James Militzer

Weekly Roundup – 9/20/14: An awkward moment, new momentum and a brewing battle highlight recent developments in finance

There was a bit of discomfort among the usual closing ceremony celebrations at the 17th Microcredit Summit this month. At the previous year’s summit, the Microcredit Summit Campaign had called upon the industry leaders in attendance to take “specific, measurable, and time-bound actions to help 100 million families lift themselves out of extreme poverty.” As this year’s summit ended, campaign director Larry Reed asked the organizations that had already achieved their commitments to join him on stage for a moment of applause.

Since the Yunus Centre counts itself among this group, Nobel Laureate and Grameen Bank Founder Muhammad Yunus joined the procession, and Reed invited him to say a few words. “I get into trouble with these commitments,” Yunus began. “I don’t know why I have to make a commitment – it’s showing off. A commitment is to myself, not to someone else. You do your thing, that’s your commitment, you don’t have to publicize what your commitment is – it’s a commitment to yourself.” He went on in the same vein for some time before seeming to remember the people behind him on stage – most of whom presumably didn’t share his aversion to public recognition. “So … I want to thank you for your commitment, let’s give everyone a big applause!” he concluded hurriedly, ceding the mic to Reed as the audience clapped hesitantly.

It was an awkward moment – and perhaps a revealing one. Yunus hasn’t been shy in voicing his criticisms of microfinance’s growing embrace of commercialism over the years. Yet it has become increasingly clear that, in spite of the work of a dedicated coterie of pro-poor organizations and campaigns, the sector at large isn’t listening to him. Even at an event like the Microcredit Summit, which highlights the efforts of the sector’s most dedicated practitioners to maintain a focus on the poor, there were signs that the realities of doing business are clashing with Yunus’s idealistic vision. This tension framed his interview with NextBillion Financial Innovation, which you can read about here, and/or view in the video below.

Whether it was his views on microfinance’s growing efforts to regulate itself (“self-regulation doesn’t really work”), his take on the sector’s embrace of outside investment (“asking for investors to come is the wrong direction completely”), or his injunctions against making money off the poor, it was hard to avoid the impression that Yunus is operating in a different world than the industry he pioneered. In a sector (arguably) driven more by the profit-minded MFIs that are making a fortune than by the socially focused ones that are struggling to make a difference, his perspective seemed almost quaint.

Unexpectedly tight time constraints prevented me from following up with Yunus on many of the issues he touched upon, but I hoped to at least ask him this: after all that’s happened in the sector he’s dedicated his life to promoting, does he still believe that microfinance as an industry can uphold its original ideals? Or do economic realities or basic human nature – which drives the desire for public recognition and personal wealth to which Yunus seems immune – make those ideals unrealistic?

Understandably tired and irritable after a morning of non-stop interviews, Yunus ended the conversation before I could ask.

Impact investing continues its momentum

In other news this week, Morgan Stanley announced that it is adding two sustainable investing portfolios for its wealth-management customers, with a goal of attracting $10 billion of client assets over the next few years. Called the “Investing with Impact” portfolios, they provide clients a pre-selected mix of holdings that are diversified, and that follow principles of sustainable investing. These portfolios add to Morgan Stanley’s roughly $3.5 billion in more than 100 products that aim to provide social benefits along with financial returns, bank representatives said.

In another sign of impact investing momentum this week, the G8 published a landmark report delivering its recommendations on how to push the sector forward. Called “Impact Investment: The Invisible Heart of Markets” and produced by a task force set up by the group last year, the report called on governments to take bold steps to reduce tax and regulatory barriers to investing for both profit and social good. It sets out eight recommendations for how governments and financial service providers in G8 countries could boost the sector’s growth. You can click here to read the report itself, and check out some snap analysis – both optimistic and skeptical.

Clash of the titans in Kenyan mobile money

Also this week, the biggest players in mobile money’s flagship market continued jockeying for position, as the country’s regulators try to referee the battle. Kenya’s Equity Bank, as part of its efforts to break into the country’s active mobile money market, is attempting to roll out mobile banking services that would compete with Safaricom’s market-dominating M-PESA. Key to Equity’s plans is a technology called “thin-SIM” – paper-thin SIM cards that stick to an existing card, allowing phones to use dual SIMs even if they have just one card slot. The technology would allow Equity to sidestep one of M-PESA’s core advantages: the fact that it’s offered by the same company that runs the country’s top mobile network. With Equity’s thin-SIM cards – which the bank plans to offer for free – Safaricom customers will be able to access Equity’s mobile banking services alongside M-PESA. This means Equity customers won’t need to migrate from the Safaricom network, or purchase dual SIM phones.

Safaricom has resisted this move vigorously, including by warning Kenyan regulators that thin-SIM cards could pose a security risk to M-PESA users. Though the GSMA, the global association for telecoms, seconded those concerns in August, last week the Communications Authority of Kenya gave Equity the go ahead to roll out the service for one year, after which a technical review will be conducted of the card’s security. Though this is apparently subject to approval by the Kenyan Parliament and the board of the Communications Authority of Kenya, the news was quickly followed by an announcement by Safaricom CEO Bob Collymore of a new upgraded version of M-PESA, to be launched in six months. Safaricom and Equity’s ongoing battle could have major implications for mobile money in Kenya and beyond – we’ll be following the story closely.

In Case You Missed It … This Week on NextBillion

NexThought Monday – Between the CEO and the BoP: Root Capital report focuses on the often overlooked role of women as “middle managers”

Why Don’t Small and Medium Businesses Grow?: Innovations for Poverty Action Working Group tackles the question from several angles

Impact Data Goes Lean: Simple measurement tool lets company know if it’s meeting its social mission

Entrepreneurs Wanted : At next week’s SEEP Conference, exploring ’push and pull’ approaches to Ag growth

Looking for Hybrid Ecosystems to Serve the BoP: Scenes from the first BoP World Convention that took place last month in Singapore

How Price Discrimination is Good for Global Health (Part 1): Professor Patricia Danzon of The Wharton School discusses differential pricing in pharmaceuticals

An interview with Muhammad Yunus: The godfather of microcredit shares his views – and concerns – about the sector

How Price Discrimination is Good for Global Health (Part 2): Patricia Danzon describes how the concept, despite its theoretical upside, ’is not working very well’ in practice

Checking Out Solar at the ’Light Library’: SunnyMoney designed a distribution model allowing customers to test products before buying

Keeping Up With Education Innovations: New portals provide insight into growing number of programs serving the world’s poor

digital payments, impact investing, microfinance