The “Global Findex” (Global Financial Index Database)–a project by the World Bank, funded by the Gates Foundation–has only been out for a couple weeks now, and already I am seeing its use for my own work in the Democratic Republic of the Congo (DRC).

In the 1970s, I was privileged to be part of the team that launched Citibank in my country, the DRC, an experience that was to become useful for another start-up in the Cote d’Ivoire and later, decades later, in Eastern Europe. My career in banking started in operations where cash and tellers were part of my responsibilities. While I was formally exposed to cash first hand, Citibank was a corporate bank in the DRC, with very limited offerings of individual deposit accounts.

This experience with Citibank, while useful and educational, contrasted in many ways with my experience in cash management as I was growing up.

First, my family had very little of it (cash). Second, whatever little they had would be hidden in mattresses or in crevasses in our mud huts. This was the case with my sister, the oldest in our family, who sold peanuts to earn the small sums she saved under a pillow. As she related to me during a summer vacation, she was saving for the dowry that I would need to pay for my future wife. Little did she know I would end up getting a scholarship to attend university in America at one of the best institutions in the country, Dartmouth College, and marry an American woman who did not need a dowry!

In my youth, I was also able to see my mother joining arrangements with a group of other women where they would contribute small sums that they would take turns using to help members gather the lump sum needed for punctual needs such as funerals, marriage, school fees, etc.

Now, 40 years later, I continue to see complex money management in my life in the U.S. Those without bank accounts can go to check-cashing stations. The college-aged might ask for informal loans from their parents or for government-supported loans. ATMs are readily accessible to American consumers. So, whether in America or in the developing world, people are always balancing their money, be it through formal or informal means (Daryl Collins et al.’s Portfolios of the Poor confirms this observation).

When the Global Findex was published, I was especially interested in the formal versus informal financial tools in the country that continues to be close to my heart—the DRC. Talking about money management, see the chart below, which shows how the DRC compares with the rest of Sub-Saharan Africa and the world.

Chart of formal vs. informal financial tools in DRC compared to rest of Sub-Saharan Africa and the world (Source: Global Findex)

When we compare the formal financial sector in the DRC to its Sub-Saharan African context and to the rest of the world, it lags considerably behind. We do know, though, that despite an underdeveloped formal financial sector, the Congolese people, like their counterparts elsewhere, are managing their finances. They just do it in different ways. Look, for example, at the data on credit (in the next chart below). While only 2.5% of people in the DRC have a loan with a financial institution, about 30% of people have a loan from a family or friend.

Chart of sources of credit in the DR Congo (Source: Global Findex)

The problem is that there is a limit to how much credit friends and family can offer. And where the generosity of family and friends ends is where the need for formal institutions is felt. The demand is strong, as we can see. People are accessing loans from different sources and are especially reliant on their personal networks. There are only a handful of microfinance organizations in the DRC, but those that are there—Opportunity International, FINCA, ProCredit, and others—are working hard to provide alternative sources of credit.

These efforts are very welcome for a country with an estimated 71 million people and where only a small fraction–less than 1%–has access to formal financial institutions. When I visited Kinshasa for the official inauguration of Opportunity DRC in May 2011, about 2,500 Congolese were already benefiting from loans at our four-month old institution. Some 70% of these clients were using formal banking for the very first time in their lives, an astounding statistic that is increasingly being addressed by the opening of new microfinance institutions in the country!

As important, or more important, as credit, however, are safe places to save. While the survey reports that 25% of people saved in the past year, only 4% of all respondents have an account in a formal financial institution. Eight percent saved in a savings club. What about the other 13%? Where are they putting their funds? Again, just as credit is happening informally in the DRC, so are savings activities. Funds are going under mattresses or in tin cans.

Kadita Tshibaka at the grand opening celebration of Opportunity DRC in May 2011.

