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The Urbanization of Financial Inclusion

Although it has been nearly 40 years since Muhammad Yunus first pioneered his microlending approach in the villages of Bangladesh, most audiences still only associate the word microfinance with operations in a rural context: images of rolling farmland, a woman tending to her flock of chickens, or laughing as she sits with the other members of her self-help group in a spacious, communal meeting point. But in India, urban populations are expected to grow from 26% to over 36-50% in the next 25 years. The RBI is making an effort to improve support for this swell of urban poor from a policy perspective, but in the meantime, how can financial inclusion programs adapt to this changing client base?

Understanding the Urban Client

Operating in an urban environment means meeting the needs of a multicultural audience. These clients are typically economically active, but often lack access to housing security, proper sanitation, and traditional family support networks, which leaves them vulnerable to income shocks and setbacks. Although they have increased access to the physical branches of formal financial institutions relative to their rural peers, financial products are rarely tailored to their specific needs. These clients also face a higher cost of living and prefer more familiar, informal products.

To meet the needs of savvy, urban clients, institutions like Swadhaar FinAccess (SFA) adapts the content, design and delivery mechanisms of their financial inclusion programs to better serve their populations.


SFA begins with a holistic approach. They must begin with the basics of budgeting and saving (like is done through the Financial Education Programme) and work outward to more specialized products like recurring deposits and insurance. They must also actively address misinformation, often deeply rooted in the community. By providing an integrated approach, SFA builds long-lasting relationships with their clients and works to provide product linkages that helps them achieve their financial goals.


Serving an urban client base also means tailoring delivery mechanisms to account for spatial and scheduling constraints inflicted by an urban environment. Narrow lanes, small buildings and few communal meeting areas limits group size and increases logistical barriers. This is mitigated by the use of client homes for the most well-established trainings.

While using clients’ homes has advantages in this setting, it also increases the importance of community outreach. The role of the Community Mobilizer is crucial at SFA, as she is responsible not only for enrollment, but securing a training location.

Another solution to physical constraints is the creation of a local, physical presence, such as SFA’s 10 FILCs (importance examined in more depth here).

From a scheduling perspective, the prevalence of fixed and variable income earners means SFA must adjust the timing and length of their programs. A fixed wage earner (a housemaid for example) prefers trainings after business hours, whereas a variable wage earner (a papadum manufacturer for example) prefers shorter trainings. For the papadum maker, one extra hour spent in trainings means one hour of wage lost.

The diversity of earners has caused Swadhaar to create different programs tailored to these groups. The Financial Education Programme for men, for example, occurs in the evenings after normal business hours. The development initiatives however, specialized sessions focusing on monsoon health or currency identification targeting entire families, take place over the weekend.

The attention paid to different wage earners has also seen SFA programs become leaner and more concise over the years to better respect the busy, hectic lifestyles of their clients. The Financial Education Programme, for example, has gone from eight sessions in its early phase, to only three sessions today.


Working in an urban environment means increased diversity in clients’ language, religion and culture. From a content design perspective, this has led SFA to use non-specific visual representations in the storyboards and role-plays. It also means offering lessons and materials in a variety of local languages, and creating materials that can withstand the travel and weather conditions faced by educators in the community. For example, it would be ideal to have short videos incorporated in the workshops, but transporting a projector from site to site is impractical.

An emphasis on scalability benefits and advanced technology is helping this issue, and SFA will likely use future grants to pilot the efficacy of tablet-based programming. Continue reading

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Financial inclusion: it’s what’s for lunch

Here’s some recent (and some other, less recent) financial inclusion media I’m consuming on my lunch break, far from Zambia (most of us Ambassadors have all left the field) but not from this important and interesting work.

  • Former Frontier Investment Group Ambassador Matt Hennessy blogs for the Grameen Foundation about where consumer data and financial identities intersect to create financial access.
  • Huzzah, more data! The World Bank’s 2012 Little Data Book on Financial Inclusion gives some boggling statistics. To illustrate, only 3% of the world’s population uses a mobile phone to receive money, compared to 66.7% of Kenyans. These are Brazil vs. Germany levels of disparity.
  • Via my professor Chris Blattman and @prepaid_africa, a quick view of mobile money’s density across the world.


