Global financial inclusion is a daunting issue. Around the world, billions of people lack access to formal financial services – and their lives are much harder because of it.
People outside formal financial systems use cash, which can be stolen or lost, to make every transaction. They lack a safe place to save. They have no credit history and must often turn to predatory loan sharks to make ends meet. They almost never have insurance, living one illness, injury, or natural disaster away from ruin.
For most of us, that sort of life would be unimaginable. But billions of the world’s most vulnerable people struggle in those very conditions.
Despite the scope of the problem, we are making demonstrable progress. In April, the World Bank announced that from 2011 to 2014, the number of financially excluded adults – those without access to a bank account – dropped from 2.5 billion to 2 billion. In fact, taking total population growth into account, 700 million more people gained access to an account in that time.
That is encouraging progress, but it’s only an important first step. Access to a bank account is not the same thing as financial inclusion – worldwide account usage remains stagnant, and there is a vast array of additional financial services that those very people lack and deserve. We still have a great deal of work to do refining that access into something more complex, productive, and impactful: full financial inclusion.
The work that we are undertaking today will help us reach those remaining individuals. For instance, we’re building the next generation of top-tier microfinance institutions in Latin America, Africa, Asia, and the United States. Our recent investment in Myanmar’s Dawn Microfinance will extend financial services to one of the final frontiers of development.
Likewise, our venture capital investments assist early- and seed-stage startup businesses in bringing disruptive new financial services and products to the base of the pyramid. In the following pages, we explore how recent investments we’ve made through Frontier Investments Group and Venture Lab help the poor save, build credit, and plan for the future.
As increasing numbers of people gain access to financial services, we’re also working to ensure that the industry itself values and respects those clients. Industry-wide challenges require industry-wide solutions, which is why Accion’s Center for Financial Inclusion continues to convene and coordinate with a broad range of stakeholders on how to foster global financial inclusion.
The Center’s progress is significant: microfinance institutions that have achieved Smart Campaign certification, which recognizes adherence to consumer-protection principles including transparency, pricing, and fair treatment, now serve more than 20 million clients worldwide and continues to grow.
The Center is also expanding promotion of sound governance in sub-Saharan Africa, where our new Africa Board Fellowship program will train board members and CEOs in risk management, navigating competitive markets, and advancing social performance. Launched in partnership with the MasterCard Foundation, the program will promote the growth and sustainability of microfinance institutions in a region with more than 6.6 million microfinance clients.
Addressing an issue as complex and difficult as financial inclusion requires sound leadership and organization – traits that Charity Navigator recognized when, in 2014, it awarded Accion its four-star ranking for fiscal management, accountability, and transparency.
As we consider our next steps, we draw inspiration from the people we serve – the individuals who overcome monumental challenges every day with courage, humor, and dignity. It is their struggles and their achievements that motivate us to create a financially inclusive world.
Thank you for your continued support.
President and CEO
DIANA L. TAYLOR
Microfinance institutions Accion has helped build, in 32 countries on four continents, since 1961
Active savers in 2014, with $4.9 billion in savings deposits
Clients served by Smart Campaign-certified financial institutions
Active borrowers in 2014, impacting the lives of 26.5 million family members and employees
Our work in Asia has expanded significantly over the last year. We formally launched operations in Myanmar through our investment in Dawn Microfinance. Myanmar is among the poorest countries in Asia, with almost 90 percent of the population lacking access to formal financial services. Our goal is to transform Dawn into a top-tier, scalable, sustainable microfinance institution and establish it as a role model for Myanmar’s nascent microfinance industry.
We continue to extend our reach in China with our partner Grassland, including expansion in Wanzhou and Chifeng, with further expansion planned for Jishou in Hunan Province and for other provinces.
Additionally, Accion is focused on developing broader training and capacity building solutions for the industry. The China Training Program, which we developed in close collaboration with a local partner, the China Association of Microfinance, will build best-practice microfinance institutions in China, positioning them for growth through the delivery of high-quality classroom trainings, webinars, online communities, and exposure visits.
In the Philippines, our partner, Bridge, continues to build a strong network of MFIs and provincial banks to reach more underserved clients throughout the country. Following a 2014 investment in First Valley Bank, Bridge has also started supporting Sugbuanon Rural Bank in Cebu, and is finalizing a number of other important partnerships.
The work of our Indian microfinance partners Swadhaar FinServe and Saija Finance has reached new heights, with a combined total outreach of more than 257,000 clients. Swadhaar is now a banking correspondent for Ratnakar Bank Limited and is planning to launch a micro-, small-, and medium-size enterprise division. Swadhaar’s client outreach increased by 45 percent in 2014. Saija Finance is also growing significantly, and closed 2014 with more than 90,000 active clients served by 26 branches in Bihar and Jharkhand.
Meanwhile, our pioneering financial education and business skills training work in India continues to expand. Since 2008, our courses have been delivered in five Indian states and in six languages to more than 175,000 clients, and we have recently established new partnerships to further client education in Nepal.
