--startsWithDoubleQuote graf-after--p">“If 92,000 people have been lifted out of poverty by their own efforts,” writes Burt, “how much more can be accomplished if society as a whole makes a concerted effort?”</p>

<h2 id="9489" class="graf--h4 graf-after--p">Yes, Mr. President</h2>
<p id="dd90" class="graf--p graf-after--h4">Luis Fernando Sanabria took over Fundación Paraguaya in 2012, after Burt was invited by President Federico Franco to join his cabinet as chief of staff. Burt is no stranger to public service — he spent a term as mayor of Paraguay’s capital, Asunción. He stepped down from Fundación Paraguaya to serve his country. He would eventually find a way of raising the Stoplight to the highest levels of government.</p>
<p id="d5a7" class="graf--p graf--startsWithDoubleQuote graf-after--p">“Before the adoption of the Stoplight,” says Sanabria, “Fundación Paraguaya was the smallest microfinance organization in Paraguay, with 9,000 clients. Since we’ve changed our focus, we’ve grown to 57,000 clients.”</p>
<p id="210d" class="graf--p graf-after--p">In December 2012, Paraguay’s national government launched its Private-Public Partnership Action Plan to Eliminate Extreme Poverty by 2018. Burt’s Stoplight became a major component of the policy. It was used to design a strategy to map 1.2 million people living in extreme poverty in 400 rural villages, 1,000 urban slums, and 116 indigenous settlements. The Stoplight also provided a methodology that enabled more than 1,500 local businesses to sponsor one extremely poor village or settlement in their community, thereby becoming the designated liaisons between government agencies that provide services and the community represented by each business.</p>

<h2 id="7ee2" class="graf--h4 graf-after--p">Beyond Paraguay</h2>
<p id="06a9" class="graf--p graf-after--h4">Burt wants more. “The truth is that, just like David against Goliath, we want to demonstrate to the microfinance industry that [the Stoplight] is a platform that needs to be used for the eradication of poverty at an international level.”</p>
<p id="1cb6" class="graf--p graf-after--p">And he’s working on it. Burt has partnered with ProMujer and the BBVA Foundation to help bring his Stoplight to Mexico. Organizations in Nigeria, Tanzania, and Uganda are asking Burt to localize his Stoplight in their respective countries. (He’s looking for financial support for that.)</p>
<p id="b7ed" class="graf--p graf--startsWithDoubleQuote graf-after--p">“Our objective is to transcend what we’ve done so far, which is fighting and alleviating poverty, to eliminating it. We want to go from financial inclusion to poverty eradication.”</p>
<p id="da63" class="graf--p graf-after--p">Burt is leading by example. The question is, what will it take to get others to follow suit?</p>

</div>

The Poverty Stoplight: Putting poverty on the map

<p id="3216" class="graf--p graf-after--h2 graf--last"><em>By Zach Weishar</em></p>
<p class="graf--p graf-after--h2 graf--last">I stand 11,152 feet above sea level in the Peruvian Andes, just outside the city of Cusco. The air is thin and my breath comes in short, unfulfilling spurts, but I am excited to get to work. I’m here to meet one of our new partners, Credinka, a microfinance institution that is reaching underserved clients in rural Peru. We will spend a week on the road meeting entrepreneurs from Cusco to Puno, and many places in between. What follows are first-hand observations about what microfinance looks like on the ground.</p>
We interviewed clients in their place of work (usually also their home), accompanied by their loan officer, hoping to capture a snapshot of their world — to experience life through their eyes. We were lucky to have the loan officers with us because the strength of the relationship between a client and their loan officer is impressive — far more robust than any bank in the States. Credinka’s loan officers travel long distances, often on public transportation, to meet clients in their homes. This is a dedicated group of individuals, especially when you consider that they often manage upward of 100 clients, all of whom are spread across the countryside. In order to understand how dynamic the client-loan officer relationship is, you have to understand the cultural context surrounding the banking system in Peru.
<p id="83b9" class="graf--p graf-after--p">Many of Credinka’s clients grew up with an intense mistrust of financial institutions, which stems back to a series of financial collapses that rocked Peru in the 1980s and 90s. One of Credinka’s employees told us how her mother used to hide money in sacks of corn to save. One day she woke up to a collapsing financial system and a worthless stash of paper bills. Others told us of banks that would collect deposits, only to close one day and swallow their client’s money, never to be seen again. Stories like this are commonplace, which means loan officers have to build trust slowly and deliberately.</p>
<p id="b670" class="graf--p graf-after--p">Each village we entered was more picturesque than the next, all nestled into the mountains surrounded by green, luscious farmland. The villages were often small, and always tightknit. This is part of why Credinka focuses on rural lending — these small villages are bound together by a social fabric, and the thought of taking a loan that can’t be repaid is unthinkable for many clients — the shame would be immense. Before a client ever takes a loan, members of the community share what financial knowledge they have, educating their neighbors about interest rates, repayment terms, and credit history. When a loan officer gets to a village, many clients often already know the right questions to ask. As a result, rural repayment rates are often higher than urban — communities work together to keep each other focused.</p>
<p class="graf--p graf-after--p"><a href="http://blogs.accion.org/wp-content/uploads/2015/11/IMG_7329.jpg"><img class="aligncenter wp-image-88 size-large" title="Farm worker in the rural foothills of the Andes mountains" src="http://blogs.accion.org/wp-content/uploads/2015/11/IMG_7329-1024x683.jpg" alt="Farm worker in the rural foothills of the Andes mountains" width="1024" height="683" /></a></p>
As we moved through the countryside, meeting one client after another, something I often hear in the office began reverberating through my subconscious: “Our clients live complex financial lives.” Despite the fact that they live largely outside of the regulated financial system, they conduct transactions and manage money in complicated, interconnecting ways. The fact that this all takes place in the informal economy just adds an extra layer of complexity. This also means that they have multiple streams of income, mostly generated by entrepreneurial enterprise. Not one client that we met worked a 9–5 — that type of opportunity is uncommon in rural Peru. Instead, a single client might raise chickens for personal consumption, pigs to sell for meat, and cows to sell milk and make cheese. This same client might also rent rooms in her home, or in a separate hostel she built, or make handicrafts to sell to tourists, or even make paintings to sell to galleries in the big city. The list is endless, but what’s astounding is how they are able to create so much value in a setting with so little structured economic opportunity. In my experience, that type of resourceful, entrepreneurial mindset is far rarer in affluent nations; here, it is a necessity.
<p id="ed55" class="graf--p graf-after--p">That is why organizations like Credinka are so valuable in these kinds of communities. Their clients have the drive, ambition, and capability to create streams of income for themselves, but they often need a lump sum to get started. The farmer I mentioned above might need a loan to buy her cows, to expand her home, or to build her hostel, and there often isn’t any other way to access this startup capital. Walter, a loan officer with whom we spent several days, told us about NGOs and small, local nonprofits that used to provide small amounts of working capital, but they slowly closed their doors over the years — charity alone wasn’t enough to meet the need. It’s organizations like Credinka that fill the gaps and provide these rural Peruvians with the resources that they need to thrive.</p>
<a href="http://blogs.accion.org/wp-content/uploads/2015/11/CINKA_2015-2.jpg"><img class="aligncenter wp-image-89 size-large" title="Microfinance client does business with Credinka branch employee" src="http://blogs.accion.org/wp-content/uploads/2015/11/CINKA_2015-2-1024x683.jpg" alt="Microfinance client does business with Credinka branch employee" width="1024" height="683" /></a>
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Ditching my desk