Africa Finance Forum Blog

In Kenya, Financial Inclusion Shifts from Access to Advanced Use

15.10.2018B. Cheronoh, Research Associate & N. Van de Halle, Program Manager - InterMedia

This blog was originally published on the CFI Website.

New data shows mobile money is increasingly becoming a gateway to more advanced financial services in Kenya.

Financial access in Kenya is already very high, especially when compared to other countries in Africa and Asia. In this setting, the momentum around expanding access has plateaued, but a new narrative is taking hold – around deepening engagement with financial services, more active use, and use of a wider range of more advanced services. Although there was no increase in the share of the population that holds a registered financial account, the 2016 Financial Inclusion Insights (FII) data shows that financial engagement is becoming more meaningful for those customers who are already included.

More specifically, in 2016 almost 7 in 10 Kenyan adults held a registered account with a formal financial institution. Mobile money continued to lead in terms of access and account registration (Figure 1). In fact, approximately 97 percent of those who had a financial account in 2016 had a mobile money account – sometimes in addition to a bank and/or microfinance account. While growth in the number of registered users plateaued, advanced use of a registered account increased in 2016 (Figure 2). Such advanced usage includes saving, borrowing, paying bills, and other activities beyond person-to-person (P2P) transfers and cash deposits and withdrawals. Savings was the most common advanced use case for both bank and mobile money accounts, followed by bill pay and receiving wages. These findings show that mobile money services can fill a range of needs beyond P2P payments.

                                              Figure 1: Click here

                                              Figure 2: Click here

As the FII team examined these high-level numbers and dug deeper into the 2016 data, we identified several other important takeaways regarding the evolution of financial inclusion in Kenya:

Mobile money continues to lead other services at providing financial access and use cases, and is increasingly becoming a gateway to more advanced services, such as savings and credit, provided by banks that are linked to mobile money accounts on the backend. In 2016, mobile money access among adult Kenyans was 81 percent while bank access was only 31 percent. Similarly, 67 percent of adults were registered mobile money account holders while only 28 percent held accounts registered directly with a bank. Easy accessibility to mobile money points-of-service (PoS) relative to banking PoS locations has likely contributed to the success of mobile money. Almost 62 percent of Kenyans surveyed said they live within a kilometer of mobile money agents, while only 31 percent and 14 percent of Kenyan adults were within a kilometer of a banking agent and a bank branch, respectively.

The landscape of providers and products is changing rapidly as banks make inroads towards attracting and retaining users through innovative mobile money platforms and partnerships. Over the last few years, banks in Kenya have resorted to innovative ways of expanding mobile-enabled financial services, including through two different models: partnerships with mobile network operators (MNOs), and running a Mobile Virtual Network Operator (MVNO), which allows them to offer all of their financial services through a mobile platform. These new models allowed services such as Equitel and KCB M-Pesa to attract active registered mobile money account users who have historically used other mobile money products, such as M-PESA and M-Shwari, and can now use those provided by their banks.

Mobile money adds value to users’ financial lives by providing a convenient credit resource and savings utility. Our annual survey found that use cases for mobile money ran the gamut from facilitating payments, particularly P2P, to supporting borrowing and saving activities. In fact, approximately eight in ten Kenyan adults were savers in 2016, and out of which 54 percent used mobile money as a mode of saving. Similarly, more than six in ten adults had borrowed money, and 26 percent of which used mobile money as a loan source, compared to only 12 percent for banks.

Despite these clear advantages and use cases, FII data indicates that some aspects of mobile money user experience could still be improved. In 2016, mobile money users’ most commonly cited challenges included service downtime and mobile money agents’ lack of cash flow.

Even with these developments, Kenyans continue to express a demand for greater access to credit and historically underserved populations continue to be excluded from formal financial services. Overall, levels of financial inclusion are lower among women, rural populations, and those living below the poverty line compared to their male, urban, and richer counterparts. The largest gap in active registered financial accounts (amounting to 27 percentage points) was between those above and those below the poverty line. This gap could in part be due to the fact that these populations have lower levels of mobile phone ownership and financial capabilities. For instance, FII data shows an almost 20 percent difference in advanced mobile phone use between those above and below the poverty line (90 percent versus 73 percent, respectively).

