Recently, I went searching for “chin-chin,” one of my favorite local Nigerian snacks, which was out of stock in the grocery store where I regularly shop. I went instead to a small kiosk in my neighborhood and was pleased to find it still in stock there. I noticed how this kiosk seemed about the same since I last patronized it six years ago, with no apparent evidence of expansion. When I shared my observation with the vendor, his response was “country too hard.” This got me thinking of the challenges that microenterprises continuously face, especially as they relate to accessing investment funds to grow their businesses.

Like many developing countries, Nigeria has a <a href="https://www.cbn.gov.ng/Out/2012/publications/reports/dfd/CBN-Summary Report of-Financial Inclusion in Nigeria-final.pdf" target="_blank" rel="noopener noreferrer">national financial inclusion strategy</a> (NFIS) to guide market and ecosystem actors on how to improve the lot of microenterprises such as my neighborhood kiosk. The strategy document spells out specific priority measures to be adopted in a bid to reduce credit risks and transaction costs associated with serving the most financially excluded members of society. Some of these measures include initiatives to support the expansion and reach of digital financial services, increasing agent banking networks, and promoting more channels for cashless payments.
<h2>Flaws in the National Financial Inclusion Strategy</h2>
The pace of financial inclusion remains sluggish, however. The country’s strategy has been less successful than anticipated due to several factors, including overly long intervals in assessing progress/impact of the policies adopted, use of limited progress indicators, lack of flexibility, and limited capacity for making quick adjustments to adjust to a fast-changing financial ecosystem.

Since the national strategy took effect in 2012, there has been some progress. The number of citizens with access to bank accounts and credit <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Key-Findings-11_01_19.pdf" target="_blank" rel="noopener noreferrer">increased slightly</a>. But access to non-bank services has barely changed: <a href="http://sustainabledfs.lbs.edu.ng/wp-content/uploads/2021/01/SOMR 2020_compressed.pdf" target="_blank" rel="noopener noreferrer">women and rural households</a> -- and <a href="https://devbankng.com/cms/uploads/FINANCIAL INCLUSION IN A DEVELOPING COUNTRY.pdf" target="_blank" rel="noopener noreferrer">individuals located in the northwest region</a> -- are still largely excluded and face access barriers.

Moreover, the chances of meeting the national financial inclusion target of ensuring 95 percent of the country’s adult population have access to formal and/or informal financial services by 2024 are low. The current <a href="https://www.cbn.gov.ng/Out/2020/CCD/2019 Annual Report of the National Financial Inclusion Strategy Implementation.pdf" target="_blank" rel="noopener noreferrer">official figures reported by the central bank</a> show an inclusion rate of 63.2 percent, making the 2024 target less feasible at this rate. The COVID-19 pandemic has also caused some previously scheduled financial inclusion initiatives, like the recapitalization exercise for microfinance banks and insurance companies, to be delayed and has put a lot of <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/nigeria/" target="_blank" rel="noopener noreferrer">financial and economic strain on Nigerian households and small firms</a>.
<blockquote class="pullquote--right">The COVID-19 pandemic has delayed financial inclusion initiatives and strained Nigerian households and small firms.</blockquote>
Weaknesses in the NFIS reduce its effectiveness, as elaborated on in this <a href="https://www.mfw4a.org/sites/default/files/resources/a_critical_review_of_nigerias_financial_inclusion_strategy.pdf" target="_blank" rel="noopener noreferrer">review</a>. These issues tend to impair the effectiveness of interventions targeted at reducing barriers to financial inclusion. A number of these gaps -- which may be relevant to countries in similar situations -- are summed up below.
<ul>
 	<li>The NFIS was only reviewed and revised for the first time after six years. This timeline suggests that the strategy is not flexible enough, does not encourage real-time learning and adjustments, and restricts the possibility of adapting the plan quickly to suit existing needs and challenges. For instance, the initial strategy listed the use of point-of-sale (POS) terminals as a priority tool for ensuring wider and more efficient service delivery. However, given the constant advancements in technology, this particular focus plan very quickly became outdated and less efficient but was only revisited after the six-year review.</li>
 	<li>The metrics for measuring progress are limited to evaluating just access to finance. However, there are equally important issues that need to be considered in assessing the true inclusion rate. These include affordability, quality, and suitability of available financial products, or appropriate skills to use and maximize these services. While the biannual <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Questionnaire.pdf" target="_blank" rel="noopener noreferrer">access-to-finance surveys</a> explore some of these areas on usage, affordability, and quality dimensions, not enough focus is placed on the findings. To buttress the importance of these issues, insights from the <a href="https://nibss-plc.com.ng/" target="_blank" rel="noopener noreferrer">Nigeria Inter-Bank Settlement System</a> indicate that about 30 percent of bank accounts are inactive. It would therefore be useful to consider if and why inactive bank accounts are increasing, or if inactive users are growing faster than the number of new users. This is so that the inclusion rates reported are more reflective of realities.</li>
 	<li>The definition of financial inclusion per the NFIS suggests a bias towards adult individuals. As such, performance monitoring is limited to household surveys and does not provide sufficient information on improvement or lack of improvement relevant to enterprises. Since progress indicators are not directly targeted at enterprises, they do not reveal crucial details of the level of financial exclusion suffered by vulnerable groups (like informal microbusinesses) within this segment of the population. It is therefore difficult to determine which specific policy reforms are needed for this group.</li>
 	<li>In implementing the NFIS, interventions introduced do not fully nor effectively take into consideration the fact that socio-economic developmental problems are entwined. Consequently, financial inclusion programs have not been properly integrated with other development initiatives such as the social protection relief programs used to reduce the impact of COVID-19 on poor households and businesses. The country’s weak institutional landscape creates further problems in this regard. An example is the disbursement of a popular welfare scheme which was done via cash rather than digital platforms because a significant proportion of vulnerable groups still do not have access to digital platforms. Policymakers and market actors need to ensure that more people across the country have access to digital technologies.</li>
 	<li>There have been multiple instances of financial regulations being introduced and subsequently withdrawn or revised, giving the impression that the policy reforms are not properly designed or coordinated. Some of these reforms are also poorly sequenced. Keeping track of the various regulatory changes can be tasking and confusing for customers and service providers.</li>
 	<li>Given that the NFIS does not have adequate legislative backing as it is not yet public policy, it makes operationalizing and enforcing the strategy tedious, thus affecting impact.</li>
</ul>
<h2>Recommendations</h2>
The plan for achieving greater financial inclusion at any national level needs to make room for adapting to the evolving financial landscape. One way of achieving this is to incorporate a comprehensive approach in monitoring and evaluating financial inclusion intervention programs.

In Nigeria’s case, more frequent progress monitoring is necessary to identify initiatives that are working well and others that may need improvement. For example, it would be interesting to monitor if the use of agent banking has significantly helped reach more people in remote locations, or if granting more licenses to new entrants in the fintech space has made the prices of financial products more competitive.
<blockquote class="pullquote--left">More frequent progress monitoring is necessary to identify initiatives that are working well and others that need improvement.</blockquote>
Also, there is a need to expand indicators being measured to include not just individuals/households, but micro, small and medium enterprises (MSMEs). While this does not negate the financial sector development approach adopted in many African markets which has resulted in significant progress, more diverse studies could also evaluate how expensive or cheap financial services are, if the banked population is using available services, and if available products are suitable to individual and business needs. Such analysis can reveal the causes behind observed trends, and how this varies across demographics, to guide appropriate drafting of policies that can improve financial inclusion.

Impact evaluation can then be used to check if and how improved financial inclusion has affected the desired outcomes highlighted in the NFIS, which include reducing poverty, closing the income inequality gap, and boosting faster economic growth. This would inform better targeting of scarce resources, and afford policymakers and implementers insightful lessons for improved interventions.

Better structured linkages with the nation’s broader welfare assistance programs and a digitalization drive can improve the chances of successful financial inclusion outcomes. One avenue for integration is to leverage the social register of poor households and find ways of including this group of low-income earners in the formal financial system. Technologically driven financial service solutions should also be encouraged, meaning the NFIS team would have to work more closely with stakeholders in the country’s digital space such as the <a href="https://www.ncc.gov.ng/" target="_blank" rel="noopener noreferrer">Nigerian Communications Commission</a> and the <a href="https://www.commtech.gov.ng/" target="_blank" rel="noopener noreferrer">Ministry of Communications and Digital Economy</a>, to push for regulations and interventions that will enhance customers’ access to the internet, encourage greater investment in digital infrastructure and more responsible use of data to increase customers’ capacity and trust.
<blockquote class="pullquote--right">Better structured linkages with welfare assistance programs and a digitalization drive can improve chances of successful financial inclusion outcomes.</blockquote>
Beyond addressing the perceived shortcomings in the implementation of the NFIS, it is important for the financial ecosystem to <a href="https://www.thisdaylive.com/index.php/2019/12/13/experts-identify-new-ways-to-deepen-financial-inclusion/" target="_blank" rel="noopener noreferrer">collectively work together</a> to tackle the major barrier of <a href="https://www.efina.org.ng/wp-content/uploads/2019/01/A2F-2018-Key-Findings-11_01_19.pdf" target="_blank" rel="noopener noreferrer">high transaction costs and affordability concerns</a> in serving low-income segments in mostly rural and remote regions. This would involve, among other things, providing a conducive environment for financial service providers to see the value in serving excluded groups.

If these policy reforms get buy-in from all stakeholders, and implementation is properly coordinated to increase policy effectiveness, Nigeria will be better equipped to meet its NFIS goals.

How Is Nigeria’s National Financial Inclusion Strategy Going?

Nigeria

Sub-Saharan Africa

Enabling Environment

Financial Inclusion Strategy

Payments

Policy, Regulation and Government Initiatives

Rural Populations

Underserved Groups

Blog Post

Earlier this month, we announced that <a href="https://content.centerforfinancialinclusion.org/people/mayada-el-zoghbi/">Mayada El-Zoghbi</a> is joining us as the new Managing Director of the Center for Financial Inclusion at Accion (CFI). Mayada is known for her extensive research in – and advocacy for – financial inclusion. As CGAP’s Lead for Strategy, Research &amp; Development, she coordinated CGAP’s strategy development and its research on women’s financial inclusion, financial services in crisis environments, and other emerging topics.

Prior to CGAP, Mayada founded and managed a development consulting firm, led numerous technical assistance, evaluation, and research assignments, served as a research director for a USAID initiative, helped develop several financial institutions, and lectured at Columbia's School of International and Public Affairs (SIPA).
<h4>CFI: What sparked your passion for financial inclusion, and what continues to propel it as you assume your new role at CFI?</h4>
<strong>Mayada</strong>: After graduating from college, I went to Morocco on a research fellowship with a program called Minnesota Studies in International Development (MSID). I lived both with a family in Rabat and spent a month in a rural community doing survey work on a rural credit research project with a professor from the Agronomy Institute in Rabat. This experience piqued my interest in financial services.

The project in Morocco was clearly not good practice and I was interested to learn more about what works. I decided to go back to graduate school to learn more about it, so I studied at SIPA. It was during a course on microenterprise development, taught by Heather Clark, who was heading UNCDF at the time and who is now a dear friend, that I knew for sure that this was a field that combined all of my interests in business, financial services, and sustainable development. Most importantly, it aligned with my social values.

