CGAP (Thinktank)

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CGAP (Consultative Group to Assist the Poor) is a Washington, D.C.-based think tank that promotes financial inclusion. As an international public-private partnership, it is supported by more than 30 national and international development organisations and corporate foundations from the financial and IT sectors. Its stated aim is to improve the lives of the poor. CGAP stands for Consultative Group to Assist the Poor, which is rarely used in full form. CGAP aims to achieve its goal by analysing and promoting commercial business models that enable the financial, IT and telecommunications sectors to reach as many people as possible with digital financial services, especially the poor. [1] [2]

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The World Bank provides the space and secretariat for CGAP, but its administrative and financial structure is independent of the World Bank. In addition to governmental and intergovernmental development organisations (including KfW, GIZ and the German Federal Ministry for Economic Cooperation and Development), major US corporate foundations from the financial and IT sectors are key members (Citi Foundation, Dell Foundation, Gates Foundation, Mastercard Foundation, Metlife Foundation, Omidyar Network). Since April 2019, Jason Lamb of the Bill & Melinda Gates Foundation has chaired CGAP's Executive Committee. [3] [4]

History and evolution programme priorities

CGAP was established in 1995, under a slightly different name Consultative Group to Assist the Poorest, in promoting and managing the microcredit sector. [5] Its self-imposed goals were to promote the institutional development and commercialisation of the sector and to improve the regulatory environment. In the early 2000s, CGAP changed its name to the Consultative Group to Assist the Poor.

The founding members were the World Bank and nine other governmental and international development organisations. The World Bank is the initiator and main funder, although its share of the budget has steadily declined, falling below 20 per cent in 2013. [6]

CGAP was instrumental in establishing the concept of financial inclusion and formulating its agenda. Since 2008, CGAP has increasingly replaced the almost exclusive use of the term microfinance with the term financial inclusion. This term describes the increased use of and improved access for all people to cashless, primarily digital, financial services in the formal financial sector. [7]

At the invitation of the G20, CGAP played a key role in drafting the policy paper for the G20 Global Partnership for Financial Inclusion (GPFI) in 2010. [8]

The new terminology in the goal was also intended to reflect a change in the focus of the programme, which was linked to microcredit over-indebtedness crises in India, Bosnia-Herzegovina, Morocco, Nicaragua and Pakistan, among others. These erupted from around 2008 because commercial microfinance providers had been very aggressive in pushing high-cost loans onto the market without adequately assessing the ability of their poor clients to repay them. CGAP's priority should, therefore, no longer be access to credit and other services but the responsible provision of these services. [8]

Collaboration and membership overlap

CGAP is a key implementing partner of the G20 Global Partnership for Financial Inclusion (GPFI).

In 2012, CGAP's corporate foundation members and CGAP member the United Nations Capital Development Fund (UNCDF) formed the Better Than Cash Alliance, which is also a key implementing partner of the GPFI. The Alliance promotes the digitisation of payments and the reduction of the use of cash as part of the overall goal of financial inclusion. In addition to the UNCDF, core members of both groups include the Gates Foundation, the Mastercard Foundation, the Omidyar Network and the Citi Foundation. [9]

There are also close links and collaboration with the Alliance for Financial Inclusion (AFI), which is funded by the Gates Foundation, a member of CGAP. AFI is also an implementing partner of the GPFI. This network of senior central bankers and financial regulators in developing and emerging markets aims to help them improve access to and use of modern, cashless financial services by the previously underserved. [10]

Many governments and international organisations are members of several of these groups. The German Development Cooperation (GIZ) provides the secretariat for the AFI and is a member of CGAP. [11] [12]

Related Research Articles

<span class="mw-page-title-main">Microcredit</span> Small loans to impoverished borrowers

Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, and a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans. As of 2009 an estimated 74 million people held microloans that totaled nearly US$40 billion. Grameen Bank reports that repayment success rates are between 95 and 98 percent. The first economist who had invented the idea of micro loans was The Very Reverend Jonathan Swift in the 1720’s. Microcredit is part of microfinance, which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983 by their current Chief Adviser Muhammad Yunus. Many traditional banks subsequently introduced microcredit despite initial misgivings. The United Nations declared 2005 the International Year of Microcredit. As of 2012, microcredit is widely used in developing countries and is presented as having "enormous potential as a tool for poverty alleviation." Microcredit is a tool that can possibly be helpful to reduce feminization of poverty in developing countries.

<span class="mw-page-title-main">Microfinance</span> Provision of microloans to poor entrepreneurs and small businesses

Microfinance consists of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services. Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient. ID Ghana is an example of a microfinance institution.

Omidyar Network is a self-styled "philanthropic investment firm," composed of a foundation and an impact investment firm. Established in 2004 by eBay founder Pierre Omidyar and his wife Pam, Omidyar Network has committed over US$1.5 billion to nonprofit organizations and for-profit companies across multiple investment areas. According to the OECD, Omidyar Network's financing for 2019 development increased by 10% to US$58.9 million.

<span class="mw-page-title-main">G20</span> Forum of 19 countries along with EU and AU

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<span class="mw-page-title-main">Village banking</span> Method of implementing microcredits

Village banking is a microcredit and saving methodology whereby financial services are administered locally in a community bank rather than in a centralized commercial bank. Village banking has its roots in ancient cultures and was most recently adopted for use by micro-finance institutions (MFIs) as a way to control costs. Early village banking methods were innovated by Grameen Bank and then later developed by groups such as FINCA International founder John Hatch. Among US-based non-profit agencies there are at least 31 microfinance institutions (MFIs) that have collectively created over 800 village banking programs in at least 90 countries. And in many of these countries there are host-country MFIs—sometimes dozens—that are village banking practitioners as well. The latest developments globally can be seen in Southeast Asia, where digitization is pacing fast to reach rural areas with hybrid on- and offline solutions.

