MICROFINANCE PUBLICATION ROUND-UP: Financial Advisors on Sustainable Investing; Risk Management in Microfinance; Supply-Side Financial Inclusion Data

“Gateways to Impact: Industry Survey of Financial Advisors on Sustainable and Impact Investing;” published by Calvert Foundation; June 2012; 14 pages; available at: http://www.gatewaystoimpact.org/images/gatewaystoimpact.pdf

This report offers the results of a survey of approximately 1,000 financial advisors in the United States regarding their ideas about “sustainable” investment, which involves aiming to generate a financial return while also creating social or environmental benefits. The survey examines: (1) the interest levels of investors in sustainable investing; (2) barriers to recommending sustainable investments and solutions to these barriers; and (3) the market potential for the incorporation of sustainable investments into client portfolios. The survey found that 21 percent of advisors surveyed showed high interest and engagement in sustainable investment, 16 percent of advisors showed interest and were relatively engaged, 25 percent were interested but not significantly engaged, 25 percent showed little interest and engagement and 13 percent demonstrated very little interest in such investment. Advisors saw three major barriers to sustainable investing: (1) perceptions of insufficient track records and weak financial performance; (2) perception of insufficient client demand; (3) lack of access to research and information; and (4) lack of comfort in advising clients on such investment. Overall, 69 percent of advisors saw such investment as an opportunity to expand their companies. One estimate of the sustainable investing market potential is USD 650 billion.

“Microfinance – A Risky Business: A Time for Strong Leadership;” by David Lascelles; published by Center for Financial Inclusion; May 2012; 7 pages; available at: http://centerforfinancialinclusionblog.files.wordpress.com/2012/06/running-with-risk.pdf

In this paper, Mr David Lascelles explores risks within the microfinance industry and gives his opinions about managing these risks. He claims that the risks in microfinance are changing, with bad debts and operational problems becoming lower in priority. Now, he says, the primary risks include regulatory compliance and public opinion. He states that these risks are manageable but require strong governance on a preventative basis, not just in times of crisis. Boards can better manage risk by: (1) establishing a risk strategy; (2) understanding risks; (3) monitoring and controlling risks; and (4) improving the relationship with the executive of the microfinance institution (MFI). He concludes that changes in sector risks will continue to occur, and MFIs must create strong boards and good policies to be prepared to deal with them.

“Financial Access 2011: An Overview of the Supply-Side Data Landscape;” by Oya Pinar Ardic, et al; published by CGAP (Consultative Group to Assist the Poor) and the International Finance Corporation; May 2012; 26 pages; available at: http://www.cgap.org/gm/document-1.9.57980/Forum5.pdf

This document discusses financial inclusion with a focus on supply-side data. It examines data related to: (1) access to financial services and the reach of financial infrastructure; (2) usage of financial services; and (3) quality of financial products and service delivery. The authors compare financial data providers and identify the following challenges to collecting data: human and other resources required to track financial inclusion indicators are usually limited; some data is not publicly available; lack of institutional identity weakens the reliability of supply-side data; and the lack of standardized definitions and data. The authors recommend: (1) building country-level data capacity; (2) using standardized definitions and methodologies; (3) seeking data from a range of providers; (4) monitoring financial activities, enabling access to financial services and complying with know-your-customer requirements more systematically; (5) collecting more detailed data on consumer segments; (6) including more data from micro-, small and medium enterprises (MSMEs); and (7) promoting open access to data. In addition, the paper documents a conversation among three policy makers and two market analysts on their perspectives about data.

By Charlotte Newman, Research Associate

About Calvert Social Investment Foundation
The Calvert Foundation is a fund that provides loans to organizations that provide affordable housing, microfinance, small business loans and community facilities. The fund is offered by the Calvert Social Investment Foundation, a private US foundation founded in 1995 with the support of the Ford, MacArthur and Mott Foundations. Investment in the fund comes in the form of donations and notes held by individuals and organizations, including Washington Mutual Bank, Ameritas Life Insurance Corp. and Gray Ghost Microfinance Fund, LLC. As of year-end 2010, the Calvert Foundation reported total assets of USD 270 million

About the Center for Financial Inclusion
The Center for Financial Inclusion (CFI) was started by US-based nonprofit Accion with the goal of connecting the microfinance community with major drivers of the global economy, such as capital markets and technology. CFI works with microfinance experts, banks, investors, regulators, technology firms, universities and others to facilitate global financial inclusion.

About CGAP
CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to providing financial access to poor people worldwide. CGAP is supported by approximately 30 development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors. CGAP reports taking in USD 20.9 million in total revenue for fiscal year 2010.

Sources and Additional Resources:

“Gateways to Impact: Industry Survey of Financial Advisors on Sustainable and Impact Investing,” http://www.gatewaystoimpact.org/images/gatewaystoimpact.pdf

“Microfinance – A Risky Business: A Time for Strong Leadership,” http://centerforfinancialinclusionblog.files.wordpress.com/2012/06/running-with-risk.pdf

“Financial Access 2011: An Overview of the Supply-Side Data Landscape,” http://www.cgap.org/gm/document-1.9.57980/Forum5.pdf

MicroCapital.org story, June 21, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Impact of Property Insurance in Ghana; Priority Issues for the Microfinance Sector; Investment in Sub-Saharan Africa,” https://www.microcapital.org/microfinance-publication-round-up-impact-of-property-insurance-in-ghana-priority-issues-for-the-microfinance-sector-investment-in-sub-saharan-africa/

MicroCapital.org story, June 11, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Financial Service Needs in Mexico; Evaluation of an Insurance Education Radio Campaign in Kenya; Self-Assessment of Governance,” https://www.microcapital.org/microfinance-publication-round-up-financial-service-needs-in-mexico-evaluation-of-an-insurance-education-radio-campaign-in-kenya-self-assessment-of-governance/

MicroCapital Universe Profile: Calvert Social Investment Foundation
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Calvert+Social+Investment+Foundation

MicroCapital Universe Profile: Accion
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=Accion

MicroCapital Universe Profile: Center for Financial Inclusion
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Center+for+Financial+Inclusion+%28CFI%29

MicroCapital Universe Profile: CGAP
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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