Financial products

Financial products are at the heart of a financial service provider's business - they are what is "sold" to clients. Like any other business, therefore, a financial service provider must be market-driven and aim to identify and meet customers' needs on a profitable basis. Customers may be private individuals or businesses and their financial service needs will range from needing somewhere safe to keep surplus money to being able to borrow to meet a cash shortfall or being able to send money to a relative in a rural area. Someone providing financial services, therefore, has to decide whether to offer their customers one product or several products and how much to charge in order to make a sustainable business.

Library Resources

resource title type year resource
ICCO STARS Ethiopia Credit Pilot Deep Dive Study 2018

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This resource appears in: Financial products

The Strengthening African Rural Smallholders (STARS) program, a five year initiative of ICCO Cooperation and in partnership with The Mastercard Foundation,  aims to transform the lives of 210,000 farmers, 50% of them are women, in Burkina Faso, Ethiopia, Rwanda, and Senegal and will have an overall impact in the lives of over 1 million people.

To inform their work ICCO recently published a Credit Pilot Deep Dive (CPDD) which investigates differences in the uptake and impact of newly developed agricultural credit products on smallholder farmers in Ethiopia. Using a mixed quantitative and qualitative approach, based on household survey triangulated with focus group discussions (FSG), this study aims to provide the STARS program, and participating MFIs, an enhanced understanding of their client base.

More specifically, the Ethiopia CPDD study provides a deeper understanding of the 75,000 (50% women) smallholder farmers,  and their households, in the STARS Ethiopia program This CPDD study focused on two main zones and credit products in Ethiopia: vegetable loans in the Meki-Ziway area and malt barley loans in the Kersa area. The participating farmers have been categorized in three groups, namely a Treatment, Rejected, and Control Group, to facilitate the analysis of similarities and differences between the groups.

Understanding the Impact of Demonetization on Bank Account Holders from Low Income Households Paper 2018

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This resource appears in: Financial products

This study attempts to contribute to the ongoing debate of the short-term and long-term effects of the Indian government's policy of demonetization on low-income households who, although being formally financially included, are most prone to adverse effects of demonetization policy owing to their socio-economic, demographic and occupational profiles. The objective of this study is to ascertain the trends and patterns of financial and economic behavior post-demonetization, as well as understand the difference in adoption and usage of bank accounts, credit and savings patterns, expenditure patterns and adoption and usage of digital financial services.

The study was conducted in peri-urban areas of four states (Maharashtra, Meghalaya, Tamil Nadu, Uttar Pradesh) across three rounds of surveys between April 2017 and February 2018, conducted among low-income households with an annual household income of less than or equal to INR 150,000 (approx. $2,300).

ICCO STARS Rwanda Credit Pilot Deep Dive Study Study Guide 2018

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The Strengthening African Rural Smallholders (STARS) program, a five year initiative of ICCO Cooperation and in partnership with The Mastercard Foundation,  aims to transform the lives of 210,000 farmers, 50% of them are women, in Burkina Faso, Ethiopia, Rwanda, and Senegal and will have an overall impact in the lives of over 1 million people. To inform their work ICCO recently published a Credit Pilot Deep Dive (CPDD) which investigates differences in the uptake and impact of newly developed agricultural credit products on smallholder farmers in Rwanda. Using a mixed quantitative and qualitative approach, based on household survey triangulated with focus group discussions (FSG), this study aims to provide the STARS program, and participating MFIs, an enhanced understanding of their client base.

More specifically, the Rwanda CPDD study provides a deeper understanding of the 44,000 (50% women) smallholder farmers, and their households, in the STARS Rwanda program. This CPDD study focuses on two main credit products in Rwanda: banana loans in the Southern Province and Irish potato loans in the Northern Province. The participating farmers have been categorized in three groups to facilitate the analysis of similarities and differences between the groups. The groups are 1) farmers that did not take out a loan, 2) farmers that accessed an informal or semi-formal loan (family, SACCO), and 3) farmers that accessed a formal loan with an MFI or bank.

Publisher ICCO Cooperation
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Rwanda
Keywords Financial Inclusion;
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Customer-Centric Guide Guideline 2018

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This resource appears in: Financial products

Between 2011 and 2014 as financial inclusion efforts grew around the globe, 721 million accounts were opened. Of this number, 55 million were mobile accounts, two-thirds of which were used less than once every three months. Most of the remainder were “mailbox accounts,” with customers immediately withdrawing all cash upon receipt of wages or social benefits.

Lack of use translates into lack of revenue for the financial services provider. A CGAP high-level analysis shows that at current use rates, providers will find it difficult to recoup the $13.3 billion it cost them to open these accounts. Low use confronts many providers with some core business challenges: What does it take to encourage customers to leave money in an account and to use digital payments mechanisms? How do you retain customers? How can you provide customers with a comprehensive suite of products and services? How do you expand customer portfolios?

The CGAP Customer-Centric Guide explores these challenges and emphasizes strategies and actions that lead to value for the business and for the customer. It offers guidance on how organizations can move toward customer-centric business models. 

Number of Pages 20 pp.
Primary Language English (en)
Region / Country Global
Keywords Customers
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The Proliferation of Digital Credit Deployments Brief 2016

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Digital credit—offering quick small loans remotely over digital channels—is a rising trend in low-income countries, especially in sub-Saharan Africa. The most visible example is the rapid success of the small value credit and savings service M-Shwari in Kenya launched in late 2012 (Cook and McKay 2015), but an increasing number of new deployments is going to market each year.

 

This Brief provides an introduction to the fast-evolving landscape of digital credit and illustrates common features of this new digital finance offering. The focus is on digital credit services that leverage customers’ existing access to a mobile phone, though there are also digital credit models building on a person’s connection to the internet. This Brief uses 10 case examples to describe the digital credit trend, recognizing that there are many more pilots and products under design than are covered. Many of the case examples are new and have not reached scale yet, while a few already have portfolios reaching 800,000 to 1.8 million active borrowers.

Author Byoung-Hwa HwangCamilo Tellez-Merchan
Publisher CGAP, Innovations for Poverty Action (IPA)
Number of Pages 4 pp.
Primary Language English (en)
Region / Country Global
Keywords digital credit, Access To Credit. loans
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Accès au crédit pour les exploitations familiales du Niger: Quels acquis ? Quelles perspectives ? Technical Note 2016 French (fr)

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Dans la zone régie par la réglementation de la Banque Centrale des États d’Afrique de l’Ouest,le Niger est l’un des pays où l’accès au financement est le moins développé et ce phénomène touche plus spécifiquement les zones rurales, et surtout l’agriculture et l’élevage.
La rareté relative du financement du secteur rural et agricole n’a pas empêché l’émergence d’expériences et d’initiatives intéressantes émanant d’actions collectives dans le cadre d’organisations ou de fédérations de producteurs.

