Opportunity
Network Blog

What is going on in the microfinance industry? With all of the busyness in our daily jobs, it is sometimes nice to poke our heads up to look around and see what is happening around us. I have been blessed with the ability to do that over the last two weeks and thought I would share some observations starting with the most recent.

Microcredit Summit Campaign: Seal of Excellence
Last week I was able to catch up with Larry Reed over dinner. Many of you will remember Larry as a longtime Opportunity employee and the first CEO of the Opportunity Network way back in 1997. Today Larry heads up the Microcredit Summit Campaign (and I might add Larry is just one example of a distinguished alumnus serving the sector in an important capacity!). Larry is particularly excited about a few things on the horizon including the impending launch of the “Seal of Excellence” that will be unveiled at next month’s Social Performance conference in Panama. Many Opportunity members will be attending that conference so stay tuned for more about this exciting new initiative designed to focus the spotlight on MFI’s which are delivering real opportunities for transformation in their lives of their clients. Those that truly deliver on this promise will be recognized and rewarded by receiving the “Seal of Excellence.”

Financial Inclusion 2020
The prior week I joined the Advisory Board for the Center for Financial Inclusion to review progress toward the goal of broader financial inclusion for all individuals by 2020. Great progress is being made across a number of interventions necessary to achieve the goal of a world in which all citizens have access to a full range of financial services to meet their needs. A major report with recommendations for MFIs and other financial service providers, government regulators, technology service providers, global institutions, academic researchers and others will be issued in time for the Financial Inclusion 2020 conference this October in London. Stay tuned for the recommendations headed our way.

Microfinance CEOs Working Group
Finally, The Microfinance CEO Working Group (affectionally know by its members as the MCWG) met to review some great work showing the impact of client over indebtedness as well as the progress our eight networks have made in piloting programs designed to share knowledge of the benefits – and challenges – of rolling out the Universal Standards of Social Performance.

Both the client indebtedness research and the SPM work were outstanding. The client indebtedness work has some clear implications for the need for and use of credit bureau data and how regulators as well as MFIs might operate to minimize the potential harm to clients from too much debt. The SPM pilot work shows a need to continue to focus and streamline reporting metrics so that the management teams leading MFIs can keep their eyes on the ball of what truly matters. This SPM research work will be published later this month to be shared before the Panama conference and we will be sure to post it on line for your further review. Similarly, the over-indebtedness research should be published next month or shortly thereafter and it too will be posted for your review.

As always, thanks for all you are doing to create a brighter future for the five plus million clients Opportunity is serving all over the world.

If you are seeing something interesting about the future of our industry or sector, please feel free to post a comment here – or contact Mark Kingston and volunteer to write a blog of your own!

I have just returned from a visit to Opportunity Uganda. Having recently joined Opportunity, this was my first visit to an Opportunity member organisation, and my first visit to Africa.

One of the things that struck me most was the widespread use of mobile phones everywhere I went. Equally striking were the bright colours of mobile money adverts covering houses and shops from large towns to small villages.

Opportunity Uganda is making the most of this mass mobile usage. Their new mobile money platform is allowing them to provide financial services to even more people, especially those in rural communities. It is also helping them drive down the cost to clients who want a convenient and secure way to save and transfer money.

If this new service to be successful, clients need to trust it and know how to use it. One way Opportunity Uganda is building up trust and understanding in their new mobile money service is by using ‘peer to peer’ training.

The idea is simple: existing Opportunity clients visit training sessions for new clients. They share their experiences of banking with Opportunity, showing how it has impacted their business and family life.

They also give live demonstrations of mobile money at work, showing how easy the menus are to use, and how quick the process is.

Opportunity is currently the only operator in Uganda able to offer the full cycle of mobile banking – withdrawing money and making payments as well as making savings deposits. Mobile banking payments are free for Opportunity clients, where other competitors charge.

Uganda’s mobile money programme is still in pilot phase, but has already seen 3000 transactions, with a recorded valued of UGX 631million ($244,000).

It is clear that mobile banking has the potential to have a significant impact on lives of poor Ugandans – I know you will join me in wishing them the very best for this powerful new service.

Knowing poverty and knowing about poverty are two completely different things.

I know a lot about poverty: I understand the mechanisms, systems and policies that trap people into a daily fight for survival. In my travels around the world, I have also visited some extremely poor communities.

But I have never really known poverty myself.

Like many of you, I have much to be thankful for. My home is comfortable and secure. My family are happy and healthy and my children are all receiving an excellent education. When we go to the grocery store, we have an amazing array of choices – we just pick and pay for what we need.

So for the next five days, I’ve decided to ‘live below the line’. Together with my wife Julie and our 3 kids, we’re going to live on just $1.50 each per day – that’s the income level that defines extreme poverty.

Our food for this week: £25 ($37.50) of groceries to feed our family of five for five days.

We’re doing this to stand alongside the 1.4 billion people who have no choice but to live below the line every day – and who have to make $1.50 cover a lot more than food.

