Friday, February 28, 2014

Re: [MFP] Paper available: "How Do the Poverty Scorecard and the PAT Differ?"

 

Thanks Mark. 
 
Can you (or others) share any recent examples of organizations that are using one or both of these tools?
 
And for anyone out there using a poverty scorecard, have you used it beyond determining the likely poverty status of people you serve to measure changes in poverty status over time?
 
Cheers,
Sean

On Feb 28, 2014, at 2:57 PM, Mark Schreiner <mark@microfinance.com> wrote:

 
Abstract: "The poverty scorecard and the Poverty Assessment Tool (PAT) are simple, low-cost ways to measure households' poverty. How do the two differ? For estimating a group's poverty rate, both are unbiased, and the scorecard has smaller standard errors. For targeting individual households, the PAT correctly classifies about one more household per 100. The scorecard has an edge in availability, recentness, and transparency."
 
 
Mark Schreiner

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[MFP] Paper available: "How Do the Poverty Scorecard and the PAT Differ?"

 

Abstract: "The poverty scorecard and the Poverty Assessment Tool (PAT) are simple, low-cost ways to measure households' poverty. How do the two differ? For estimating a group's poverty rate, both are unbiased, and the scorecard has smaller standard errors. For targeting individual households, the PAT correctly classifies about one more household per 100. The scorecard has an edge in availability, recentness, and transparency."
 
 
Mark Schreiner

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[MFP] Global Peace Index

 

 

 

An interesting Web Site:

 

Global Peace Index

http://www.visionofhumanity.org/#/page/indexes/global-peace-index

 

Normand Arsenault

 

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Re: [MFP] Why Academics Mustn't Control Research

 

Oh thank you. That means so much to me. I think for EDM I will chop down the paper I sent you in December. Thanks, Malcolm. 
 
Kim Wilson
Faculty, Fletcher School, Tufts University (617-763-2469)
Kimberley.Wilson@Tufts.Edu


From: Malcolm Harper <malcolm.harper@btinternet.com>
To: MicrofinancePractice@yahoogroups.com
Sent: Friday, February 28, 2014 10:28 AM
Subject: Re: [MFP] Why Academics Mustn't Control Research

 
Did I thank you for this ? Now back home, let me do so again.  Why not make it into a paper for EDM ? We get all manner of 'academic' papers that suffer from the problems you mention, the writers are all too often in the thralls of a system which rewards elaborate manipulation and decries 'usefulness'. Tell them so, in our own columns.
 
Malcolm
 
From: Kim Wilson
Sent: Sunday, February 16, 2014 10:25 PM
Subject: [MFP] Why Academics Mustn't Control Research
 
 
Hi friends of MFP.

I hope you like this post. I make these observations from being in academia for nine years.
 
Kim Wilson
Faculty, Fletcher School, Tufts University (617-763-2469)
Kimberley.Wilson@Tufts.Edu
 

 


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Re: [MFP] Why Academics Mustn't Control Research

 

Did I thank you for this ? Now back home, let me do so again.  Why not make it into a paper for EDM ? We get all manner of 'academic' papers that suffer from the problems you mention, the writers are all too often in the thralls of a system which rewards elaborate manipulation and decries 'usefulness'. Tell them so, in our own columns.
 
Malcolm
 
From: Kim Wilson
Sent: Sunday, February 16, 2014 10:25 PM
Subject: [MFP] Why Academics Mustn't Control Research
 
 

Hi friends of MFP.

I hope you like this post. I make these observations from being in academia for nine years.
 
Kim Wilson
Faculty, Fletcher School, Tufts University (617-763-2469)
Kimberley.Wilson@Tufts.Edu
 

 

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Wednesday, February 26, 2014

RE: [MFP] consultancy business and entrepreneurship training in DRC and Rwada

 

 

In November 2012, TED Talks had been watched one billion times worldwide. There are very good Ted Talks on entrepreneurship.

 

Here are a 25 TED Talks related to entrepreneurship:

 

Note: You may find that the talk is translated into your language. Look at the bottom of the video screen. You can also find the transcript of the talk in many languages at the bottom of the video screen.

 

1. Ken Robinson: How schools kill creativity - Jun 2006

25,313,068 views. This is the most popular Ted Talk.

Sir Ken Robinson makes an entertaining and profoundly moving case for creating an education system that nurtures (rather than undermines) creativity.

