Strong Progress Overall

Perhaps the most encouraging finding from the Report included an increase in the number of MDG “trailblazer countries,” or countries with an MDG Index score of at least five. Approximately 10 of 45 MDG trailblazers are in Sub-Saharan Africa — almost twice the number of trailblazer countries from two years ago. These statistics suggest that focused charitable efforts and strong government cooperation have made select SSA countries hotbeds for MDG progress. Opportunity International has over 1,500 staffers on the ground in trailblazing countries like Ghana, Malawi, Rwanda, and Uganda. Among the many services offered, Opportunity provides Edu-School Loans, Agricultural Finance programs, Voluntary Savings programs, Financial Literacy, and Staff Leadership Development to the four MDG stars. The sustainable development approach featured at Opportunity should cement the efforts of dedicated staff and ensure that progress turns into achievement in Sub-Saharan Africa. While the number of MDG leaders increased, 14 poor countries (nine in sub-Saharan Africa) are lagging behind and have shown little improvement over time, or in some cases have declined. This year, the Democratic Republic of Congo (DRC) and Zimbabwe stand out as the worst-performing countries, with MDG Progress Index scores of only 0.5. There remains a worrying trend that economic growth is not as related to poverty reduction as it could be, raising questions about the inclusivity of growth as well. Political turmoil in war-torn countries like the DRC has long-standing harm to the health, education and agriculture of the country and its people.

Sub-Saharan African Resources Have Exploded Over the Past Decade

In 2000, domestic and donor government expenditures and private resource flows totaled approximately $105 billion. By 2011, they had grown more than four-fold, reaching an estimated $468 billion. The IMF projects that domestic and private resource availability will continue to grow quickly over the coming years, driven by strong economic growth and growing private sector interest. SSAs do not seem to be starving for resources given these notable funding strides. The reason why some MDGs seem unreachable could be because of negative side-effects created by statistical goal-setting. African countries’ commitments to the MDGs related to extreme poverty, hunger, education, gender, child mortality, and HIV/AIDS are vital for increasing support for social sectors, but they have also raised some important considerations.

First, a ‘one-size-fits-all’ approach does not reflect country-specific needs and political settings. For example, governments may not want to allocate 10 percent of domestic outflows to agriculture if their economies and labor force are not concentrated in that sector. These types of quantitative spending commitments could have unintended costs in terms of encouraging unproductive programs (i.e. costly and corruption-prone support programs) or promoting the completion of quantitative targets over the quality of services delivered. Second, these MDG-related spending commitments could crowd out public investments in other African Union priority areas not mentioned as MDG targets, like infrastructure — (the report particularly identifies power and transportation). Global investors would be wise to closely monitor resource allocation in the Sub-Sahara region to ensure that sustainable progress turns into achievement, regardless of MDG status. Opportunity International helps alleviate donor apprehension and safeguards efficient resource allocation by moving people from a cycle of poverty into a sustainable cycle of success. Its holistic banking model delivers – from the Philippines to Sub-Saharan Africa to Nicaragua. The cycle starts with Opportunity providing a loan to build a business. The client then receives business and leadership training and is supported and empowered by a trust group. The result is business growth and success. In fact, 95 percent of loans are repaid. And, with that, $1,000 grows to $6,000 over five years, as loans are recycled, allowing more clients to receive loans. It’s taking an investment, leveraging the funds, and reinvesting back into the business of our clients.

Africa’s Immense Potential. According to The Economist, approximately one quarter of African adults use formal banking and just 3% have credit cards. Other research Opportunity International has gathered states that women, youth, the poor and rural residents are the least likely to have a bank account. To provide financial access where the need is greatest, Opportunity International prioritizes serving these marginalized groups in particular. It is this commitment that has led Opportunity International to build ten financial institutions in nine African countries and to focus our efforts on serving women and clients in remote areas.

The Vital Role of Technology. The Economist highlights the increasingly widespread adoption of banking technologies such as credit cards and cell phone banking in Africa. These services equip banks to affordably serve hard-to-reach communities while also offering benefits like increased convenience and security. For example, Opportunity International’s microfinance institution (MFI) in the Democratic Republic of Congo (DRC) utilizes innovative biometric technology. This enables the institution to securely and digitally identify clients through fingerprint recognition software directly linked to our core banking system. Biometric technology also decreases the MFI’s environmental footprint through reducing paper handling. In addition, it empowers our women clients by linking their money to their fingerprints, preventing a male family member from excluding them from the management of household finances.

