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MicroSaveMarket-led solutions for financial services
MicroSaveMarket-led solutions for financial services
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Microfinance in East Africa
WaterAid Regional Workshop Embedding Microfinance in Sanitation Programs
Ledger Bahari Beach Hotel, Dar es Salaam16th May 2014
By George Muruka, Senior Specialist: Microfinance and Livelihoods at MicroSave
MicroSaveMarket-led solutions for financial services
Sanitation Situation There is an urgent need to facilitate
access to improved sanitation facilities!
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MicroSaveMarket-led solutions for financial services
Types of Sanitation FacilitesSanitation Facilities ContinuumUnimproved Facilities Improved Facilities
Moving people from using …
•No facilities, • bush or field (open
defecation)• Buckets
To using improved facilities such as…
•Facility• Pit latrine
• Open pit
• Hanging toilet or hanging latrine
• Pit latrine without slab,
• Shared or public facilities of any type
• Pit latrine with slab
• Ventilated improved pit (VIP) latrine
• Composting toilet
• Pour-flush
• Flush i.e. not to piped sewer system/ septic tank/ pit latrine
• Flush or pour-flush to:
• Septic tank• Piped sewer system
MicroSaveMarket-led solutions for financial services
Microfinance as a development tool
• Microfinance is the provision of a broad range of financial services to poor/low income people to manage their livelihoods.
• From microcredit to microfinance: Microcredit refers to credit only. But the poor also need all financial services and therefore microfinance.
• Microfinance services include: savings, loans, micro-insurance, livelihoods financing, money transfer and payments etc.
• Deployment and access is usually through multiple delivery channels e.g. branches, ATM, mobile phones,
• Currently theme, financial inclusion, focuses on banking the unbanked. Regional Context:
Low access to formal financial services
(About 25% of adults accessing formal financial services. 6 EA
countries , pop. est. 345 million)
MicroSaveMarket-led solutions for financial services
Financial Sector Overview
East Africa Region
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MicroSaveMarket-led solutions for financial services
Microfinance: Country Context 1/5 (Info. 2010 to date)
TANZANIA (pop. est. 49 million)BanksBoT (www.bot-tz.org)
29 Few mass market banks e.g. NMB
MFIs 40+ mf service providers2 Regulated MFIs
Focus on meeting prudential requirements
Member Based
7+ Community BanksSeveral SACCOs/SACAs
Great potential but yet to diversify offerings
Network TAMFI (www.tamfi.co.tz)
Potential partner to access MFIs
Access to formal financial Services
17% • Mobile money yet to change situation
• Rural livelihoods and low population density hinders growth
Sanitation promoters
• Government projects
• NGO projects• CBOs members
own financing
• Limited private sector financing
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MicroSaveMarket-led solutions for financial services
Microfinance: Country Context 2/5
KENYA (pop. est. 44 million)BanksCBK (www.centralbank.go.ke )
43 Some mass banks e.g. Equity, K-Rep, Cooperatives, Jamii etcOthers have mf units/depts
MFIs 50 Multiple national & regional credit only MFIs, 6+ regulated
Member Based 5,000+ SACCOs Strengthening of regulations e.g. 200 SACCOs with FOSA
Network AMFI(www.amfikenya.com)
Strengthened by efforts on MFI regulations and microfinance banks membership
Access to formal financial Services
32% Mobile money changing the dynamics
Sanitation promoters
Largely Government, NGOs, CBOs support
Substantial private sector financing being experienced
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MicroSaveMarket-led solutions for financial services
Microfinance: Country Context 3/5
UGANDA (pop. est. 35 million)BanksBoU (www.bou.or.ug )
23 Few mass banks e.g. Centenary
MFIs 124 (10+regulated deposit taking )
Focus on rural and per-urban traders
Member Based Multiple & unregulated rural SACCOs, weakened by government funding
Weak control system and low staff capacity
Network AMFIU (www.amfiu.org.ug)
Strong network
Access to formal financial Services
32% Growing access to mobile money services (MTN, Airtel etc)
Sanitation promoters
Government, NGOs, CBOs
Limited private sector financingMore efforts required
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MicroSaveMarket-led solutions for financial services
Microfinance: Country Context 4/5
ETHIOPIA (pop. est. 91 million)Banks 17 3 state, 70% of assets, high
liquidity, low interbank lending, CBE largest branches
MFIs 30 23 regulated, 1+ million clients, 3-5% interest on savings, except from income tax. Largest 4 = 88% of savings, 83% of credit
Member Based Limited SACCOs
Farm produce cooperatives,
Network AEMFI(www.aemfi-ethiopia.org)
Strong network, sector training and publication
Access to formal financial Services
?? ??