L’ONG SOS Faim a ainsi identifié quatre cas qui ont pu être capitalisés, analysés et discutés lors d’un atelier organisé en octobre 2015 à Niamey.

 

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Jeunesses rurales africaines : contours, aspirations et perspectives Journal Article 2016 French (fr)

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Les pouvoirs publics ont multiplié ces dernières années agences et programmes en faveur des jeunes ruraux mais ces différentes stratégies tardent malheureusement à se concrétiser. Surtout, elles peinent à appréhender ces « jeunes ruraux » dans toute leur complexité. Nous vous invitons donc à lire le numéro 71 de la revue Grain de Sel « Jeunesses rurales africaines : contours, aspirations et perspectives ». Les différentes contributions de ce numéro rappellent à ce titre qu’il n’existe pas une mais des jeunesses rurales et que les catégories-mêmes de « jeune » et de « rural » sont loin d’être étanches et clairement définies. Qui sont les jeunes ruraux ? Quelles sont leurs aspirations, leurs attentes, leurs difficultés ? Les politiques et programmes en oeuvre y répondent-ils ? 

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Les Services financiers aux entrepreneurs - Un levier essentiel de création d’emplois et de développement socioéconomique Paper 2015 French (fr)

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Partout sur la planète, les micro et petites entreprises constituent un moteur essentiel d’innovation, de création d’emplois et de développement socioéconomique. Ces entreprises forment le tissu social et génèrent un développement durable car elles sont solidement enracinées dans leur milieu. Or, dans les pays en développement et en émergence, l’accès limité au financement constitue trop souvent un frein à la création, à la croissance et à la pérennisation de ces entreprises. La Banque mondiale rapporte à ce sujet que des quelque 400 millions de micro, petites et moyennes entreprises répertoriées dans les économies en développement, plus de la moitié, soit entre 200 et 245 millions, ont un accès déficient au crédit.

Les entrepreneurs à la tête de ces entreprises font le plus souvent face à un vide (le missing middle, ou chaînon manquant) en matière de services financiers : ils demandent des services financiers plus élaborés que ceux qu’offrent généralement les institutions de microfinance, mais ne répondent pas entièrement aux critères imposés par les banques classiques. Cette situation est particulièrement marquée chez les femmes entrepreneures.

Ces entreprises soutiennent à la fois la production et la consommation locale. En outre, elles fournissent parfois leurs produits et services à de plus grandes entreprises qui contribuent, à leur tour, à l’essor économique et au développement des communautés. Ce faisant, elles stimulent directement le développement du secteur privé et la création de dizaines de milliers d’emplois accessibles aux individus défavorisés et sont susceptibles d’aider ceux-ci à sortir de la pauvreté et de l’isolement.

Cet impact positif est d’autant plus important que tous n’ont pas les compétences ou le potentiel pour devenir entrepreneurs : plusieurs ont besoin que naissent et croissent autour d’eux des entreprises susceptibles de leur fournir les emplois dont ils ont besoin. Il importe donc de rendre accessible aux entrepreneurs le financement ainsi que les autres services financiers dont ils ont besoin afin de leur permettre, à eux-mêmes mais aussi aux employés qu’ils engageront, de prendre la place qui leur revient dans l’économie et d’ainsi développer leur plein potentiel à titre de moteurs de croissance économique. 

Un accès adéquat aux services financiers pour les entrepreneurs permet une amélioration des conditions de vie non seulement pour les individus qui en bénéficient, mais également pour leurs familles et pour l’ensemble de leur communauté. De façon générale, le fait de stimuler la création et la croissance des petites entreprises créatrices d’emplois contribue à élargir les rangs de la classe moyenne, avec tous les impacts positifs qui en découlent : accès accru aux soins de santé, à l’éducation, à l’habitat et aux moyens de transport, progrès économique généralisé, soutien de la démocratie et moteur de stabilisation pour la société.

En rendant disponible aux micro et petites entreprises une offre de services financiers spécialisée et adaptée à leurs besoins, les coopératives financières et autres institutions de microfinance rendent possibles d’une part l’inclusion financière des entrepreneurs ayant un accès limité ou nul aux services offerts par les banques et, d’autre part, la poursuite de l’accompagnement qu’elles offrent à leurs membres et clients dont les activités commerciales se développent au fil du temps. Cette continuité s’avère essentielle pour ces entrepreneurs qui, bien qu’ayant évolué dans la formalisation de leurs activités et pouvant désormais se qualifier auprès des banques, souhaitent conserver le lien d’affaires et la relation de confiance qu’ils ont établis avec leur institution de microfinance. Pour cette dernière, le fait de fidéliser ainsi un membre ou client lui permet d’accroître son volume d’affaires, de pérenniser ses opérations et de poursuivre ainsi ses efforts d’inclusion financière auprès d’un plus grand nombre d’individus grâce à l’introduction d’une forme d’intermédiation entre ses différentes clientèles.

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Accès aux crédits bancaires et efficience technique des exploitations agricoles dans les périmètres irrigués du gouvernorat de Tataouine dans le Sud-Est tunisien Paper 2015 French (fr)

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Ce papier met en relief l’impact de l’accès des exploitants agricoles aux crédits bancaires sur l’amélioration de leurs efficiences techniques. A cet effet, l’approche paramétrique de la frontière stochastique de production a été utilisée pour mesurer les niveaux de l’efficience des exploitants agricoles des périmètres irrigués du gouvernorat de Tataouine dans le Sud-Est de la Tunisie. L’analyse des déterminants de l’efficience a permis de révéler la relation positive entre l’accès des exploitants aux financements bancaires et leurs niveaux d’efficience. L’âge de l'agriculteur, le système de cultures et l’existence d’une activité d’élevage ont constitué, également, des facteurs contribuant de manière significative au rehaussement de l’efficience technique des exploitants agricoles.

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Author Salah Selmi, Samir Ben Ali, Salwa Hadded
Publisher Revue méditerranéenne d'economie, agriculture et environnement
Number of Pages pg. 75-80
Volume / Issue# Vol 14 / No. 1
Primary Language French (fr)
Region / Country Global, Africa, Northern Africa
Tunisia
Keywords Efficiency, Credit Access, Agricultural Banking
Related Resources
Etude de cas du warrantage au Niger Case Study 2015 French (fr)

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Cette note présente une partie d’un rapport préparé par Matteo Cortese & Jonathan Coulter (les auteurs) à la demande de l’Agence Française de Développement (AFD), du Centre Technique de coopération Agricole et rural ACP-UE (CTA) et du Fond International pour le Développement Agricole (FIDA).

Le warrantage communautaire

Ce produit a été développé au Niger à partir de la fin des années ’90 par la FAO dans le cadre du « Projet Intrants ». Il s’agit d’un système dans lequel un groupement de producteurs et/ou productrices stocke et met en garantie la récolte de ses membres et contracte un prêt auprès d’une IMF, sécurisé avec un mécanisme de double cadenas.

