Africa Finance Forum
The global financial crisis has stimulated renewed interest among academics and policymakers in early warning systems (EWSs) or models able to provide risk alerts on the potential for systemic banking crises on an objective and systematic basis. Most of the attention has been devoted to advanced economies, which have been at the epicentre of the recent turmoil. With the notable exception of the IMF, which has recently initiated a research program aimed at enhancing its financial sector surveillance framework, low income countries (LICs), particularly in Sub-Saharan Africa (SSA), have not been explored as of late.
SSA LICs’ banking systems have on average proved resilient to the recent episodes of global financial stress. This is primarily the result of the structural reforms implemented by many countries over the past decade within a context of sound macroeconomic policies. Most countries have improved the regulatory framework for supervision, bolstering prudential requirements and supervisory rules. However, as banking systems deepen and new sources of risks materialise SSA LICs need to move ahead with their plans to strengthen supervisory capacity and financials sector resilience. Further actions are warranted to explore the impact of macroeconomic and financial developments on systemic banking risk. In this respect, EWSs can represent a valuable tool for policymakers and regulators in the region.
In a forthcoming paper co-authored with Giovanni Caggiano (University of Padua) and Leone Leonida (Queen Mary University of London) we develop an EWS of new generation to predict systemic banking crises in SSA LICs. In particular, we focus on a sample of 38 countries during 1980-2008. Focusing on a group of homogenous economies contributes to improve the predictive power of EWSs. Moreover, despite having experienced a number of systemic distress episodes, especially during the 80s and 90s, SSA LICs have received no attention in the relevant empirical literature. We test for a number of macroeconomic and financial variables that have been widely used in the literature as well as for indicators proxying the structural characteristics of SSA LICs’ banking systems.
We find that a decline in real output, a depreciation of the nominal exchange rate, high domestic credit growth, and banking system illiquidity are all positively correlated with the probability of incurring a systemic banking crisis in SSA LICs. Our findings indicate that banking distress in SSA LICs is typically preceded by weakening macroeconomic fundamentals, in particular a slowdown in economic activity and a depreciation of the currency. Given the low economic diversification of SSA LICs, any decline in GDP growth is felt by the banking sector through a generalised deterioration in asset quality, which increases the probability of a systemic banking crisis, other things being equal.
On the other hand, a depreciation of the exchange rate lends credence to the hypothesis that banking crises in SSA LICs may be driven by excessive foreign exchange (FX) risk exposure. Our results show that currency turmoil can indeed trigger a banking crisis when banks are highly exposed to FX risk. This can affect the banking system directly, through currency mismatches in the balance sheet, or indirectly, through exposures to unhedged borrowers. Moreover, the high dollarization of most SSA LICs exposes them to the risk of a generalized run on their foreign currency deposits. Given that our proxies for currency mismatch in the banking system’s balance sheet (net open FX position) and for liability dollarization (M2 to reserves) are not statistically significant, we can infer that the channel through which a currency depreciation works in SSA LICs is primarily indirect, i.e. via exposures to FX risk by bank borrowers.
Our results also show that rapid domestic credit expansion relative to GDP precedes banking crises. This may signal the peak of a credit cycle, where relaxed credit standards and build-up of financial imbalances in the real economy lead to widespread defaults and therefore systemic banking problems. Related to this, we find that the banking system in SSA LICs is crisis-prone if it engages in excessive credit activity relative to the deposit base. In other words, the probability of a systemic banking crisis increases when banks tend to finance an increasing share of their loan portfolio with non-core liabilities, resulting in low liquidity and/or vulnerability to deposit withdrawals.
Our results have important policy implications at a time when financial regulators and central banks in SSA LICs are reassessing their financial regulatory agenda in the context of recent reforms spurred by the global financial crisis, in particular Basel III. Our findings underline the need to implement an effective macroprudential framework in addition to standard microprudential regulation, monetary policy and administrative measures to address the risks to financial stability emanating from undiversified and dollarized environments. In this respect, SSA LICs’ financial systems might benefit from credit-related measures such as sectoral ceilings on credit exposures and/or credit growth, and higher risk weights and/or provisioning rates on foreign currency lending to ensure adequate protection from concentration risk and currency-induced credit risk.
