Annual Report 2015 - scbf.ch€¦ · SCBF ANNUAL REPORT 2015 | 45 PHOTOS Courtesy of Advans Pakistan, Al Barid Bank, Alexandria Businessmen´s Association, Banco Popular, COMIXMUL,

Annual Report 2015

S C B F A N N U A L R E P O R T 2 0 1 5 | 3

Table of Contents

List of abbreviationsMessage from the SCBF Chair and the Secretary General SCBF at a glance About SCBF Objectives Co-funding windows Members - a short history New members in 20152015 Facts and FiguresOverview of interventions completed in 2015Overview of interventions approved in 2015Overview of interventions under implementation in 2015SCBF operations since inception - global overviewInterviews and case studies 2011-05 Abdelhak Benanane at Barid Cash and Zakia Hazzaz at ABB Innovative distribution channel: ´Barid Cash´postal banking 2012-11 Case study: Down-scaling to increase outreach to microfinance clients in Nepal 2011-07 Motaz El Tabaa at ABA and Dalal W. Takla at DBACD First life insurance with savings plans offer to low-income Egyptians by the Dakahlya Businessmen´s Association for Community Development (DBACD) and the Alexandria Businessmen´s Association (ABA) 2012-01 Konrad Ellsässer at FIDES Introduction of microinsurance in rural Senegal 2012-08 Konrad Ellsässer at FIDES Senegal Strengthening self-reliance and the asset-building strategies of poor house holds and microenterprises in northern Mozambique by introducing microinsurance via Microbanco FIDES Moçambique 2013-10 Marcelle S.G. Gerard at FINCA Haiti Providing access to finance for Haiti´s rural and agricultural populations 2013-11 Gema Stratico at Habitat for Humanity Building capacity to expand housing microfinance in Central America FSW-10 Mario Wilhelm at Swiss Re for endorsement of Habitat for Humanity Feasibility study for property microinsurance: exploring the market opportunities for housing and property insurance in Kenya 2013-09 Ximena Escobar de Nogales at Bamboo Finance Strengthening middle management and reviewing the product and segment offering for MSMEs 2013-06 Case study: Strengthening FMS´s position in the SME microlending market in SenegalInstitutional changesFunding and contributionsFinancial report Letter from auditor Balance sheet Income statement Notes to financial statementsStrategic outlook for 2016Appendices Appendix 1: Organisational structure Appendix 2: Financial overview since inception Appendix 3: Partner financial institutions and technical assistance providers

456

9

10 12 15 16 18

32 33 34

40 41

4 | S C B F A N N U A L R E P O R T 2 0 1 5

List of Abbreviations

CTA Construction technical assistanceDFI Development finance institutionFEW/FE Financial education window / financial education campaignFSP Financial service providerFSW/FS Feasibility study window / feasibility studyHMF Housing microfinanceMC Management CommitteeMFI Microfinance institutionMIS Management information systemsMSME Micro, small and medium enterprises PFI Partner financial institutionPUW/PU Product up-scaling window / product up-scaling supportSC Steering CommitteeSCBF Swiss Capacity Building Facility – Association for Income and Employment GenerationSDC Swiss Agency for Development and CooperationSME Small and medium enterprisesSub-SC Sub-Steering Committee


Message from the SCBF Chair

& the Secretary General

The year just ended marked the start of a new funding phase, with renewed contributions from the Swiss Agency for Development and Cooperation SDC. The financial and technical support we receive from our members allows us to continue and expand our activities to benefit low-income populations in developing and emerging economies. It also allows us to refine and implement our fundraising strategy beyond 2018.

SCBF remains focused on promoting private sector-led financial inclusion. This includes expanding access to high-quality, demand-driven financial services for low-income populations, ensuring the efficient use of our resources, responding to the needs of our target clients, and always striving for pragmatic solutions.

We will reinforce our focus on tangible outcomes and insist on the related reporting. This Annual Report is a first step in that direction, and we invite you especially to study the ‘Facts and figures’ section on page 9.

Knowledge management and feedback loops will quickly gain in importance in line with the growing number of projects that have been supported and completed. It is critical that we constantly learn from and share with like-minded stakeholders to improve our processes, selection criteria and approaches.

Furthermore, we will pay special attention to inclusive insurance projects. Together with microsavings, this area is of particular interest to our main funder, and Roland is delighted to bring his particular expertise to bear in the responsible expansion of relevant risk management services to our clients.

Though still a young organisation, SCBF has already achieved a great deal, as you will read in the following pages. We have the capacity to grow our membership and, more importantly, support innova-tive approaches to expand responsible financial services to a much larger number of end clients.

We hope that you enjoy reading the 2015 SCBF Annual Report.

Roland SteinmannSecretary General

Olga SpeckhardtSCBF Chair

It is critical that we constantly learn from and share with like-minded stakeholders

to improve our processes, selection criteria and approaches.

Olga Speckhardt Roland Steinmann

https://na1.documents.adobe.com/verifier?tx=CBJCHBCAABAAm4rJR8-ynbugapjypkjXgcblIy80k8oo

https://na1.documents.adobe.com/verifier?tx=CBJCHBCAABAAm4rJR8-ynbugapjypkjXgcblIy80k8oo


SCBF At a GlanceABOUT SCBF

The Swiss Capacity Building Facility (SCBF) is a public-private development partnership dedicated to improving the lives and livelihoods of low-income people and microentrepreneurs in developing and emerging economies, through financial inclusion as a strategy for alleviating poverty.

SCBF currently unites 16 Switzerland-based member organi-sations. This creates a unique partnership working to help partner financial institutions (PFIs) to enhance their outreach to financially excluded populations, as part of social and economic development work.

As such, SCBF also serves its members as a networking platform on which to share best practices and join forces to advance the Swiss agenda for promoting financial inclusion in developing and emerging economies.

OBJECTIVES

The association’s specific objectives are to:

a) Foster the development of inclusive financial sectors that offer responsible, client-oriented and economically sustain-able services that help reduce vulnerability and contribute to income and employment generation among low-income people (notably women), smallholder farmers, and micro, small and medium enterprises (MSME).

b) Pool the financial expertise and resources of the private and public sectors and, in particular, leverage private investment to enhance the scale and effectiveness of Swiss contributions to the growth of inclusive financial services in the South.

CO-FUNDING WINDOWS

The SCBF’s operations are organised around the following three co-funding windows:

1. The primary PRODUCT UP-SCALING WINDOW (PUW) co-funds the development, testing and launch of both client-oriented financial products and product distribution channels that meet the needs of low-income households, smallholders, and MSMEs, with a particular focus on women and rural areas. The PFIs concerned are assisted in overcoming prioritised constraints that have so far hampered them in up-scaling their ‘pro-poor’ banking and/or insurance operations in a sustainable manner.

2. The supporting FEASIBILITY STUDY WINDOW (FSW) co-funds the preparation of feasibility studies and business plans, as well as related activities. These are fundamental to (1) introducing insurance services, (2) transforming successful financial inclusion programmes into regulated financial institu-tions, and (3) establishing greenfield financial institutions in environments in which the existing financial institutions are not able or willing to engage in inclusive financial services. The FSW helps prepare the groundwork for action-oriented proposals for the PUW, and thus excludes academic research. It is intended for members and SDC partners only.

3. The supporting FINANCIAL EDUCATION WINDOW (FEW) co-funds financial education campaigns that are essential before PFIs can introduce insurance and other new financial services in operating areas in which financial literacy levels are low. The FEW supports ongoing product up-scaling. It is intended for members and SDC partners only.

APPROACH

SCBF is a unique partnership fostering social and economic development in developing and emerging economies through financial inclusion. It began in 2010 as an informal collaboration between six members, based on their long-standing participation in financial sector development around the world. New members rallied to the idea, and SCBF member-ship has now grown to its current level of 16 members. In December 2012, the partnership was formally registered as a non-profit association in Fribourg, Switzerland.

Joined Members

2010

2012

2013

2015

From left to right: Rolf Marti (Zurich Insurance), Maria Teresa Zappia (BlueOrchard), Ximena Escobar de Nogales (Bamboo Finance), Laura Hemrika (Credit Suisse Foundation),

Nathalie Wyser Vizcarra (SDC), Bahar Pirmadjid (Allianz), special guest Jürgen Hammer (SPTF), Christian Sinobas (KiWi), Isaac Magina (Swiss Re), Hans Ramm (SDC), Olga Speck-

hardt (Syngenta Foundation), special guest George Kistler (Opportunity International), Gertrud Stäuber (SCBF), special guest Michael Rüegger (SCOR), Alexandre Berthaud

(E-Savings.club), Roland Steinmann (SCBF), Konrad Ellsässer (SMH), Mariano Larena (Symbiotics), Magdalena Gampp (responsAbility), Gabriella Crescini (Swisscontact), Cristian

Canis (Venture South), Marina Kortenbusch (BFC), Markus Schär (FIDES)


Members - and a Short History2010-2015 FROM 6 TO 16 MEMBERS


New Members In 2015

E-SAVINGS.CLUB

With subsidiaries and operations Europe, Africa and Latin America, E-Savings.club is a disruptive financial technology company based in Switzerland and a focus on emerging economies. Swiss technology combines with an ancient Asian financial tradition (the rotating savings and credit associa-tion, or ROSCA) to achieve a financial revolution: the ‘Uber’ of personal financial services. The E-Savings.club concept was sparked by the realisation that the two billion people who still do not have access to financial services will not be financially included if we continue on the same path of developing complex and supply side-driven products. People at the bottom of the pyramid hardly understand these products, and financial education is thus required to avoid the pitfalls of over-indebtedness and account dormancy. E-savings.club’s answer is to leverage traditional familiarity with the informal savings structures which exist throughout the developing world. These structures have different names but the same core mechanism, which is a time-bound commitment and regular payments. E-savings.club’s goal is to revolutionise finance by making it collective. Further information can be found at www.e-savings.club

SYMBIOTICS

Symbiotics, incorporated in Geneva in 2004, is an investment company specialised in emerging, sustainable and inclusive finance. It offers market research, investment advisory and asset management services.

