Role of MFIs in building sustainable livelihoods of the poor It’s all about financial services Unbundling Microfinance Products and Services Marcus Fedder Managing Partner Agora Microfinance Partners LLP

MFIs serve their clients best when concentrating on providing the fullest range of appropriate financial services to help the poor build their livelihoods A combination of MFI-provided financial services and NGO- provided multi-pronged interventions can lead to a greater success in alleviating poverty for the poor and the very poor

Agora works in close partnership with Concern Worldwide on the Board of AMK (Cambodia's largest MFI in terms of number of clients) and in the creation of greenfield MFIs Agora and Concern select countries and areas to build greenfield MFIs on the basis of detailed market research Concern’s presence in the countries in Africa chosen for greenfields is a key criterion as Operating in the field, Concern has in-depth knowledge of the population and of micro business potential

Agora and Concern expertise and focus complement each other Microfinance is one building block in Concern’s holistic approach Agora focuses on providing full range financial services: -Loans -Savings -Remittances -Insurance

Focusing on "microfinance only" is a conscious decision not to provide "microfinance plus" as an MFI The important task of capacity building is left to Concern – a specialist in this field So, are the poor really potential clients for MFIs?

Data source: AMK Cambodia

Data source: AMK Cambodia

Loan Use by Poverty Group-2011 PoorMedium Better- off Agriculture 37%33%30% Animals 14%13%18% Fishing CPR 4%3%2% Manufacture 2% Petty Trade 4%5%7% Services 1%5%11% Cost Migration 1% 2% Land 0%1%2% Assets 4%12%10% Gold 0% Debt 5%3%2% Give Loan 2%6%2% Food 12%7%0% Health 8%2%1% Celebrations 1% 2% Emergency needs 7%5% Data source: AMK Cambodia

Data source: AMK Cambodia

Specialists provide the best services: Concern Worldwide as a specialist NGO is best positioned to provide a holistic approach Agora's MFIs are best positioned to provide financial services at fair and sustainable costs to the client

As a result, clients have the choice to obtain the most suitable products from the MFI without having to pay for bundled services they may not require Bundling services and off-loading the costs onto clients contravenes (in Agora's view) the principle of client protection By letting each institution concentrate on its core expertise and strength, clients are served better and MFIs are better positioned to maximise their social return whilst realising an attractive and fair financial return for their investors

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