The inclusive finance field has expanded so much beyond my initial exposure to an agricultural loan program in rural Morocco. The many ways in which this sector continues to evolve and expand is what continues to draw me in. I’m especially excited by our ability to shape responsible growth of the industry, and the role that organizations like CFI have in guiding both public and private sector actors in inclusive finance.
<blockquote>I’m especially excited by our ability to shape responsible growth of the industry.</blockquote>
<h4><strong>CFI</strong>: Why did you choose to join CFI? What about CFI resonated with you?</h4>
<strong>Mayada</strong>: I’ve worked on inclusive finance from many angles: managing institutions in the field, supporting donors on their strategies, conducting research, providing technical assistance to providers and other stakeholders. All of these experiences have been rewarding, but perhaps the role that I’ve enjoyed the most is thought leadership. I’ve been fortunate to do that at CGAP for the past 10 years.

With its convening power, independence, and ability to influence the private sector, investors and the broader inclusive finance community, CFI is unique. Its position as an independent think tank with deep expertise in consumer protection and a strong advocacy platform representing people living in poverty makes it an extremely compelling platform for me personally. At a time when digital platforms represent transformative opportunities to serve the poor and present serious risks for those who are the least able to withstand those risks, there’s no denying that a laser focus on consumer protection has to be front and center. Ensuring that the digital economy evolves in a way that’s both inclusive and protective is critical, and I believe that CFI is well positioned to lead the industry in such a way as to make that a reality.

Q and A with Mayada El-Zoghbi, CFI’s New Managing Director

Consumer Protection

Responsible Digital Finance

Women

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

Delivery Channels

Banks

Financial Service Providers

Data Analytics

Financial Technology

Fintechs

Partnerships

Telcos

Report

<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

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

Latin America and The Caribbean

Dominican Republic

Ecuador

Nicaragua

Peru

Adelina Dasso

Senior Investment Officer, Accion Global Investments

Alex Qian

Senior Investment Officer, Accion Global Investments 

Mayada  El-Zoghbi

Managing Director, CFI

Victoria White

Debdoot Banerjee

Elizabeth Winters

Ashley Lewis

Federico  Gomez Romero

Michael Schlein

Mona Kapoor

Esteban Altschul

Libby Morley

Archana Kejriwal

India

South Africa

South Asia

Kenya

Brazil

East Asia and Pacific

Indonesia

Bolivia

China

Haiti

Uganda

Access Usage Gap

Agricultural and Rural Finance

Alternative Data

Behavioral Insights

Challenges and Crises

Credit

Customer Centricity

Digital Credit

Digital Financial Services

Entrepreneurs of MSMEs

Financial Health

Microfinance Institutions

MSME/SME Finance

Personal Financial Management

Resilience

Client Treatment

Crop Insurance

Governance

Human Centered Design

Impact Investing

Insurance

Risk Management

Smallholder Farmers

Advisory Services

Credit Provision

Microfinance

Mobile Banking

Appropriate Product Design and Delivery

Inclusive insurance

Human Touch

Insurance Companies

Insurtech

Saving

Risk and Credit Analysis

Supply Chain Finance

Transparency

Article

Video

Podcast

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.

South Africa is a global hub for fintech innovation. Accion supports and advises South African innovators using technology to help entrepreneurs expand their businesses and families protect their homes around the world.

<em>This article is available in English and Spanish.</em>

<a href="/digital-tools-open-opportunities-for-women-to-thrive" target="_blank" rel="noopener noreferrer">Digital financial products can help close gender gaps</a> that persist around the world, but they need to meet women where they are. Data is a building block to help us understand what women need most to overcome obstacles and seize opportunities.

To shine a spotlight on the role that data plays in supporting women, <a href="/how-can-data-open-opportunity-for-women-during-and-after-covid-19" target="_blank" rel="noopener noreferrer">I spoke with leaders from three financial service providers</a>, Bindu Ananth from Dvara Trust, Verónica Gavilanes from Banco Pichincha, and Buhle Goslar from JUMO. They shared how they’re leveraging data to serve their female customers better by:
<h3>Analyzing the impact of COVID-19 on women entrepreneurs</h3>
There’s no question that the pandemic has taken a real toll on the lives of women and has had a <a href="/5-ways-to-help-women-entrepreneurs-adapt-during-covid-19" target="_blank" rel="noopener noreferrer">critical impact on women-owned businesses</a>. Our partner <a href="https://www.pichincha.com/" target="_blank" rel="noopener noreferrer">Banco Pichincha</a> is dedicated to supporting micro and small businesses in Ecuador. Before the pandemic, Banco Pichincha already studied the barriers that their women entrepreneur customers faced through survey data. Because the pandemic has added new challenges, Banco Pichincha is taking action. By analyzing their customer data, they identified how women entrepreneurs, in particular, were struggling, and how they could support them through the crisis. Their loan products that are intended for women consider the barriers that women face and include conditions, requirements, guarantees, and grace periods required to close the gap for women.

As the pandemic progressed, Banco Pichincha also noticed that many of their women entrepreneur clients were adapting their businesses by adding things like delivery services using motorbikes and digital e-commerce platforms. Banco Pichincha started to offer flexible support for these small businesses to reinvent themselves. As Verónica Gavilanes, General Manager of Microfinance at Banco Pichincha, remarked, “In every place in the world, women are very resilient and seek alternatives to move forward, so we wanted to fund activities that were suitable for the pandemic. We have almost 40 percent of women who reinvented their businesses to seek these opportunities in the market.”
<h3>Applying a holistic lens to data</h3>
Financial service providers can’t use data alone to drive impact, especially for women. They also need to consider the real-world context. <a href="https://www.jumo.world/" target="_blank" rel="noopener noreferrer">JUMO</a> is a tech company founded to create a financial services platform for people who don’t have access to financial products in Côte d'Ivoire, Ghana, Kenya, Tanzania, Uganda, Zambia, and Pakistan. To address the digital gender divide present in their markets, JUMO works to understand the barriers that their female customers face. As Buhle Goslar, Africa CEO of JUMO, told us, “To really be able to bring customers who have been left behind into the formal economy and to give them access to these services, we have to have a deep understanding of what’s happening in the real world, not just looking at their digital footprint. Because if you don’t do that, then the data doesn’t make sense.”

<img class="alignright wp-image-23706" src="https://content.accion.org/wp-content/uploads/2021/03/iwd-webinar-speakers.png" alt="Leaders of financial service providers join Accion's webinar" width="500" height="316" />When JUMO applied a real-world lens to their customer data, they discovered they weren’t reaching as many women as they anticipated because of structural issues where their customers live and work. Many women in their markets can’t afford phones or internet, and those who can are less likely to use their phones to pay bills and bank online. JUMO decided to reach these women by raising an impact fund to invest in these clients who were being left behind. “You need to be willing to not just look at product innovation, but also business model innovation if you want to use your data insights to open up opportunity for more people,” says Buhle.

<a href="https://www.dvara.com/" target="_blank" rel="noopener noreferrer">Dvara Trust</a> is the founding promoter of Dvara KGFS, a rural-focused non-banking finance company in India.  Dvara KGFS uses a combination of traditional, physical branches and digital banking to bring credit, savings, and insurance to rural communities in India, and the majority of their nearly one million clients are women. Dvara Trust uses data from their customers’ lives to build a model based on a deep understanding of their needs. When customers enroll, they share their goals, challenges, and household circumstances. Dvara uses this information and transaction data to determine how their services are working. And when customers provide negative feedback, Dvara’s team analyzes it to identify access issues or specific channels and agents that aren’t serving women well. Taking a step back and considering the full picture of a customer’s experience gives providers insight into the needs of the people they serve and can uncover systemic issues that are holding women back.
<h3>Giving women ownership of their data</h3>
The more that women use digital platforms to manage their personal finances, business transactions, and savings, the wider their digital footprint. The financial records and data within this footprint can help women get loans and other services, especially when they don’t have a previous credit history. When women build their digital footprint across different platforms, it can become fragmented and less valuable, so we must find ways to weave all of this information together. “There’s a conversation to be had about how we move away from data silos to data flow, [to] allow women to really own the value of their digital footprint so that we don’t just have the providers monetizing and enjoying the benefits of the data, but that the end-user — the consumer — is also sharing in those benefits,” says Buhle.

As all of these data sources continue to grow, Dvara Trust emphasizes the need for data privacy and data protection to protect the consumer and ensure that data benefits the customer and not just the provider. “Financial services industry can benefit from data, but providers must ensure that the value is passed onto customers and that they can have control and privacy,” says Bindu Ananth, Co-founder and Chair of Dvara Trust. For women to own and benefit from their digital footprints, they need platforms that avoid creating data siloes while prioritizing data privacy and security.

Data gives financial providers a powerful tool to bridge the gender gaps and reach more women. But companies should be careful when wielding this power and be ready to correct course if the data is duplicating the gender bias in society at large or otherwise not benefitting the customers it's meant to help. “The purpose of the system is what it does. So, if it’s excluding people, that’s because it was designed to exclude people. The way we think about product at JUMO is that we need to build a system that is deliberately designed to be inclusive. One of the ways in which we have done this is not about technology or the data, it’s about our customer principles which embody our theory of change and how we would like the world to be,” says Buhle.

<a href="/how-can-data-open-opportunity-for-women-during-and-after-covid-19">Watch our full discussion here</a> to hear more about how Banco Pichincha, JUMO, and Dvara Trust are using data to open opportunity for women.

Leveraging data to close the digital gender divide

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

[embed]https://vimeo.com/510355709[/embed]

Low-income farmers can’t always access the training and inputs they need to earn a stable income and adapt to challenges like a changing climate. Innovative financial tools open opportunity for small-scale farmers to thrive. Our partner Apollo Agriculture takes a tech-based approach to empowering smallholder farmers with the tools they need to succeed.

Tech gives farmers in East Africa a boost

Twenty-six-year-old Rosina Das runs a small grocery shop in her village near Balakati, Odisha, in eastern India. She and her husband own a small lot of land, but their crops don’t bring in enough money for them to provide for their two children and meet their household needs. Because her family hasn’t been able to afford to install pump irrigation, they must rely on rain for their crops and can only grow during India’s <em>kharif</em>, or monsoon, season. Rosina needed another way to support her family, so she converted a small room in her house into a grocery store and became a small business owner.

When Rosina first started her business, she used her savings to buy grocery items to sell in her shop. Her business quickly took off since there weren’t many other stores in her village. Once Rosina opened her doors, she gave families in her community the ability to purchase fresh food and other essentials that weren’t able to buy before. Rosina availed of her first loan with <a href="https://annapurnafinance.in/" target="_blank" rel="noopener noreferrer">Annapurna Finance Ltd.</a>, a microfinance institution and Accion partner in India, two years ago as a group lending client to grow her small business even further. As her household income increased, her family was able to break their pattern of dependence on seasonal agriculture.

Like millions of other micro, small, and medium enterprises (MSMEs) operating in India, Rosina’s business has struggled greatly during the coronavirus pandemic. Not only did her sales plummet, but she also had a hard time getting new inventory to sell in her store as her suppliers were limited by transport restrictions during India’s strict lockdown. Without her regular customer volume or sufficient stock to sell, Rosina suddenly found herself without a stable income and unable to repay her small business loan installments. She learned about India’s loan moratorium from the other borrowers in her lending group and worked with Annapurna to reschedule her repayment dates and extend her loan tenure for two more months — a huge relief for her stalled business and her family.