Since its inception, Symbiotics has invested over USD 2.4 billion in more than 275 microfinance institutions in 50 emerging economies, working with more than 28 investment funds and many institutional investors.

Furthermore, Symbiotics’ experienced Capacity Building and Technical Assistance Unit (CB&TA) offers specialised, custom-ised and fully-fledged CB&TA management services. CB&TA is the perfect fit with our investment activities, and is targeted to maximise impact and strengthen the institutional capacity of our partners.

The company is headquartered in Geneva. It has offices and a total staff of over 80 professionals in Cape Town, London, Zurich, Mexico City and Singapore. Further information can be found at www.symbioticsgroup.com

“E-Savings.club shares similar objectives to the SCBF, such as to strengthen the leading role of the Swiss financial sector in microfinance and other development-oriented technical and financial investments, and to offer tailor-made technical assistance to partner financial institutions in the global South. Becoming a member of the SCBF is also a seal of trust for our clients and gives us visibility both within Switzerland and globally.”

Alexandre Berthaud, CEO

“Symbiotics is pleased to join SCBF, a Swiss partner aligned with our common values and objectives towards the growth of inclusive financial services. We look forward to sharing our experience in technical assistance and capacity building services, and working with other members to contribute to the SCBF centre of excellence for the ultimate benefit of the financial institutions and grantees we serve.”

Mariano Larena, Head of Technical Assistance and Development Finance


5,859basic loans

38,162life insurance with savings

351housing loans with construction technical assistance

500,000money transfers

372agricultural loans

600mobile money services

5,600loans with life insurance

766members of management & staff trained

207loan savings

16,894clients trained

REGION APPROVED ONGOING COMPLETED

North Africa 3 5 2

Middle East 0 1 0

Sub-Saharan Africa 5 11 4

Asia 4 3 1

Latin America & the Caribbean 4 1 3

TOTAL 16 21 10

2015 Facts and FiguresREGIONAL DISTRIBUTION OF TECHNICAL ASSISTANCE

In 2015, SCBF technical assistance was delivered in 23 developing and emerging economies through 16 approved, 21 ongoing and 10 completed interventions.

OUTREACHOutreach to low-income populations through different types of financial products for the ten interventions completed in 2015 is shown below. This table is based on the results published in the respective final reports upon completion of the SCBF-funded technical assistance interventions. However, the intervention logic of SCBF is that its PFIs continue the up-scaling of the new or improved financial services and, likewise, their outreach to their clients. SCBF will track this outreach again three years after the final report for each intervention in order to track the ‘full’ results triggered by the technical assistance support. Moreover, the figures below represent just a small fraction of the portfolio of all interventions, namely 10 out of 71 as at December 31, 2015. By the end of 2018, the target is that at least 1,450,000 new low-income clients and indirectly 7,250,000 family members will have accessed the client-oriented financial services through the SCBF technical assistance support.

In 2015, nine product up-scaling interventions and one feasibility study were completed. The total budget was CHF 1,958,098 for the former, with a PFI contribution of 34%, and CHF 152,516 for the feasibility study on housing-related banking services, with a 30% contribution from the PFI. Two of the product up-scaling interventions were conducted in North Africa: in Morocco with a focus on delivery channel development in banking, and in

Egypt on insurance endowments. The total budget came to CHF 591,103, and the average contribution by PFIs was 22%.

To see the final reports for these interventions, please refer to the SCBF website:http://scbf.ch/product-upscaling-interventions for product-upscaling interventions, andhttp://scbf.ch/feasibility-studies for the feasibility study

1 0 | S C B F A N N U A L R E P O R T 2 0 1 5

Type of product No. of interventions/studies completed

Banking - MSME lending 3

Banking - housing 2

Banking - delivery channel development 2

Insurance - endowments 3

Overview of Interventions Completed in 2015

S C B F A N N U A L R E P O R T 2 0 1 5 | 1 1

NORTH AFRICA

Morocco, product up-scaling, 2011-05Al Barid Bank, a subsidiary of the Moroccan Post Office, built 41 Barid Cash outlets with flexible hours in major cities, and is planning further expansion in rural areas based on the newly established network. For further information, see the interview with Abdelkah Benanane at Barid Cash and Zakia Hazzaz at ABB on p. 18.

Egypt, product up-scaling, 2011-07ABA and DBACD, two of the top five MFIs in Egypt, offered entry-level life insurance with savings to low-income popula-tions. For further information, see the interviews with Motaz El Tabaa at ABA and Dalal W. Takla at DBACD on p. 20.

SUB-SAHARAN AFRICA

Senegal, product up-scaling, 2012-01FIDES Microfinance Senegal, a greenfield MFI with no prior experience with inclusive insurance products, piloted and rolled out a savings life product for the low-income segment in rural areas. For further information, see the interview with Konrad Ellsässer at FIDES on p. 22.

Mozambique, product up-scaling, 2012-08MBFM successfully developed and offered a credit life product and an insured savings product to low-income households and microentrepreneurs in northern Mozambique, where many NGO-run microcredit operators have previously failed. For further information, see the interview with Konrad Ellsässer at FIDES on p. 23.

Senegal, product up-scaling, 2013-06FMS conducted a study to understand a Senegalese market with a tendency towards over-indebtedness and consumer lending, and to develop financial services to mitigate such risks.For further information, see the case study on p. 31.

Kenya, feasibility study, FSW-10Habitat for Humanity, with support by Swiss Re, explored product concepts and distribution opportunities for housing and property microinsurance in Kenya. For further information, see the interview with Dr. Mario Wilhelm at Swiss Re, endorsing Habitat for Humanity on p. 28.

ASIA

Nepal, product up-scaling, 2012-11NMB Bank worked with the Nepalese central bank to down-scale and develop its own pro-poor banking strategy, as well as appropriate products to meet its low-income sector lending targets, instead of doing so indirectly by lending to MFIs. For further information, see the case study on p. 19.

LATIN AMERICA & THE CARIBBEAN

Honduras, product up-scaling, 2013-09With a co-funding by FMO, Banco Popular, the second-largest MFI bank in Honduras, trained its middle management to improve their skills and enhance productivity, and to develop a new credit savings product, ‘Credi-Ahorro’, for women aged 35 to 50. For further information, see the interview with Ximena Escobar de Nogales at Bamboo Finance on p. 30.

Haiti, product up-scaling, 2013-10FINCA Haiti addressed the need for rural financial services by launching a new agricultural loan product aimed at smallholder farmers with commercialised production, and by establishing more rural offices. Furthermore, it deployed a new mobile money platform as an alternative distribution channel to assist its clients with their banking transactions. For further information, see the interview with Marie Marcelle S.G. Gerard at FINCA Haiti on p. 24.

Honduras & El Salvador, product up-scaling, 2013-11 a & bCOMIXMUL in Honduras and CrediCampo in El Salvador conducted a market survey and to redesign their existing housing loan products, including technical construction assistance, to better suit the needs of their clients. For further information, see the interview with Gema Stratico at Habitat for Humanity on p. 26.

Ten product up-scaling interventions, three education campaigns and three feasibility studies were approved in 2015. The total budgets were CHF 2,237,476 for product up-scaling, with a PFI contribution of 41%, CHF 446,579 for financial education campaigns, with a PFI contribution of 36%, and CHF 589,150 for the three feasibility studies, with a 38% contribution from PFIs. Two of the product up-scaling interventions and one financial education campaign were approved in North Africa. All three were implemented in Tunisia. These efforts concentrate on loans and insurance offerings, with the FE supporting the latter. The total budget approved for this region stood at CHF 581,128, with average PFI co-funding of 47%.

To see the factsheets for these interventions, please refer to the SCBF website www.scbf.ch


Overview of Interventions Approved in 2015

Type of product No. of interventions/studies approved

Banking - MSME lending 4

Banking - savings 1

Banking - delivery channel development 1

Banking - microleasing 3

Banking - microcredit 3

Banking - housing 1

Insurance - credit life plus 1


NORTH AFRICA

Tunisia, product up-scaling, 2012-04This intervention was redesigned in 2015. Advanse established a greenfield MFI in Tunisia to offer a range of loan products to MSMEs in response to the harsh socio-economic crisis. The technical assistance was used for a number of capacity-building initiatives, from establishing a strong management team to defining the first set of inclusive loan products.

Tunisia, product up-scaling, 2014-10Enda Inter-arabe is replacing its internal solidarity fund with an extended credit life plus product, and to lay foundations for developing additional inclusive insurance products with limited external assistance.