These gaps in Kenyans’ engagement with formal financial services could be reduced by programs that focus on providing Kenyans with identity cards. The number of Kenyan adults who held the necessary ID to open a financial account dropped from 91 percent in 2013 to 78 percent in 2016. Tellingly, not having the required state ID was the main reason cited in the FII Survey by men and women for not registering a mobile money account and the second most common reason for not registering a bank account. In April 2016, the government announced a plan to employ 1,200 additional registration clerks to help Kenyans acquire identity cards before the 2017 general election. It remains to be seen what effect targeting this barrier will have on the 2017 FII data.

Boosting financial literacy is necessary to ensure that newly financially included Kenyans are prepared to use financial services successfully. FII found that only 17 percent of Kenya’s adult population was financially literate in 2016. As financial products proliferate and become more complex, it is especially important that users and potential users have the skills they need to navigate their options and use services in a way that provides welfare benefits, rather than exposes them to consumer protection risks. It is worrisome for instance that according to the FII data almost one in five borrowers in Kenya did not know their interest rates, or the cost of their loans.

Even as Kenya continues to progress towards improved financial inclusion, driven by mobile money and deepening engagement with advanced services, more must be done to ensure these advances are truly inclusive and result in meaningful outcomes for all Kenyans. The FII team looks forward to seeing how programs targeting barriers, such as financial literacy and phone ownership, and how innovative partnerships between banks and MNOs may continue to impact the data in the coming years.

What recommendations for accelerating financial inclusion in Kenya do you derive from InterMedia’s Data Fiinder? We’d love to hear from you.

For more information regarding the FII team’s research in Kenya, read the 2016 Kenya Annual Report here, or contact Beatrice Cheronoh, Research Associate, Financial Inclusion Insights.

Financial Inclusion Insights is a research program funded by the Bill & Melinda Gates Foundation and designed to build meaningful knowledge about how the financial landscape is changing across eight countries (Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Tanzania and Uganda).

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About the Authors

Beatrice Cheronoh is a Research Associate in InterMedia and is based in Nairobi office. She currently assists with InterMedia's Financial Inclusion Insights (FII) survey in Kenya, as part of FII's multiyear research program in eight countries in Africa and Asia, conducted on behalf of the Bill &Melinda Gates Foundation. Her responsibilities include data management, data checks and conducting analysis with SPSS. She has experience in data processing and analysis, and a focus on socio-economic research. Beatrice is currently pursuing a Master of Science in Social Statistics from the University of Nairobi, and she earned her Bachelor of Science in Agricultural Education and Extension from the same university.

Nadia Van de Halle currently manages financial inclusion and consumer insights research and strategy for InterMedia, a global research firm with offices in Nairobi and Washington, DC. Previously, she managed Africa initiatives at Accion’s Center for Financial Inclusion. She has an expertise in consumer protection and standard setting for social impact and has a successful track record of fundraising and fieldwork in over ten countries. Nadia has a Masters in economics from Johns Hopkins University’s School of Advanced International Studies, BA in Political Science from the University of Pennsylvania.

African urbanisation – a changing dynamic

25.09.2018Gerald Gondo, Business Development Executive, RisCura Africa

This blog was originally published on the ESI AFRICA website.

On a recent trip to Morocco to attend a conference, I had the pleasure of being seated next to and in front of two young families on the aeroplane, both returning home to Morocco after visiting friends and family abroad. One father I chatted to was born and raised just outside Casablanca. An actuary by profession, he was quick to rattle off some facts and figures about his home country.

The conversation and attending the conference did get me thinking about the thematics synonomous with the African investment narrative, one of which is urban dwelling. In turn, the theme of urbanisation is synonomous with infrastructure.

The overall infrastructure gap in Africa, at an estimated US$90billion per annum, is widely acknowledged. Thus, investment practitioners specialising in infrastructure investment on the continent are increasingly alert to the need to match and tailor the provision of infrastructure funding to Africa's urbanisation realities, and how these realities differ from, or in some instances, closely follow the rest of the world's experiences. Many of the presentations delivered at the AVCA conference gave mention to this statistic. Whilst appreciating the fact that urbanisation will increasingly prove to be a vital and critical element to the transformation of African countries, comprehension of how the narrative of urbanisation has and will continue to evolve is key.

