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Financial Services for the Poor
 
DIG is committed to expanding the frontiers of development finance though innovative programs that help poor families and entrepreneurs around the world increase their income and build their asset base. Illustrative of this point, we have utilized our expert program management and advisory services on a variety of successful endeavors. These key programs include:

Detailed descriptions of these programs are located below:

SUWASA Kenya II (2013-2015): The USAID-funded SUWASA Kenya II project aims to bring affordable, clean water to low-income communities in Kenya through innovative financing arrangements among banks, utilities and the urban poor. Leveraging DIG’s experience and success from SUWASA Kenya I, SUWASA Kenya II is designed to facilitate commercially-viable deals in the water sector. To facilitate these deals, DIG strengthens the capacity of commercial banks to design and deliver customized loan products for utilities needing capital, and builds the utilities’ capacity to develop bankable infrastructure financing proposals and improve household service delivery. Ultimately, the project aligns the financial incentives of the utility, bank and consumer to drive a financially sustainable model that increases first time and improved access to water, reduces the cost of water to the end user, and increases profitability of the utilities and the banks.  By capitalizing on SUWASA Kenya’s experience in innovative water financing and replicating this throughout Kenya, this project will serve as a model for larger regional initiatives in Africa. With collaborating sector partners, SUWASA Kenya II has identified potential investments of more than USD 36 million among 29 urban utilities, including network extensions and rehabilitation, household connections, non-revenue water reduction and installation of energy-saving and renewable energy improvements, among others.  The project will work with up to eight utility partners and three commercial banks to meet the overall SUWASA goal of fostering the transformation of water and sanitation delivery services in Africa to achieve long-term financial sustainability through the application of market-based principles.  

Dakar Municipal Finance (2013-2015): The city of Dakar, Senegal, hired DIG to help it launch its first municipal bond. DIG is providing technical and monitoring assistance to the municipality, which expects to raise a maximum of USD 40 million through a five-year bond scheduled to be offered in August 2014. With the funds, the city will implement projects to improve the quality of life of the urban poor. DIG is working closely with the mayor and senior municipal officials to set the Senegalese capital on its course to become the first local authority in the French speaking West African monetary zone to raise funds through a bond offering. The City of Dakar will not only serve as a model for other municipalities in Senegal, but for the region as a whole.   

SUWASA Kenya Initiative (2010-2013):  The SUWASA Kenya project fell under the umbrella of the USAID-funded Sustainable Water and Sanitation in Africa (SUWASA) initiative, which aims to strengthen water and sanitation utility governance and finance to expand and improve water and sanitation services for the poor in Sub-Saharan Africa. As a subcontractor to Tetra Tech, DIG implemented the SUWASA Kenya Initiative, a 30-month project to improve water and sanitation services for close to 40,000 slum dwellers in two Kenyan cities. In Kisumu, SUWASA Kenya facilitated a partnership whereby K-Rep Bank provided financing to the Kisumu Water and Sewerage Company (KIWASCO) to install small pipe infrastructure and households connections for more than 8,500 low-income residents. Rather than paying exorbitant prices set by water vendors, consumers now pay approximately half the price for double the amount of water. In Nakuru, SUWASA Kenya brought together the Nakuru Water and Sanitation Services Company (NAWASSCO) and Family Bank to introduce a public pre-paid meter system to improve access to clean and affordable water for more than 30,000 people. A combination of financing from Family Bank to NAWASSCO and grants from the USAID Small Investment Program and Government of Kenya Water Services Trust Fund funded the pilot project, the first pre-paid meter system to be launched in Kenya. 

Improvement of Shelter Afrique’s Anti Money Laundering (AML) Policies and Procedures (2010): DIG was contracted by Shelter Afrique, a regional housing finance institution based in Kenya, for assistance in achieving compliance with the Financial Action Task Force’s (FATF) best practices on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT). To this end, DIG reviewed Shelter Afrique’s AML policies, processes, systems and procedures and analyzed its organizational structure and institutional capacity. DIG further assessed the current state of financial regulatory compliance in Kenya. Through these activities and on-site technical assistance, DIG provided Shelter Afrique with concrete and workable recommendations, updated operations manuals and internal control systems, and effective AML software. DIG also developed training materials and training staff in how to comply with AML/CFT standards.