Au fil des années ce système, adapté au milieu rural du Niger, a eu une expansion importante dans la sous-région. Le warrantage vise comme objectif principal la gestion optimale des productions agricoles par les populations rurales, avec par conséquence une amélioration du « cash flow » du petit producteur. L’outil permet aux producteurs de ne pas brader leur récolte, de faire face à leurs obligations sociales et financières et/ou de mener des activités génératrices de revenu (AGR).

Du point de vue du modèle de gestion, le crédit warrantage peut être octroyé directement à un groupement de base qui possède un magasin, ou passer à travers des OP de 2ème ou 3ème niveau qui regroupent plusieurs groupements/coopératives de base. Dans ce dernier cas, on retrouve un modèle de warrantage communautaire centralisé par une OP (qui dans certains cas peut aussi détenir la clé de l’IMF, qui lui délègue en grande partie la phase du monitorage). Dans le cas classique où l’IMF négocie directement avec l’OP de base et fait elle-même le monitorage régulier du stock, on peut parler d’un modèle de warrantage communautaire décentralisé.

Pour ce qui concerne l’évolution du warrantage communautaire au Niger, le volume estimé de crédit warrantage était à 600 millions FCFA en 2009, avec une dizaine de SFD et environ 125 OP impliqués. Cependant, la quantité totale des stocks warrantés, estimée à 5.000 T, représentait seulement le 0,15% de la production nationale (estimée à 3.200.000 tonnes).

En ce qui concerne les institutions financières, trois « IMF de crédits directs » (Taanadi, Asusu et SICR Kokari), qui se refinançaient auprès des banques commerciales, sont arrivées à dominer les encours, ayant pris le relai aux IMF mutuelles en difficultés.

Sur la période 2009-2014, les données disponibles ne permettent pas d’avoir une photographie claire de la situation. Néanmoins, les informations collectées sur le terrain et à distance dans le cadre de la présente étude donnent l’impression que la croissance du mécanisme ait stagnée depuis la fin de l’appui de la FAO avec le Projet Intrants (en 2008) . D’un côté les difficultés liées à des mauvaises campagnes agricoles dans les dernières années, et de l’autre coté la rigidité du système de double cadenas (qui retarde souvent l’octroi du crédit pour les producteurs/productrices), semble avoir en quelque sorte freiné l’évolution attendue du crédit warrantage au Niger.

Un des exemples le plus dynamique du modèle de warrantage centralisé était en 2009 celui de la Fédération des Unions des Groupements Paysans du Niger (FUGPN) Mooriben, qui totalisait à la campagne 2008/2009 plus de 88.000.000 FCFA de crédit warrantage pour ses membres.

Toutefois, après une chute du montant octroyé au cours de la campagne 2009/2010, les Unions de Mooriben ont abandonné au fur et à mesure le warrantage, dû à plusieurs facteurs : mauvaises campagnes agricoles qui ont diminué la disponibilité des stocks à warranter, difficultés liés au retard dans l’octroi du crédit (dû en grande partie au mécanisme de double cadenas), besoin de financement aussi en début de la campagne agricole, négociation d’un crédit à des conditions très favorables avec une banque agricole étatique (la BAGRI) et surtout, des fonds propres qui servaient à garantir le produit sans besoin de nantir le produit. En effet, les Unions de Mooriben, vu la possibilité, ont préféré passer à un crédit commercialisation (un crédit pour l’achat des produits agricoles, avec une vente différée), car ce type de crédit a été retenu comme plus simple à gérer. Il a l’avantage de faciliter l’accès au crédit des producteurs (qui reçoivent la liquidité dès qu’ils déposent leurs sacs au magasin).

D’une façon générale, on peut retenir que le warrantage communautaire a des éléments forts de durabilité : l’appropriation locale, des fortes pressions des pairs (implicite, quand il n’y a pas une caution solidaire explicite), une relation forte de responsabilité avec le prêteur, la gestion décentralisée non dépendante des cadres légaux et des institution régulatrices (qui ne marche pas souvent) et de la non exigence de tiers détenteurs coûteux ou la couverture d’assurance (la plupart des risques peuvent être couverts par des garanties mutuelles entre les membres, ou entre les OP).

Aussi, quand il est effectué à des fins de sécurité alimentaire il a des fortes externalités positives, en retenant des stocks dans des zones rurales et en rendant la population plus résistante (résiliente) face à des crises. Dans ce sens, le warrantage a dépassé les banques de céréales en efficacité.

De l’autre côté, certaines aspects amoindrissent sa durabilité, notamment : l’inflexibilité du produit warrantage (un calendrier avec de dates fixes pour le stockage, l’emprunt et le remboursement, en grande partie une conséquence inévitable du modèle) ; le manque de SFD mutuelles efficaces présentes dans la zone où les producteurs vivent ; sa dépendance au support extérieur pour la construction des entrepôts ; ses exigences pour des apports formatifs continus et durables ; les actions gouvernementales qui renversent les principes de base du marché et causent que des déposants perdent de l’argent (un problème répété à cause de la mise sur le marché de stocks de produits vivriers subventionnés par le gouvernement) ; les petits producteurs ont une capacité limité de « jouer sur le marché » (play the market), comparé à d’autres acteurs.

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Agricultural Lending: A How - To Guide Guideline 2015

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The International Finance Corporation (IFC) has published a guide to agricultural lending entitled  Agricultural Lending: A How - To Guide” that explains the trends, opportunities, risks, and mitigation strategies associated with agricultural lending in developing markets. Using a simple five-phase approach, it presents a step-by-step road map for financial institutions interested in introducing agricultural lending products. 

Author IFC
Publisher IFC
Washington D.C., USA
Number of Pages 136 pp.
Primary Language English (en)
Region / Country Global
Keywords Agricultural Lending
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How commercial banks can offer financial products to SMEs for investing in energy efficiency Paper 2014 English (en)

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Energy consumption can account for up to 50 per cent of the total business costs for small and medium-sized enterprises (SMEs). Investments targeting energy savings provide a quick way for a small business to gain a cost advantage. Well-designed energy efficiency projects often show positive cash flows relatively quickly and allow for the projects themselves to pay back investments (and loans). Globally, there is a significant untapped potential to reduce energy costs. Demand-side market failures relate to lack of information. Supply-side market failures relate to limited access to finance for energy efficiency investments. Sustainable energy finance facilities (SEFFs) address this financing gap and provide access to technical advice for SMEs and banks. The success of SEFFs has demonstrated that commercial banks can bridge the sustainable energy financing gap by: 1) understanding the opportunity to improve their clients' cost structures using the right communication approach; 2) leveraging existing information from their own loan portfolio combined with publicly available information on the energy performance of technologies; 3) ensuring dedicated staff have project finance skills and that contracts are suitably tailored; 4) gaining access to energy expertise; and 5) having access to a list of high energy performance technologies.