[caption id="attachment_23303" align="alignright" width="393"]<img class="wp-image-23303" src="https://content.accion.org/wp-content/uploads/2021/02/papina-das-annapurna-finance-214x300.jpg" alt="Papina Das, an entrepreneur in eastern India" width="393" height="550" /> <em>Papina Das owns a small dairy business near Balakati in eastern India.</em>[/caption]

Rosina also learned about Annapurna’s midterm loan offering, a type of emergency loan that could help her restart her business. She received an emergency loan of 15,000 INR (205 USD) within seven days of application and purchased what she needed for her store. As demand has rebounded in her village, Rosina has provided the groceries that her community needs. Just a few months ago, she lost hope and couldn’t imagine her livelihood returning to normal. Now she is grateful to Annapurna for providing the support she needed to reopen her business.

Papina Das, 34, lives in the same village as Rosina, where she runs a small dairy business selling milk in her community and to nearby villages. She employs one other person from the village to help her feed and milk her cows. She started her business two years ago with a group loan from Annapurna. The other members of her lending group are also self-employed and own dairy businesses. Before COVID-19, Papina made a profit of more than 10,000 INR (137 USD) per month from her milk sales.

Papina’s sales dropped dramatically when the pandemic started. Residents of her village and the surrounding villages suffered greatly from the lockdown’s financial impact and many people lost their livelihoods. Even Papina’s regular customers stopped buying their usual volume of milk. Although milk is an essential commodity, her profits plummeted as economic instability decreased demand and people feared infection at markets.

Within one month of lockdown, Papina’s profits were cut in half. She was forced to lay off her employee and unable to pay her loan installments on time. After an Annapurna employee <a href="/how-three-financial-service-leaders-are-adapting-to-covid-19#annapurna" target="_blank" rel="noopener noreferrer">proactively contacted her by phone</a> and informed her about the loan moratorium during the lockdown, Papina opted to take a three-month moratorium on her payments. Like Rosina, Papina decided to take advantage of Annapurna’s midterm loan. Within three days of applying, she received a 20,000 INR (274 USD) loan. With this assistance from Annapurna, she’s rehired her assistant and restarted her dairy business. She’s also purchased another cow to speed up her business’s recovery, and her milk sales have nearly recovered to pre-pandemic levels.

A flexible loan can be the reason that a grocery store stays open in a village with few options for fresh food, or a dairy business continues providing milk to families in a rural community. Through <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion’s partnership</a>, Accion is working with Annapurna Finance to develop a new digital emergency loan product for group lending customers like Rosina and Papina. To build products that help entrepreneurs stay in business, we surveyed Annapurna’s small business clients to understand <a href="/critical-lessons-from-a-survey-of-small-businesses-in-india" target="_blank" rel="noopener noreferrer">their experience and confidence using digital tools, how gender gaps affect digital access, the role of misinformation, and more</a>. When financial services providers like Annapurna consider the unique challenges that their clients face, they can play a critical role in helping India’s <a href="/digital-tools-open-opportunities-for-women-to-thrive" target="_blank" rel="noopener noreferrer">women entrepreneurs use well-designed digital tools</a> to overcome the pandemic’s challenges and help rebuild their local economies.

Women entrepreneurs get back to business in India

[embed]https://vimeo.com/489465107[/embed]

When we open opportunity and access to financial services like crop insurance, we change lives. With simple financial tools, we can make sure that farmers can keep providing for their families. <a href="https://www.accion.org/opening-opportunities-for-smallholder-farmers-in-a-changing-climate" target="_blank" rel="noopener noreferrer">Find out how we help them secure their livelihoods.</a>
<h2>En español:</h2>
[embed]https://vimeo.com/503307647[/embed]

Smallholder farmers find a secure future

Nearly two-thirds of the world’s poor depend on agriculture to survive, and many of these families collect money only once a year, stretching their income from one harvest to the next. But climate change is putting their livelihoods in peril — as global surface temperatures increase, so does the risk of drought, the intensity of storms, and the frequency of natural disasters. Furthermore, our global food supply is at risk because it depends in large part on the productivity of smallholder farmers who live and work in emerging markets. In sub-Saharan Africa and Asia, smallholder farmers provide over 80 percent of the food supply.

In sub-Saharan Africa, nearly <a href="https://blogs.imf.org/2020/06/04/safeguarding-africas-food-security-in-the-age-of-covid-19/" target="_blank" rel="noopener noreferrer">half the population</a> lives below the poverty line and depends on agriculture, herding, and fishing to feed their families and earn an income. Their food supply is extremely vulnerable to climate change and the effects of a food shortage can be devastating — malnutrition surges, school enrollment drops, the economy suffers, and lives are lost.

<img class="alignright wp-image-23023" src="https://content.accion.org/wp-content/uploads/2020/12/kenya-nakuru-farmers-300x200.jpg" alt="" width="400" height="267" />However, when farmers have the ability to adapt to shocks and crises, they can avoid the worst impacts of food shortages. That’s why it’s crucial for farmers to have access to savings accounts, credit, and insurance. For many of us, the idea of saving seems pretty simple: you set money aside in a secure place and earn interest. But, many people around the world lack access to a formal savings account, and <a href="https://www.accion.org/global-challenges" target="_blank" rel="noopener noreferrer">less than half</a> of adults saved at all in 2017. Moreover, <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">235 million</a> unbanked farmers receive agricultural payments in cash, including 115 million women. Since cash is invisible to lenders, it doesn’t generate credit histories and as a result, it prevents families and businesses from borrowing appropriate financing if they need it. In Ethiopia alone, creating a digital agricultural payments system could cut the share of unbanked adults by up to <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses" target="_blank" rel="noopener noreferrer">60 percent</a>.
<h2>How agricultural fintechs open opportunities in Africa</h2>
<span style="font-weight: 400">Through our early-stage investment initiative, Accion Venture Lab, we’re supporting innovative agricultural fintech startups. These companies build useful tools that give low-income farmers, who are most vulnerable to extreme weather conditions, the opportunity to afford high-quality seeds and fertilizer, save securely, and adapt when challenges arise. </span>

<span style="font-weight: 400">Formal accounts open opportunities for farmers to access a wider array of financial services, including credit and insurance. Insurance and innovative digital products can help smallholder farmers endure climate risks, improve their farming practices, and boost their incomes over time. Accion Venture Lab portfolio company Pula is doing just that in 11 countries across Africa and Asia. So far, they’ve provided over 3.3 million traditionally excluded smallholder farmers with agricultural insurance and data-driven insights and advice to help them increase crop yields in sustainable ways. This has been a game-changer for </span><a href="/for-rose-in-kenya-crop-insurance-is-a-game-changer" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">Rose Kilonzo</span></a><span style="font-weight: 400">, a Kenyan farmer who now has confidence that she can provide for her family no matter the circumstances. </span>

<span style="font-weight: 400">“When you plant, you have faith it will be taken care of should your crop fail,” she tells us. With a more secure income, she’s looking forward to expanding into commercial agriculture and passing on the trade to her children and grandchildren.</span>

<img class="alignnone wp-image-14546 size-large" src="https://content.accion.org/wp-content/uploads/2018/09/Kitui_0022-1-1024x684.jpg" alt="" width="1024" height="684" />

<span style="font-weight: 400">Another innovative tech-based company we are supporting is </span><a href="/this-agricultural-fintech-empowers-the-farmers-who-feed-the-world" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">Apollo Agriculture</span></a><span style="font-weight: 400">, an agricultural fintech that helps farmers maximize their profits with financing, farming products, optimized advice, and insurance. Their model combines input financing with sophisticated analytics, remote sensing, agronomic machine learning, and mobile money. This approach opens opportunities for the poorest farmers to purchase high-quality farming inputs, such as hybrid seeds and fertilizer, on credit with flexible repayment terms and post-harvest due dates. </span>

<span style="font-weight: 400">In addition to financing and distributing agricultural inputs, Apollo Agriculture’s integrated solution includes the necessary training to farm effectively and sustainably. This multifaceted approach ultimately allows farmers to increase their crop yields, leading to greater financial security, better livelihoods, and a reliable food supply for the world.</span>

<span style="font-weight: 400">Eventually, Apollo Agriculture plans to leverage its technology to support farmers with personalized solutions based on their specific geographical, weather, and land characteristics. In the long term, these customized farming techniques will improve soil quality and curb erosion, which helps boost productivity and sustainability.</span>
<h2>A tech-based approached to farmer credit in Latin America</h2>
<span style="font-weight: 400">In Latin America, we’re investing in </span><a href="/how-one-company-uses-tech-to-support-brazilian-farmers" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400">TerraMagna</span></a><span style="font-weight: 400">, a Brazilian company that uses their proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score and an accurate estimate of collateral value. Because family-run farms in Brazil lack access to traditional financial institutions, they often seek credit from retailers where they purchase seeds, fertilizer, and other inputs. TerraMagna partners with these local retailers and uses their tech-based approach to reduce the manual cost of the underwriting process and assess the collateral value with more precision, which lowers the retailers’ credit risk and enables them to provide lower-cost loans.</span>

<span style="font-weight: 400">Lenders in Brazil have typically used land as collateral and have found it difficult to properly accept crops as collateral, given the high fraud risk. Using satellite images, TerraMagna can track the crop status in real-time and help prevent fraud attempts. This approach aligns with our thesis that technology and innovative lending models can work together to create new asset collateral, ultimately granting better access and better credit pricing to family farmers.</span>

<span style="font-weight: 400">We will continue to support smallholder farmers, open opportunities for young people to get into the farming business, and remove the barriers to profitable and sustainable farming for the most vulnerable. As the world’s population grows, so too will our portfolio of partners offering innovative financial and business development services that enable farmers to prosper in a changing climate.</span>

Opening opportunities for smallholder farmers in a changing climate

As an essential service, the Brazilian agricultural market has been sheltered from the devastating economic effects of COVID-19-related shutdowns, but farmers still face enormous challenges. Most of Brazil’s farms are small or medium, and they depend on credit for 80 percent of their working capital each season. But these independent farmers are often ignored by banks because they are difficult to reach geographically and challenging to underwrite. As the government continues to reduce subsidies to farmers and demand for crops increases, the need for responsible financing to support this vital sector of the country’s economy is becoming more critical than ever.

Even before the pandemic started, the <a href="/2020-and-beyond-whats-next-for-fintech-innovation-in-latin-america" target="_blank" rel="noopener noreferrer">Accion Venture Lab team was looking</a> for startups that drive the digital transformation of Latin America’s agricultural landscape with innovative financial products. When we met with <a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a>, we immediately realized that the company was in a unique position to help underserved farmers because of their use of satellite imaging to appraise and monitor collateral and their embedded finance model, which allows input suppliers to improve underwriting and reduce costs.

