Presents the qualitative research data – the experiences of poor people trying to save using informal sector mechanisms – from the “Relative Risks to the Savings of the Poor” paper. The paper provides details of the richness and complexity of poor people’s attempts at saving in the informal sector and their successes, failures and losses as they do so.
The Feedback Loop- A Process for Enhancing Responsiveness to Clients Or, What Do We Do With All This Client Data?
MFIs usually undergo impact assessment reviews and evaluations but rarely do these studies leading to substantive changes within their institution.
This paper highlights the results of the feedback processes at five ImpAct partner institutions– a bank focusing on the low-income market, two group-based microcredit institutions, a set of member- owned financial institutions, and a savings and credit microfinance institution.
The paper builds on the Ford Foundation impact study and examines the lessons learnt for institutionalising the feedback into the MFIs’ systems and products. Further, it makes recommendations on how to complete the feedback loop and accordingly develops a toolkit/checklist to help MFIs use the data they (and their evaluators) collect to make and implement responsive decisions/changes within the organisation.
Key Questions that Should Precede New Product Development
Many MFIs are looking at new product development as a way of responding to their clients’ needs. This note suggests six essential questions to be asked prior to setting about new product development, which can generally be classified into—motivation, commitment, capacity, cost effectiveness and profitability, simplicity, and complexity. Moreover, it tries to build the understanding of the readers about the complexity and cost of product development. It advises the MFIs that client-responsive products would reduce drop-outs, attract increasing numbers of new clients and contribute substantially to their long-term sustainability.
Dropouts and Graduates: What Do They Mean For MFIs?
This note explores dropouts and graduates and their significance for MFIs. Clients drop out of microfinance programmes mostly because of poorly designed products that fail to meet their needs. Not only inappropriate products, but also replication of models and systems without even considering the economic or socio-cultural conditions of the area affects the customer base. It further highlights the implications—such as cost and time—of the clients’ dropout on the MFIs. Graduation and its benefits for NGOs seeking to establish permanent and sustainable MFIs are also discussed.
Use and Impact of Savings Services among Low Income People in South Africa
This paper discusses how low-income people in South Africa (SA) save, how they use different savings services/systems and the impact of these savings facilities on their household budgets/lives. It also discusses how these findings would improve Ithala Bank’s and other institutions’ efforts to mobilize savings. Specifically, the paper:
Studies savings services used and not used by low income people; Examines the perceived advantages and disadvantages of these savings services; Assesses the socio-economic characteristics of the people using them;
Explores how savings services are used to manage household income; Investigates why some people save in kind and which financial services may induce them to start monetary savings; Draws lessons for Ithala and other financial institutions seeking to develop poor-responsive savings services.
The methodology that the study uses is: Focus group discussions; Interviews with low-income people and Ithala officials.
The findings of the paper are:
35 savings products were in use – 17 were Ithala products. The most used products were: Short-term loans from moneylenders; Cash saving through Accumulating Savings and Credit associations (ASCAs); Targeted savings through Ithala; Funeral schemes or burial societies. Ithala had intense competition from informal sector products. Most Ithala clients were low-income people of low literacy, and a significant number were senior citizens; Use of informal sector products was greater than that of the Ithala products. The paper concludes by recommending that Ithala should incorporate some informal sector features into existing and future products.
Are You Poor Enough? Client Selection by MicroFinance Institutions
The debate between the proponents of maximising sustainability, outreach and scale and thus serving many poor people (including poorer people) and the proponents of targeting “the poorest of the poor” continues. The polarisation between the two camps of “sustainability” and “targeting the poorest” was encapsulated by the original positions of the Consultative Group to Assist the Poorest (CGAP) and the MicroCredit Summit. The debate is essentially a healthy one and should help all of us involved in the industry clearly focused on what matters: providing financial services to poor people. The paper argues for the inclusion of the ‘non-poor’ in MFI programmes to cross-subsidise outreach to the poor. The eventual impact of microfinance on poverty and the sustainability of MFIs will ultimately depend on the organisations’ systems and products. The overall challenge is to design appropriate products and efficient systems for the benefit of both MFIs and their clients