Whilst many of the private equity funds reported participation in extraordinary medium and long-term opportunities across Africa, suffice to say their investment returns could be enhanced if the requisite infrastructure was in place.

An article by Ester Boserup, titled Economic and Demographic Interrelationships in sub-Saharan Africa, comes to mind. The article posits that urbanisation for most African countries started out during their colonial periods in support of colonial economic needs, such as exports to Europe. Unlike the case for other regions, urbanisation was not brought about by, and did not bring about, industrialisation. Now, with increased investment from PE funds, urbanisation is starting to occur intrinsically as people move from rural to urban areas to develop their own economic activities and communities.

The Africa Development Forum succinctly supports this changing dynamic in Africa. Across a number of the continent's economic nodes, broad-based economic prosperity and population density are occuring together despite the infrastructural challenges. The collective challenge for African policy-makers is to allow for greater trade and linkages between their economies to create larger markets with better connectivity.

Of equal importance is the need to change the substance of the rural to urban development narrative. According to the Africa Development Forum rural and urban development should demonstrate mutual dependence with economic integration; in doing so, producing inclusive growth and development in both rural and urban areas. Whilst African cities are growing fast, there is a need for the urban infrastructure to support this growth, alongside the provision of adequate basic services to new settlements.

Basic services include, but certainly are not limited to, energy, roads, water, and information and communication technologies (ICTs). Long-term growth requires an efficient system of urban centres that include small, medium, and larger cities that produce industrial goods and high-value services, along with well-functioning transportation networks to link national economies with regional and global markets.

Of course, funding is always an issue, but a constructive development is the convergence between African pensions and savings with infrastructure provision. This is firmly underway, with over US$3,4 billion in capital raised for African infrastructure funds since 2012. Whilst this value only represents just under 4% of the annualised overall infrastructure deficit for Africa, it is a positive indicator of increased private sector involvement in the funding of infrastructure as an asset class.

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About the Author

Gerald Gondo serves as an Executive within RisCura Africa and is responsible for Business Development. Prior to joining RisCura, Gerald was also a founding partner of a specialist investment advisory and investment management business (Atria Africa) based in Mauritius. Gerald's passion to have first-hand experience in investing in Africa led him to join a leading pan-African asset manager (Imara Asset Management) where he had dual responsibility of being lead analyst on listed equities in Egypt, Morocco, Zambia and Mauritius whilst also building the fixed income capability of Imara Asset Management in Zimbabwe. He started his career in private equity investment in Sub-Saharan Africa (Business Partners) and has also worked as a credit analyst for a highly-rated specialist institutional fixed income boutique (Futuregrowth Asset Management), where he was responsible for credit analysis for corporate credit and securitisation issuances within South Africa.

Interest rate caps: The theory and the practice

12.09.2018Aurora Ferrari, Advisor & Oliver Masetti, Economist - World Bank

This blog was originally published on the World Bank Blogs' website.

Ceilings on lending rates remain a widely-used instrument in many EMDEs as well as developed economies. The economic and political rationale for putting ceilings on lending rates is to protect consumers from usury or to make credit cheaper and more accessible. Our recent working paper shows that at least 76 countries around the world, representing more than 80% of global GDP and global financial assets, impose some restrictions on lending rates. These countries are not clustered in specific regions or income groups, but spread across all geographic and income dimensions. However, interest rate caps in high income countries are mostly introduced to protect consumers from usury, while in low income countries they are more commonly introduced to make credit cheaper and more accessible. In Sub-Saharan Africa (SSA) interest rate caps are used by at least 17 countries. This includes upper middle-income countries such as South Africa, lower middle income countries such as Kenya, as well as low income countries such as Chad and Senegal.

Interest rate caps are not static, but are an actively used policy tool. Since 2011, we find at least 30 instances when either new interest rate caps have been introduced or existing restrictions have been tightened. Over 75% of those changes occurred in low- or lower-middle-income countries. In SSA, new caps were implemented in Kenya and existing caps tightened in WAEMU. This outweighs the five instances globally, including Zambia, when restrictions have been removed or eased and indicates that countries increasingly limit the maximum level of lending rates.

