CGAP Annual Report 2013

This Annual Report presents CGAP’s work in Fiscal Year 2013 (1 July 2012 through 30 June 2013), the last year of the previous five-year strategy framework.

As a global partnership working for the public good, CGAP played a proactive role in shaping and adapting to the developments over the past five years. For example, CGAP was an early proponent in accelerating new business model innovation to reach more people at lower costs. As technology-based solutions emerged and were tested over recent years, CGAP was an early leader in exploring various business models and generating new knowledge on branchless banking as a way to overcome some barriers to financial inclusion. We supported new players to the area of financial inclusion while at the same time influenced key policy makers and regulators and motivated them to consider branchless banking and other new ideas as possible solutions to increasing financial access for the poor.

We helped to develop a number of viable models for financial services for the poor, many of which are being adopted by mainstream financial service providers, in line with CGAP’s advice. One example is CGAP’s pioneering work in Pakistan in 2009 with mobile operator Telenor and Tameer Microfinance Bank to launch easypaisa, the country’s first branchless banking service, which now processes well over 2 million transactions a month in bill payments and money transfers.

In the final two years of the Strategy IV period, we amended the strategy to include a renewed focus on the clients themselves—and our need to understand their financial needs better. We championed the need to refocus on client-centric solutions, based on recognizing the different needs of different segments of the poor. In particular, we sought to better understand how to reach two specific underserved segments: the extreme poor and youth.

Recognizing that microfinance is not a cure-all and isn’t always the most appropriate solution for all poor households, particularly those that are among the poorest, CGAP began to explore new models on how to help poor families graduate out of extreme poverty and into sustainable livelihoods. Through the CGAP–Ford Foundation Graduation Program—a global effort to understand how safety nets, livelihoods training, and microfinance can be sequenced to create a pathway for the poorest out of extreme poverty—we have gained greater knowledge on the lives of the poorest and what it takes to address their needs. Similarly, CGAP’s work around youth has focused on the role that financial services, and savings in particular, play in the lives of a growing and often disenfranchised demographic group—the estimated 1.2 billion young people ages 15–24 in the developing world.

In many ways, CGAP’s commitment to a deeper understanding of poor clients and to the responsible delivery of appropriate services is a common theme throughout all of our work.

Advancing financial inclusion through a better understanding of the lives of the poor must be grounded in rigorous data, so that progress can be measured objectively and credibly. We have supported, and continue to support, several initiatives to strengthen the global data architecture on financial access. Through our involvement with the G20’s Global Partnership for Financial Inclusion (GPFI), we have supported creation of the Basic Set of Financial Inclusion Indicators, which aims to promote harmonization of indicators and their definitions to make cross-country comparisons possible. CGAP also continues to collaborate closely with the Microfinance Information Exchange (MIX), a data service on the performance of MFIs.

At the policy level, CGAP helped to shift global and national policy agendas toward a new balance between financial inclusion and stability. We were early in our support to global and national-level policy makers, for example, as early as 2010 in the G20 context and with the global financial SSBs, as they turned their attention to building inclusive financial systems. As an Implementing Partner of GPFI, CGAP has supported the G20’s growing role in promoting financial inclusion globally. Inspired by the G20’s call for relevant global SSBs to consider how they can contribute to encouraging financial inclusion, the five main SSBs have explicitly recognized the compatibility of financial inclusion with their core mandates. Many SSBs have also taken concrete steps on financial inclusion in the past years, and CGAP collaborated on many of these steps.