This blog post summarizes a quick review of commercial investments in mobile financial services and branchless banking. We focused our review on equity deals between 2005 and 2010 involving mobile payment companies, agent companies, payment platforms and others providers that we knew were targeting the financially excluded in developing countries.
Transparency on funding for microfinance made significant progress over the last decade. There are strong reasons to believe that transparency contributes to more effective and more responsible funding.
Public funders have been instrumental in promoting and developing the microfinance industry; close to 70% of cross border public funding going into microfinance comes from public sources. Currently, the financial inclusion world is abuzz with excitement about branchless banking and the potential of services like M-PESA in Kenya to dramatically reduce costs and increase access to financial services. Yet branchless banking is a new delivery channel mainly implemented by private stakeholders such as for-profit mobile network operators or commercial banks.
MIVs constitute the largest group of MIIs. MIV investment levels quadrupled between 2006 and 2008, and today, according to Symbiotics and MicroRate 2011 MIV surveys, more than 100 MIVs manage total assets of around US$7 billion.
There is broad recognition within the development community that donors have contributed significantly to building microfinance institutions that serve the poor around the world. But isn’t it time donors updated their investment portfolio to reflect new thinking and the new reality on the ground? It takes a broader ecosystem of providers to deliver the diverse set of services that the poor need. Strategies that remain focused on only one of these providers – MFIs – are missing the bigger picture.
At the mid-year Social Investor Roundtable, the Sangam Group (CEOs of the 10 largest MIVs) and annual Development Finance Institutions (DFI) consultation on responsible finance agreed on a “to-do” list of six concrete actions for investors.
Despite evidence of financial and impact tracking, most DFIs do not disclose data on financial performance. Reporting on social impact is even harder to obtain. We are a long way from full transparency.