Our Approach
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“Through our research and advisory work, we aim to increase access to, and use of, formal financial products and institutions by greater numbers of poor and marginalized people. Better understanding of the constraints and opportunities on both the supply and demand side will help the industry to make 'inclusive finance' a reality.” Evelyn Stark, Team Leader, Expanding Access
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Graduation Models
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The graduation model incorporates the targeting and transfer elements of safety net programs, and introduces entrepreneurial activity through training, an asset grant, and credit. The key to the graduation model is the careful sequencing of several development services to facilitate consumption stability and, subsequently, enterprise development.
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When savings accounts in financial institutions serving the poor outnumber microloan accounts seven to one, one thing is certain: microfinance clients want savings services.1 The problem is, deposit-taking financial institutions don't always have the ability or incentive to provide them. Recent research led by CGAP found that "double bottom line" financial institutions (which seek to pursue a development mission while operating sustainably) can mobilize savings from poor clients and still be profitable overall. When "total client profitability" is considered, providing savings may be a real business opportunity over time.
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Pro-Poor Innovation Challenge
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Extending financial services to larger numbers of very poor populations continues to be one of the biggest challenges facing the microfinance industry. CGAP's poverty agenda has therefore always focused on a commitment to demonstrate that the financial frontier could indeed be deepened to reach poorer people and that services can be designed to reduce their vulnerability and increase their economic well being. The Pro-Poor Innovation Challenge (PPIC) has been a cornerstone of this agenda, funding smaller institutions that demonstrate effective models and methodologies for deepening poverty outreach and impact, while working toward sustainability.
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Social Performance
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Country-Level Savings Assessment Tool: These financial-sector studies identify opportunities for, and obstacles to, increasing poor people’s access to formal-sector deposit services.
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Assessing the Relative Poverty of Microfinance Clients: This CGAP tool measures the levels of poverty of clients relative to people within the same community through a poverty index that allows for comparisons between MFIs and across countries. Primarily designed for donors and investors who would require a more standardized, globally applicable and rigorous set of indicators to make poverty-focused funding decisions, should be used in conjunction with other appraisal tools.
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