In terms of microprudential regulation, implementing the liquidity requirements set out in Basel III might also be a useful complement to existing liquidity rules. On the other hand, our results do not warrant tightened capital requirements, which represent the cornerstone of recent international regulatory reforms. Finally, it is important that financial regulators in the region, with the assistance of international financial institutions, continue efforts to strengthen supervisory capacity, especially in contexts of sustained credit growth, as was the case in Nigeria before the 2009 banking crisis . Ultimately, EWSs are useful tools for policymaking but should never substitute the judgment of financial regulators.
Pietro Calice is Principal Investment Officer with the African Development Bank
Sub-Saharan Africa has the least developed financial sector in the world. With the exception of South Africa, the total African bank assets amount to less than USD 300 billion, which is nearly ten times less than the largest Chinese bank and about the size of the third largest Swedish bank. Even after taking into account the differences in GDP, the African financial sector remains very much underdeveloped, with a penetration rate around 30 %, twice inferior to the average figure in developing countries. In addition to its very small size, the African banking sector remains very much fragmented: the largest banking group in SSA totalled USD 17 billion – three times less than the first Cypriote bank – and only a dozen banking groups have total assets in excess of USD 5 billion.
Africa hosts more than 500 banks, including plenty of very small sized banks that are inefficient since they are unable to generate returns of scale, are not very innovative, and often display poor performances. These banks therefore cannot generate a healthy and competitive environment, and occupy low risk in very profitable niche markets, such as public debt, change or money transfer markets (Western Union, etc.), with hardly any impact on private sector financing. As a result of this underdevelopment in Africa’s banking sector, the amount of private sector credits does not exceed 20% of the African GDP, the lowest rate in the world. Furthermore, a significant portion of the financing needs of African economies – particularly in the areas of agribusiness, building and civil engineering, petrol and mining industries – are covered by external financial systems (donors, international banks, suppliers’ credits, etc.).
Fostering New Pan African “Leaders”
In order to fully benefit of the opportunities in the continent, the African banking sector should identify pan African “leaders” capable of carrying the pan-African capital-intensive operations. Development Financial Institutions (DFIs) can contribute, through targeted actions in order to support some banking groups that are well positioned to play this role. Apart from existing groups (Ecobank, BOA, UBA) – which already receive help from DFIs – two kinds of players are likely to prove good candidates: regional groups with an already critical size, and major banks in the African financial centres. Players in the first group include Orabank or BGFI Bank in Central and West Africa, I&M, Equity Bank or Kenya Commercial Bank in East Africa, and BancABC in South Africa. These banks have good knowledge of the markets but are limited in their means. They could benefit from capital injections by DFIs, such as FMO in Afriland First Bank, Proparco in I&M, and Orabank or IFC in Equity Bank. As for the main African financial centres, three countries could lead the way at a regional scale: Nigeria, Morocco, and South Africa. If the last two do not belong to sub-Saharan Africa, their geographical area represents their natural growth territory. Banks in these countries traditionally stayed within their geographical boundaries, and their pan African expansion is a recent development: Moroccan banks in Francophone West Africa, and Nigerian or South African banks in Anglophone Africa. However, their expansion over not well-known and not very accessible markets remains limited. The largest banks in these countries remain still very much interested in their domestic markets. This is where DFIs have a role to play in encouraging and supporting these banks outside their borders. Proparco and FMO supported BMCE's regional growth in this very approach, by contributing to the establishment of closer ties with the BOA Group. In the same way, Société Financière Internationale (SFI) invested in BCP Maroc to finance Group Banque Atlantique's buy-back in West Africa.
Long Term Financing Needs
Given the fact that DFIs contribute to the development of a local, pan African banking sector, their main actions up until now were essentially based on very traditional funding based on long-term debt and equity, in order to provide banks with the missing long-term resources. Today however, other forms of support solutions that are more innovative should be considered. First of all, giving the banks access to international markets could permit to lower their long term refinancing dependency of DFIs. Groups such as Ecobank offer fundamentals, that would enable them to obtain good financing solutions in these markets, but that are too little known by investors outside Africa. DFIs could help by integrating African banks in the international financing systems, for example by guaranteeing their first bond offerings. DFIs could also help local banks to better exploit home market available resources. For example, insurance companies and other social security funds dispose of important long term capital but – due to their missing knowledge of the banking sector –may be reluctant to invest them long term with banks. A significant portion of these resources, when not invested in developed countries banking markets, are placed locally in government debt securities. By guaranteeing loans lent by these institutions to local banks, DFIs would contribute to feed these long-term resources to the banking sector and finance a more productive sector. Similarly, most African banking sectors have excess short-term resources, which although very stable, cannot be used to finance long-term investment due to cash banking regulations. In order to make better use of these resources, DFIs could explore the possibility of offering liquidity guarantees: providing banks with refinancing in case of a liquidity crisis, which would enable them to transform a greater share of short-term resources into long-term ones. Finally, in order to help banks increase their resources' maturity, DFIs should also consider stimulating long-term interbank market refinancing, or encourage banks to develop local bond markets.
