s5_microfinance trends and natural disasters indonesia nov 2011

8/3/2019 S5_Microfinance Trends and Natural Disasters Indonesia Nov 2011

1/77

ASEAN DISASTER RISK FINANCING & INSURANCEFORUMNovember 8 10, 2011

Jakarta, Indonesia

Microfinance in ASEAN

Eric Duflos, Regional Manager for East Asia and the Pacific, CGAP


2/77

Table of Content

1. What is CGAP?

2. What is Microfinance? What is FinancialInclusion? Who are the key actors?

3. Global challenges and opportunities forfinancial inclusion

. ren s an success s or es n

5. Microfinance and Natural Disasters

6. Next steps

2


3/77

1. What is CGAP?

3


4/77

CGAP: an independent policy and research center

CGAP is an independent policy and research center dedicated toadvancin financial access for the world's oor.

It is supported by over 30 development agencies and private foundationswho share a common mission to alleviate poverty.

, ,standards, develops innovative solutions and offers advisory services togovernments, service providers, donors, and investors.

At a glance:

7 locations: offices in Washington DC and Paris, with 5 regionalrepresentatives based in Abidjan, Dhaka, Moscow, Nairobi, and Ramallah

~ s a ~70 countries with CGAP activities

150,000+ copies of CGAP publications distributed annually


5/77

CGAP Priorities

Understanding of client demand

Increase understanding of needs of different market segments

Expand range of delivery models To promote broad set of financial services at lower costs

Encoura e conducive olicies and re ulations

Su ortin field in advancin res onsible financeagenda

Su ort donors to im rove effectiveness

5


6/77

2. Definitions and Actors

6


7/77

Questionforparticipants

and for what purpose?

7


8/77

What is Microfinance?

Microfinance = Financial services for the poor

Diverse institutionsproviding

Permanent access

to

A wide variety of quality services

to

A broad range of poor and low-income peopledelivered

Cost effectively


9/77

What is Financial Inclusion?

Financial inclusion is a state in which all workin a e

adults, including those currently excluded or underservedby the financial system have effective access to the

credit, savings, payments and transfers, and insurance.

Financial inclusion goes beyond microfinance and includesSME financing.

9


10/77

Key actors in financial inclusion


11/77

The clients: Poor households everywhere have veryactive financial lives

Formal

Informal

11

Source: Collins, Daryl, Jonathan Murdoch, Stuart Rutherford, and Orlando Ruthven. 2009. Portfolios of the Poor: How the World'sPoor Live on $2 a Day. New Jersey: Princeton University Press. Slide from Collins, et al, May, 2010


12/77

FinancialServiceNeeds

Life Cycle Investment

Birth

Education

Businessinvestments

Marriage

Funeral

Purchasing land

and other assets

Emergencies

improvement

Injury

Theft

Harvest School fees

Natural disasters Recurrent festivals


13/77

Differentclientsegmentsneeddiverseservices

Estimated livelihood segment sizingon peop e

World population < USD 2 a day 2,640Credit Savings Insurance

,

Low-wage salaried 300

Unemployed 100

Consumption

credit ?

Casual laborers 365

Micro-entrepreneurs 160

Pastoralists 40

Workingcapital

Fishermen 40

Small holder farmers 610

Agriculturalfinance ?

13

Source: Oliver Wyman 2008


14/77

Questionfortheparticipants

microfinance in your respective countries?

14


15/77

MICRO Maincategoriesofproviders

Private commercial banks (e.g. ACLEDA, Xac Bank)

. .

A variety of government-run and/or government-ownedfinancial service entities (e. . China Postal banks)

NGOs (e.g ASA in Bangladesh)

Commercial finance (and leasing) companies Informal actors (e.g. moneylenders supplier credit)

Financial cooperatives (e.g. RCCs, CECAM)

ew p ayers on e scene: Nonbank retail agents supporting branchless banking models

(e.g. gaz stations in Brazil, pharmacies in Pakistan)

Mobile phone operators and nonbank prepaid card issuers (e.g.

