The poor have very unpredictable financial lives. Their income arrives in irregular increments and they struggle to build assets, leaving them vulnerable to financial shocks. These households need access to financial tools to allow them to manage risk; build assets; accumulate usefully large lump sums; and manage daily household cash inflows and outflows.
Because of their precarious situation and unreliable income, the poor need financial services even more than the non-poor simply to survive from day to day. Formal financial tools to address these needs are unavailable to more than one-third of the world’s population – 2.5 billion people – and where the tools are available, they are often not well suited to clients’ needs.
Grameen Foundation was established in 1997 with a bold charge from microfinance pioneer Professor Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, to spread the principles of microfinance beyond the borders of his native Bangladesh. Just as Grameen Bank has done, Grameen Foundation has moved beyond the basic principles of microcredit to develop and provide a full range of financial-services solutions to both poverty-focused organizations and the poor people they serve.
Over our history, we have served – and continue to serve – as a leading proponent of “responsible microfinance,” which focuses as much or more on the social bottom line as it does on the financial one. For more on our approach to microfinance, please read “What We Believe: Delivering Financial Services – “Microfinance” – to the Poor [1].”
Grameen Foundation partners with financial institutions, telecom operators and other providers to create and scale financial products and services – traditionally delivered, as well as those delivered via the mobile phone – for the poor and poorest. We focus on designing and delivering innovative solutions that address the financial needs of poor households. These financial products and services improve lives and livelihoods by reducing risk, improving financial security and increasing income.
Grameen Foundation has long recognized the important role mobile phones can play in the fight against global poverty. Today, we are developing unique solutions that combine the mobile phone and “human networks of local trusted intermediaries to both disseminate and collect information that meets the unique needs of the poor. Globally, we focus our efforts in the areas of health, agriculture, financial services, livelihoods and job creation, following a three-pronged, time-proven approach:
1. We gain knowledge about the financial needs of poor households through market research and data analytics, enabling us to understand different segments of the poor population and understand their diverse needs.
2. We drive rapid innovation in product development and design, as well as in new delivery channels, such as mobile phone-based approaches.
3. We ensure that there is are viable business models behind the products and services, to drive sustainability.
Here are just a few examples of the man project we’re working on.
Smallholder farmers are typically geographically dispersed in hard-to-reach rural areas, limiting their access to formal financial services and information on agricultural best practices and market information, and affecting their capacity to increase yields and sell at more favorable prices.
Grameen Foundation is piloting the use of mobile technology in Latin America to facilitate information flows as well as financial transactions between a rural agricultural co-op and its members, to help farmers enhance yields as well as increase their incomes. We are testing an innovative produce-sourcing and purchasing system that will enable the cooperative to access real-time information about its producers and use this information to create production forecasts that will help it understand and anticipate the liquidity needs of its farmers.
Mobile network operators (MNOs), commercial banks and other providers have lagged when it comes to product design and innovation for the poor, leading to a limited and often inappropriate set of products and services. Poor households have a range of financial needs and require diverse financial tools to manage risk, smooth day-to-day cash-flows, or grow their businesses. This need is unmet.
Grameen Foundation’s AppLab Money program in Uganda was launched in March 2012 to help move beyond simple mobile-payment transactions, innovate around product design using a human-centered design process, and scale viable products through corporate partners. Drawing on our comprehensive research on financial literacy, savings and mobile phone usage behavior, as well as our on-the-ground experience developing solutions for the poor and poorest, the AppLab Money project combines in-depth research and rapid product testing to provide easily accessible and appropriate products for the poor in Uganda – and beyond.
Smallholder farmers are typically trapped in a life of producing crops with low yields and marginal profits. They also are often isolated from markets and productive value chains, and lack access to financial services that would enable them to smooth their income. In addition, at harvest time, when prices are lowest due to excess supply, most smallholder farmers cannot afford to wait for optimal prices before selling to traders.
Grameen Foundation, in collaboration with Farm Concern International (FCI), is working to address these market gaps by developing an integrated and mobile-enabled system to help smallholder farmers in rural Kenya properly store and manage their crops post-harvest, virtually bulk their grain during harvest time, link to a financial institution to provide partial advances against the value of their stored crop, and connect with markets for final sale when prices increase, which is typically about three months after harvest.
Links:
[1] http://www.grameenfoundation.org/what-we-do/financial-services/what-we-believe