Developing synergies between the various markets
Developing the bank's resources is not the only way to increase their response capabilities. Better use of resources would also overcome the constraints imposed by their limited size. Developing the syndication market could prove especially useful in this regard. As syndication develops on a per country base, “transnational” syndication remains very rare: only bank groups with subsidiaries in several countries (like Ecobank, BOA Group, Standard Chartered, Standard Bank, etc.) are able to initiate them and these syndications generally remain within the group. DFIs certainly have a role to play to organise this market and encourage increased bank cooperation. They could, for example, develop their coordination capabilities by offering local banks intermediation services. This path has been little explored by DFIs, whose syndication attempts are usually limited to the projects they are involved in, bankable in hard currency. Yet, it would stimulate local currency finance markets, over which DFIs have very little control. From a more general point of view, and always with a view to develop the capacity of local banks, it seems possible to increase cross-border cooperation by encouraging banks operating in different markets to develop synergies between them. There are very few partnership examples, such as the one developed between Nedbank (based in South Africa) and Ecobank (present in the rest of sub-Saharan Africa). Most Ghanaian banks, for example, have no partner banks in the WAEMU region, even though Ghana is located in the middle of the area, which greatly limits the scope of the operations they can perform with their active clients in this region. DFIs could, for example facilitate regional trade by guaranteeing African vis-à-vis their banking counterparts in neighbouring countries (as they do for international trade between Europe and Africa, for example). Generally speaking, a transverse DFI approach would enable them to gather banks likely to develop synergies, and thereby stimulating regional banking integration and dissemination of knowledge between different markets. Such support would allow banks to know their neighbouring markets, and thus contribute to strengthening the capacity of African banking systems.
Julien Lefilleur joined Proparco in 2004, a French development financial institution that is a member of the French Development Agency Group. Having occupied a series of positions in Proparco - mainly in the Banks and Financial Markets department - he opened in 2010 Proparco's regional office for West Africa in Abidjan. Julien Lefilleur is also the Chief Editor of the Proparco magazine Private Sector & Development, which he founded. He graduated at École Centrale de Paris with a PhD in economics from the Sorbonne University.
Poverty. How much of it can be avoided with simple financial skills? If there is anything we have learned over the years, it is that poor financial decision-making by the average economic citizen can be the foundation of financial crises and the root of poverty. The problem is that poor decision-making seems to be inherent in everybody – at least, that is what Economics Nobel Prize winner Daniel Kahneman wrote. This is why the world needs to increase financial education and financial inclusion for individuals, when they are young and are still able to form positive financial habits. After all these youngsters are future leaders, investors, policy makers, and parents.
African Development Bank President Donald Kaberuka stressed at this year’s World Economic Forum that the prevalence of poverty is especially pertinent in African countries with a large youth population. As Africa’s projected youth will represent 75% of the total population by 2015, a large segment of the African population will be entering the labor market in the next few years and will need the education and access required for proper savings and asset building. Contrastingly, in sub-Saharan Africa for example only 16.8% of youth between the ages of 15–25 years hold accounts at formal financial institutions.
Both scholars and policymakers have started to recognize that young people need to learn about managing financial matters at the same time as they are provided with the tools to actually participate in it. The lacking national infrastructures for children and youth to partake in the financial system remains an obstacle. On the one hand, formal savings mechanisms remain unattractive for young people due to heavy document requirements, including identity cards, recommendation letters and wage slip. On the other hand, legal age restrictions and compulsory parent consent can hinder opening an account. Changing the manner in which financial institutions deal with the unbanked, financially vulnerable population of children requires a review of certain social regulations and effective collaboration.
