Proyecto Capital
Financial inclusion opportunities in Latin America and the Caribbean
A woman who saves is a life that changes lifes.
Publications (En breve)

Saving is possible. This document supports this statement on the basis of a qualitative study regarding participation experiences in saving programs aimed to Peruvian women residing at rural areas. The main results of this study refer to the effective changes in women’s different life domains (economic, personal and relationships), emphasizing the fact that saving allows to realize dreams. It also provides a description of the Saving Women and the conditions that make saving possible, a view of saving as a mechanism to expand the social support network, and finally an emerging result is described showing the link between saving and entrepreneurship (defined as small-scale productive activities). In sum, the evidence allows breaking the myth that people in poverty cannot save, and challenges the belief that an additional input of money is needed to save (for example, Conditional Cash Transfers). Indeed, women save and many of them do so even when they do not get a subsidy. The document concludes with recommendations over the design and evaluation of such programs, as well as some thoughts on saving as a strategy for overcoming poverty through financial inclusion.

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In this paper, we study the possibility of expanding access to the financial system to the poorest sector of the population through the use of savings accounts, by means of an institutional change in the way conditional cash transfer programs (CCTs) operate. In particular, we discuss the potential benefits, challenges and conflicts that would be created if CCTs chose to deposit the transfers they grant recipients directly into savings accounts.

Because of the scope of CCTs worldwide nowadays, this institutional change has the potential to affect millions of people. Combining financial inclusion and CCTs is not a new idea. Various CCTs have started moving in that direction, modifying their payment systems (Maldonado, Moreno, Giraldo Pérez and Barrera Orjuela 2011). Nevertheless, the idea of trying to achieve greater financial inclusion by combining CCTs and savings has been little explored.

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The report presents the results of the consultancy "Preparation of a strategy proposal for differentiated graduation of households from the Juntos Program", carried out by CARE Peru and Proyecto Capital. The main goal of it was to prepare a a strategy proposal for differentiated graduation of households from Juntos, based on an analysis of the experience of various public and private entities. A significant part of the consultancy consisted of fieldwork in Ayacucho, particularly with Juntos beneficiary families.

The document reviews mechanisms used for exiting other conditional cash transfer (CCT) programs in Latin America. Also, it includes some strategies for graduatin from extreme poverty based on the approach developed by the Consultative Group to Assist the Poor (CGAP) in Bangladesh and by the Ford Foundation.

The main factors of success in programs and projects focused in productive rural and financial activities with a similar population to that of the Juntos beneficiaries households were identified. Flexibility in implementation of programs and their components, as well as formation, accompainment and strengthening of producer associations are two of them. Any strategy of production must be linked to commercialization processes. Also, the importance of financial inclusion of the poo was verified.

A stakeholder mapping in Ayacucho identified the institutions that should be involved in the graduation process. Also, the Juntos beneficiary households in this region were characterized.

Based on these inputs, an exit strategy for Juntos Program is proposed. It should be considered from the beginning in the design of the program itself. The strategy must be based on a prior assesment to determine the possibilities in each locality. Based on that, a portfolio of possible productive activities or enterprises that could be implemented by beneficiary households should be developed. Training, associativity and commercialization proposals are key elements in this process. It is also necessary to provide clear guidelines for supervising families, decreasing the discretionality that currently exists.

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Although Paraguay’s economy has grown in the past five years, levels of poverty and inequality remain high. Policies seeks to coordinate a series of social initiatives and resources to meet the demands of the population and create opportunities for the exercise and enjoyment of civic rights. To achieve those goals, 11 key strategic or “emblematic emblematic” programs have been designed in key areas, creating a social protection network, known as “Sâso Pyahu” (Paraguay in Solidarity), which targets the most vulnerable sectors.

The only program completely focused on conditional cash transfers is Tekoporâ, which reaches  early 94,000 beneficiary families in all districts of the country and is managed by the Social Action Secretariat (Secretaría de Acción Social, SAS). Other social programs also have CCT components, including the Abrazo Program, in which the “Family” component includes solidarity vouchers for  about 1,489 families. This program is managed by the National Secretariat for Children and adolescents (Secretaría Nacional de la Niñez y la Adolescencia, Snna).

In comparison with other countries in the region, Paraguay still lags behind on inclusion of the population, especially poor segments, in the banking system. One reason why residents of rural areas do not use financial services is the high transaction cost, mainly because of travel to the departmental capital where financial institutions are located, because of the lack of transportation, infra-structure, distance and/or access to means of transportation. This also affects providers of financial services.

Nevertheless, there are opportunities for access. Inclusion in the financial system will also be facilitated by the use of new technologies by both traditional financial entities and those in the microfinance sector. These initiatives are currently expanding. This is done through mobile banking and non-bank correspondent entities, and will mark a major step forward in access to financial services for the poorest sectors.

Published in Publications

In Colombia, in 2008, the government decided to make the payments for the Familias en Acción (Families in Action, FA) Program through deposits in a savings account opened in the name of each

beneficiary. Taking advantage of the beneficiaries’ inclusion in the financial system, the government decided to go even further and promote a cultural of formal savings. It designed the Culture of Savings Promotion Pilot  Project (Proyecto de Promoción de Cultura del Ahorro, PPCA), which included interventions involving two tools: financial education and cash incentives. It was clear, however, that if the pilot were to expand to include more beneficiaries in the future, robust, conclusive information about the results of the interventions would be needed. The decision was therefore made to accompany the implementation of the pilot with an impact evaluation. This paper presents the results of the first year of the pilot project’s operation, documenting its implementation, identifying constraints and bottlenecks, and determining what has been the most effective tool so far for promoting formal savings. Because the pilot has been under way for only one year, the results described in this paper are not yet conclusive, but they do point to trends in results of the comparison of the impact of various interventions on families’ savings behavior.

