A partnership between FINCA and The MasterCard Foundation makes it possible for as many as a half-million marginalized people living in remote areas to create their own safety nets, and save for a better future. Announced in Dar es Salaam, the $12.7 million grant supports efforts to massively scale-up operations through the use of technology, with the potential to reach as many as a half million people in Malawi, Tanzania and Zambia.
President and CEO Rupert Scofield commented, “The advent of new technologies and partnerships like this one have the potential to transform how millions of African women and men gain access to financial services, especially when it comes to savings mobilization.”
FINCA Africa’s five subsidiaries serve a client base made up mostly of those living below the poverty level. Our average client is an entrepreneur who is the sole income earner for the family, and supports, on average, between five to seven family members. The majority of income is invested in her family’s wellbeing: housing, nutrition, health and education.
Yet for all the 305,000 credit clients and 310,000 savings account holders that FINCA currently reaches in Africa, there are still over 320 million unbanked individuals on the continent that are in need of financial services.
In Tanzania, specifically, with a per capita GDP of just $1,500 and 36% of the population living below the poverty line, FINCA and the financial services sector have a great challenge before them, but an even greater opportunity.
The majority of low-income populations either are served by informal financial services providers, or have no access to financial services at all. This is particularly true in rural areas.
Financial exclusion is primarily a problem of distribution. The distance from bank branches and the high cost of servicing low-balance accounts are key reasons for financial exclusion among the poor in Africa.
Technology-based solutions are emerging as the new frontier to address the challenges associated with reaching rural and remote communities, because they can reduce transaction costs for both clients and institutions, while broadening and deepening outreach.
With the infusion of $12.7 million over the next 4.5 years, our partnership with The MasterCard Foundation will allow us to deploy some of these alternative service options – such as mobile banking, agent banking, and developing a satellite and low-cost branch network, will significantly enhance FINCA’s ability to increase outreach – particularly into remote and rural regions – and will result in welcoming new clients that live and work farther from FINCA’s branches. It will also allow FINCA to reduce costs and pass these savings on to clients.
Having set a goal of reaching 500,000 low-income borrowers and savers by 2015, FINCA’s scale-up in Tanzania, Malawi and Zambia will require the development of a professional cadre of local leaders and managers to keep pace with expansion, the adoption of new technologies, and the design and delivery of new products and services.
Thanks to this partnership, FINCA will systematically deliver high quality training and education to FINCA staff, and will share what we learn, as well as materials and approaches we develop, with the wider MF community. FINCA views this as the most efficient way to meet our capacity development needs as we grow, expand our offerings, and transform our operations into full financial service institutions in Africa.
The third component of the partnership – and one that we’re particularly excited about – is the roll-out of a systematic approach to measuring social performance that seeks not merely to prove microfinance’s impact, but ensure client protection remains at the forefront of our growth.
By embedding social performance in all aspects of our operations, we will be able to dramatically expand outreach in a way that ensures we’re reaching the clients most in need of our services, and in a way that keeps their financial and social progress as a priority.