Grameen Foundation Insights

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At Grameen Foundation, our goal is to spur innovation in the global movement to eliminate extreme poverty. Part of that work is to develop better solutions and share them with people like you.

On GF Insights, we share lessons learned from our leaders in the field, news about efforts to expand access to financial and information services for the poor, and how poverty-focused organizations are using data to improve the way they work.

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11/15/2010 by

Jason Polen works as a Social Media Intern for Grameen Foundation based out of our Seattle office.

In developing countries, the demand for financial services still far exceeds the supply. Usually when this occurs, businesses scale-up to meet the demands of the market. However, microfinance institutions (MFIs) are still not fulfilling the financial demands of the world’s poor. What is preventing MFIs from reaching everyone hoping to break the cycle of poverty? The key barrier is technology; many small and medium sized MFIs lack affordable, efficient, and usable technology.

In New Delhi, on November 17th, Grameen Foundation and Microsoft are holding a conference focused solely on the intersection between technology and microfinance. The 2010 Microfinance Leadership Summit entitled, “Fueling Growth: Strategic Technology for Microfinance” will bring together leaders from throughout the microfinance and technology ecosystem to discuss how they can better leverage technology to meet their business and social goals. Grameen Foundation and Microsoft will outline how MFIs can use technology to decrease administrative and transactions costs, increase social benefits, and maximize transparency.

Unfortunately, most small and medium sized MFIs charge relatively high interest rates (though they are still lower than the alternatives offered by informal loan sharks). Providing a thousand $25 microloans has significantly higher administrative costs than providing one $25,000 loan. Charging high interest rates is the only way for most MFIs to be sustainable, but adopting the appropriate technology can change this. It has the potential to significantly reduce the cost of distributing, monitoring, and collecting microloans, which decreases administrative costs and therefore interest rates. MFIs that have successfully integrated their banking software with mobile banking technology have experienced enormous decreases in overhead costs. Transactions become automated, reducing accounting costs and thousands of hours spent calculating inefficient or duplicate data entry. With the increased use of technology, MFIs can decrease the interest rates charged to borrowers and focus on reaching more people in need. 

11/13/2010 by

Christopher Kellen is a Bankers Without Borders volunteer for Grameen Foundation. He recently traveled to Bangladesh to study work being done at the Grameen Bank, and you can read more about his travels on his blog. Before he left, he also found a great example of microfinance happening right in the middle of his "backyard" of New York City.

11/10/2010 by

Along with several Grameen Foundation staff, the McCall Family - Jordan, Sarah, Ben, and Molly - flew to Santo Domingo, Dominican Republic to visit one of Grameen Foundation’s local Microfinance Institutions, Esperanza. This is an excerpt from Molly’s journal she wrote for school about her experience in the Dominican Republic.

Molly's school journal describing her experiences in Santo Domingo, Domincan Republic

October 5, 2010
At 1:30 pm our friends picked us up to go to the airport. First we flew to Dallas, Texas. We landed in Dallas at 9:30 pm. We spent the night at a Holiday Inn.

October 6, 2010

We had to wake up at 2:30 am! We drove to the airport with some funny old ladies who laughed and snorted. Our plan got to Miami, Florida at 9:45 am. At 10:45 am we left for Santo Domingo. We touched down at Santo Domingo at 1:45 pm. Then we went to our hotel and ate lunch. Factoid: every day in Santo Domingo it rains around 3 pm. Then we took some nice long naps. Next, we watched TV. Finally we went out to dinner with a group of people.

October 7, 2010

First we went on a bus to a bank meeting. Then we saw pigs. The owner of the pigs sells them for pesos. Next, we went to a clinic where people get help when they are sick. After that we went to a bank office and ate lunch. I liked the rice. After lunch, we went to a colmado which is like a little convenience store. Women borrow money from Esperanza to open them. Later we went to another colmado and a place that sold fried chicken. Then we went home. Then we went to dinner at an old colonial restaurant.

 

[caption id="attachment_1135" align="aligncenter" width="300" caption="Molly and her brother, Ben, in front of a home in Santo Domingo"][/caption]

 

October 8, 2010

First we had breakfast at our hotel. Next we went to a bank meeting where people talked about how they came to Esperanza. It took place in someone’s front yard at a coastal town. People deposit money at the bank meeting for their businesses. One woman sold shoes, another sold coffee and tea. Then we went to lunch because we were a half hour off schedule. That took place at an Esperanza office. I had rice and a salad. After that we went on a cool water purifying tour. It was very fun although very hot. In the afternoon we went on a tour of the colonial district in downtown Santo Domingo. There were a lot of pigeons there. We visited the place where heroes are buried. Finally we went to dinner at a magical place on the water. 

11/09/2010 by

Kimberly Davies is a Program Associate for the Microsavings Initiative, which is part of Grameen Foundation’s Solutions for the Poorest program.

[caption id="attachment_1192" align="aligncenter" width="300" caption="Women gather at a center meeting just outside Varanasi, India"][/caption]

Last year, Grameen Foundation began a three year journey, funded by the Bill and Melinda Gates Foundation, to increase the number of active monetary savers by 1.45 million people, especially the bottom poor living under US$1.25 per day. For this project, we are working with three microfinance institutions, CARD Bank in the Philippines, CASHPOR in India, and ACSI in Ethiopia. I recently had the opportunity to visit all three MFIs over a four week period, to work with our project managers on the ground, learn more about each project, and visit clients in the field. I will be writing several posts over the next few weeks, so I wanted to introduce myself briefly, and give a bit of background on savings and our project:

What is your project?

We are taking a holistic approach to create safe access to formal savings products by focusing on market research and product design, creating a marketing strategy and financial literacy program, using front-end technologies capable of enabling field-based transactions, and building institutional capacity.

Why is savings important?

The poor often have such inconsistent and unpredictable incomes that savings is an important risk management tool. Bad weather affecting agricultural production, family illness, and natural disasters are just some of the tragedies that commonly occur, creating financial hardships for poor families. Savings can be used during these hard times, cutting down on the need for emergency loans, which often come at high interest rates. 

11/08/2010 by

Alex Counts, Grameen Foundation president and CEO, considers how important it is for MFIs to "keep score" when it comes to poverty reduction. Being profitable is not enough to define success — MFIs need to demonstrate how well they're achieving their social mission.

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