Sanitation promoters
Government housings program
Limited private commercial sector driven sanitation financing 9
MicroSaveMarket-led solutions for financial services
Microfinance: Country Context 5/5
RWANDA (Pop. 13 million)Banks 9 3 National, 6 Foreign
MFIs 62+ MFI organisations (multiple legal forms)
• Concentration around Kigali• 65 branches, 27% of total
outlets
Member Based
Umerenge SACCOs • A central bank fin. access program reach rural areas
• Mobile bank linkage
Network AMIR (http://amir.org.rw)
62 members, FE and value chain financing projects
Access to formal services
30% Highest around Kigali
Mid income by 2020, and 80% access by 2017
Sanitation promoters
Largely driven by public and NGOs
SACCO program and MFIs are highly potential
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MicroSaveMarket-led solutions for financial services
Microfinance Services Suppliers vs legal status
1. Members based institutions e.g. SACCOs, Self help groups (SHGs) and Community Banks. Typically represent communal efforts to pool and access financial services amongst a defined membership.
2. Credit only MFIs: often registered as NGOs
3. Deposit Taking MFIs/Microfinance banks: Regulated by central bank in respective countries
4. Retail Commercial Banks targeting mass market/bottom of the pyramid/the low income market segment. Fully regulated by central bank
MicroSaveMarket-led solutions for financial services
Sanitation-finance approaches /Products
Household level:1. Toilet/sanitation facilities construction from own funds
2. Village solidarity & participatory toilet construction financing (in kind contributions + loans e.g. SEDIT VICOBA program, traditional NGOs programs
3. MFIs loans through solidarity groups for construction, repairs, sewage connections.
Community level (Sanfin for scaling up sanitation):1. Co-financing: NGOs grants and CBOs cash and in-kind
contribution e.g. Maji na Ufanisi in Kenya.
2. Sanitation Fund: Mix of savings groups table banking (savings/loans) + external grants/loans e.g. CCI Jenga fund
3. Sanitation Enterprises e.g. Cash flow based loans by banks and MFIs to individual entrepreneurs/registered CBOs
MicroSaveMarket-led solutions for financial services
Embedding & Scaling Up Sanitation Microfinance
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MicroSaveMarket-led solutions for financial services
Why the slow approach to financing sanitation?
1.Limited understanding of the sanitation sector/Marketo FIs are familiar with business and trading sectorso Lack of strategy on sanitation financingo Low staff capacity
2.Unclear regulatory environmento Unclear policy especially on private systemso However, public actors slowly appreciating role of private
operators due to limited public funds
3.Sanitation service operators slowly commercializing their activities
o Weak legal structure e.g. CBOs, FBOs, individuals etco Government funding expectationo Excessive focus on advocacy, capacity building/training o NGOs are not familiar with the demands of FIs e.g.
Financial proposalo Limited commercialization of WATSAN activities
MicroSaveMarket-led solutions for financial services
Scaling up Sanitation financing1. Integrating sanitation and Housing schemes
o Targeted sanitation/housing programs by NGOs/CBOs o Funding CBOs to manage public sanitation facilities e.g. UN
Habitat, TAFSUS & Municipal Council, Tanzania.o Need for capacity building to CBOs
2. Smart subsidy schemes with commercial banks & MFIso Output based financing for community water/Sanitation
projects e.g. WSP and K-Rep Bank in 2005. Program invested US$ 1.1. m, Community water projects received development loans from US$ 75,000 –170,000), K-Rep committed US$ 4 million to scale up the program.
o Direct financing of sanitation facilities to reduce capital cost. Leading to reduction of loans amounts required by the borrowers
3. Loan guarantee schemes for community project o Collaboration between Bank and Sanitation NGO e.g. Family
Bank & Practical Action (Kenya), US$ 65,000 guarantee fund.
MicroSaveMarket-led solutions for financial services
Embedding Sanitation Microfinance Process
Product Roll outProduct Roll out
Processes still under development _Sanfin project in Tanzania
Review of Strategy & Products
Review of Strategy & Products
Product Development/Refinement(6 months)
Product Development/Refinement(6 months)
Sanfin Team (MFIs & San NGOs)
Pilot Test6 – 12 months
Pilot Test6 – 12 months
• MFI/NGOs buy-In,
• Staff Training ,• Demand mapping
& creation(continuous)
• MFI/NGOs buy-In,
• Staff Training ,• Demand mapping
& creation(continuous)
MicroSaveMarket-led solutions for financial services
CBO Managed Public Toilet Enterprise
MicroSaveMarket-led solutions for financial services
CBOs Receipts and Transaction Records
MicroSaveMarket-led solutions for financial services
Sanitation Infrastructure Development
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MicroSaveMarket-led solutions for financial services
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THANK YOU