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Innovations in savings and credit groups: evidence from Kenya
01.03.2007
This article reports from a church-based savings and credit group's project called Tuinuane, in Kenya. The project builds upon the Worth programme of PACT, but has added some interesting and innovative features allowing country-wide outreach. First, it utilizes a church institution; second, it avoids the use of field officers and instead group leaders are screened and trained through a detailed implementation plan; and third, it uses mobile phones in planning, monitoring and follow-up efforts. The attachment to the church and access to mobile phones makes plausible, low-cost, long-term contact with mature groups. -
Barriers to microcredit for disabled persons: Evidence from economically active persons in Uganda
01.03.2012
Prior research has identified five barriers hindering disabled persons’ access to microcredit: exclusion by staff; exclusion by non-disabled members of credit groups; self-exclusion; exclusion by credit design; and exclusion by the disability itself. This study applies survey data to examine which barriers disabled persons themselves consider to be the most important in Uganda. The survey covers disabled persons with some kind of existing economic activity and is thus not representative of all disabled persons in the country. The data show that exclusion by credit design is the most relevant obstacle from the perspective of the disabled person. The study suggests that microfinance institutions (MFIs) should revise their credit products and make them more disability-friendly to reach out to more disabled customers. These disability-friendly products may also help the MFI to reach other poor and discriminated groups. -
Crossfire: ‘Should financial inclusion be part of the next set of MDGs?’
01.12.2013
In this issue's Crossfire, Hugh Sinclair and Matthew Gamser discuss whether financial inclusion should be part of the next set of Millennium Development Goals. -
Market opportunities for microfinance institutions
01.12.2013
Taking a business scholar's standpoint I assess the future of the microfinance industry. The basic question I try to answer is why the microfinance market continues to grow while public support for the industry is shrinking. I identify six underlying forces – demographic transition, reduced poverty, urbanization, economic growth, technological innovations, and shifts in microfinance paradigms – that drive the growth of the microfinance industry. Furthermore, I identify six non-traditional microfinance markets that may present interesting opportunities in the years to come: insurance, housing, small and medium enterprise lending, savings, micropensions, and microfinance in high-income countries. I conclude the article highlighting that policymakers, regulators, and international support organizations may encourage or hamper the future of microfinance as outlined in this article. -
The uptake of mobile financial services in the Middle East and North Africa region
01.12.2013
Recent research shows that business models based on prepaid electronic payments systems and agent networks can help address the problem of lack of access to financial services observed in the vast majority of developing countries. In this 2012 study we reviewed the development of mobile financial services (MFS) in Morocco, Algeria, Tunisia, Egypt, Israel, West Bank and Gaza, Jordan, and Lebanon, as a way to solve the supply-related problems that explain the low access to finance rates these countries suffer. We concluded that adapting the regulatory framework is the most important challenge for the uptake of MFS initiatives. We also concluded that MFS business models can extend access to finance to the unbanked by reducing transaction costs through the use of prepaid platforms, agent networks, alternative risk management policies, optimization of remittances, and new or reformed retail payments architectures. Finally, we also observed that MFS initiatives could greatly favour the development of the microfinance sector. -
Microinsurance demand: determinants and strategies
01.12.2013
Vulnerability to risk, a constant factor in the lives of the poor, is a cause of persistent poverty. Microinsurance offers one approach to mitigating risk, yet demand is disappointingly low. This paper aims to improve the understanding of factors that determine the demand for microinsurance products. Based on a review of more than 30 studies, it blends academic findings with practical examples and presents the most important determinants of demand, including understanding of insurance, client value, liquidity constraints, trust, behavioural factors, and use of other risk coping mechanisms. The paper also presents solutions that can be incorporated into an organization's marketing strategy. -
Towards reasonably priced microcredit: analysing Egyptian NGO-MFIs' cost structure and financial performance
01.12.2013
Interest rates have always been a much debated topic in microfinance, as the prices paid by low-income clients tend to be higher than conventional banks' rates. In Egypt, microcredit rates are increasingly being criticized and viewed as unreasonably high. The study analyses the effective interest rates charged by Egyptian NGO-MFIs compared with commercial banks' rates, and using time series cross-sectional regression models, the study examines the main determinants affecting NGO-MFIs’ portfolio yield and operating expenses in order to identify prospects for providing reasonably priced credit for low-income Egyptians. Findings suggest that, as the average portfolio yield for NGO-MFIs in Egypt has exceeded the global average portfolio yield, there is a clear potential for providing microcredit at lower prices, and much can still be done towards more operational efficiency. -
Geography and microenterprises: clustering, networking, and knowledge spillovers
01.12.2013
Although an examination of the determinants of microenterprise performance has been a frequent area of research in the literature, data shortcomings have prevented a careful study of the effects of firm clustering and networking. Using GPS technology to pinpoint firms' locations, we examine the potential agglomeration benefits not only from the clustering of small businesses, but also the potential benefits of knowledge spillovers benefiting entrepreneurs. We find that for some microenterprises clustering is beneficial in terms of employment growth while for others clustering raises total revenue per worker. Although the size of the owner's informal business network does not appear to improve growth, we find a positive effect on revenue per worker for commercial firms. There is evidence that having lived in a larger city in the past enhances performance for some firms.