Banking in Africa: Continent of Dreams also lays out the central challenges facing African banks:

A Diverse Environment. Africa is larger than the combined total land mass of the United States, China, India, Japan and all of Europe. Thus, as The Economist points out, there is substantial variance both between and within countries in terms of economics and financial access. In Opportunity International’s experience, the needs of our institution in the DRC—where roughly 0.5% of the population is formally banked and 75% live on less than a dollar a day—are very different from those in Ghana, where financial inclusion is limited yet nationwide poverty rates fell a staggering 23.2% from 1992 to 2006.

No Single Africa Model. Due to the continent’s diversity, there is no silver bullet solution to rapidly providing financial access throughout Africa. The Economist shares a number of strategies used by international and regional banks to tap into the African market. Opportunity International has also needed to modify our approach by country, recognizing that a successful product requires some adaptation before it can be replicated at another bank. Our strategies must also nimbly adjust to external changes due to the volatile nature of economies, governments and climate in much of Africa.

At quick glance, Africa looks like a banker’s dream. Its massive population, budding economic development and low levels of financial access seem to offer a recipe for substantial bank growth. Yet, as The Economist indicates, the risks within the African market make it a tough nut to crack. At Opportunity International, we don’t know all of the answers to the challenges the region poses, but we believe that we have the right motivation. Without financial access, low-income households are often forced to choose whether to spend limited funds on their small businesses, their children’s educations or their food. We believe that nobody should have to make those decisions, and that drives us to continue developing innovative, client-focused strategies at our ten MFIs across Africa.

A typical cell phone used for banking

We utilize cell phone banking, satellite bank branches, ATMs and point-of-sale (POS) devices provide low-cost, secure banking to formerly excluded clients. We are establishing points of access within one kilometer (about two miles) of a client’s home or business. We are migrating to cloud-based systems and developing of a new generation of skilled IT leaders to continue these innovations.

The Power of Technology

Marie-Claire Ina opens an account in Kinshasa, DR Congo

Marie-Claire Ina (left) opens a biometric-based account at Opportunity International’s bank in Democratic Republic of Congo. With support from the UN Capital Development Fund (UNCDF), this is one of only a few places in the developing world offering this powerful technology. It requires only a fingerprint-embedded ID card to access an account. Even those who are illiterate or lack formal identification have control over their finances and a recognition many have never known.

Annie Nyangomba at Opportunity DR Congo

Annie Nyangomba (right) holds out her finger to be read. She also is opening an account at the Kinshasa branch of Opportunity DR Congo. Annie says she was reluctant to open a bank account before because she thought it would be too expensive. But now that she has the structure of a bank account, she feels more secure and recognized. “Now I get more respect,”Annie tells us, “and I hope to see my social life change. I feel more secure for the future of my children.”

Gaining Access: Cell Phone Banking

Felicitus Mmboge in her Nairobi, Kenya shop

In Nairobi, Kenya, Felicitus Mmboge (left) uses her cell phone to save and transfer money, pay for goods, and accept payments in her beauty products business. She even receives and repays her Opportunity loans with her cell phone. Cell phone banking allows her to make these transactions without having to shutter her shop to visit a bank branch, saving her travel expenses and lost income.

Financial tools like cell phone banking, satellite bank branches, ATMs and point-of-sale devices strengthen communities. They increase security and keep Opportunity International’s clients close to their homes and businesses. Whether in rural villages or sprawling city markets, our clients have safe, affordable, reliable and convenient access to their accounts so they can keep their businesses open and avoid costly travel to the bank.

Invest in Opportunity’s technology solutions »

An example of an Opportunity POS device used in a shop

The plan for kiosk satellite branches brought new lessons and challenges for OISL, one of Opportunity’s microfinance institutions in Ghana. With cash transactions, they found that the structure of the bank does matter to clients. Clients report feeling more reassured when handing over their hard-earned cash at an actual bank branch, as opposed to a smaller, less permanent-looking kiosk. OISL made an operational decision to try a different approach and they continued to look for new, economically sound ways of reaching deeper into communities. The results are taking OISL down a new path.

