A FINANCIAL INCLUSION

SOLUTION FOR NICARAGUA

Presented by

A FINANCIAL INCLUSION

SOLUTION FOR NICARAGUA

Presented by

Humanos marries the mind of business with the heart of humanity.

T he Humanos Institute is a not-for-profit start-up dedicated to marrying

the mind of business with the heart of humanity to help transform the

lives of people living in poor communities. We bring multi-disciplinary

teams from industry, academia, government, and not-for-profit sectors to co-

create innovative, scalable and sustainable solutions to the most pressing prob-

lems of our times.

Our vision is to

reimagine the

world and how

we live our

lives in it;

helping those

in need and

inspiring

people to

reconnect with

our human

values.

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a human-centred approach to problem solving that was born in the innovative

culture of Silicon Valley and is being used by long-time innovators like Apple

and disruptive start-ups such as Air BnB. Design Thinking is grounded in the

premise that we begin with a deep understanding of the needs of the people of

whom we aim to help, and engage with them as equal partners to develop solu-

tions. In this approach, we follow an empathetic loop of asking questions, lis-

tening, learning, testing ideas out, getting feedback, iterating, and repeating. In

the Design Thinking process, the people and their context is of paramount im-

portance – we don’t show up with preconceived solutions, but instead focus on

finding out what truly matters at that time and in that place for the community

with whom we’re working.

At Humanos, we have just started to put into motion our vision to reimagine

the world and how we live our lives in it. We want to encourage people to re-

connect with our human values and instead of focusing on what makes us dif-

ferent focus on our shared humanity. We want to inspire people to redefine

what it means to live a good life, where we are able to see beyond our own

needs and desires, and take action to help improve the lives of others.

We are experts in the Design Thinking

methodology,

OUR PARTNER

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OUR GOAL

To immerse ourselves in the

community, to understand their hopes

and dreams and fears, and to co-

create a solution with them that

ushers them into a new era of

financial inclusion.

OUR CHALLENGE

How might we develop a financial

inclusion program that benefits the

community as a whole?

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Design thinking is a human-centered

approach that starts with the people you’re

designing for and ends with new solutions

that are tailor-made to suit their needs. It

combines human desirability, technological

feasibility, and business viability to produce

break-through innovation.

WHAT IS DESIGN THINKING?

w e a r e h e r e

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UNDERSTANDING

BRAINSTORMING

R E F I N I N G

Empathize | Def ine

Ideate | Prototype

Test | Prototype | Repeat

OUR HOST

750

rural men,

women, and

children

El Naranjo

Jinotega,

Northern

Nicaragua

Region

of dry

mountainous

land

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wood, stone,

bamboo, and

dirt homes

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OUR FIELD WORK

1 week

32 interviews

110 hours of

design thinking

“Using design thinking as a template

to tackle poverty by creating new

innovative solutions and gathering

insights from the villages truly gives

you a deeper understanding of the

problem and thus being able to

create a more

meaningful

solution.”

MONICA

VOHRA

It all starts with a distinctly human

capability: empathy. The ability to understand

the people you are trying to help, to be able to feel

their feelings, and to be able to see the world

through their eyes. That is the cornerstone of

Design Thinking and the best way, arguably the

only effective way, to understand the problem

you are trying to solve.

So, as the initial step in our journey, we visited 32

families in their homes. We talked and, more

importantly, we listened. This opened a window

that allowed us to peek into the minds and lives

of the locals, bringing us one step closer to a true

understanding of how the locals see life.

Working in the context of microfinance, we

focused on the behaviours and attitudes

concerning financial activities at home, at work,

and with financial institutions. We explored what

the financial culture in El Naranjo was like, why

people used or did not use financial services, and

how it affected their ability to prosper.

We found seven key barriers to saving and

borrowing externally, but the over-arching and

underlying barrier was trust. Trust would be the

key ingredient to break down any of the barriers. FEAR

TRUST ACCESS KNOWLEDGE

INABILITY

TO SAVE

FINANCIAL

CULTURE

SOCIAL

STATUS FEAR

Trust a firm belief in the reliability, truth, ability, or strength of

someone or something

SELF

Self-Confidence

“I am afraid I can’t pay back

a loan with the money I

make.”

Self-Image

“I’m too poor— banks are

for people with more mon-

ey.”

COMMUNIT Y BANK

Weak Solidarity

“It will be hard to get help if

something really goes

wrong.”

Financial Façade

“I don’t think everyone tells

the truth about their mon-

ey.”

Privacy

“Sharing details about my

money makes me feel un-

comfortable.”

Banking Image

“I don’t trust the banks to

keep their word.”

Power Position

“The bank can take

advantage of me because

they have the knowledge

and the money.”

Limiting Assumptions

“The banks don’t trust me

because I am poor.”

LA

CK

OF

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Knowledge facts, information, and skills acquired by a person

through experience or education

Access the right or opportunity to use or benefit from something

LA

CK

OF

Formal Education

“I didn’t go to school, and

I’m not sure I can learn

other things.”