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Over the past fifty years, the Dominican Republic has shown outstanding economic performance: between 1960 and 2007, the country’s GDP grew by an average of 5.3 percent, more than the average for Latin America as a whole (3.8 percent). As the 2005 Human Development Report notes, this economic growth has not been accompanied by “deliberate policies to turn economic growth into social welfare” in a context
in which “the progress made had an unequal impact, depending on region, gender and the person’s income level”. Poverty rates, which had been decreasing since the late 1980s, rose again during the crisis of 2002-2003 because of the impact of a significant financial crisis.

Against this, one social policy tool is “Solidaridad” (“Solidarity”), the Dominican Republic’s conditional transfer program; designed early in the last decade and in operation since 2004, it is the social policy tool for directing transfers toward the poorest population. This document, is an assessment to analyze the possible link between conditional cash transfer programs and financial inclusion programs in Dominican Republic.

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CCT program’s viability depends, among other things, in their success in reaching their beneficiaries, however this is not always an easy task due to geographical conditions and the insufficient coverage of the formal financial system. Therefore, CCT programs’ success in reaching the poor is highly dependent on the efficiency and availability of information and communication technologies (ICTs) infrastructure. 

In Brazil’s particular case, Bolsa Família Program (BFP) has been largely successful thanks to the implementation of an innovative ICT model, known as correspondent banking, or branchless banking. In this paper we will take a look at the role of correspondent banking in CCT programs,

its advantages and challenges. First we will quickly present the role of ICTs in Latin American CCT programs. Then we will focus more in depth—as it is our case study—on how correspondent banking works for Bolsa Família (BFP), the Brazilian CCT program. And, finally we will present the advantages and challenges of the correspondent banking model.

Published in Publications

Managing and implementing Conditional Cash Transfer programs is a complex process that involves many institutions that need to work side by side in order to achieve one of their most important goals: deliver the CCT to the beneficiaries. Ideally, beneficiaries should receive their payment easily and at a minimum cost of displacement.Payment infrastructure managed by financial institutions should be considered as the primarychannel for CCT delivery, due to their scale and security capabilities; also, for ensuring efficiency of the payment process.Since bank branches and ATMs are usually located quite far fromwhere most CCT beneficiaries live, alternative payment channels must be considered for lowering the payment process’ transaction costs.

It is in that measure that the integration of information and communications technologies (ICT) to the programs’ logistical process can be of great advantage, especially regarding the payment process. At the same time, the use of cell phones has spread with astonishing speed particularly among the poor all over the world. 

As more mobile phones reach the hands of people who lack access to formal financial services, the more consolidated the concepts of mobile money, mobile payment and mobile banking have become. This phenomenon is inevitable and irreversible; however regulatory matters, business models, and security, among others issues are still under debate. Some of the countries with the largest deficit in formal financial services access have developed very innovative solutions for using mobile phones as a payment instrument.

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In the past decade, financial education (FE) has gained an important place on the public agenda in various countries around the world, becoming a matter of national interest. A variety of FE programs have emerged in response to diverse needs and to assist specific sectors of the population. Some of these initiatives act individually, while others support complementary programs, such as those aimed at social and financial inclusion.

In an effort to make relevant information about existing FE programs publicly available, the matrix

described in this paper identifies these programs and provides easy access to information about them. The programs identified have been classified into categories, for ease of location and rapid access to the information. The FE matrix is only a starting point, however; it is necessary to continue adding not only initiatives that have not yet been identified, but also those that could emerge in the near future. We therefore encourage the entire academic community to provide information to enrich the FE matrix, for the benefit of all interested parties.

The matrix has an open structure, so more initiatives can be included based on contributions submitted by interested parties via the Proyecto Capital portal. This matrix will be updated regularly with input from the academic community. We present the matrix in our InShort version, but we also attach the original format, for better and more complex data manipulation.

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On 28 September 2010, the Financial System Authority (Autoridad del Sistema Financiero, ASFI)

and Proyecto Capital signed an agreement to define a general framework for technical cooperation to evaluate, design and implement a program of massive financial inclusion, from the standpoint of national social protection policy and socio-economic inclusion of poor families in Bolivia.

The agreement especially seeks to ensure more equal opportunity, participation and civic inclusion, as well as public policies for asset generation, through a financial inclusion process targeting recipients of conditional cash transfer (CCT) programs, such as Financial Inclusion Project

Mobilization of Savings of Beneficiaries of Conditional Cash Transfer (CCT ) Programs the Renta Dignidad, Bono Madre-Niño Juana Azurduy and Bono Juancito Pinto.

This framework agreement includes three phases: 1) preparation, 2) design and 3) implementation. For the first (preparatory) phase, a team was formed that included four ASFI staff members and a consultant from Proyecto Capital. The team met every two weeks to discuss and develop an assessment of the relevance and timeliness of taking advantage of CCT programs to begin a process of massive financial inclusion by mobilizing the savings of the programs’ beneficiaries.

Published in Publications