Tunisia, financial education, FEW-07The objective of this campaign is for Enda Inter-arabe to reach at least 150,000 clients in an effort to promote better money management and the use of financial services, including insurance. This campaign is designed to reinforce the inclusive insurance product pilot in the country, PUW 2014-10.

SUB-SAHARAN AFRICA

Rwanda, product up-scaling, 2014-08With this intervention, the objective of two microfinance insti-tutions in the Great Lakes Region - Letshego in Rwanda and Hekima in DRC - is to expand their housing portfolio through the design, development and roll-out of new products involving non-financial housing support services.

Rwanda, product up-scaling, 2014-09Equity Bank Rwanda aims to replicate Fanikisha+ lending in Rwanda, deriving lessons from Tanzania. Fanikisha+ is a range of five group and individual lending products tailor-made to female entrepreneurs’ needs. They combine financial literacy, entrepreneurship training and business coaching.

Benin, product up-scaling, 2015-01The Benin Post Office to seeking to increase its savings base by digitising the ‘tontine’ traditional, informal savings service and by using field officers to collect savings. The Post Office plans to open new accounts remotely and collect regular deposits in the field.

Ghana, feasibility study, FSW-13This study is to provide a group of potential investors – Swiss Microfinance Holding, Lindt & Sprüngli, Armajaro and Allianz Ghana – with key market data to determine the profitability of a business venture that would offer affordable and meaningful insurance services to cocoa farmers in remote areas to reduce their and their families´ vulnerabilities.

Rwanda, financial education, FEW-06This financial education campaign targets women entrepreneurs and aims to improve their knowledge about a range of financial services, as well as basic accounting skills. It is expected that they will be able to make better decisions about how to grow their business, when to invest and how to finance investment. The campaign is linked to PUW 2014-09.

ASIA

Myanmar, product up-scaling, 2015-07ALLIANCE has launched a capacity-building initiative to develop a small-enterprise client loan portfolio. It aims to develop, pilot and launch a loan product tailored to clients’ needs, and to adjust its MIS, training, and marketing activities accordingly.

Myanmar, financial education, FEW-08This financial education campaign by ALLIANCE targets micro-business clients (predominantly women), small businesses and farmers to help them make informed decisions about how to finance their operations. This pilot financial education project is to be fully integrated permanently into ALLIANCE´s struc-ture to better understand household needs and to facilitate product development efforts.


Bangladesh, feasibility study, FSW-14The Syngenta Foundation intends to assess the Bangladeshi market for agricultural insurance, and its regulatory framework. It aims to understand the demand for agricultural risk mitiga-tion products and the most effective ways to distribute them to smallholder farmers. At the same time, it will conduct a dry run, to understand local farming and to assess risk manage-ment strategies on a variety of crops.

Myanmar, feasibility study, FSW-15The Syngenta Foundation intends to assess the Myanmar market for agricultural insurance, and its regulatory framework. It aims to understand the demand for agricultural risk mitiga-tion products and the most effective ways to distribute them to smallholder farmers. At the same time, it will conduct a dry run with similar concepts, to understand local farming and to assess the impact of a variety of risks on crops.


Peru, product up-scaling, 2015-02FENACREP is preparing and testing tailored microleasing products to give small rural farmers access to productive assets in a pilot scheme in Puno. FENACREP plans to scale up this intervention in other rural areas of Peru.

Nicaragua, product up-scaling, 2015-03FDL and Banco LAFISE Bancentro Farmers are seeking to diversify their portfolio by cementing their position in the agro-industrial sector. They will do this by offering microleasing products to farmers with reduced access to credit.

El Salvador, product up-scaling, 2015-04Fundación Campo is introducing microleasing in El Salvador, beginning with a pilot in the beekeeping sector. It will provide access to credit for farmers wishing to invest in productive assets.

Haiti, product up-scaling, 2015-05FINCA Haiti aims to improve mobile banking through client education and the availability of sub-agents. It is setting out to analyse the limited client acceptance of the Tcho-Tcho mobile channel for loan repayments, to adapt its product and marketing accordingly, and to pilot this revised approach at three branches.

Fourteen product up-scaling interventions, five financial education campaigns and two feasibility studies were approved prior to 2015, and thus treated as ongoing in 2015.


Overview of Interventions Under Implementation in 2015

Product up-scaling interventions under implementation in 20152011-01 Palestine Pilot test of savings products at an MFI in Palestine (suspended due to regulatory changes)2012-06 Guatemala Institutional strengthening for financial inclusion2012-10 Mozambique Outreach expansion through mobile banking services2013-05 Morocco Replicating Caregiver: providing health microinsurance to low-income clients of Association Al Amana2013-07 Ethiopia Access to water and solar energy through microinsurance2013-08 Morocco Scaling up mobile banking: delivering G2P benefits to rural areas (on hold due to regulatory changes)2013-12 Tanzania Promotion and acceleration of women in small businesses 2013-13 Morocco Bank down-scaling in Morocco2014-01 Tanzania Introducing agricultural insurance to smallholder farmers in the Arusha region2014-02 Tanzania Introducing agricultural insurance to smallholder farmers in the Iringa region2014-03 Morocco KiWi eKiosk pioneering integrated cards & mobile payments for micromerchants2014-04 Ghana Introduction and up-scaling of microloans for the distribution of bichar stoves2014-05 Nepal Scaling up of innovative microinsurance products for the rural poor2014-06 Burkina Faso Development of savings and insurance products for migrants through international postal transfers

Financial education campaigns under implementation in 2015FEW-01 India Financial education for underserved clientsFEW-02 Tanzania Introducing agricultural insurance to smallholder farmers in the Arusha regionFEW-03 Tanzania Introducing agricultural insurance to smallholder farmers in the Iringa regionFEW-04 Morocco KiWi eKiosk pioneering integrated cards & mobile payments for micromerchantsFEW-05 Mozambique Financial education in an inclusive finance approach based on the development of savings and credit groups

Feasibility studies under implementation in 2015

FSW-11 Myanmar Feasibility study for the implementation of key performance indicators and a programme linking the independent PACT programmes PGMF and VRT

FSW-12 Mozambique Feasibility study for agricultural insurance

INSURANCE

Nicaragua

Honduras

Haiti

Guatemala

El Salvador

Ecuador

Feasibility study

Financial education

Savings & Insurance

Credit life plus

Agriculture

Health

MSME lending

Savings

Delivery channel

Money transfer

Microleasing

Microlending & Energy

Microlending & Water

Microlending & Housing

NORTH AFRICA

Egypt

Tunisia

Morocco

Bolivia


Financial Products per CountryProduct upscaling

COMBINED

Financial education & Feasibility studies

For further informationsee Appendix 2, page 42

Peru

BANKING

SCBF Operations - Global Overview


Regions of Implementation

MIDDLE EAST

Jordan

Palestine

Myanmar

Pakistan

Vietnam

Nepal

ASIA

Bangladesh

Cambodia

India

Senegal

Zambia

Mali

Rwanda

Mozambique

Ivory Coast

Kenya

Burkina Faso

Ethiopia

Ghana

SUB-SAHARAN AFRICA

Benin

Tanzania


Interview with Abdelhak Benanane, CEO at Barid Cash, and Zakia Hazzaz, International Cooperation Director at Al Barid Bank (ABB)

Please tell us the reasons you approached SCBF for technical assistance.It is our core business and mission to increase the access of low-income populations to formal financial services. Al Barid Bank already has a lot of experience in boosting financial inclusion and reaching out to the disadvantaged masses. To us this collaboration with SCBF is not a project but a contribution to our core activity.

How are Barid Cash outlets distributed?As of now, Barid Cash owns 73 access points. Another 56 are managed by our partners. The goal is to achieve 250 outlets in total by the end of 2016. Barid Cash has had very positive experience using ´geomarketing´ mapping and spatial analysis tools as a decision-making framework to localise future outlets in the regions where low-income populations are prevalent.

What impact has the opening of Barid Cash outlets had on rates of financial inclusion in Morocco?It is too early to say as our operations have not fully taken off. We expect to gain a better understanding of the impact in about a year, once the new banking regulations have been put in place. However, we can say that in the past two years, Barid Cash has processed around 500,000 national and international cash transfers by our users.

What feedback have you had from clients who benefit from Barid Cash? Users appreciate the proximity, quality and speed of service, and convenience of the opening hours. Unlike traditional banks, Barid Cash outlets are open from 8am to 8pm, and until sunset during Ramadan. People trust the Moroccan Post Office as a trademark. As a subsidiary of the Post Office we would like to build on that trust and offer other inclusive financial services in the future.

What constraints, if any, have you encountered during the implementation stage?ABB considered externalising the recruitment of its agent network for Barid Cash money transfers to individual retailers. However, a new banking law came into effect in January 2015, presenting a clear constraint for such networks and preventing ABB from mandating physical persons as franchises. The provisions of the new banking law should be published soon. On the other hand, the delays in implementing the law provided ABB with enough time to prepare well for the new regulatory framework.

In what areas do you expect Barid Cash outlets to innovate in the future?Barid Cash would like to extend its financial services by offering bank accounts, savings accounts, and insurance services, thus becoming a one-stop financial provider for the poor. Under the new law, our clients will be restricted to a maximum bank account balance of MAD 20,000 (~CHF 2,000). We aim to be as relevant as possible to our low-income clients, abiding by the principles of proximity, accessibility, and flexibility.

