Using Business Relationships to Drive Inclusive Financial Services Feed the Future Regional Trade Meeting | April 12 th, 2016 | Tanzania Presented by Amolo Ng’weno, East Africa Regional Director at BFA for:

Historically Direct Approach To Financial Inclusion A formal financial institution reaches out to an underserved client Direct Approach Doesn’t Work Well Costs and risks (perceived and actual) constrain this approach

But Underserved People Interact with a Range of Touchpoints These touchpoints may be shops, schools, employers or businesses who buy from them, with whom people transact regularly and mainly in cash

Increasingly, These Touchpoints Have Smartphones These devices can be used to digitize the interactions captured at the touchpoint End customer likely has a mobile phone, but not a smartphone Pain points experienced by touchpoints Lack of employee oversight by owner Loss or theft Inability to add expand service offering

Tech Partners Provide Connections A range of service providers can put their software on smartphone, enabling new data flow & collection Tech partners may provide some or all of these services: Connection Collection & storage Analysis Purpose & usage Tech Partners may be: IT Companies with connections and value propositions Larger corporations with large base of low income suppliers, employees, acquirers of transactions FIBR, in essence, is the Digitization of the Business Relationships into Useable Data

The Sale of Data Linkage Model 1 Model 1: Sell data, new and direct Aggregator sells data to financial institution, which is able to assess risk and provide for underlying customer or touchpoint client directly Data Flow Financial Flow

Wholesale Funding Linkage Model 2 Model 2: Wholesale Aggregator offers the financial service directly or through the touchpoint client using wholesale funding or underwriting from a financial institution Data Flow Financial Flow

Platform to Platform Linkage Model 3 Model 3: P2P Aggregator manages the financial services as a platform from funders but does not itself assume the risk Data Flow Financial Flow

FIBR Works With Project Partners to Link Financial Services Project Partners make up Business, Technology and Financial Partners that can offer all kinds of services FIBR Project Partners have links to underserved people, which can be digitized and used to link unbanked customers to new financial services Financial service provider FIBR Project Partner Touchpoint – SMEs End user – Low income customers

An Example of a FIBR Linkage in Agriculture A potential example and roles of a FIBR project partner, touchpoint entity and end user FIBR Project Partner: Agriculture tech company or solution to track loans to farmers Value proposition: Digital solution to manage and create digital records of hundreds of loans that are currently managed on physical ledger or through verbal agreements. Bridge to funds towards working capital Touchpoint: SME Purchase clerks (PC) with smartphone Value proposition: Easier to manage hundred of loans and more access to capital for PCs to provide more loans to farmers (and do more business) End user: Smallholder farmers Value proposition: Opportunity to access capital to smooth jagged income flows due to erratic crop season Linkage: Loan Service Provider Provides funding for working capital for PC to disperse more loans Data Flow Financial Flow

What FIBR Offers For Project Partners A package of technical assistance and support for the design and development of new linkage solutions For Industry Opportunity to participate in active learning as FIBR moves forward Investors could fund working capital of the FSP to facilitate wholesale model and/or also provide equity funding for the project partners

Thank You A global consulting firm specializing in the development of financial services for low income people around the world Our approach is to seek out, create and implement solutions to the challenges faced by low income people in managing the financial matters that underpin their lives. We purposefully partner with cutting-edge financial and nonfinancial institutions that touch the times of low income customers. In creating solutions, we integrate our deep expertise in customer insights, business strategy, new technology and growth-enabling policy & regulations. The MasterCard Foundation works with visionary organizations to provide greater access to education, skills training and financial services for people living in poverty, primarily in Africa. As one of the largest, independent foundations, its work is guided by its mission to advance learning and promote financial inclusion in order to alleviate poverty. Based in Toronto, Canada, its independence was established by MasterCard when the Foundation was created in About the Partners