It does appear that this change is on the way. Over 80 countries celebrated Global Money Week last month organized by Child and Youth Finance International. 20% of these were from Africa. The overwhelming success was created by the partnerships formed between national stakeholders and was a testimony to the fact that African countries were ready, willing and able to put financial access and education of youngsters on the map. Zambia set the pace for nationwide initiatives on financial capability for children and youth under the patronage of the Central Bank of Zambia and the Financial Sector Development Program. In Ghana the first local stakeholder meeting on education and access for children was held and HFC Bank opened savings account for more than 200 high school students in Accra. The Central Bank of Nigeria (CBN) and the Financial Literacy and Inclusion Forum (FLIF) jointly organized Global Money Week, creating media campaigns, financial literacy shows and school outreach programs. It was recognized that the average Nigerian child is not introduced to money early enough and is therefore prone to making bad financial decisions. The CBN has now named financial inclusion a national agenda point.
The efforts during Global Money Week are the first step to creating national strategies that will reshape financial landscapes both in Africa and across the world. It is only through collaboration and knowledge-sharing among national stakeholders that the necessary frameworks can be built that will educate and empower entire generations. In Africa, many countries are now creating their strategies for financial education and inclusion of their citizens. We must ensure that children are not forgotten in these efforts.
By reshaping the norms of financial behavior we will be able to empower the next generation and help them become the sound financial decision makers we need them to be.
Akwasi Osei is Child and Youth Finance International's (CYFI) Africa Regional Coordinator. CYFI is leading a global movement to increase financial education and financial inclusion of children and youth. It is working with over 100 partners in over 83 countries worldwide. The CYFI network has a goal of reaching 100 million children in 100 countries by 2015, as a first step to eventually reaching all children and youth across the world. The Movement has the support of the United Nations Secretary General and the G-20.
Securitization is a financial engineering technique that enables a private or public entity to raise cash by selling its cash-flow producing assets or its future revenues. These assets are sold to a Special Purpose Vehicle (SPV) which, in order to raise the needed cash, issues fixed income securities on the local capital market.
Although widely used in developed countries and in some parts of Africa (Morocco, Tunisia, South Africa and Nigeria), securitization is a new concept in most Sub-Saharan countries. In the WAEMU, asset securitization has been possible since 2010 when the regional regulator (the CREPMF) issued the relevant texts. The law allows for a very large spectrum of FCFA-denominated assets to be securitized: besides traditional mortgages, it is possible to securitize any kind of existing assets and even future cash flows. Moreover, there is no restriction on entities that can sell their assets: they can be financial and non-financial companies, as well as public sector entities. However, no securitization transaction has occurred yet in this part of Africa. This article explores how securitization can contribute to the development of the local bond markets.
The public debt market in the WAEMU presents numerous challenges to both potential issuers and investors. Issuing costs are high relative to other forms of debt financing and almost all corporate issuers need to have their bonds partially or fully guaranteed by a Development Financial Institution (DFI) or a guarantee fund, which further increases costs. Sovereign or quasi-sovereign issues dominate the bond market, and there is little credit discrimination among these bonds and the guaranteed corporate ones, they have more or less the same risk/reward profile. Maturities are concentrated in the 5-year segment with only a couple of bonds issued at 7 or 10 years. In a nutshell, the fixed income universe in the WAEMU is quite homogeneous, offering investors little choice in risk, yield and maturities.
The CREPMF has recently introduced the possibility of substituting a guarantee with a financial rating given by one of the 2 licensed rating agencies. This action would allow for more credit discrimination among securities, since interest rates would reflect the real credit risk of each issuer. However, the first bond without guarantor and with a credit rating is yet to be issued.
Asset securitization can be the solution for private and public sector entities looking to raise cash, as well as for investors keen on diversifying their portfolios, while substantially increasing the depth of the local bond markets. Through securitization, companies can monetize part of their good-quality assets or future revenues by selling them to a Special Purpose Vehicle (SPV), thus raising cash without having themselves direct recourse to capital markets. If the securitized assets are worth more off-balance sheet (translating into lower borrowing costs against the specific assets than against the company’s entire balance sheet), raising cash through securitization is much more cost-efficient than issuing company debt. With the advent of financial rating, securitization can help curb financing costs for companies that are considered risky and thus have a lower credit rating than part of their assets would.
