CGI

CGI Closes: Amidst Glitz and Pomp, Substance

Jamie Zimmerman — Fri, 26 Sep 2008 18:32:00 -0400

The Clinton Global Initiative is coming to a close and as I sit here listening to Gordon Brown talk about the importance of the global economy and the gap between the rich and poor, I find myself also thinking about the images of Drew Barrymore, Matt Damon, Muhammad Yunus, Bono, Bill Gates, Wylclef Jean and Bill Clinton on my camera, and last nights performances of James Taylor and Yousoo Ndour's. Waking up from my day dream, I realize that this conference could have easily succumbed to three days of a star-studded, papparazzi-riddled social affair. And perhaps in some ways it is.

But as I go through the notes I've taken over the last three days, I am quite pleasantly surprised by the amount of substance and the breadth of issues and innovations covered over the last three days. Indeed, I'm so impressed that I find myself at the end of this conference in 30 minutes unwilling to end my blogging on its sessions and commitments. Over the next week, I plan to continue providing commentary on CGI sessions, issue areas and commitments. Here is a sampling of topics I plan to cover:

Asset Building Beyond Microfinance? The Forgotten Bottom and the Missing Middle
Rural Finance: a New Frontier for Global Asset Building?
Technology, Information and the New Age of Access
Energy, Climate Change and Sustainable Development: An Opportunity for Microfinance?
Food Prices Shifting Microfinance Focus?
CGI Commitments: My Top 10 List

Send questions, comments, and stay tuned!

CGI Call for Integrated Solutions II: Perspectives from Obama and McCain (or NOT)

Jamie Zimmerman — Thu, 25 Sep 2008 18:18:00 -0400

At this morning's opening plenary, members of the CGI searched for open seats while the the press groaned about the lack of space, sat on the floor, weaseled their way onto members-only tables and the national press complained about the lack of exclusive press pools just for their reporters and cameras. Needless to say, there was a lot of nervous energy in the room, waiting to hear form presidential candidates John McCain and Barack Obama provides the opening and closing remarks to a panel on Integrated Solution to water, food and energy crises. Or maybe just to hear them talk. But I figured that with all the commotion surrounding their appearance here, I would be remiss not to cover their remarks on the Ladder, despite (sadly) the lack of any direct comment on asset building.

Perhaps to be expected, McCain's opening remarks for the session actually only focused remotely on the environmental issues of the session and instead addressed the financial crisis and his decision to suspend his campaign to address them. He did talk about the need for a greater supply of oil and for clean burning coal (apparently he isn't aware of the anti-oil, anti-carbon sentiment expressed throughout the CGI, particularly from Clinton and Gore, who yesterday called the phrase "clean-burning oil" a patent lie). Energy issues aside, McCain did pledge to fight malaria, improve child and maternal health, improve food security, reforming foreign aid, and especially, freeing trade (although this issue has been all but ignored at this conference). Those are many good causes, but I didn't get a sense of the "integrated approach" he would take to achieve them, likely because he didn't have time to articulate it after spending most of his 15 minutes advocating the his position on the Wall Street Bailout Bill.

Obama's closing remarks, on the other hand (and perhaps also to be expected), focused much more on the specifics of his "integrated solution" to global issues. Indeed, in the spirit of CGI, he made very specific commitments in the areas of climate change (incentives for energy investment), poverty (bottom up development through aid reform), education (passing the Education for All Act) and health (malaria nets), stating, "prosperity cannot be sustained if it shuts people out." But his integrated solution did not just call for working toward all of these goals simultaneously, but also for national and global cooperation and action to do so. In his words, "the world is intertwined and our destinies are shared" and the global challenges of climate change, disease, extremism and poverty "threaten our common humanity."

Obama took time for politicking as well, stating that it's "outrageous that taxpayers bear the burden of greed and irresponsibility on Wall Street, but we must do something. ...American people deserve to hear from the candidates - times are too serious to put campaigns on hold." And he also laid out his position on what needs to be included in the Bailout Bill, a quasi-déjà vu of McCain's own schpeel 1 hour earlier. The biggest difference perhaps was that, in this crowd, Obama's was received with cheers and ovation as opposed to polite applaud.

CGI's Call for Integrated Solutions I: How About a Broader Perspective on Poverty?