Banking Knowledge

“I don’t understand how the

bank words and all their

rules.”

Tunnel Vision

“Farming is all I know.”

Physical Costs

“The cost and time it takes

to travel to the bank is not

worth going.”

Banking Fees

“The bank charges a lot of

money monthly to take out

a loan.”

Collateral

“I don’t have a house deed

or anything else that the

bank will accept as collat-

eral.”

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Fear a feeling of anxiety concerning the outcome of something

or the safety and well-being of someone

Status a person’s standing or importance in relation to other

people within a society

Future Uncertainty

“I’m scared I won’t be able

to pay back the loan

because the harvest

changes every year.”

All or Nothing

“I don’t want the bank to

take my house—it is all I

have.”

Fixed Status

“It’s hard to make my life better even

though I really want to and try to.”

Reputation

“I don’t want to be seen as someone who

cannot keep his word.

Additional Burden

“I’m worried this will be too

much for me to handle.”

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Culture the attitudes and behaviour characteristic of a particular

social group concerning personal finances

Save possession of the means or skill to keep and store up for

future use

INABILITY TO

Unachievable Goals

“I want to buy a cow, but it

is impossible to save

enough money.

Weak Investment Mindset

“I don’t sell my beans until I

need the money to pay for

the necessities for my

family.”

Weak Saving Habits

“I spend more when I earn

more, and spend less when

I earn less—there is no

room for saving.”

Mindset

“It’s impossible to save because every-

thing is so expensive.”

Actual Inability

“With three children, we don’t have

enough money to save, especially with a

bad harvest season.”

WEAK FINANCIAL

LackOf TRUST

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Trust: the underlying barrier.

Lack of trust not only hinders borrowing and saving,

but individual and community development.

Without trust in self, there will always be a perceived inability to change

one’s circumstance– social or financial.

Without trust in community, knowledge-sharing will not be commonplace, and

the pressure to stay within social status will

prohibit collaboration and the betterment of others.

Without trust in banks, fear will persist, and resources will be

underutilized and deemed inaccessible.

Trust: the overarching barrier.

These barriers become needs and

these needs become the platform

for our solution.

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I need to trust my abilities

and feel that others are

trustworthy.

I need to learn more so I

can confirm or correct my

assumptions.

I need to have access to

money for planned and un-

planned situations.

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I need to have reassurance

and protection in uncer-

tainty.

I need to overcome social

pressures and limitations.

I need to build financial

discipline and a long-term

mindset to achieve my

goals and dreams.

I need to understand the

benefits of and opportuni-

ties for saving.

"Coming up with an innovative

solution that is sustainable in the

long-run is a collaborative effort—only

when we co-create together with

community members can we achieve

truly effective solutions.”

PABLO HENNIQUE

The Centro Comunitario del Naranjo will be a

purpose built structure where the people from El

Naranjo can gather and benefit from the services

that it houses, namely the trade school, the

financial literacy training, and the co-operative

bank. It will act as a central location where the

people of El Naranjo can come together, help

build a sense of solidarity, increase trust and

benefit from the services it provides.

The construction of the centre will be carried out

by the people from El Naranjo. It is important to

make the people of El Naranjo feel that the centre

belongs to them by working together, as a

community, to build it. The design of the centre

could be done by one of Global Brigades

Architectural Brigades. Funding would come from

external sources.

The Centro Comunitario is not only a practical

place to carry out services for the community, but

is also a powerful symbol of what El Naranjo can

achieve when the community comes together to

work as one for the benefit of all.

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A new skill can become a new

profession. This helps to diversify

income and relieve dependency on

agriculture. In a school setting, the

community will be learning trade skills

together and working together, building

solidarity. The goal is to see people

collaborate through the school to form a

business like a bakery or repair shop.

Through these

workshops, people

will be empowered

individually and as a

community.

Trade School Workshops that provide men and women an opportunity to

learn new skills.

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In El Naranjo, the top expressed desired

skills included baking, tailoring, and

carpentry. The workshops offered will be

catered to the needs and opportunities of

each community. Participants benefit by

using finished products for personal or

commercial use. Not only do they learn new

skills, but also earn a source of revenue.

These classes could be taught be community

members who are experts or by external

volunteers. There is also potential to form

relationships with local colleges and

businesses.

The specific details of workshop length,

duration, and frequency will be decided

during implementation by each community’s

preferences.

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Chicken Program A program designed to teach the financial essentials to

those in most need within the community in simple and

familiar terms.

T he chicken program will be used as

a vehicle to teach the community

members concepts like Borrowing,

Saving and a Business Mindset, using

chicken!

Most of the community members are

already familiar with and feel comfortable

when talking about chicken, eggs and hens.

They know the growth cycles, how to take

care of them and their value, so why not

take advantage of this to introduce new

concepts that could otherwise be too

intimidating on their own?