Paper  -  English (en)

Author Simone Anzboeck and Inez Couzinet
Publisher Practical Action Publishing
Number of Pages 10 pp.
Volume / Issue# vol. 25 no.2
Primary Language English (en)
Region / Country Global
Keywords Small And Medium Enterprises (Smes), Value Chain Finance, Enterprise Development, Agricultural Microfinance
Related Resources
The Firm to Farm Finance Toolkit: Hearing, Creating & Delivering Human-Centered Solutions for Inclusive Access to Finance Toolkit 2014

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The toolkit developed by USAID entitled “The Firm to Farm Finance Toolkit: Hearing, Creating & Delivering Human-Centered Solutions for Inclusive Access to Finance” provides step-by-step guidance on how to apply a framework to hear client needs and create and deliver financial products and services for low-income households in a sustainable and client-centric manner.

Author The United States Agency for International Development (USAID)
Publisher The United States Agency for International Development (USAID)
Number of Pages 51 pp.
Primary Language English (en)
Region / Country Global
Keywords Access To Finance, Financial Products, Inclusive Finance
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Empirical Analysis of Agricultural Credit in Africa: Any Role for Institutional Factors? Paper 2013

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A strong and efficient agricultural sector has the potential to enable a country feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries. It is however ironical that despite the great potentials Africa has in agricultural production; the continent is a net importer of food. Aside the problem of poor access to land and modern technology, the major bane of Africa’s agricultural development commonly cited in the literature is low investment or credit. It is in the light of the above that this study examined the extent of agricultural credit and the factors responsible for the level of agricultural credit in Africa. The agricultural credit model was estimated using the panel data covering 1990-2011 generated for ten countries selected across the five sub-regions in the continent. Both fixed and random effects models were estimated and compared with the Pooled OLS. Our finding reveals that higher savings rate produces greater agricultural credit in the continent. Although, savings rate is generally low in Africa, the impact of savings on agricultural credit is still massive. All the four governance variables- Corruption index, Rule of Law index, Regulatory quality index, and Government Effectiveness index- have negative impact on agricultural credit in the continent. The interest rates being charged by the various financial institutions especially commercial banks have adverse effects on credit to the agriculture sector. Land available for agriculture has positive significant impact on agricultural credit in Africa. Overall, governance issues are crucial to addressing the challenges of low and dwindling agricultural credit in Africa.

Author A. Salami, D. Felix Arawomo
Publisher African Development Bank (AfDB)
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global, Africa
Keywords Financial Products, Agricultural Credit
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Le warrantage paysan, un outil de protection des ressources Article 2013 French (fr)

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Souvent présenté comme un outil de spéculation sur les fluctuations de prix et d’accès au crédit, le warrantage permet aussi aux producteurs de se protéger d’une pression sociale qui les pousse à ponctionner régulièrement une partie de leurs récoltes et peut mettre en danger la sécurité alimentairede leur ménage en période de soudure.

Le warrantage existe au Burkina Faso depuis 2005 et connaît un vif succès auprès des producteurs et des institutions financières. Les deux plus anciennes expériences, mises en oeuvre dans le Sud-Ouest du pays, sont celles de l’Union Ten Tietaa et de la Copsa- C (Coopérative de prestation de services agricoles « Coobsa »), deux organisations faitières qui continuent aujourd’hui à accompagner les producteurs dans la mise en oeuvre du warrantage. Ces deuxorganisations ont bénéficié de l’appui respectif des ONG SOS-Sahel et CISV, et se sont inspirées dans leur développement d’expériences de warrantage plus anciennes au Niger (Union Cigaba de Konkorindo au Sud-Ouest du Niger).

Les expériences qui se développent au Burkina Faso sont qualifiées de « warrantage paysan » car elles restent localisées au niveau du village, la capacité de stockage des entrepôts ne dépasse pas, en général, les 80 tonnes et les partenaires financiers sont des agences locales d’institutions de microfinance. Le warrantage se développe selon deux grandes tendances : – Au niveau des zones excédentaires en céréales, et dans le Sud-Ouest notamment, les producteurs stockent essentiellement du maïs, du riz et du sorgho. – Au niveau des zones déficitaires en céréales, auNord notamment, les producteurs stockent plutôt des cultures de rente comme le niébé, l’arachide et le sésame, dont la vente en période de soudure permettra l’achat de céréales.

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Le warrantage équitable au Niger et au Burkina Faso : une bonne pratique de finance rurale Multimedia 2013 French (fr)

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Le warrantage équitable au Niger et au Burkina Faso explique étape par étape ce qu'est le warrantage équitable et quelles sont les bonnes pratiques à adopter à travers des exemples du Niger et du Burkina Faso. Le documentaire rassemble les innovations et les pratiques sur le warrantage de ces pays. 

Lien vers le documentaire  -  French (fr)



Publisher FAO
Primary Language French (fr)
Region / Country Global, Africa, Western Africa
Niger, Burkina Faso
Keywords Smallholder Farming, Financial Products, agricultural risk management, Risk Mitigation, Farm Management, Poverty Reduction
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Revue des mécanismes de financement n°01 Newsletter 2012 French (fr)

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Informer les acteurs du développement agricole et rural en Afrique de l’Ouest et du Centre des opportunités de financement qui s’offrent à eux, tel est l’objet de la présente revue. L’enjeu reste la mobilisation des importantes ressources financières nécessaires à la réduction de la pauvreté des ménages ruraux et à la sécurité alimentaire de nos pays.

Etats, producteurs, transformateurs et distributeurs de produits agricoles sont, en effet, appelés à investir massivement pour la maîtrise de l’eau, l’amélioration de l’aptitude des terres, la modernisation des exploitations, l’accroissement des capacités de transformation et le développement des marchés. Les seuls budgets publics ne sauraient répondre à autant de besoins. Les institutions de microfinance, non plus, ne pourront drainer une épargne suffisante pour faire face.

Le crédit bancaire devra, décidemment, jouer un rôle déterminant dans le financement des infrastructures, équipements et fonds de roulement requis pour plus de productivité, plus de valeur ajoutée et plus de réserves sécuritaires. Il nous faut alors élargir l’accès aux fonds mis à disposition par les bancaires.

Un tel effort commence par une meilleure maîtrise des instruments et mécanismes mis en place par les établissements spécialisés, banques de développement et caisses agricoles, notamment. La BIDC est à l’honneur pour ce premier numéro. La rubrique "L’Institution" procède à une brève présentation de cet outil que la CEDEAO s’est donnée pour impulser le développement économique et social des quinze Etats membres. Des espaces sont, par la suite, dédiés pour mieux connaître les instruments de financement, les conditions d’éligibilité, les procédures d’accès, le portefeuille en cours et les perspectives envisagées.