We previously invested in African agri-fintech startups <a href="/for-rose-in-kenya-crop-insurance-is-a-game-changer" target="_blank" rel="noopener noreferrer">Pula</a> and <a href="/apollo-agriculture-raises-6-million-to-help-small-scale-farmers-make-more-money" target="_blank" rel="noopener noreferrer">Apollo</a>, and we are convinced that this is the right time to support the agri-fintech space in Brazil. The current conditions are favorable for a company like TerraMagna to thrive: satellite images are now more accessible, low interest rates make debt funding possible, and new regulations will bring more financing to the sector.

Accion Venture Lab is thrilled to make its first agri-fintech investment in Latin America. We are most excited that TerraMagna is:
<h3>Connecting small and medium farmers with fairly priced credit</h3>
The lack of access to traditional financial institutions forces smallholder farmers to seek credit from expensive retailers where they purchase seeds, fertilizer, and other inputs. TerraMagna addresses this problem by using their proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score and an accurate estimate of collateral value. This approach reduces the manual cost of the underwriting process, which lowers the retailers’ credit risk and enables them to provide lower-cost loans. Lenders in Brazil have typically used land as collateral and have found it difficult to properly accept crops as collateral, given the high fraud risk. Using satellite images, TerraMagna can track the crop status in real-time and help prevent fraud attempts. This approach aligns with our thesis that technology and <a href="/time-to-shine-for-innovative-fintech-lenders" target="_blank" rel="noopener noreferrer">innovative lending models</a> can work together to create new asset collateral, ultimately granting better access and better credit pricing to smallholder farmers.
<h3>Taking a holistic approach to strengthening the farming sector</h3>
Rather than lending directly to farmers, TerraMagna leverages partnerships with local input retailers to monitor, underwrite, and fund their loans. Since these retailers operate with slim margins and are forced to sell seeds and other agricultural goods primarily on credit, they value TerraMagna’s ability to reduce their loan risk and improve their collateral documentation. TerraMagna’s precise, lower-cost underwriting processes and collateral-monitoring technology allow retailers to provide farmers with loans that cover a larger portion of their working capital and enable them to purchase higher-quality inputs. With broader financing coverage, farmers can ease the pressure on their margins, improve their financial resiliency, and reinvest their profits into their farms.
<h3>Leveraging data to improve the agricultural ecosystem</h3>
As TerraMagna continues to monitor farms across the region and develops relationships with input retailers, they will gather critical data about how agronomic conditions and inputs impact farmer yields. As we’ve seen through our work with Apollo and Pula, this data can generate insights and personalized agronomic advice that helps retailers better support farmers, increasing their crop yields and benefiting the overall health of the agricultural ecosystem.

As QED’s Nigel Morris said in our <a href="/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">latest podcast series</a>, “a great company going into COVID is invariably a great company coming out.” TerraMagna is a perfect example of this. With their unique technological skills and vast knowledge of the agricultural sector, the team built a product with competitive advantages for the suppliers and turned it into a profitable business. And they went one step further and fully immersed themselves in the fintech world, first by participating in the underwriting process and now by funding some of the suppliers’ loans to provide better pricing and expand their lending capabilities.

We’re continuously impressed by the eagerness of TerraMagna’s team to keep learning and innovating, and we can’t wait to see what comes next for them.

How one company uses tech to support Brazilian farmers

I write to share the sad news that Accion has lost a very dear member of our family. Accion’s founder, Joseph H. Blatchford, passed away yesterday at the age of 86. Joe was a courageous and charismatic leader who overcame cultural and economic differences to help disadvantaged people around the world. His pioneering work built the foundation for Accion, and my colleagues and I continue to find inspiration in his legacy.

Over the last decade, I had the chance to share several meals with Joe and his wife, Winnie, who was also among the founding generation of Accionistas. We often talked about how Accion has changed over the years, but, perhaps more importantly, we spoke about how Accion remained the same. Joe spoke with passion about his vision to give those less fortunate the tools they need to help themselves. Those tools keep changing, but that mission remains the core of our work. I remember asking him how he recruited that first generation. He said he looked for “people with the audacity to think they can make a difference.” I smiled and said, “I like to think we’re still attracting people with that very same audacity.”

Joe founded Accion in 1961 as a recent graduate of Berkeley Law School. He was fresh off a goodwill tennis and jazz tour of 30 Latin American cities, during which he saw firsthand political turmoil and enormous poverty. He was deeply moved. He wondered how young Americans might help in a meaningful and enduring way. At the same time, they would gain a deeper understanding of the challenges around the world.

With the help of fellow Berkeley Law students Jerry Brady and Gary Glenn, Joe recruited Accion’s first class of thirty American volunteers who would work on projects in Venezuela. Accion didn’t try to impose answers; they listened carefully and heard what the community felt it needed. In the early days, for example, they helped build schools and drainage channels. Accion’s volunteers provided technical support and assistance to enable local residents to launch their own projects. They believed that lasting change was built on giving the communities the tools they needed to help themselves.

Joe wrote, “We believe that the collective initiative of hundreds of such communities can bring progress without bloodshed, and champion the most revolutionary idea of all—the dignity of the individual human being.”

Joe expanded Accion in the late 1960s with chapters in Brazil, Peru, and New York. Joe speculated that President Kennedy may have drawn inspiration from Accion when he founded the Peace Corps in 1961. In fact, Joe was appointed Director of the Peace Corps in 1969 by President Nixon. Under Joe’s leadership, the Peace Corps expanded its applicant pool by boosting recruitment efforts in minority communities and allowing couples with children to apply. In 1971, Joe became the first director of the ACTION agency, which centralized all domestic and international volunteer agencies, and which later became the Corporation for National and Community Service. His commitment to service was lifelong.

Joe’s vision for Accion and the foundation he built positioned Accion to become a global leader in expanding financial inclusion to benefit underserved populations around the world.

After Accion issued its first loans to small, informal enterprises in Brazil in 1973, Accion’s clients soon shattered the myth that the poor were bad credit risks. Given access to affordable capital, they could and would improve their lives. From that point on, Accion expanded a network of microfinance programs and partners across Latin America and into the United States, sub-Saharan Africa, India, and beyond. We’ve found, funded, and grown fintech companies leveraging new technologies to reach the underserved. And we’ve converted our decades of expertise into influence, challenging the industry to serve and protect low-income clients everywhere.

None of this would have been possible without Joe. Please join me in sending our deepest thanks and condolences to Winnie and the entire Blatchford family.

Remembering Accion’s founder Joe Blatchford, 1934-2020

Chandra Kanthayadav was first inspired to open her business during the Festival of Rakhi one year in her hometown of Raipur, India. The popular Hindu festival is a celebration of the love between siblings and close friends, symbolized by people tying special woven bracelets called rakhis on their loved ones’ wrists. She saw how other shops in her community had great success during the festival, so she decided to open her own stall to sell rakhis and other items. Chandra quickly sold out of her inventory during that first festival and in the next festival after that.

Recognizing an opportunity to build a permanent business, Chandra opened a storefront adjacent to her family home and began searching for a way to stock her store with everyday household goods and seasonal items. At first, she borrowed from her family, friends, and other informal sources to pay for her inventory, but the higher interest rates and inconsistent availability of these informal loans prevented her from reaching her goals. Chandra found a better solution when she learned she could get funding through a more formal channel.
<h2>The power of financial services for women in India</h2>
Microcredit, small loans for low-income entrepreneurs, gives women in rural India access to the financing needed to strengthen their businesses and earn their own income. Chandra first took a group loan from Sub-K with women in her community that she’s known for over 17 years. Sub-K, a partner of Accion, is a financial provider focused on reaching underserved populations in India, especially focusing on women entrepreneurs in rural areas. Chandra has continued to work with Sub-K to purchase her inventory, eventually quadrupling her store inventory (stock) value from 5,000 rupees to 20,000 rupees. Next, she plans to expand her store to make room for increased inventory.

Sub-K celebrated their 10th anniversary in August this year. Over the past decade, they’ve helped millions of women like Chandra realize their entrepreneurial dreams, in turn instilling confidence, expanding financial literacy and stability, and improving household conditions for women and their families. As Chandra’s business continues to grow, she feels more respected in her community, and her success helps her provide for her children’s education. To reach more underserved micro, small, and medium enterprises (MSMEs) and individuals, Sub-K has launched a new digital financial tool called SARTHI.
<h2>Advancing financial inclusion through technology</h2>
[caption id="attachment_22266" align="alignright" width="146"]<img class="size-medium wp-image-22266" src="https://content.accion.org/wp-content/uploads/2020/09/Sub-K-SARTHI-platform-146x300.png" alt="" width="146" height="300" /> <em>Sub-K’s fintech platform called SARTHI, which stands for Seamless Advanced Resourceful Tech-driven Hybrid Interface.</em>[/caption]

Sub-K uses an extensive agent network to <a href="/finding-a-new-way-to-reach-the-last-mile-in-india" target="_blank" rel="noopener noreferrer">reach micro, small, and medium entrepreneurs in rural areas</a> who lack access to traditional banks. The company recently launched their new SARTHI fintech platform to complement this model and provide entrepreneurs with the tools they need to manage and grow their businesses. SARTHI will offer products like MSME credit, digital microloans, and health insurance that customers can access on their own mobile devices or with assistance from Sub-K’s staff and agents. SARTHI is integrated with multiple banks and third-party partners to provide customers with a wide variety of products and payment choices and quick application processing.

“This platform marks a major milestone in our digital transformation journey. We genuinely believe that the future is digital, and we are committed to bring a large segment of the excluded population into the mainstream by effectively leveraging the power of fintech,” says Sasidhar N. Thumuluri, Sub-K managing director and CEO. SARTHI was developed with advisory services provided by Accion through a <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and Mastercard</a>.

Small businesses like Chandra’s are the backbone of the Indian economy, and they need financial services to weather challenging times and succeed in the future. We are proud to support Sub-K in their efforts as they move to the next chapter of advancing financial inclusion. Victoria White, the managing director of Accion’s Global Advisory Solutions, says, “Sub-K’s proven commitment to reaching last-mile customers, their expansive reach through their agent network and bank partnerships, and their demonstrated embrace of digital technologies made them an ideal partner for our efforts with Mastercard to help microbusinesses benefit in a digital economy. The launch of this platform is an important milestone in that effort.” By investing in digital tools that help microentrepreneurs build better businesses and better lives, we can bridge the financial services gap in rural India and bring financial inclusion to more people.

Banking goes digital to reach rural entrepreneurs

<strong>“We want to facilitate information to the stakeholders that need it: policymakers, investors, providers,”</strong> explains Mayada El-Zoghbi, managing director of the Center for Financial Inclusion (CFI), an action-oriented think tank that develops insights and collaborates with stakeholders to achieve a comprehensive vision for financial inclusion. In this moment, CFI is providing real-time data to help governments and financial service providers understand the impacts of COVID-19 on their constituents and determine how to best support them. In episode nine of <a href="https://www.accion.org/series/venturekast-rebuild" target="_blank" rel="noopener noreferrer">VentureKast: Rebuild</a>, Mayada explains that “the impact COVID-19 has not been equal across all segments or across all countries,” and that there has been a disproportional impact on women, migrants, and micro and small businesses. She adds that effects have also depended on “how digitally connected people are," pointing out that some MSMEs who sell through e-commerce have actually grown.