This program targets families in most need

and individuals who would probably not

benefit from having a community bank

because of simple fear of the unknown.

These individuals could also be identified as

the late adopters of the community bank.

From their perspective, this program offers

a great opportunity to receive some

chickens, training and guidance with no

upfront cost. Each selected family will

receive ten hens and a rooster to start. They

will be mentored in the key principles of

business, teaching them that these hens are

assets that will generate a recurring

revenue.

The coaches will work with the selected families to ensure that the hens multiply in

a sustainable manner, and any additional eggs will be sold. They will do this enough

times until the money earned will be enough to do the following:

Repay the original cost of the ten hens and the rooster

Save some money in the community bank

Purchase food and a fence for the hens to keep producing eggs

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By repaying the original cost of the hens,

the families will learn about repayment and

interest rates. By saving some money in the

community bank they will begin to lose the

fear of saving money outside their home.

And by purchasing food and a fence they

will be reinforcing the long-term business

mindset required to get out of poverty.

Overall, the program aims to

empower low income individuals

by providing them with a new

source of income, financial

security and initiate a change of

mindset within the community,

one where long term investment

and businesses are the norm.

x 10

$ $

$ $

$

Community Bank A cooperative owned and run by the community with

financial services designed and available for all.

T he community center will have a

community bank dedicated to

providing affordable and accessible

financial services to the people of El Naranjo.

It will be run by community members

elected by their peers from the community.

Initially, the community bank will offer

savings and loans to individuals. In order to

have access to these services, every person

will have to go through financial

literacy training to get the

necessary knowledge in order

to understand and maximize

their benefit from the banks

services. This step is crucial

because we realized

that

without

proper financial knowledge, these financial

solutions won’t be effective.

The loan services will be initially available

on an individual basis to all those with some

sort of collateral. We recommend interest

rates be set at 1% per month to begin with,

which is below market rates to encourage

engagement and build trust. In the long-run,

group loans can be considered and interest

rates modified by the executive committee

of the bank.

The savings services will be available to

everyone in the community. We recommend

to set the interest rate in line with rates

offered by other commercial banks in

Nicaragua and higher than the inflation rate.

The success of the community

bank will depend on creating a

collaborative culture whereby

community members feel

ownership in the bank and

trust in its governance.

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Key decisions regarding the process of governing the bank that need to

be addressed include:

Length of service for administrators

Process for making decisions such as setting of interest rates for

borrowing and saving and who qualifies for special programs

How to deal with default

1% Loan

Interest Rate

Modified Loan

Interest Rate

TIME

Financial Courses Group classes that provide focused financial education

offered concurrently with the bank’s services.

T he courses will be simple and

friendly. These will be offered in an

ongoing basis to the community

members, first by external specialists, and

eventually by local experts within the

community. These courses will cover three

main areas: borrowing, saving and starting

a new business.

For anyone taking out a loan from the

community bank the borrowing course will

be a requirement.

They will learn about what

the principal is, interest

rates, the terms of a loan,

collateral and other concepts.

Similarly, the saving course will

be mandatory for anyone that

choses to open up a savings

account. This course will discuss

concepts like return on savings,

shareholding and the safety of the bank.

The business course will be offered for

anyone participating in the chicken

program, in one of the workshops or

anyone who is interested in learning more

about starting a business. Concepts like the

value of assets (chickens, pigs, sewing

machines, etc.), return on asset, budget

allocation, negotiation skills, and thinking

beyond the short term will be

covered.

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The financial courses will be the

glue holding the entire financial

literacy of the village together. It

will strengthen the sense of

community in El Naranjo and it will

empower its members.

Desirable &

Beneficial Skills

+

Group Training

Tangible

Investment Loan

+

Training

+

Financial

Support

Loans & Savings

+

Community

Location

+

Training

Self-Confidence

+

Collaboration

Self-Confidence

+

Knowledge

+

Financial

Discipline

+

Overcoming

“Poor” Status

Access to

Resources

+

Self-Confidence

+

Less Fear

trade school chicken program community bank

Tailored

Curriculum

+

Practical

Application

Self-Confidence

+

Knowledge

+

Ability to Save

Confidence, growth,

and prosperity

as a community

financial courses

“The Centro Comunitario, which

includes a co-operative bank,

job skills training, and financial

literacy training is meant to

combine the energies of the

community so that together

they achieve much more than

on their own.”

LOREA SAAVEDRA

HOFMANN

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Thank you. We couldn’t have done it without you.

HUMANOS

Niels Billou

Pablo Hennique

Matt Smart

Stami Zafiriou

Lorea Saavedra

Hofmann

Adil Mansouri

Asmae Skalli

Monika Vohra

Justina Li

GLOBAL BRIGADES

Jairo Cortez

Bismark Silva

Roberto Nicaragua

Norlan Arostegui

Wilmer Arostegui

BIZ KID$

Jeannine Glista