Revue des mécanismes de financement n°01  -  French (fr)

Author Hub Rural - Plateforme d'Appui
Publisher Hub Rural - Plateforme d'Appui
Senegal
Number of Pages 4
Primary Language French (fr)
Region / Country Global, Africa, Western Africa
Benin, Burkina Faso, Côte d'Ivoire, Ghana, Guinea, Mali, Niger, Senegal, Togo
Keywords mecanismes de financement
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Manuel de formation sur le warrantage au Niger Training Guide 2011 French (fr)

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Ce document est le résultat d’une initiative conjointe des projets Capitalisation et IARBIC née du constat de manque d’un manuel standard de formation sur le warrantage et des évolutions importantes enregistrées dans la pratique du warrantage depuis quelques années. 

Il a été élaboré de manière participative afin de prendre en compte les diverses expériences à travers non seulement les échanges directs mais aussi la revue d’une abondante documentation.

De la théorie à la pratique, ce manuel se veut un outil à la disposition des formateurs pour organiser des sessions de formation en warrantage. Il constitue ainsi un document très pédagogique pouvant être facilement adapté selon le type de public formé. Il présente les avantages de cette technique de crédit pour l’ensemble des acteurs de la filière des intrants, décrit son organisation et propose des recommandations pour assurer une diffusion plus large.

Lien vers la publication  -  French (fr)

Is Micro Too Small? Microcredit vs. SME Finance Article 2011

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In this paper NYU economists Jonathan Buachet and Jonathan Morduch compare the employment and poverty outreach of SMEs to that of microenterprises. There is surprisingly little data on the profile of microcredit borrowers, and even less that might be matched to comparable surveys of SME employees. They draw on a series of surveys of both microcredit borrowers and SME employees, building from a 2008 survey of Bangladeshi SMEs which are customers of BRAC Bank, a for-profit arm of Bangladesh’s largest NGO.

The survey is particularly valuable in including questions that can be used to predict the likelihood that the employees’ households are below global poverty lines. They then compare those household-level predictions to similarly-constructed likelihood scores taken from independent data on microcredit borrowers in Bangladesh. Bauchet and Morduch relate those results to data from an additional microcredit survey with detailed consumption data. In focusing on customers of BRAC Bank, they narrow attention to SMEs that are most likely to align with BRAC’s broader imperatives of development, social welfare improvement, and poverty reduction.

Author Jonathan Buachet; Jonathan Morduch
Publisher Financial Access Initiative
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Keywords Microcredit, Small And Medium Enterprises (Smes), Enterprise Development
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Review of Small Farmer Access to Agricultural Credit in Nigeria Technical Note 2010 English (en)

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The important role of credit in agricultural enterprise development and sustainability has prompted the Federal Government of Nigeria (FGN) to establish credit schemes such as the Agricultural Credit Guarantee Scheme (ACGS) and Agricultural Credit Support Scheme (ACSS) to ensure farmers’ access to agricultural credit. Yet, the situation has not improved substantially; based on the 2006 Core Welfare Indicators Questionnaire Survey, it is estimated that only 18 percent of farm households (mainly small- scale farmers) have access to financial services (Akramov 2009). This brief reviews existing knowledge on small-scale farmers’ access to credit with particular focus on conditions for accessing credit, the maximum credit provided, repayment of credit, other factors limiting access, and the impact of credit on small-scale farmers.

Paper  -  English (en)

Author Idris Olabode Badiru
Publisher IFPRI
Abuja, Nigeria
Number of Pages 6 pp.
Volume / Issue# Policy Note No. 25
Primary Language English (en)
Region / Country Global
Nigeria
Keywords Access To Finance, Agricultural Credit, Financial Services
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Understanding and Responding to the Savings Behavior of Poor People in the People in the North East of India Report 2008

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This qualitative research was conducted in the four North Eastern states of Assam, Meghalaya, Manipur, and Tripura. The objective of the research is to understand the existing saving practices of people in these states, the challenges the people face, and the opportunities for formal sector institutions to provide savings services. Based on the client responses, four savings products were identified whose attributes are expected to meet the diverse savings needs of the low-income people of the region.

Amhara Credit and Savings Institute: Ethiopia Report 2006

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The purpose of this case study is to highlight how the Amhara Credit and Savings Institution (ACSI) has been successful in terms of delivering financial services to poor, rural and remotely located communities in Ethiopia.

ACSI was selected for this series of case studies on state owned financial intermediaries based on its growth (both in loan portfolio and savings mobilized), service diversification, efficiency and sustainability - remarkable achievements given the challenging environment in which it operates.

Author Dlamini, P.; Brislin, N.
Publisher USAID
Number of Pages 51 pp.
Primary Language English (en)
Region / Country Global
Ethiopia
Keywords Access To Credit, Savings, Financial Services
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Entering New Markets: How Market Research Can Inform Product Development Article 2005

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This note discusses how market research can inform and lower the risks associated with new product development done by urban micro-lenders entering rural areas. The note focuses on technical considerations regarding various market research options in situations when one enters a completely new market. The content is based on research work undertaken jointly by the Microfinance Centre for CEE and the NIS (MFC) and its Armenian partner MDF-Kamurj during 2002-2004 within the SEEP Network Practitioner Learning Program.

MDF-Kamurj has taken a strategic decision to enter rural areas due to limited growth opportunities in markets currently being served. As an urban micro-lender, MDF-Kamurj lacked rural market intelligence. MDF-Kamurj is not the only MFI that has faced this challenge. According to MFC 2003 regional microfinance industry mapping, 56% of NGO MFIs from Europe and Central Asia planned to enter rural areas. This is perceived as a major institutional challenge. If urban MFIs are to be successful in serving rural populations they need to better understand rural market needs associated risks. This can be achieved by informing new product development through various market research activities. Market research not only has the potential for reducing operational risks, thus cutting costs of product development and roll-out, but it also inspires the development of innovative solutions.

This note aims to guide the reader through some possible options for market research that can be undertaken at various stages of product development:

  • Internal preparation
  • Market research
  • Concept development
  • Pilot test
  • Revision and roll-out

For each option there are considerations related to its purpose, practical application, key methodological principles and lessons learned. These points are illustrated the case study and completed by information on the costs of the research in section 7.

In conducting the project, a holistic approach was taken to experiment and test different alternative market research options in order to generate lessons for the microfinance industry. The note is designed to be a menu of different option, from which microfinance practitioners can draw whatever is relevant for each of them.

Author Matul, M., Szubert, D., Vardanyan, G., Lalayan, M., Tomilova, O.
Publisher Microfinance Centre
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Keywords Market Research, Product Development, Rural Finance
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Managing Risk and Designing Products for Agricultural Microfinance: Features of an Emerging Model - Case Studies Case Study 2005

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The following case studies are available.