  • Also via Chris Blattman, an interesting op-ed on unconditional cash transfers for the poor in the United States.
  • Zoona’s powerhouse Managing Director, Lelemba Phiri, speaking at the 2014 Mobile Money Expo on how to be deliberate about financial inclusion:

Bon appétit. Continue reading

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Silence that begs to be broken (and fixed)

We have been in Paraguay only a short time, relatively, so I can’t presume to know much about the country and its people, but we do have impressions that have raised questions. Since the beginning of our visit, the vast differences in wealth have been obvious. Many homes in Asuncion stand safely behind walled enclosures. And many of these enclosures are topped with broken glass, razor wire, and electric fences. In addition, some of these enclosed homes even take up an entire block. While one might imagine (and only imagine) what lies behind these walls, the streets right outside are in disrepair, to put it mildly. The homes without walls down by the river are wooden shacks separated by muddy paths and a portable toilet every so often. We passed by a water main leak that created a large pond-size puddle at the bottom of the hill that took five to six days to be repaired. The water flowed for that long! In front of every walled home, care is taken to sweep up, daily it seems, the leaves and any trash that might have accumulated, but the empty lot right next door remains full of trash and debris. The parks which might be lovely if tended to, are not. One park had a skate board ramp which hasn’t been in working order for what must have been a long time, it is mostly in shreds.

So, what is the legacy of a country that has been ruled by a ruthless dictator for over 30 years? What happens to the voice of the people? During that time, questioning the regime led to imprisonment, torture, and even death in some cases, making it easy to surmise why one wouldn’t been keen to complain when things weren’t working. How long does it take to undo the crime of silencing the people? We had dinner with a Paraguayan family and discussed briefly some of the infrastructure challenges here and it was said, “well, at least people are talking about it now.” We asked, “is that new?” and, “oh, yes” was the answer. So, if a kind of silence pervades the culture of not complaining and demanding a working infrastructure, how does that seep into every aspect of life? How free are people to voice their ideas, differences of opinion, challenge authority and so on. A city, and perhaps the country, that reveals such vast needs needs all the creativity and innovation of its people. So how to liberate that…to give people back their voice in the home, at work and in the streets? Fear may be manifested in the walls around the homes as it is in the wall of silence of the people. Perhaps more talking about that might help. Nothing can stop a people once they begin. Continue reading

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A glimpse inside the “Joint Liability Group” lending process

Sangita, Sarita, Rekha, Kavita and Reshma arranged themselves in an orderly row against the flamingo pink-colored wall in the narrow, two floor home. They listened intently as the Swadhaar loan officer explained, in detail, the lending and payment collection process they were about to embark upon.

As he slowly reviewed the material before the group, he emphasized the power of saving daily and the dangers of overindebtedness. The women periodically asked questions, and laughed at each other’s light hearted responses while Reshma’s young son cooed happily in her lap. Part way through the session he got restless, and they called for another young boy who picked him up, propped him on his hip and went hunting for chocolate down the block. (He returned about 20 minutes later with a chocolaty grin.)

photo 1 (14)

Of the group of five women, two were new to Swadhaar and three were on their second loan cycle. They were employed as house maids, tiffin cooks and papadum manufacturers and together, they had formed a joint liability group (JLG). Through the JLG, the women would guarantee each other’s loans against default.

As per standard Swadhaaar procedure for JLG loans, these women had already completed an appraisal meeting where they reviewed basic loan information (presented in a visual fashion), applications and KYC (Know your Customer) details. Next, they cleared a group familiarity crosscheck, designed by Swadhaar to ensure the group members were truly acquainted with one another. Finally, they passed a home verification visit, done on an individual basis to further confirm application details.

Now, going through their second group meeting, they were one step closer to receiving their loan. If all goes well, they will soon be invited to the branch office for financial education training and disbursement.

During the second half of the meeting, I had an opportunity to chat with the women while the loan officer finalized the pre-printed paperwork with each borrower and any remaining KYC documents.

I asked them what they liked about Swadhaar and one woman responded, “I feel easier with Swadhaar.”

photo 2 (11)

Another woman remarked on Swadhaar’s low interest rate relative to other informal sources she had borrowed from in the past.

