MicroLead

MicroLead

The Challenge

Although microfinance global outreach has increased tremendously over the past 30 years, an estimated 2.7 billion people around the world do not use formal financial services. About 56 percent of adults worldwide remain unbanked. Access to financial services, particularly deposit services, underpins the ability of low-income people to achieve sustainable progress on their own terms, enhance their capacities to weather shocks, smooth income streams, and save for the future. Yet providing these services, on a profitable basis, to low-income rural people remains a major challenge for most financial service providers.

How We Are Helping?

MicroLead, a global initiative to support the development and roll-out of deposit services by regulated financial service providers, seeks to respond to the rural vacuum of services. With the generous support of the Bill & Melinda Gates Foundation, The MasterCard Foundation and the LIFT Fund in Myanmar, MicroLead is working with a variety of FSPs and TSPs to reach rural markets with demand-driven, responsibly priced products offered via alternative delivery channels in combination with financial education so that customers not only have access but actually use quality services.

Begun in 2009 when UNCDF, in partnership with the Bill & Melinda Gates Foundation, initiated a flagship USD 27 million global microfinance programme to provide loans and grants on a competitive basis to microfinance institutions, commercial banks and financial cooperatives based in developing countries and pursuing a savings-based approach to expand operations to underserved markets. Expanded in September 2011 with a generous contribution from The MasterCard Foundation, UNCDF launched the expansion of MicroLead via a USD 23.5 million, six year programme which will increase access to financial services, particularly savings services, to a minimum of 450,000 low income people in rural markets of Sub-Saharan Africa. In this new phase, experienced institutions and networks from developed and developing countries will establish greenfields or provide technical assistance that results in significant impact, particularly in the number of small-balance savers reached. With a view to strengthening the field, a learning agenda was added to enable UNCDF to test if a savings-led approach creates stronger and more resilient financial service providers. The MicroLead expansion employed a proven competitive process and selected 11 projects to enable innovative and experienced microfinance leaders to scale up operations in underserved African countries. Projects funded by MicroLead include bank downscaling and greenfielding, financial cooperative creation and strengthening, Savings Group linkages to formal financial institutions, MFI transformation into deposit-taking institution, human-centered product design development, and deployment of alternative delivery channels such as mobile money, rural agents, susu collectors and point of sale devices. Market research, product development, channel development, product marketing, and financial education components will result in significant scaling up of operations. In October 2012, UNCDF expanded MicroLead to Myanmar with a USD 7 million, 4.5 year grant from LIFT Myanmar, a multi-donor trust fund. The Myanmar programme has awarded funding to three Asian microfinance leaders to support their entrance into Myanmar.

To date, MicroLead has awarded funding in 21 countries for 29 projects (working with 39 FSPs) worth USD 43.5 million. Our programme is enabling our partners to strengthen their deposit offerings and reach into previously untapped rural markets. With a specific emphasis on savings, women, rural markets, and technology, MicroLead is a performance-based programme that will build the capacity of financial institutions to pilot and roll out sustainable financial services, particularly savings services. Over two million additional small-balance depositors, a majority of whom are women and rural dwellers, will be reached by 2016.

To learn more about MicroLead, please download the MicroLead brochure

Results:

  • Funding awarded in 21 countries for 29 projects (working with 39 FSPs) totaling USD 43.5 million.
  • Eclipsing its own targets, by the end of 2013, MicroLead’s first phase (with 17 of the 39 partner FSPs) was reaching over 800,000 depositors.
  • MicroLead Expansion (phase two) targets to reach over one million rural depositors in SSA by 2016 and over 140,000 rural depositors in Myanmar by 2017.

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In Detail

Additional Information

Project

MicroLead

GoalIncrease access to and usage of financial services, particularly deposit services, by rural customers via market research, product development, channel development, product marketing and financial education.
How
  • Offering grants and loans that incentivize leading providers to start up new, or strengthen existing financial institutions that target low-income people, especially with savings, in underserved areas, particularly countries struggling to recover from crisis and conflict;
  • Through a competitive process to select leading indigenous microfinance providers from developing countries to expand their reach by implementing a variety of approaches including greenfields, transformations of MFIs to formally regulated deposit-taking institutions, and providing technical assistance to in-country MFIs;
  • Supporting technical advisors who work to help those providers to develop the institutional capacity to extend their reach.
Period2008-2017
Active InBenin, Bhutan, Burkina-Faso, Burundi, Cameroon, Democratic-Republic-of-Congo, Ethiopia, Ghana, Lao-PDR, Liberia, Malawi, Myanmar, Rwanda, Samoa, Sierra-Leone, Solomon-Islands, South-Sudan, Tanzania, Timor-Leste, Uganda, Vanuatu.
PartnersUNCDF, Bill & Melinda Gates Foundation, The MasterCard Foundation, LIFT Myanmar.
Total project cost and UNCDF contributionUSD 58,562,939
USD 7,871,850

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