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Microfinance

Corridors for Shared Prosperity: A Case for Replication

Pallavi Shrivastava's picture

For those trying to address challenges in global poverty, inclusive businesses offer solutions to some of the world’s most intractable social problems. Business models that create value for the low-income communities are becoming viable - these have been tested, fine-tuned and perfected by some of the finest brains. Once perfected, it makes sense to contextualize and spread these innovations or the knowledge to markets across the globe. To be able to do this, replication is an important tool.

Measured Profit is not Welfare or is it? Intriguing evidence from when microfinance clients gave up microfinance

David McKenzie's picture
I finally got around to reading an intriguing paper by Banerjee, Duflo and Hornbeck that has been on my reading list for a while. This paper is a nice example of making lemonade out of lemons – they had intended to evaluate a health insurance product that a microfinance organization in India made mandatory for its clients in selected villages.

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Accountability, Transparency, Participation, and Inclusion: A New Development Consensus?
Carnegie Endowment for International Peace
Four key principles—accountability, transparency, participation, and inclusion—have in recent years become nearly universal features of the policy statements and programs of international development organizations. Yet this apparently widespread new consensus is deceptive: behind the ringing declarations lie fundamental fissures over the value and application of these concepts. Understanding and addressing these divisions is crucial to ensuring that the four principles become fully embedded in international development work.
 
Ebola communication: What we've learned so far
Devex
This week, a World Health Organization infectious diseases expert reported the death rate due to Ebola in West Africa has now climbed to 70 percent, higher than previous estimates. And by December, new cases could hit 10,000 a week. For front-line medical workers, the projections couldn’t be grimmer. They are overwhelmed and their numbers are dwindling — Médecins Sans Frontières has already lost nine staff members to the epidemic — but reinforcements remain sparse. For organizations involved in communication and awareness-raising campaigns, meanwhile, this situation means they need to be more aggressive and robust, and their messaging fool-proof.  We know many of them are on the ground, conducting door-to-door campaigns and spot radio announcements, putting up posters and distributing pamphlets to inform communities about the disease. Some have even resorted to using megaphones to reach people who choose to remain indoors, conduct skits in schools and communities via youth drama troupes. A few aid groups are even considering perceived viral forms of communication like music and video messaging led by former football player and now UNICEF ambassador David Beckham.  But are these campaigns actually working? Will the new plans be effective?
 

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Aid Transparency Index 2014
Publish What You Fund
The 2014 ATI results follow the trends observed in previous years. A lead group of organisations are making significant and continuous improvements to the information they publish on their current aid activities – and many others have taken steps towards improving their publication in 2014 – but the majority have not made significant progress and continue to lag behind.
 
12 ways to communicate development more effectively
The Guardian
From fundraising to behaviour change, communications is key to development work. Our panel explain how to do it better. Sina Odugbemi, senior communications officer (policy), World Bank, Washington DC, USA, @WorldBank:

  • Make a case for development spending: Polls in Europe consistently show that support for development is wide but shallow. This is due to the limited power of emotive campaigns. People need to know if any of their money is doing permanent good or whether the cynics are right. That kind of case-making is, sadly, not done consistently and rigorously.
  • Avoid promoting quick fixes: What that does is provoke disillusionment down the road. We need to discourage young people particularly from thinking complex problems can be solved with a rush of energy and cool new tools. We need to be communicating that many tough challenges will require stamina and sustained effort and commitment.

Looking for new ways to serve Muslim microfinance clients

Mayada El-Zoghbi's picture
“To alleviate poverty in Pakistan, we have to focus on the farmers,” says Farida Tariq, founder and chief executive officer of Wasil Foundation, a microfinance institution. “But many farmers will not opt for interest-based lending because of religious reasons.”
 
To address this gap, Wasil started offering a Sharia-compliant microfinance package aimed specifically at smallholder farmers.
 
Wasil Foundation: Islamic Financing to Farmers

Wasil is an example of how microfinance and Islamic finance can be successfully combined.
 
An estimated 650 million Muslims live on less than $2 a day. Examples like Wasil show that Islamic microfinance can play a key role in bringing the poor into the financial mainstream in a way that doesn’t force them to choose between their religious practices and their wallets.

But despite an impressive increase in the number of financial service providers that offer Sharia-compliant microfinance products in Muslim countries, Islamic microfinance is still limited to a few countries. The range of offerings is narrow as well – most are largely focused on the cost-plus-markup product known as murabaha, which is geared toward asset purchases. 

How can regional integration improve access to finance in South Asia?

Sarmad Shaikh's picture

South Asia is the least integrated region in the world. Intra-regional trade in South Asia is less than 2% of GDP compared to over 20% in East Asia. Labor mobility and regional travel is minimal, with few exceptions. Even remote communication is low – only 7% of international telephone calls in South Asia are to countries within the region, compared to 71% for East Asia. The case for closer integration has remained strong for a while now, and it is refreshing to see that some movement, albeit watchful, in addressing some of the region's deep rooted political economy issues, particularly between India and Pakistan.

The discussions around closer integration have centered on energy, trade, connectivity and stability. All of these offer strong potential to enhance growth in the region. However, financial sector integration overall, and access to finance in particular, hardly ever make it to the agenda of regional integration forums and deliberations. This is unfortunate, because the region has a long way to go in providing adequate access to financial services and insurance products, especially to the vulnerable segments of the population. Given that South Asia is home to more than half a billion of the world’s poor, this becomes a poverty reduction goal as much as a financial inclusion goal.

To End Extreme Poverty, Learn from a Small Village in India

Sri Mulyani Indrawati's picture

Photo: Nandita Roy / World Bank
"Five years ago, I was no one," said Kunti Devi to me, sitting up straight against the wall of her one-room mud hut in Bara, a small village in India's eastern state of Bihar. "Now, people know me by my own name, not just by the name of my children."

I was sitting on the floor, across from Devi, a mother of eight, who belonged to one of the most vulnerable and socially excluded castes in India. She recalled how when her husband got injured and lost his job a few years ago, the family was pushed over the brink — from subsistence to hunger and poverty. At the time, Devi took a bold step for a poor woman used to living in the shadows of society. She joined a women's self-help group in her village and took a small loan to raise goats. With the income she generated, she repaid her first loan and took another one — this time to lease land to produce grain. She borrowed again when her family faced a health crisis. Today, Devi has several sources of income. She is also planning ahead. She wants to open a food outlet on a busy road. And now, with two of her sons married, she wants to find a larger living space for her growing family.

Can Islamic Microfinance spur Inclusive Prosperity?

Ahmed Rostom's picture


Can Islamic Microfinance give more people access to the financial services they need to grow their business? (Credit: DFID, Flickr Creative Commons)
Research has shown that financial sector development and the efficiency of financial systems are closely linked to economic growth. Ensuring the provision of financial services to the poor can also address the challenge of poverty alleviation and directly target financing towards economically and socially underprivileged groups. Appropriate financial services, such as savings services, investment, insurance, and payment and money transfer facilities,  enable the poor to acquire capital to engage in productive ventures, manage risks, increase their income and savings, and escape poverty.


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