Biometric fingerprint technology at Opportunity Malawi

In the past 40 years, the microfinance industry has grown to its current level whereby MFIs are operating in virtually every country. In this dynamic and rapidly growing industry, leaders continue to learn and expand their services to improve the lending and supporting process. On this panel, Opportunity International’s VP of program management, Simona Haiduc, and her fellow speakers explored the current hot topics of microfinance and what they believe is the next revolution in the industry.

Moderator:

Linda Darragh, Professor and Director of Entrepreneurship Programs, Booth School of Business

Panelists:

• Ellen Carmichael – Field Coordinator, CARE
• Greg Casagrande – Founder and Managing Director, MicroDreams
• Simona Haiduc – VP of Program Management, Opportunity International

Opportunity Uganda staff inside mobile banking van, Mbarara (Photo: Oliver Krato)

Highlights from the Panel:

Early on in Malawi, says Haiduc, people mistrusted banks so Opportunity invested in financial literacy training, and their trust in us went way up. We also invested in biometrics, and soon the Opportunity International Bank of Malawi (OIBM) card became the only identification that our clients owned. After a while, we experienced a significant uptake in savings accounts. The uptake in Malawi is five to seven times higher for savings than loans. We discovered that our clients want to save $1 at a time, so we had to design a savings product that would make this work–one with no minimum balances and with minimal fees.

At first, our vision was how we could bring access to every last village in Malawi, and we came up with the 60-minute concept, where every family living in poverty would have access to our financial services within a 60-minute walk or ride from home. This has now become the 1 kilometer concept.

Kenyan client Margret Wangui accesses banking services from her mobile phone.

To achieve this, we are deploying a hub-and-spoke model which includes low-cost satellite branches, mobile phone technology (90% of our clients have access to or own a mobile phone), ATMs that give 24/7 access to banking services, point-of-sale (POS) devices that deliver financial services at retail shops and gas stations, and mobile banking vans that are equipped with “teller offices.”

At CARE, says Ellen Carmichael, we are now linking up our informal savings groups with formal banks. Haiduc highlights that Opportunity is looking to partner with CARE to further expand our microfinance services in Rwanda.

This is just one of the Opportunity blog posts from the 2011 Chicago Microfinance Conference. To read our full conference coverage, click here.

Portfolios of the Poor

The results are surprising: people in poverty have surprisingly sophisticated financial lives, saving and borrowing with an eye to the future and creating complex portfolios of an average of seven different formal or informal tools, including savings.

Ruth-Anne Renaud, our VP of Women’s Philanthropy, led the lunchtime talk with 16 colleagues in the office and on the phone. Questions she asked us to consider:

1. According to this book, the poor face a “triple-whammy” of problems that keep them in poverty: small incomes, irregular and unpredictable cash flows, and lack of access to reliable financial instruments to match their irregular cash flow patterns. How does microfinance help households cope with these challenges?
2. After reading this book, one reviewer said that people in poverty actually have more complicated financial strategies than the rich. Would you agree with this statement? How does microfinance help simplify the financial strategy of a person living in poverty?
3. Were you surprised at how much the poor were able  to save given their small incomes? How does this support Opportunity International’s strategy to provide access to savings?

A few of our group’s comments…

I found it very interesting that the poor even have portfolios. That was an eye-opener for me. I’m always struck by how financially similar our clients are to us. -Sarah

When they put away a small portion of their savings by lending to a neighbor or another informal method, they are taking an incredible leap of faith. It’s a testament to how strongly they want a way to save. – Shelley

Thembi is the owner of a financial portfolio featured in one of the book's case studies. She is pictured here walking through the streets of the South African township where she lives. (Photo from portfoliosofthepoor.com)

People living in poverty are finding ways to save no matter what, as with the “merry-go-rounds” (officially called ROSCAs). They exist in almost every community without formal banking. It’s a beautiful thing and a lot better than having no options to save. -Steve

Reading this book reminded me how much I love it that we offer loans and other products to meet these additional needs, like microinsurance. -Dana

As we’ve built up trust on both sides, it’s enabled a progressive evolution to provide more services to meet the needs of our clients. -Sarah

This is why microfinance works, because people in poverty already understand what we have to offer and understand how valuable these tools are. This is one of the best cases we have for an integrated approach to offering loans, savings, insurance and training to people in poverty. –Steve

As astounding as it is that two billion people in the world live on $2 a day, it’s even more amazing when you know that that number is just an average. For people living in chronic poverty, the challenge is not only their low but also their irregular daily incomes, as well as the near-constant financial risk they face. Reading Portfolios inspired me with the knowledge that Opportunity’s work is important because it gives people access to financial tools that help them plan for the future and contribute much-needed economic stability to their lives.