OISL has begun developing more local business partnerships to utilize the resources that are already reaching their current and potential clients across the country. At the end of 2011, OISL began enrolling local merchants as “OISL agents” by supplying them with POS devices, so that clients can transact business with OISL while in their shops. Under this model, a client is able to add electronic money to their mobile phones, withdraw cash and make loan repayments right in their local bakery, cell phone accessory shop or grocery store.

A typical cell phone used to make financial transactions, including loan repayments via text message

Today, OISL has 25 POS devices deployed in retail shops in the western, eastern, Brong Ahafo, and Greater Accra regions of Ghana, and is establishing partnerships with more merchants in this upcoming year. OISL’s other service delivery channels include 29 branches, three traveling mobile vans, and two Community Banking Centers, which are premises where clients meet with loan officers. Not only this, but OISL clients can make financial transactions in an unlimited number of locations simply by using their mobile phones. OISL partners with the local mobile phone service provider MTN, which allows clients to keep their money electronically and make various types of transactions. Using their cell phones, clients can pay bills or transfer money to relatives and friends using text messaging. At participating retail shops, the MobileMoney service allows clients to load money onto their phones, withdraw their mobile money as cash, or purchase products and services in that store. In 2011, OISL rolled out MTN’s MobileMoney solution at all of its branches and plans to begin partnering with other mobile phone service providers in this upcoming year.

Cocoa farmer Beatrice Boaten (left) at a mobile banking van in Kumasi, Ghana, with her loan officer Abena Sarpong

These types of partnerships with retail merchants and cell phone service providers are cost-effective and allow OISL the ability to expand to new areas as never before. For Opportunity Ghana, the year 2012 started off well and 2013 looks bright indeed. We look forward to seeing what new innovations the new year has in store.

Dana Lunberry is a program manager based in Opportunity’s US headquarters. She manages and reports on our work in Ghana and eight other countries in which we operate.

More than 1.5 billion people live in extreme poverty and many are women entrepreneurs with a plan to help themselves, their families and their communities. Just $150 funds an Opportunity loan for a woman entrepreneur so she can start or expand a business, provide for her family, create jobs for her neighbors and build a safety net for the future.

The data is clear: If you want to change lives in the developing world you must invest in women. It’s that simple.

Client Annie Nyangomba, Kinshasa, DR Congo

Today, I accepted the One Woman Holiday Challenge, and launched an online fundraiser so I can play a role in helping our women clients build better futures. I believe in our mission and our clients so deeply that I kicked off my campaign with a personal commitment to match, one to one, every dollar invested up to $25,000. This, combined with the generous match from an anonymous donor, will triple the value of every dollar invested in my campaign. Not only do we triple our investment, but also our impact.

I invite all our supporters to join me by participating in the One Woman Holiday Challenge. To start your own fundraiser, go to opportunity.org/woman. Once launched, you will be able to track your fundraiser’s progress and receive regular updates, which will hopefully inspire you to share this with everyone in your network of friends, family and colleagues.

Meet Annie Nyangomba, just one of the many Opportunity clients we will serve through this challenge. In the photo above, Annie holds out her finger to be read at the Kinshasa branch of Opportunity Democratic Republic of Congo. It’s one of the few places in the developing world offering this technology, which requires only a fingerprint-embedded ID card to access an account. Even clients who are illiterate or don’t have formal identification are able to control their finances, some for the first time ever.

A mother of two, who sells sweet potatoes in the local Masina Market, Annie was hesitant to open a bank account because she thought it would be too expensive. That was before she became an Opportunity client. She now feels more secure and recognized as an important member of the community. Her income has increased 20% and she receives business training and advice from her loan officer, Pelagie Kawadio. “Now I get more respect,” Annie says. “I feel more secure for the future of my children. I especially have a sense of hope. It’s like God is giving me a second chance to change my life.”

Together, we can meet the One Woman Holiday Challenge for clients like Annie, and millions of other women like her, who merely want the opportunity to provide for their families and improve their children’s futures.

Partner with Opportunity to invest in better futures, one woman at a time.

The One Woman Holiday Challenge launches today. Click this photo for more information.

