The link between financial literacy and microfinance has previously been explored on this blog. This post mentions a few ways microfinance institutions can build effective financial education campaigns.
Microfinance clients are scattered over large geographical areas. Have different levels of formal education, speak a variety of languages and have disparate access to media. No doubt, creating a successful financial literacy campaign is a difficult task but covering the following elements may help develop a multi-pronged education drive that conveys some measure of utility to different audiences at a national or regional level.
Channels for Financial Literacy Campaigns Related to Microfinance
Trainings, workshops, ads, etc., can be delivered through the following channels.
- Radio – ubiquitous nature helps reach the masses
- National TV network – good geographical reach and low cost of subscription
- Mobile phones – especially useful in countries with mobile banking
- Local convenience stores or corner shops – suitable for distribution of pamphlets
- An MFI’s premises or group meeting location (trainings could be initiated by a group of MFIs or an independent body)
While it may be easier to develop ads and place them on the media, trainings sessions that involve personal contact, entertainment and proper explanation of pros and cons of various microfinance services will have a lasting impact on the audience.
Financial Literacy Tools in Microfinance
Money management should be fun. Some tools trainers can rely on to engage the audience as well as ensure they understand and remember the training content.
- Ad campaigns – run on radio, TV and print media
- Stories, short skits, jingles and mnemonics about prudent financial management
- Budgeting worksheets (during training sessions)
- Use of multimedia – slides, videos and images
- Group discussions
- Mobile phone games –complexity of games limited by handset features
- Interactive simulations to test knowledge acquired
- Books and pamphlets – in local language, accompanied with pictorial depictions where necessary.
The second part of this article mentions two other ways microfinance institutions can create good financial literacy campaigns.
Further Reading:
9 Marketing Best Practices in Mobile Banking – Part II
Summary of Social Performance Measures for Microfinance Institutions by SPTF
Operation HOPE’s Financial Literacy Empowerment Educational Program Banking on Our Future Reaches 500K Youth (eon.businesswire.com)
Another Financial Literacy Resource (newtrierlibrary.blogspot.com)
Fehmeen,
Ive followed your work over the last couple of months and kudos to you for doing a phenomenal job with this MF initiative.
I understand you blog out of Pakistan and hence would be well versed with socio-cultural and religious issues that might hinder the growth of microfinance as a poverty eliminating tool in Pakistan. So, how about a literacy campaign that would partner with the Mullahs in the country which still command a considerable influence on ordinary folk especially in the rural areas of Pakistan. Do you think such a prospect could be pursued? Do you think we can educate the Mullahs to see the goodwill in microfinance because surely if you can get the clergy to rally behind you I think MF might just attain the requisite impetus in Pakistan.
Dear Ahmed Sahab,
I’m glad you mentioned that. I reviewed microfinance in Pakistan (in an article soon to be published on another website) where I emphasized the need to integrate religion and microfinance (MF) considering the central role religion plays in rural areas of our country.
Certainly, Mullahs can play a vital role in this context. Here are some basic elements of a thought-experiment on this topic.
Religious leaders can be approached by MFIs to generate ideas about adapting microfinance to the regional context, where the dominant purpose would be to get the Mullahs on board by giving them importance. New ideas for Islamic microfinance may come to view, and a discussion on the Islamic nature of the Grameen model can help garner their initial acceptance of MF. At the same time, MFIs may setup free medical camps in the area to get a chance to educate potential clients about MF and to establish a ‘philanthropic’ image.
Mullahs can be asked to research religion-based content for financial literacy campaigns, such as Islamic financial management practices (e.g. Sunnahs and Quranic verses about profiteering, investing, saving, transparency, fraud, etc.) and good business practices. This religious theory can be added to the original content of the campaign and Mullahs may be asked to deliver the relevant lectures at the training centre, as well as at the Juma-Prayer Sermon.