A taxonomy of interest rate caps

Interest rate caps come in many different forms. Restrictions used across countries vary substantially regarding what they cover and how they work. An innovative taxonomy presented in this paper classifies interest rate caps according to the following features:

•    Scope. A primary form of variation is the type of credit instrument/ institution and/or borrower they apply to. Caps can affect only a narrowly defined segment of the market (e.g. payday loans, credit cards, mortgages), cover loans by certain institutions (e.g. MFIs or credit unions) or cover all types of credit operations in the economy. WAEMU for example has a broad interest rate cap, while Nigeria applies a narrow cap that only affects mortgage rates.

•    Number of ceilings. Countries use either a single blanket cap for all transactions or multiple caps based on the type of the loan and/or socio-economic characteristics of the borrower. South Africa for example has multiple caps, while Kenya has a single ceiling.

•    Type. The level of the cap can be either defined as a fixed, absolute cap or as a relative cap that varies based on the level of a benchmark interest rate. An example for an absolute cap is the WAEMU, where the cap is set at a fixed 15 percent for banks and 24 percent for MFIs (and other credit institutions). In contrast, Kenya uses a relative cap set at 4 percentage points above the central bank’s rate.

•    Methodology. The level of the relative cap can be either defined as a fixed spread over the benchmark, as in Kenya, or as a multiple of the benchmark rate.

•    Benchmark. Most countries using a relative cap link it to the level of an average market rate, for example, the average lending rate over the past six-months. Alternatively, the ceiling can be defined as a function of the central bank’s policy rate. In Zambia, like in Kenya, the benchmark was the central bank rate, while for CEMAC it was the average market rate.

•    Binding. Independently of the type of benchmark used, caps can be binding or non-binding, i.e. they are below or above market rates. In countries where the primary aim is to prevent usury the ceilings are usually fixed at levels that affect only extreme pricing but leave the core market to operate with minimal implications. In contrast, if interest rate caps are used as a policy tool to achieve certain socio-economic goals, such as lower overall cost of credit, ceilings are set at binding levels intended to influence the market outcome. The caps in Kenya and the one used in Zambia are examples of binding caps, which were set at levels below prevailing market rates. In contrast, the various caps in South Africa are set at high levels.

•    Fees. Some interest rate caps also explicitly regulate non-interest fees and commissions of the loan. This is either done by setting separate limits on non-interest costs or by defining the interest cap in terms of an annual effective rate (APR) that includes all fees and charges. The first approach is taken by the South African Reserve Bank, which publishes a comprehensive list of maximum fees applicable to different types of credit in addition to the respective interest rate caps. 

This taxonomy is illustrated in the figure below:

Effects of interest rate caps

Establishing the causal effects of interest rate caps is challenging due to the heterogeneity of caps used and endogeneity concerns, but economic theory points to several possible side effects. Country case studies on Kenya, Zambia, Cambodia, the West African Economic and Monetary Union (WAEMU), India, and the United Kingdom show that effects and side-effects depend on the type and specification of the cap.

•    Caps set at high levels do not seem to affect the market and can help limit predatory practices by formal lenders. Non-binding caps, i.e. caps set well above market rates, affect only extreme pricing with little impact on the overall market. If interest rate caps include regulations on non-interest fees and the non-regulated lending market is limited, then caps are a potential way to remove predatory lenders in the formal sector.

•    The effectiveness of caps is often undercut by the use of non-interest fees and commissions. The increased use of non-interest charges often reduces price transparency and makes it more complicated for borrowers, especially those with limited financial literacy, to assess the overall costs of the loan.

•    Binding caps set well below market levels can reduce overall credit supply. The extent of the decline depends on the scope of the restrictions. Whereas narrow caps affect primarily a clearly defined market segment, broad restrictions can reduce overall credit supply in the economy. Blanket caps further affect the distribution of credit as they result in a particularly large decline of unsecured and small loans, as well as in credit to SMEs and riskier sectors. Average loan size increases, suggesting a reallocation from small to large borrowers, in many cases to the government.

In light of the possible unintended consequences of interest caps, alternatives and complementary measures to interest rate caps should also be considered. These include measures to foster competition, reduce risk perception, overhead costs, and cost of funds. Consumer protection and financial literacy measures are also important measures, especially if interest rates are meant to protect consumers from usury rates.