We encourage you to answer one of our discussion questions or share your reflections about this book in the comment field below. Have a suggestion for what we should read next? Share it with us!

The Datano satellite branch is a small outlet located in Ghana’s western region, in the Amansie West District of Ashanti, west of Accra. The branch is staffed by three employees including one loan officer. Although the branch only recently opened its doors to families, Opportunity Ghana‘s staff have been working with groups of farmers in the region for some weeks now.

The Millennium Villages Project is an initiative designed to enable rural Africans to eradicate extreme poverty and achieve the UN Millennium Development Goals. MVP personnel and partners work with villages to create and facilitate sustainable, community-led action plans that are tailored to the villages‘ specific needs. The Millennium Villages Project is based on the findings of the UN Millennium Project and is led by the science, policy and planning teams at the Earth Institute, Millennium Promise and the United Nations Development Programme.  

Ghanaian clients at the new satellite bank branch in rural Datano

Already at Opportunity Ghana, MVP branch staff have assisted 88 clients with Trust Group loans and training, and 130 families with savings accounts–a first for most of the clients in this community. The branch has a lending portfolio of $22,043 and a savings book valued at $23,557.

MVP branch staff will also serve families in several communities clustered around Datano, where the main economic activity is smallholder farming. Opportunity Ghana is helping farmers achieve higher productivity and protecting them from loss through the implementation of Opportunity’s agriculture finance strategy, which will allow families to build a sustainable framework that increases food security and sparks economic activity for the entire community.

This rural expansion in Ghana is empowering more people living in geographically remote regions to provide for their families and their futures with microfinance solutions. We can’t wait to see how the clients of Opportunity Ghana partnering with MVP continue to work to achieve the Millennium Development Goals, and work their way out of poverty.

The recent onslaught of flooding around the globe has highlighted the devastating impact natural disasters can have on people regardless of where they live. The damage to homes and livelihoods, however, is particularly felt when victims have no form of financial security.

Savings products enable Opportunity Philippines clients like Jemmalyn Alcantara of Manila to plan for the future, even in the event of natural disasters like typhoons or flooding.

Currently, millions of families in developing countries don’t have access to savings services because they don’t have the minimum deposit most commercial banks require (some two-thirds of the world’s adults still do not have a basic bank account). Their savings come in such small increments that most banks are not prepared to offer them an account. In addition, many people living in poverty don’t have or can’t afford documents such as birth certificates, which are needed to access traditional banking services.

Because savings is an economic necessity, people living in poverty must find other ways of keeping their money. Without many alternatives, some hide their money in hollowed out bamboo poles, in boxes under their beds, or in a hole in the ground. They also put their money into assets, such as livestock or pieces of jewellery. But assets offer little security as they are vulnerable to their environment–they can be stolen, deteriorate or be destroyed by natural disasters. People living in poverty need savings that are both safe and liquid, offering a safety net against crises such as floods.

Opportunity International offers savings products that enable people in poverty to securely deposit and save small amounts of money. Often without a minimum balance requirement, these savings accounts enable families to plan for unexpected expenses and can lessen the devastating impact of natural disasters.

With homes, families and livelihoods destroyed, survivors of the recent floods in the Philippines are faced with the overwhelming task of rebuilding their lives. Microfinance empowers families to recover from tragedy and reshape their futures.

To read the original blog post on Opportunity Australia‘s blog, click here.