2011-05: Innovative distribution channel: ´Barid Cash´ postal banking


CONTEXT AND BOTTLENECKSNepal is one of the poorest countries in the world, currently ranking 157th of 187 countries on the Human Development Index. In 2014, 34% of the population aged 15+ had an account at a financial institution, 16% had formal savings and 12% engaged in formal borrowing. The central bank set a target for commercial banks to lend 4.5% of their total assets to the ‘deprived sector of the country’. As the presence of banks in rural areas is limited, most lending is to microfinance banks. These offer various microfinance products within a limited legal, financial and technological framework. SCBF supported NMB Bank in reducing its dependency on MFI operations (which are often perceived as high risk) and in developing its own microfinance strategy and related products.

RESULTSThree loan products were developed to cater to the needs of different income groups (see figure). By the end of January 2015, NMB had 681 active microfinance borrowers (against a target of 1,700) with a loan portfolio of NPR 59 million (USD 549,500) (see figure). The bank was able to increase direct microfinance outreach to 12 branches (the target was nine) by the end of March 2015, with four in remote regions. It has trained ten staff members exclusively for microfinance services, and 500 microfinance clients. A new system with a focus on microfinance clients was developed and fully integrated to the core banking system. In line with the central bank’s requirements, NMB Bank plans to establish another eight rural branches.

LESSONS LEARNT• It is difficult to make changes to the existing set-up to pilot a microfinance programme which accounts for only a small share of a large bank’s portfolio. It is crucial to involve the board and senior management closely, and to provide adequate microfinance expertise.• It takes considerable time to recruit specialised microfinance staff. The initial disbursement of microfinance loans by regular staff led to problems and delayed the intervention. • Involving the bank’s financial literacy team in the development of the modules and tools led to a sense of ownership for the bank’s training team.

Case Study on Down-scaling in Nepal

2012-11: Down-scaling to increase outreach to microfinance clients in Nepal

CLIENT FOCUSBibirani Tamang and her family rear yaks and Chauri cows for their living. Bibirani makes butter and churpi to sell at the local market. The demand for these products is high, as yak milk has a high fat content, and the milk of Chauris, which graze in the pristine Himalayas, is organic and thought to have medicinal properties. In 2013, NMB Bank provided a loan of USD 930 and another one in 2015 of USD 1,860 to Bibirani to increase her livestock and to buy a machine to make churpi during the off-season. In the past she has struggled to maintain a good living standard. Today she generates cash surpluses, allowing her to invest in her business and in personal assets.


Interview with Motaz El Tabaa, Executive Director, ABA,

and Dalal W. Takla, Development and HR Manager, DBACD

Why did you choose specifically life insurance with savings as part of the expansion of pro-poor financial services in Egypt?Motaz: Egyptian law prohibits MFIs from offering purely saving products to its clients. We decided to offer this savings-based microinsurance product for two main reasons: 1. to offer a long-term saving tool for the poorest in the regions, and 2. to allow them to save for retirement, as the social insurance system for this population segment remains inadequate. Of course, short-term savings tools are important for our clients, too, mainly for cash manage-ment purposes. For that reason, we have been working with the Postal Bank for several years, though progress is slow. Now several banks offer e wallets – an exciting new opportunity that we are currently exploring.Dalal: Savings-based microinsurance is an affordable product that is tailored to the needs of our clients. It helps to mitigate the impact of risk on their families. The savings component is much in demand. Under the current regulatory framework, MFIs are unable to mobilise savings as a standalone financial product.

What other kinds of inclusive insurance products are available to the people of Egypt?Motaz: In Egypt, the main inclusive insurance products remain credit life and credit guarantee insurance. In addition, there are initiatives concerning medical discounts, livestock insurance, and most recently hospital cash. ABA provides credit life and livestock insurance and has recently started providing medical discounts. We are trying hard to get full medical insurance cover for our clients through the national health insurance scheme, but negotiations with the Ministry of Health are difficult because our contacts change frequently. For livestock insurance we work with the governmental insurance scheme.Dalal: The Egyptian Post Office offers a microinsurance programme called the ‘Citizen’s account’, which targets very

low-income people. However, this programme is inflexible. If a client misses a premium payment, their account is closed and the remaining savings are paid out. Then there is medical insurance offered by the Egyptian government. It is compulsory for specific segments (children, students, public employees, plus some private-sector segments), but the service is a poor fit with people’s real needs.

What challenges have you encountered during the implementation stage?Dalal: We have encountered the following four challenges:1. People do not understand the regulatory set-up under which we, as an NGO in partnership with a private insurance company, can provide them with insurance or savings. At the same time, they are cautious about getting involved with private insurance companies, based on negative word of mouth from other people’s previous experiences.2. We have not been able to measure the impact of the product on clients´ lives as it was implemented only in August 2015, and savings withdrawals start in year three or in the event of the client´s death. To date, there have been no claims. 3. Administrative procedures with CIL, our insur-ance partner, are unclear. We do not have immediate evidence of a client’s participation in the programme, which should come from CIL. 4. Lastly, some clients default on premium payments a few months after enrolling in the programme.

2011-07: First life insurance with savings plans offered to low-income Egyptians

by the Dakahlya Businessmen’s Association for Community Development (DBACD)

and the Alexandria Businessmen’s Association (ABA)


How many clients have you gained through this product up-scaling intervention, and how have they benefited?Motaz: To date, we have signed up 6,822 clients with 7,998 insurance policies. The process started very well, but it then slowed down when we learned that the loan officers had been forcing clients to buy insurance in order to get credit. This is when we stopped the initiative. Together with our insurance partner CIL we will launch another marketing campaign to educate clients and our loan officers about the benefits of this product and its bonus. We will also incentivise loan agents to sell the product effectively and responsibly. Our target is to sell 150 policies per month.Dalal: We believe the product has a great social impact on the clients. However, in view of its recent start, its impact has yet to be examined. DBACD rolled out the insurance product in August 2015, and since then we have reached 2,970 active clients.

Do clients value this product more for its insur-ance or more for its savings component?Motaz: Clients appreciate it mostly for its savings compo-nent. The insurance cover is rather low and not the primary reason to buy this product. However, we have a slight issue with the returns on the investment fund: our product offers 9-10%, while individuals can get as much as 12.5% from certificates of deposit (CDs). Though the minimum amount for CDs is too high for our clients, they compare the interest rate with our product. The policy term is two to three years, with a maximum of five years. We are currently in talks with other insurance companies to negotiate a deal to reduce insurance premiums and increase the investment fund. The goal is to target slightly better-off clients, and to get a product from an insurance company without involving an investment fund as a third party, in order to cut administrative costs. Dalal: Women appreciate the product for both savings and insurance, while men value mainly its savings component. The best way to convince clients to enrol in the programme is to educate them on how savings can be used to mitigate risks and provide insurance in the event of the policyholder’s death.

Is there anything that prevents more clients from opting for this new product?Motaz: Given the political turmoil and resulting economic crisis that Egypt has endured, most of our clients live from one day to another, without planning for the future. As a result, I can see why many do not come to us for a long-term savings solution.

Dalal: The return on savings is rather low and the saving period is very long. The product needs more flexibility from CIL. Sometimes clients want to pay for a few months in advance, which is not currently possible.

What was your approach to financial education linked to this new product, and how do you measure its impact?Motaz: Financial education was crucial to the success of this product. We trained around 15,000 clients through various approaches. We have an ongoing education campaign, split into four categories, each focusing on a different client segment. The feedback we have received is very positive. Clients appreciate not only acquiring knowledge about insurance, but also gaining the ability to identify the risks of borrowing and the advantages of saving. From our side, we could see that the financial education campaign was reflected positively in our clients’ loan performance. Dalal: We targeted a population segment that has little knowledge of risk management and is often financially illiterate. We trained loan officers on how to educate clients to improve their skills in both areas, which helps the loan officers to sell the product. Around 23% of active microinsurance clients attended financial education workshops. The product is easy to understand and to explain. Clients of other programmes showed interest in these workshops, too. In total, DBACD trained 8,700 clients. Following the financial education workshops, more clients expressed interest in the insurance product.


Tell us about your partner financial institution on the ground, and its experience in the inclusive insurance sector prior to entering the market in Senegal. FIDES Microfinance Sénégal is a microfinance institution founded in 2011 and based in St. Louis in the north of the country. Its shareholders are Swiss Microfinance Holding (SMH) as a sponsor, two DFIs (KfW and IFC), and two social investors (Investisseurs & Partenaires et Oikocredit). It provides savings, credit and insurance services in rural and urban areas. Insurance (savings life and credit life) has been introduced thanks to the support of SCBF. FMS mainly serves two client segments: entrepreneurial women running income-generating activities on the one hand, and small enterprises with up to ten employees on the other. Both client segments are vulnerable, because an accident involving, or death of, a family member can bring these people back under the poverty line. This is why insurance and savings are important.Inclusive insurance in Senegal still largely takes the form of credit insurance, securing repayment for the bank in the event of the borrower’s death. Under the SCBF project we have been able to achieve two principal outcomes:1. Develop insured savings and credit products, based on the assessment of client demand; 2. In partnership with Allianz, build a low-cost distribu-tion and claim settlement model under which small tickets

are also insurable on a cost-covering basis, and claims can be paid out within 48 hours rather than after several months.