I am challenged by this data. I realize that in Opportunity’s work in the DRC, we must work hard to earn the trust of clients and continuously strive to offer them cost-effective products and services at costs that they can afford. This is where the judicious use of technology can help as delivery costs are lowered and the resulting gains are transferred to clients. Opportunity DRC has applied for a deposit-taking license to give the Congolese people one more safe place to keep their small savings–somewhere better than mattresses.

When I talk about tapping into the unbanked, therefore, I mean tapping into what they are already doing on their own by giving them the facilities and tools to manage their funds securely and more effectively.

Thanks to the Global Findex, we now have a visual of what this looks like. In the graph above, what I would like to see over the next decade is for that bar on the far left to grow, indicating that people are able to get credit from a formal financial institution when they need it. We’re pushing for choices; we’re pushing for quality; we’re pushing for inclusion; we’re pushing for fairness and respect in our dealings with our clients; we’re pushing for transparency; and we desire to build sustainable institutions focused on delivering transformative services to our clients.

Betty Mutua from Opportunity International on Vimeo.

Today on Mother’s Day, honor the mothers and women in your life who work hard for their families, and do it with endless poise and grace. Create tribute patches to them on the Global Opportunity Quilt at opportunity.org/honormom. Your gifts will make an impact on the lives of Opportunity’s women clients all over the world who work hard to provide for their families.

Actress Malin Akerman–Opportunity supporter, star of upcoming movie Rock of Ages, recent traveler to see Opportunity’s work Tanzania:

Katherine Haley, Young Ambassadors member, co-chair of YAO-DC:

Check out Katherine’s Live Below the Line impact page and blog at livebelowtheline.com/me/katherinehaley, where she explains her motivation this way: “In today’s world, extreme poverty and inequality are unjustifiable and unfair. Live Below the Line demonstrates the problem in a concrete way, while raising money to address the problem.” Katherine has already raised over $3,000 for Opportunity International’s work, and you can help her with a gift that encourages her and makes an impact on global poverty all at the same time.

Courtney Abernethy, member of the Board of Governors, will take the Live Below the Line challenge next week with her 11-year-old daughter Preston:

I feel like I am always going around trying to generate awareness about the reality of global poverty, especially with my children. In Matthew, Jesus tells his disciples to feed the hungry because whatever you do for the least of these, you are doing for me. Now, most of us who go to church know this. But how can we make this command real and relevant while living in a culture of excess? Live Below the Line challenges us–adults, children, whole families–to look at how much food costs and how little $1.50 actually can provide. It forces you to walk in the shoes of 1.4 billion people across the globe. Once you experience it just for a week, then hopefully, you will respond with a desire to alleviate this reality. Our goal is five days Live Below the Line… I plan on visiting Preston’s school to have our simple lunch together, to share what and why we are choosing to do something so simple when 1.4 billion do not get a choice. Sometimes we talk about truths, beliefs and convictions but never take any action because we do not know how or where to start. Live Below the Line gives people a tangible way to put action behind those words.

Abbi Antablin, the Regional Director for YAO at Opportunity, takes us shopping on her first day on the Live Below the Line challenge:

Ian Haisley, Opportunity’s Director of Online Strategy, blogs and gives us a first-hand peek at the challenge of “living below the line”… and why it’s worth it:

He’s been detailing his experiences on his blog ianhaisley.com. Here’s one of his reflections from Day 2: “It’s not that I’m extremely hungry today, I’ve actually been surprised how much less I really need to feel full. Its just that I should have removed the things I can’t eat [chocolate, cranberry juice] from my view. I suppose that is a blessing and a curse that comes along with living in the U.S., food is often extremely accessible. It is so easy to forget that there are over a billion people who can’t just walk to their local Trader Joe’s and grab something to eat.” To support Ian’s challenge, go to www.livebelowtheline.com/me/ianhaisley.

Learn More

On Thursday, the Global Poverty Project posted a multimedia presentation on Google+ called ”1.4 Billion Reasons,” which educates the public about extreme poverty. You can see the presentation on Google+ by clicking here.