Safaricom MPESA)


16/77

Actors at the Meso LevelMESO

Market Infrastructure

Financial infrastructure Payments and clearing systems,local capital markets

Information infrastructureand transparency

MIS, auditing, rating, benchmarking,credit bureaus

Technical supportservices

esearc compan es,universities, training andtechnical assistance providers,technology firms

dissemination Associations, networks

Wholesale Financing Investment funds, apexes


17/77

Actors at the Macro LevelMACRO

Prime Minister and cabinet Parliament, regulators Ministry of Finance Central bank Other ministries (agriculture, planning, social affairs)

, Local authorities Unions, political parties, and other

socioeconomic/political organizations


18/77

Prudential and Nonprudential RegulationsMACRO

Prudential Regulation

savings, and financial system from

contagion

Controls financial solvency of regulatedinstitutions and stabilit of the s stem Governs the conduct of business (fraud,

Involves understanding and protectingthe core health of institutions

Does not involve government taking

, .

Is relatively difficult, intrusive, andex ensive

Tends to be easier to administer


19/77

Interventions that Hinder MicrofinanceMACRO

Provision of subsidized credit directly by state banks or othergovernment institutions

High costs for government

High risk of politicization

Creates unfair competition

Debt forgiveness High costs for governments and providers

Negatively impacts credit culture

Creates disincentives for roviders/funders to enter market

Interest rate ceilings

(see next slides)


20/77

Do Interest Rate Ceilings Protect the Poor?MACRO

Interest rate ceilings may lead to marketcontraction

MFIs often respond by

withdrawing from more costly markets (e.g.,

rural/remote areas

becoming less transparent about total loan costs

Clients often are driven to informal providers

(moneylenders)

= Bad for poor customers


21/77

What Is a Conducive Macro-Level (Policy)Environment?MACRO

Financial stabilityFinancial stability

romotes a sta e econom c, nanc a , an ega env ronment or m cro nance

Enables the development of sustainable microfinance services and institutionsthat grow with their clientseliminating subsidized, short-lived programs

Encourages institutions to operate efficiently

Adapts traditional collateral requirements to poor clients

Improved accessImproved access

emoves po cy arr ers o e pro a e prov s on o verse m cro nanceservices

Facilitates the use of information and communication technologies (ICTs) andnonbank retail channels to reduce costs of delivering financial services toclients

Protection of clientsProtection of clients

Promotes consumer protection and market conduct regulations


22/77

3. Global Challenges and Opportunities

Challenges

Huge unmet demand Going beyond credit

Reducing costs a n a n ng oc a m ss on Resisting external shocks

22


23/77


to banking accounts in developing

23


24/77

Huge unmet demand: 2.7 billion working-ageadults without access to formal financial services

75 to 100

50 to 75

25 to 50

Adults without an account (%)

Central Asia &

0 to 25

No data

High income OECDand non-OECD

50%East Asia &

Pacific

Middle East &

North Africa

South Asia

5 %

Sub-Saharan

% show the averagepercent of unbankedpopulation

Africa

88%Latin America andCaribbean

60%

24Source: CGAP and Workd Bank Group. 2010. Financial Access 2010. Washington, D.C.:World Bank Group. Map shows percent of households without a deposit or loan account inan institution (Banks, Savings Banks, MFIs)


25/77

The poorest dont just need credit

Creditmighthelp Otherservicesmighthelp

food aid

health services

ve oo s

social development

financial services

self-confidenceentre reneurshi

lack of self-confidenceday-to-day life

good health

social capital

nessesisolation


26/77

Need for better understanding of enterprisesegmentation

Self-employed

Microenterprise Very SmallEnterprise

SmallEnterprise

eve o

formality(registration/taxes)

o

registeredNot taxpayer

os y no reg s ere

Mostly not taxpayer

ar a y reg s ere

Partially taxpayer

u y reg s ere

Taxpayer

Type ofemployees

Self 1-4 employeesmainlyfamily members

< 5 employees,also out of family

>5 employees,includingtechnical staff

Businessorganization

Singleperson

Integrated inhousehold

Some separationfrom household

Clear businesscycle and staffspecialization

nterna rate oreturn

g g e um ow

FinancialNo writtenrecords

Weak recordsSome documentation

Financial recordsbills a ments

Financialstatements

26

report for up to a year

Source: Team analysis; based on interviews with Financial Institutions, Finscope FSM segmentation tool, and desk research


27/77

ReducingthecostofMicrocredit

Interest Yield Trends 2003-2006

27Source: Rosenberg CGAP 2009


28/77

Informal financial services are less reliable and moreexpensive: Indian example data

Underlyingneed

Manis financialstrategy

Cost of informalservices

Cost of formalservices

Intra-year liquidity Pawning jewelry 180% annualized Credit card 24% APR onmismatch with local money

lenderoverdrawn amount

Long-termsavings

Investment in goldand agricultural

Fluctuates with goldprices and land

Mutual funds,fixed deposits

Approximately4-5% real rates of

5-10xhigher

.correlated withrainfall

Short-termsavings Physical savings athome Zero nominalreturns Bank account 3.5% nominalreturns poorerfamilies

