Publication Type: Publication

THE CASE FOR RESPONSIBLE INVESTING IN DIGITAL FINANCIAL SERVICES (EM COMPASS NOTE 67)

17 Apr 2019

Together with private sector investors, IFC has been leading a global effort to develop new guidelines for responsible investing in digital finance. These guidelines leverage IFC’s significant experience with the Equator Principles and responsible investing in micro, small, and medium enterprises (MSMEs) by focusing on strengthening governance, risk management, consumer protection, and financial well-being for the unbanked and underserved—as well as IFC’s experience as advisor and investor in the digital finance space.

Originally posted on IFC’s website. 

THE 2019 FINACCESS HOUSEHOLD SURVEY

09 Apr 2019

The 2019 FinAccess household survey is the fifth in a series of surveys that measure drivers and usage of financial services in Kenya. The 2019 report was officially launched on April 3rd 2019. The four previous surveys of 2006, 2009, 2013 and 2016 have shown that Kenya has made significant progress in fostering financial inclusion, with the latest survey providing a thirteen year perspective on Kenya’s financial landscape.

Formal financial inclusion has risen to 82.9 percent, up from 26.7 percent in 2006, while complete exclusion has narrowed to 11.0 percent from 41.3 percent in 2006. The disparities in financial access between rich and poor, men and women, and rural and urban areas have also declined remarkably. Key drivers of these changes include: the growth of mobile money, government initiatives and support, and developments in information and communications technology (ICT).

Originally posted on FSD Kenya’s site. 

CREATING IMPACT—THE PROMISE OF IMPACT INVESTING

09 Apr 2019

Investors’ appetite for impact investing—in which they seek to generate positive impact for society alongside strong financial returns—could total as much as $26 trillion, according to the report Creating Impact: The Promise of Impact Investing.

The report is the most comprehensive assessment so far of the potential global market for impact investing. It estimates that as much as $269 trillion—the financial assets held by institutions and households across the world—is potentially available for investment. Channeling just 10 percent of this amount into projects focused on improving social and environmental outcomes would go a long way toward providing the necessary funding for the world to achieve the Sustainable Development Goals and to shift to a lower-carbon future.

The report estimates that in public markets involving stocks and bonds, investor appetite could be as high as $21 trillion. An additional $5 trillion could come from private equity, non-sovereign debt, and venture capital. Turning this appetite into actual investments will depend on the creation of investment opportunities and investment vehicles that enable investors to pursue impact and financial returns in ways that are sustainable.

Originally posted on IFC’s website. 

GLOBAL PERSPECTIVES ON RESPONSIBLE INVESTING

20 Mar 2019

Over the course of the past year, Aon has noted a dramatic upsurge in the number of institutional clients who are exploring or implementing responsible investing (“RI”) initiatives. Just a few years ago, institutional investors with RI programs were few and far between. Today, Aon has many clients in various stages of RI program development, from educational initiatives for investment staff and boards to full on deployment of RI policies and procedures. To stay current with the evolving landscape, they launched a global responsible investment survey to capture current attitudes towards and developments in investors’ RI thinking, and share those results in this paper.

Originally posted on Aon’s website. 

REINVENTING BUSINESS THROUGH DISRUPTIVE TECHNOLOGIES

18 Mar 2019

Disruptive technologies are transforming business models in Emerging Markets. This report examines eight sectors – Power, Transport, Water, Digital Infrastructure, Manufacturing, Agribusiness, Education, and FinTech – and also discusses the impact of technology on gender, climate and other broader thematic topics.

STATE OF THE INDUSTRY REPORT ON MOBILE MONEY 2018

28 Feb 2019

Now processing over $1.3 billion a day, the mobile money industry added a record 143 million registered customers in 2018. In a dynamic and fast-evolving ecosystem, providers are attracting new investments and forming strategic partnerships, leveraging data and innovative financial technologies, and developing robust and interoperable payments systems to diversify their revenue, product offerings and customer base. The progress, challenges and most ground-breaking industry trends are explored in this year’s State of the Industry Report on Mobile Money.

The report was posted on GSMA’s website. 

SAFEGUARDING RULES FOR CUSTOMER FUNDS HELD BY EMIs: A TECHNICAL NOTE

06 Feb 2019

Technical note exploring regulatory options for protecting consumers’ mobile money

The proliferation of nonbank electronic money issuers (EMIs) presents opportunities for financial inclusion for poor people by expanding the reach of financial services and enabling poor customers to participate in their country’s economy. However, with these benefits come important risks, including loss of customer funds and unavailability of customer funds upon demand. Inability to access funds upon demand may be due to insufficient liquidity or operational failures, while loss of customer funds may be due to loss of the e-float resulting from imprudent investment or insolvency of (i) the EMI or another fiduciary party such as a trustee holding the funds on behalf of the customers or (ii) a bank that holds part or all of the e-float.