India Implementation Grant Program (2009-2012): DIG supported Habitat for Humanity International (HFHI) in India by catalyzing a strong housing microfinance sector as a means to encourage inclusive financial markets and improve housing conditions for low-income families in India’s urban realm. The program increased the poor’s access to financial services and improved housing through technical assistance to CapStone, an urban focused microfinance institution (MFI), and to HFHI’s Housing Microfinance Technical Assistance Center (HMFTAC), an institution that provides technical assistance to MFIs and outsourced construction technical assistance to poor households. Through CapStone, DIG examined new business models for providing individual microfinance products, housing microfinance products and micro-mortgage products in urban environments. DIG provided technical assistance to CapStone by designing financial products, developing and reviewing operations manuals and training modules, and providing comprehensive training for CapStone staff in DIG’s individual lending delivery approach.  For the HMFTAC, DIG’s role was to promote and stimulate the housing microfinance sector in India through training HMFTAC staff to provide a broad range of housing-related technical assistance to MFIs, including market analysis, peer learning, manuals, training, budgeting, and client construction services.  

Microfinance Technical Assistance to Emkan (2009-2010): DIG provided comprehensive on-site technical assistance and senior management to support Emkan in its goal of becoming one of the largest microfinance institutions in Lebanon. DIG successfully launched Emkan’s operations at all levels. This includes developing the five-year business plan and financial projections as well as performing strategic planning for the launch of the initial branches and initial market analysis, product design and on-going roll-out. DIG also designed the detailed microfinance and branch level operations manuals and related materials including loan applications, incentive schemes, and MIS technical parameters and report formats. DIG also led the training of all Head Office and Branch Management and field-level staff as well the development of a training-of-trainers (TOT) program for all aspects of the nation-wide microfinance field operations.

Bank Downscaling: Technical Assistance to Union Bank of Nigeria (2009-2010): DIG implemented a comprehensive technical assistance program for the creation and start-up of a microfinance division within Union Bank of Nigeria, the country’s largest commercial bank. DIG developed strategic plans, designing products, building human resource capacity, establishing operational systems and delivery mechanisms, and supporting the set up of a tailored management information system (MIS). Working in close collaboration with the bank, DIG also guided management and laid the groundwork for the transformation of the microfinance division into a full-fledged microfinance bank.

Microfinance Training of Trainers for USAID-Iraq (2009-2010): With funding from USAID through the Tijara Program, DIG was contracted by Louis Berger Group (LBG) to offer a comprehensive training of trainers program, focusing on the Consultative Group to Assist the Poor (CGAP courses, to provide real-life training opportunities for microfinance practitioners from Iraq. DIG’s role was to update CGAP’s training courses in both English and Arabic in the subjects of Financial Analysis, Accounting, Operations Risk Management, Product Development, Delinquency Management, and Human Resources Management; assess the 11 TOT candidates’ current knowledge of the modules; train the First Generation of Microfinance Trainers; provide LBG with recommendations on which Iraqis should be certified as trainers; and issue formal certifications for the trainers.

Consumer Protection and Financial Literacy in the West Bank (2009-2010): The Expanded and Sustained Access to Financial Services program (ESAF) supported USAID's efforts to build a more inclusive financial sector that increases the sustainable access to financial services for Palestinian households and micro, small and medium enterprises (MSMEs). As the program’s implementing agency, the Academy for Educational Development (AED) contracted DIG to conduct an assessment on the state of consumer protection and financial literacy in the West Bank for the Banking, Insurance, Microfinance, and Leasing sectors. Through extensive research, a field mission, and focus groups, DIG evaluated how the current state compared to international good practices as delineated by the World Bank. DIG further made recommendations and prioritized follow-up activities for regulatory bodies, industry associations, and other consumer and financial protection literacy stakeholders. These recommendations were reviewed and favorably received by the Palestinian Monetary Authority and Palestine Capital Market Authority. In 2010, DIG was contracted to return to the West Bank to implement these recommendations.