Opportunity DR Congo’s Laurette Naul in the staff workshop in Kinshasa

The workshop began with an exercise for team members to share their gifts and explore how those gifts could benefit Opportunity’s clients in practical ways. Staff was excited by the eye-opening results. During this exercise, Laurette realized that her love for crafting pearl necklaces and for drawing could benefit clients. Since then, she has been using her artistic flair to draw informative cartoons that have been added to some of the training modules for Congolese staff and clients. Gilbert Lagaillarde, CEO of Opportunity DR Congo, said of the training, “We’ve discovered extraordinary potential in our team and we thank God for their gifts and how those gifts will benefit our organization and the clients we serve.”

DR Congo CEO Gilbert Lagaillarde distributes certificates to the staff who participated in the workshop.

No matter the global economic climate, smart organizations know that one of their best investments is in people. That’s why we’re investing in our staff through workshops, leadership training and professional development, so that they can continue to provide training and hope for people in poverty. We’re proud to partner with staff like Laurette.

Diane Ferguson is the report writer in Opportunity’s Resource Development department.

Client Argelia Ramirez (right), a shop owner in Henequen, Colombia, now has a safe place to save.

“We have provided loans and training to the Colombian people for more than 40 years,” said Enrique Ordonez, Opportunity Colombia’s CEO. “Thanks to the generous support of the Citi Foundation, our clients will also have a safe place to save their money, a critical tool for those working their way out of poverty. This new financial intermediary has as its sole objective to offer opportunities to the less fortunate so that they have the opportunity to save money and plan for the future.”

In a country where more than 12.7 million people live on less than $2 a day, and only 2.5% are using microfinance services, Opportunity Colombia will enable marginalized people, especially women, to engage in the local economy, overcome extreme poverty and build stronger communities. Currently, more than 75% of Opportunity Colombia clients are women.

Opportunity Colombia CEO Enrique Ordonez speaks at the grand opening celebration.

“Opportunity Colombia’s bank will provide those outside the economic mainstream with greater access to financial resources they need to begin building a more stable future for themselves and their families,” said Pamela Flaherty, President and CEO, Citi Foundation. “We are pleased that the support of the Citi Foundation will enable Opportunity International to expand financial inclusion in Bogotá.”

Celebrating this important milestone, Opportunity Colombia hosted a grand opening event last month in Bogotá, attended by international dignitaries, philanthropists, corporations and clients as well as local and international Opportunity staff.

Learn more about this grant from Citi Foundation »

John de Bruyn, with emcee Jenny Alexandra Reyes, leads the group in prayer

With 150 attendees at the beautiful Metropolitan Club, in the hills above Bogota, Opportunity Colombia’s CEO Enrique Ordonez and his staff were on hand to welcome the finance community, local corporations, donors, the Board of Directors and Opportunity International’s global operations staff. Jenny Alexandra Reyes, Chief of Collections at Opportunity Colombia, was the emcee, and John de Bruyn, Chair of Opportunity Colombia’s Board, led the group in an opening prayer, giving thanks for the opportunity to help people in poverty to transform their lives.

Opportunity Colombia CEO Enrique Ordonez at the podium

Enrique welcomed attendees and thanked staff and supporters. Since 1973, he said, loans have been a critical tool Opportunity used to help impoverished Colombians build or expand their businesses. In 1971, Mr. Ross Clemenger, a Canadian Citizen who developed his pastoral activities in our country, gave the first Opportunity loan in Colombia to Mr. Carlos Moreno. Though Mr. Clemenger passed in July, his work is more vigorous today that ever. But in these years, one equally vital tool was missing: savings. “Tonight,” Enrique said, ”we open the doors of a new financial intermediary that has as its sole objective to offer opportunities to the less fortunate [so that they can] save money.”

Alois Gitterle of Credit Suisse

Alois Gitterle, Director and Senior Client Advisor at Credit Suisse, highlighted the continuing need for capacity development, financial inclusion and effective training in the microfinance sector to keep up with its exponential growth. The collaboration between Credit Suisse and MFIs like Opportunity Colombia helps to accomplish this, enabling Opportunity to develop the people, processes and products it needs in Colombia to meet its social and financial goals and increase its geographic footprint to new areas, adding four new branches in the cities of Bogota and Cucuta. Alois discussed the Microfinance Capacity Building Initiative (MCBI), established in 2008, which is funded through the Credit Suisse Foundation and complements the bank’s long-term business engagement in the sector, leveraging their banking expertise. They’re proud of their long history in microfinance. They were recently awarded a special commendation for microfinance engagement in connection with the Financial Times/International Finance Corporation Sustainable Finance Awards in recognition of 10 years of comprehensive and complementary work in microfinance across all divisions of the bank.