Creativity expert Sir Ken Robinson challenges the way we're educating our children. He champions a radical rethink of our school systems, to cultivate creativity and acknowledge multiple types of intelligence.

http://www.ted.com/talks/ken_robinson_says_schools_kill_creativity.html

 

2. Gayle Tzemach Lemmon: Women Entrepreneurs, Example Not Exception - Jan 2012

368,767 views

"Women aren't micro–so why do they only get micro-loans? Reporter Gayle Tzemach Lemmon argues that women running all types of firms– from home businesses to major factories– are the overlooked key to economic development."

http://www.ted.com/talks/gayle_tzemach_lemmon_women_entrepreneurs_example_not_exception.html

 

3. Cameron Herald: Let's Raise Kids to be Entrepreneurs - Jun 2010

1,103,125 views

"Bored in school, failing classes, at odds with peers: This child might be an entrepreneur, says Cameron Herold. In his talk, he makes the case for parenting and education that helps would-be entrepreneurs flourish — as kids and as adults.

http://www.ted.com/talks/cameron_herold_let_s_raise_kids_to_be_entrepreneurs.html

 

4. Jacqueline Novogratz: Inspiring a life of immersion - Feb 2011

502,211 views

We each want to live a life of purpose, but where to start? In this luminous, wide-ranging talk, Jacqueline Novogratz introduces us to people she's met in her work in "patient capital" -- people who have immersed themselves in a cause, a community, a passion for justice. These human stories carry powerful moments of inspiration.

Jacqueline Novogratz founded and leads Acumen Fund, a nonprofit that takes a businesslike approach to improving the lives of the poor. In her new book, The Blue Sweater, she tells stories from the new philanthropy, which emphasizes sustainable bottom-up solutions over traditional top-down aid

http://www.ted.com/talks/jacqueline_novogratz_inspiring_a_life_of_immersion.html

 

5. Jacqueline Novogratz: Invest in Africa's own solutions - Oct 2006

370,774 views

Jacqueline Novogratz applauds the world's heightened interest in Africa and poverty, but argues persuasively for a new approach.

Jacqueline Novogratz founded and leads Acumen Fund, a nonprofit that takes a businesslike approach to improving the lives of the poor. In her new book, The Blue Sweater, she tells stories from the new philanthropy, which emphasizes sustainable bottom-up solutions over traditional top-down aid.

http://www.ted.com/talks/jacqueline_novogratz_invests_in_ending_poverty.html

 

6. Susan Cain: The power of introverts - Mar 2012

7,611,785 views

In a culture where being social and outgoing are prized above all else, it can be difficult, even shameful, to be an introvert. But, as Susan Cain argues in this passionate talk, introverts bring extraordinary talents and abilities to the world, and should be encouraged and celebrated.

Our world prizes extroverts -- but Susan Cain makes a case for the quiet and contemplative.

http://www.ted.com/talks/susan_cain_the_power_of_introverts.html

 

7. Simon Sinek: How Great Leaders Inspire Action - May 2010

15,603,474 views

"Simon Sinek has a simple but powerful model for inspirational leadership all starting with a golden circle and the question "Why?" His examples include Apple, Martin Luther King, and the Wright brothers. "

http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html

 

8. Elizabeth Gilbert: Your Elusive Creative Genius - Feb 2009

7,991,523 views

"Elizabeth Gilbert muses on the impossible things we expect from artists and geniuses—and shares the radical idea that, instead of the rare person "being" a genius, all of us "have" a genius. It's a funny, personal and surprisingly moving talk."

http://www.ted.com/talks/elizabeth_gilbert_on_genius.html

 

9. Shaun Anchor: The Happy Secret to Better Work - Feb 2012

6,923,832 views

"We believe that we should work to be happy, but could that be backwards? In this fast-moving and entertaining talk, psychologist Shawn Achor argues that actually happiness inspires productivity.

http://www.ted.com/talks/shawn_achor_the_happy_secret_to_better_work.html

 

10. Jamie Heywood: The Big Idea My Brother Inspired - Feb 2010

419,757 views

"When Jamie Heywood's brother was diagnosed with ALS, he devoted his life to fighting the disease as well. The Heywood brothers built an ingenious website where people share and track data on their illnesses — and they discovered that the collective data had enormous power to comfort, explain and predict."

http://www.ted.com/talks/jamie_heywood_the_big_idea_my_brother_inspired.html

 