As Malin Akerman says, “I dare you to challenge yourself.” Take the Live Below the Line challenge in support of Opportunity. Go to livebelowtheline.com/us-opportunity.

Trust Group treasurer Unayezu (left) and president Mubonjyamema (center), with another client at right, share their stories.

The “Those Who Trust Each Other” Trust Group started 11 years ago. The 14 members of the group receivemicrofinance loans to grow their businesses selling a variety of products including bananas, beans, veggies, and sorghum, and there’s even a butcher! They meet weekly in Ntunga with their Opportunity Rwanda loan officer, who travels out to advise them on their businesses, and to collect and process their loan repayments.

Meet Mubonjyamema Ephiphamie

Client Mubonjyamema is the president of the Trust Group. She provides for her family selling sorghum, ground nuts and beans, and with the income from her growing business she was able to build a long house with four front and back rooms with separate entrances that she rents out to four families. Each family operates a business out of their own front room, and then lives in the back. Mubonjyamema’s hard work is paying off and she proudly told us that she’s now able to send all five of her children to school.

Meet Unayezu Philomene

Unayezu is the treasurer of the group. She’s a widow whose husband was killed in the Rwandan Genocide in 1994. Unayezu’s three daughters are in school and one has even completed high school. She also has two sons currently in secondary school. Unayezu is on her second loan, which she’s using to grow her business selling green bananas. She was able to build a house after one year at her business and has now installed electricity. She’s working hard to provide a better life for her children, and she’s doing it all on her own!

Meet Mukamuhizi Alphonsine

Mukamuhizi Alphonsine shyly but proudly told us about her success selling salt, sugar and soap, and how she can now contribute to her family finances.

Mukamuhizi is a lovely, soft-spoken woman in a yellow and orange dress and a stunning headdress. She shared with us how her first microfinance loan has enabled her to buy salt and sugar to sell, and with her growing profits she’s now added soap to her inventory too. Mukamuhizi’s success enabled her to put a concrete floor in her home, make repairs, install electricity, and buy new furniture. She talked about how she can now provide for her family and even has a little left over to buy nice fabric for herself without having to burden her husband to buy it for her. She is obviously proud of her success–her family is better-off because of her.

Though the women in the group say they don’t celebrate Mother’s Day as we do in the U.S. and U.K., they did celebrate International Women’s Day on March 8th, which I thought was wonderful. I asked the entire group what qualities make a good mother. Here is what they told me:

• “A good mother is someone who can raise children with good values.”
• “A good mother respects herself.”
• “She can live in peace with her relatives.”
• “A good mother teaches her children to respect others and themselves.”

Their answers showed me that all mothers–no matter their life experiences, nationality or income–want similar things. This was affirmed when we spoke to the women in another Trust Group later that same day, who told us a good mother had love for her family and for God, and she looks for ways to promote family, self-advancement, progress and hospitality. Though I’ve now returned to the U.S., these women I met have stayed with me. Wherever they are this Sunday, I want to wish them all a wonderful and happy Mother’s Day! I pray for their continued success and that they will always be able to provide for themselves and their children.

Celebrate the mothers and women in your life by creating a tribute patch on the Global Opportunity Quilt at opportunity.org/honormom. Your gift will impact the lives of Opportunity’s women clients in Rwanda and all over the world who are working hard to provide for their families.

Panel, from left: Nina Diamond (moderator), Karl Muth, Dennis Ripley, and Kate Cochran

Kate Cochran explained that Vittana’s service is a peer-to-peer microlending website for students. It serves 3,000 students in 12 countries with interest- and risk-free loans at an average of $750, for a term of 12-36 months, and cosigned by an MFI with an appetite by innovation. Though this is higher than the traditional microfinance loan, Cochran says that, yes, these are microfinance loans and that the industry needs to expand its definition. She says that Vittana is a pilot intended to show the world that the microfinance model will work for students. Students are naturally very web-savvy, and their extensive familiarity with social media platforms “brings awareness and allows capital to flow.”