Housing Microfinance Training in the Dominican Republic (2009):   Agence Française de Développement (AFD) contracted DIG to deliver a week-long training course on housing microfinance to Dominican microfinance practitioners. The course, presented in Spanish, provides a general mapping of the state of practice for housing finance for the poor as well as challenges practitioners face in the field.

Program to Support Arab Center for Agricultural Development (ACAD) to Comply with Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Requirements (2008-2009)Agence Française de Développement (AFD) contracted DIG to provide ACAD with the systems, tools, and training to respond and comply with AML/CFT requirements in the West Bank and Gaza. Through on-the-ground missions to the West Bank, DIG undertook a comprehensive review of ACAD’s institutional structure, operations, systems and internal controls to assess its compliance with the Palestinian Monetary Authority’s Anti-Money Laundering law. Based on its findings, DIG worked with ACAD to design and implement a training plan to build staff capacity to ensure compliance with AML/CFT standards, and to effectively integrate required changes into ACAD’s existing systems and structures.  

Financing Models for Self-help Based Shelter Improvement (2008-2009): In 2008, DIG launched the Financing for Self-help Based Shelter Improvement program in Jordan after being contracted by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to support the adaptation and implementation of the United Nations Relief and Works Agency for Palestine Refugees in the Near East’s (UNRWA) Microcredit and Microfinance program. Under this initiative, DIG developed new financing tools geared towards shelter improvement in the Palestinian refugee camp, Talbiyeh, a camp in Jordan for residents who do not qualify for UNRWA's Special Hardship Case. DIG reviewed UNRWA programs and designed the microfinance home improvement market demand study that was conducted in four camps in Jordan (Talbiyeh, Beqa’a, Marka and Jarsh). Leveraging the information garnered in these studies, DIG designed a home improvement lending product and corresponding loan application form. DIG further developed an implementation strategy as a pilot for successive product launches in the West Bank and Gaza, Syria and Lebanon.

Technical Assistance to Tameer Microfinance Bank (2007-2008):  In 2007, DIG secured its second contract with Tameer Microfinance Bank in Pakistan for the provision of technical assistance under the umbrella of CGAP Retail Advisory Services (RAS) program. To further support Tameer’s shift from a typical bank model using outreach and relationship teams to a more traditional MFI model using loan officers, DIG conducted a needs assessment of the organization; designed, carried out, and analyzed a market demand assessment; and provided intensive training and technical assistance. To streamline and update Tameer’s approach to training, DIG developed and delivered six training modules. The first six-day training module Microfinance Operations and Supervision Training included: an introduction to microfinance; an overview of microfinance products; and instruction on lending methodology, loan origination, selling techniques, loan applications, portfolio follow-up and delinquency management, customer service, and human resources. Subsequent sessions included a Training-of-Trainers (ToT) workshop, Risk Credit Committee Training, MIS Training, Loan Assessment Training, and Branch Management and Field Supervision. The latter included instruction on branch structure, staff roles and responsibilities, loan origination, staff supervision and capacity building, monitoring and evaluation, and internal controls.

As part of its on-site technical assistance, DIG assessed and made recommendations on Tameer’s three MIS systems, loan applications, and relationship manual. DIG further reviewed and expanded Tameer’s business plan with updated financial objectives and projections. DIG’s efforts to establish and expand Tameer Microfinance Bank have contributed to its scale: As of March 2011, Tameer boasted an impressive gross loan portfolio of USD 18.2 million and over 71,000 active clients and was fully operationally and financially sustainable. In fact, Tameer is one of the first nationwide, private sector, commercially sustainable MFIs in Pakistan.

CapStone Financial Services Private Ltd. (2007-2011):  In 2007, DIG established CapStone Financial Services Private Ltd. in Chennai, India as an urban-focused microfinance institution.  CapStone began lending in February 2008 as a unique provider of financial services to lower income households in urban India. CapStone offered a full suite of individual microfinance loan products, with a particular emphasis on housing repair and reconstruction loans.  Through professional delivery of competitively priced microfinance loan products, CapStone pioneered growth to an underserved market segment. The institution’s small pilot fund of USD 200,000 revolved 3 times, resulting in more than 1,000 loans with an average size of USD 550.

