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You can find the current article at its original source at http://www.guardian.co.uk/global-development-professionals-network/2013/may/07/financial-services-microfinance-global-development-debate
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| Live chat: can the poor bank on financial services? | Live chat: can the poor bank on financial services? |
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| Unlike some development activities which seem far removed from the needs of people in developing countries, providing access to financial services is an easy intervention to justify. The Bill and Melinda Gates Foundation outlines the challenges clearly: "Poor people do not live in a static state of poverty. Every year, many millions of people transition out of poverty ... At the same time, large numbers of people fall back into poverty due to health problems, financial setbacks, and other shocks. If available at critical moments, effective tools for savings, payment, credit, and insurance can help households capture an opportunity to climb out of poverty or weather a crisis without falling deeper into poverty." | Unlike some development activities which seem far removed from the needs of people in developing countries, providing access to financial services is an easy intervention to justify. The Bill and Melinda Gates Foundation outlines the challenges clearly: "Poor people do not live in a static state of poverty. Every year, many millions of people transition out of poverty ... At the same time, large numbers of people fall back into poverty due to health problems, financial setbacks, and other shocks. If available at critical moments, effective tools for savings, payment, credit, and insurance can help households capture an opportunity to climb out of poverty or weather a crisis without falling deeper into poverty." |
| With some 2.5 billion people (pdf) who do not have a formal bank account at a financial institution (a group often referred to as 'the unbanked'), a plethora of services and initiatives have emerged, often as part of a wider private sector development strategy. Arguably the best known intervention is microfinance, defined as both a means of lending small amounts while taking little or no collateral, and as a movement "that envisions a world in which low-income households have permanent access to a range of high quality and affordable financial services". | With some 2.5 billion people (pdf) who do not have a formal bank account at a financial institution (a group often referred to as 'the unbanked'), a plethora of services and initiatives have emerged, often as part of a wider private sector development strategy. Arguably the best known intervention is microfinance, defined as both a means of lending small amounts while taking little or no collateral, and as a movement "that envisions a world in which low-income households have permanent access to a range of high quality and affordable financial services". |
| But as Claire Provost writes : "A sweeping review of the evidence concluded that the "enthusiasm [for microcredit] is built on … foundations of sand". Despite widespread support, it was unclear when, and for whom, microfinance had been "of real, rather than imagined, benefit to poor people", it said, suggesting political scientists should examine what had fuelled the excitement in the first place..". | But as Claire Provost writes : "A sweeping review of the evidence concluded that the "enthusiasm [for microcredit] is built on … foundations of sand". Despite widespread support, it was unclear when, and for whom, microfinance had been "of real, rather than imagined, benefit to poor people", it said, suggesting political scientists should examine what had fuelled the excitement in the first place..". |
| And microfinance is not the only financial inclusion tool that has to answer some tough questions. Despite the promise of mobile money, concerns are being raised about the safety of mobile banking systems. Blogging after last year's 'Enhancing economic development through technology' conference, Elizabeth Dickinson notes: "Mobile banking could be one of the hottest targets in coming years for online theft. What's at stake if hackers did break into the system is not just the individual acts of theft. It's the image of mobile banking — as a secure and reliable platform — that is at risk." | And microfinance is not the only financial inclusion tool that has to answer some tough questions. Despite the promise of mobile money, concerns are being raised about the safety of mobile banking systems. Blogging after last year's 'Enhancing economic development through technology' conference, Elizabeth Dickinson notes: "Mobile banking could be one of the hottest targets in coming years for online theft. What's at stake if hackers did break into the system is not just the individual acts of theft. It's the image of mobile banking — as a secure and reliable platform — that is at risk." |
| So how best to address the challenges in creating affordable financial services? What are the most effective and sustainable ways to provide the kind of access that can reduce income inequality and increase economic growth? And after the global financial crisis, the recent critique of microfinance and the promising but uneven ascent of mobile money, will the poor be able to bank on financial services? | So how best to address the challenges in creating affordable financial services? What are the most effective and sustainable ways to provide the kind of access that can reduce income inequality and increase economic growth? And after the global financial crisis, the recent critique of microfinance and the promising but uneven ascent of mobile money, will the poor be able to bank on financial services? |