For example, the first securitization transaction in Morocco that took place in 2002 involved a mortgage pool securitization for Crédit Immobilier et Hôtelier (CIH), a bank who wished to restructure its balance sheet. Through the true sale of a quality mortgage portfolio, CIH was able to raise DH500M (approximately $45M) through the indirect issuance of two senior and one junior tranche. The longest (16-year) senior tranche was issued with a 7.32% annual coupon, only slightly above the 7.1% coupon offered on a 15-year Moroccan government bond issued some months earlier. Had the CIH issued under its own signature, its borrowing costs would have been much higher.
Governments could also resort to securitization of existing assets or future flows, in order to reduce budget deficits, as well as to finance future investments. The Italian and Belgian governments in the late 90s both securitized outstanding social security receivables, thus putting them off-balance sheet in order to reduce their budget deficits to comply more easily with the Maastricht criteria. In 2004, the Government of Hong Kong SAR decided to securitize the future toll revenues from state-owned tunnels and bridges, thus raising a total amount of HK$6 bn (approximately $800M). The state government of West Bengal (India) raised Rs.15 bn (approximately $300M) through the securitization of future taxes levied on several fuel products. Apart from instant cash inflow in an alternative way, these kinds of transactions allow public authorities to have a better asset-liability management, by matching public asset cash flows to the repayment of the asset-backed securities, and a more efficient cost-benefit analysis and hence management of public assets, by clearly earmarking revenues to be used to fund them, instead of relying on general tax-backed funding. Moreover, future flow securitizations involve a thorough assessment of the sovereign originator’s legal and institutional environment, notably recovery processes and claim enforcement rules, which can foster necessary institutional reforms. This in turn can have a positive spill over effect on general investor confidence.
Securitized assets are carefully selected and their future behaviour (future cash-flows) is thoroughly modelled. The future cash-flows (and the risk of non-payment associated with them) are then structured into fixed income securities (tranches) of different risk-return profiles. Thus the same asset pool will serve as a funding source for senior (low-risk, low-return) and junior (higher risk, higher return) securities. The basic idea is to spread the risk unevenly among tranches and reward investors according to the amount of risk taken. For example, the above cited Moroccan mortgage-backed securities were issued in 3 different tranches, all offering different risk exposure, maturity and remuneration.
Getting exposure to a specified pool of assets and having the possibility to select the desired risk-return investment profile are clearly two important steps forward in the development of the local bond markets. While until now, investors could basically subscribe to two kinds of risks (sovereign and quasi-sovereign), with relatively low risk profiles, with the introduction of asset-backed securities, investors will not only be able to get exposure to a new risk classes, but they will also be able to select how much of it they want to hold (by choosing either the senior or more junior tranches). The asset-backed securities also introduce the notion of real credit risk: that of not being able to get back 100% of their initial investment or all coupons, based on the underlying asset pool’s overall performance.
Are institutional investors ready for the big change? Definitely. Are companies and national treasuries ready to add securitization to their list of financing options? Not quite so. Securitization, and financial engineering in general, are quite unknown concepts for the majority of companies in the WAEMU. The subprime crisis has not helped much either in popularizing the concepts in a positive sense. Since companies have traditionally raised cash through banks or DFI loans, a large part (if not all) of their asset base is pledged as guarantee, so there is little room left for alternative asset-based financing. Securitization offers a different perspective on assets: they are no longer considered as an end, but rather as a means to optimize a company’s financing. Realizing this concept may take some time and may need a more innovative state of mind.
We believe that education is key to the success of any financial innovation and that applies in the WAEMU as well. Once public and private sector decision-makers thoroughly understand the concept and philosophy of securitization, it will no longer appear as a mystical, complex and ultimately risky alternative. Bonds issued in this fashion will tap into huge reserves of regional savings (through asset managers and insurance companies) and thus further enhance the efficiency of local capital markets.
Anna Selejan has been the Managing Director of ALC Titrisation, the first privately owned securitization SPV management company in the WAEMU, based in Abidjan, Côte d’Ivoire. Prior to setting up ALC Titrisation, she worked as Vice President – Investment Management with IC Securities, a Ghanaian asset management company and as Fixed Income and SRI (Socially Responsible Investment) portfolio manager with Allianz Global Investors in Paris (France) for several years. She holds a Master’s degree in Economics from the Budapest Corvinus University, Hungary and a Master’s degree in Portfolio Management from Université Paris XII, France.