What was your main motivation behind the intro-duction of inclusive insurance in Senegal?The objective was twofold: 1. Provide a service enabling clients to protect themselves against key risks, while mobilising a first-class international insurer as a final risk-taker;2. Strengthen FMS in a competitive environment by offering an attractive product range.

What aspect of the product do clients appreciate most? Has there been any criticism?It was not easy to introduce the first formal insurance product for the low-income population. The fact that the product is simple, and efforts have been made to explain it, were probably the key success factors. Initial criticisms were linked to a cumbersome client registration process which has now been streamlined in agreement with Allianz.

What was your target market? What was your outreach to clients with this insurance offer?The target market is the bank’s clientele. At present about 30,000 clients are insured. The increase in the number of insured people will depend on overall growth in the client base.

Interview with Konrad Ellsässer, Director of FIDES2012-01: Introduction of microinsurance in rural Senegal


Do you consider this pilot product a success from the PFI and client points of view?The product is considered a success by the PFI because it is generating substantial additional income. Client satisfaction is high. Nevertheless, there is still important potential to be explored. For example, a product combining savings, credit and insurance for housing finance is still to be developed. Housing is a big issue for low-income people and such a product can secure a key asset-building strategy. There is still considerable room for improvement.

Do you plan to replicate this same model in other countries?We are considering using similar products in new ventures in rural areas in Ghana and Ivory Coast. Allianz, our partner in Senegal, has asked us for authorisation to use the FMS insur-ance product in Egypt, in its partnership with local banks.

2012-08: Strengthening self-reliance and the asset-building strategies of poor households

and microenterprises in northern Mozambique by introducing microinsurance via Micro-

banco FIDES Moçambique

Why did you choose to operate in a region (northern Mozambique) in which many MFIs have failed? We were asked by the SDC to engage in its target region. Nampula has the second-largest population concentration in the country, with a great deal of potential for financial services. The biggest challenge in the region is the low level of school education. It is very difficult to find staff and to build capacity.

What did you hope to achieve with the introduction of inclusive insurance products to people in this region? How does this complement your product portfolio?We did considerable research first. We saw that most clients manage to come out of poverty several times in their life, but they fall back again each time a major lifetime event occurs. We also saw that most of these turning points were insurable events. We then started to negotiate with the biggest private insurer in South Africa, Hollard, with which we had already developed a partnership in Namibia. Together with the insurer we developed an insurance package combining life insurance and funeral insurance, with the death of the client or one of their family members being the most important lifetime event to be covered. We succeeded in developing insurance cover that finances the funeral with a fixed amount to cover necessary expenses. This is independent of the level of credit or savings the client has signed up for. This is an important achievement for poor people and goes beyond what we had developed in Senegal.

How many clients have you insured with these products in northern Mozambique?At present we have about 6,000 policy-holders, meaning that around 12,000 people are insured and 24,000 are beneficiaries. Further development will depend on how the institution itself grows. We would like to see all clients have a minimum level of coverage.

What is your break-even projection, given the challenging context of a greenfield MFI in a region in which others have failed?The business plan of the bank is currently under revision. The more the institution goes into low-income segments and rural areas, the longer it will take to achieve sustainability. The key is to establish the right mix of poorer clients with small tickets and financing for established small enterprises absorbing larger loans.

What is the feedback from clients?It is too early to judge. To date only a small number of claims have been settled. Clients can judge the product when they have seen at least one claim paid out in their neighbourhood, to people they know. Clients have the option of choosing an uninsured savings product, but they normally prefer to forgo earning interest on their savings and choose savings with insurance instead. Interviews with clients seem to indicate high satisfaction with the insurance coverage, but this still needs to be investigated further.

How will you continue measuring the success of this venture?There are several elements: client outreach and client satisfaction measured with FMS social performance measurement tools, the number and the nature of the claims settled, profitability for the MFI and the insurer, and the speed of claim settlement.


Interview with Marcelle SG Gerard CEO, FINCA Haiti

What is FINCA’s mission in Haiti?FINCA’s mission is to reduce poverty with long-term solutions that allow people to build sustainable wealth, create jobs and improve living standards.

How does the SCBF technical assistance grant help to generate employment and improve lives in Haiti?FINCA Haiti hired 17 loan officers, one supervisor, two coordinators and one consultant to implement the agricultural loan product and supervise its development. The technical support also helped indirectly to improve life in Haiti. FINCA Haiti was able to reach out to more Haitians, who are now better able to support themselves and their families through the profits earned from their farming activities. Likewise, clients using mobile money have been able to generate further savings. How many smallholders have you reached out to through the agricultural loan? How does it compare with your estimated outreach figures?Since the start of the project, we have reached out to 19,173 agricultural, rural and peri-urban clients. The estimated outreach figures have been surpassed by 174.4%.

What do you see as the biggest success in this pilot intervention?The whole pilot has been a success because demand for agricultural loans has always been there. However, the biggest specific success is related to mobile money. We received a very positive response from the clients who use this new technology. Even though most of them come from poor backgrounds with little educa-tion, they understand all of the advantages of using mobile money services.

How can you further educate your clients about the benefits of using mobile money services to reduce costs?The mobile money service is the latest financial service that FINCA Haiti offers to its clients. The objective is to reduce client costs. However, mobile money is a new concept in Haiti and low-income clients have been rather slow to accept it. Clients are accustomed to tangible money and are suspicious about transactions that do not involve it in its physical form. Thanks to the technical assistance received from SCBF, FINCA Haiti was able to start a promotional campaign with a focus on client education via short and repetitive training sessions. Loan officers keep repeating to clients the advantages of using mobile money. As a result of this campaign, the number of clients who repay their loans via mobile money services has increased from 343 in 2013 to 5,343 in March 2016.

2013-10: Providing access to finance for Haiti’s rural and agricultural populations


Has this particular intervention been beneficial for FINCA, too? If so, in what sense? If not, what would you have done differently?It has been beneficial for FINCA Haiti in terms of innova-tion and visibility. It allowed us to diversify the financial products we offer in order to reach more clients. The mobile money services are available also for non-FINCA clients, which promotes FINCA´s visibility. In the long run, it will help us reduce our operating costs by having more cashless branches, and thus also needing to invest less in security systems.

What plans do you have to continue your social mission in Haiti?As stated in our mission, we want to continue reducing poverty by allowing people to build sustainable wealth, create jobs and improve living standards. We forecast serving more people with our existing financial services, specifically those who are financially excluded in Haiti, and especially women. We want to increase the number of people we serve with agricultural loans and village banking loans in the most remote areas. In order to better serve this type of clients, we are planning to offer mobile disbursement so they can access their money quickly, easily and at a lower cost, without having to travel to a branch. We have identified huge demand for agricultural loans. These are very risky for microfinance institutions to provide because of the inherent risk in agriculture in Haiti. We are willing to take that risk on if we are able to find an insurance fund that will join us in this intervention. Furthermore, we will continue serving all entrepreneurs to help them grow their businesses. In the long run, we would like to provide insurance products to businesses and families to help them cope better with unexpected events. As at March 2016, our portfolio stood at 35,878 clients, at a volume of USD 8,638,459. Of this, 32.54% is accounted for by very low-income clients, and 87.96% of the entire portfolio is made up of women. Our goal is to reach 45,306 clients with a volume of HTG 891,278,625 (~USD 14,385,237), while maintaining the percentage of female clients at over 80%.

As stated in our mission we want to continue reducing

poverty by allowing people to build sustainable wealth,

create jobs and improve living standards.


Interview with Gema Stratico Program Manager – Market Development and

Why did you choose Honduras and El Salvador for housing microfinance interventions?Habitat already had previous microfinance market knowledge and experience working with financial service providers (FSP) in both countries. The poverty context and housing deficit situation as well as a well-developed microfinance market presented an appealing opportunity for partnership with SCBF to leverage the programme results there. Habitat for Humanity also saw good potential in working with the national Habitat organisations. Was there a market opportunity for pro-poor banking institutions?According to the project results, these countries definitely proved to be a market opportunity. We worked with Credicampo and Enlace in El Salvador and COMIXMUL in Honduras. For example, Credicampo approved 13% more loans than estimated. In the first quarter of 2016 alone, Credicampo disbursed 746 loans and Enlace 769, showing high demand for the product.