“Everyone right now is looking at how can we shift delivery to more digital means,” says Mayada, “because that’s the way we will reduce infection [and] spur recovery.” Mayada discusses how microfinance institutions are “making efforts to divert to digital disbursement and collection.” Digital ID systems, e-commerce platforms, and innovative lenders who leverage data to deliver credit are scaling to provide crucial services to previously excluded customers. Mayada’s message is an inspiring one as she emphasizes the importance of collaboration across the ecosystem, adding that there has been a “massive increase in the number of countries who have realized that this is not a problem that can be solved purely through commercial means.” Mayada  shared some of her key takeaways from the ..

Please join our host and co-managing director of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer"><strong>Venture Lab</strong></a><strong><u>,</u></strong> <a href="https://www.accion.org/bio/vikas-raj" target="_blank" rel="noopener noreferrer"><strong>Vikas Raj</strong></a><strong><u>,</u></strong> as he interviews industry leaders every Thursday about how COVID-19 is impacting their work.

&nbsp;

&nbsp;

"We need collaboration and a multi-stakeholder approach" — CFI’s Mayada El-Zoghbi

Ibu Oom Rohmayato owns a rice milling business with her family in Majalaya, Bandung in West Java, Indonesia. She dreamed of expanding her family’s business and needed access to working capital to purchase additional unhusked rice to mill, so <a href="https://www.accion.org/expanding-the-benefits-of-a-growing-digital-economy-in-indonesia-and-india" target="_blank" rel="noopener noreferrer">she turned to group lending to grow her business</a>. She joined a group in her community and together they applied for a working capital loan from <a href="https://bina-artha.com/" target="_blank" rel="noopener noreferrer">Bina Artha Ventura (BAV)</a>, a financial service provider in Indonesia and partner of Accion.

Group lending creates opportunities for women in rural areas like Ibu Oom who otherwise would not have access to financial services. <a href="https://static1.squarespace.com/static/5db8891e058ab7204b4e9088/t/5dea83f380f97670d487de8e/1575650294671/MIX+Market_Global+Outreach+%26+Financial+Benchmark+Report_2017-2018.pdf" target="_blank" rel="noopener noreferrer">80 percent of group lending participants are women, and 65 percent live in rural areas</a> where traditional banks don’t have a presence. By forming groups of people in the same communities that can guarantee each other, group lending uses social collateral to serve those without any credit history. Since group lending first began, it has relied heavily on frequent in-person interactions. Loan officers build relationships with their customers from the initial application to biweekly cash disbursement and repayment collection, and members participate in group meetings and often mentor each other. But as the COVID-19 pandemic has necessitated social distancing and quarantines, we must rethink the group lending process and how if it might function digitally.
<h2>The case for human-centered design in group lending</h2>
Digitization has become an important <a href="/the-digital-transformation-of-microenterprises-a-path-forward-in-a-post-covid-19-world" target="_blank" rel="noopener noreferrer">path forward for financial service providers</a> and businesses during the pandemic. Many group lending providers have the ability to digitize their application processes and implement cashless transactions, but that might not be the best solution for their group lending customers. As providers consider digitizing their products, they must ask themselves if digitization will benefit the group lending customer, or if will it create more problems for them. While current circumstances discourage in-person gatherings, the solution to adapt group lending is not technology alone — we must pursue a human-centered design approach.

The core of design thinking is a focus on the end-user by building deep empathy and understanding of their lives while designing products and solutions. If we know our users, we will always build according to their needs and desires and can cultivate trust. As a part of <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">our partnership with Mastercard to drive the digital transformation</a> of underserved micro and small businesses, BAV is in the process of launching a mobile phone-based model so they can continue to serve customers like Ibu Oom during the pandemic and into a more digital future. Christian Banno, Chief Business Officer of CASEA and board member of BAV, describes BAV’s approach to designing digital products for their customers, “When you try to digitalize the process for the clients — when you try to make clients adopt digital means — things become more complicated because we need to make sure that the client is at the center of the change. We need to make sure that the change is not only benefiting the microfinance institution, but that it is benefitting and enriching the life of the client.”
<h2>Can group lending operate in a digital world?</h2>
Group lending can only succeed when there is trust between customers and financial institutions, and that trust is built through many physical meetings and interactions with the customer. Forming these relationships digitally may become easier in the future as more and more customers use digital tools in other aspects of their lives. But an element of human touch will still be needed for group lending — especially for those clients in rural areas who have minimal exposure to digital transactions.

<a href="https://www.dvarakgfs.com/" target="_blank" rel="noopener noreferrer">Dvara KGFS</a> serves groups and individual customers who run small businesses in rural India through a network of branches in remote areas. They’ve invested in building mobile phone-based solutions to serve their customers, including a digital payment platform for customers to manage their money remotely while the pandemic prevents people from visiting branches. They plan to add more features to their digital platform to enhance the services that people receive and to make branches more relevant by converting them into cash checkout points using the Aadhaar Enabled Payment System (AEPS) and facilitating online utility payments using the Bharat Bill Payments System (BBPS). Joby CO, Chief Executive of Dvara KGFS, says, “Going forward … I don’t see that the branches will go away, but I see the branches can really become more relevant as customers can access a lot more services digitally through the branches using the branch internet.”

For group lending participants to feel comfortable with new tools, they must be designed with the end-customer first, using a human-centered approach. Providers must pursue a hybrid approach for clients where <a href="/in-a-no-touch-world-tech-cant-leave-low-income-people-behind" target="_blank" rel="noopener noreferrer">human touch complements their new technology</a>. “We need to maintain physical touch because we don’t want to exclude them. We are here to include people, we’re not here to exclude people,” says Christian. To learn more about how we might reimagine group lending, <a href="/reimagining-group-lending-for-a-digital-world">listen to our recent conversation with Christian and Joby here</a>.

Can group lending work in a socially distant world?

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

<em>“Accion gives me the opportunity to connect with other financial inclusion leaders around the globe. It strikes me that we are all united in our experiences and our responses to support clients in these extraordinary times, despite the different worlds we serve. This is truly what humanity means — a single force.” — Kshama Fernandes, Managing Director and CEO of Northern Arc</em>

Around the world, low-income communities are all too familiar with the disruptions caused by natural disasters, political upheaval, and even disease outbreaks. Yet the COVID-19 crisis has ushered in an unparalleled time of uncertainty which threatens to literally wipe out decades of progress in poverty alleviation. To make sure the world’s most vulnerable people can weather this crisis, it’s imperative that we each take steps to respond to the impact of this pandemic. At Accion, we are working hand in hand with our inclusive financial service provider partners to swiftly adapt to business challenges and communicate frequently with clients. We are committed to ensuring that the people who have moved out of poverty, stay out of poverty. One way we’re doing this is convening partners from over 30 countries who are using different business models to learn from each other and share best practices about how to navigate this crisis.

Three of our partners — Kshama Fernandes, Managing Director and CEO of Northern Arc in India, Taiwo Adesina Joda, Managing Director of Accion Microfinance Bank in Nigeria, and Kurt Koenigsfest, CEO of BancoSol in Bolivia — recently shared <a href="/supporting-inclusive-recovery-from-covid-19-a-conversation-with-accion-and-our-partners">how they are helping people in their communities survive and preparing them to eventually bounce back from the COVID-19 crisis</a>.
<h2>With the right support, the underserved will lead recovery in India</h2>
The number of COVID-19 cases continues to rapidly increase in India and has not yet reached its peak. To help struggling businesses, <a href="https://www.bloomberg.com/news/articles/2020-05-22/india-s-central-bank-extends-moratorium-on-loan-repayment" target="_blank" rel="noopener noreferrer">the Central Bank of India has extended the moratorium on loan repayments through August 31, 2020</a>. However, some financial institutions are not receiving any moratorium from their own lenders, causing them to face liquidity pressures and eventual solvency challenges. Our partner <a href="https://www.northernarc.com/" target="_blank" rel="noopener noreferrer">Northern Arc</a> is a financial inclusion platform that offers credit to the underbanked by servicing over 150 banking institutions that serve millions of low-income borrowers all over India. Northern Arc has provided a loan repayment moratorium to their bank clients and continues to lend to those facing short-term liquidity issues to help them keep their businesses open. Additionally, Northern Arc has been working with its network of investors to improve access to credit for banking institution clients and maximize impact.

Kshama Fernandes, Northern Arc’s Managing Director and CEO, has seen the resilience of people who have been able to bounce back after a natural disaster takes everything from them, including small towns that recover after cyclones disrupt their lives. She believes that the same resilience will help people recover from the tremendous challenges of COVID-19, saying, “I have great confidence in particularly the small and medium borrowers and tier 3 and 4 cities where recovery will happen first. These are borrowers who are considered traditionally risky but that’s really where the revival will happen.”
<h2>Financial support propels small business reinvention in Nigeria</h2>
COVID-19 has impacted business in Nigeria tremendously and has caused supply chain disruptions that have affected more than 60 percent of trade, education, and food and drink businesses. Within Nigeria, intercity travel has stopped, and this has also affected supply and demand and placed small businesses in a difficult and uncertain situation. Taiwo Joda, Managing Director of <a href="https://www.accionmfb.com/" target="_blank" rel="noopener noreferrer">Accion Microfinance Bank</a> (AMfB), shared how he and his employees are working with their clients to navigate through the crisis. They trained their 500 agents on how to communicate with their clients so they can remain in close contact by reaching out often and with empathy, to ensure client needs are being met. Additionally, AMfB provided a moratorium and extension on the tenor of loans at very reduced interest rates. With AMfB’s support, a medical doctor who has been a client over 6 years volunteered to educate people in his community about COVID-19 and <a href="/one-doctors-story-facing-a-health-and-economic-crisis-head-on-in-nigeria">started manufacturing hand sanitizers</a>. Another client, a teacher who has not been able to work due to school closures, was able to start an online training program for her students with the loan she received. Mr. Joda shared, “You can hear the excitement in her voice as she describes how she started an online training program for her students. I was happy to see the transition of someone who felt frustrated to someone who was moving forward and using initiative to drive the market.”

Mr. Joda is optimistic about the future and sees a lot of opportunity for business growth and the ability of clients to recover. These two clients demonstrate the kind of resilience AMfB is seeing in the people they serve. To help even more clients pivot and succeed, AMfB started a special training program with experts on small businesses to engage their clients on how best to restart or reinvent their businesses. These businesses will also need funding to reinvent and restart themselves. To make it easier for clients to access funding, AMfB is using additional digital channels and creating digital loan products where clients, especially those located in very remote areas, can apply for loans.
<h2>Businesses adapt with digital banking in Bolivia</h2>
Bolivia has been under strict lockdown since March due to the pandemic and the rate of contagion has not reached its peak yet. The government declared an unprecedented moratorium on loan repayment for 180 days. This is causing <a href="https://www.bancosol.com.bo/" target="_blank" rel="noopener noreferrer">BancoSol</a>, a 30-year-old commercial bank with a microfinance focus, to take swift action to empower branch workers and continue serving clients safely, since it relies on daily human interaction at brick-and-mortar branches. The bank is still lending, but management is concerned about the liquidity constraints the banking sector will face in the future, given the likely impact once the loan moratorium is lifted in Bolivia. BancoSol is taking voluntary provisions to create reserves because they anticipate that many clients will not be able to pay back loans and will need additional working capital.

