Emerging trends in microfinance

Financial inclusion continues to be one of the key challenges in the microfinance sector today that would play an integral role in shaping its performance in the future. At the Mexico G20 summit last summer, 17 countries led by the Presidents of Chile, Indonesia, and Mexico publicly committed to advance financial inclusion. Although the term microfinance has been associated with the working methodologies of Muhammad Yunus of Grameen Bank and with organizations such as Opportunity International, Accion and ASA, its employment as a tool to fight against poverty has always been debated, since its usage still lacks a necessary component to creating successful entrepreneurship values.
The concentration of MFIs have been growing in the regions of Africa, Latin America and Asia over the years, and this trend is attributable to the increasing below-poverty line population in those regions alongside the proliferation of the urban poor. Primary sources of funds for early MFIs were generated from savings of clientele and venture capitalist funding. However, the scenario has been changing rapidly. Nowadays, Central Banks across the globe have been taking initiatives to allocate financial services to the poorest of the poor; this in turn, has enabled hundreds of MFIs around the globe to become profitable in the long run. Commercial banks have begun to acknowledge the profits they can achieve from the low end of the retail market and mobile phone operators continue to discover innovative methods of allowing the poor to access mobile-based banking services.
Over the past year, there have been various trends that have emerged in the microfinance sector as businesses and individuals continue to realize the benefits of microfinance. Some innovative trends that have been adopted by microfinance institutions as they try to make their solutions more sustainable are listed below-
   Specialized Microfinance Institutions: Microfinance institutions are focusing on customer specific demands, which vary across a wide range of customers and according to the location. Last year saw an increasing progress in translating the needs of the poor into improved context-specific product offerings and policy approaches. A set of providers across the globe accelerated experimentation with innovative products that better match people’s savings needs and behaviors. For example, Jipange KuSave in Kenya tested the provision of interest-free loans with a third of the amount held back as savings. Opportunity Bank in Malawi has a commitment savings product for farmers that allow them to lock away their post-harvest payouts and distribute it over the year to smooth cash flows.
   Diversification of Microfinance Institutions: Microfinance institutions believe in offering broad range of products and services under an umbrella of microfinance that previously started with small loans, now offers money transfer, insurance and savings services as well.
    New channels: Branchless banking and franchisee-based services have become extremely effective and prevalent these days to approach potential clients who live in rural areas. One of the top developments in Kenya’s branchless banking industry was the launching of M-Shwari in Kenya, which provided access to savings and loans to M-Pesa customers. Through a partnership between Vodafone, Safaricom and the Commercial Bank of Africa, M-Pesa customers can now apply to CBA for a mini-loan and sign up for an interest bearing savings account, directly from their phones. Since its launch in November, M-Shwari now has 1million users.
   Turnkey Solutions: Most of the microfinance institutions have started offering services to their clients that differ from traditional services like savings, insurance and loans. Some MFIs offer services such as supply chain management or assisting with marketing infrastructure to grow micro-businesses.

Lessons we can Learn from Nelson Mandela

Nelson Mandela was born 94 years ago today in the small village of Mvezo, South Africa. As we reflect on the world’s most renowned freedom fighter and peacemaker on his birthday, we should also reflect on the lessons that he has taught us.
Leadership

When confronted with the challenge of changing the status quo of an entire nation Nelson Mandela showed unshakable leadership. When the decision was made to move from peaceful demonstrations to armed confrontation he knew that he should be the one to lead the armed wing of the ANC, known as the Spear of the Nation (Umkhonto we Sizwe). It was only the trust of his people that allowed Mandela to successfully convince the ANC leadership that the move was right. By putting himself in a highly visible position he inspired his people, and altered the course of history.
Forgiveness

When Nelson Mandela won the presidential election in 1994 white people across the nation were concerned about the policies that he might enact. Instead of punishing his enemy, he made them his friend, and thus earned their respect and devotion. It is a special man that can forgive the people and regime that imprisoned him for the better part of three decades. If a man who lost so much can forgive, than the rest of the nation could certainly find a way to forgive, as well.
Accountability

Mandela’s actions involving the armed wing of the ANC ultimately led to his long imprisonment. During the Rivonia trial it was apparent that the Apartheid regime was going to try to have Mandela executed on the basis of terrorism charges. Facing death, Mandela did not refute what he was being condemned for, quite the contrary in fact. Nelson used the trial as a pulpit to talk about the Apartheid regime’s actions against his people. He took pride in his decision, and explained that Apartheid had pushed the ANC into a corner where peaceful demonstrators across the nation were coming under fire. He argued that the ANC could only fight successfully by employing the use of equal force. Mandela’s life was ultimately spared, and he was sentenced to life in prison on Robben Island.