Diagnostic on the Legal and Regulatory Environment for Microfinance in Lebanon (2007): As part of CGAP’s MENA Initiative, a series of diagnostic exercises were conducted in Lebanon to support inclusive financial sectors in the Middle East/North Africa (MENA) countries. DIG worked with DAI to conduct a review of the microfinance sector in Lebanon, investigating the current legal and regulatory framework for microfinance activities and examining government plans and donor programs to scale up microfinance services. DIG and DAI formulated recommendations for a coordinated and effective donor support program to scale up microfinance in the country.

Housing Finance for the Poor (HFP) (2006-2009): Funded by the Bill & Melinda Gates Foundation, HFP was a three-year, multi-country contract to test and explore innovations in the field of housing finance for the poor. Through action research, the program endeavored to provide donors, policy makers, and development finance practitioners with a tangible and comprehensive blueprint for prioritizing future investments and efforts toward the promotion of housing finance globally. DIG developed and tested groundbreaking housing finance products and approaches for servicing poor individuals in a variety of development contexts through partnerships with more than a dozen institutions (including MFIs, microfinance banks, commercial banks, and apex institutions).

Through HFP, DIG developed and tested numerous housing finance products, services, and methodologies including but not limited to:

  • Mortgage products targeting the poor
  • Varying approaches to housing microfinance
  • Housing finance subsidies for the poor
  • Housing finance in conjunction with slum improvement
  • Housing finance in post-emergency settings
  • A credit scoring model for housing finance
  • Technological innovations related to housing microfinance

Through our comparative analysis of HFP activities in India, Pakistan, Indonesia, South Africa, Morocco, Angola, and Mexico, we assessed key products and potential markets for housing finance for the poor, and conditions needed to enhance its scale and sustainability. To better understand the contexts in which these markets operate, DIG also conducted research on policies and regulations impacting access to housing finance for the poor.

Over the course of the HFP program, DIG provided extensive technical assistance and training to 230 financial institutions. Notable successes included: providing extensive technical assistance and training to commercial banks and service companies to design and deliver housing finance products for the poor – both as asset-building and consumption loans; assisting housing microfinance institutions working to achieve scale; linking housing finance to subsidy products; developing innovative financial tools for slum improvement; and launching an on-line community of practice website ( www.housingfinanceforthepoor.com) to disseminate program findings and serve as a platform for knowledge sharing among partners, donors, and practitioners.

Microfinance Training of Trainers for USAID-Iraq (2006-2007): With funding from USAID through the Izdihar Program, DIG, in partnership with SANABEL, was contracted to offer a comprehensive training-of-trainers program focusing on both CGAP and non-CGAP courses, and to provide real-life training opportunities for microfinance practitioners from Iraq. This was the first training for leading microfinance institutions in Iraq, and was an important step in developing the sector in the country. While the implementers understood the need to rapidly inject funds into the Iraqi economy, the focus was on achieving this through sound procedures in a transparent manner and through sustainable institutions. DIG and SANABEL offered training in topics such as operational risk management, delinquency, microfinance market assessment, product development, loan assessment, information systems, and strategic marketing. Successful graduates of this program were SANABEL/CGAP certified, and are providing training to microfinance practitioners operating in Iraq through the Private Bankers Institute.

Technical Assistance to Association for Rural Development (2006-2007): DIG provided comprehensive training to southern Lebanon’s Association for the Development of Rural Capacities (ADR) to improve its microfinance service delivery and fine-tune its product offering. DIG worked closely with ADR’s staff in areas including the development of operations systems and methodology, product development, and basic financial planning. In addition, DIG provided monitoring and evaluation support to ensure proper implementation of re-designed policies and methods.