Jamie Zimmerman — Thu, 25 Sep 2008 17:34:00 -0400

All day yesterday, I capitalized on the opportunity to unabashedly promote the asset building framework by putting a spotlight on its prominence in poverty alleviation discussions and commitments here at CGI. And I actually barely skimmed the surface of some of the specific asset-focused activities coming out of these sessions (Habitat, others). As much as I relished it, I also want to acknowledge that asset building and financial services for the poor are one piece of poverty alleviation in a complex global environment. The specific commitments are great, but what about the larger perspective?

Yesterday's afternoon CGI held a plenary on profits, jobs and equitable growth. The stifling of poverty alleviation around the world is not simply due to lack of access to effective financial services, but also to lack of access to property, to opportunity, to education and to healthcare. Exclusion from any combination of these often results market inefficiencies, slack productivity, an inability for an individual to live to their full human potential. Hernando de Soto called for property rights and legal empowerment of the poor to give them the tools they need to achieve their version of the American Dream.

Still wearing me asset-building hat, I applauded when members were reminded of the threat and persistence of poverty traps, but were instead described as inequality traps. But the panel didn't go far enough: the term "inequality" was largely used in the context of income. In fact, President Clinton remarked that income inequality has increased every year in the United States since 1973. This seems a dramatic statement, but imagine how much more impact it would have had if he had instead stated the rise of wealth inequality, much starker (by some estimates 50 times more) than income inequality.

If we are going to develop any successful, integrated solutions to poverty alleviation (the subject of this morning's plenary too, and more to come on that), then the very least we could do is stop describing poverty so very narrowly as a lack of income. Instead, why not describe it as a lack of assets (financial, human, social) that the enterprising poor can leverage in any number of ways to improve their lives?

Savings and Asset Building at CGI Part II: Working Group Session II – Financial Services for the Poor

Jamie Zimmerman — Wed, 24 Sep 2008 20:09:00 -0400

There is still much to learn about the financial tools needed to help the world's poor mitigate risks and build assets in order to build an economic base and contribute to long-term economic development. This session primarily focused on "building assets in the developing world."

Sylvia Matthews , director of Global Development at the Bill and Melinda Gates Foundation opened the second working group session stating that 2.3 billion with no access to financial services for the poor, even though evidence suggests they would make perfect customers. She asked her panelists: "What do people need, what works, what are some solutions and how do we reach scale?" Again, asset building and asset protection products reigned supreme:

Bob Rubin, the first Director of National Economic Council, then Secretary of the Treasury, and now a Director at Citigroup, Inc remarked on the health of the financial system and impact on financial services for the poor. "We need to stem the crisis of confidence in the US now, but we also need to put into place effective responses to longer-term problems the country faces, like healthcare, education and economic opportunities for the poor."

Fazle Abed, the Founder and Chairman of BRAC, spoke about BRAC's ability to reach the poor at scale. Abed described a simple model of success for BRAC, which now reaches millions of clients and has collected 200 million in savings deposits of the poor: "We started small, then tried to make it effective, then efficient, then expanded." Savings coupled with lending is a critical part of their model, which he says "happens like clock-work." It gives clients discipline and regularity, and loans repaid weekly in small sums. In his view, the biggest challenge faced to provide financial services in most countries, is that MFIs cannot mobilize savings -- a huge regulatory hurdle to reaching the poor with savings and other financial services. When financial institutions can't take savings, they lose out on that access to capital and have to borrow equity from capital markets, stifling the growth of some institutions. Abed called for a structure permits these organizations to take deposits so that they can expand programs in un-reached areas quickly.

James Mwangi, CEO of Equity Bank, Africa's largest microfinance institution and now large regulated bank, described the sweeping success of the bank's pro-poor model. Equity holds 52% of all bank accounts in Kenya. Equity's client base also doubled since their last CGI visit, from 1.4 million depositors to 2.8 million. Equity has been able to scale (7 of 10 accounts opened in Kenya today are opened at Equity) because they tried to remodel the bank to meet the needs of the poor. For instance, they structured a low-cost, simple savings product to be more competitive than otherwise available to population (typically under than mattress). Getting the product right, as well as the system to deliver it, has helped Equity become one of the most innovative, fastest growing, pro-poor financial institutions in the world, none of which would be possible, he says, if the bank were unable to collect savings in Kenya.

At the end of the panel, the Working Group was asked: Given the challenges and needs of the poor, what do you believe are two to three actions that different sectore should take in order to meet the financial needs of the poor?

To the global asset building community, I ask: What do you think?