11. Shawn Achor: The happy secret to better work - Feb 2012

6,923,875 views

We believe that we should work to be happy, but could that be backwards? In this fast-moving and entertaining talk, psychologist Shawn Achor argues that actually happiness inspires productivity. Shawn Achor is the CEO of Good Think Inc., where he researches and teaches about positive psychology.

http://www.ted.com/talks/shawn_achor_the_happy_secret_to_better_work.html

 

12. Dr George Ayittey: Cheetahs vs Hippos for Africa - Jul 2007

465,387 views

Ghanaian economist George Ayittey unleashes a torrent of controlled anger toward corrupt leaders in Africa -- and calls on the "Cheetah generation" to take back the continent.

Economist George Ayittey sees Africa's future as a fight between Hippos -- complacent, greedy bureaucrats wallowing in the muck -- and Cheetahs, the fast-moving, entrepreneurial leaders and citizens who will rebuild Africa.

http://www.ted.com/talks/george_ayittey_on_cheetahs_vs_hippos.html

 

13. Majora Carter: 3 stories of local eco-entrepreneurship - Dec 2010

323,572 views

The future of green is local -- and entrepreneurial. In her talk, Majora Carter brings us the stories of three people who are saving their own communities while saving the planet. Call it "hometown security."

Majora Carter redefined the field of environmental equality, starting in the South Bronx at the turn of the century. Now she is leading the local economic development movement across the USA.

http://www.ted.com/talks/majora_carter_3_stories_of_local_ecoactivism.html

 

14. Brené Brown: The power of vulnerability - Dec 2010

14,119,700 views

Brené Brown studies human connection -- our ability to empathize, belong, love. In a poignant, funny talk, she shares a deep insight from her research, one that sent her on a personal quest to know herself as well as to understand humanity. A talk to share. Brené Brown studies vulnerability, courage, authenticity, and shame.

http://www.ted.com/talks/brene_brown_on_vulnerability.html

 

15. Ludwick Marishane: A bath without water - Dec 2012

1,208,775 views

If you had to walk a mile for a jug of water every day, as millions of people do, it's unlikely you'd use that precious water to bathe. Young entrepreneur Ludwick Marishane tells the amazing, funny story of how he invented a cheap, clean and convenient solution: DryBath, the world's first bath-substituting lotion.

Student Ludwick Marishane invented a water-less bathing lotion and was named the 2011 Global Student Entrepreneur of the Year Award -- all because he didn't feel like taking baths.

http://www.ted.com/talks/ludwick_marishane_a_bath_without_water.html

 

16. Anil Gupta: India's hidden hotbeds of invention - May 2010

499,122 views

Anil Gupta is on the hunt for the developing world's unsung inventors -- indigenous entrepreneurs whose ingenuity, hidden by poverty, could change many people's lives. He shows how the Honey Bee Network helps them build the connections they need -- and gain the recognition they deserve.

Anil Gupta created the Honey Bee Network to support grassroots innovators who are rich in knowledge, but not in resources.

http://www.ted.com/talks/anil_gupta_india_s_hidden_hotbeds_of_invention.html

 

17. Margaret Heffernan: Dare to disagree - Aug 2012

1,483,172 views

Most people instinctively avoid conflict, but as Margaret Heffernan shows us, good disagreement is central to progress. She illustrates (sometimes counterintuitively) how the best partners aren't echo chambers -- and how great research teams, relationships and businesses allow people to deeply disagree.

The former CEO of five businesses, Margaret Heffernan explores the all-too-human thought patterns -- like conflict avoidance and selective blindness -- that lead managers and organizations astray.

http://www.ted.com/talks/margaret_heffernan_dare_to_disagree.html

 

18. Gary Vaynerchuk: Do What You Love (No Excuses!) - Mar 2010

653,741 views

"At the Web 2.0 Expo, entrepreneur Gary Vaynerchuk gives a shot in the arm to dreamers and up-and-comers who face self-doubt. The Internet has made the formula for success simpler than ever, he argues. So there's now no excuse not to do what makes you happy."

http://www.ted.com/talks/gary_vaynerchuk_do_what_you_love_no_excuses.html

 

19. Nigel Marsh: How to Make Work-Life Balance Work - Feb 2011

2,091,166 views

"Work-life balance, says Nigel Marsh, is too important to be left in the hands of your employer. Marsh lays out an ideal day balanced between family time, personal time and productivity — and offers some stirring encouragement to make it happen. 