This fall, I spoke to a class at the University of Minnesota about Opportunity International’s work and about my involvement with Young Ambassadors for Opportunity (YAO). The students were asked to write a one-page reflection paper on the topic, which gave me a great insight into a college student’s first impressions of Opportunity. The students in this class, called Entrepreneurial Management: Launch to Maturity, were primarily upper-classmen, and most of them were double-majoring in entrepreneurship and another business discipline like finance or marketing. Here are a few excerpts and highlights from just a few of the students’ reflection papers:

Ava Ramberg

“I found the speech on Opportunity International to be a breath of fresh air. So far [in class] we have had many speakers that talk mainly of their own journeys and companies, while these are all very interesting, Nolan Soltvedt was able to take the speech beyond the realm of the individual.” A few points Ava highlights–

• Opportunity has been able to raise millions by creating a business model for efficient business models. They have developed a system in which loans get repaid at a rate far beyond those in the U.S.
• Opportunity International has taken the next step in globalizing nonprofits and has efficiently scaled itself into a massive presence in this sector

Students can be a part of the microfinance movement and mobilize their campus to help alleviate global poverty. For ways to get involved, visit opportunity.org/students.

Bryan Axelrod

“The loan process in America is very different than the countries in which Opportunity International operates. The American process is very formal, requiring paperwork, credit checks, and collateral.” Speaking of the Trust Group model, he says, “This system has such a high repayment rate that is amazing. It is an interesting thought that [developing] countries respect honor and trust more than much of America or similar countries.”

“Opportunity International is a great idea when comparing the other options in international philanthropy.” Bryan discusses how Opportunity empowers clients to improve their futures through their own hard work and utilizing the microfinance solutions it offers to them. “In this way,” he says, ”the methods that are used by Opportunity International are much more sustainable than the other organizations.”

Kelsey Marti

Like Bryan, Kelsey also talked about the Trust Group model. She says, “[The Trust Group model] shows that the people around you will push you to make the payments if you can’t, because otherwise they are held accountable for the money you don’t pay. Interesting concept.”

The info about Opportunity’s microinsurance products also made an impression on Kelsey. She says, “Their weather-index crop insurance is a very unique feature for Opportunity.” She describes the process by which farmers can take out an insurance policy to help them make ends meet if their crop yields go down because there is not enough rain.

On college campuses around the world, students are excited about the concepts behind microfinance and the movement to end global poverty. Students, are you looking for a way to get involved? Bring poverty alleviation efforts to your school by applying to become Opportunity’s representative on campus through our Campus Coordinators program, or by organizing a Two Dollar a Day Challenge at your school. Visit opportunity.org/students or http://www.opportunity.org/contact-us/contact us[/intlink] for more information.

Clients gather at the banking kiosk in Fatima, Malawi. Reaching people in rural areas is an important step to alleviating global poverty in countries like Malawi.

Travel in your mind to the shores of Lake Malawi. In this remote region, extreme poverty is widespread. But because of the donations, hard work and advocacy of Opportunity supporters and staff, the Malawians here have been empowered financially.

To reach the unreachable, http://www.opportunity.org/Opportunity International[/intlink] Malawi has replicated its successful “hub-and-spoke” approach by opening a hub branch office in the district capital Nsanje, followed by the most recent launch of a “spoke”–a banking kiosk in the village of Fatima. Both locations are supported by an Opportunity Malawi mobile banking vehicle. This hub-and-spoke system is successfully increasing Opportunity’s http://www.opportunity.org/our-work/rural-outreach/outreach[/intlink] to more of these very isolated rural areas.

The new operations will initially help:

• 17,000 economically marginalized families to open secure http://www.opportunity.org/our-work/savings/savings accounts[/intlink]
• 3,500 families (approximately 17,500 people) to access small business http://www.opportunity.org/our-work/loans/loans[/intlink] and http://www.opportunity.org/our-work/training/training[/intlink]
• 3,800 individuals to receive coverage with credit life, crop, funeral and product transit http://www.opportunity.org/our-work/microinsurance/insurance[/intlink]

Mobile banking vehicles like this one help Opportunity to reach rural and isolated families like those in Fatima.

With your help, we can bring further expansions and improvements like these http://www.opportunity.org/our-work/where-we-work/microfinance-in-africa/microfinance-in-malawi/Malawian[/intlink] banking locations to more people living in poverty all around the world. To get involved in bringing http://www.opportunity.org/what-is-microfinance/microfinance[/intlink] to the more than two million Opportunity clients worldwide, go to http://www.opportunity.org/be-involved/opportunity.org/be-involved[/intlink].

How can you help?