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About the Authors

Aurora Ferrari is currently the Adviser to the FCI Senior Director for financial sector issues. Prior she was the manager for Financial Stability, Bank Regulation and Supervision unit of the World Bank (WB). In this capacity she oversaw the WB work in these areas, managed the FSAP program, coordinated the WB participation in Basel and represented the WB at the Financial Stability Board. Before then, Aurora was the manager responsible for financial sector policy advice and programs in Europe and North Africa, which focused particularly on crisis management, bank resolution, and state owned banks. Before joining the WB, Aurora worked at the EBRD in the Financial Institutions Group focusing on investments in banks.

Oliver Masetti is an economist (Young Professional) in the World Bank’s Financial Stability Team. He joined the World Bank in August 2016 and worked for the first year in the Office of the Chief Economist. Previously, he was an economist at Deutsche Bank in Frankfurt covering financial and macroeconomic developments for countries in Sub-Saharan Africa and the MENA region. Oliver holds a PhD in economics from Goethe University Frankfurt and a Master’s degree from St. Gallen University, Switzerland. He was a visiting student at Bocconi University and the Stockholm School of Economics.

Leveraging African Pension Funds to Fill Africa's Infrastructure Gap

03.09.2018Arnaud Floris, Financial Sector Advisor & Yves Kra, Research Officer - MFW4A

This blog benefited from the comments of the MFW4A Coordinator, David Ashiagbor.

New figures from the African Development Bank estimates that Africa needs to invest between US$130 and 170 billion in infrastructure annually, with a funding gap of $68—108 billion1. These are much higher than previous estimates of $93 billion in investment needs and a $31 billion financing gap. At the same time, financing for Africa’s infrastructure has declined by 25%, from a high of $83.3 billion in 2013 to $62.5 billion2 in 2016, according to the Infrastructure Consortium for Africa (ICA).

African governments, western donors, and other bilaterals/multilaterals together provide over 75% of funding for the continent’s infrastructure today. Pressure on public budgets, both domestic and foreign, mean that these alone cannot fund the continent increased needs, as evidenced by the decline in funding (see chart and table). Global attention has therefore turned to how the private sector can contribute to funding Africa’s infrastructure needs. In this context, there is increased interest in the role of Africa’s pension funds in funding the continent’s investment needs.

Source: "Infrastructure financing Trends in Africa - 2016" (ICA)

Economic growth, an emerging middle class, and pension reforms have brought more people into the social security net and have contributed to the growth in pension fund assets under management (AuM), across the continent. Price Waterhouse Coopers (PwC) estimates AuM in 12 African markets will rise to around USD 1.1 trillion by 2020, from a total of USD 293 billion in 20084.  Hard figures are difficult to come by, but it is estimated that less than 1% of AuM across the continent is invested in infrastructure. Why is this and how can African governments, institutional investors, and DFIs work together to leverage Africa’s growing long term savings to fund its investment needs?

For African pension capital to be a viable source of funding for infrastructure, the pension funds need to have the ability and the willingness to invest in the asset class. Their ability to invest is affected by issues like regulation (Is the pension fund allowed to invest in alternative assets? If so, under what conditions and to what extent?), their existing assets under management, as well as their understanding of the sector. The willingness of these same pension funds to invest in infrastructure is affected by their understanding and evaluation of the risks, their assessment of how infrastructure fits within their investment policy and strategy, and their ability to identify projects they are willing to back.

Regulation is often cited as the main stumbling block to investment in infrastructure by African pension funds. However, reforms in key markets are creating an enabling environment for local institutional investors to participate in infrastructure. Nigeria allows pension fund managers to invest up to 5% of AuM in infrastructure funds and 15% in corporate infrastructure bonds5. However, as of March 2018, only 0.08% of AuM was invested in infrastructure bonds and 0.01% in infrastructure funds, according to the National Pensions Commission (PenCom)6.

Some commentators argue that the low levels of investment in these asset classes reflect regulatory barriers such as a ban on direct equity stakes and limitations on cross-border investments. In their view, regulators should be encouraging pension funds to use alternative assets like infrastructure and private equity as a risk diversification tool, and that these limitations, especially with respect to cross-border investments, achieve precisely the opposite effect. Regulators respond that their first duty is to protect the pensions of their fellow citizens. In that context, it would be unwise to give pension funds unrestricted access to an asset classes which neither they, nor the regulators, are familiar with. One only has to look to the origins of the global financial crisis to understand the potential damage which cause.