This Technical Note takes a deep dive into safeguarding customer funds held by EMIs. It addresses regulatory requirements of fund safeguarding that are meant to protect customer funds. These requirements fundamentally aim to ensure that e-float is sufficient, safe, and liquid to meet customers’ demand for converting electronic money into cash and may include maintaining funds in bank accounts, spreading them across several banks to reduce the concentration risk, and/or investing them in other safe, liquid assets such as government securities. The paper details how some regulations address the concentration risk for the EMI and the bank holding the e-float, identifies the pros and cons of several regulatory options for fund safeguarding, and references countries that use the options. These countries include Bangladesh, Brazil, Colombia, El Salvador, Ghana, India, Indonesia, Jamaica, Kenya, Lesotho, Liberia, Malawi, Malaysia, Myanmar, Namibia, the Philippines, Rwanda, Sri Lanka, Tanzania, Turkey, and Zambia and the countries in WAEMU.

For a review of country examples, see “Safeguarding Rules for Customer Funds Held by EMIs: Country Examples.”

Originally posted on FinDev Gateway’s website. 

CGAP FUNDER SURVEY 2017: TRENDS IN INTERNATIONAL FUNDING FOR FINANCIAL INCLUSION

06 Feb 2019

Annual survey shows increased commitments and integration into sustainable development agenda

One of the key takeaways from the latest CGAP Funder Survey is that international funders committed $42 billion to financial inclusion in 2017—a double-digit percentage increase from the prior year. For the first time in five years, public funding has grown faster than private funding.

At the same time, the nature of funders’ engagement is shifting to reflect their broader development priorities. Funders are increasingly expected to position financial inclusion as a cross-cutting priority and seek synergies in their programming to achieve the Sustainable Development Goals as well as financial inclusion outcomes.

And while debt funding continues to be the main funding instrument, equity funding has been on the rise, and grants have declined for the first time in a decade. While this decline in grants is observed across all regions, it is most pronounced in Europe and Central Asia and Latin America and the Caribbean.

This Brief covers the highlights from the 2017 CGAP Funder Survey, which reports funding commitments from 54 international funders, both public and private, as of the end of 2017.

Originally published on the FinDev Gateway’s website. 

THE GLOBAL RISKS REPORT 2019

06 Feb 2019

The 14th edition of the Global Risks Report, prepared by the World Economic Forum with the support of Marsh & McLennan Companies and other partners, examines the evolving macro-level risk landscape and highlights major threats that may disrupt the world in 2019 and over the next decade.

The Global Risks Report 2019

John Drzik, President, Global Risk and Digital, Marsh

The most striking aspect of this year’s report is the level of concern about geopolitical issues. Of the top ten risks expected to deteriorate in 2019, seven are connected to the political environment. Over 90% of respondents expect economic confrontations/frictions between major powers to deteriorate in 2019, with a similar number anticipating the erosion of multilateral trading rules and agreements.

Top Risks Expected to Increase in 2019

Source: World Economic Forum, Global Risks Report 2019

Navigating a fractious world

New political agenda and regulatory uncertainty are both making it harder for companies to carry on replicating the business models and successes they have enjoyed in recent decades and inhibiting their ability to make crucial business decisions and investments.

At a time when opportunities from emerging technologies are demanding boldness and agility, an uptick in state-affiliated cyber attacks is aggravating points of failure within company operations, infrastructure, supply chains and customer interactions.

Extreme weather and climate change are undermining the expectations of many businesses, requiring not only better resilience measures but also bolder action to get ahead of likely regulatory developments and negative customer reactions.

Global Risks Landscape

Source: World Economic Forum, Global Risks Report 2019

And let’s not underestimate the psychological impact of all this volatility and uncertainty, both in the workplace and society at large. The imperative for enhancing employee wellbeing has seldom been higher.

Is your company responding effectively to the risks it is facing? Find out more by reading the Global Risks Report 2019.

Originally published on Marsh & McLennan’s website. 

THE STATE OF MICROINSURANCE 2018: THE INSIDER’S GUIDE TO UNDERSTANDING THE SECTOR

16 Jan 2019

There are just 12 years remaining to achieve the UN Sustainable Development Goals (SDGs), and urgent action is needed if no-one is to be left behind. This report, and future editions, will focus on providing concrete examples of how inclusive insurance is contributing to the broad development agenda in a structured way that links directly to selected SDGs. It builds on work published by Microinsurance Network (MiN) members in the 2017 report Inclusive Insurance and the Sustainable Development Goals, and responds to the need to demonstrate how practice supports theory. Around the world, MiN members are already playing a leading role in providing innovative, affordable insurance products.

Originally published on Microinsurance Network’s website.