Below are the latest and greatest articles, reports, and research from the field of microfinance and economic development. From remittances in Asia to microinsurance in Africa, it’s definitely been an interesting week!
Center for Financial Inclusion, "M-Pesa Launches in India," May 15, 2013
M-Pesa launched in India last month and will be conducted through a partnership between Vodafone and ICICI Bank. The service will roll out in phases, beginning with the eastern areas of the country. The first phase includes a network of 8,300 agents and will include cash deposits, withdrawals, money transfers, airtime top-ups, bill payment services, and the ability to make purchases at select stores.
Michael J. McCord, et al., The Landscape of Microinsurance in Africa - 2012, The Microinsurance Center, May 16, 2013
ABSTRACT: This landscape study aims to describe the current state of, and recent trends in, microinsurance in Africa. A total of 214 respondents from 39 countries where microinsurance was identified provided data for 511 providers and 598 products. The study identifies gaps in access to and the supply of microinsurance, as well as key bottlenecks to sustainable expansion of the sector. Its ultimate goal is to help industry stakeholders – insurers, delivery channels, policy makers, regulators, donors and others – identify areas for improvements that will eventually lead to better products and services for low-income clients.
The Wall Street Journal, "Number of the Week: Class of 2013, Most Indebted Ever," May 18, 2013
The average debt load for each borrower receiving a bachelor’s degree this year is about $30,000, according to an recent analysis of government data. That number has doubled over the course of a recent graduate’s lifetime. Even adjusting for inflation, the average debt burden was half that size 20 years ago. According to the Federal Reserve, total outstanding student-loan debt stood at $986 billion at the end of the first quarter of this year, representing an increase of 2.1% from the previous quarter and nearly 50% from the same quarter in 2009.
The Atlantic, “Poor People Are Now More Likely to Live in Suburbs Than Cities," May 20, 2013
This week the Brookings Institution released a new study of population and income trends that finds the US suburbs are showing a rapid increase in poverty rates. According to the research, those living in poverty in the suburban areas grew 64 percent between 2000 and 2010, while many major cities exhibited a decrease in poverty levels. More densely populated cities still have high poverty rates but the total number of poor living in suburban area exceeds that in urban area, representing a reversal in nearly a century's worth of population trends.
IFAD and The World Bank, Sending Money Home to Asia, May 20, 2013
According to a new report, Asian migrants sent approximately US$260 billion to their families in 2012. However, many of the benefits of these cash flows did reach those in rural areas due to high transaction fees and limited financial service availability. High fees (on average 8.35%) also limit the amount of funds going to reduce poverty and providing for recipient families. The report examines how to improve the market for remittances to Asia. Asia represents one of the largest remittance markets in the world, affecting over 70 million families. In Afghanistan, Bangladesh, the Philippines, and Nepal, remittances account for 10% of GDP; in Tajikistan, they may total more than 50% of GDP.
In case you missed it…
These items were recently released in the past few months but are relevant to conversations we’re having at FAI.
Gabriel Davel, Regulatory Options to Curb Debt Stress, CGAP, March 15, 2013
This Focus Note argues that it is preferable to implement appropriate monitoring mechanisms and regulatory interventions at an early stage in credit market development, to detect potential debt stress and prevent reckless lending practices, thereby avoiding risks to financial markets, consumers, and the regulator’s credibility. Davel divides crises of reckless lending and over-indebtedness into five stages: a) preconditions; b) commercialization and expansion; c) debt build-up with low default; d) default and contraction; and e) institutional failure and potential contagion. The first three phases are the run-up to the crisis, while in the last two, the crisis has hit. Davel argues that it is the responsibility of regulators and lenders to recognize the signs while the market is still in one of the first three phases.
The World Bank, The Global Findex Database: Financial Inclusion in Europe and Central Asia, April 2013
In Europe and Central Asia 45 percent of adults have an account with a formal financial institution though just 7 percent report having saved formally in the past year, according to new data from the Global Financial Inclusion (Global Findex) database. This note describes how individuals' use of financial services differs significantly by gender, education, employment status, and other individual characteristics. The note also provides insight into how adults in the region save, borrow, make payments, and manage risk.