To invest in infrastructure successfully, African pension funds need the resources to do so. With AuM in countries like Nigeria growing at close to 30% per annum, and given that less than 5% of the population of sub-Saharan Africa is covered by the pension plans, there is obvious scope for significant growth. The global industry figures hide wide variations across and within countries. Industry fragmentation is a major issue in many countries, with assets split across dozens of small pension funds, meaning that they can only make minimal investments, which can be below the minimum ticket size of many infrastructure projects.

Unlocking the potential of African pension funds to finance infrastructure also means addressing factors that influence their willingness to invest in the asset class. First among these is the lack of awareness about the ‘infrastructure asset class’ across the continent. Even in South Africa, with its sophisticated financial markets, few pension funds have experience of investing in infrastructure. Pension funds, regulators, and other stakeholders must be empowered with the right information which will enable them to evaluate if and how infrastructure fits within their investment strategies and objectives.

Secondly, the scarcity of investable assets and the corresponding dearth of appropriate vehicles through which to invest must be addressed. This is a familiar subject for many commentators. However, until recently, there has been little effort to understand the specific risk appetite, regulatory regime, and return expectations of African pension funds. The assumption has been that these are the same as for other classes of investors. The result is that many projects presented to African pension funds today are not investable from their point of view. In short, the approach needs to shift from one of product placement to one of designing investment solutions for African pension funds.

Enabling actions must address both the supply and demand sides of pension fund investment in infrastructure. Potential solutions include targeted interventions in the development of investable infrastructure projects and special purpose vehicles, risk-sharing mechanisms, and more traditional co-investment opportunities through investment platforms. Overall, fostering an exchange of knowledge and a sharing of experiences among industry stakeholders—notably, pension funds, regulators, and asset managers—is key to unlocking institutional capital for infrastructure finance in Africa from both domestic and international investors.

With the appropriate regulation, governance and internal capacity to assess and manage the risks associated with investment in infrastructure, there is no reason why African pension funds cannot take on a greater role in financing the continent’s infrastructure transformation in the medium to long term.

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1  African Economic Outlook 2018, African Development Bank. www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/African_Economic_Outlook_2018_-_EN.pdf 
2  Infrastructure Financing Trends in Africa 2016, ICA. http://www.icafrica.org/fileadmin/documents/IFT_2016/Infrastructure_Financing_Trends_2016.pdf 
3  ICA members include among others G8 countries, African Development Bank, Development Bank of Southern Africa, World Bank, European Commission and European Investment Bank.
4  Source: Africa Asset Management 2020 -­‐ Report by PwC examining the asset management industry across 12 African countries (Algeria, Angola, Botswana, Egypt, Ghana, Kenya, Mauritius, Morocco, Namibia, Nigeria, South Africa, Tunisia). http://www.amafrica2020.com/amafrica2020/docs/am-africa-2020.pdf 
5  PenCom Regulation on Investment of Pension Assets, 17 December 2012.
6  PenCom Monthly Report March 2018. https://www.pencom.gov.ng/wp-content/uploads/2018/05/Summary-of-Pension-Fund-Asset-RSA-Registration-as-at-31-March-2018.pdf 

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About the authors

Arnaud Floris is a Financial Sector Development Advisor with the Making Finance Work for Africa (MFW4A) Partnership. He holds a wide range of working experiences in resource mobilization, general management and strategic development roles within development finance and private sector organizations across Europe and Africa. Before joining MFW4A, Arnaud worked within the resources mobilization and allocation unit of the African Development Bank, where he was a lead team member of the African Development Fund's Performance-Based Allocation process, involving over 100 stakeholders, 54 beneficiary countries, and a three-year budget of 7.5 billion Dollars. 

