1. contact@e-mfp.eu www.e-mfp.eu Microfinance for Decent Work A global action research  European Microfinance Week 2010 Bernd Balkenhol

2. contact@e-mfp.eu www.e-mfp.eu Clients of microfinance institutions must cope with serious work challenges Child Labour Working Conditions Informality …and vulnerability to income shocks Over-indebtedness isolation, no voice

3. contact@e-mfp.eu www.e-mfp.eu Hypothesis 1: Financial institutions produce tangible work-related benefits to their clients. Hypothesis 2: In the long term this is also good for the financial institution’s bottom line. Hypothesis 3: There is a case for public policy to support financial institutions that go for decent work of their clients. Assumptions

4. contact@e-mfp.eu www.e-mfp.eu 16 Partner MFIs

5. contact@e-mfp.eu www.e-mfp.eu ASIA CENTRAL ASIA MIDDLE EAST AND AFRICA LATIN AMERICA CHILD LABOUR NRSP, Pakistan LAPO, Nigeria NYESIGISO, Mali INFORMALITY ESAF, IndiaIMON, Tajikistan RCPB, Burkina Faso SUBOPTIMAL WAGE EMPLOYMENT BAI TUSHUM, Kyrgyzstan VULNERABILITY, OVERIDEBTEDNESS TYM, Vietnam VFC, Cambodia AMK,Cambodia NWTF, Philippines PRIDE, Uganda CONFIANZA, Peru BANCOVELO, Honduras UNSAFE WORKING CONDITIONS BASIX, India Al AMANA, Morocco TAMWEELCOM, Jordan Work-related problem areas

6. contact@e-mfp.eu www.e-mfp.eu What MFIs do to address to make work for their clients 1. Risk Management & Over-Indebtedness  Financial Education of Trainers and Clients (AMK & VFC)  Risk Mgmt. Training on Emergency Fund Product (NWTF)  Introduction of Micro-Insurance & Training (Confianza, TYM & Bancovelo)  Entrepreneurship Training (NWTF) 2. Child Labour  Extension of Micro-Insurance Product to Family (NRSP)  Education Loan for Associated School Fees (LAPO)  Training Package combining BDS, WIND, and CL awareness components (Nyésigiso)

7. contact@e-mfp.eu www.e-mfp.eu Who are these clients? N= 4748 Findings from the Diagnostic Tool: 90% reported to be “self-employed”; 50% have at least one employee and appear to have created nearly 8000 jobs; 54% of client’s business activities are classified as informal with only 41% of clients reportedly paying taxes; 483 child laborers were found among client’s employees; 11% reported dangerous working conditions or injuries; 8% reported cross-borrowing and 14% had repayment issues; 43% reported a large, unforeseen expense in the preceding year; Only 2-3% use a form of insurance to cover unforeseen expenses; and 73% do not belong to any association

8. contact@e-mfp.eu www.e-mfp.eu Impact indicators Decent Work Area InnovationCommon DW Indicators Innovation Specific Indicators Impact Child Labour School fees loan GERME/ WIND/ CL training Extended MI (health) Incidence of Child Labour # of missed days of school # of days working # of days in school HH income PPI Score MI uptake Use of MI Exposure to trng. Materials Attendance records Changes in opinion on CL Child Labour Risk Management & Over- indebtedness FE of trainers/clients Risk Mgmt. Training on Emergency funds Intro. Of MI and training Entrepreneurship trainning Ranking of unforeseen expenses Means to cover unexpected expenses Financial behavior Planning horizons Accumulation of physical assets Accumulation of financial assets (i.e. savings) Renewal of MI Claim ratio for MI Sustainability of business venture Vulner ability

9. contact@e-mfp.eu www.e-mfp.eu What data is used to create these impact indicators? Using Child Labour as an example : Common DW IndicatorsData from surveysCommon DW Indicators Data from surveys Incidence of CL Age of child Type of activity Hours/day Days/week PPI Score Combination score from 13 questions posed by Grameen’s Progress out of Poverty Index # of missed days of school # of days/month your child misses school Reasons why child misses school MI uptake MIS reports Insurance. Product Client acknowledges taking the product # of days working Days/week child engages in work activity Cross-checked with: # of days/month your child misses school Use of MI # claims reported by NRSP Clients claims use of product Client describes incident covered HH income Client reports monthly income and expenses Client reports assets and business expenditures Exposure to Training Materials Client reports observing CL materials Client attitude towards child work changes Attitude profile questions

10. contact@e-mfp.eu www.e-mfp.eu How do these indicators illustrate measurable and significant impact: Randomization  Research samples have been stratified to match the general portfolio of each MFI;  In some cases, a specific type of client (with a certain financial product), gender, or location was necessary; in which case, stratification occurred within this “sub- sample”. Control and Treatment groups  To control for external factors possibly impacting the research, Treatment and Control groups were used, wherein innovations were offered to the Treatment group only.  In this way, significant differences between groups can be causally linked to the innovation. Panel Data Sets  Each MFI begins research with a baseline survey; subsequently, after implementation of the innovation, surveys are conducted every six months to further inform research on trends and the direction of the data over multiple data points.

11. contact@e-mfp.eu www.e-mfp.eu Indicators to signal changes in formality status Knowledge about formality Registration Book keeping Bank account Tax payment Firm or asset insurance Membership in an association Participation in government promotion schemes

12. contact@e-mfp.eu www.e-mfp.eu What do clients want? Design of loan products: “Increase credit ceiling…” “need more loans…” “Credit (increase limit)…” Information on accident prevention: “Awareness, loan, saving, insurance…” “AWARENESS” “Yes MFI support to invest and improve working conditions” “awareness, training and insurance” “AWARENESS, MORE LOAN AND FINANCIAL SUPPORT.” “LOAN FOR CONSUMPTION PURPOSE,SAVING AND INSURANCE” “Help improve the working conditions” “Living condition could be improved if continues providing MF services” “Awareness and capacity building” “awareness and information about income generating opportunities”

13. contact@e-mfp.eu www.e-mfp.eu What do clients want? Advice on expansion: “To invest and expand activity. This will increase income and improve livelihood” “To help expand my work” “Help me increase my work” “Increase loan amount so that I could expand my work” “Training in vocational skills” “Linkages with factories for work and information about business opportunities “ “Give us some technical assistance and facilities” “Vocational skills training for son (mason)”

14. contact@e-mfp.eu www.e-mfp.eu Next steps March 2011 - June 2012: Impact Analyses  finalization of panel datasets for each participating MFI;  an econometric final impact analysis for each dataset. June 2012: Dissemination  Knowledge-sharing event with ILO constituents, SFN members, and representatives from MF industry and participating MFIs;  MF4DW Best Practices & Case Studies;  MF4DW monograph;  Training Courses;  Tracking tool (G 20 GPFI).

15. contact@e-mfp.eu www.e-mfp.eu Questions?