Swadhaar, bound by the RBI microlending guidelines, charges 26% per annum (on a declining principal balance). Though this might seem unreasonably high for readers in the US accustomed to rates sub 5%, mortgage rates in India sit comfortably above 10%, not to mention the increased operational costs and collateralization concerns associated with the microfinance industry and its clients.

While her comment does not surprise me, considering the rate charged by informal lenders routinely falls over 100%, the interest rate debate rages strongly in the international community following events like the Andhra Pradesh Crisis of 2010 (which as my fellow Ambassador recounts here, strongly shapes the domestic sentiment towards the industry). Continue reading


At the heart of microfinance

“Pray tonight that there will be no rain tomorrow,” I am told when I am informed that the next morning, Yogesh, the branch manager of one of Swadhaar’s northern Mumbai branches, will pick me up and take me to visit some clients in the field. My prayers were heard – sort of. We set off with some rain showers but are spared a real monsoon downpour (by now, I can tell the difference).

While travelling to the branch office, I learn more from Yogesh about this branch: it is in Borivali, a northern suburb of Mumbai; and, he and his team of seven loan officers currently serve about 6,000 clients. Yogesh has been with Swadhaar for eight months as a branch manager. Before that, he used to work as a loan officer for a different microfinance organization offering individual loans. While he is telling me about his work as a loan officer I can feel his deep dedication to his job and especially to his clients.

I  feel even more of the same when we meet Vishant, the loan officer whose clients we are going to see that day. “I love what I am doing – it is social work,” he tells me enthusiastically while we are rushing through the streets. Finally, after finding our way through the narrow lanes of a slum area, we stop at one of the humble homes.

Inside the single room home, there is a group of six women already waiting. The women have formed a group to apply together for a Swadhaar group loan. This loan is an individual loan with joint liability among group members.

The meeting today is what is know as “group formation,” where the group is meeting for the second time with their loan officer and, today, will actually sign the loan agreement. In the previous appraisal meeting, Vishant has explained everything about the loan and the linked insurance, has checked the required papers to prove the women’s ID and has asked the women several questions about each other to verify how well they actually know each other. He has documented all these information and has prepared a loan application paperwork for each woman in the group. Thus, today, after repeating the most important details about loan and insurance once more and answering a few more general questions, he walks every woman in the group through the prepared paperwork and makes sure each woman understands and agrees with what she is signing.

This process gives me the opportunity to learn a bit more about the women’s plans. There is Yogita, the designated group leader. She is one of the youngest but the most experienced borrower in the group, as this will be her second loan with Swadhaar. She has a day job as a worker and with her first loan she started a successful sewing business in the evening. With her new business, she already makes an additional 200-300 Rps (about $ 3-4) per day and, now, wants to buy a better stitching machine, so she can actually start producing more elaborate saris for which she can charge higher prices. Her pride over her achievements and her confidence clearly stand out from the rest of the group. As for the other women, this will be their first loan to either expand an already existing or to start a new business.  Aarti would like to step into Yogita’s shoes and intends to buy a sewing machine; Kavita and Komal already run an imitation jewelry business and plan to expand it; Lata also wants to expand her existing ‘tiffin lunch’ business, while Rupali plans to start a candle making business.

After all the paper work has been signed, the busy microentrepreneurs have to rush back to their businesses and I hardly have time to wish them good luck and thank them for letting me experience a bit the soul of microfinance. Continue reading


How the Internet saved my Ambassadorship

The hope I had to go to Dar Es Salaam while writing my fist post is now all faded. Long story cut short: I’ll have to wait until next time to visit beautiful Tanzania, as my proud-to-be-Tanzanian friends call it. However, readers, please thank God for the Internet. That amazing invention allows you to be in a place without actually being there. I know this doesn’t make much sense, but  bear with me for a second.

First, let’s talk about the project I was supposed to be working on with my fellow Accion Ambassador Sifael Ndandelathe Smart Campaign Certification project. The scope of this project makes it essential for a person to be on site to be able to assess the compliance of a microfinance institution with the seven client protection principles. Indeed, the chore of the Smart Campaign Project is to really make sure that microfinance institutions keep their clients’ needs at the center of their activities. You are therefore assessing the interactions between one institution and its clients: from the policies that direct that relationship to the practice of it. This calls for an immersion into the relevant environment in order not to miss out on a lot of acting forces.