1. Meet the experts and learn about microfinance. Join us for Opportunity’s Fall Microfinance Conference, October 8-9, in Washington, D.C. http://www.opportunity.org/opportunity-international-conference/Click here[/intlink] to learn more and to register.
2. Start a web-based fundraiser. Go to optinnow.org/fundraisers and launch a fundraiser for events like birthdays, travel, races and other sporting events, or just to raise awareness about this important issue. Engage the support of family, friends and colleagues to support your efforts and help end global poverty faster.
3. See the impact of Opportunity’s work firsthand. Travel on an http://www.opportunity.org/be-involved/insight-trips/Insight Trip[/intlink] to countries in Africa, Latin America and Asia. You will return home inspired to effect global change.

Be a part of Opportunity’s working solution to global poverty.

School proprietor Maria Nassaka is pictured here with Opportunity's VP of Women's Philanthropy and WON Insight Trip traveler Ruth-Anne Renaud. Says Ruth-Anne: "I met Maria in January 2009 on my first trip to Uganda. It was so heartening to see her again and to learn that her school is doing well."

Guest blogger and Women’s Opportunity Network (WON) member Julie Hindmarsh sends us this report while on WON’s “Mothers, Daughters and Sisters” Insight Trip to Uganda.

What a thrill to visit a school that has received loans from Opportunity Uganda! Maria Nassaka’s husband started the school in 2000 with only 50 children. When he died in 2004, she became director, growing it to its current strength of 200 students. She employs 18 teachers and has an average of 18 students in each class. Porridge made from cornmeal produced from her own field feeds the children each day. Parents who can afford more are able to buy a cooked meal for their children at the school.

Since most everyone in Uganda has difficulty paying school fees at times, Maria cannot rely on fees to consistently fund school expenses. Loans from Opportunity have enabled her to construct more classrooms, and she raises 400 chickens, a cow and a calf to help make ends meet. To me, she exemplifies the woman of noble character in Proverbs 31, who “opens her arms to the poor and extends her hands to the needy.”

When asked about hopes for her own children, Maria said she wishes “for them to aim high. To get a university education, find work and be able to buy property. I work very hard so they will learn to work hard. Then they won’t come back to me. Many children don’t learn to work and then end up back at their parents’ home. I want my children to succeed.”

In their book, Half the Sky: Turning Oppression into Opportunity for Women Worldwide, Pulitzer Prize-winning authors Nicholas Kristof and Sheryl WuDunn emphasize two tools that improve the lives of women and girls living in poverty in the developing world: education and microfinance. It is widely recognized that education holds the potential of breaking the cycle of poverty in the next generation, yet there is still a great need for increased funding.

Educated girls make a difference.

• When a girl receives seven or more years of education, she will marry four years later and have 2.2 fewer children.
• When 10% more girls go to secondary school, the country’s economy grows by 3%.
• Educated girls grow up to be educated women who will reinvest 90% of their higher average income in their children’s welfare–providing a powerful generational multiplier effect.

One of the Insight Trip "daughters" makes many new friends at the school in Kampala as she shares stickers...and adds one to her own forehead.

Education is out of reach for many Ugandan children–especially girls.

While most African countries have public school systems, many schools are of poor quality or are not accessible to children–especially girls–in rural communities. Public school uniforms often cost $30 or more, the equivalent of one month’s income for many families.

Opportunity International’s Banking on Education school proprietor loan program is proof that necessity is the mother of invention. Responding to her community’s need, an educator like Maria may start a day care or primary school in her home and later seek an Opportunity Trust Group loan to expand her facilities. Now, through the Banking on Education program, a school proprietor can obtain a larger loan of $5,000 to $25,000 to make capital improvements to her school, such as new classrooms, computers, bathroom facilities or safe drinking water. Business skills and community leadership training, as well as ongoing mentoring, helps school proprietors create and implement a successful business plan. Opportunity also provides school fee loans and savings accounts to help more parents afford school tuition. This helps girls, in particular, who are often the first ones pulled out of school when families have financial difficulties.

To expand educational opportunities for children on a larger scale, Opportunity International has piloted education loan programs in Ghana, Malawi and the Dominican Republic, and is now expanding into Uganda.

In Uganda, Opportunity hopes to achieve the following goals through its Banking on Education program.

• Provide 151 loans to schools
• Impact 95,000 people including students, parents, employees and family members
• Encourage the enrollment of more girls (80% of men and only 60% of women are literate in Uganda)
• Provide student loans and school fee savings accounts to help more parents afford school fees

Since 2007, Opportunity has given 350 loans to private schools serving 87,000 children living in poverty.

