2016 has been the year of handing over the baton from Millennium Development Goal (MDG 2000-2015) to Sustainable Development Goals (SDGs 2016-2030). Let us say that we aren’t sure that the old racers – micro lenders, micro financiers – have assimilated the new economic development’s rules of the game and have taken into account the power of the new racers who aggressively entered into the lane: the technologists.
Besides, new racers are warming up for competing in the arena of development finance: e-money issuer, financial cooperative, nonbank deposit-taking institution, nonbank financial institution, non-financial firm, crowd funders and all those in the category of the alternative finance.This is the official list of the competitors, which has been released by Basel III Committee beginning this year ( http://www.bis.org)along with the guidelines for countries’ supervisors for a fair competition; actually the GVTs have been invited to make available an enabling environment, which should be in line with the UN Agenda for SDGs (http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E).
Among the other sponsors who have collaborated for fair games,there are: WB-CGAP (http://www.cgap.org/publications/new-funder-guidelines-market-systems-approach-financial-inclusion,FSD Africa (http://www.fsdafrica.org) and others.
We have elaborated on the matter and worked out a Logical Framework, which can be a reference for ground work at both macro and micro interventions. The former to deal with a country institutional and organizational framework and the latter to cope with management of financial inclusion at individual grass root organizations; see: Five Questions about Financial Inclusion: http://www.emergingmarketsesg.net/esg/2016/08/26/five-questions-about-financial-inclusion-special-interview-with-dr-ascanio-graziosi-rome-italy-august-26-2016/.
The message from above sponsors has the following significance, at leastas we detected it. It intends to help supervisors (A) to react to the changes and innovations in products, services and delivery channels with sustainable interventions. (B) to move from the Credit-based economy to Community-based economy: creating opportunities and fight jobless. (C) to empower people with opportunities, to ameliorate the life’s conditions of the excluded and wide the access for the underserved, with an appropriate and sustainable use the financial leverage. (D) to shift from classic microfinance – the provision of financial services to the poor by specialized service providers, to financial inclusion, “a state where both individuals and businesses have opportunities to access, and the ability to use a diverse range of appropriate financial services that are responsibly and sustainably provided by formal financial institutions” (CGAP).
Market segmentation is the avenue to go and here we have proposed four big segments: a) People in needs for basic services. b) People who aim at improving the family budget. c) People who aims at start-up. d) People who aim at expanding ongoing business.
In the first segment, the financial provider is in the presence of food aid while in the second one we have income generating activities; in the third and fourth segment the lender is in the presence of enterprise development and, in such a case, there is accumulation, which should be correctly evaluated. In the Basel III’s terminology we may say that the point a) and b),c), d) refer, respectively, to unserved and underserved customers).
For financial inclusion purpose, above-mentioned segments deserve an accurate investigation to understand which kind of service may be added to the electronic device, making it clear the differences among lenders, developers and philanthropists.
Why legends and myths? It is well-know the story, now a legend, of the famous Indian lady who some time four decades ago, was given a small amount of money and paid it back. Myths, because since then the media added to it much folklore and emphasis. Everything started from this wrong step: an easy going to credit; let’s hope that financial inclusion will be analyzed with facts and without folk tales.