Emergency loantowards medicalemergency

100 day loan 50% annualized Personal loan 14-16% APR

-

improvement loan

investment

contribute to othervillage feasts

improvementloan

Remittance Informal provider Unreliable,3-5%

Bank or postalremittance

0.5% till Rs. 10,000-- declining

28

Source: IFMR Trust.

services thereafter forincreasing amounts


29/77

Maintaining the social mission of microfinance

October 22, 2009

Wall Street Journal, October29, 2010

Mainstream Indian and

IPOs PrivateE uit

cro nance oa poses

question of profit andexploitation

international banks have

backed the microlendingindustry in India with more

year, with private-equityfunds pouring more than

$250 million into theSeptember 29, 2010

Times of IndiaConsumerAbuse?

industry in India last yearalone

Ten days ago, Zaheera Bi, 46,of Kabrasthan Street inYemmiganur town committedsu c e una e o o era e eharassment from a micro-finance firm.

29


30/77

Resisting exogenous shocks

2008: Food and Fuel Crisis

-

2010: Andhra Pradesh 2011: Arab S rin

Impact of Food crisis on MFIs portfolio

2012 ????

15

20

25

5

10

Only 3 out of 45MFIs say theirorganization has

0

56.8% 43.2% 35.1% 27.0% 13.5%

Our PAR (portfolio at Our loan portfolio has The default rate has Our loan portfolio has The share of very

not beenaffected by thecrisis

30

as a consequence of

the crisis

the crisis

consequence of the

crisis

portfolio has

decreased

Source: CGAP survey with 42 leading MFIs in 2008


31/77

Global Challenges and Opportunities

Opportunities

Innovation branchless banking G2P

Donor support Responsible FI Role of Government

31


32/77

Access to finance has important benefits to households

1. Building 2. Smoothing 3. Managing

. -

32


33/77


transaction costs?

33


34/77

Innovation can help reducing transaction costs

Useexisting Useexisting

reta

infrastructure

technology

34


35/77

Innovation: Branchless Banking

deliveryoffinancialservicesoutsideconventionalbankbranchesusingin ormationan communicationstec no ogiesan non an retai agents.

k nt nt

Ba

Age

Clie

35

On average branchless banking services are 19%


36/77

On average, branchless banking services are 19%cheaper than banks

4.8

% BB cheaperthan banks

2.1

2.4

3.9

2.8

2.8

Receivin

Sending 12%24

1.6

5.2

3.3

3.7

Medium-term savings

Short-term safekeeping

Branchless

-43%

50%

7.4

3.4

8.4

6.9

High Usage

Bill Payments50%

12%

6.5

2.97.5

.

Kenya Bank Customer

M-PESA Customer

14%

PriceUS$

Note: Prices are based on one month usage of services. Data was received on actual average transactions byM-PESA and Kenya Bank customers to develop these use cases.

PPP)


37/77

Branchless banking spreading globally

100

96

80

40

60 1 in 4

2220

0

Live branchlessbanking

implementations

Implementations with>1 million registered

users

37

Sources: CGAP, Coffey International


38/77

G2P has the potential to increase Financial Inclusion

Globally: 170 million low income individuals receive some form of regular payment from theirgovernments

FocusforFinancialInclusion

GovernmenttoPerson

(G2P)Payments

SocialSafetyNet

(SSN)Programs

(wages,pensions)SocialTransfers NoncashSupport

Conditional

TransfersFood

Tobetteroff

employees

Workfare

UnconditionalTransfers

PriceSubsidies

FeeWaivers

Tolow

income

employees

170

mil

Nearly half of the 40 social transfer schemes launched since 1999

feature electronic delivery - But globally fewer than 1 in 4 G2Precipients get payment into financially inclusive account


39/77

Donors commit $21.3 billion to Microfinance

Total Commitments to Microfinance as of December 2009: $21.3 billion*

41 Public Donors and

Investors(Multilaterals, Bilaterals, DFIs)

r va e onors anInvestors

(Foundations, Institutional andRetail Investors)

.$6.7 billion

90 Microfinancenves men

Intermediaries(MIIs)

pexes

5.6 n

$7.5Apexes

1.9 n12.7 n 1.1 n

n

cro nance(Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy)