Managing Risk and Designing Products for Agricultural Microfinance: Features of an Emerging Model - Paper Paper 2005

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The paper begins by highlighting that agricultural finance has been characterised by poor loan repayment rates and unsustainable subsidies. Accordingly, agricultural credit from some donors and multilateral development banks has dropped dramatically in recent decades and is now often considered too risky. Agriculture is widely considered more risky than industry or trade.

The purpose of this paper is to provide practitioners, policymakers, and donors with a thorough overview of agricultural microfinance. It aims to provide them with information to expand the access of farming-dependent households to sustainable financial services on a large scale.

This paper sets out a model, termed agricultural microfinance, for providing financial services to poor, rural farming households. The model aims to combine key features of traditional microfinance, traditional agricultural finance, and other approaches – including leasing, area-based insurance, and contracts with processors, traders and agribusinesses – into a hybrid defined by 10 main features.

The analysis in this paper suggests that successful agricultural microfinance lenders rely on various combinations of these features to mitigate the risks associated with lending to farming households, although in no experience were all 10 features present. It contends that the presence of a substantial number of these features appears to contribute to a well-performing portfolio, in diverse combinations, in a variety of circumstances – in general, the first few features are found in most successful experiences, while those that come later on the list have proven important in addressing particular risks or situations found in lending to specific types of agricultural activities.

  1. Repayments are not linked to loan use
  2. Character-based lending techniques are combined with technical criteria in selecting borrowers, setting loan terms, and enforcing repayment
  3. Savings mechanisms are provided
  4. Portfolio risk is highly diversified
  5. Loan terms and conditions are adjusted to accommodate cyclical cash flows and bulky investments
  6. Contractual arrangements reduce price risk, enhance production quality, and help guarantee repayment
  7. Financial service delivery piggy-backs on existing institutional infrastructure or is extended using technology
  8. Membership-based organisations can facilitate rural access to financial services and be viable in remote areas
  9. Area-based index insurance can protect against risks of agricultural lending
  10. To succeed, agricultural microfinance must be insulated from political interference

The paper is based around a discussion of each of these features – outlining the key elements, giving examples and highlighting the challenges that still need to be addressed. Case studies from leading organisations are also provided.

Product Marketing Strategy Toolkit Toolkit 2004

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This toolkit begins by setting out that all businesses orient themselves toward the marketplace using one of four concepts or approaches:

  1. The production concept: “Make it and it will sell”
  2. The product concept: “Make it well and it will sell”
  3. The selling concept: “Promote it well and it will sell”
  4. The marketing concept: “Make something the market values and it will sell”

It further notes that these four concepts have been used by businesses in most industries over time. Movement from one to the next has typically (but not always) been linear, with the industry passing through each phase before moving to the next. The microfinance industry is similar to other industries in this respect, as it has moved over time from a production concept (in which MFIs aimed to produce as many affordable group loans as possible by replicating a blueprint of what had been successful elsewhere) to a product concept (in which MFIs sought to improve the quality of the product they were offering) to a selling concept (in which MFIs focused on selling their “new and improved” but still rather narrow range of products to an essentially homogenous market). Slowly but surely, however, an increasing number of MFIs are adopting the marketing concept and orienting themselves not towards production or products or sales, but rather, towards particular target markets. They are adopting a more demand-driven, client-oriented approach.

It is also highlighted that there are certain aspects that make marketing financial services more specialised. It is argued that because microfinance institutions sell financial services, their product marketing strategy will be greatly influenced by four characteristics common to all services: intangibility, inseparability, variability, and perishability. In addition, because the products being sold are financial services, there are two other distinguishing characteristics that should be taken into account, high involvement and loyalty.

The product marketing process can be divided into two parts. The first part aims to develop valuable products, while the second half aims to communicate that value to the market. This toolkit is designed to guide you through both parts of the process and to assist you in creating a product marketing plan that summarises your overall product marketing strategy and guides you in its implementation.

The toolkit is divided into nine sections, each of which explores one step of the process. Not surprisingly, the first step is for you to identify who your market is, what that market needs, and what it values. The second step is to examine your existing products to see how effectively they meet market needs. Based on the results of your research, you can then define your target market and your overall product strategy (step 3) and begin developing, differentiating and pricing products so that they have value to both your customers and to you (steps 4 and 5). Once you’ve developed a valuable product, you must prepare your marketing messages (step 6) and then deliver those messages through an effective marketing communications mix (step 7). The results of all seven steps are then brought together to form the marketing plan (step 8). Last but not least, the overall product strategy must be monitored and managed (step 9).

Author Frankiewicz, C, Wright, G A.N, Cracknell, D
Publisher MicroSave
Number of Pages 120 pp.
Primary Language English (en)
Region / Country Global
Keywords Agricultural Marketing, Financial Products, Business Strategy
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A Technical Guide to Rural Finance: Exploring Products Document 2003

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Traditionally, policies towards rural finance have been centered on the extension of credit, often subsidized and directed, to rural areas, and have ignored the reality that rural people demand a diverse array of financial services, including savings, money transfers, insurance and credit. Today’s financial systems approach to rural finance recognizes that a wide menu of financial services (priced to cover costs) is needed, as part of a broader farmer support package, in order to reach out to the greatest number of people in rural areas. Successful microfinance organizations have had to tackle, not only the problems of delivering products and services to low-population rural areas, but also to take into account the wide diversity and seasonality of their client’s income sources (beyond simply agricultural production and on-field labour).

This guide by the World Council of Credit Unions (WOCCU), draw on cases of innovative practices in rural finance in Central America, Brazil, Ecuador, Kenya, Uganda, Rwanda, and the Philippines, and makes a number of recommendations relating to the successful operation of sustainable rural finance institutions. Recommendations include the need to:

  • Assess the demand of rural clients for multiple financial services;
  • Identify and examine all income sources and expenses of their clients at the household level; and
  • Assess environmental credit risks associated with production and market cycles.

The guide also reviews a range of rural finance products and delivery mechanisms including:

  • Long-term agricultural investment loans, short-term rural enterprise and farm loans;
  • Lending against warehouse receipts and group-based lending;
  • Buyer and supplier credit;
  • Savings;
  • Leasing;
  • Insurance – including credit, savings, funeral and crop insurance options;
  • Remittances – exploring how to best to link remittance receivers to formal financial institutions.

This is a short document which provides a useful introduction to the subject of financial products that meet the needs of rural populations.

Author Evans, A.C.; Ford, C.
Publisher WOCCU - World Council of Credit Unions, Inc.
Number of Pages 18 pp.
Primary Language English (en)
Region / Country Global
Keywords Financial Products, Agricultural Lending
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Innovative Products and Adaptations for Rural Finance Paper 2003

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This paper was one of the lead papers in the conference “Paving the Way Forward for Rural Finance” in June 2003. The paper reviews the characteristics of households and agricultural enterprises as well as the conditions for sustainable development of the financial institutions that serve them.