In Latin America, we invested in Credinka, a microfinance institution focused on providing savings accounts and working capital loans to underserved rural communities in southern Peru. In Colombia, our longtime partner Finamérica has completed its transformation into a commercial bank, which will allow it, among other things, to reach more clients in need of services.
Investment and expansion likewise continues in Africa, where we are working to launch operations in Mozambique. Our partner in Nigeria, Accion Microfinance Bank (AMfB), recently received Nigerian Central Bank approval to operate nationally – formerly, regulations prevented it from operating beyond the Lagos area – which promises significant expansion and growth opportunities.
Our Training and Capacity Building unit has developed an interactive training program to help MFIs across the globe effectively manage key credit and operational risks and build a culture of risk management into their institutions. The classroom-based program also includes four risk-management tool guides and two online modules, which are open and free for the industry. We are also working with the Consulting Group to Assist the Poor (CGAP) to distribute these tools broadly.
Additionally, our Channels and Technology team has been supporting our partners through the smart use of digital technology and distribution channels. Compelling new C&T projects are currently under way in Ecuador, the Dominican Republic, India, Myanmar, Nigeria, Peru, Tanzania, and beyond.
As Accion’s Frontier Investments Group moves toward close as an independent, third-party fund – the first global financial technology fund focused on the base of the pyramid – we continue to extend new or follow-on capital and technical support to our portfolio companies, including:
Azimo, an online remittances company offering low-cost, fast, and secure payments from any device, 24/7, to recipients in more than 190 countries through a variety of methods, including agents, bank accounts, m-wallets, and more.
Eseye, a machine-to-machine technology and service provider that uses cellular technology to connect devices to the Internet so that they can be monitored and controlled remotely.
Since its inception in 2012, Accion’s Venture Lab has invested in 20 innovative startups, providing them not only with seed funding but also technical support and strategic guidance. Some of Venture Lab’s most recent partnerships include:
Artoo, a company whose technology improves the onboarding and assessment process for borrowers at microfinance and other lending institutions in India. Field staff are equipped with Internet-enabled tablets and smartphones that integrate seamlessly with the lender’s existing technology, delivering rapid biometric verification and paperless processing in the field.
AYE Finance, an innovative lender to micro- and small businesses in India. AYE serves the “missing middle” of small-scale manufacturing and service businesses that cannot access loans for business expansion or working capital from mainstream institutions.
Community Investments Management, an investment advisor providing debt financing for the small and medium enterprise (SME) segment of the U.S. market. Through its investment funds, CIM finances SME marketplace loan originators and servicing agents and purchases loans it believes will achieve sound returns for investors.
First Access, a Tanzanian startup that delivers a credit-scoring solution to MFIs and other emerging-market lenders by assessing applicants’ creditworthiness with data from their prepaid mobile phone histories.
GO Finance, a Tanzanian-based alternative SME lender providing working-capital finance to small businesses in local product distribution value chains. The company leverages digital data and mobile money channels to more effectively underwrite and manage loans for the highly underserved SME market in East Africa.
Intoo, an online credit marketplace for SMEs in Brazil. Using a proprietary platform, Intoo pools data from diverse sources to build credit profiles for businesses that typically do not have access to financing, then connects them to a wide network of banks and financial institutions.
Konfio, an online lending platform that uses innovative credit algorithms and alternative data analysis to help micro-businesses in Mexico with no access to credit obtain affordable working-capital loans.
LendStreet, a U.S.-based lending platform that allows consumers to restructure and refinance their distressed debt. By partnering with banks, collection companies, debt settlement agencies, and others, LendStreet acquires and onboards borrowers who are currently in default, offering them new loans with accredited and institutional investors.
Umati Capital, a provider of invoice discounting aimed at addressing working capital shortages for SMEs in Kenya. Umati partners with upstream value-chain processors and buyers to provide up-front cash quickly and efficiently to producers who are typically unable to secure financing from banks.
The Center for Financial Inclusion at Accion continues to work closely with diverse stakeholders – banks, insurance companies, academics, credit-card companies, retailers, regulators, mobile-network operators, and more – to develop the most effective ways of fostering global financial inclusion.
The Smart Campaign, a signature initiative of the Center, continues to illuminate and advance one of the industry’s most pressing issues: client protection. To date, nearly 40 microfinance institutions have been certified by independent assessors as adhering to the Campaign’s Client Protection Principles, which cover such critical areas as transparency, fair and respectful treatment, responsible pricing, and prevention of over-indebtedness.
Those institutions include some of the world’s largest and best-known MFIs, and they collectively serve more than 20 million clients. Many more MFIs are currently being assessed. Since the Campaign was launched in 2009, it has been endorsed by more than 4,390 individuals and institutions, including over 1,500 MFIs.
As the Campaign advances, we continue to assess and improve its approach. We are expanding into the broader arena of financial inclusion and have already begun to research issues in digital financial services and microinsurance. We are streamlining the certification process and extending certification validity. We are increasing our focus on measurement and information systems through standards-setting and quantitatively researching client perspectives on their treatment by institutions. We are also working to build greater awareness of, and commitment to, the Campaign, in order to accelerate its adoption around the world.