* CGAP surveys capture 85 to 95% of the total cross-border funding to microfinance


40/77

Finance inclusion is becoming more responsible

Initiatives improve financial

CONSUMERS

RESPONSIBLEFINANCE

Consumers organize and

advocate for responsible finance Consumers know rights, act

res onsibl avoidINDUSTRY

Providers adopt and implementClient Protection Principles(CPPs)

over-indebtedness

Power of feet

policy and processes + funderssupport CPP implementation

Providers offer appropriateproducts + innovation in

Implements consumer protectionregulation disclosure rules, faircontracts etc.

service delivery Industry adopts and reports on

ESG standards

Mandates effective recourse andsets standards for self-regulation

Champions consumer awarenessand financial capability

Reaches out to industry andconsumer representatives

40


41/77

Governments increasingly supportive: G20 GPFI

9 Principles for innovative financial inclusion,elaborated and acce ted b all in Toronto

Principles and link withthe Standard Setting

Partnership with the main SSBs: FATF, BCBS,CPSS, IAIS, IADI + OECD, FSB

Bodies1

2010 stocktaking report Scaling-up SME accessto financial services in the developing worldSME Finance

2 14 winning proposals of the SME Finance

Challenge

New subgroup, but which will build upon importantwork already completed on data by somecountries/institutions

Data and Target Setting3


42/77

4.TrendsandsuccessstoriesinASEAN

42


43/77

GrowthinclientsinASEAN

Borrowers and De ositors EAP

12,000,000

14,000,000

6,000,000

8,000,000

, ,

Borrowers

Depositors

2,000,000

4,000,000

Source: MIX Market 2011 Data represent totals. Excluding BRI and PSBC

-2007 2008 2009 2010

2010 Mix data for all Asia

43


44/77

ReturnsonAssetsareStable

Source: MIX Market.

7%

ROA EAP (Median)

4%

5%

6%

rcent Cambodia

Indonesia

1%

2%

3%Pe

Philippines

Vietnam

44

0%2006 2007 2008 2009 2010


45/77

PortfolioatRisk(PAR>30days)islowerthanglobal

Source: MIX Market.

45


46/77

MainTrendsfromCSFIBananaSkin

.2. Reputation3. Credit Risk

4. Liquidity

.2. Credit Risk3. Inappropriate regulation

4. Reputation. nappropr a e egu a on . orpora e overnance

Fastest risers 1. Credit Risk2. Com etition

1. Competition2. Re utation

3. Political Interference4. Mission Drift5. Liquidity

3. Credit Risk4. Mission Drift5. Management Quality

46

Q i f i i


47/77


strategy for microfinance or financial

47

ASEANcountriesaredevelopingnationalstrategies


48/77

REGION COUNTRY

MENA Egypt, Jordan, Syria, Tunisia, Yemen

SOUTH ASIA Nepal, Pakistan

EAST ASIA & PACIFIC Cambodia, Fiji, Indonesia, Lao PDR, Malaysia, Philippines,Solomon Island, Thailand, Vietnam, PNG

AFRICA Benin, Burkina Faso, DRC Congo, Congo Brazzaville, Cte

d'Ivoire, Ethiopia, Gambia, Ghana Liberia, Madagascar,Mali, Malawi, Mauritania, Mozambique, Niger, Nigeria,Rwanda, Sierra Leone, Senegal, Tanzania, Togo, Uganda,Zimbabwe

EUROPE AND CENTRALASIA

Kyrgyz Republic, Russia, Uzbekistan

48

LAC Brazil, Mexico

Source: CGAP Research 2007 and 2011 - In red some of the latest countries

P li I i th R i


49/77

PolicyIssuesintheRegion

Governments la a si nificant roles in financialinclusion in the region both at the policy and retail levels(e.g. Vietnam, Lao PDR, Thailand, Malaysia, Indonesia)

egu a ory success s or es n am o a, e pp nesand Malaysia (consumer protection)

There is a two s eed develo ment: Re ulatorframeworks are not optimal yet in several large markets(Vietnam, Myanmar, Thailand)

g emp as s on s a e an mo e s n some coun r es

Increasing attention on consumer protection

49

Cross border funding in East Asia is increasing rapidly


50/77

Crossborder funding inEastAsia is increasing rapidly

CommitmentstoMicrofinancefor EAPasofDecember2009:$1.5billion*27 Public Donors and

Investors(Multilaterals, Bilaterals, DFIs)

Investors

(Foundations, Institutional andRetail Investors)

.$0.55 billion

42 Microfinance

Intermediaries(MIIs)

.