BancoSol is also preparing to be flexible, to support their clients when they need help the most. The bank is ramping up digital banking services through its app and is using social media to communicate and engage with clients. Approximately half of the bank’s transactions are digital, but the rest are still happening in person. BancoSol CEO Kurt Koenigsfest expects the percentage of digital transactions to continuously rise during and after the pandemic. Younger clients in urban areas have adopted BancoSol’s banking apps quickly, but older clients in rural areas often find digital services more challenging. To help onboard more clients, BancoSol has quickly increased phone-based support for those that need help setting up digital accounts, so they are not left behind. BancoSol’s support is essential for clients who need extra help to keep their businesses running. Some resourceful clients have re-created their businesses and begun to make and sell masks and gloves to keep people safe during the pandemic. With the bank offering support digitally and physically, entrepreneurs are showing they can adapt their businesses to the current environment.

Despite working in different countries and with varied models, inclusive financial service providers can learn from one another and leverage approaches they are taking to serve communities hit hard by the economic effects of the pandemic.

Accion is working with our partners so they can offer the best solutions to help low-income people stay financially resilient, and we will continue to share insights from these efforts. Philanthropy powers Accion’s work; as a nonprofit, we experiment with new ways to serve our partners and to create innovative business models, while taking informed risks that for-profit entities can’t or won’t —especially amid a global crisis. <a href="http://act.accion.org/drivinginclusiverecovery">With your support, we can keep helping these partners cultivate new products, markets, and policies to serve their clients when they need help the most</a>.

How do we drive an inclusive recovery from COVID-19?

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.

Accion’s partners have always used innovative approaches to bring financial inclusion to underserved people and businesses in emerging economies. The coronavirus pandemic has put their spirit of innovation to the test as they must find new ways to continue serving clients while protecting their wellbeing and that of their employees.

We’re sharing examples of adaption from our partners around the globe that we hope will be helpful for all organizations to keep in mind when considering client and staff safety and business continuity during a time of constant changes.
<h3>1. Ensure staff has the equipment and education to do their jobs safely.</h3>
Our partner <a href="https://www.accion.org/this-company-is-making-healthcare-more-accessible-in-emerging-markets" target="_blank" rel="noopener noreferrer">Field Intelligence</a> is a startup operating in Nigeria and Kenya that uses data-driven supply chain management software and highly efficient distribution service to help pharmacies operate more efficiently. Their pharmacy clients remained open throughout the pandemic to provide necessary services in their communities. As a preemptive measure, Field Intelligence completed a handwashing and safety campaign to encourage 150 pharmacies to use safe practices that prevent the spread of the virus. They also supplied and trained all of their delivery staff on proper personal protective equipment usage. By tapping into their existing network, they were able to quickly provide training to their staff. These steps were critical for keeping essential workers safe over the past few months. As many countries begin to reopen and ease restrictions, businesses should prioritize safety above all else and provide the training and equipment that staff and clients need.
<h3>2. Enable staff to provide customer support remotely.</h3>
<a href="http://apolloagriculture.com" target="_blank" rel="noopener noreferrer">Apollo Agriculture</a>, another startup in Kenya, partners with small-scale farmers to help them access everything they need to maximize their profitability, from financing and insurance to farming products and optimized advice. These <a href="https://www.accion.org/this-agricultural-fintech-empowers-the-farmers-who-feed-the-world" target="_blank" rel="noopener noreferrer">farmers are facing great challenges</a> during the pandemic and Apollo empowers them to be productive and sustainable. To continue providing customer support to farmers, Apollo faced a major challenge: transitioning their call center of over 150 people to remote work. Most of their call center agents did not previously have internet or a computer in their home. Despite these challenges, Apollo successfully transitioned the entire team to remote operation and equipped all staff with reliable internet in a matter of days — all during their busiest time of year and the COVID-19 crisis. As remote work may continue for some time, staff need to be fully equipped to work remotely to make these solutions sustainable in the long-term.
<h3>3. Innovate to meet customer's needs digitally.</h3>
In Bolivia, <a href="https://www.accion.org/transforming-finance-low-income-people-bolivia" target="_blank" rel="noopener noreferrer">BancoSol</a> — a regulated commercial bank dedicated to serving micro and small entrepreneurs — knew that their customers needed urgent services to stay afloat during the pandemic and that digital tools would be crucial for reaching them. BancoSol launched a pilot of a remote lending program and is also working on revamping their existing mobile application to serve more clients digitally. Additionally, tellers are encouraging clients to sign up for online banking services and begin using them to minimize face-to-face contact and continue to be able to manage their businesses and connect with customer service representatives. So far, results from BancoSol’s initiative have been encouraging — in the first ten days of their efforts, online transactions increased by five percent, and transactions have continued to rise since then.
<h3>4. Make a plan to keep your team safe and productive in the long-term.</h3>
As China has reopened its economy and more people have returned to work, conversations with our partner <a href="https://www.accion.org/giving-customers-a-reason-to-trust-digital-finance-in-china" target="_blank" rel="noopener noreferrer">Grassland Finance Limited</a> have given us a glimpse into what many of our other partners may experience in the coming weeks and months. Grassland shared with us that their staff is:
<ul>
 	<li>Practicing social distancing in the office. Staff continue to work in shifts and will do so until the situation improves.</li>
 	<li>Wearing protective masks and regularly monitoring for symptoms to ensure those coming into the office are healthy.</li>
 	<li>Avoiding in-person team activities and unnecessary travel.</li>
</ul>
For Grassland and other partners, the need to increase digital capacity to adapt to immediate challenges and to move into a new normal is a key theme. Seah Hooi Koon, Grassland’s COO, shared, “The disaster also showed again the importance of building up the digital capability of both our company and of our clients, and this will be key in our strategy going forward.”

Digital capability, adaptability, and a spirit of innovation will continue to guide companies forward as the situation evolves around the globe. At Accion, we will continue to stay in close contact with our partners to learn from them as they adapt and to provide resources to help them increase digital capabilities, keep staff safe, and continue to serve their clients.

Four examples show how businesses can stay safe and effective right now

Each morning, Laal Kumari Singh rises early to feed her herd of cows, milk them, and leads them to a pasture to graze. As the sun begins to set, she leads them back home for another feeding and milks them once more. When her regular customers arrive to purchase fresh milk – an important source of protein and nutrients — throughout the day, Laal carefully measures the milk that her cows produce, saves exactly what she needs for her family, and sells the surplus both to people in her community in Raipur, India and to larger suppliers.

There are millions of small business owners like Laal in India, each working hard to support their families and fulfill a need in their communities. When these enterprises thrive, so do the families and communities that depend on them. That’s why our partner <a href="https://www.subk.co.in/index.php" target="_blank" rel="noopener noreferrer">Sub-K</a> set out to bring financial tools to underserved businesses in India, particularly the last mile where no financial services have reached before. Sub-K uses <a href="/instead-sending-people-bank-sub-k-brings-banking-people">its large network of agents</a> to reach people in rural communities in India and connect them to banks. “It’s really critical for us to have the touchpoints on the ground to interact with these communities that probably have never had a banking relationship. So to that extent, our agents play a very important role in introducing these communities to the banking system,” explains Sub-K’s CEO Sasidhar Thumuluri.

By working with Sub-K to purchase additional cows for her herd, Laal has expanded her business dramatically. When she first started her milk business, she only owned five cows. Now, her herd of cows, calves, and buffaloes has grown to nearly 40, producing 30 to 40 liters of milk for her to sell each day. Because of Laal’s success, she’s been able to support her three kids: two sons and one daughter. She uses her increased income from the expansion of her milk business to help pay for her children’s education. She’s thinking of the future, too — she’s already invested in buying a shop in nearby Sarura to further build her family’s financial security.
<h2>Continuing to serve small businesses during the pandemic</h2>
As the coronavirus pandemic leaves its impact on communities, the entrepreneurial dream that led Laal to build a better life for her family is in danger. To help small business owners in India overcome this devastating financial shock, Sub-K is introducing emergency loans and accelerating digital solutions. Even before the crisis hit, Sub-K recognized this opportunity for driving financial inclusion. “Digital is the way to go to reach the large-scale masses and the last mile,” says Sasidhar.

Despite the clear advantage in connecting small business owners like Laal to digital services, Sasidhar also knows the great challenges this presents. Many of Sub-K's clients have never had a formal bank account before, much less access to any digital banking services. So Sub-K is used to giving clients extra support to learn about products and become comfortable with new platforms. Their agents have typically done this work hands on in local communities, but as face-to-face interactions are halted, Sub-K is offering digital payment options on their mobile phones. Only 20 – 30 percent of Sub-K's clients in rural areas currently have smartphones, but even those without online access can utilize digital services through Sub-K's call center or by reaching out to local agents. As Sub-K works to quickly expand their digital platform to address new challenges from the pandemic, they are taking a multichannel approach that will continue to meet these clients where they are. If clients are given what they need to use digital financial services, this shift could make it possible to reach even more financially excluded people in the longer term.

Sasidhar stresses the importance of rebuilding from COVID-19 in a way that brings the most vulnerable microbusinesses into the digital economy: “Let’s not go back to our old normal, and let’s not wait for the situation to get normalized and then get back to the old way of doing business. Here is an opportunity that we need to grab. Let’s develop tools. Let’s educate them. Let’s make sure we build a new normal, which to me is a [digital] ecosystem play. It is possible. Let’s get together, collaborate, and make this happen.” With the right tools and support, entrepreneurs like Laal can grow their businesses and build stability for themselves and their families. The future of these small businesses — under threat from the pandemic — depends on their ability to access the financing they need digitally. Learn more from Sasidhar by watching our recent webinar, <a href="/going-digital-an-essential-move-for-msmes-in-a-post-covid-19-world">Going digital: An essential move for MSMEs in a post COVID-19 world</a>.

Finding a new way to reach the last mile in India

Our global food supply depends on the productivity of farmers all around the world, especially the smallholder farmers who live and work in emerging markets. But the coronavirus pandemic has presented new challenges for already-vulnerable farmers and disrupted global supply chains. This crisis poses a great threat to food security for much of the world’s population.

Even before COVID-19, the 300 million smallholder farmers around the world faced a funding gap of over $167 billion. Particularly in sub-Saharan Africa, which is home to over 50 million smallholder farmers, closing this gap would significantly boost efforts to fight poverty and hunger. Our partner <a href="http://apolloagriculture.com/" target="_blank" rel="noopener noreferrer">Apollo Agriculture</a> is addressing this need with an innovative, tech-based business model that helps farmers maximize their profits with a bundle of financing, farming products, optimized advice, and insurance. Accion Venture Lab is happy to extend our support of Apollo as they continue to empower farmers in East Africa with the tools they need to build financial stability, maximize their profits, and produce food for their communities, which is even more important amid the pandemic crisis.
<h2>Why we invested in Apollo Agriculture</h2>
Around the globe, smallholder farmers are the backbone of societies as they grow and harvest essential crops that feed nearly 2 billion people, mostly people living in emerging markets. Unfortunately, these farmers face tremendous hardships from climate-related challenges, trade volatility, financial limitations, and now, a global pandemic. Most smallholder farmers do not have access to credit and or the technical expertise needed to optimize their harvests. Their crop yields are also hindered by a lack of access to quality inputs, like seeds and fertilizers, and a need for appropriate agronomic advice.

