“A New Look at Microfinance Apexes;” by Sarah Forster, et al; published by CGAP (Consultative Group to Assist the Poor); July 2012; 26 pages; available at: http://www.cgap.org/p/site/c/template.rc/1.9.58459/
This brief summarizes a study performed by CGAP (Consultative Group to Assist the Poor), a US-based nonprofit policy and research center, on microfinance “apexes,” which filter public resources to microfinance providers in a country. The authors consider a 2008 study by CGAP, which identifies 76 apexes in 46 countries; a literature review; a 2010 quantitative survey of 23 apexes; and a case study analysis of six apexes. The brief first looks at microfinance apex trends, sizes and characteristics on a global scale. The authors’ recommendations include addressing issues such as the organization and management of apexes, increased capacity building in early-stage markets, leveraging commercial finance in advanced markets, carefully selecting and supervising microfinance institutions that will receive investments, and structuring funding to be useful to retail lenders. The authors conclude that apexes are likely to continue to be major investors in microfinance and should learn from the challenges faced and overcome by other organizations in the field to maximize their effectiveness.
“Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor;” by Hugh Sinclair; published by Berrett-Koehler Publishers; 2012; 267 pages.
This book chronicles the experiences of Mr Hugh Sinclair during his approximately ten years of working in the microfinance sector. The book begins with his time working for microfinance institutions (MFIs) in Mexico, Mozambique and Nigeria and describes the negative impressions he has of the management of these MFIs. Mr Sinclair then documents his work with microfinance investors and his impression that many investment funds decide which MFIs to invest in based on profit potential rather than on social impact. He talks at particular length about Nigerian MFI Lift Above Poverty Organisation (LAPO) and the persistence of investment funds in loaning to LAPO despite public information documenting its illegal practices and reportedly exorbitant interest rates. The book also discusses peer-to-peer lending platforms, criticizing several for not publishing information such as the interest rates charged to borrowers. Mr Sinclair then delves into the crises in the microfinance sectors of Nicaragua and India. He concludes by offering advice to “ethical” microfinance institutions, microfinance investment funds and microfinance borrowers on choosing MFI or investment fund partners while ensuring that the “social mission” is upheld. An appendix gives a brief overview of Mr Sinclair’s view of the economics of microfinance.
“Selling More, Selling Better: A Microinsurance Sales Force Development Study;” by Serena Guarnaschelli, et al; published by the International Labour Office; May 2012; 34 pages; available at: http://www.ilo.org/public/english/employment/mifacility/download/mpaper16_sales.pdf
This report summarizes and builds on a survey of 18 microinsurance practitioners from 13 countries, focusing on optional insurance products sold to individuals, households and groups. The document describes “lessons learned” in four steps of the value chain: recruitment, training, incentivizing and monitoring. The authors recommend choosing staff from the communities served and ensuring they have adequate training. For training, they suggest developing a belief in insurance, providing interactive training, allowing sellers to personally experience the insurance product, implementing training sessions for staff to practice “selling” insurance to other staff and offering field training and “refresher” sessions. For incentivizing, the authors state that insurance providers should diversify their incentives by developing both financial and non-financial incentives such as recognizing a top-seller in an internal newsletter. Finally, in the monitoring process, the authors recommend integrating monitoring mechanisms with sales staff training to staff performance and address product issues. The authors conclude that each insurer must tailor its approach to its particular client base and other organizational characteristics to maximize effectiveness.
About CGAP (Consultative Group to Assist the Poor)
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.
About International Labour Organization (ILO)
Founded in 1919, the International Labour Organization (ILO), is an agency of the United Nations, an organization promoting peace and improved living standards. The objective of ILO is to advance opportunities for men and women to obtain productive work in conditions of freedom, equity, security and human dignity. Headquartered in Switzerland, its founding mission is that labor peace is critical to prosperity.
By Charlotte Newman, Research Associate
Sources and Additional Resources:
“A New Look at Microfinance Apexes,” http://www.cgap.org/p/site/c/template.rc/1.9.58459/
“Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor,” by Hugh Sinclair, published by Berrett- Koehler Publishers.
“Selling More, Selling Better: A Microinsurance Sales Force Development Study,” http://www.ilo.org/public/english/employment/mifacility/download/mpaper16_sales.pdf
MicroCapital.org story, August 7, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Microfinance Trends in Latin America and the Caribbean; Livestock Insurance in India; Using “Digital Footprints” to Boost Financial Inclusion,” https://www.microcapital.org/microfinance-publication-round-up-microfinance-trends-in-latin-america-and-the-caribbean-livestock-insurance-in-india-using-digital-footprints-to-boost-financial-inclusion/
MicroCapital.org story, July 19, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Financial Advisors on Sustainable Investing; Risk Management in Microfinance; Supply-Side Financial Inclusion Data,” https://www.microcapital.org/microfinance-publication-round-up-financial-advisors-on-sustainable-investing-risk-management-in-microfinance-supply-side-financial-inclusion-data/
MicroCapital Universe Profile: CGAP
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29
MicroCapital Universe Profile: International Labour Organization
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Labour+Organization+%28ILO%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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