Apexes

. .

$0.5Apexes

.

(Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy)

* CGAP surveys capture 85 to 95% of the total cross border funding to microfinance 50

Top funders of microfinance in Asia


51/77

Topfunders ofmicrofinanceinAsia

%ofCommitmentstoEAP Four out of the five top

receiving 5 countries are inASEAN.

WorldBank 10%AsDB 6%

China, Indonesia, Vietnam,Cambodia, Philippines,

represent ~80% of total

IFAD 6%

GTZ 5%

commitments to EAP.

51

ASEANSuccessStoriesinFinancialInclusion:NGO


52/77

Transformations

Card Bank Philippines

Converting profitable branches into aan

Started in 1986 as a social NGOserving landless women

1997 licensed as rural bank

Profitable branches converted into

bank 267,000 micro-borrowers

495,000 micro-depositors

99.94% are women

Insurance, housing loans, businessdevelopment centers

,

Fully sustainable52

ASEANSuccessStoriesinFinancialInclusion:NGO


53/77

Transformations

ACLEDA Bank in Cambodia

From a project to the bank with the largestou reac n am o a

Started in 1993 as a national NGO formicro and small enterprises'eve opmen an cre .

2003 received a full banking license

266,000 micro-borrowers 703,151 micro depositors (dec 2010)

Launched a regional training center

Ex anded in Lao PDR

Fully sustainable

53

ASEANSuccessStoriesinFinancialInclusion:State

k f


54/77

BankReforms

BRI Indonesia

Convertin a loss makin statebank into profit microfinance units

Before 1984 subsidized inefficient state

Established Unit Desas microfinance profitcenter

IR deregulation in 1983

4.5 million borrowers

m on epos ors

Diversity of clients and services (16% ag.loans)

Resisted Asian crisis IPO in 2003 nowhighly profitable

54

A policy success story in the Philippines?


55/77

ApolicysuccessstoryinthePhilippines?

Central Bank took a test and see approach by allowing nonbank agentsto function as a remittance agent

Regulation s a s e ru es or agen s o carry ou Issued e-money regulation in February 2009

Business

Banks and nonbanks are allowed to play, so we see bank-led andnonbank-led models (i.e. SMART Money vs. GCash)

One-half of active mobile money users are unbanked

Customeradoption

Intensive users are 40% more likely to live within 5 minutes of an agent

1-in-10 unbanked users save of their family savings in a mobile wallet

Microfinance and Natural Disasters


56/77

MicrofinanceandNaturalDisasters

56

Impacts of Disasters on Clients and MFIs


57/77

ImpactsofDisastersonClientsandMFIs

Loss of livelihoods

Destruction of homes Trauma

ClientLevel

Damage to infrastructureLoss of portfolio (high delinquency)InstitutionLoss of files/informationLiquidity issues, cant lendStaff losses / trauma

Level

What are the minimum steps for MFIs to be prepared?


58/77

Incor orate disaster risk into their exisitin riskmanagement systems (e.g.):

Insure all physical assets

Back-up data

Keep minimum of cash in branches

Arrange potential emergency borrowing

58

How does micro-insurance help clients and MFIs


59/77

re are?

Desi nin effective and affordable micro-insurance fordisasters is challenging (sufficiently diversified outreach

is biggest challenge)

Therefore caution is required when considering micro-

insurance as a ma or disaster relief tool

MFIs may however offer life, health and loan insurances

which can be helpful most often in collaboration with areputable insurance company.

59

How can MFIs help clients ability to withstand andrecover from disasters?


60/77

recover from disasters?

Savings is the most useful financial service to prepare

key (but requires regulation and supervision)

em ttances can a so p ay a eyrole in preparing clients

es eciall if tide with savin saccounts and once crisishappens (e.g. Haiti)

Housing improvement loans canalso help clients be better

60

prepare

ExpandServicesthatareinDemand


61/77

p

Credit Emergency loans Housing loans

MoneyTransfers

Can be a major source of income pre and post-crisis

Getting cash into the communities is fastest/easiest way torecovery (particularly for communities with large numbersof immigrant workers such as Haiti, Sri Lanka)

Savings Demand increases after disaster (Sri Lanka, India, Aceh) Offer voluntary, stop compulsory

Leasing Better than in-kind grants, restores assets without marketdistortions

Works as screen only those serious about their

Insurance Limited experience for MFIs partner with providers Difficult product for natural disasters given covariant risk

What immediate steps should MFIs take inresponse to natural disasters?


