Accelerated Motion Chapter 3. Acceleration Definitions of Acceleration.
The Pieces for Pro-Poor Market Acceleration are Coming Together
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Transcript of The Pieces for Pro-Poor Market Acceleration are Coming Together
Pieces for pro-poor market acceleration are coming together
CG Meeting, May 13, 2014
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Key messages
• Our mission has become global development priority
• In-country progress is being made
• Pro-poor market development at scale poised to take off
• CGAP’s priorities aligned to accelerate opportunities
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Post WWII: Aspiration for universal employment& social protection
“Everyone has right to:
• Standard of living adequate for health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services
• Security in event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”
UN Declaration of Human Rights, 1948
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Reality 60+ years later: Half the world remains excluded
~50-60% with
informal jobs
40+%below $2/day
~50% w/out any
social security
coverage
50+%w/out formal
financialaccount
When given opportunity, poor families improve their lives
5Source: Bandiera, Oriana/ Robin Burgess et al. 2013. Can Basic Entrepreneurship Transform the Economic Lives of the Poor. BRAC Working Paper.
Earnings four years after program end(in Taka)
Control group
Graduation program
+ 38%
Series1
6,370
4,616
Survey highlights
• Higher income due to more hours worked, not higher productivity
• Extra income split between consumption and savings
• Poor adopt working patterns of rural middle class
Country embrace of Financial Inclusion as important tool
6Source: Finscope Surveys, Kenya, Rwanda and Uganda. http://www.finscope.co.za/pages/default.aspx
Population served by formal institutions
(in %)
26
41
28 29
21
42
16
57
2006 2009 2006 2009 2008 2012 2009 2013Kenya Uganda Rwanda Tanzania
• Growing importance of non-banking financial institutions
• Some country-specific solutions (e.g., SACCOs in Rwanda)
• In some cases, informal use rising in parallel (e.g. Uganda)
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2009
2011/12
2013
• G20 embrace of Financial Inclusion as pillar of development agenda
2014
• 50+ countries making national Financial Inclusion commitments
• World Bank aspiration of “universal access transaction services/ accounts” by 2020
• Efforts to integrate financial access as enabler into UN post-2015, MDG successor framework
Strong global political tailwinds
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Better understood
demand
Viable business models at base
of pyramid
Digital innovation increasing scale and
lowering costs
Supporting national
policies and regulations
Pieces for market acceleration coming together
Importance of understanding demand-side context
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Game
Advice Relevance
Insights-based approaches: MicroEnsure example
“Life is difficult and everyone has their own
problems.”
Insight: Importance of Everyday Realities
“I play games on my phone and watch Novellas
to relax.”
Insight: Small Pleasures
Insight: Thirst to Learn
“Education is very important. I would like to
see my son live a good life.”
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Share of domestic depositorsPercent, 2012
Return on equityPercent, 2012
Source: Xac Bank Annual Report, 2012; Khan Bank Annual Report, 2012, MiBanco Annual Report, 2012; Equity Bank Group Annual Report, 2012;l Accleda Bank Financial Highlights, 2012;Bank Supervision Annual Report, 2012, Central Bank of Kenya; Supervision Annual Report, 2012, National Bank of Cambodia; The Mix Market; Global Findex Database, World Bank (2012)
Success of hidden champions in low-income banking
22.3
26
42.9
44.3
18.7
28.8
25.2
31
Replication and acceleration of digital success
12Source: Safaricom M-Pesa timeline on http://nchinampesa.safaricom.co.ke/; Financial Inclusion Tracker Survey and Financial Inclusion Insights, Intermedia; CGAP Team Analysis
Mobile money users in years since inception(users in millions)
• Total reach: 90+% of adults in Kenya (68% for M-PESA only)
• 47% of adults in Tanzania, a competitive market with four providers
• Steep growth potential in Bangladesh – only 9% of adults reached to date
1 2 3 4 5 6 70
2
4
6
8
10
12
14
16
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M-PesaTanzaniaB-Kash
Potential for rapid scaling of new services
• Banking partner with no previous retail business
• M-Pesa transactions history allows for algorithmic underwriting of small loans
• Many first-time borrowers despite steep cost (7.5% fee per month)
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12
240
1
45
1 Month 12 Months 1 Month 12 Months
M-Shwari balances (in millions US$)
20x
Savings Loan volumes
Source: Company reports; CGAP teams
45x
14Source: CGAP Teams
Continued proliferation of Digital Finance innovations
Water
Energy
Agriculture
Transportation
Health
Microfinance
Insurance
MOBILE MONEY
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Pay-as-you-go access to water: Sarvajal example
• “Water ATMs” dispense reverse osmosis-filtered water against pre-paid card charge
• ATMs send SMS to indicate water supply and quality levels for remote monitoring
• 15 ATM pilot launched in October 2013 with Delhi Water Board at very low cost to consumer (0.005 US$/liter)
Source: Company reports; CGAP teams
Public sector actions: India example
Example actions to date
Source: RBI Committee Report on Comprehensive Financial Services; CGAP teams
Financial Access
Promoting infrastructure• UIDAI enrolling 600m
with option to open bank account
Rule making• Agent regulation
expanded on eligibility and non-exclusivity
Driving volume• Digitization of G2P
(NREGA, pensions, fertilizer, food, kerosene, etc.)
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• New types of banking licenses
- Payment banks (no credit)
- Wholesale banks (no deposits)
• Digital finance-friendly regulations
- Opening up to telcos• Aggressive aspirations
- Leveraging national ID, G2P digitization and opening for non-banks to create basic access for everyone by 2016
2014 RBI Committee recommendations
CGAP V: Recommitment and priorities
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CGAP’s Mission
Shared Vision
A world where everyone can access and effectively use the financial services they need to improve their lives
To improve the lives of poor people by spurring innovations and advancing knowledge and solutions that promote responsible and inclusive financial markets
Five Year Priorities
Understanding Demand to Effectively Deliver for the Poor
Financial Innovation for Smallholder Families
Developing Robust Provider Ecosystems
Building an Enabling and Protective Policy Environment globally
Promoting Effective and Responsible Funding for Financial Inclusion
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Re-introducing the Vargas-Hancco family
Helping people improve their lives
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The Vargas/Hancco Family
Advancing financial inclusion to improve the lives of the poor
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