http://www.ted.com/talks/nigel_marsh_how_to_make_work_life_balance_work.html

 

20. Richard St. John's 8 Secrets of Success - Dec 2006

5,707,647 views

"Why do people succeed? Is it because they're smart? Or are they just lucky? Neither. Analyst Richard St. John condenses years of interviews into an unmissable 3-minute slideshow on the real secrets of success."

http://www.ted.com/talks/richard_st_john_s_8_secrets_of_success.html

 

21. Jessica Jackley: Poverty, Money—and Love - Oct 2010

1,035,680

"What do you think of people in poverty? Maybe what Jessica Jackley once did: "they" need "our" help, in the form of a few coins in a jar. The co-founder of Kiva.org talks about how her attitude changed — and how her work with microloans has brought new power to people who live on a few dollars a day."

http://www.ted.com/talks/jessica_jackley_poverty_money_and_love.html

 

22. Malcolm Gladwell: Choice, happiness and spaghetti sauce - Sep 2006

4,350,948 views

"Tipping Point" author Malcolm Gladwell gets inside the food industry's pursuit of the perfect spaghetti sauce -- and makes a larger argument about the nature of choice and happiness. Detective of fads and emerging subcultures, chronicler of jobs-you-never-knew-existed, Malcolm Gladwell's work is toppling the popular understanding of bias, crime, food, marketing, race, consumers and intelligence.

http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html

 

23. Rachel Botsman: The currency of the new economy is trust - Sep 2012

806,909 views

There's been an explosion of collaborative consumption -- web-powered sharing of cars, apartments, skills. Rachel Botsman explores the currency that makes systems like Airbnb and Taskrabbit work: trust, influence, and what she calls "reputation capital."

Rachel Botsman writes and speaks on the power of collaboration and sharing through network technologies, and on how it will transform business, consumerism and the way we live.

http://www.ted.com/talks/rachel_botsman_the_currency_of_the_new_economy_is_trust.html

 

24. Juliana Rotich: Meet BRCK, internet access built for Africa - Jun 2013

481,756 views

Tech communities are booming all over Africa, says Nairobi-based Juliana Rotich, cofounder of the open-source software Ushahidi. But it remains challenging to get and stay connected in a region with frequent blackouts and spotty Internet hookups. So Rotich and friends developed BRCK, offering resilient connectivity for the developing world.

Juliana Rotich is the co-founder of Ushahidi, open-source software for collecting and mapping information -- and of iHub, a collective tech space in Nairobi, Kenya. She is a TED Senior

http://www.ted.com/talks/juliana_rotich_meet_brck_internet_access_built_for_africa.html

 

25. Julie Burstein: 4 lessons in creativity - Nov 2012

1,124,566 views

Radio host Julie Burstein talks with creative people for a living -- and shares four lessons about how to create in the face of challenge, self-doubt and loss. Hear insights from filmmaker Mira Nair, writer Richard Ford, sculptor Richard Serra and photographer Joel Meyerowitz.

As a producer, Julie Burstein builds places to talk (brilliantly) about creative work. Her book "Spark: How Creativity Works" shares what she has learned.

http://www.ted.com/talks/julie_burstein_4_lessons_in_creativity.html

 

Source: http://blog.ted.com/2013/12/16/the-most-popular-20-ted-talks-2013/

 

 

 

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of kmcilvaine@womenforwomen.org
Sent: 26 février 2014 07:51
To: MicrofinancePractice@yahoogroups.com
Subject: [MFP] consultancy business and entrepreneurship training in DRC and Rwada

 

https://careers-womenforwomen.icims.com/jobs/1091/consultancy%3a-diversification-of-the-wfwi-12-month-curriculum-with-an-expanded-scope-on-economic-empowerment/job

 

Terms of Reference

Diversification of the WFWI 12 month curriculum with an expanded scope on economic empowerment

 

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RE: [MFP] Introducing Case Briefs: Highlighting successful innovation

 

Dear Hugh,

 

Indeed, we can and should look for intermediate-scale models for incrementally offering value-added financial products. The coop union models in Canada and places like Germany and Netherlands are roughly based on this very principle.  Such models have not evolved yet around VSLAs in any significant way, perhaps because of slower evolution and greater degree of emphasis on making sure that VSLA roots are strong first.  Your idea of starting with life and home insurance sounds good!

