“Tracing social business models from charity to billion dollar banks” – This was the title of a lunch session at the Impactory in Luxembourg. I joined forces with the Executive Director of LMDF – The Luxemburg Microfinance and Development Fund, Kaspar Wansleben, to give participants a good introduction on microfinance and how its business models changed over time.
Participants were mainly interested in the following issues:
Zambia is one of these countries for me about which I do not know anything. This might be a good thing for an African country since many of them get into the headlines for not so positive things like currency devaluations, droughts, or sacked central bank governors. What was the last thing I heard about Zambia? I have no idea…..
Well, I thought, let´s have a look at this country from an access to finance perspective. Continue reading
I paid a visit to Mozambique in early February 2014 to conduct a number of interviews with major stakeholders, ie. Banks, telecom operators, microfinance institutions, end-clients such as savings groups, etc. And come up with effective ideas for pilots to increase access to finance via branchless banking and links of formal-informal providers, and private-public funders in rural areas.
In Mozambique, 77.8% of the adult population has no access to financial services. You find around 0.6 bank branches per 100,000 people in rural areas. Whereas urban areas “already” have 4.2 branches per 100,000 inhabitants. There are 18 banks some of them even exclusively serving micro and SME clients (e.g., Socremo, Procredit, Tchuma, Opportunity Bank).
During my time at CGAP (until 2008), I have been the lead researcher on banking agents, their business model, the costs, and benefits, etc. During the last 5 years, I have spent very little time on the topic, but have now stuck my nose again in the various implementations of banking agents around the world. Especially in Colombia, the government has put a lot of emphasis in its “Banca de las Oportunidades” (BdO), a financial sector policy with the objective to increase access to finance in the country via microcredit, banking agents, and many new regulatory changes. The BdO became active in 2007 when I wrote my initial blog post about them and also published a publication with CGAP on the business model and key success factors of these retail outlets processing financial transactions. Continue reading
I had already experienced this in June, but Kinshasa is a surprisingly expensive city.
I guess the main reason is the small local production; so many products are being imported primarily from France or Belgium.
For some items however, there is a drastic difference between supermarket vs. street vendor/market: CDF 6,500 (around US$12.50) per kilo tomatoes in the supermarkets vs. CDF 1,200 (around US$2) per kilo on the street. Bread is also around 5 times more expensive at the supermarket than on the street. A whole case of Primus, the local beer, i.e., 12 bottles (0.7l), you will get for around CDF7000 (around US$15) at a local ‘depot de boisson’ (I first understood we would visit a fish shop when my colleague told me we would visit a client, a ‘depot de b/poisson’), and for the 250ml tetra pack of juice at the supermarket, you will pay around US$1.50. Continue reading
On September 13 2008, I took my flight to Kinshasa …first to Brussels, and then to Kin with a 45-minute stop over in Douala
(I must admit that I had been quite uninformed, to say the least, about African geography, but yes: Douala is in Cameroon). This is exactly the part where the flights to and from Kinshasa cross the equator and always shake with turbulences. With all what has happened with airplanes in the last months, I am not anymore very at ease flying…
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I do not know Africa well…or better “at all” since my knowledge is limited to 2 weeks in Lomé, Togo and a few days in Morocco which does not count. Spending the last week here in Kinshasa, listening to Congolese music, talking to people waiting in line to open their bank account, getting used to the continuous smell of mosquito spray surrounding me (ok, people who live here longer, will probably not use that stuff at some point…), learning a few words in the local language Lingala, and hearing people yell “mundele” (“white” in Lingala) when I step on the street, is interesting, fun, and something very new to me.
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As promised in the last post, here some detailed information on Colombia’s banking agents. Banca de las Oportunidades (BdO), the government entity managing the national financial sector policy, published a presentation in May 2008 on the results of banking agent networks managed by 10 Colombian financial institutions between June 2007 and May 2008. Continue reading
Banking agents, i.e., retail and postal outlets processing financial transactions on behalf of banks, seem to be the theoretic solution to reach new geographies and new client segments with banking services. Low population density with low transaction volumes, and low-income clients demanding small value transactions often require new distribution channels and do not justify building branches. Continue reading
Many already suspected that introducing taxes on financial transactions would prevent poor clients in developing countries to entrust banks and other financial institutions with their often small savings. It was interesting to read in the transcript of a speech by Mercedes Cuellar, the President of Asobancaria, the Colombian banking association, that the “4/1000” (locally pronounced cuatro por mil) in Colombia increased the use of cash in the country from 46 percent to 68 percent. Continue reading