What is your assessment of the partner financial institutions in the long run?Credicampo and Habitat El Salvador now have an ongoing partnership that benefits both organisations as a direct consequence of SCBF support. Habitat El Salvador also worked with Enlace on an impact study together with Oxfam at the end the SCBF project. The

The situation in Honduras is more complicated. COMIXMUL made an unfortunate decision and invested USD 4.5 million in a hospital, resulting in it becoming illiquid and prompting an institutional crisis. This decision forced the cooperative to cease soliciting and approving credit applications for housing improvement and other lines of financing. Since then, we have responded to the situation by investing in its housing product through our MicroBuild Fund. Unfortunately, neither the product nor the institution has flourished. How satisfied are clients with the product?In general, clients are very satisfied with the product in Honduras and El Salvador, as well as in other countries in which Habitat introduces, strengthens or improves a housing microfinance product. These loans have proved to have a positive impact on the clients’ confidence in coping with unforeseen disasters, and this leads to a feeling of security. We invite readers to read the impact report from Enlace at https://www.habitat.org/sites/default/files/impact-report-enlace.pdf

Why did the MFIs decide to go ahead with this type of inclusive financial product specifically?Housing is at the forefront of the vision and mission of Habitat for Humanity. The housing microfinance product is a very emotional one, and a need that is shared by everyone. People are drawn to home improvements as they fulfil their dreams of doing well for themselves and

2013-11: Building capacity to expand housing microfinance in Central America


achieving greater acceptance in society as they become prosperous members of their communities. Thanks to SCBF support, the project shows that housing significantly increases quality of life and represents a crucial and stable financial asset. From the FSP´s point of view, housing microfinance products (HMF) improve growth and market penetration and enable them to attract and serve a wider client group. They strengthen client retention and loyalty based on the step-by-step home improvement plan defined by each of the clients. How many clients have you reached, and in which regions do you see the greatest potential for growth?In partnership with Credicampo, the number of loans disbursed increased by 64% between December 2012 and December 2015, to its current level of 2,820.The Enlace partnership provided 4,447 loans. The total amount mobilised for Enlace and Credicampo in that period was USD 6.5 million – an increase of 82%. That’s a great example of the growth potential within El Salvador. How sustainable is the product? How many loans did you have to sell to break even?The HMF is highly sustainable. Breakeven was reached in less than 24 months and both of the FSPs are granting an average of 250 loans per month. What was your experience working with SCBF, and how does it compare to other donors? Do you have any suggestions for changes?Thanks to the partnership with SCBF, Habitat has been able to leverage our MicroBuild initiative. We were able to track the impact on clients and FSPs in a more specific manner because the project also included a study of social indicators. Habitat suggests the possibility of reducing SCBF reporting requirements, which can be extremely demanding. For instance, progress monitoring could be replaced by field visits from SCBF personnel, so they could be involved first-hand.


Interview with Dr. Mario Wilhelm Senior Microinsurance Specialist, Swiss Re for endorsement of Habitat for Humanity

FSW-10: Feasibility study for property microinsurance: exploring the market

opportunities for housing and property insurance in Kenya

Mario, what are your reasons behind endorsing Habitat for Humanity for financial support from SCBF?Swiss Re’s recent sigma study shows that 70% of economic losses as a result of natural disasters are not insured. This figure is even higher in developing countries where insurance markets are still underdeveloped. In the financial inclusion debate, microinsurance has become a very important topic, and many microinsurance schemes are being piloted. However, most of these activities focus on life insurance bundled with microfinance loans or airtime. There are only a handful of property microinsurance schemes worldwide. In a conversation with Habitat for Humanity, we realised that it has a network of relevant stakeholders in the low-income housing sector in Kenya. This provides the perfect basis for testing opportunities for home microinsurance.

Tell us about Habitat´s feasibility study approach.First of all, Habitat for Humanity set up a team of different stakeholders working on the project. It hired Bankable Frontier Associates, a global strategy consulting firm that works with well-known insurance consultants. In fact, one of the consult-ants developed and implemented a home microinsurance product with a big African insurer. Habitat also teamed up with a major bank in Kenya with an interest in low-income housing finance. Swiss Re joined the team to make sure that the consultants got access to the insurance industry as well as feedback on product proposals. Secondly, Habitat followed a structured approach by conducting both supply-side and demand-side research, and formulating product concepts that it tested with the bank and its clients. It was also important to set up a timeline and to work towards clearly defined milestones.

Is there a business case for property microinsurance in Kenya? If so, what type of insurance product is likely to be profitable and most beneficial to clients?The feasibility study identified a big cover gap in property insurance in Kenya. Some 34% of Kenyans live in permanent structures, which means that currently 34% of properties are insurable. Only 0.5% are currently covered, however. The study shows that, with product innovation, the market for property insurance can be expanded by an additional 6%, comprising middle and upper-income segments living in semi-permanent properties. The feasibility study proposes different products depending on the needs of different client segments. The main opportunity appears to be an enhanced housing credit insurance proposition that covers the impact of fire and the risk of the lack of effective title. Both product components provide a benefit not only to the homeowner but also to housing finance lenders.

What are the recommendations for marketing such a product successfully?There is a growing focus on bundling insurance cover with other services. Enhanced housing credit insurance could, for instance, be packaged with housing credits in partnership with banks and microfinance institutions. This approach offers the potential to increase outreach and scale. Since compulsory insur-ance is often seen as a cost rather than a benefit to the client, enhancing the policy to offer tangible value to the borrower and lender is one strategy to bring about a positive long-term change in attitudes. Finally, positive first-hand experience with insurance, and word‐of‐mouth marketing from neighbours, friends, and family are also enduring solutions.

Photo © Habitat for Humanity International / Teresa K. Weaver

Sofia Koech and her family, who live in a farm community west of Nairobi, built a larger core house with a housing microfinance loan from Habitat for Humanity Kenya´s retail microfi-nance programme that began in 2008. She is paying off a small loan that allowed her to put in concrete floors and her family has plans to take out a new loan to pay for stonework on the exterior walls of her house.


Mario Wilhelm,Swiss Re

What are the critical steps in growing the property insurance market in Kenya?The most critical thing is to share with the market that property microinsur-ance is, indeed, feasible. Habitat for Humanity is supporting public access to the feasibility study, which can be downloaded from the SCBF website. All of the stakeholders involved are also actively promoting the study. Swiss Re, for instance, has shared it with all major insurance clients in Kenya, as well as with banks and microfinance institutions.

Are there any indications that this feasibility study may be used as a basis for new product development in Kenya?There are signs that several local insurance companies are exploring and testing property microinsurance. In one case, a bank was inspired by the feasibility study and has restructured its housing loan products. This shows that the study has had an impact on other sectors, in addition to the insurance industry.

Since compulsory insurance is often seen

as a cost rather than a benefit to the client, enhancing the policy

to offer tangible value to the borrower and

lender is one strategy to bring about a

positive long-term change in attitudes.


Bamboo Finance operates in over 30 emerging markets. Tell us about your business model. Bamboo Finance is a commercial impact investor specialising in business models that produce and deliver essential products and services to low and lower-middle-income consumers in growth markets globally. We invest private equity and currently manage three funds, the Finan-cial Inclusion Fund I, the Oasis fund and the Financial Inclusion Fund II. These have roughly USD 280 million in assets under management, spread across 41 investments that reach over 29 million people and account for over 25,000 jobs in portfolio companies.

Why did you choose Banco Popular for technical assistance from SCBF?We acquired a participation in Banco Popular in 2012, when Bamboo Finance bought the Accion Investments in Micro-finance (AIIM) portfolio. Banco Popular

began as the microfinance programme of Fundación Covelo. In 2008, the foundation was officially transformed into a regulated bank, and is now the second-largest microfinance bank in Honduras, with 24 branches across the country. In 2013, Banco Popular was preparing a technical assistance project to strengthen operational and administrative standards in order to secure the bank’s growth and improve its performance. The project sought to strengthen middle management and review the product and segment offering for MSMEs. Following an onsite visit, Bamboo Finance decided to back this initiative. Together with the bank’s management, we contributed to the project concept and helped to define its scope, determine its deliverables, and select the consultant, etc.

Tell us about the new ‘Credi Ahorro’ product. How do clients and Banco Popular benefit from it?

The Credi Ahorro product was one of the deliverables from the technical assistance project which sought to refine the segmentation of MSE clients, and design and roll out a new product. Credi Ahorro was meant to boost savings across all branches and increase client loyalty through a monetary incentive on their microfinance loans. The incentive consisted of transforming up to 2% of due payments into savings, in return for on-time repayments. Unfortunately, as at April 2016 the product has failed to deliver. To date only 118 Credi Ahorro products have been taken out, of which only 33 are active. The balance is negligible. (A Credi Ahorro product is no longer active when a client misses three consecutive savings instalments.) Banco Popular management is determined to under-stand the reasons behind the product’s failure to scale.

How many clients have gained, directly or indirectly, from the SCBF technical assistance grant?Banco Popular has 20,800 clients, who we believe have benefited from the bank’s better performance and, in particular, its stronger middle management.

How will you continue measuring the impact of this venture?While Banco Popular faced certain challenges in 2015, the institution has recovered well. With the recent increase in capitalisation, we believe that the bank is equipped to scale and grow. The deposits portfolio, in particular, is expected to expand. Bamboo Finance expects this growth will consolidate Banco Popular as a leading responsible financial player in Central America.

Interview with Ximena Escobar de Nogales Head of Social Performance & Impact Management, Bamboo Finance

2013-09: Strengthening middle management and reviewing the product and segment offering for MSMEs


CLIENT MAME MEISSAMame Meissa buys fish directly from fishermen in Saint-Louis and sells it at a local market. She buys the fish in cases of 50 kg each. The price per case depends on the catch of the day and fluctuates between FCFA 35,000 and 100,000. Fishing activities are seasonal, and fish become scarce after July. This heavily influences Mame Meissa’s business. Having taken out an FMS loan, she was able to build up stock during the period when the prices are low and to increase sales profits. She says: “I have built trust in Fides Microfinance Senegal. The repayment schemes and interest rates are fair. I have proved that I am able to repay the money every week”. In the long run, she is confident that she will be able to build up savings that will allow her to reduce her dependence on credit and to secure working capital on a sustainable basis.