The paper presents the main innovations in lending procedures (such as warehouse receipt, long term loans for investment, credit bureaus and credit scoring, etc...), savings (such as outsourcing the collection of savings), remittances and technology used in the rural finance industry (such as ATMs and PDAs). Innovations are evaluated based on their contribution to expanding the frontier of rural finance.

The paper also presents an important section that deals with the issues of design and introduction of innovations in financial products. The author explains that there are two phases during the innovation process, these phases are: the discovery phase and the design and implementation phase. To be successful innovation requires support of the organization.

The paper also presents the main reasons that can cause failure of any innovation:

  • lack of commitment of the institution
  • lack of control over the process and its outcome
  • faulty communication of the innovation
  • wrong assessment of demand
  • internal misunderstanding or resistance to new products
  • unrealistic projections and;
  • lack of internal control.

The paper ends with recommendations for institutions, governments and donors

Author Juan Buchenau
Publisher USAID; DFID; WOCCU; BASIS
Number of Pages 39 pp.
Primary Language English (en)
Region / Country Global
Keywords Innovation, Savings, Remittances, Information Technology, Product Design
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What Do Microfinance Customers Value? Article 2003

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This note is based on the key findings regarding customer needs and satisfaction levels from research conducted between 1999 and 2001 with four microfinance institutions affiliated to WWB. The findings represent the opinion of over 3,000 individual customers, located in three countries: Bangladesh, Uganda and Colombia. This research was conducted as part of WWB’s Strategic Positioning Program (SPP), which incorporates industry and competitive analysis, diagnosis of the organization, and statistically valid surveys of existing and past clients. Survey questionnaires asked about the importance and satisfaction of clients with a variety of loan attributes, in absolute terms and relative to other service providers. Clients were also asked open-ended questions, including what additional products and services they wanted.

The results suggest that microfinance clients:

  • Value speed and convenience
  • Want access to larger loans
  • Want respect and recognition
  • Care about interest rates
  • As their experience grows, clients of group loans want different loan amounts, and resent the need to guarantee repayment by other members of the group
  • Want business loans
  • Want to be able to deposit voluntary savings
  • Want housing and education loans
  • Want health and life insurance
  • Willing to pay what it costs for responsive, sustainable services

This note aims to make comparisons across institutions to illustrate the areas in which customers from different countries and institutions employing diverse methodologies have similar and varying levels of satisfaction. While it can be difficult to make direct comparisons across countries, due in part to the local realities of each country’s microfinance market, the trends in the data provide insight to managers regardless of location.

Author Women's World Banking
Publisher Women's World Banking
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Global
Keywords Mission, Financial Products
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The demand for flexible microfinance products: lessons from Bangladesh Case Study 2001

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Using evidence from microfinance institutions in Bangladesh, this paper suggests that many of the poor refuse to use MFI products, while among those who do, dropouts, overlapping and delinquency appear to be rising. Informal sources of finance continue to be as important for poor households as they always have. This evidence suggests that MFI products are not as flexible as poor people would wish.

Having looked at how MFIs respond to client demands and preferences, the author concludes that there is a need for most MFIs to base their development more strongly on market research and pilot testing, which characterised the pioneering work of the Grameen Bank in its early days. MFIs will have to recognise and manage the trade-off between product flexibility and client satisfaction on the one hand and costs and risk for the MFIs on the other.

Author Meyer, R.L.
Publisher Rural Finance Program, Ohio State University
Primary Language English (en)
Region / Country Global
Keywords Delinquency, Informal Finance, Client Needs, Market Research, Costing
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Key Questions That Should Precede Starting New Product Development Article 2001

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Looking Before You Leap: Key Questions That Should Precede Starting New Product Development

The microfinance industry is one of the few remaining industries in the world that is primarily product- rather than market-driven. With the rising recognition of the costs associated with high levels of drop-outs and their implications for achieving sustainability, there is a growing appreciation of the need to deliver client responsive products. Increasing levels of competition in many markets have also highlighted the importance of a market-driven approach to microfinance. There is little reason to doubt that the microfinance industry will follow the trend of the commercial world towards a market-driven approach and that MFIs that do not respond to the needs of their clients will eventually fail.

Many MFIs are looking at new product development as a way of responding to their clients’ needs. However, they often do not understand the complexity and cost of product development. This note suggests a few essential questions to ask prior to setting about new product development.

These questions are as follows:

  1. Motivation: “Are we starting product development to make our MFI more client-driven?”
  2. Commitment: “Are we setting about product development as a systematic process based on defined objectives?”
  3. Capacity: “Can our MFI handle the strains and stresses of introducing a new product?”
  4. Cost Effectiveness and Profitability: “Do we fully understand the cost structure of our products?”
  5. Simplicity: “Can we refine, repackage and re-launch existing product(s) before we develop a new one?”
  6. Minimize Confusion, Complexity, and Cannibalisation: “Are we falling into the product proliferation trap?”
Author G. Wright, M. Brand, Z. Northrip, M. Cohen, M. McCord, B. Helms
Publisher MicroSave
Number of Pages 10 pp.
Primary Language English (en)
Region / Country Global
Keywords Financial Products, Financial Markets, Client Assessment, Costing
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Key questions that should precede new product development Document 2001

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This briefing note (No.9 in the MicroSave-Africa series) outlines six essential questions that a microfinance institution should ask prior to setting about new product development. The six questions are:

  1. Are we starting product development to make our MFI more market driven?
  2. Are we setting about product development as a process?
  3. Can our MFI handle the strains and stresses of introducing a new product?
  4. Do we fully understand the cost structure of our products?
  5. Can we refine, repackage and relaunch existing products before we develop a new one?
  6. Are we falling into the product proliferation trap?
Author Wright, G.; Brand, M.; Northrip, Z.; Cohen, M.; McCord, M.; Helms, B.
Publisher MicroSave
Primary Language English (en)
Region / Country Global
Keywords Agricultural Microfinance, Product Development, Market Research
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The MBP Guide to New Product Development Toolkit 2001

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The Microenterprise Best Practices guide for new product development is designed for staff of financial institutions and non-governmental organisations interested in developing new products and services for their clients. The guide provides a systematic approach that organisations can follow to evaluate, design, test and launch a new product. It includes both technical guidance and practical exercises.

The actual time required for an organisation to follow the process outlined in this guide will depend on its specific circumstances, e.g., availability of time and money and the difference between the new product and current products. However, it generally takes 2 months for market research and design of a prototype and another 4-6 months for pilot testing. Worksheets and exercises are provided for all the phases and activities of the product development process. Institutions may not be able to work through them methodically but should devise a work plan and select the tools that are most needed.