 

Taking cue from you, I found this paper Burial Societies in Rural Ethiopia to be a very useful reference. Indeed, it is possible to have members owned insurance system. Interestingly, one third of Iddirs also provide health insurance. The authors, though, caution readers about their limitations.  

 

There have been cooperatives of SHGs (federations) in India (what Hans Dieter Seibel calls a village level banks) that have successfully adopted strategy of offering additional products; but not without their challenges.  SHG Federation Structures in India publication at DGRV site provides a good account.  APMAS has been one of the pioneers for federation capacity building, self-regulation/ self- governance.  Policy environment in India is very different, which is a critical factor in allowing informal SHGs to organize themselves into formal coops.

 

But back to your point, institutional architecture beyond the primary VSLAs will still need to be developed carefully to offer additional products including insurance; it is unlikely to happen on its own.  With cost efficiency as primary driver in many VSLA programs so far, maybe next set of programmes will need to pay attention to additional design options that would include products beyond basic saving and short term loans.  From some of the VSLA program implementers we had here in Coady courses, there seems to be innovations happening already on the ground in an organic fashion, suggesting larger appetite for additional financial products and services.  Maybe, insurance can become one of the next frontiers! Especially where scale has been achieved.

 

In the new design frame, I would urge that we need not be completely averse to linkages with private sector institutions, though I agree that relationship will need to be carefully designed and facilitated. I too organize the certificate course on community based microfinance at Coady and have a bias towards promoting community based institutions, but we all know from experience that developing higher tier coop structures are not always easy or cheap,  one has to carefully decide how many tiers can one build to achieve required scale, and sometimes private sector institutions may be better options as engaged partners.  There are equal number of failed cooperatives as there are failed corporate partnership ideas. As Arman points out, the promise of hybrid versions are perhaps yet to fully realized.

 

Great conversation! Apologies for writing this frequently, and hope that others will jump in as well.

 

Regards,

Anuj

 

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of Hugh Allen
Sent: Tuesday, February 25, 2014 1:20 PM
To: MicrofinancePractice@yahoogroups.com
Subject: RE: [MFP] Introducing Case Briefs: Highlighting successful innovation

 

 

Dear Anuj,

 

I must start by saying that what I know about insurance is roughly equal to my grasp of quantum theory, so maybe I’m off the mark, but here’s my reaction.

 

I agree with you that if you want a broad palette of insurance products, informal systems won’t be good enough,  but my argument is that if you wants widespread access to basic, simplified products there are solid examples.  I am not talking about group-level social funds, which work very well but are very small scale, and I am not talking about linkages to international insurance systems where reinsurance is possible.  I refer to a practical intermediate step where apexes of groups come together in numbers that are anything from a couple of hundred to 7-800 and provide limited insurance for some pretty extreme (but important) contingencies and use simplified financial systems and actuarial calculations that are based on local rather than national research.  Iddirs in Ethiopia started after world war 2 and cover the entire country.  There is hardly an adult anywhere who is not a member and they have proven to be sound, simple and sustainable throughout the entire country and offer very substantial benefits.  So my argument is based on the idea that we should start with community-based systems that offer very basic services that are in high demand and offer substantial benefits – with limited co-variant risk.  Life (or funeral) insurance is an obvious candidate as is ma jor medical with a fixed payout, or having your house catch fire.  No-one troubles to die or burn down their house to get an insurance payout.  The inconvenience is considerable.  Thus, costs are virtually zero because claims are uncommon and meetings periodic, while surpluses can be generated through a premium pool that allows for capital accumulation and safe investments.  Aiming for an intermediate level product that is simple enough to be self-managed is where I think we should set our sights.

 

Savings groups were successful because the inventors had no way of financing a loan fund and had the wisdom to look at what the informal system was already offering and tweaked it.  They realized that bringing in external entities (even local MFIs) would be complicated, expensive and ha ve limited success, so they used the tontine as the basic building block.  Now with some 10 million people in savings groups no-one really questions any more the practicability and value of this system. 

 

What I find surprising is that when we start to look at other financial products (i.e. insurance) we go back to a failed paradigm and start by assuming that linkages to the informal sector are a pre-requisite and under-value the potential of an intermediate-scale model that is member-managed and can offer a service that is a whole lot better than what savings groups can provide at this time.  So, what I am suggesting is that we should invest some of the creative energy into experimenting with community-managed insurance that we invested in savings groups and see where it takes us, without , at the start, external dependency. 