Case Study on Strengthening FMS´s Position in Senegalese SME Market 2013-06: Strengthening FMS’s position in the SME microlending market in Senegal

CONTEXT AND BOTTLENECKSIn Senegal, economic growth is largely concentrated in a limited number of urban centres, while the majority of the population lives in rural areas or works in the informal sector. Oversupply in SME lending in urban areas has led to over-indebtedness and to consumer loans. In 2014, only 15% of the population aged 15+ had an account, 7% had formal savings and 4% were engaged in formal borrowing. SCBF supported FMS, the majority of whose clients are female micro-entrepreneurs, in developing financial services for SMEs in rural areas and small towns. The project enabled external expertise to be mobilised in two fields: 1) a compre-hensive market study to gain a deeper understanding of the SME market in Senegal, with a special focus on over-indebtedness risks and ways to mitigate them, and 2) a review of guarantee mechanisms and procedures, triggered by the riskier behaviour of clients in Senegal.

RESULTSBased on the study, FMS was able to build a solid business plan with a clear SME sector strategy, reinforcing the trust of investors and lenders. FMS offers much lower individual loan amounts to include poor and rural population segments, and has found the right balance of different client segments to manage risks effectively.

CLIENT AWAAwa is the owner of a restaurant and a small food store on the university campus. She is the mother of four, employs six people and has her own house, which she had built with the money she earned. Awa has never had to rely on a loan. However, with a growing business and increasing liquidity needs, she needed to find a solution. When a group of women from her district told her about “a network that really helps women to get to work”, she became interested and made enquiries. Where FMS was concerned, it was the word-of-mouth recommendation and the social aspect of the group loans that reassured her, as well as the small weekly repayments. Awa says: “Previously, I could buy only the very basic products from merchants on credit, but with the growing business I needed more working capital to succeed. Now I am able to buy a broader product range and bigger quantities, which allows me to manage the restaurant more professionally”.


Institutional ChangesThe organisational evolution of SCBF continued in 2015,

especially at secretariat level.

The latter’s reorganisation was driven by the recommendations from the external review completed in 2014, and by changes in personnel. Over the course of the year, two new members of staff joined, while three resigned, resulting in a completely different team at the end of the year.

The resignation of SCBF’s secretary mid-year triggered a re-assessment of the secretariat’s structure and staffing needs. In line with the recom-mendations of the external review, the secretariat’s human resources base was increased to 2.3 full-time staff.

1. The new set-up relies on dual leadership from the Secretary General and the Chief Financial Administrator and Controller, with two members of staff supporting them (see organisational chart in appendix 1).

2. The Management and Finance Assistant will be the secretariat’s administrative backbone, while the Financial Inclusion Officer will provide thematic expertise on financial education, outcome tracking and savings mobilisation.

The arrival of Gertrud Stäuber in June marked a change in procedures. From then onwards, the review of financial proposals became completely separated from the technical proposal. In her position as Chief Financial Administrator and Controller, Gertrud is in charge, as an independent party, of assessing and negotiating the budget of grant proposals. Meanwhile, SCBF’s members continue to provide their expertise in assessing the technical part of the proposals. This change addresses one of the key recommendations made during the external review. Gertrud is also in charge of internal controlling, reviewing and approving accounting and budgeting, contracting, as well as human resource management.

The new Secretary General, Roland Steinmann, joined SCBF in October. The Secretary General has overall responsibility for the secretariat. He will decisively drive the SCBF’s global position as a specialised grant-making organisation focused on client-oriented financial services. Given his expertise in the area of inclusive insurance, he will assist members with thematic inputs and further develop SCBF’s pipeline. Moreover, he will increase SCBF’s efforts in internal knowledge management, and the sharing of results with interested stakeholders.

The new set-up relies on a dual leadership by the Secretary General

and the Chief Financial Administrator and Controller.


Funding and Contributions

SWISS PUBLIC SECTOR

Since 2015, SCBF has been funded by the Swiss Agency for Development and Cooperation. Its objective is to combat poverty and promote sustainable economic growth around the world through business and employment banking on a micro and meso level. The implementing partners are the SCBF member organisations in the Swiss private sector. To diversify its funding sources, SCBF is increasing its focus on securing financial support from private donors.

The SDC funding is split into two phases:

The SDC places special emphasis on developing fragile states and countries affected by conflict. It has thus earmarked the additional following financing facilities to support interventions in the countries of North Africa:

Additionally, the SDC dedicated 85 technical expert days, equivalent to CHF 110,500.

SWISS PRIVATE SECTOR

In 2015, the Swiss private sector committed technical expertise equivalent to CHF 114,400 (representing 88 expert days). Members made no financial contributions.

PARTNER FINANCIAL INSTITUTIONS

The target for contributions by PFIs is a minimum of 20% of the total budget. The actual average contribution for projects approved in the course of 2015 was 39.8%.

Phase From To Extended Budget (CHF)

Phase 1 01/12/2010 30/11/2014 30/11/2016 6,600,000

Phase 2 01/01/2015 30/11/2018 - 6,000,000

Phase From To Extended Budget (CHF)

Phase 1 01/12/2011 30/11/2014 30/11/2016 2,250,000

Phase 2 01/12/2015 31/12/2018 - 1,500,000


Letter from Auditor

Financial Report



Balance Sheet

Balance sheet as of 31 December

Notes 2015 2014ASSETS in CHF in CHFCurrent assets

Cash and cash equivalents C1 4 578 618.11 2 727 673.62Other receivables 265.78 870.88Accrued income and prepaid expenses 910.00 910.00Grants receivables C2 5 133 200.00 800 000.00Total current assets 9 712 993.89 3 529 454.50

TOTAL ASSETS 9 712 993.89 3 529 454.50

LIABILITIESCurrent liabilities

Deferred income and accrued expenses 12 657.00 12 522.27Committed financing contracts C3 2 134 292.60 2 136 236.97Total current liablities 2 146 949.60 2 148 759.24

Fund capital (restricted)Income and Employment Generation Fund C4 5 288 238.64 747 657.02Earmarked for North Africa Fund C4 1 777 805.65 633 038.24Earmarked for UNWRA Fund C4 500 000.00 0.00Total fund capital (restricted) 7 566 044.29 1 380 695.26

TOTAL LIABILITIES 9 712 993.89 3 529 454.50


Income Statement

Income Statement as of 31 December

Notes 2015 2014INCOME in CHF in CHFIncome from contributions

Contributions from Donors 8 000 000.00 2 204 950.58Other 0.00 -2 279.22Total 8 000 000.00 2 202 671.36

TOTAL INCOME 8 000 000.00 2 202 671.36

EXPENSES

Income and Employment Generation Fund -1 256 300.00 -1 758 281.93Earmarked for North Africa -304 453.00 -243 025.00Earmarked for UNWRA Fund 0.00 0.00Total -1 560 753.00 -2 001 306.93

Management and administrative expensesPersonnel expenses -237 623.89 -139 482.65Administrative expenses C5 -16 665.33 -68 724.00Total -254 289.22 -208 206.65

TOTAL EXPENSES -1 815 042.22 -2 209 513.58

Operating result 6 184 957.78 -6 842.22Net financial income 391.25 2 279.22Net exceptional income 0.00 4 563.00Total 391.25 6 842.22

Result before change in fund capital (restricted) 6 185 349.03 0.00Contributions, net -8 000 000.00 0.00Commitments, net 1 560 753.00 0.00Total -6 439 247.00 0.00

-253 897.97 0.00Allocation of mgmt. and admin. exp. to:- Income and Employment Generation Fund C4/D2 203 118.38 0.00- Earmarked North Africa Fund C4/D2 50 779.59

0.00 0.00

Contracts' financing

Annual result before allocation of management and administrative expenses to fund capital (restricted)


Notes to Financial Statements

Notes to the Financial Statements as of 31 December

A Presentation

B Significant accounting policies

B1 Accounting Conventions

B2 Change in accounting principles

---

funds decreases; -

C Additional information related to specific balance sheet and income statement positions

C1 Cash and cash equivalentsBank accounts with Credit-Suisse related to: 2015 2014Income and Employment Generation 2 161 067.77 1 388 807.26Income and Employment Generation - special 500 000.00 -Earmarked for North Africa Account 1 550 750.34 1 338 866.36UNWRA 366 800.00 -TOTAL 4 578 618.11 2 727 673.62

C2 Grants receivablesGrants receivables from SDC related to: 2015 2014Income and Employment Generation 4 000 000.00 800 000.00Earmarked for North Africa Account 1 000 000.00 -UNWRA 133 200.00 -TOTAL 5 133 200.00 800 000.00

Swiss Capacity Building Facility Association (hereinafter SCBF) is a public-private development partnership with the Swiss Agency for Development and Cooperation (SDC) founded in December 2010 and established as an association within the meaning of Article 60ss of the Swiss Civil Code. The SCBF headquarter is located in Fribourg with a support office located in Zurich.

SCBF objective is to financially support its partner financial institutions with a clear social missions to serve those on low incomes, particularly women and smallholder farmers.

