breakfast briefing wednesday 23 jan 2019 · 1/23/2019 · 1.regulated institutions require good...

#ThinkMicro @YCareInt | www.ycareinternational.org

Breakfast Briefing

Wednesday 23rd Jan 2019

About Us

3 Countries of operations

Cambodia, India, Zambia

Operator-investor model via equity in

subsidiaries

Currently expanding in Sub-Saharan Africa

~ 1 million clients400,000 loan clients300,000 depositors300,000 insurance

+Money transfersBill payments etc

Conventional + mobile (agent) banking models

~ 3,000 staff+ 4,500 mobile agents

275 branches

Mostly rural operations except India

USD 350 m total assets(consolidated)

$180 m in deposits

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Why do we need microfinance & Who provides it

• Commercial banks usually not interested as they consider the poor too risky (unsecured loans = risky)• 2 billion people are not in the banking

sector worldwide

• Alternatives such as local moneylenders are predatory and exorbitant

Different classes of microfinance

• Regulated microfinance institutions• Non-profits/charities• Co-operatives/SACCOs• ROSCAs• Down-streamed banks

WHY WHO

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What is good microfinance

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Range of Financial Products

• Livelihood/Working/Investment capital: Loans

• Risk capital: insurance, deposits

• Other products: remittances, leasing 9





• Other products: remittances, leasing 10





• Other products: remittances, leasing

For the unbanked • Estimated 2 billion globally• Mostly rural/poor• Vast gaps in Africa

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Rural models & products

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Group-based structures

- Mutual guarantees- Efficient (economies of

scale)- Forum for other

activities/training/financial literacy

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Group Loans

- Livelihood financing- Mostly agriculture, cattle

and small trade- Other financing such as

for education- Usually short-term loans

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Group Loans

- Livelihood financing- Mostly agriculture, cattle

and small trade- Other financing such as

for education- Usually short-term loans

Insurance

- Credit Life- Health- Weather Index/crop- Limited success globally

so far

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Urban models & products

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Individual models more common*

- Family based transactions- Usually somewhat

banked populations- Often limited to business

and consumption financing

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Individual/ Business Loans

- Small business financing for stock & working capital

- Vehicle financing- Education

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Deposits & Health Insurance

- May be accessed directly without microfinance

- Sometimes used for larger borrowings

- More relevant for the top end of microfinance clients

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Deposits & Health Insurance

- May be accessed directly without microfinance

- Sometimes used for larger borrowings

- More relevant for the top end of microfinance clients

Remittance (Fintech)

- Lots of buzz and potential- M-Pesa, EasyPay etc- Currently limited to

money transfers & bill payments

- Other financial products in future?

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The question of Impact

The Ideal

- Increased incomes- Less vulnerability- Ability to cope with stress- Asset accumulation- Education and housing- Better standards of living

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The question of Impact

The Ideal

- Increased incomes- Less vulnerability- Ability to cope with stress- Asset accumulation- Education and housing- Better standards of living

The Evidence

- Limited empirical evidence/research- Aggressive lending models carry risk

of over-indebtedness- Proxy indicators overall positive- Social performance = impact?

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AMK Cambodia…our experience

The Aggregated Results

- Increased consumption- Less vulnerability- Asset accumulation- Education- Better standards of living

But…findings are not black and white

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AMK Cambodia…our experience

The Aggregated Results

- Increased consumption- Less vulnerability- Asset accumulation- Education- Better standards of living

But…findings are not black and white

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In conclusion…private sector microfinance(A $200 bn industry)

Pros

1. Regulated institutions require good standards, capital and safety

• Essential for savings/deposits

2. Financial sustainability objective can create stable institutions and improve chances for lasting impact

3. Usually more successful in achieving scale & efficiency

• Should lead to more affordable products for clients

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In conclusion…private sector microfinance(a $200 bn industry)

Pros

1. Regulated institutions require good standards, capital and safety

• Essential for savings/deposits

2. Financial sustainability objective can create stable institutions and improve chances for lasting impact

3. Usually more successful in achieving scale & efficiency

• Leads to more affordable products for clients

Cons

1. Usually does not differentiate on the basis of impact: treats all microfinance as the same

2. Quest for profits and scale can lead to over-indebtedness

3. Profit motive keeps such investors away from some markets (SSA)

4. More transparency will be good

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Thank You! www.agoramicrofinance.com

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http://www.agoramicrofinance.com/

Getting young people

into work. And out of poverty.