Savings and Asset Building at CGI Part I: Poverty Alleviation Working Group Commitment Lunch

Jamie Zimmerman — Wed, 24 Sep 2008 18:43:00 -0400

When I walked around yesterday's CGI exchange, getting a convention-style glimpse into the organizations and corporations making commitments to poverty alleviation this year, I was particularly excited to see not only institutions focused on financial services for the poor, but particular, savings and asset-building. Yes, the actual word - asset-building - at the CGI. Considered by some as an inaccessible term to describe wealth creation opportunities for the poor, I am thrilled to see it permeate the global microfinance field (as I assumed it would). Oweesta, the CDFI running IDA and other asset intervention work in native American communities in the USA, seems the only organization focused on empowerment of native communities, and if carrying the AB message in all of their materials. And Oxfam, who have been running a Gates-funded Savings for Change program (informal rotating savings groups mobilizing deposits for those still completely untouched by formal microfinance) for a few years around the world, have added the term asset building to the September version of the program's one pager.

Asset-building is catching on, and in the microfinance field, savings is the catalyst. For example, in the first working group session on poverty alleviation (just wrapped up at 1), three of the biggest names in microfinance (Christopher Crane of Opportunity International, Elizabeth Littlefield of CGAP and Maria Otero of Accion International) discussed their experience with their organizations commitments to the poor. For two of of these microfinance leaders, savings took center stage.

For Christopher Crane, CEO of Opportunity International made a commitment in 2005 to scale to 50 million people into financial services and 5oo million dollars in the field within 5 years Just three years, later, OI has already mobilized 600 million dollars, and amazingly half of that (300 million dollars) comes from the savings of clients in Africa. Obviously, this is an indication of a tremendous demand for savings. And itÕs also a sign of things to come. Crane foresees the MicroFinance field consolidating; bigger, stable, formal institutions will be best able to use new technology to digitize transaction (smart cards, mobile banking, etc), and they also will have greater access to capital not only through their ability access the capital markets, but also through their ability to mobilize savings)

Elizabeth Littlefield of CGAP spoke of their 2005 commitment to figure out how to get mobile banking to poor people in developing countries. Technology reduces the transaction costs that are largely the main obstacle to banking services for the poor, though it often needs to be used in conjunction with a cash point (i.e., banking agent). The lessons CGAP has learned from its 10 pilots are both good and bad. The good news is that it works and its popular (20 telecom operators experimenting with mobile banking and demand is huge (3 million subscribers in 18 months in Kenya)). In her view, though the bad new is that mobile banking has not figured out savings. In the next two years, CGAP is committing to understanding the needs of the poor in order to tweak the system, create better policy environment, do more experiments, and in the end, create good products that will reach 25 million people with effective mobile banking services.

All this on savings and asset building, and we haven't even started the working group session on financial services for the poor... Stay tuned...

Live from the CGI: President Clinton Exclusive II – Energy, the Environment and T. Boone Pickens

Jamie Zimmerman — Tue, 23 Sep 2008 23:24:00 -0400

Last night, in the few minutes we weren’t talking about the financial crisis and the impending bailout, President Clinton waxed political on the potential for energy investment in the United States. According to the President, the near-certain reality of approving legislation liberalizing off-shore drilling should be seen as a political opportunity for progressives interested in sustainable environment and combating climate change. But if we’re going to “give” drilling to the right, the left should negotiate hard for the environment, including:

Extending solar and wind energy tax credits from three years to ten;
The creation of a fee collection system to modernize the electricity grid;
$10,000 tax credits for purchasing plug-in electric hybrid cars, and;
Compressed natural gas for trucks

On the subject of T. Boone Pickens, whose advertising campaigns have sparked intrigue across the USA, Clinton commented, “Boone Pickens is a god-send to this effort.” More specifically, Pickens’ plan is to modernize the electricity grid and harness the wind to power the whole of the United States. This is something reportedly is something wind can actually do, with the right grid. And despite few fiscal incentives to invest in this new technology (something President Clinton suggests need immediate remedy), there is currently two-year waiting list for wind-powered mills.

But why is off-shore drilling inevitable? In Clinton’s mind, even though he knows for a fact that there is no more than 6 months of oil in the arctic refuge that the legislation would open to drilling, the fact of the matter is that the government has got to “get real.” Everyday Americans are hurting in a big way, and they see gas prices as the cause of so much of their pain. This short-term solution is a political necessity. But, if “there is going to be drilling, let’s get something for it.”