So, they may or may not buy a WhatsApp in freedom and independence. The electronic devices should empower people; if not there could be Provider’s disillusion, Client’s illusion and likely Community’ financial implosion. Financial inclusion isn’t the objective, but a tool to achieve inclusive growth’s goal.
The problem is to manage the field operations in a way to make it financial inclusion happens: sustainability, affordability, transparency and accessibility of the use of the financial leverage to the economy, which will continue to have a casting position, but mitigated by the community-based economy. Sustainable microfinance creates jobs. And having in mind that financial inclusion is a tool to achieve the objective countries’ inclusive growth.
This month last year, ING, Economic Division produced a report on “creating a job at the bottom of the pyramid” … “in the developing world has to grow by a third to provide these jobs, from 400 million enterprises currently towards 537 million. Half of the required jobs are needed in Asia, followed by Africa (45%). Financial constraints are the largest obstacle for MSMEs to grow and thus provide jobs for the poor. The loan portfolio to MSMEs has to grow by 80% from $6.9 trillion to $12.4 trillion to finance the creation of so many jobs. This huge credit gap will not be closed through the traditional relationship banking model since physical branches are costly to operate, especially in remote rural areas”. And it added three questions: … But is FinTech the game changer for the traditional bricks and mortar bank model that excludes so many enterprises? How can FinTech improve access to MSME finance and lower its cost? And what technologies look most promising?
Six months before (May 2016) we provided the answers and proposed a Paradigm. Taking from the international financial establishment recommendations, the main message we detected is to move from CREDIT-BASED ECONOMY to COMMUNITY-BASED ECONOMY, thus re-designing the entire architecture of the approach in favor of poor people and small business as well, and shift the paradigm of the financial interventions from over-indebted economy at micro and macro level to a real people’s empowerment via jobs creation and promote opportunities via Bottom-up. https://www.linkedin.com/pulse/from-mdgs-sdgs-technologists-new-populists-ascanio-graziosi/ .
How to position before the Poverty matters? The answer is provided by the below-market segmentation by Empowering people in four big market segments. We do say that while studying a new paradigm for solidarity, (Why capitalism is broken, https://www.linkedin.com/pulse/why-capitalism-broken-ascanio-graziosi/) the suitable way to go is to elaborate on what has been recommended by the international financial establishment:
- a) People in need of basic services
- b) People who aim at improving family budget
- c) People who aim at start-up business
- d) People who aim at growth-up business
In the first one, the financial provider is in the presence of poverty tout-court and food aid, while the second comprises income generating activities; in the third and fourth segment the provider is in the presence of enterprise development and, in such a case, there is accumulation, which should be correctly evaluated.
Referring to Basel III’s terminology we may say that the point (a), (b), and (c), (d) indicate, respectively unserved and underserved customers.
The features of above segments make it the difference among lender, developer and philanthropist. For financial inclusion purpose, the segments ask for an accurate investigation, to understand which kind of service may be added to an electronic device.
In line with the President Obama Initiative for Africa, Mr.Elumelu – Nigerian tycoon and banker – in an interview spelt out his vision on what to do to promote African entrepreneurial spirit: “There are some areas — flood disasters, for instance — where you must give charity. But I think the charity approach to solving other issues must be reassessed. It’s all about sustainability; it’s all about self-reliance. It’s catalytic philanthropy”. (https://www.devex.com/news/tony-elumelu-s-new-africapitalism-82590).
In a Post, Graham Wright urged for a revisit the design and delivery of digital credit: https://www.linkedin.com/pulse/digital-credit-have-we-been-here-before-microfinance-graham-wright. https://www.linkedin.com/pulse/we-really-financially-excluding-27-million-digital-credit-wright.
Summing up, digital providers may benefit a lot cooperating with financial providers, when it comes to design a model that has to match-up finance and technology, which asks for expertise and experience in financial services above the ground. For more: https://www.linkedin.com/pulse/open-letter-fintech-ascanio-graziosi/
A proposal on how to ground field operations, the Exhibit (https://ascaniograziosi.net/2017/06/15/investment-proposal-fundraising/ ) highlights the logic of the approach and the avenues to achieve inclusive growth via business at macro and micro level because sustainable finance is the backbone of the countries’ economies.