Blog

Insurance matters for capital market development – or does it really?

Does insurance matter for welfare and growth? Within the microinsurance discourse, the answer to this question is usually considered from the risk mitigation point of view: By helping people to mitigate risk, it makes them more resilient, thereby impacting on household welfare. Then there’s also an intermediation role. By acting as institutional investors, insurers aggregate domestic capital and mobilise it into long-term investments. Thus, it is commonly assumed that insurance strengthens capital market development for growth.   But what if it is not so straightforward? Recent research conducted on the link between insurance and capital market development across fifteen Sub-Saharan African countries…

Secure in Exclusion – early warning signs of a less inclusive financial sector in South Africa

Opening a bank account in South Africa can be a frustrating experience. First, you need to pull together an inventory of documents (proof of income, employment and address, national identify, passport, etc.), second you need to book time off work or make provision for an early Saturday (when banks operate), then you need to physically go to the Bank, wait in the queue, and hope that the Banks’ processes and systems will agree that you are in fact who you say you are. Hopefully this only takes one trip. More likely, it will be multiple trips. For example when a…

This road will not get you there

This week I drove 600km from Cape Town airport to my home and sheep farm in the rural Karoo. Whereas the drive was pleasant and gave me time to reflect on many things, the joy of driving was definitely not the purpose of this journey. Getting home to my family was the goal.   I have realised that much of our difficulties in making headway with financial inclusion links back to this confusion between the road and the destination. Financial services, such as bank accounts or mobile money accounts, are roads not destinations. We travel across them because we want to…

Deepening measurement in financial inclusion

You manage what you measure and thus it is important to have a measurement framework that drives the right behaviour. Financial inclusion has strong established measurement frameworks dealing with access to and usage of financial services. (e.g. AFI's access and usage indicators, FinDex's formal account ownership indicator and FinScope's access strand).   These have had a strong impact on policymakers and regulators. 24 AFI members have committed to access targets and 31 to usage targets. National and global advances in these metrics are regularly celebrated and encouraged. New technologies, such as GIS plotting, has opened the door to target access…

Alternative data 'lends' a hand

Worried about how to improve your credit score? At least you have one. The harsh reality is that credit bureaus do not have data on the vast majority of the world’s population. According to the World Bank, credit bureaus cover less than a third (30%) of the adult population in the entire world, and in Sub Saharan Africa, they only cover 6% of the adult population.   What does this mean for credit lending? It means most adults in the world are excluded from access to formal credit. Why? There are a number of reasons that cause exclusion to credit;…
 

Blog

Insurance matters for capital market development – or does it really?

Does insurance matter for welfare and growth? Within the microinsurance discourse, the answer to this question is usually considered from the risk mitigation point of view: By helping people to mitigate risk, it makes them more resilient, thereby impacting on household welfare. Then there’s also an intermediation role. By acting as institutional investors, insurers aggregate domestic capital and mobilise it into long-term investments. Thus, it is commonly assumed that insurance strengthens capital market development for growth.   But what if it is not so straightforward? Recent research conducted on the link between insurance and capital market development across fifteen Sub-Saharan African countries…

Secure in Exclusion – early warning signs of a less inclusive financial sector in South Africa

Opening a bank account in South Africa can be a frustrating experience. First, you need to pull together an inventory of documents (proof of income, employment and address, national identify, passport, etc.), second you need to book time off work or make provision for an early Saturday (when banks operate), then you need to physically go to the Bank, wait in the queue, and hope that the Banks’ processes and systems will agree that you are in fact who you say you are. Hopefully this only takes one trip. More likely, it will be multiple trips. For example when a…

This road will not get you there

This week I drove 600km from Cape Town airport to my home and sheep farm in the rural Karoo. Whereas the drive was pleasant and gave me time to reflect on many things, the joy of driving was definitely not the purpose of this journey. Getting home to my family was the goal.   I have realised that much of our difficulties in making headway with financial inclusion links back to this confusion between the road and the destination. Financial services, such as bank accounts or mobile money accounts, are roads not destinations. We travel across them because we want to…

Deepening measurement in financial inclusion

You manage what you measure and thus it is important to have a measurement framework that drives the right behaviour. Financial inclusion has strong established measurement frameworks dealing with access to and usage of financial services. (e.g. AFI's access and usage indicators, FinDex's formal account ownership indicator and FinScope's access strand).   These have had a strong impact on policymakers and regulators. 24 AFI members have committed to access targets and 31 to usage targets. National and global advances in these metrics are regularly celebrated and encouraged. New technologies, such as GIS plotting, has opened the door to target access…

Alternative data 'lends' a hand

Worried about how to improve your credit score? At least you have one. The harsh reality is that credit bureaus do not have data on the vast majority of the world’s population. According to the World Bank, credit bureaus cover less than a third (30%) of the adult population in the entire world, and in Sub Saharan Africa, they only cover 6% of the adult population.   What does this mean for credit lending? It means most adults in the world are excluded from access to formal credit. Why? There are a number of reasons that cause exclusion to credit;…
 

 

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