However, what if you are not able to make it to that relevant environment for some reasons? (In my case the reason is quite simple: being a Senegalese trying to go to Tanzania ABSOLUTELY requires you to have a referred visa which means that your visa application can only be processed in Tanzania and that can take months).  Well, you have your savior THE INTERNET to allow you to do at least some of the job.

  • Skype: As an incomplete substitute to a face to face conversation, you have this amazing software application that, besides hearing a voice, allows you to see the facial expression, hand gestures with which a word was said to give you a fuller understanding of a context.
  •  Viber and whatsapp:  All you need for these is an internet connection and you are free to speak with or text your interlocutor as much as you want.  I believe these are perfect ways to coordinate meetings: they are fast plus they are excellent informers (when your message is received and seen, you know it is received AND it is seen)
  • VoIP phones: These are my favorites so far. While the two above requires both you and your interlocutor to have an internet connection to be able to speak for free, with VoIP phones not only do you speak for free (well you just need to pay your internet bills), but the person you are talking to doesn’t need to have an internet connection. For the conservative ones (like me), VoIP phones are just like normal phones, even better – and I have access to one in the Accion Ghana Hub office!

These three have been my best buddies, allowing me to speak with my project partner as well as the relevant people to assist on the Client Protection Principles self-assessment of one of our partners.  They are not without their challenges (number one being access to good internet connection in the first place) but they do offer a new dimension to international collaborations. Now, human beings, let us further our hologram technologies to be able to teleport ourselves and then we can fully enjoy the benefits of international collaboration without major challenges! (Always wishful thinking!)  Continue reading

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It’s scalable! It’s revenue generating! . . . So is it a social enterprise?

Running the social entrepreneurship check on Zoona

Try this: Google the words “Zoona” and “social enterprise” together. What do you get? Some 305,000 results. From the United Nations Development Programme to the Skoll Centre for Social Entrepreneurship, it seems everyone is raring to apply the industry buzzword to Zoona.

zoona screengrab

Yet, after 10 weeks of interning, I can tell you the number of times I’ve heard my Zambian colleagues call Zoona a social enterprise: zero.

If Zoona looks, feels, and smells like a social enterprise, why doesn’t it just claim the title and call it a day? I decided to investigate, and what I learned was both surprising and intellectually refreshing.

In my social entrepreneurship course, my professor Dr. Sara Minard defined social enterprise as “a hybrid model for social value creation.” It is “created to achieve a stated vision and mission aiming to solve a state or market failure, where success is measured by both financial sustainability and social impact.”

From this definition, Zoona does fit the milieu of social entrepreneurship well.

  • It serves a double bottom line: Social enterprises thrive on “blended value”, the ability to create both financial and social value. On the financial side, Zoona generates a steady revenue stream through fees for service. Through those same earnings, Zoona invests in its agents to help their businesses and SMEs grow.
  • It’s scalable: Zoona employs a sustainable business model, akin to franchising, to quickly grow its strategic footprint of agents. A new initiative called “Zoona in a Box” further streamlines the startup process.
  • It’s local: Often, social enterprises pride themselves on being able to empathize with their customers, providing human-centered solutions that fit the target population. Portlandia and development wonks can rest knowing Zoona was started by two Zambian brothers, Brad and Brett Magrath, who recognized the demand for financial services in a country where an estimated 86% of the population is unbanked (source).
  • It has learned from failure: Like any hardy business, Zoona has gone through its share of re-prototyping to improve and refine its value proposition. (At one point, a stalwart colleague tells me, the company had only 250 kwacha in the coffers—less than $50 USD.) After some ups and downs, Zoona raised the first international investment in a Zambian company in 2012: over $3 million USD in Series A funding from Accion’s Frontier Investment Group, along with Omidyar Network and Sarona Asset Management.

I spoke with Lelemba Phiri, Managing Director for Zoona Zambia, and Keith Davies, Head of Data Analytics, to find out Zoona’s perspective. Both agreed that Zoona is first and foremost a business. And while both acknowledge that Zoona could be considered a social enterprise, neither Phiri and Davies are completely comfortable with the buzzword’s fuzziness.

Continue reading


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