And as we go, we’re raising money to help Opportunity empower more people to live life above the line instead of below it.

Find out more about the Live Below the Line Challenge here.

I never imagined I would be standing on the edge of a dusty, remote crossroad eating freshly shucked oysters from a market stall. I was in a remote fishing village in the central Philippines, visiting a group of women who eke out a fairly meagre living by buying crates of oysters and selling them by the side of the road to passers-by.

They offered me a sample. I baulked at first. I mean, oysters from a Filipino market stall in the midday heat? No fridge in sight. Salmonella? Hepatitis? But my hosts weren’t backwards in indulging so I took the plunge too. When in the Philippines, right? They shucked them on the spot. Down the hatch. They were fresh, plump and flavoursome.

These women are embarking on a three-year community enterprise development program to improve their businesses and lives, through business training, skills development and coaching. Their Community Enterprise Development Assistant (CEDA), Annie will work closely with them to improve organization; to form subcommittees to work on development plans to clean up their local environment and improve sanitation, as well as register as a cooperative association to develop their enterprise by adding value to their raw resources and forge links with new markets for their products. Annie’s role is catalytic in terms of social preparation or empowerment, and she has an exit plan in mind from the beginning of the program to make sure she doesn’t foster dependency. Currently, there are nine CEDAs working in 42 communities in the central Philippines.

It’s important to engage partners early in the process:

• firstly seeking approval and backing from the Mayor and the village leaders to ensure cooperation
• then a general assembly is held with representatives from all the households in the local area to exchange information, ask questions, and clarify roles and responsibilities
• community ownership and participation is started early at the planning phase: the locals craft the mission and vision statements for the group
• formalising roles and responsibilities in a MOU between the parties ensures expectations are clear from the outset

One of the main success factors for sustainable impact is strong partnership with local government that remains accountable to constituents after the exit phase. While TSKI provide all of the enterprise development training, they have also built up relationships for specialised technical training with contacts in the Department of Science and Technology, Bureau of Fishing and Aquatic Resources, University of the Philippines, South East Asian Fisheries Development Centre.

On the day I visited, the women were joyful and purposeful, and despite their surroundings had a real positiveness around them that was infectious. They had been learning cheers as part of their team building, and they couldn’t wait to show me. After a couple of false starts and lots of laughter, they completed the group chant in unison. I didn’t catch every word but they finished with, “Go, go, go, fight, fight, fight, go team fight” and I have no doubt that’s exactly what they’ll do.

Social Performance Management (SPM) is about ensuring that what we do – the products and services we offer to clients, and the way we offer them – is aligned with our mission to bring about transformation in the lives of our clients.

This means that SPM is, in large part, about measurement – collecting data on who we are serving and how their lives are changing, and analysing that data to assess how we are meeting our mission, and how we can perform better.

But SPM isn’t just about data. There is a vast store of knowledge in the microfinance sector about what works and what doesn’t when it comes to reaching and serving poor microfinance clients. That knowledge has been captured in a number of ‘best practice’ initiatives in the sector. In this SPM post we look at 3 key initiatives: The Smart Campaign, MicroFinance Transparency and the Social Performance Taskforce.

We strongly encourage all members to embrace these initiatives to improve practices and increase positive impact on our clients.

The Smart Campaign was formed to protect clients from harm, and ensure minimum standards from microfinance institutions. The Smart Campaign consists of 7 ‘Client Protection Principles’:  appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, privacy of client data and mechanisms for complaint resolution.

The Smart Campaign is asking microfinance institutions worldwide to endorse the Campaign and participate in a self‐assessment based on the Client Protection Principles. The Smart Campaign also recommends third-party assessment, and undergoing a certification process.

As well as protecting our clients, the Smart Campaign’s core principles help build stronger, long‐lasting relationships with clients, increasing client retention and reducing financial risk, all of which helps microfinance institutions differentiate themselves in the market. This is why members need to incorporate client protection into their operations.

The second initiative is MicroFinance Transparency which represents an industry movement toward responsible pricing practices.  This initiative promotes disclosure of interest rates on loan products to clients, and more widely online. Provision of transparent information to clients on other terms and conditions of products is also promoted. MFTransparency encourages organisations to endorse MFTransparency‘s mission through a written commitment.

The final initiative is the Social Performance Taskforce (SPTF).  MFIs are encouraged to register as a SPTF member, and in doing so show a commitment to improving the social outcomes of microfinance.  It is also a commitment to implement the Universal Standards for Social Performance Management, a set of widely recognised best practices developed – with help from Opportunity International – by the Social Performance Taskforce.  Members are also encouraged to have an external social rating or social audit completed of their organisation and to submit a social performance profile to the MIX.

Opportunity Network, through our membership of the Microfinance CEOs Working Group (MCWG) endorses these initiatives because we believe this is an effective way of tapping into this knowledge and improving services for clients.

Stay tuned for our next SPM blog where we will let you know more about how Opportunity is working towards meeting these initiatives.