Yves Kra  is an Associate Research Officer in the Knowledge Management Team of the MFW4A Partnership. Among other daily tasks, he conducts assessments of African national financial sectors and drafts corresponding reports. Moreover, Yves conducts on-demand, bespoke research for the MFW4A Secretariat and its partner institutions, most notably the African Development Bank, European Investment Bank, and the Agence française de développement (AFD). Yves holds a Ph.D. from Paris XIII University, which he defended in 2017 as part of a research project on the complementarity between banks and microfinance institutions in WAEMU (West African Economic and Monetary Union). His current research interests include development finance, microfinance, banking, and applied econometrics to developing countries.

2018 In Review: A Message from the Partnership’s Coordinator

30.07.2018David Ashiagbor

Dear Readers,

As we approach the August break, I am pleased to share with you an update on our activities in the first half of this year and the details of some our initiatives planned for the final quarter of 2018.

Knowledge management is a cornerstone of MFW4A's mandate and mission. We have continued to strengthen our profile as an authoritative source of information on financial sector development in Africa. Our website enjoyed both growing traffic and greater engagement by its visitors-a 5.4% increase in website visitors was recorded, while the number of sessions per user grew by 8.3%. We are in the process of revamping the website, and expect to launch a new look, fresher more accessible version with increased multimedia capabilities in September. Our Webinar series continued with sessions on subjects including digital finance and capital markets, as well a series on Leveraging African Pension Funds for Housing Finance in Africa, in partnership with the Centre for Affordable Housing Finance (CAHF).

We also partnered with CAHF, the African Union for Housing Finance (AUHF), the International Finance Corporation (IFC), and the Caisse Regionale de Refinancement Hypothécaire de l'UEMOA (CRRH-UEMOA) to organise a workshop on 'Mortgage Product Design and Portfolio Management' in Abidjan in February 2018. The workshop brought together over 40 executives of state agencies and commercial banks from 16 African countries to explore the opportunities and challenges related to building viable and sustainable housing finance operations in Africa.

MFW4A also launched our Trade Finance Initiative (TFI), in collaboration with the AfDB and with funding from BMZ and GIZ. The initiative started with a webinar, entitled 'Overcoming Challenges of Trade Finance in Africa,' on 21 March 2018. The TFI aims to improve the understanding of the trade finance market in Africa, promote regulatory compliance, and to build the capacity of local banks introduce sophisticated products and grow their trade finance business, particularly with SMEs.  Other activities planned under the TFI, include policy workshops and capacity building events later this year.

In long term finance, the Secretariat is supporting a consortium of local pension funds who are looking to invest in infrastructure with capacity building. In keeping with the concerns raised by the Consortium members, MFW4A's capacity building will focus on PPPs and infrastructure investment. The first workshop is scheduled for Nairobi in early September. These interventions align with the Partnership's commitment to supporting the mobilisation of domestic savings for long term investment in Africa, a work stream which is also supporting the Africa Investment Forum (AIF), scheduled to take place on 7-9 November in Johannesburg, South Africa.   

Also in September, we look forward to hosting the Francophone Africa Pension Funds Roundtable in Abidjan, in collaboration with FINACTU, a strategic consulting firm specializing in African development,   and CIPRES, the Inter-African Conference of Social Welfare. The Roundtable aims to develop a common understanding of the issues and challenges facing pension funds in francophone Africa, in much the same way as the Secretariat has done for key anglophone markets.  

MFW4A will launch a series of Regional Financial Sector Policy Dialogues, starting with West Africa in September. The event's aim is to take stock of current financial sector reforms in West Africa in order to identify priority actions for the coherent and robust development of the financial sector, with the final goal of informing national and DFI FSD strategies.

Finally, we will host the MFW4A Annual General Assembly (AGA) in Abidjan on 5-6 December. This flagship event will provide us with the opportunity to showcase the Partnership's achievements in the preceding period, as well as our plans and programmes going forward. It is also a platform to engage with you, our stakeholders, so please save the date.

We will of course be providing further details on all these events and much more in the coming months. In the meantime, it remains for me to wish you a restful summer and thank you for all your support. Your newsletter will return on 4 September.

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LATEST POSTS

In Kenya, Financial Inclusion Shifts from Access to...B. Cheronoh, Research Associate & N. Van de Halle, Program Manager - InterMedia
African urbanisation – a changing dynamicGerald Gondo, Business Development Executive, RisCura Africa
Interest rate caps: The theory and the practiceAurora Ferrari, Advisor & Oliver Masetti, Economist - World Bank

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