This afternoon, the Remittances Action Group of the European Microfinance Platform (e-MFP) met to share member experiences, plan future action steps and announce the release of the “Financial Literacy for Remittances and Diaspora Investments” handbook. The document, which is the first of three planned outputs to be completed by the group, was published by German bilateral development agency GIZ, with participation from PHB Development, a Belgium-based consulting firm, and e-MFP, which is a Luxembourg-based membership organization. As the handbook was released as a compact disc and on paper, it is not available online other than via the above link as of today. Details on the other proceedings of the meeting, such as the other planned outputs of the Remittance Action Group and news from action group members, are slated for publication by MicroCapital in a separate brief.
Gera Voorrips of PHB Development, who heads the Remittance Action Group, explained that remittances sent by migrants to their home countries are worthy of attention because the volume of such payments exceeds the total flow of international development aid. The group sees significant opportunities to connect senders and recipients of remittances with financial literacy training and financial products such as savings accounts and investments in the migrant’s home country such as through diaspora bonds.
Ms Voorrips explained that to create the handbook, which is primarily aimed at donors to microfinance institutions, 50 projects from banks and aid organizations were screened and clustered into five strategies:
1. Transparency and competition;
2. Product design, including linkages with non-remittance products and prerequisites to offering remittances such as technology improvements and partnership building;
3. Focusing on the demand side to convert senders and recipients into users of other services;
4. Steering remittances to promote microentrepreneurship such as by investing in the business of a relative or linking to training on financial literacy or entrepreneurship;
5. Investments in the home country of the migrant such as the Overseas Filipino Worker bonds, through which the government of the Philippines has raised hundreds of millions of USD.
Adrian Dincsoy of GIZ explained that the group is seeking partners to make more people aware of the handbook and replicate its use. GIZ has used the handbook in an ongoing project to train 13 bank staff in Uzbekistan to educate remittance recipients on the benefits of opening savings accounts. With a budget approximately equivalent to USD 40,000, the program aims to educate 6,000 people leading to the opening of 900 accounts during the 6-month period ending in January 2013. Regarding whether many of the new accounts end up being left dormant, Mr Dincsoy explained, “Once people open an account they use it.”
Regarding financial education, Ms Voorrips suggested that changes in client behavior are much more likely if linked with specific products.
Those interested in learning more about the handbook may contact Ms Voorrips at gvoorrips[at]phbdevelopment.com and Mr Dincsoy at adrian.dincsoy[at]giz.de.
This content is sponsored by e-MFP, the organizers of European Microfinance Week. It is the second in a series of articles covering the proceedings of the event, which is taking place in Luxembourg from November 14 to November 16. MicroCapital is reporting onsite throughout this time.
Additional Resources
Financial Literacy for Remittances and Diaspora Investments: http://www.giz.de/Themen/de/dokumente/giz2012-en-handbook.pdf
November 14, 2012, “SPECIAL REPORT: At European Microfinance Platform’s Microfinance Week, ADA, REDCAMIF Detail Support for MFIs, National Networks in Developing New Products as Part $7m Effort in Central America, Caribbean,” https://www.microcapital.org/special-report-at-european-microfinance-platforms-microfinance-week-ada-redcamif-detail-support-for-mfis-national-networks-in-developing-new-products-as-part-7m-effort-in-central-america/
September 22, 2012, “MICROFINANCE EVENT: European Microfinance Platform’s Microfinance Week, Luxembourg, November 14-16, 2012, Onsite Reporting to be Provided by MicroCapital,” https://www.microcapital.org/microfinance-event-european-microfinance-platforms-microfinance-week-luxembourg-november-14-16-2012-onsite-reporting-to-be-provided-by-microcapital/
May 31, 2011, “MICROCAPITAL BRIEF: GIZ to Invest $28m to Boost Small and Medium-Sized Enterprises (SMEs) in Nigeria,” https://www.microcapital.org/microcapital-brief-giz-to-invest-28m-to-boost-small-and-medium-sized-enterprises-smes-in-nigeria/
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