Author Brand, M.
Publisher Microenterprise Best Practices Project
Number of Pages 165 pp.
Primary Language English (en)
Region / Country Global
Keywords Product Development, Agricultural Microfinance
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Exploring Client Preferences in Microfinance: Some Observations from SafeSave Article 2001

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This paper looks briefly at some preliminary data from SafeSave, a small MFI working in Dhaka’s slums with an unconventional product that is much more flexible than the dominant product in Bangladesh. SafeSave’s clients, who may be men, women or children, open individual accounts and are not organised into groups. They are visited every day (sometimes twice daily) in their own home or workplace, and all transactions are done during that daily visit, so the client does not have to visit a branch office nor attend meetings.

Such flexibility admits the possibility that different clients will choose saving, withdrawing, borrowing and repaying patterns that vary widely. SafeSave keeps detailed computerized records of all transactions of each client, so the authors were able to look in detail at the actual behaviours of a large sample of SafeSave clients. The data consisted of financial records (from the first transaction until February 2000) of 2,836 clients, all of whom have been clients of SafeSave for at least two months and are thus eligible to use the full range of SafeSave services. This short paper highlights some of the issues that emerge from the study.

Following a brief introduction, the paper begins by discussing the findings from the analysis of how SafeSave’s clients behave and uses case study examples to demonstrate the different points being made. The findings also raise a number of different questions, three of which are then discussed:

  1. Would greater flexibility attract microfinance clients who have been under-served so far? In particular, would poorer clients be attracted?
  2. Can flexible products be delivered to the poor?
  3. Can flexible products be delivered to the poor on a large scale and in other environments, or are they suitable only for small specialist slum-based MFIs?

Bangladesh, los clientes de SafeSave no siguen solo un comportamiento. Por el contrario, en una muestra de clientes se observa un conjunto total de posibles comportamientos que se ilustran en el artículo a través de gráficos y casos de estudio.

El análisis de estos casos de estudio demuestran la gran variedad de necesidades y oportunidades para las que los habitantes de las barriadas pobres utilizan los servicios financieros. También demuestran que cuando se les proporcionan servicios flexibles, los utilizarán de maneras diversas, igual que los menos pobres.

Estas dos observaciones respaldan un creciente consenso en los círculos de las microfinanzas de que los productos y sistemas de provisión deben ser más sensibles a la demanda. En teoría esto puede hacerse ampliando la gama de productos, primero abierto y luego contractual (como hace otra IMF llamada ASA, en Blangladesh), a sus préstamos corrientes, o a través del desarrollo de un único producto excepcionalmente flexible, como lo demuestra este caso de SafeSave.

Asimismo, este análisis plantea una serie de interrogantes, las cuales hacen referencia a lo siguiente:

  • si los pobres se sentirán más atraídos por los servicios flexibles;
  • si se pueden ofrecer productos a los pobres de manera segura y sostenible;
  • y si se pueden ofrecer productos flexibles a los pobres en una gran escala y en otros entornos.

Las mismas, se responden en el artículo a manera de conclusión.

Author I.Martin; S.Rutherford y M.Maniruzzaman
Publisher CGAP Secretariat y el Banco Interamericano de Desarrollo (BID)
Number of Pages 12 pp.
Primary Language English (en)
Region / Country Global
Keywords Agriculture Credit, Financial Services, Sustainability, Client Demand
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The demand for financial services by the rural poor Document 2000

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This policy brief summarises lessons learned from IFPRI's multicountry programme on rural finance and household food security. It points out that the notion that the poor are not creditworthy or cannot save has been laid to rest by the number of successful financial institutions that are providing savings, credit and insurance services to poor people in developing countries.

To satisfy the demand for financial services by the poor through institutional and product innovation is not possible without a thorough appreciation of the issue of food insecurity. For example, in poor households the spheres of consumption, production and investment are inseparable in the sense that consumption and nutrition are important to a household's ability to earn income. Thus consumption loans should be regarded as working capital loans which maintain the production factor labour.

Research by IFPRI on the demand for financial services points out that product innovation that responds to the food security motives of rural households can lead to higher outreach and higher impact on the poor. However, policy makers also need to recognise that while the poor are creditworthy and able to save and insure, financial institutions may still fail to cover their costs, even with improved products.

Why bother with product development? Document 2000

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This briefing note emphasises that microfinance is still too "product driven" and needs to change to a market driven approach that will identify and meet customers needs on a profitable basis. Microfinance institutions are reminded that in the commercial world, companies that have simply marketed a product without reference to customers' requirements have soon closed.

The note concludes with details of all the materials that are available on the MicroSave-Africa website to help institutions improve their approach to product development.

Beyond basic credit and savings: Developing new financial service products for the poor Article 1997

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As the microfinance revolution continues, increasing numbers of financial institutions are seeking to diversify the financial services they offer to their clients. In particular there is a growing awareness that improved client-friendly savings facilities provide an essential service for the poor, while at the same time providing more capital for the institution. This paper examines the experience of BURO Tangail, a Bangladeshi microfinance institution committed to providing flexible and responsive financial services to its clients and operating in what is perhaps the most competitive market in the world of microfinance.

The following steps are followed by BURO Tangail when developing a new product:

  1. Research and identify needs and opportunities.
  2. Design and pilot test.
  3. Monitor and evaluate the pilot test.
  4. Make revisions and scale-up the implementation.

 

The paper describes a number of interesting ideas from BURO Tangail and other sucessful financial institutions. For example, the use of Customer Consultative Groups and giving products easily recognisable trade marks and product names such as "Savings of the rural community"(BRI) or "Save to increase your chances" (BAAC).

Author Graham A. N. Wright
Publisher MicroSave
Number of Pages 14 pp.
Primary Language English (en)
Region / Country Global
Keywords Financial Products, Access To Credit
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Behavioural Interventions That Advance Financial Inclusion Case Study

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Financial service providers (FSPs) are continually looking for innovative ways in which they can design and deliver financial services to reduce cost and increase the overall value of these services to customers. In this context, FSPs are increasingly translating new insights from behavioral science – particularly on financial decision-making – into practical and implementable interventions. Such interventions have proven to effectively reduce the cost of acquiring new customers, improve the retention of existing customers and reduce the occurrence of customers that use financial services but that increase the cost of providing those services (e.g. through inactive bank accounts or low savings balances).

A recent study identified 18 unique behavioral interventions that FSPs can implement to influence the savings, credit, payment and insurance decisions of individuals. These interventions can be implemented with customers across several typical promotion, sales and servicing interaction points. In this brief, the interventions have been grouped into four broad areas:

  1. Client choice architecture;
  2. Commitment features;
  3. Pricing and financial benefits;
  4. Client communication.
Author Herman Smit and Rinelle Chetty
Publisher insight to impact (i2i)
Number of Pages 7 pp.
Primary Language English (en)
Region / Country Global
Keywords Client communication; Financial Inclusion
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