Inclusive Finance 2014: Report Highlights

11 February, 2015

To provide you with a snapshot of past and new developments in the sector, please find here some important reports that have been published in 2014.

The Consultative Group to Assist the Poor (CGAP) is a global partnership of 34 leading organizations that seek to advance financial inclusion. Housed at the World Bank, CGAP combines a pragmatic approach to responsible market development with an evidence-based advocacy platform to increase access to the financial services the poor need to improve their lives. Its annual report 2014 covers the first year of CGAP’s new five-year strategy and its portfolio of initiatives.

The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank working toward full global financial inclusion. Constructing a financial inclusion sector that reaches everyone with quality services requires the combined efforts of many actors. CFI contributes to full inclusion by collaborating with sector participants to tackle challenges beyond the scope of any one actor, using tools that include research, convening, capacity building, and communications.

Through the Financial Inclusion 2020 project, CFI is working to build a movement that mobilizes key stakeholders around the goal of full financial inclusion, using the year 2020 as a focal point to galvanize action. By bringing together private sector players, regulators, industry developers, technology providers, and other actors, the project facilitates reaching new and underserved markets with a full range of quality services. It's been a year since the Financial Inclusion 2020 Global Forum. The CFI 'Financial Inclusion 2020: Round-Up 2014' e-magazine reviews how the drive for financial inclusion is faring. It brings highlights of the past 12 months from around the financial inclusion world - new ventures, milestones and ongoing debates. Based on the various conversations CFI had with industry participants on progress made of each major recommendation presented at the Global Forum, the e-magazine also includes a snapshot of progress in each of the five "Roadmap to Inclusion" areas, from technology-enabled business models to consumer protection. 

The Global Microscope 2014 was supported by funding from, and in collaboration with, the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group; CAF—Development Bank of Latin America; the Center for Financial Inclusion at Accion; and Citi Microfinance.The report assesses the regulatory environment for financial inclusion across 12 indicators and 55 countries. This year’s report has a new indicator framework that considers products and institutions beyond microfinance to reflect financial inclusion more broadly. Due to the Microscope’s new focus and significant methodology changes, users should be cautious when making comparisons across years. Most of the research for this report, which included interviews and desk analysis, was conducted between June and August 2014.

The Centre for the Study of Financial Innovation is a non-profit think-tank, established in 1993 to look at future developments in the international financial field - particularly from the point of view of practitioners. Its goals include identifying new areas of business, flagging areas of danger and provoking a debate about key financial issues.

This year's title of the report, "Facing Reality" refers to the fundamental structural changes that are taking place in the industry. It recognises the increasing diversity of microfinance service providers as well as the possibility that insufficient focus is being placed on the strategic development required to realise the sector's financial inclusion potential. Achieving sustainable growth, whilst addressing the concerns of overindebtedness raised in this report, will require reaching out to new client segments with appropriate products. Business models and credit methodologies will have to evolve accordingly.

Launched in 2008, Convergences is a multidisciplinary platform for thought in Europe that aims at building new convergences between public, private, and solidarity-based actors to promote the in 2000 adopted Millennium Development Goals (MDGs) and to alleviate poverty and privation in developed and developing countries. Convergences brings together a network of more than 200 public, private, and solidarity-based partners from a variety of sectors – international cooperation, microfinance, social entrepreneurship, social and solidarity economy, social business, BoP strategies, environment and development – towards a common goal: de-compartmentalizing these sectors and allowing dialogue, debates, and co-construction between all actors involved towards a more inclusive and responsible economy.

For the fifth consecutive year, Convergences has published the Microfinance Barometer. This year’s edition is entitled “The future of microfinance: towards a new deal?” Researchers and experts of the sector share their insights on the evolution and prospects of microfinance, along with latest figures on the sector in France and across the world. In partnership with Groupe Caisse des Dépôts, Fédération nationale des Caisses d’Epargne, the City of Paris, the European Microfinance Platform (e-MFP) and NpM-member Oikocredit.

responsAbility Investments AG is a large, independent asset manager in the field of development investments and offers professionally-managed investment solutions to both private and institutional investors. The company supplies debt and equity financing to non-listed firms in emerging economies and developing countries.

The annual publication of the Microfinance Market Outlook report is intended to provide readers with an in-depth outlook for the microfinance markets.To evaluate how the microfinance world is likely to develop in future, the report includes detailed interviews with 32 experts from all major microfinance markets worldwide to gauge their expectations. The experts interviewed are decision-makers at MFIs and rating agencies, as well as investors and advisors.

The Microfinance Market Outlook provides a current overview of the investment universe and offers an economic outlook for the target markets in 2015. This year, the publication turns the spotlight on India, thus providing continuity in the analysis of this booming market. Lastly, the increasing role of private equity investing in the field of microfinance is another pertinent topic that is examined in this Microfinance Market Outlook.

As with all investments, ways to contribute to economic development and entrepreneurial activity by investing in inclusive finance also carry potential financial and reputational risks.To mitigate such risks, a group of institutional investors launched the Principles for Investors in Inclusive Finance (PIIF) in 2011. The PIIF are housed within the PRI (Principles for Responsible Investment) Initiative and provide investors with specific guidance on responsible investment in inclusive finance.

The inclusive finance modules in the PRI Reporting Framework are based on the PIIF. 52 PRI signatories reported to these modules in 2013-2014, making this the largest data gathering exercise on responsible investment in inclusive finance.Overall, the responses are encouraging and show that investors in inclusive finance are interested in the impact they have on the ultimate clients of inclusive finance. Yet work needs be done to maximise this impact. More indirect investors (pension funds and other investors who use external managers to invest on their behalf) should include consideration of PIIF in their selection, appointment and monitoring of fund managers and other intermediaries. Direct investors could do more to engage and support the retail institutions in which they invest. While many say they are doing something, few report they have formalised policies and processes or have training or incentive schemes in place. The full impact of their intentions may therefore remain unrealised.







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