Access to financial services

23 January 2019

Introduction

• Unprecedented youth population

• 2/3rds of youth out of work / training - facing extreme

poverty and discrimination

• YCI’s partnership network of YMCAs and others

• Equipping the most disadvantaged young people aged

15-24 to move out of poverty and into safer, more

sustainable work.

• 15 countries, reaching over 59,000 young people &

communities per year

The need: why finance?

Financial services continuum

Financial Service Providers (FSPs)

micro-finance,micro-insurance

Formal

bank loan

Informal

savings group,

family, moneylender

Young people need access to

financial services to:

• Start/sustain/grow businesses and support

employment

• Improve household conditions – fund education,

housing, other basic needs

• Build resilience to shocks e.g. illness, natural

disasters

• Gain control over decisions & plan for the future

The challenge: young

accessing finance

Barriers to access

• Youth make up a disproportionate share of the

“unbanked” - 9/10 financially excluded

• Only 50% of FSPs provide services to youth -

perceived as risky, low ROI

• Youth’s inability to fulfil FSPs’ conditions: age, ID,

address, collateral etc.

• Gender e.g. women & land ownership

• Lack of information, mistrust of FSPs

• FSP products are not appropriate to young

people’s needs

• Additional barriers for disadvantaged young

people: remote, rural, literacy

• Demand for finance exists among youth

o Mastercard Foundation & BCG research

2015: savings, credit, WTP

o YCI research 2016-17: Sierra Leone, Liberia,

Togo, Zambia

Our response

• Business start-up grants, loans, kits

• Financial education

• Partnerships with micro-finance institutions

for youth friendly products

Individual

Training

vocational, life skills, business

Post-Training

finance, mentoring, market linkages

• Urban – with SDI

• Savings + short-term loans + women’s

empowerment + community development +

lobbying decision-makers

• Rural – Village Saving and Loan Association

(VSLA)

• 11,000 members across West Africa

Group Savings & Credit

What difference have we made?

Business start-up grant

“I am the eldest of my 3 siblings and the head of the household.

Hairdressing is my passion. YMCA provided me with training

and equipment, then I was able to open my own salon. Before

YMCA’s support, I earned 2000 Ariary (42p) a day. Now I earn

about 9000 Ariary (£1.90) a day. I contribute towards all my

siblings’ school fees. Before I was shy, now I have gained

confidence. I am also planning to complete my high school

baccalaureate.”

Mirana, 18, Carion, Madagascar

Savings and credit group

“Before I joined the savings group, I was not doing

anything, just relying on men for support.

So I started saving and with time I decided to take a

loan within the savings group to start a business on my

own. After 8 months, I paid the loan completely. Now I

can no longer be abused by men, I now live a decent,

independent life. Now I can support my child

comfortably and this has brought a lot of smiles to my

face.”

Vivien, 28, Freetown, Sierra Leone

Mohamed – Sierra Leone

Rebuilding lives in the aftermath of the Ebola outbreak…

Conclusion & Next Steps

• Finance as part of holistic package of support for

young people can lead to:

o increased income & standard of living

o increased voice & influence

o reduced vulnerability

o increased ability to cope with shocks

• Learning Paper and documenting impact

• Importance of multi-stakeholder collaboration to

promote conducive legislation and environment

for youth-friendly finance

• How can we work together to accelerate change?

• We need support to:

o co-design new models for youth-friendly finance

o provide advisory support to YCI & partners

o provide mentoring support to young people

• Opportunities offered by digital technology to

reach more young people at lower cost

Questions?

Thank you.Regional Programme [email protected]

England and Wales Reg. No. 1109789 | Company Reg. No. 3997006

@YCareInternational

@YCareInt

www.ycareinternational.org020 7549 3150

Senior Partnership [email protected]

Join the conversation online #ThinkMicro

@YCareInt

breakfast briefing wednesday 23 jan 2019 · 1/23/2019 · 1.regulated institutions require good...

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