This is the third in a series of blog posts from the “Mothers, Daughters and Sisters” Insight Trip to Uganda. Check back in throughout the week for news and inspiring stories about the women and families of Uganda. To get involved and support the women of WON and Opportunity’s work in Uganda, visit the page for our Virtual “Walk” for Uganda.

Julie Hindmarsh is a WON member who lives in Baltimore, Md. She works as a clinical instructor at Johns Hopkins School of Nursing, specializing in public health and global health care. Previously, she was director of the Women’s Cancer Prevention Program and health planner for the Office of Family Resources in the Baltimore County government. Julie currently serves on the Board of Directors for Opportunity as well as for the organization’s microinsurance subsidiary MicroEnsure.

Malouje Sibusiso Kamanga (above) was the first customer to open a savings account at the newly opened kiosk in Nkhata Bay, Malawi.

Opportunity Malawi’s Nkhata Bay bank kiosk officially opened to the public on April 14th, 2010. The kiosk, which will expand to a satellite branch, is located in Malawi’s northern region. According to Dickson, the kiosk’s customer service agent, “Things look promising – within barely an hour of opening the doors I started savings accounts for 10 families.”

Malouje Sibusiso Kamanga, a secretary, opened her first ever  savings account when she worked in Lilongwe. She was recently transferred to Nkhata Bay and has eagerly awaited the opening of the newest kiosk. In fact, she was so eager that she was the  very first client in line to open a savings account on the day that the kiosk opened! “Today, Opportunity Malawi has opened a branch in my community,” says Malouje. ”I love Opportunity’s service — staff are friendly and understand my needs. I can afford to bank here.” She plans to encourage her coworkers, relatives and friends to put their money into a savings account at Opportunity Malawi.

Opportunity International serves the clients in Malawi’s northern region through the Mzuzu branch and six other banking outlets: Luwinga, Karonga, Chitipa, Livingstonia, Nkhata Bay and the mobile bank. The region has increased its total number of savings clients to nearly 27,000, up from 24,775 at the end of 2009. Outreach to loan clients has also increased significantly, from 4,665 in December 2009 to 7,993 today – a 71% increase!

Other exciting new developments are taking place at Opportunity Malawi, like the introduction of cell phone banking and the opening of a brand new satellite bank branch in Ndirande Township. Check in frequently with Opportunity’s blog to read more about Opportunity Malawi and about the clients of Opportunity all over the world.

In her blog post yesterday from the World Economic Forum in Davos, Melinda discusses the “important link between improving health and increasing access to savings accounts.” She points out that access to savings accounts allows impoverished people to save for medical emergencies, thereby contributing to their improved health. She also highlights the variety of ways Opportunity is providing access to banking services in even the most remote areas through the use of low cost kiosks, ATMs and mobile banks.

You can read her post here:

http://blogs.ft.com/gapperblog/2010/01/melinda-gates-in-davos-lessons-from-africa/

And visit www.opportunity.org to get involved with the fight to end global poverty.

Mrs. Jabalasa, an Opportunity International client, has found security in financial services which has enable her to grow her successful potato business in Malawi.

This year as we stock up on pumpkin and pecans, cook our Thanksgiving meals and recount our blessings, I am reminded of those who provide their communities with food. In particular, I’m thinking of an Opportunity International client with a food retail business who has found security in financial services this year.

Mrs. Jabalasa has a successful potato business in Malawi. She wakes up early each morning to arrive at the Blantyre Market by 4:30 a.m. She stacks her potatoes and takes her place on the tarp from which she operates her business. She knows her clients, and she knows what a quality potato looks like.  At the end of the day, she gathers her profits, packs up her business and returns home just before sunset. For the past two years, her business has thrived, and Mrs. Jabalasa has reaped a “bountiful harvest” of profits.

This year, however, she found financial security for the first time. With a recommendation from friends, she opened a savings account with Opportunity Malawi. Having previously kept her money hidden at home, the promise of security for her savings is a great blessing for her. Mrs. Jabalasa has saved $114 to date. The bank is close to her business, and she is grateful that keeping her savings there is safe and convenient.

I myself am thankful for women like Mrs. Jabalasa, who provide food for their communities and security for their families.