Of course, it is unlikely all Mullahs will do this out of goodwill. Two solutions can be to:
1- offer financial incentives for delivering lectures at the training centre (this will not be unethical since Mullahs will simply be promoting Islamic values),
2- extend microloans or microsaving services to these Mullahs, which would make them influential early adoptors of the financial services (surely, if they use these services, they can be a central/authoritative source of information for others seeking to avail the service).
In order to sell the benefits of MF to these religious leaders, the social benefits of entrepreneurship and economic self-sufficiency can be shared (reduction in poverty, crime, drugs, hunger, etc.). Having said that, it is vital that MFIs deliver their promise, which involves charging ‘resonable’ interest rates (to avoid the dire situation in AP, India).
Speaking of interest rates, we must remember that Islamic microfinance products would easily crush greedy moneylenders and penetrate the market quicker than conventional microfinance. Granted, Islamic microfinance faces high monitoring costs (there is a risk of client falsely claiming their businesses failed, in order to absolve themselves of debt obligations), but this is where the literacy campaign comes in, by getting Mullahs to tout the religious significance of keeping promises.(Note: This is not a fail-safe solution).
As far as content goes, financial literacy campaigns should not necessarily promote microfinance as the only way of generating funds – once potential clients know about different sources of funds (equity capital, debt capital, donations, etc.) they may gradually gravitate towards MF due to the ease of access.
Lastly, the rural population can be educated about MF through a number of channels, depending on the livelihoods of the community. For instance, information can be distributed at the vet’s office in areas where cattle farming is popular. Other central locations can be chosen too, such as medical centres (mentioned earlier).
Not all of the above ideas target Mullahs directly. This is because the Grameen Bank story tells us it can work the other way round too – in one Bangladeshi village, potential Grameen clients forced their religious leader to accept the service because they (clients) were desperate for the funds realizing the utility offered.
I would love to hear your views about this. (I think this ‘reply’ can be drafted as an entire article on this site!)
Thanks for complimenting my blog – I envision it will be a central source of standardized information about microfinance, which can be accessed by practitioners and students all over the world. In other words, it’ll be like an online textbook with information sorted out in an easy-to-understand manner, so let’s see if I succeed!
Kind regards,
Fehmeen
Fehmeen,
Thank you for the detailed response, verily that ‘reply’ could constitute a whole article on this site and maybe you should add it as an article. Actually, I think it might be a great idea to mix and match a few things on your blog such that it acts to serve as a “live” guidebook of sorts, aiming to cater to the conceptual needs of students and practitioners alike while touching on more practical aspects in microfinance implementation. Personally, though an avid knowledge seeker, I am not a microfinance puritan like you. However I do believe fundamentally in the macroeconomic impact of this microeconomic scheme. Poverty elimination should be a common global responsibility of every individual and I laud you for your work for it not just fulfils that integral duty of a global citizen but also you top up the experience by dispensing for free, ideas, knowledge and education. May Allah reward you for your efforts!
Do let me know how others can contribute to facilitate your goals. Have you been in touch with microfinance organizations in Pakistan or based out of some other country? Let me know if you would wish for me to facilitate a networking opportunity for yourself with practitioners in Pakistan and abroad. I have a colleague in business school who worked as a Managing Director in a microfinance organization based in Thailand. Maybe you can conduct his interview and create a blog entry out of it.