<img class="wp-image-21198 alignleft" src="https://content.accion.org/wp-content/uploads/2020/05/apollo2.jpg" alt="" width="446" height="298" />In 2016, we supported Apollo Agriculture in their pre-seed round to help address the impediments smallholder farmers face, and we are excited to have the opportunity to support them again in a follow-on investment in their Series A. At its core, Apollo Agriculture is a tech-enabled financing solution for smallholder farmers in East Africa that allows them to <a href="https://www.accion.org/seeds-fertilizer-mobile-money-kenyan-farmers-get-the-supplies-they-need" target="_blank" rel="noopener noreferrer">acquire the agricultural inputs they need</a>. Their model combines input financing with sophisticated analytics, remote sensing, agronomic machine learning, and mobile money. Farmers can purchase high-quality farming inputs, such as hybrid seeds and fertilizer, on credit with flexible repayment terms and post-harvest due dates. The offering also includes customer-centric, voice-based trainings developed by the Apollo team to help farmers learn best practices for tasks like planting and combating pests and to develop financial literacy.

Accion Venture Lab is excited to continue supporting Apollo Agriculture as they grow and scale their business. We are most excited by Apollo’s:
<h4><strong>Ability to address a core financing need for a large, underserved segment</strong></h4>
Apollo Agriculture addresses one of the fundamental challenges of improving farmer livelihoods in Africa by financing the comprehensive toolkit of inputs, agronomic training, and planting tools that underserved smallholder farmers need to increase crop yields. Apollo is working with smallholder farmers in Africa who are growing vital staple crops, such as maize, tomatoes, sorghum, potatoes, and beans. The farmers in this segment cover a range of economic levels, including those who are truly the poorest of the poor to those who own small, commercial farms. Apollo’s model is flexible enough to work with all socioeconomic levels of smallholder farmers.
<h4><strong>Innovative business model</strong></h4>
At the time of our seed investment, we felt that Apollo was <a href="https://www.accion.org/fintech-startup-revolutionizing-kenyan-agriculture" target="_blank" rel="noopener noreferrer">the most innovative company in agricultural finance</a> and were excited to support a financing model focused on smallholder farmers. Nearly three years later, Apollo continues to focus on innovation by using cutting-edge tools like satellite imagery and remote sensing — technology used in developed markets for decades — to benefit smallholder farmers in Africa. Rather than inventing a new and unproven solution, Apollo is leveraging existing technology to provide a tried and tested set of solutions.

Since the pandemic began, Apollo has seen an increased need for its products, even while business conditions rapidly became more challenging due to significant mobility restrictions, a curfew, and a rapid transition to remote work. Their tech-enabled business model has allowed them to continue providing customers with high-quality farm products and financing throughout the pandemic. We believe that Apollo’s model could be the key to unlocking significant improvements in the livelihoods of farmers around the world, a critical need as the world grapples with a potential food crisis caused by the turmoil of the COVID-19 pandemic.
<h4><strong>Strong value proposition</strong></h4>
Beyond simply distributing agricultural inputs, Apollo’s integrated solution combines the financing and <a href="https://www.accion.org/learning-new-skills-helped-this-longtime-farmer-thrive" target="_blank" rel="noopener noreferrer">training that are necessary for farmers to use them effectively</a>. This approach allows farmers to increase their crop yields, leading to greater financial security, better livelihoods for farmers and their families, and a reliable food supply for the world. Farmers can select high-quality inputs purchased on credit, allowing them to reserve their money for other needs. Eventually, Apollo’s vision is to leverage its technology to provide customized inputs to farmers based on their specific geographical, weather, and land characteristics. These personalized farming techniques will also help to limit erosion and improve soil quality, further boosting productivity and sustainability.
<h4><strong>Ability to de-risk credit access to smallholder farmers</strong></h4>
Apollo will continue to serve a huge population of unbanked farmers who, prior to using their model, were too high-risk or inaccessible to receive the capital and resources they need to succeed. The team has proven that smallholder farmers, with the right tools and knowledge, can afford to pay back loans and continue to use their services. Apollo continues to have a high loan payback and customer repeat rate. Apollo’s offering has been strong enough to encourage farmers to re-engage even after experiencing disappointing crop prices or environmental challenges the previous season, and even during this unprecedented pandemic. As farmers are facing immense difficulties during the coronavirus pandemic, the ability to access capital will be critical for them to recover financially while continuing to produce the food that so many depend on.

It has been a great journey to see Apollo Agriculture grow, and we believe that this series A will propel them to empower so many more smallholder farmers — not only in Kenya, but across Africa. As Apollo continues to grow and scale, they can provide the critical financing farmers need to achieve their greatest potential and continue feeding the world.

This agricultural fintech empowers the farmers who feed the world

The pandemic has taken a devastating toll on the world’s working poor. Typically they rely on daily cash transactions to earn money and buy food for their families. They lack a safe place to save money, or the means protect themselves from financial ruin brought by a sudden illness or natural disaster. The pandemic has spurred real fears of starvation that precede fears of sickness.

Accion’s mission is to change this reality by building a financially inclusive world. We are doing that by supporting and investing in financial service providers who are reaching underserved populations around the world.

The crisis has shone a spotlight on the importance of our work in building resilient communities. For example, Dr. David Akinpelu in Lagos, Nigeria, relied on <a href="https://www.accion.org/one-doctors-story-facing-a-health-and-economic-crisis-head-on-in-nigeria">financing from our partner Accion Microfinance Bank</a> to buy the medical equipment he needed to grow his private community hospital. The hospital is now providing care to patients with little ability to pay and educating people on preventing the spread of COVID-19.

If we do nothing, the financial engine supporting people like Dr. Akinpelu could <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">seize up</a>. Meanwhile, three billion people still lack the tools they need to save, build a business, or purchase insurance to guard against emergencies. Without support for the financial service providers reaching out to these populations, existing disparities will only widen, and creating pathways out of poverty will grow more difficult.
<h2>Inclusive finance is key to recovery and resilience</h2>
The communities we serve certainly aren’t strangers to disruptive shocks, and our partners have shown a remarkable ability to meet their needs in challenging times. Following the devastating 2010 earthquake in Haiti, the poorest country in the Western Hemisphere, Accion’s partner <a href="https://www.sogebank.com/" target="_blank" rel="noopener noreferrer">Sogesol</a> helped <a href="https://www.accion.org/helping-small-businesses-farmers-resilient-haiti">more than 8,000 Haitians restore their homes and small businesses</a> through microcredit and distributed emergency grants to 2,000 of its most vulnerable clients.

In Uganda, which hosts almost <a href="https://data2.unhcr.org/en/country/uga" target="_blank" rel="noopener noreferrer">1.4 million refugees</a>, Accion partner <a href="https://www.ugafode.co.ug/" target="_blank" rel="noopener noreferrer">UGAFODE Microfinance Limited </a> launched a digital program in 2019 to serve people fleeing conflict or hardship. UGAFODE is also <a href="https://www.accion.org/its-a-group-effort-to-help-refugees-build-new-lives-in-uganda" target="_blank" rel="noopener noreferrer">the first financial institution in Uganda to open a branch inside a refugee settlement</a>.

Today, our partners are rapidly adapting to meet new needs arising from the pandemic. In India, <a href="https://www.accion.org/a-start-up-innovates-to-give-the-uninsured-a-safety-net">Toffee Insurance is introducing new products</a> to help underinsured people build financial resilience to the impact of COVID-19 and challenges that may arise in the future. <a href="https://toffeeinsurance.com/">Toffee</a> has successfully reached India’s uninsured by offering specific, simple policies covering risks that are most relevant to consumers, like dengue, malaria, bicycle damage, and theft.
<h2>What Accion is doing now</h2>
Accion’s work to build inclusive, resilient communities through access to quality financial services, including credit, savings, and insurance, is more critical than ever.

The global nature of the pandemic looms larger than any local crisis—emergencies can lead to financial ruin for low-income and underserved populations, while <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">small businesses are especially vulnerable</a> to disruptions and shifts in supply and demand. The crisis also raises <a href="https://www.centerforfinancialinclusion.org/building-resilience-how-to-ensure-women-are-not-left-behind-as-a-result-of-covid-19" target="_blank" rel="noopener noreferrer">unique challenges for female entrepreneurs</a> and threatens to reverse gains made in including women in the global economy.

Accion has acted quickly to support our partners and the vulnerable communities they serve.

We’re assisting inclusive financial providers through advisory engagement and helping leaders around the world share lessons gained from evolving challenges. We’re aggregating <a href="https://www.accion.org/covid19">resources</a> and <a href="https://www.accion.org/five-crucial-insights-from-china-for-facing-the-pandemic">sharing insights</a> from China that can help partners in other countries prepare for the months ahead. And we are actively exploring how to connect our partners with emergency funding and are coordinating with them to work on both short- and long-term challenges related to COVID-19. We know there is much more to be done.
<h2>We need your support</h2>
In this unprecedented time, donors will play a more important role in sustaining Accion and our partners. Accion relies on philanthropic support to fuel everything that we do. Philanthropy from institutions and individuals allows us to be pioneering and create demonstration models that encourage further action. Because we’re a nonprofit, we can take risks that for-profit entities can’t, and cultivate new products, markets, and policies that benefit underserved people.

Donors are already stepping up in response to this crisis. Over 700 philanthropic organizations have signed <a href="https://www.fordfoundation.org/the-latest/news/top-foundations-pledge-flexible-funding-to-grantees-in-wake-of-covid-19-crisis/" target="_blank" rel="noopener noreferrer">a pledge</a> to commit more flexible funding in response to COVID-19. And just last week, our partner Mastercard announced <a href="https://mastercardcontentexchange.com/newsroom/press-releases/2020/april/mastercard-builds-on-covid-19-response-with-commitment-to-connect-1-billion-people-50-million-small-businesses-25-million-women-entrepreneurs-to-the-digital-economy-by-2025/" target="_blank" rel="noopener noreferrer">a pledge</a> to bring a total of 1 billion people and 50 million micro and small businesses into the digital economy by 2025, with a focus on women entrepreneurs.

We are grateful for our partners who have already shown support through additional funding commitments and offering increased flexibility for existing grants. This will enable us to work shoulder-to-shoulder with our financial service provider partners to make sure they can continue serving their customers – not only during the immediate response to the pandemic, but over the entire course of recovery. We must act quickly to secure even more funding and make sure it’s  directed toward developing countries, mobilized to reach <a href="https://www.centerforfinancialinclusion.org/can-financial-inclusion-moderate-impacts-to-coronavirus" target="_blank" rel="noopener noreferrer">those who need it most</a>.

This is a challenging moment. But together, we can give people the financial tools they need to manage through this crisis.

Your support can help continue building a financially inclusive world

As the global coronavirus pandemic threatens the livelihoods of millions around the world, our mission to give people the financial tools they need is more urgent than ever. The populations we serve are particularly vulnerable right now, without access to affordable healthcare, savings, or loans to stay solvent in a crisis. As the whole world faces this challenge, we have an opportunity to learn from each other and improve how we offer inclusive financial services to those who need them. We’re committed to sharing the knowledge we have to help our global community remain resilient.