Southern Agriculture and Business Recovery (SABR) (2006-2007): In the aftermath of the 2006 conflict between Israel and Hezbollah, the USAID-financed livelihoods recovery SABR program was launched in response to the immediate needs of the heavily damaged agriculture sector - the key source of employment and productivity in southern Lebanon. Due to an existing presence on the ground and long-standing relationships with local municipalities, the SABR program team – comprised of American Near East Refugee Aid (ANERA), DIG, and the Association for the Development of Rural Capacities (ADR) – was able to quickly and effectively respond to the crisis. By rebuilding critical agricultural infrastructure, SABR improved the economic livelihoods of thousands of families and hundreds of communities in Bint Jbeil, Tyre, Nabitya, Saida, and Marjyoun – the locations most directly affected by the bombings. As a result of these activities, SABR accomplished the following: 

  • Improved the economic livelihoods of 24 communities, 82,582 direct beneficiaries and 315,500 indirect beneficiaries.
  • Generated 33,074 hours of direct, immediate employment for cash-strapped households.
  • Implemented 34 high-impact infrastructure rehabilitation projects in rural, agriculture dependent communities.

IFAD Strategy for Rural Finance in the NENA region (2006-2007): Through a contract with the International Fund for Agricultural Development (IFAD), DIG devised the rural finance strategy for IFAD’s Near East and Northern Africa region (NENA). The strategy helped shape and strengthen IFAD’s impact and the sustainability of its interventions in the rural financial sector.

Diagnostic on the Legal and Regulatory Environment for Microfinance in Syria and Microfinance Sector Review (2006): DIG conducted a policy diagnostic study in Syria to assist CGAP in its plans to develop a coordinated and effective multi-donor program to bolster the government’s plan to scale up microfinance services. The study consisted of assessing the microfinance sector, investigating the legal and regulatory framework for microfinance activities in Syria, and reviewing the government’s and donors’ plans to scale up microfinance services. The project also included analyzing and making recommendations to the Syrian government on The General Microfinance Decree number 15 and its related Executive Instructions.

Identification of Appropriate Financing Instruments and Technical Assistance to Further Support the Microfinance Sector in Egypt, the West Bank and Gaza, Jordan, Lebanon and Syria (2006): Funded by the European Investment Bank, DIG led a microfinance sector study to identify appropriate financing instruments and technical assistance to support the microfinance sector in Egypt, the West Bank and Gaza, Jordan, Lebanon and Syria.

Action Plan for the Safeguarding of the Cultural Heritage of the Old City of Jerusalem (2006): UNESCO is working to assist households in the Old City to obtain financing to improve individual homes as infrastructure has historically belonged to individual families. This project is groundbreaking as it is the first time UNESCO is expanding beyond restoration to bring a development approach to its preservation activities. For that reason, the United Nations agency hired DIG to design a housing microfinance program to assist these households within the context of the Old City’s distinctive heritage.

Financing Mechanisms for the “Cities without Slums” Program in Morocco (2006): As part of the World Bank’s housing sector adjustment loan to the government of Morocco (GOM), the GOM is providing financial literacy education for homeownership to families in the Cities without Slums program. DIG worked with the GOM to design a program linking commercial banks to potential clients living in slums through credit education and loan origination support. The program prepared some 44,000 households for transitioning out of slum-dwellings to becoming homeowners. As part of the in-country assessment, DIG worked closely with relevant ministry staff, commercial banks, MFIs, and local NGOs to analyze obstacles to lending and identify potential mechanisms for improving the performance of a related loan guarantee facility. Ultimately, DIG devised a two-year plan to: (1) assist the GOM in building stronger, more effective links between commercial banks, the Department of Social Housing at the Ministry of Habitat, and target slum households to meet the demand for financing through the guarantee facility; and (2) ensure adequate understanding of housing finance on the part of potential borrowers.

Syria Microfinance Environment and Savings Bank Assessment (2006): DIG, in collaboration with DAI, conducted a diagnostic assessment of the financial sector and the overall business and policy environment pertaining to microfinance in Syria for CGAP. The study included an in-depth feasibility assessment of the Syrian Savings Bank’s potential role in the microfinance market. The team compiled a comprehensive report based on field and desk research and provided recommendations on how to improve the financial, business, and policy issues affecting microfinance. During the mission, the team met with key financial sector policy makers and regulators to make suggestions for regulatory changes needed to create an enabling environment for the emerging microfinance market. The mission also included meetings with MFIs and other institutions engaged in financial service delivery to determine the current and potential future supply and demand, and the potential gap between them.