Helping low-income Africans to improve their ability to manage financial risks is a key component of sustainable development. Insurers, intermediaries and others around the continent have been working to develop and improve microinsurance products that offer both value for clients and a business case for insurers. This blog focuses on one such product offered by a microinsurance intermediary to help market vendors and others manage potential financial losses due to flooding.
In October 2011, the bustling Circle Market in Accra was devastated by a torrential flood, destroying many small businesses and bankrupting many of their owners. The MicroInsurance Centre’s MILK Project partnered with microinsurance intermediary MicroEnsure and German aid agency GIZ to explore the value of a microinsurance product in helping small business owners cope with the severe financial consequences of the flood. The “Obra Pa” product is mandatory for borrowers of certain microfinance institutions (MFIs), and offers clients two benefits: i) payment of their outstanding loan balance and one month of interest to the MFI, and ii) a cash payout of USD114.
We applied MILK’s “Client Math” methodology, which aims to address some of the open questions about the value of microinsurance, using detailed surveys of small samples of insured and uninsured groups (20-30 each) to document their responses to shocks. To explore the role insurance played in coping with the flood, we measured the full cost of the shock for the insured and the uninsured and examined the financing strategies used by each.
What did we learn? That insurance, alone, was insufficient to cover the full cost of such a large shock. When our MILK team visited clients after the flood, we found that they had still not recovered from the devastation of the event. They had not fully regained their borrowing status nor returned to pre-flood sales levels in their businesses. Coping mechanisms used by both the insured and uninsured included the same strategies - borrowing from friends and family, reducing consumption and using their limited income to slowly re-start their businesses. These findings are consistent with MILK’s studies of other property insurance programs in Colombia, Haiti and the Philippines. Insurance provided some relief, but the insured still struggled to recover from the devastating consequences of the flood, even months later.
One interesting value component of the product appeared to be that it offered some access to additional borrowing, albeit not from MFIs. The promise of a payout and the deleveraging resulting from the loan forgiveness seem to have served as a type of “guarantee”, improving clients’ creditworthiness and enabling them to borrow from friends and family to get by. We do not typically think of insurance as a “guarantee” for a loan, but we are seeing indications that beneficiaries use the promise of a payout (particularly when claims are paid slowly) as a type of collateral against new borrowing to cover immediate needs before claims are paid. Compared to the uninsured, who remained indebted and had a reduced capacity to repay that debt, this benefit proved useful, even if only necessary due to the slow payment of claims. For some clients, this access to credit seems to have been instrumental in their ability to move toward to full recovery from the shock, however slowly.
Product limitations may partly reflect client willingness to pay. The Obra-Pa product in Ghana was a mandatory product with premiums included in MFI clients' loan payments. As such, it was a low-cost product that could be included in a loan payment without burdening the borrowers with separate, likely higher premiums. In all of our studies of similar products, MFIs offered property coverage on a mandatory rather than voluntary basis to address adverse selection and potentially low demand. This suggests that a higher coverage option, which would have proved more valuable in the wake of the flood, may be difficult to sell voluntarily, especially to the poorest and most price-sensitive.
In studying the case of Ghana, we identified some of the limitations of microinsurance products that aim to help microenterprise owners cope with the effects of a weather catastrophe. These clients face uncovered risks due to the size (too small) and timing (too slow) of the insurance benefit and must therefore complement the insurance with other strategies. In contrast, MFIs can typically use these products to transfer their loan related weather risk to an insurer. Efforts to support non-insurance risk management strategies for microentrepreneurs as well as more risk-sharing between MFIs and their clients may be good next steps to helping microentrepreneurs cope with weather related risks.
You can read the full brief on property insurance in Ghana and all the other MILK documents at: http://www.microinsurancecentre.org/milk-project.html
Ms. Magnoni is President of EA Consultants and Client Value Project Manager for the MicroInsurance Centre’s MicroInsurance Learning and Knowledge (MILK) Project. She is an international development advisor with over 15 years of international finance and development experience. Much of her recent work has centered on understanding client needs and preferences and linking these to the development of products and programs to improve access to finance, markets and social protection for low income segments. She has designed microinsurance programs for various institutions, networks and government agencies. She is currently managing the collection and analysis of lessons around understanding the value for clients of microinsurance for the MILK Project. These studies have helped to further the industry understanding of the role microinsurance plays in mitigating financial risks in clients' lives. Ms. Magnoni has a Masters in International Affairs from Columbia University.