While we aggregate and <a href="https://www.accion.org/responding-to-the-pandemic-guidance-for-financial-service-providers">share resources</a> across the globe, we’ve been working closely with two of our partners in China, <a href="http://grassfin.com/#/" target="_blank" rel="noopener noreferrer">Grassland Finance Limited</a> and <a href="https://www.cdfinance.com.cn/en/index" target="_blank" rel="noopener noreferrer">CD Finance</a>, and learning from their experience. Before the coronavirus pandemic spread across the globe, it hit China, devastating some areas and creating challenges for small businesses everywhere. After a two-month nationwide lockdown to contain the virus, businesses have reopened across China. Though China is very unique in many aspects, as other nations are facing this same contagion, we can learn from China’s experience.

We recently hosted a webinar for our partners with Ms. Hooi Koon Seah, COO of Grassland Finance Limited, and Mr. Dongwen Liu, CEO of CD Finance, and they shared their top lessons learned from navigating this crisis:
<h2>Protect the wellbeing of staff and clients</h2>
Above all else, prioritize the safety of employees and clients. By taking the virus seriously and taking immediate action, organizations can protect both their business and their clients. Institutions must comply with all official quarantine requirements and health protocols to protect employees and customers. Grassland and CD Finance adjusted their budgets as needed to increase the number of protective masks and cleaning supplies available to staff in regions that were hit harder by the virus. “Most of all, we want our staff to know that they belong and that the company holds their wellbeing as the highest priority,” said Ms. Seah.
<h2>Communication is critical</h2>
While in-person contact is restricted, maintaining a close connection with employees through other communication channels ensures that they feel secure and supported. Good communication channels should be in place for both employees and clients to stay connected while working remotely. In China, the top digital communication platforms were already widely adopted and became critical for both employees and clients to stay in touch. Our partners in China found that using these existing platforms helped them stay connected to clients. Mr. Liu notes, “It’s really important for our clients to recover their business in the coming days. What we can do is to have a close connection with them and ask what kind of support we can give to them and help them to recover their abilities gradually.”
<h2>Develop and execute emergency plans immediately</h2>
Companies need to identify possible worst-case situations and determine how they will respond. Now is the time for the financial services industry to take this crisis seriously and make every effort to support their staff and clients. The crisis moves fast, and its effects are far-reaching. By being prepared in advance and unafraid to act quickly and boldly, financial service providers can help their customers stay afloat through an unprecedented challenge.
<h2>Evaluate risk by sector and develop segment-specific response plans</h2>
Due to dramatically reduced cash flow during and after the lockdown, overdue loan payments increased greatly. Grassland learned in an impact assessment conducted with support from Accion that the crisis hit certain sectors harder than others and required a differentiated strategy for each. Depending on the sector and market, Grassland Finance prolonged the payment period, granted additional loans, or deferred loan repayments.

The agricultural sector faced unique challenges during the lockdown, which occurred during the planting season. Farmers faced challenges in securing the agricultural inputs they needed, like fertilizers. CD Finance was able to disburse $5 million USD in loans for farmers to buy fertilizers through a partnership with an agricultural inputs company.
<h2>Focus on building digital capacity</h2>
As this crisis unfolded, China had several factors working in its favor for business to continue. Digital payment and e-commerce platforms like WeChat Pay and Alipay are widely adopted, reducing the need for cash. With good infrastructure in place, including electricity, telecommunications networks, and internet access, many employees were already equipped to work remotely.

During the national lockdown, loan officers were unable to visit clients, and clients were unable to visit banks. Mobile communications and digital payment options were critical. Educating customers about digital payment platforms reduces dependence on cash. CD Finance relied on their existing digital platform to manage payments. Based on previous loan history and credit assessments, they were able to make quick determinations on whether or not to offer credit and loan extensions through this digital channel.

Every market will face unique difficulties and China has some aspects that enable it to act faster and more effectively than other countries. Yet, these insights can help as financial service providers guide their clients through this hard time. As we continue to face daunting challenges, know that there will be a time for recovery. “Although the disaster remains a serious challenge for both financial institutions and small businesses, we should stay remain optimistic. We believe that things are slowly getting better in China, and it will be in the rest of the world as well. This can be an opportunity where we show our worth and commitment to our mission,” says Ms. Seah. We know that Accion’s mission is more urgent than ever, and we will continue to share as many resources as we can to help underserved populations to endure the pandemic.

<a href="https://www.accion.org/responding-to-the-pandemic-guidance-for-financial-service-providers"><em>View</em><em> Accion's recommendations for financial service providers on protecting customers, employees, and business operations during the COVID-19 pandemic.</em></a>

&nbsp;

Five crucial insights from China for facing the pandemic

<span style="font-weight: 400;">Smallholder farmers in Kenya — like smallholder farmers everywhere — work very hard, and live precariously, always facing challenges from drought to floods to commodity market fluctuations. Margaret Auma Oyoko, who grows maize and raises cows, when asked to describe her day says simply, “When I wake up, I pray to God to help me in my activities like farming, feeding the cows, and other household duties.”</span>

&nbsp;

[caption id="attachment_20230" align="alignleft" width="500"]<img class=" wp-image-20230" src="https://content.accion.org/wp-content/uploads/2019/12/Kenya_Nakuru_0030-2-1024x684.jpg" alt="Alfred in maize field" width="500" height="334" /> <em>Alfred appreciates how healthy his crops are with Apollo’s fertilizer.</em>[/caption]

<span style="font-weight: 400;"><a href="https://apolloagriculture.com/">Apollo Agriculture</a>, an Accion Venture Lab portfolio company, was founded to help farmers like Margaret thrive in the face of their many challenges. When farmers become Apollo clients, they receive not only high-quality seeds and fertilizer but also advice to help them farm more effectively. </span>

<span style="font-weight: 400;">Alfred first heard about Apollo from a friend who is also a farmer. He reports that he and several neighbors have all had positive experiences with Apollo so far. “Their fertilizer is very </span><span style="font-weight: 400;">rich, which meant my crop yield was very high. After harvesting and selling my maize, I was able to pay the school fees,” he says, adding, “I’ve also learned so much more about </span><span style="font-weight: 400;">agriculture. They teach us a lot and show us how to do farm work.”</span>

[caption id="attachment_20232" align="alignright" width="500"]<img class=" wp-image-20232" src="https://content.accion.org/wp-content/uploads/2019/12/Nakuru_0023-1024x684.jpg" alt="Susan shows an Apollo agent her produce." width="500" height="334" /> <em>Susan shows an Apollo agent her produce.</em>[/caption]

<span style="font-weight: 400;">Susan Wangui Wanjiru also learned about Apollo through a friend, and while like Alfred, she appreciates the quality of its products, she is especially impressed by its tech-enabled systems. She first signed up as a customer via text message and then an agent came to her property and assessed her farm. Says Susan, “The beauty of it is that Apollo does not give out cash to anyone, not even the agents. You send </span><span style="font-weight: 400;">it</span><span style="font-weight: 400;"> directly to them [using M-Pesa]. You then get your balance as a text message.” For a busy farmer and mother, the convenience is invaluable.</span>

<span style="font-weight: 400;">Summing up his Apollo experience, Alfred says, “Before, I struggled to get farm inputs. The next problem was finances, as you have to buy everything with cash. It was also difficult to find people who could teach you something new. But now it’s better with Apollo.”</span>

Seeds, fertilizer, mobile money: Kenyan farmers get the supplies they need

For families to get ahead, they need access to financial products and services. However, many people in India don't understand how to use these tools well, so they <a href="https://repository.lboro.ac.uk/articles/Conceptualising_financial_literacy/9494978">avoid them and avoid planning for the future</a>. This leaves them vulnerable to predatory lending, overselling, and fraud, and it can lead to crippling debt and poor financial management. Financial education can make all the difference by helping people to build <a href="https://www.centerforfinancialinclusion.org/what-is-financial-capability#targetText=Financial%20capability%20is%20the%20combination,access%20to%20appropriate%20financial%20services.">financial capabilities</a>.  Armed with the knowledge, skills, and self-efficacy needed to make the best money management decisions available, individuals can finally reach their economic potential.

For roughly two decades, Accion has included education and training services as important components of its financial inclusion work. As part of its client education programs in India, Accion has partnered with <a href="https://www.axisbank.com/">Axis Bank</a> to deliver programs inlcuding Mass Awareness Campaigns and the Money Plan Program. The former focuses on spreading awareness of basic financial concepts and the latter on creating awareness about the importance of keeping track of debt, savings, and expenses. Women are the main beneficiaries of these programs, which focuses on developing their decision-making skills to effectively drive women’s empowerment.
<h3><strong>Mass Awareness Campaigns </strong></h3>
Mass Awareness Campaigns focus on spreading financial literacy to low-income households across India, primarily in rural areas. The program uses tools like street plays, drama, and magic shows to teach all aspects of people’s financial lives, including earning, spending, saving, borrowing, and investing. It spreads awareness of good spending habits, monthly budgeting, identifying appropriate institutions, and avoiding risks. For many clients, this program is crucial for building initial awareness, inspiring financial conversations among family and neighbors, and driving them to seek out additional training. More than 15,000 individuals have participated in these campaigns, and many have gone on to take part in the Money Plan Program.
<h3><strong>From awareness to the Money Plan Program</strong></h3>
The Money Plan Program is a three-day in-depth workshop which focuses on building a deeper understanding of critical financial concepts. It focuses on improving the financial capacity of low-income women by giving them the tools to maintain their personal and household accounts efficiently. Through a set of modules, participants learn about financial planning, cash flow and budgeting, savings, debt, investment, insurance, and banking.

The initial results of the impact of program are promising. A survey of 9,000 women showed that it promoted significant behavior changes, especially in terms of financial discipline and budget planning. After the workshop, respondents reported a 27 percent increase in savings and an 18 percent increase in the use of bank accounts for saving. Interestingly, it wasn’t only attendees who benefitted. Respondents shared that after the program, their spouses also engaged in the financial planning exercises and in joint decision-making.
<h3><strong>The road ahead for financial education programs</strong></h3>
While the initial impact has been positive and women have been excited to use interactive tools for building their financial capability, scaling the programs has been challenging. They require large human resource investments, both in terms of time and money. Additionally, the programs do not permit real-time collection of data, which makes supervision and monitoring time-consuming and costly.

India is the world’s second-largest smartphone market and <a href="https://www.gsma.com/mobileeconomy/india">is expected to add over 330 million mobile subscribers by 2020</a>. Many of the new mobile and internet users have experience learning on digital platforms. This gives us the opportunity to build people’s financial capability through online and mobile channels. Mobile-based delivery of information, available whenever and wherever the learner needs it, would reach communities at greater scale than in-person programs currently can.

Accion has already rolled out such tools in Latin America.  The platform <a href="https://www.accion.org/these-women-are-growing-their-businesses-and-their-confidence">Ovante</a> is helping entrepreneurs build and enhance their business skills, grow their enterprises, and adopt healthy habits for using financial products and services. Users access the platform on their mobile phone or computer and receive information and tools to improve their business in real time. Based on the experience in Latin America, Ovante will be tailored for the Indian market and will aim to provide low-income microentrepreneurs with the tools they need to run their businesses and support their families and communities.

<em>Arisha Salman contributed to this article. </em>

&nbsp;

What's next for financial education in India