Client Cecilia Oquendo Gomez prepares to cut the ribbon

Credit Suisse also contributes funding and expertise to the training of thousands of staff members at microfinance institutions around the world, including Opportunity Colombia. They help to develop a quality workforce by partnering with Opportunity Colombia in NextGeneration Banker staff training and development programs. And they helped implement the back-office technology Opportunity Colombia needed to gain constitutional and operational licenses, such as the T24 banking system. “Credit Suisse is proud to partner with the dedicated management and staff of Opportunity Colombia,” Alois concluded. “We’re satisfied that this is a bank that will continue to adopt best practices well into the future.”

The ribbon cutting

Harry Turner, CEO of Opportunity International’s Global Microfinance Operations, noted that what sets Opportunity Colombia apart from other local MFIs is its dedication to holistic client transformation. Clients gain improved economic status, are better able to build their capacity in business and in life, and they receive social support from their Trust Group and the guidance of their loan officer. And this philosophy led to Opportunity’s Code of Conduct, which reminds us to always treat clients with dignity, fairness and respect, offering transparent fees and clearly explained contractual obligations.

Cecilia Oquendo Gomez, one of Opportunity Colombia’s most successful clients, told the sad story of her daughter Vanessa’s long battle with cancer. When Vanessa passed away a few years ago, it was difficult not only because they had lost their daughter, but because their deep debt from her medical fees meant that they risked losing the business they had worked years to build. Even though Cecilia’s first loan from Opportunity was small, that capital and her subsequent loans helped her to slowly reestablish her family’s business.

David Simms hands a commemorative plaque to Carlos Moreno, with Enrique Ordonez at right

Finally, David Simms, Chairman of the Board of Opportunity’s Global Microfinance Operations, took center stage to thank Opportunity’s donor community for their unwavering support, patience and trust in the goal to make this day a reality. More than 1,000 partners contributed to this historic effort, including Credit Suisse; Caterpillar Foundation; Citi Foundation; InterAmerican Development Bank; private foundations (Soran Foundation, John and Jacque Weberg Foundation); as well as the Robert Jenkins Family, Warren and Mary Lynn Staley, and Alan Barnhart. David presented a commemorative plaque to Carlos Moreno, Opportunity’s first loan client, honoring him for his historical place in Opportunity International’s legacy.

As David told the crowd, “The grand opening and expansion of Opportunity Colombia is the result of a strong and sustaining vision, great commitment, hard work and abiding faith. I share this joyful moment with the entire Opportunity International family of staff and supporters.”

Congratulations on this wonderful achievement, Opportunity Colombia!

As I look at the microfinance industry globally, I’m encouraged by the trends and the progress we’ve achieved so far. Whether you search in Wikipedia, CGAP or MIX Market, whatever the source of the data and however qualified, microfinance does have an impact on the lives of some 100 million clients today. And when you take into account that our clients are supporting an average of five people — family members, adopted orphans and employees — the impact of financial decisions are even greater. No wonder the industry is under such intense scrutiny!

Opportunity Relationship Officer Phiona Ndikibuliraani, left, offers guidance to sugarcane farmer Loy Naigaga, in rural Uganda, ensuring Joy’s long-term financial success.

When so many potentially vulnerable people are affected by an industry, it calls for the utmost care in how operators define and deliver on their mission. Microfinance must first and foremost be about making a difference in the lives of the impoverished and marginalized. It must be about having a positive impact for the overall welfare of microfinance clients. In order to effectively meet these needs, microfinance institutions (MFIs) must put clients at the center of their work.

MFIs must offer clients products and services that are responsive to their needs, with built-in flexibility to adapt as their businesses evolve. They must price products and services in a way that acknowledges that they are serving people in poverty. Yes, the microfinance target market arguably is very risky. Interest rates and fees charged should, justifiably, take into account this risk component, the high administrative costs of delivery of products and services, the funding costs, and the inflation rates in the markets served, among key factors. However, this cannot justify the high charges applied by some practitioners in certain markets, especially in cases where one finds large pricing differentials in the same market. I feel strongly that the profit motive must not take precedence over the social, transformative motivation. For some of us, serving impoverished people through microfinance is not simply a business. It is a calling, a mission, a passion.