| Join our expert panel on Thursday 9 May to share your views on the above issues as well as your thoughts on how best to see the unbanked banked. The live chat will run from 1pm to 3pm BST and will be in the comment threads below. | Join our expert panel on Thursday 9 May to share your views on the above issues as well as your thoughts on how best to see the unbanked banked. The live chat will run from 1pm to 3pm BST and will be in the comment threads below. |
| The live chat is not video or audio-enabled but will take place in the comments section (below). To join the panel or simply give your views ahead of the chat, email globaldevpros@guardian.co.uk. Follow our tweets using the hashtag #globaldevlive | The live chat is not video or audio-enabled but will take place in the comments section (below). To join the panel or simply give your views ahead of the chat, email globaldevpros@guardian.co.uk. Follow our tweets using the hashtag #globaldevlive |
| Panel | Panel |
| Brigit Helms, director, Speed program, DAI, Maputo, Mozambique. @helmshart | Brigit Helms, director, Speed program, DAI, Maputo, Mozambique. @helmshart |
| Brigit is an expert in financial inclusion, specialising in finding innovative business solutions to development problems in Africa, Asia, and Latin America. Brigit formerly held positions at McKinsey and Co. and Unitus Inc., and was a founding leadership team member of CGap, a global research centre for financial inclusion. | Brigit is an expert in financial inclusion, specialising in finding innovative business solutions to development problems in Africa, Asia, and Latin America. Brigit formerly held positions at McKinsey and Co. and Unitus Inc., and was a founding leadership team member of CGap, a global research centre for financial inclusion. |
| Timothy Ogden, managing director, Financial Access Initiative, New York City, US. @timothyogden | Timothy Ogden, managing director, Financial Access Initiative, New York City, US. @timothyogden |
| Timothy works to explore how financial services can better meet the needs of poor households. He writes regularly on development, philanthropy and social entrepreneurship for a variety of outlets. | Timothy works to explore how financial services can better meet the needs of poor households. He writes regularly on development, philanthropy and social entrepreneurship for a variety of outlets. |
| Lily Bowles, associate, Village Capital, Washington, DC, US. @villagecapital | Lily Bowles, associate, Village Capital, Washington, DC, US. @villagecapital |
| Lily is a development professional and specialises in guiding Village Capital's development strategy, research, communication and outreach efforts and data analysis. | Lily is a development professional and specialises in guiding Village Capital's development strategy, research, communication and outreach efforts and data analysis. |
| Elisabeth Rhyne, managing director, Centre for financial inclusion at Accion, Washington, DC, US | Elisabeth Rhyne, managing director, Centre for financial inclusion at Accion, Washington, DC, US |
| Elisabeth works to collaborate with development actors on challenges confronting the microfinance industry, focusing on promoting client protection. She formerly directed microenterprise development at USAid, and has published guides to microfinance for bankers and investors. | Elisabeth works to collaborate with development actors on challenges confronting the microfinance industry, focusing on promoting client protection. She formerly directed microenterprise development at USAid, and has published guides to microfinance for bankers and investors. |
| Peter Gakure Mwangi, mobile payments professional, Kopo Kopo Inc., Nairobi, Kenya. @PeterAfrica | Peter Gakure Mwangi, mobile payments professional, Kopo Kopo Inc., Nairobi, Kenya. @PeterAfrica |
| Peter is a mobile payments professional and advocate for the use of mobile banking. He currently works on developing Mpesa technology to enable account holders to convert cash to digital assets, make purchases through various merchants and transfer money to families living in rural areas. | Peter is a mobile payments professional and advocate for the use of mobile banking. He currently works on developing Mpesa technology to enable account holders to convert cash to digital assets, make purchases through various merchants and transfer money to families living in rural areas. |
| Betty Wilkinson, director of public management, financial sector and trade division, central and West Asia department, Asian Development Bank, Manila, Philippines | Betty Wilkinson, director of public management, financial sector and trade division, central and West Asia department, Asian Development Bank, Manila, Philippines |
| Betty is an expert in financial sector development and public management, specialising in innovation in financial inclusion, small business development and rural development. She has worked as a banker, donor representative, field researcher, policy advisor and a developing country government senior official. | Betty is an expert in financial sector development and public management, specialising in innovation in financial inclusion, small business development and rural development. She has worked as a banker, donor representative, field researcher, policy advisor and a developing country government senior official. |
| Joanna Ledgerwood, senior advisor, Aga Khan Foundation, Geneva Switzerland | Joanna Ledgerwood, senior advisor, Aga Khan Foundation, Geneva Switzerland |
| Joanna leads AKF's work facilitating access to financial services globally. She has written numerous papers and books on microfinance, including both editions of 'The microfinance handbook', published by the World Bank. | Joanna leads AKF's work facilitating access to financial services globally. She has written numerous papers and books on microfinance, including both editions of 'The microfinance handbook', published by the World Bank. |
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