SCBF's financial statements are first-time prepared in accordance with the provisions of the Swiss accounting law as stipulated in subtitle 32 of the Swiss Code of Obligations (CO). In accordance with transitional provisions of art. 2 para 4, the balance sheet and income statement may deviate from the principle of consistency in representation and disclosure in respect of prior year figures (2014). Therefore, a direct comparison with the prior year is only partially possible. The financial statements are presented in Swiss francs.

Several changes in terms of presentation have been made to the financial statements as per 31.12.2015 with the objective to clearly present the funds and comittments at the date of closure.

New agreements signed with SDC are booked as Grant Receivables and simultaneously as funds increase;Payments from SDC reduce the account Grant Receivables;Commitments towards institutions are booked as committed financing contracts and simuntaneously as

Payments in the scope of these contracts reduce the liabilities.



C5 Administrative expensesAdministrative expenses 2015 2014Office Rent 10 920.00 9 280.00Audit and consulting charges 5 745.33 8 235.00Advertising, marketing and representations costs - 2 441.69Other administrative costs - 6 836.31TOTAL 16 665.33 26 793.00

D Additional information

D1 Average number of employees (full-time equivalents)

D2 Allocation of management and administrative expenses to fund capital (restricted)

D3 Significant events after the balance sheet date

The annual average number of employees (FTE) for the reporting year, as well as the previous year was below 10.

The committment of SDC towards the project UNRWA has been signed under the condition of the approval of the transofrmation strategy by UNRWA. Due to a deviation from the agreed strategy, the contract was cancelled by SDC on March 22, 2016. The funds already received in the amount of CHF 366'800 have subsequently been returned to SDC.

According to the agreement with SDC and as stipulated in contract No. 81039703 concerning the granting of a core contribution earmarked for North Africa, the management and administrative expenses are charged to the fund capital in the ratio of 80% standard credit, 20% North Africa.


C3 Committed financing contracts2015 1.1. New

commitmentsUnused

commitmetnsCommitments,

netPayments Refund Cash-flow, net 31.12.

Income and Employment Generation Fund 1 547 381.47 1 307 750.00 -51 450.00 1 256 300.00 -1 232 737.87 0.00 -1 232 737.87 1 570 943.60Earmarked for North Africa Fund 588 855.50 308 788.00 -4 335.00 304 453.00 -334 294.50 4 335.00 -329 959.50 563 349.00Earmarked for UNWRA Fund 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Total 2 136 236.97 1 616 538.00 -55 785.00 1 560 753.00 -1 567 032.37 4 335.00 -1 562 697.37 2 134 292.60

C4 Fund capital (restricted)2015 1.1. New

commitmentsUnused

commitmentsCommitments,

netContributions

SDCTransfer

Allocation of m/a expenses 31.12.

Income and Employment Generation Fund 747 657.02 -1 307 750.00 51 450.00 -1 256 300.00 6 000 000.00 0.00 -203 118.38 5 288 238.64Earmarked for North Africa Fund 633 038.24 -308 788.00 4 335.00 -304 453.00 1 500 000.00 0.00 -50 779.59 1 777 805.65Earmarked for UNWRA Fund 0.00 0.00 0.00 0.00 500 000.00 0.00 0.00 500 000.00Total 1 380 695.26 -1 616 538.00 55 785.00 -1 560 753.00 8 000 000.00 0.00 -253 897.97 7 566 044.29


Strategic Outlook for 2016

A number of important work streams will be launched during 2016, while some which have

already started will be continued. At the thematic level, we will develop strategies to further

sharpen the SCBF’s focus while maintaining the necessary flexibility to allow for innovation.

SCBF started out with a relatively broad approach to financial education. This allowed members to include a variety of finan-cial education elements in their product development efforts. It is time for SCBF to assess its strategic position in this area in order to maximise its impact and to achieve sustainable results. A first step in that direction will be the organisation of a knowledge-sharing workshop with those members that are already advanced in their financial education efforts. Based on the workshop results, a short position paper will guide SCBF’s further activities in this field.

Where inclusive insurance is concerned, the promotion of formal risk management tools is of special interest to SCBF’s main funder, the SDC. These tools are considered a key element in protecting the economic lives of low-income clients, preventing them from falling back into poverty. In addition, insurance can unlock access to capital and hence trigger investment, thus contributing to economic growth. As insurance is a relatively young area within the broader financial inclusion movement, it deserves special attention. Work to draw up the SCBF´s inclusive insurance strategy will allow the Association to focus its efforts when actively developing projects, while remaining open to accepting other proposals.

To better capture insights and results from supported projects that are coming to an end, SCBF will increasingly focus on the associated knowledge management and communications. This includes, for example:

• Outcome studies: for selected thematic areas, SCBF will commission independent outcome studies in order to better capture cross-cutting results and outcomes. The first study will

be on housing microfinance, where SCBF has already supported three product development projects and one feasibility study.• Tracking of key outcome indicators: since its incep-tion SCBF has insisted on a clear focus on outcome. Greater efforts are required to systematically capture and track relevant information centrally. • Communication and website: with more and more results and insights emerging from the projects supported by the SCBF, our communications are becoming increasingly important. This will include the development of an appropriate communication concept and, potentially, a redesigned website.

SCBF’s articles of association, and especially certain sections of internal policies and procedures, will require another overhaul. With the restructuring of the secretariat and more tasks being handled centrally, the corresponding competencies and guide-lines must be adapted.

Finally, fundraising will become an area of dedicated effort to broaden our funding base and demonstrate that the principles of a public-private partnership work.

Fundraising will become an area of dedicated effort to broaden our

funding base and demonstrate that the principles of a public-private

partnership work.


Appendices

- Appendix 1

The SCBF Organisational Structure

- Appendix 2

Financial Overview Since Inception (status 31.12.2015)

- Appendix 3

Partner Financial Institutions and Technical Assistance Providers (status 31.12.2015)


The SCBF Organisational Structure

Appendix 1:

Financial Overview Since Inception

Appendix 2:


Appendix 3:

AccionBamboo FinanceBusiness & Finance Consulting E-Savings.clubFinancial Systems Development Services FINCA InternationalGFA Consulting GroupHabitat for Humanity InternationalHorus Development Finance KiWiMCril

Equity Bank RwandaFederación Nacional de Cooperativas de Ahorro y Crédito (FENACREP)FIDES Microfinance SenegalFINCA HaitiFINCA NicaraguaFondo de Desarrollo Local (FDL)Fundacion CampoHattha Kaksekar Limited HekimaKiWi MoroccoLetshego Rwanda Limited ManushiMicro Banco FIDES MozambiqueMyanmar Microfinance Ltd.NMB Bank LImitedPoste du BéninPride RFWSonapostThaneakea Phum Cambodia Tinh Thoung Microfinance InstitutionUjjivan Financial ServicesUNRWA Microfinance DepartmentVitas Jordan

Partner Financial Institutions supported since inception (PUW only)

Technical Assistance Providers supported since inception (PUW, FSW & FEW)

2 Insurance Brokers

8 Micro Banks

11 Commercial Banks

5 Postal Banks

17 Deposit-taking MFIs

13 Microcredit Organisations

3 Primary Insurers

1 Aggregator/Agent

Microfinanza (Consultants)MicroInsurance Centre PamigaPlaNet FinanceresponsAbilitySwiss Microfinance Holding StonestepSyngenta Foundation for Sustainable AgricultureSwisscontactWomen’s World Banking

Alexandria Businessmen Association Acre AfricaAdvans Bank PakistanAdvans Bank TanzaniaAdvans Bank TunisiaAl Barid BankAlliance for Microfinance in Myanmar Apoyo Integral Guatemala ASA InitiativeAssociation Al AmanaBanco LAFISE (Bancentro)Banco PichinchaBanco PopularBank of KigaliBuusa Gonofaa Cairo Amman Bank Commercial International Life Insurance Company ComixmulCooperativ de Ahorro y Crédito Cabanillas MañazoCooperativa de Ahorro y Crédito TikariCrediféCrédit Immobilier & Hôtelier Dakahlya Businessmen Ass. f. Community DevelopmentEnda Inter-Arabe

All figures in this report are in Swiss francs (CHF), unless indicated otherwise. In 2015, the average exchange rate was CHF 0.96197 to USD 1, and CHF 1.06795 to EUR 1. Source: www.oanda.com


PHOTOS

Courtesy of Advans Pakistan, Al Barid Bank, Alexandria Businessmen´s Association, Banco Popular, COMIXMUL, Credicampo, Dakahlya Businessmen´s Association for Community Development, Enlace, FIDES, FINCA Haiti, Fundacion Campo, Habitat for Humanity, NMB Bank, Syngenta Foundation for Sustainable Agriculture

MISSION

The Swiss Capacity Building Facility (SCBF) is a public-private development partnership dedicated to improving the lives and livelihoods of low-income people and microentrepreneurs in developing and emerging economies, through financial inclusion as a strategy for alleviating poverty.


Swiss Capacity Building FacilitySeebahnstrasse 858003 Zürich | SwitzerlandTel: +41 44 585 12 55E: [email protected] www.scbf.ch

Documents

Annual Report 2015 - scbf.ch€¦ · SCBF ANNUAL REPORT 2015 | 45 PHOTOS Courtesy of Advans Pakistan, Al Barid Bank, Alexandria Businessmen´s Association, Banco Popular, COMIXMUL,