Karl Muth talked about reducing hard currency and other risks with expanded technology, though Grameen is not “driving technology, it’s consumer-driven.” He told a storyabout the changing nature of money transfer and the people’s finance transactions. On a recent trip to Uganda, he noticed the scarcity of buses. Just a few years ago, being a bus driver was a sought-after job in Uganda because drivers transported cash for people from urban to rural areas and received 5% as payment. But today, with so many cell phones that can transfer money and make remittances, the demand for cash-carriers has dried up and so in consequence, few people want to be bus drivers. Twelve hundred of Grameen’s clients in Uganda are using mobile money and making web-based transactions, said Muth, and Grameen has tech-savvy staff that travel around the country giving technology advice and training to clients. Muth sees Grameen as a an intermediary offering products that connect the client in the village to trillions of dollars in the global financial market. “The way we build products is important because efficient access is important,” he said.

Dennis Ripley talked about Opportunity’s microinsurance subsidiary MicroEnsure and the new insurance products made possible through cell phones and technology. Ripley explained that he and MicroEnsure CEO Richard Leftley had arranged a deal several years ago with TIGO in Ghana, one of the largest cell phone companies. For the cost of their regular $10 monthly cell phone fee, about 7,000 TIGO customers currently receive free access to term life insurance for themselves and one member of their family, with coverage at about 40 times that cost. Opportunity is also using social enterprise platform Salesforce to gather accurate household and land data for farmers (we’ve found that most incorrectly estimate the sizes of their land plots) in order to determine the appropriate size of their agricultural finance loans. Echoing one of the ongoing themes of the day, Ripley called savings the “holy grail of microfinance.” This is especially true for farmers, for whom savings improve cash flow until harvest time to help them pay their bills so that they don’t have to side-sell their crops at a deep undervaluation.

Dennis Ripley discusses the innovations being used to reach more of Opportunity's microfinance clients.

In Malawi, Opportunity has created a financial distribution channel that ensures that clients are within 60-minute walking distance of a banking outlet. It employs the hub-and-spoke method with satellite branches, ATMs, biometric smart cards, mobile banking vehicles, teller-staffed kiosks, and point-of-sale (POS) devices. Just as they were finished building this matrix, and Opportunity Malawi was about to reach 90% coverage, M-PESA exploded in Kenya and so Ripley and the Opportunity Malawi leadership decided to map out the country’s cell towers as well, and now Malawian clients can use their cell phones to make financial transactions too–we estimate that every Opportunity Malawi client lives or works within no more than one kilometer of a banking outlet. Today, Opportunity Malawi serves over 421,000 deposit clients and over 57,000 loan clients. Once we start taking deposits, Ripley explains, we are able to think more creatively and strategically about our value chains. In Southern Nicaragua, for instance, we’re offering tools that combine the rapidly growing fields of agriculture and tourism to help move the needle on poverty. In Granada, we’ve opened the innovative Emprendadora School, which offers a traditional high school education plus hands-on experience in those fields.

In addition to the products Ripley detailed here, Opportunity’s partnership with Credit Suisse helps us implement further innovations, including Euronet in Malawi, a system that produces bank cards at a lower overall cost for clients and banks, and the rollout of the T24 Emerge Technology System in Colombia, enabling us to grow our bank and expand our offerings of services and financial products to our clients. In Ghana, Credit Suisse supports the marketing and expansion of branchless banking through cell phones, ATMs and POS devices.

For me, the takeaway from this panel was the efficacy of microfinance’s new innovations and existing technology, as well as the ongoing need for even more efficient tools that meet clients’ needs. Clients are innovative and resourceful, and they will find ways to access existing technology like cell phones in order to spend less of their day accessing financial services and more time growing their businesses and improving the economic situation of themselves and their families. Microfinance organizations can give their clients the best shot at improving their situations by continuing to innovate with the most effective technological tools.

Meet Teacher Naomi Amenya

Naomi Amenya is a passionate educator of the 150 children at her Royal Seed Home & School in Ghana.