MFIs must make every effort to treat clients fairly and gain a reputation for this ethos. Whether it is in pricing, or granting and collecting loans, microfinance clients must be respected, and they must feel that the institutions serving them will do so with humility and integrity.

MFIs must invest in the development of human capacity by training both MFI staff and clients. This is an added cost for the industry but one very much worth bearing in order to build the groundwork for sustainable financial growth among clients, and professional growth among staff.

Microfinance practitioners must ensure that they have in place sound governance and internal control structures, policies and procedures, as well as data integrity. That is, the information supplied to donors, funds providers, regulatory authorities, and the public at large must be accurate, transparent and reliable. They also must devise metrics to track a client’s transformative journey, from group borrower to independent small business owner with multiple product needs, as she or he develops and expands the business. Not all microfinance clients are entrepreneurs. Nor will all entrepreneurs succeed. This is a truism for businesspeople in developed and developing countries alike. The strength of microfinance is in its variety of other product offerings in addition to small business loans. These products may include savings, domestic and international transfers, trade finance, insurance, financial literacy and life skills training, and more, depending upon the local regulations and the license held by the microfinance institutions.

MFIs must utilize metrics to track their impact and progress with clients, or where gaps may appear. Introducing self-assessment policies and procedures is a way to catch problems and issues at an early stage and, more importantly, to develop pre-emptive or remedial action plans in a timely fashion.

As competition in the microfinance industry intensifies in the coming years, MFIs must be careful not to follow the path taken by the mortgage crisis, with imprudent lending practices involving over-lending to clients. Where credit bureaus can be created by the regulatory authorities or the microfinance industry, this is to be strongly encouraged as a source of information for managing multiple borrowings by clients. I see increased competition in the industry as a net positive if it leads to more lives positively impacted, increased quality of products and services, and more innovative delivery systems aimed at lowering costs for clients.

A few aberrant cases of excessive pricing and coercive collection practices are enough to negatively impact the reputation of the whole microfinance industry. Initiatives like The Smart Campaign, which emphasize the need to put clients at the center of microfinance, are a bellwether for the shift in focus that is taking place. In Opportunity International‘s own banks, we strive to adhere to our Code of Conduct, published in every local branch, which outlines not only our commitment to transparent pricing and a fair return on equity targets, but our pledge to always treat clients with dignity and respect.

We must read the writing that has appeared on the wall in recent months. If the microfinance industry and its members fail to self-police, to exercise due prudence and restraint in the conduct of their operations, to serve and treat their clients fairly, and to rigorously comply with the laws of host countries in letter and in spirit, then we are inviting tight and perhaps detrimental regulatory oversight and public scrutiny. And even more importantly, our clients risk losing more than profits; they risk losing everything.

Kyenjojo branch, March 2012

In communities where formal banking is uncommon or nonexistent, community education is key to building trust and engagement in the services and resources offered at Opportunity International branches.

Informal methods of saving money and taking out loans are common and can be costly, even fiscally dangerous, to people with few resources or recourse in the event that things go wrong. Some people in poverty may distrust banks, in part because they assume they will not be welcomed. Because Opportunity provides tools, resources and training to help clients and communities build up financial stability, we also work hard to help them understand that we want to offer them a hand up, not a handout, which will help them build a strong future.

Opportunity’s Kyenjojo branch staff

Understanding this, and building on the success of our branch in nearby Mubende, Opportunity Uganda has established a new community bank branch in Kyenjojo, which officially opened on March 20, 2012, with 18 new clients. The branch disbursed its first loans in May, and is preparing to launch important new initiatives designed to strengthen the entire community.

Prior to the opening of the Kyenjojo branch, Opportunity Uganda met with local leaders, including the Kyenjojo district local government, the town council and the resident district commissioner. Meetings such as these are critical to helping community leadership understand both Opportunity Uganda’s mission in Kyenjojo and its banking services throughout the region. Meeting with these leaders is also paramount in expanding the bank’s growing understanding of the community’s needs. The development of these new relationships encourages us and gives us hope in the future success of this strategic branch.

Stay tuned for Part 5: Equipping the Kyenjojo Community for Transformation