About the issue of dealing with the mullahs, well I think my question was ill posed to some extent. The clergy has its role to play in society, you look to them for spiritual guidance and they forward their interpretation of it to you. Unfortunately in the rural uneducated masses in Pakistan where microfinance solutions are most desired, the communication of “Microfinance=good” notion would be a hard sell. There is no easy solution to it in my own frank opinion however I do believe that a solution exists and requires some concerted thought! Microfinance actually translates into a moral dilemma for many a Believers including myself. Read Al-Baqarah 275-281 and you suddenly feel at a loss to understand where the line can be drawn when it comes to borrowing/lending money in the world of today. Hence pushing the idea of microfinance forth in a deeply Islamic society as in Pakistan is a challenge with or without the mullahs. Yes you are correct, there may be instances where the masses would feel that the need for financing would create moral (Islamic) and mullah submission however let’s not act to put more burden on an already confused and despaired nation. I would agree though that a strict introduction and endorsement of Islamic microfinance tools would be the way ahead and we need to pivot our strategy on that however the need of the hour is to think out of the box. Looking at microfinance success stories in rural Bangladesh may sound like a close analogy to the problem at hand but why don’t we look into case studies of success for ideas on a societal level which were dismissed as totally unislamic at their onset. Family planning is a prime example and begs our consideration. A decade ago the word contraceptive was a taboo back home though today it is as easy to buy a pack of them as it is to buy a pack of smokes. On the contrary smoking advertisements have been banned (for a good reason) on national print and electronic media whereas advertisements with one of the most catchy tunes on television today encourage contraceptive use. Now how did that happen is worth figuring out I think.
Just my perspective of things.
Godspeed!
Ahmed
Dear Ahmed Sahab,
You present some interesting ideas and I agree we need to create a new microfinance model to break boundaries and efficiently help the poor. I recently came across two such models that are worth mentioning: Seeds for Development and Trickle Up Pilot Project. The first one loans ‘seeds’ instead of money (harvested crops are then sold at market value) and the second one combines micro-grants with micro-savings. In both cases, there is no role of interest charges. These models, as they are now, are not designed to be immediately self-sufficient, but they certainly seem sustainable and promising.
As long as MFIs deal in products instead of money, they can operate under Islamic guidelines, and then product diversity is just a matter of being creative. I plan to write a series of articles about Islamic microfinance products in the future – it is certainly an interesting subject.
Creating a reference guide (e-book) is on my to-do list but I’d like to build my own knowledge base first by publishing a comprehensive set of article on this site. I’m sure the book will offer great value to people new to this field because there aren’t a lot of resources on the internet about this topic.
Perhaps you can guide me to relevant informational resources (research papers, case studies) in this regard. My networking in the sector is limited. I have friends working in PPAF and PMN, while my father is part of the Easy Paisa team (dealing with international remittances). LinkedIn has proved to be a highly resourceful in terms of international linkages. It goes without saying, I will be grateful to you for any networking opportunities to get more views and opinions on this blog. Plus, I’m contemplating the idea of getting corporate backing for this free online resource so I’ll appreciate any guidance in this regard.
Kind regards,
Fehmeen
Fehmeen,
I can share some resources with you. Please provide me with an email address that you can be reached at.
Corporate backing however may not be an easy sell. You would need to come up with a well structured business plan highlighting to the prospective sponsoring agency that the goals of this blog align well with those of the sponsor. The global outreach of this blog gives it a global appeal and hence the idea might resonate well with a microfinance organization that operates on a global scale.
You can bounce ideas off me and I can lend my advice if needed.
Best,
Ahmed
Dear Ahmed Sahab,
I have sent an e-mail to you in order to share my own address. Thanks for offering to help me – here are two thoughts:
1. Live Guidebook
The idea is definitely in the forefront. I’ve written over 100 articles and have had almost 40,000 pageviews by people from around 130 countries. However, I’ll need to set aside plenty of time to work on this project.
2. Corporate Backing
I plan to retain ownership of this blog for strategic purposes, but perhaps a semi-formal and non-financial relationship with a development agency will be beneficial. Informational resources may be donated to the blog, and in return, the agency can promote this venture as a voluntary development initiative (including the live guidebook). At the same time, I stand to gain in two ways:
- the relationship may add (the much needed) practical flavour to the content I write, and
- I will have access to updated informational material.
The blog serves readers from over 130 countries, where USA, India, Pakistan, UK and Canada send the most traffic.
What are your thoughts about this?
Kind Regards,
Fehmeen