Naomi Amenya’s eyes sparkle as she gives words of encouragement to the 150 children, including 80 orphans, under her care. Naomi operates Royal Seed Home & School on the road to the Cape Coast in Ghana. Children at Royal Seed learn English, math, grammar and environmental science and are fed two meals every day. The school’s campus consists of classrooms, a dormitory for orphaned children and a small plot where Naomi raises chickens, rabbits and goats.

Naomi became an Opportunity client six years ago. Her loan officer recognized that she was a good credit risk in spite of her lack of collateral or credit history. And in fact she has successfully paid off all of her previous loans, using them to build a kitchen and additional classrooms onto Royal Seed. Naomi’s vision is to continuously enlarge her “shelter of hope” for as many children as possible in Ghana and beyond.

As part of Opportunity’s Banking on Education program, we invest in schools by providing proprietor loans. Proprietors use the loans to hire qualified teachers, improve infrastructures, expand classrooms, provide nutritious meals and purchase much-needed equipment. To help schools succeed and become sustainable, Opportunity also offers tailored training and business advice. These educational entrepreneurs, in turn, provide children with a quality education that empowers them with the skills and abilities to get higher-paying jobs, build strong families and help in the economic development of their communities.

A teacher affects eternity; he can never tell where his influence stops.
–Henry Brooks Adams

National Teacher Day

In honor of National Teacher Day today, thousands of American communities are taking the time to honor their local educators and acknowledge the crucial role teachers play in making sure every student receives a quality education. The National Education Association and the site Parenting.com celebrate public school teachers who show unwavering passion, dedication and commitment to educating America’s future. All this week in honor of Teacher Appreciation Week, thank a teacher who has made a difference in your life or that of your children by Tweeting a message with the hashtag #thankateacher.

Thank you to the teachers in the U.S. and around the world who are giving us all a better future.

Michael Schlein discussed the genesis of the industry, beginning with organizations’ realization that “poor people could repay their loans and you could build a business model around that,” and insisting, somewhat controversially, that there is a profit to be made in working with this population.  He pointed out that it’s a very exciting time for microfinance, full of great change and great potential. It “shows people that there are markets at the base of the pyramid,” he said. “All the charity in the world will not get you to” the 2.7 billion people who lack access to financial services. Still, “it’s amazing what access to financial services and a very small loan can do,” said Schlein. He also said that we need to get beyond credit, that products such as savings and insurance are crucial to ending poverty. He called upon the industry to employ “new radical disruptions that can break through the existing structure” to “reach underserved areas.” He even expressed the belief that the crisis in Andhra Pradesh would not have happened if those MFIs had taken savings, because, he said, savings position the MFI as a trusted entity and cements the organization’s position in the community.

David Roodman closed the day discussing his new book, Due Diligence: An Impertinent Inquiry into Microfinance, and the scientific experiments and mathematical formulae that he said call into question its effectiveness. A controversial take, his presentation examined several famous studies and discussed his own mathematical evaluations of the findings. He also pointed to anecdotes that refute the effectiveness of the group lending model, although most of the examples he presented came from South Africa, a country where the group-lending model is unusually unsuccessful compared to other developing countries.

Roodman cautioned that organizations expose themselves to risk when they lend to the “poorest of the poor,” but that savings is a bright spot that has a great impact on poverty. He also championed deposit-taking, insurance, and money transfers, and the rollout of technological innovations. He acknowledged that Schlein, and Rupert Scofield (co-founder, President and CEO of FINCA) have been critical of his methods and conclusions in his latest book. Roodman’s Microfinance Open Book Blog cites Scofield’s criticism: “[Scofield] says that I ‘[set] the statistical/methodological bar pretty high,’ so that the body of evidence on which I am willing to rely is thin; and I ‘[overreach] in the sense of drawing bold, sweeping conclusions.’ It is true that I admit only the best evidence.” For his part, Scofield writes that two of Roodman’s conclusions, based on randomized control studies, were conducted with for-profit organizations engaging in “predatory lending,” the reason why it might be difficult to conclude definitively that they were reducing poverty.

