Africa´s largest financial inclusion programme creates suspicion

Posted on 8. September 2014 by hannah

e-id1On August 28, 2014, the pilot programme of the MasterCard-branded National eID card was launched in the Nigerian capital, Abuja.

In the pilot phase, the National Identity Management Commission (NIMC) will issue MasterCard-branded identity cards with electronic payments functionality to 13 million Nigerians. This initiative is the largest roll-out of a biometric-based verification card with an electronic payment solution in the country and the broadest financial inclusion programme in Africa.  Continue reading →

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Is ProCredit exiting Africa?

Posted on 4. September 2014 by hannah

pchProCredit Holding, one of the most successful and most structured greenfield holdings, seems to become used to exiting its African affiliates. They have been courted with equity and technical assistance from a range of development finance institutions (DFIs) including KFW, IFC, DOEN Foundation, and even a private pension fund TIAA-CREF.  Today, however, it seems as if the business of providing loans to microenterprises in Africa is not a strategic priority anymore for the Frankfurt-based network. In 2007, according to a presentation I found online, the world was still rosy, financial and economic indicators looked promising, and donors got excited in supporting ProCredit in reaching “the heart of darkness.” Well, Africa represented only 4% of assets of ProCredit Holding, so I guess decisions were primarily based on the South American (25% of assets), and Eastern European (71% of assets) context. Continue reading →

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Mobile Money in the DRCongo – a nut to crack for MNOs

Posted on 3. September 2014 by hannah

The GSM Association launched a study in July 2013 as part of its Mobile Money for the Unbanked (MMU) programme. According to the study, DRC is one of the most promising mobile money markets in Sub-Saharan Africa due to an enabling regulatory environment and the potential to scale in a country with around 70 million people. However, poor infrastructure, low literacy levels, dispersed populations, and a mobile phone penetration of only 17.5% made it challenging up to now to understand the use cases for mobile money in the DRC. Continue reading →

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Microfinance and educational credit: A promising alliance?

Posted on 2. September 2014 by hannah

CIMG2267This was the title of yesterday´s event in the House of Microfinance in Luxembourg. Since LMDF invests in the Higher Eduction Finance Fund (HEFF) and the board meeting was held yesterday, LMDF proposed a brief session to introduce HEFF to the public and discuss questions. The session was jointly organized with InFiNe – The Inclusive Finance Network Luxembourg Continue reading →

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Agent management – how to set up the channel

Posted on 24. August 2014 by hannah
CIMG0048

A Lemonbank agent in Brazil

I know… I know… it took me longer than planned. But here it is: The continuation of my previous blog “Microfinance Institutions and Alternative Delivery Channels (ADCs)” which was based on the presentation by Mark Flaming and Joseck Mudiri “Microfinance Institutions and Mobile Financial Services Channels”. I briefly listed a few points on the business model of an agent network. In this blog, I wanted to convey the strategic channel options, Mark and Joseck provide:

MFIs are primarily operating in markets where payment service providers (PSPs) are offering e-wallet services that MFI customers are beginning to adopt. However, these MFIs have no connection to the PSPs, and MFI customers cannot transact between their MFI and e-wallet accounts. Continue reading →

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Microfinance Institutions and Alternative Delivery Channels (ADCs)?!

Posted on 14. August 2014 by hannah

CNB City Sogamoso 1 (3)Is this a question or a statement? There are quite some unanswered questions about microfinance institutions developing alternative delivery channels, such as agent or ATM networks or other mobile financial services. Do microfinance institutions have sufficient institutional capacity, sufficient resources to implement these channels well? Will such implementation deviate too much management attention from their actual core competency: lending to the poor? Continue reading →

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Psychometrics in credit analysis – Threat or Promise?!

Posted on 7. July 2014 by hannah

A recent article in the Financial Times (June 25, 2014) brings the topic and discussion around it back on the table. Psychometric tests as part of a credit analysis become increasingly popular, especially with commercial banks and large microfinance institutions. It is mostly those institutions which are trying to reduce the administrative burden and cost of doing microfinance, visiting the client in his business, at home, counting inventory, talking to the neighbors as references, etc. By yielding profiles of loan applicants´ honesty, intelligence, aptitude and beliefs, the tests facilitate lending to the otherwise called “unbankable” borrowers without a credit history, hard collateral, or an active account. But is the thorough credit analysis in microfinance with an in-depth knowledge about the customer and his business really possible to pack into a list of a few questions? Continue reading →

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Partnership for Financial Inclusion conference in Johannesburg!!

Posted on 23. May 2014 by hannah

20140523-150903-54543689.jpgThis is the titel of a two-day conference I am attending. The partnership was launched on May 7, 2012 with the objective to “project will create new opportunities for economically disadvantaged people to expand businesses, gain access to cost-effective financial services, and manage risk.”

Via this US 37.4 million, 5-year partnership, the IFC and the Mastercard Foundation will help greenfield microfinance institutions in Africa to rapidly increase their outreach, develop new products, and create new delivery channels.

Continue reading →

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Reasons to be wary of African debt expansion

Posted on 5. May 2014 by hannah

Nobody is quite clear how to look at the African expansion of capital markets. Does it present healthy investment opportunities or rather the early signs of a dangerous credit bubble?

The IMF review issued last week mentioned improved fiscal policies, but it warned that a few countries had “undertaken excessive fiscal expansions partly financed by foreign borowing thereby increasing their vulnerability to sudden cash flow reversals.” (Unfortunately, i could not find the one study mentioned in the article, but this one is also quite informative on the subject)

Continue reading →

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Booming but fragile new middle class in Africa

Posted on 22. April 2014 by hannah

The article in the Financial Times from last weekend ( April 19/20, http://www.ft.com/intl/indepth/the-fragile-middle) mentions how Africa has effectively developed a new middle class numbering 115m in 1980, reaching 326m in the past years. But only 14% (44m) have only firmly achieved that status earning between USD 10-20/ day. Others are still floating taking home around USD 2-4, ie. living barely above the poverty line, and the ” lower middle” making USD 4-10 a day.

Africa’s middle class is with 33% still the smallest compared to other emerging regions, e.g., 77% in Latin America and 56% in developing Asia.
Continue reading →

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