Youth Investment Strategy for MENA (2005-2007): DIG served as a technical advisor to the ImagineNations Group under a grant from the Gates Foundation to develop innovative youth-focused microfinance and income generation programs with a particular focus on the MENA region. DIG diligently worked toward the development of a feasible and coherent blueprint for a Youth Investment Strategy in Morocco. The purpose of this initiative was to provide long-term employment opportunities and access to entrepreneurship training and credit, as appropriate, to young Moroccans. DIG established a Youth Investment Alliance comprised of the senior advisor to the king and the heads of Morocco’s largest banks and private institutions, as well as leading NGOs.

Technical Assistance for Start-up of Tameer Microfinance Bank (2005-2006): Tameer was founded as a USD 10 million national microfinance bank, one of the first nationwide, commercially sustainable, private MFIs in Pakistan dedicated to providing services to the economically active poor. DIG was contracted to serve as the primary technical assistance provider for the set-up of Tameer Bank, and works closely with all levels of Tameer staff in the following areas: (1) developing comprehensive growth and outreach strategy; (2) establishing operational systems and procedures; (3) designing and monitoring the performance of financial products; (4) recruiting and training line staff (loan officers, management); and (5) developing monitoring and evaluation systems.

Microfinance Guarantee Facilities Suitable for Housing and Community Investments: Trends and Lessons Learned (2005): DIG conducted an in-depth, international study for the World Bank’s Financial Sector Operations and Policy Department. The purpose was to present a framework for understanding the workings of microfinance guarantee facilities, especially guarantees that can be applied to housing microfinance and to infrastructure and community investments in less developed countries. The study’s objectives were to: (1) outline a rationale for using guarantee facilities as an alternative to more traditional forms of microfinance loan portfolio financing; (2) discuss the basic principles underlying the design of existing microfinance guarantee facilities; and (3) develop a standard framework for understanding the mechanics of a successful guarantee facility, focusing notably on risk analysis, pricing, and contracts structuring. The final report produced helped stimulate institutional thinking at the Bank regarding the establishment of guarantee facilities, both at the global level and in specific country settings.

Yemen Microfinance Market Assessment (2005): DIG conducted an assessment to review three potential options for the German government-owned development bank KfW to invest in the microfinance sector in Yemen, and recommended the most appropriate course of action for KfW. Options reviewed included: (1) investing in the Social Fund for Development, an apex organization mandated by the government to support the microfinance industry in Yemen; (2) investing in a commercial bank interested in entering the microfinance market through a “downscaling” initiative; and (3) investing directly in a promising microfinance institution.

Market Study and Analysis for Start-up of Microfinance SME Bank in Afghanistan (2005): DIG conducted a feasibility study and market survey for a group of private investors to determine the potential for establishing a commercial, microfinance bank in Afghanistan. Through in-depth, in-country assessments, DIG analyzed the potential demand for microfinance services, as well as the repayment capacities of low-income employees and micro, small and medium enterprises (MSMEs). As part of this study, DIG surveyed approximately 70 SMEs and 1,000 micro-entrepreneurs, and examined the local regulatory framework for licensing and operation of an MSME bank in Afghanistan. Following analysis of survey data, DIG produced an in-depth market assessment report and proposed a bank implementation strategy based on the existing demand and supply of microfinance services.

Boulder Microfinance Training Program (2000-2009): DIG’s senior management staff (Franck Daphnis and Marianne Carliez) delivered a variety of courses at the annual Boulder Microfinance Training Program. The pioneer initiative is an intensive “best practice” microfinance training with an alumni network of over 2,500 practitioners from 131 countries. DIG staff designed and taught Microfinance Methodologies, Housing Microfinance, Market Assessments, as well as a one-week training program on Housing Finance for the Poor. The DIG curriculum for this program included courses on  Housing Microfinance: The State of Practice;  Individual Lending and Housing Microfinance Product DeliveryBest Practices in Financing Slum Improvement: Case Studies of Casablanca, Ahmadabad and Sao Paulo; and  Mortgages for the Poor: An Overview of Products and the Supporting Infrastructure. 

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