Archive for: Savings

This morning in Nairobi, Safaricom and Equity Bank were joined by Kenyan President Mwai Kibaki as they announced a new product called M-Kesho, an interest-bearing savings account. Kenya’s 9.4 million M-PESA users will have access to mobile microsavings, microinsurance, and other banking services with Equity Bank,  a CGAP project partner.

If M-PESA has given millions of Kenyans a safe, cheap alternative to carrying cash, then today’s new service, M-Kesho, will give millions of Kenyans a safe, cheap alternative to keeping cash under the mattress. CGAP is supporting Equity Bank to learn more about how to deliver savings accounts to poor, unbanked people. The Technology Program at CGAP is co-funded by the Bill & Melinda Gates Foundation, CGAP, and the UK Department for International Development.

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Earlier this month, the Bill & Melinda Gates Foundation (full disclosure – the Foundation co-funds the CGAP Technology Program) announced a suite of grants to “give $38 million to help 18 micro-lenders explore ways to make savings accounts available to 11 million poor people across 12 countries in Africa, Asia and Latin America over the next five years.”  Joyce Lehman is a Program Officer at the Financial Services for the Poor unit at the Bill & Melinda Gates Foundation, and she explains in this interview how the Foundation is trying to foster microsavings with technological innovation.

We hear a lot about microcredit, but very little about microsavings. Why? How will this series of grants try to change that?
Savings is the most neglected financial service available to the poor, and despite what most people may think, the poor do need a safe place to save money. Most microfinance institutions  (MFIs) are non-governmental organizations (NGOs) with a mission to serve the poor, and typically don’t have either the organizational ability or the regulatory status to take deposits. Because the poor save in small amounts, transact frequently and maintain low balances, commercial banks cannot cover the cost of serving the poor through their traditional bank branches, which are expensive to build and maintain.

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A sound financial sector rests on timely and accurate information: microfinance institutions (MFIs) require information to monitor their business and make decisions, and supervisors rely on information to verify the soundness and stability of institutions and the market as a whole. At the foundation of this process lies the MFI’s “back office”, which can be broadly defined as the people, processes, and in some cases but not always, technology which help institutions manage their business.

A good back office system lies at the core of every successful financial institution. In many cases, however, MFIs struggle to generate accurate information and reports for themselves, funders, and supervisors.  This limits the soundness and efficiency of MFIs, reduces the government’s ability to supervise the market, and in turn, negatively impacts the expansion of access to financial services.

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We’ve been running an occasional podcast series with some of the voices we’re listening to this year as part of the CGAP/DFID Branchless Banking in 2020 scenarios work. The process is based on one driving question: How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020? You can participate directly through this blog or posting discussions through our Mobile Banking and Microfinance LinkedIn Group. –Jim

Michèle Scanlon is Founder & Principal Consultant at Green Giraffe, an emerging market telecom & payment consultancy based in South Africa providing strategic advisory and project management services. Michèle has been covering global telecoms emerging markets for 12 years with a special focus on prepaid mobile commercial strategies evolving into other prepaid stored value applications such as prepaid electricity and mobile financial services.

I spoke with her a few months ago – to put mobile banking in context, as well as understand some of the factors that will affect how little or much mobile banking will grow in Africa based on what she sees around the continent.

Download the Podcast – Michèle Scanlon

We’ve been running an occasional podcast series with some of the voices we’re listening to this year as part of the CGAP/DFID Branchless Banking in 2020 scenarios work. The process is based on one driving question: How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020? You can participate directly through this blog or posting discussions through our Mobile Banking and Microfinance LinkedIn Group. –Jim

Dave Parratt is with MTN Mobile Money, based in South Africa. I spoke with Dave earlier this year to hear his views on how a mobile network operator can make the switch from selling prepaid airtime to a banking relationship. As he explains, it’s easier said than done, though he’s bullish about the future.

Download the Podcast – Dave Parratt

What’s more convertible for currency – a mobile payment or a goat? At the moment, in India, the goat is the only option for many people. So said Vikram Akula, chairman of Indian microfinance powerhouse SKS at today’s plenary session on correspondent (branchless) banking, chaired by CGAP’s own Greg Chen at this (at times overwhelmingly large) microfinance jamboree in Delhi.

“We have financial apartheid in India. Yes, we have microcredit. But when it comes to cashless payments and a safe place to save, poor people are not just not included – they are financially excluded,” Akula said. “The business correspondent model, if  done correctly, can end financial apartheid.”

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