62/77

response to natural disasters?

Take stock of key assets & establish crisis task force

Ensure safety of key resources Review impact on clients

ase 1:

Stocktaking

Monitor and follow up with clients

Design product modification (e.g.

Phase 2:resc e u e re nance c ange me o

Design new products (e.g. emergency loans)Monitoring

Institute liquidity management obtaining liquidity

support if needed Revie health of portfolio and set aside reserves Develop new products as part of reconstruction

ase :

Focus on

62

What kind of adjustments should and should notbe made with clients loans after a disaster?


63/77

be made with clients loans after a disaster?

No blanket rules: all loans need to be evaluated on caseby case

Decision to re-schedule should be based on detailedassessmen o c en s emporary oss o ncome

Refinancing (larger loan) can be appropriate for those

who have lost roductive assets. Write off should be last resort

63



64/77

get involved in relief activities?

64

Under what circumstances should MFIs getinvolved in relief activities?


65/77

MFIs always want to help but they have to be carefulabout ettin involved in activities which are outside theirexpertise

MFIs can conduct assessment, and help relief agenciesa e ear y s age

MFIs should not remain involved in relief long after the

disaster as the could be erceived as hand outagencies

In short they need to help but

be smart about it

65

Examplesofinvolvementindisasterreliefefforts


66/77

Identif needs of clients / communities

Partner with relief distribution efforts

Partner with grant providers but MFIsshould avoid direct disbursement

In sum, facilitate and coordinate

Example:Sareeram SriLanka


67/77

Operates in the northern area of Sri Lanka

se n ras ruc ure ve c es an s a o

distribute relief until govt agencies arrived (2-3

Helped move people to camps

immediate needs

of affected people

Limitations of microfinance in post disaster


68/77

Alone microfinance cannot solve the livelihood andeconomic issues faced by affected populations

nanc a serv ces are not as cruc a as me ca serv ces,food distribution, shelter, infrastructure which require

s ecialized a encies

Placing over-ambitious

can be dangerous

68

Microfinance &LivelihoodsFramework


69/77

Clients need to recover their livelihoods perhaps themost important focus after basic survival needs are met

Sustainable livelihoods are those that can cope with, andrecover rom s resses an s oc s, w e no un erm n ngexisting natural resource base (DFID, WB)

Microfinance is one way to support recovery ofsustainable livelihoods

Other livelihoods support tools include cash/in-kind, ,

Thingscangowrong:SriLanka2005(posttsunami)


70/77

Mix of grants and subsidized loans exacerbated

harming the credit culture

highlighted weak capacity, proliferating moreprograms when already too many

Disbursement pressure

donors (through apexes) challenged MFI sustainability

6.NextSteps


71/77

71

KeyquestionsforPolicymakers


72/77

1. What part of the response should be targeting clients(in the form of relief)?

. a par o response s ou e arge ng s owto structure this?

3. Who gets the subsidy?

4. How can we prepare for or lessen the impact of futurecrises?

Revisit: PolicyandDonorResponse


73/77

What part of the response should be targeting clients?

Channel separately from MF. Relief is needed and is an appropriateresponse. Scale of relief should match damage.

What part of response should be targeting MFIs?. . .

needs to balance needs of entire industry.

Who gets the subsidy?

Both clients and MFIs. Do not put pressure on MFIs to channelsubsidy to clients (via interest rate cuts, grants, etc).

How can we re are or lessen the im act of future crises? Provide TA to MFIs on new products (savings, insurance). Help MFIs establish disaster preparedness plans. Invest in appropriate systems and help MFIs diversity portfolios.

Suggestionsforgovernments


74/77

Promote regulatory and supervisory environment for micro-deposit taking savings and insurance which are most

helpful for poor clients in times of disasters

Ensure strong donor coordination in microfinance before,during and after disasters

Inject liquidity through professional apexes whennecessary

reng en capac y o s o e prepare

Have good knowledge of the industry through robust dataand dia nostics of financial inclusion

74

Conclusions


75/77

Disaster creates both losses, but potential for

u ythe crisis to determine strategy

Need to ensure the right incentives are in place-

Stay in touch


76/77

The MicrofinanceGateway

Publications

cgap.org

Financial InclusionRegulation CenterSocial media

76


77/77

Advancing financial access for the worlds poor

www.cgap.org

www.microfinancegateway.org

s5_microfinance trends and natural disasters indonesia nov 2011

Documents