Schlein and Roodman bookended the day with messages that reflect the current tenor of public debate about the industry as a whole. Most of the day’s speakers made the point that despite recent controversies, there is enormous growth and potential in the industry, especially through the expansion of technology innovations such as cell phone banking, growing web access and technology that increase clients’ access to these tools. (See my forthcoming blog about the panel, “New Products & Innovations in Microfinance.”) The experts also lauded the regulations and monitoring initiated by leaders in the industry through initiatives such as the Smart Campaign.

The discussion and evolution of modern microfinance continues, and while some of the messages of the day were controversial, the overall theme was a positive one: with current regulations and new innovations, the microfinance industry will only strengthen, growing to meet more of the needs of a greater number of clients even more effectively, reaching more of the unbanked and moving the needle on global poverty.

Living Below the Line – Day 1: Shopping from Ian Haisley on Vimeo.

Today is the first day of my Live Below the Line challenge for Opportunity, where I eat and drink for $1.50 a day for five days. Live Below the Line is a campaign that raises awareness about the 1.4 billion people who live below the poverty line and have to make $1.50 cover a lot more than food every day.

My wife Jackie and my sister Natalie decided to join me in the challenge as well, which made it a bit easier to add variety to our menu for the day, since we were able to pool our money and spend $4.50 total. Take a look at how we did on our first shopping trip.

Our menu today will consist of:

• Bananas
• Corn
• Rice
• Black Beans
• Ramen Noodles
• Roma Tomatoes

In 2010 I had spent time in Johannesburg while filming Bang Bang Club. I became good friends with my security guard, Stranger (yes, that was his name), who invited me to his birthday party. It was the most beautiful party I had ever been to, in the township Soweto. I met mothers, daughters, sons, fathers and neighbors who were all celebrating (about 100 people!) and as I looked around I was so moved and impressed with how much Stranger and his family were able to provide given the limited resources. When I got back from the trip I knew I needed more, more Africa and more learning.

I had been looking for an organization that was working in Africa and focused on smart solutions that provide options for people living in poverty. I wasn’t interested in taking a picture next to a well, a school or a hospital and then walking away. I wanted to dive in and get involved. I needed to understand how experts are creating real opportunities to create long-term change. And, I needed to go back to Africa to learn, see and hear how it all works.

Then I met Opportunity International. Honestly, I had NO idea how the organization worked and why microfinance, including loans and insurance, were such an important part of the process. It was, without a doubt, one of the most important trips I’ve ever taken. I was so honored to have been invited and to spend the next five days with Opportunity International, learning, listening, laughing and falling more and more in love with Africa. But, I realized we all have a lot more work ahead of us …stay tuned for my next post about the trip and to hear how Roberto changed the beat of a Trust Group meeting.

Opportunity's Willow Creek booth, complete with a life-sized model of a mobile banking van

“We’re very excited to be part of Willow Creek’s Celebration of Hope for these three weekends raising awareness and funds,” said John Kamperschroer, a VP in our Resource Development department. Nicole Mohovich, our major events manager, said, ”It was great to see that people were aware and interested in microfinance. We gave out our Opportunity gift cards and they were really excited to get involved and to take action.”

Women make up 70% of the one billion people living on less than $2 per day, explained the Celebration of Hope website. So they’ve chosen to focus on the disproportionate impact of global poverty on women and girls. ”There are so many opportunities–there’s the heart to make a tangible change, and then the heart to help people create a sustainable way of life by what they are receiving,” Susan DeLay, Willow Creek’s managing editor, told The Christian Post. As the article explained, “Willow Creek has a ‘heart for global issues’ and has used that interest to combat global poverty through dozens of Celebration of Hope events over the past seven years.”

Over the course of three weeks, an estimated 60,000 people are expected to attend the 2012 event. If you haven’t yet joined the campaign, head to Barrington this Sunday and check out the website to get involved.