 

Hugh

 

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of Anuj Jain
Sent: 25 February 2014 03:52
To:
MicrofinancePractice@yahoogroups.com
Subject: RE: [MFP] Introducing Case Briefs: Highlighting successful innovation

 

 

Hi Hugh,

 

Good question. Though I am not qualified to answer it fully, I have following to offer.  

 

I had a Diploma course participant in 2012, who did her independent research on community based health insurance subject, and I had the chance to study that subject with her in some detail. Gist of her findings was that community based insurance can indeed help a lot, especially those who are not otherwise covered or cared for in the macro system. And yet, the examples of large scale CBHIs were few and far between, and also fraught with big challenges.  

 

As we know, at the micro-level, in VSLAS, or in Iddirs, or in SHGs, self-insurance does play a critical though limited role.  But given the complexity of insurance (need for diversity of risks, scale, actuarial  management, need for taking long-term view and capital management, fraud and conflict of interest), designing it under self-management system is perhaps a big challenge.  From my personal experience, my home insurance is by Farmers’ Mutual here in Antigonish, a cooperative and a very well-run enterprise with long reputation. And there are other coop insurance enterprises here competing with large corporates. So indeed, it is possible. And yet, I as a member of the coop do not feel any more empowered per say; and still had to agree my coop’s unilateral increase in premiums three years in a row. I still like them, perhaps because of my personal bias towards coops, and good customer service I get; but don’t feel any more ownership in the coop.

 

Self-financed and managed insurance works, in theory, but I am not sure if it can be done with sufficient scope and scale (home, health, cattle, crops, life) without broader Institutionalization and aggregation/ diversification of risks.  Perhaps a hybrid version (consolidated professionals management along with community administration/ process) is a more viable option?  But as I said, I have very limited experience, so, let the experts chime in.  And may be, we need to experiment with VSLAs, now that they are in sufficient numbers, to see if micro-insurance products can be introduced gradually. Please do share if you know of any pilots.  < o>

 

Regards,

 

Anuj

 

 

  

 

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Be half Of Hugh Allen
Sent: Monday, February 24, 2014 7:54 PM
To:
MicrofinancePractice@yahoogroups.com
Subject: RE: [MFP] Introducing Case Briefs: Highlighting successful innovation

 

 

Anuj. I am curious as to why, with all our success with community managed savings groups we repeat the approaches with microinsurance that have so signally failed in microfinance: bring in the outsiders. When we do this we quickly find that admin costs eat a large percentage of premium value and get hit quite hard by covariant risk (drought, floods etc.)  I am fairly sure that with capped benefits for a limited range of risks, communities can do as good a job. Imperfect and inadequate for sure, but a great improvement on nothing at all. Such institutions (think Iddirs in Ethiopia) can be stable a nd sustainable and can form the basic building blocks of a more integrated system, over time.  I am certain that starting with the community is a much sounder way to proceed - although I acknowledge that what savings groups have achieved may not be easily replicated in other areas.

On 24 Feb 2014 23:32, "Anuj Jain" <ajain@stfx.ca> wrote:

 

Well-argued Peter!

 

Micro-insurance, in many ways, is a conundrum of sorts.  At a system level, as you have indicated, the gross risk  of the affected population is often much higher than what they can realistically pay through premiums. And that is very often just a simple fact of life; be it health, asset, small holder farming, or even life insurance.  While we can wish and hope that private sector should and will bear the residual risk; that seems more and more a wishful thinking.

 

As this case-study also suggests, there is some room to maneuver the costs of administration and to avoid fraudulent claimants; by letting the community based and managed decision making; but there is a limit in that. And Hence, at the system level, there is almost a compulsion either have cross-subsidy (in the market sphere) or subsidy (by the State).

 

My own personal experience with micro-insurance, post Tsunami in Tamil Nadu/ India was no different, where the project had managed to sell over 175,000 policies (home, assets, life) within a short span after the launch, but the first year itself experienced another cyclone and meant larger pay-out than the premiums collected by the insurance company; forcing them to rethink and red esign the products.

 

This issue is not isolated in developing world; it even dogs a nation like USA where affordable health care (Obama Care) is forcing everyone to enroll so that cross-subsidy of more vulnerable can become more financially feasible; but it is a tough political (and economic) battle to fight.

