Scott Anderson

The Most Popular Posts for May : Details, details, details

Not to get all technical on you, but hey, sometimes that’s what our contributors do. And here at NextBillion, we’re forever grateful. Looking at the blog posts receiving the most pageviews in May, it’s clear that our readers also like to sweat the details, as three exceptionally detailed (yet extraordinarily readable) posts topped our readers’ favorites.

The most-popular as well as the most-shared post across social media was NexThought Monday: Too Good to be True?: Is the Global Findex survey overstating growth in financial inclusion? by Daniel Rozas and David Roodman. Since it was published in the spring, the well-respected World Bank’s 2014 Global Findex report has made a splash in media around the world. It found that financial inclusion grew from 51 to 62 percent between 2011 and 2014, a shift that represents a total of 700 million people worldwide.

Exciting news, no doubt. But Rozas and Roodman, while praising the research endeavors, found several reasons to be skeptical about the reported gains, which may be significantly overstated. Rozas is an independent microfinance consultant and co-founder of the MIMOSA project, and a staff member of the European Microfinance Platform (e-MFP). Roodman, author of Due Diligence: An Impertinent Inquiry into Microfinance, is a development economist who has been assisting in the MIMOSA project.

The problem, these experts note, may not be the fault of the survey but in the aggregation process, and could have widespread implications. Key quote:

“The core value of Findex is to enable data-supported decisions for those involved in financial inclusion. There are many questions that would benefit from this deeper understanding: for instance, why is financial inclusion in low-income countries growing so much slower than in middle-income ones? And what are the factors behind these differences – are they the result of specific policies or simply a byproduct of broader macroeconomic trends?

“Unfortunately, until the data issues can be clarified, answers to these and other questions will remain unreliable.”

Second Most Viewed for May

Ending Energy Poverty? The Solutions Already Exist by Susie Wheeldon

2015 has been a banner year for investments and new startups in off-grid energy. To get a handle on just how big, we heard from Susie Wheeldon, who is with one of the more established organizations in solar power procurement for the developing world. Wheeldon is the campaigns manager at SolarAid, a London-based international charity immersed in business-based solutions to poverty and climate change. In 2008, SolarAid created a social enterprise called SunnyMoney to run its on-the-ground operations in Africa. Since then SunnyMoney has sold 1.7 million solar lights, which it estimates have helped 10 million Africans save £200 million in energy costs.

Wheeldon shines an optimistic light on the state of affairs for smaller-scale distributed power solutions.

“In 2011, the International Energy Authority (IEA) estimated that to provide Sustainable Energy for All $640 billion is needed over the next 20 years. This represents a 300 to 500 percent increase on current investment. It’s an astronomical figure – likely to be beyond the customer, government and aid agency collective abilities to pay for and provide. Yet in the footnote of last year’s Africa Energy Outlook, the IEA noted that:

“‘Grid-connected renewable projects require a more robust governance framework to succeed, but some smaller-scale and off-grid projects have greater potential to sidestep institutional weaknesses.’

“Despite huge challenges, we are seeing that some of these smaller-scale initiatives are certainly not waiting for the huge investments needed by larger energy projects, but forging ahead as fast as they can. Incredible customer demand for solar products and the year-on-year growth of the sector is showing that, given access to clean energy products, millions of African people have stopped waiting for grid lines that may never come, and are investing in their own futures.”

Third Most Viewed for May

Kenya’s Mobile Finance Revolution Takes the Next Steps: Two new developments go far beyond mobile money by Graham Wright

Kenya’s mobile finance market is evolving, and for the country’s leading financial services players, that evolution has been a profitable one. But beyond M-PESA’s remarkable payments revolution and the continued growth of M-Shwari’s mobile banking services, there are two other important developments in the Kenyan market, wrote MicroSave founder Graham Wright. One relates to (the) fact that although there has been fantastic growth in the mobile banking system, it’s not clear if the majority of the new customers are actually using them. The other development relates to “contextual engagement services,” under which customers can shape their banking experience to their own context, something that will inevitably grow as smartphone penetration does in those markets. One of Wright’s key takeaways on what we can expect in the near future:

“There is a growing focus on small-scale, consumer loans, not only from banks, but also from non-bank finance companies such as afb, many of which have their roots in payroll lending. But as more ambitious lenders with higher risk tolerance come into the market, it is fair to anticipate that it will be easy for people to get multiple larger loans via their mobile money accounts … and the results could be disastrous. The default-based credit reference bureaus in Kenya are post hoc, and really just create blacklists of people with poor credit history. So they don’t provide much help with curbing creeping over-indebtedness until it has engulfed and overwhelmed the borrower. (And I still worry about blacklisting someone for non-repayment of a $5-$20 M-Shwari loan). Further, as India has discovered, even comprehensive credit reference bureaus do not pick up the underlying informal sector borrowing that is so prevalent in many countries.”

Most Shared on Social Media

NexThought Monday: Too Good to be True?: Is the Global Findex survey overstating growth in financial inclusion? by Daniel Rozas and David Roodman

Six Years, Many Lessons: Scaling Impact from the Ashoka Globalizer Program by Maria Zapata

Kenya’s Mobile Finance Revolution Takes the Next Steps: Two new developments go far beyond mobile money

Editor’s Pick

Relief Through Finance: How microfinance builds resilience to disasters and crises by Sam Mendelson

Given the recent earthquake in Nepal and the increase in the effects of climate change, getting financial services quickly to disaster areas is more important than ever. Key quote:

“The irony and the opportunity is that microfinance has the greatest potential for impact in places which also happen to be most susceptible to crisis – whether natural disaster or civil conflict. Poverty and exclusion thrive in the gaps. In the 33 Fragile and Conflict-Affected Situations (FCS) as defined by the World Bank Group, poverty rates are at 51 percent – a number that represents half a billion people.”

microfinance, solar