We have recently launched the Africa Board Fellowship, an expansive, new five-year program that seeks to provide best-practice approaches in governance and risk-management to board members and CEOs of financial institutions in sub-Saharan Africa. Peer learning seminars, virtual collaboration, and program advising comprise the program’s cornerstones. The first class has just been inaugurated in Cape Town, South Africa.
The Center for Financial Inclusion’s Financial Inclusion 2020 (FI2020) is an audacious and extensive initiative that mobilizes a wide variety of leaders to bring our common vision of a financially inclusive world into being.
Among its recent activities, the FI2020 team released Aging and Financial Inclusion: An Opportunity, a report that examines the unmet financial needs of the growing global aging population. Produced in partnership with HelpAge International, the report encourages policymakers and providers to consider older people as an increasingly important market segment whose needs can be quite different from those of younger adults, and to seek solutions to meet their financial needs.
Meanwhile, our work with another critically excluded population – persons with disabilities – served as a model for the United Nations Development Programme’s recent policy paper, “Financial Inclusion of Excluded Segments.”
The FI2020 team also works closely with The Economist’s Intelligence Unit on the annual research and release of the Global Microscope, which rates the regulatory and business environments of 55 countries to see how those countries address the financial needs of the poor.
The Center for Financial Inclusion also serves as the secretariat for the Microfinance CEO Working Group, which convenes 10 of the world’s leading industry organizations to work collaboratively on advancing responsible microfinance. Most recently, the MCWG, working with the law firm DLA Piper/New Horizons, released Client Protection Principles: Model Law and Commentary for Financial Consumer Protection. Developed as a resource for regulators, policy makers, microfinance associations, and financial service providers to advance consumer protection based on the Smart Campaign’s Client Protection Principles, the “model law” includes model legislative provisions, as well as commentary and guidance on international best practices and options for implementation.
Following a 1991 pilot program in Brooklyn, by 1994 we had carried the Accion flag to several cities across the country to strengthen local communities and fuel the dreams of entrepreneurs. Over the last 20 years, Accion has supported tens of thousands of small-business owners like Eleazar Delgado to create or expand healthy enterprises.
Eleazar is the owner of Café Jumping Bean in Chicago, Illinois. In 1994, he introduced bagels, cream cheese, and cappuccinos to a community far more familiar with tacos, Mexican bread, and instant coffee. One year later, a $5,000 Accion loan gave his young business a boost. Over time, the business grew, thanks to a second Accion loan, a community of support, and Eleazar’s vision, all of which have made his coffee and sandwiches a mainstay of the Pilsen neighborhood.
“People always ask me how is it that I opened this place, how I survived, everything I’ve done,” Eleazar says. “It was a lot of hard work and you know what? It still is, every day giving everything I’ve got. Things have changed now. I have a family, I’ve got a six-year-old, but I’m still here every day. I still give this place 100 percent.”
With large banks failing to meet the demand for small business capital, many entrepreneurs applied for loans in 2014 through a new, rapidly growing online lending marketplace. Understanding that the Internet provides business owners with a way to research their options and access capital in many product forms, the U.S. Network launched an online presence. Through this effort, the Network is raising awareness of the work of Accion among women, minority, and immigrant entrepreneurs. The online work in turn creates great opportunities to provide a better customer experience as well as achieve efficiencies. In 2014, the platform processed more than 1,000 applications and disbursed more than $1 million to U.S. small businesses. To expand our support online beyond capital, we created a library of online education resources, including articles and videos to help entrepreneurs run and better manage their businesses.
When a nationwide study in 2014 revealed persistent lending disparities to entrepreneurs across lines of race, gender, and firm size, the fight to reduce these inequities stood at the heart of Accion’s work and our corporate partnerships. With the help of key partners, the U.S. Network developed new partnerships with Women’s Business Centers nationwide to address the gender lending gap, mobilized resources to help small food and beverage businesses thrive, and increased lending to community-oriented businesses committed to creating local jobs, hiring and sourcing local goods, and giving back to their communities.
Four member Accion organizations headquartered in cities throughout the United States form the largest nonprofit micro- and small business lender in the country. Since 1991, members of the U.S. Network have provided more than 54,000 loans totaling over $454 million. In 2014 alone, our members lent more than $47 million to businesses nationwide. Through our targeted lending and financial education programs, we foster job creation, increases in family income, and economic vibrancy for small-business owners and their communities nationwide.
Your support provides the funding that allows us to reach people in unserved and underserved regions around the globe.
Your contributions fund the research and development of product and process innovations that help bring needed financial tools to millions of hardworking individuals.
Your charitable gifts provide financial education and business training to clients so they can improve their businesses and lives.
Ultimately, your support means that millions of people around the world can be empowered to improve the lives of their family members, employees, and neighbors in critical ways – with better nutrition, regular schooling, or simply a roof that doesn’t leak.
For all this, we thank you, and we ask you to continue to help us to build a financially inclusive world with access to economic opportunity for all.
Your contributions fund the research and development of product and process innovations that help bring needed financial tools to millions of hardworking individuals.
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