 

Here is a source that estimates economic losses for Haiti to highlight the scale of challenge we face:

 

“Haiti, which was hit by a 7.0 magnitude earthquake in January 2010, suffered an estimated 222,570 fatalities and close to $8 billion worth of economic damage, according to its government. However, Haiti is also highly vulnerable to hydro-meteorological disasters and Maplecroft's research reveals that even without the damage from the 2010 earthquake, which was equivalent to 73% of annual GDP, the Caribbean country would still have had the 12th highest economic loss in the index (loss to GDP).” Natural Disasters Economic Losses Global Index 2010

 

I just can’t  see how any micro-insurance can realistically succeed at scale without systemic cross-subsidy or State or donor subsidy; even if re-insurance players were to brought into the picture. But must admit, my experience is rather limited. Micro-Insurance Innovations Facility at ILO has done a lot of work; it will be useful to hear their views on this subject. Here is a paper by ILO that throws some light on this subject.

 

Regards,

Anuj

 

 

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of Peter Burgess
Sent: Monday, February 24, 2014 3:36 PM
To:
Micro financePractice@yahoogroups.com
Subject: Re: [MFP] Introducing Case Briefs: Highlighting successful innovation

 

 

Dear Colleagues

 

A quick read of the Fonkoze Case Study suggests that there are a whole set of issues that are misunderstood about the purpose and practice of microcredit and microinsurance ... and the role of conventional 'for-profit' financial organizations being engaged with the social microfinance sector. 

 

Certainly there is no reason for capital markets to be excluded from support for the microfinance sector, but the reason the capital markets are supporting this sector should be that they see the value of 'creating good' rathe r than merely making goods that someone with money can buy and produce a profit! 

 

People who are typically the clients of a microcredit institution like Fonkoze are going to need help from time to time because of natural disaster. The big question is who should 'fund' the recovery that these people need. 

 

And then there is a second question. How should the high cost of administration in an emergency recovery situation be funded? 

 

In this case study, it seems that the big entities in the financial ecosystem backed out as soon as the need for their help was real and substantial. It seems to me that a rather modest hit to the profits of these institutions took precedence over what Fonkoze and its clients really needed. 

 

Remember these names ... big Swiss Re and MiCRO (MIcroinsurance Catastrophe Risk Organization) limited their exposure essentially leaving Fonkoze and its clients stuck with the disaster. This is essentially what the financial sector does all the time, and it is high time they get called on their practices. 

 

A long time ago I was the 'risk' manager and CFO of an international company operating in 26 different jurisdictions ... we managed our risk and self insured for most of the hazards that were likely to come up most of the time. However we did carry 're-insurance' for the very big event that we hoped would never happen. This was a win win for my company and for the insurance industry. 

 

< p class="MsoNormal">You cannot use quite the same model with very poor communities that are the typical clients of the social microfinance institutions. Big finance organizations that have a for-profit business model cannot deliver in the poor community world and at the bottom of the pyramid. Extracting profit from the BoP is almost always going to be at an unacceptable cost to the community ... yet these communities need investment in order to progress. Muhammad Yunus is on the right track with the idea of Social Business just as he was with social microcredit. 

 

Peter Burgess 

 


____________
Peter Burgess
TrueValueMetrics ... Meaningful Metrics for a Smart Society

Multi Dim ension Impact Accounting

twitter: @truevaluemetric @peterbnyc 
mobile: 212 744 6469 landline 570 431 4385
email: peterbnyc@gmail.com
skype: peterburgessnyc

 

On Mon, Feb 24, 2014 at 11:47 AM, <mifacility@yahoo.com> wrote:

 

The ILO’s Microinsurance Innovation Facility has launched a new series.


The Case Brief series highlights successful innovation stories from the Facility’s grantees. Each brief describes a grantee's experience and lessons learned. The latest case brief features the experience of Fonkoze.

 

Increasingly insurance is being seen as a way to protect low-income people against the worst effects of catastrophes, such as the storms, floods and earthquakes which are regular and devastating for poor Haitians. Yet a chasm exists between the world of multinational reinsurers and the daily life of Haiti’s most vulnerable. Find out how Haiti’s largest microfinance institution was able to bridge this gap in the Case Brief: Fonkoze.

 

 

 

Please feel free to share the case briefs with others.

 

Best regards,
ILO’s Microinsurance Innovation Facility

 

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