<span class="mw-page-title-main">Sustainable Sanitation Alliance</span> Network of sustainable sanitation organizations

The Sustainable Sanitation Alliance (SuSanA) is a loose network of organizations who are "working along the same lines towards achieving sustainable sanitation". It began its work in 2007, one year before the United Nations International Year of Sanitation in 2008. The intention of creating SuSanA was to have a joint label for the planned activities for 2008 and to align the various organizations for further initiatives.

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Financial inclusion is the availability and equality of opportunities to access financial services. It refers to processes by which individuals and businesses can access appropriate, affordable, and timely financial products and services - which include banking, loan, equity, and insurance products. It provides paths to enhance inclusiveness in economic growth by enabling the unbanked population to access the means for savings, investment, and insurance towards improving household income and reducing income inequality

<span class="mw-page-title-main">Microcredit Regulatory Authority</span>

Microcredit Regulatory Authority (MRA) is the central body to monitor and supervise microfinance operations of non-governmental organizations of the Republic of Bangladesh. It was created by the Government of People's Republic of Bangladesh under the Microcredit Regulatory Authority Act. License from the Authority is mandatory to operate microfinance operation in Bangladesh as an NGO.

Innovations for Poverty Action (IPA) is an American non-profit research and policy organization founded in 2002 by economist Dean Karlan. Since its foundation, IPA has worked with over 400 leading academics to conduct over 900 evaluations in 52 countries. The organization also manages the Poverty Probability Index.

The International Association of Insurance Supervisors (IAIS) is a membership organization of insurance supervisors from more than 200 jurisdictions, constituting 97% of the world's insurance premiums. It is the international standards-setting body for the insurance sector. The IAIS was established in 1994 and operates as a verein, a type of non-profit organisation under Swiss Civil Law.

<span class="mw-page-title-main">Compartamos Banco</span> Mexican bank

Compartamos Banco is a Mexican bank and the largest microfinance bank in Latin America, serving more than 2.5 million clients. The bank was founded in 1990 and is headquartered in Mexico City.

<span class="mw-page-title-main">Microfinance Information Exchange</span>

Microfinance Information Exchange, Inc. was a non-profit organization that provided market data and intelligence on financial service providers catering to low-income populations around the world. Founded by the Consultative Group to Assist the Poor (CGAP) and sponsored by the Citi Foundation, CGAP, the Mastercard Foundation, MetLife Foundation, Bill & Melinda Gates Foundation and others, MIX had offices in Washington DC, New York, Lima (Peru), Baku (Azerbaijan), Dakar (Senegal), and Hyderabad (India). MIX's mission was to provide data analytics to empower decision-makers - socially responsible investors, policy makers and financial services providers - to build an inclusive financial services ecosystem. Since its founding in 2002, MIX had built the digital information infrastructure needed to bring greater transparency to financial sectors serving low-income populations in emerging markets, including providing market data on over 3,000 financial services providers (FSPs). In 2016, MIX shifted its strategy to help improve the information flow in other segments of financial inclusion, like smallholder agricultural finance, fintech, digital financial services (DFS) and green energy finance. In May 2020, MIX became a unit of the Center for Financial Inclusion, a thinktank housed at Accion.

<span class="mw-page-title-main">The Maya Declaration</span>

The Maya Declaration is a global initiative for responsible and sustainable financial inclusion issued by the Alliance for Financial Inclusion that aims to reduce poverty and ensure financial stability for the benefit of all. It is the first global and measurable set of financial inclusion commitments by developing and emerging economies.

The Global Policy Forum (GPF) is organized by the Alliance for Financial Inclusion, or AFI, as the keystone event for its membership and financial inclusion policymakers worldwide. Each year, it is co-hosted by a different member institution in a different region of the world. As of November 2023, AFI had 86 member institutions from over 80 countries, making the AFI GPF the most important and comprehensive forum for regulatory institutions with an interest in promoting financial inclusion policy. The AFI GPF is focused on developing and improving national financial inclusion strategies and policies and is used as a platform for senior financial regulators to exchange ideas as well as engage in peer-to-peer learning activities.

<span class="mw-page-title-main">Alliance for Financial Inclusion</span> Malaysia-headquartered policy network

The Alliance for Financial Inclusion (AFI) is a policy leadership alliance owned and led by member central banks and financial regulatory in developing countries with the objective of advancing financial inclusion.

The Better Than Cash Alliance is a global partnership of 80 governments, companies, and International Organizations that accelerates the transition from cash to responsible digital payments to help achieve the Sustainable Development Goals (SDGs).

The Challenging the Frontiers of Poverty Reduction: Targeting the Ultra Poor (CFPR-TUP) project was initiated by BRAC, a Bangladesh-based development organisation in 2002. The ultra poor are a group of people who eat below 80% of their energy requirements despite spending at least 80% of income on food. In Bangladesh, they constitute the poorest 17.5 percent of the population. These people suffer from chronic hunger and malnutrition, have inadequate shelter, are more prone to disease, deprived of education and more vulnerable to recurring natural disasters. The CFPR-TUP programme is aimed at households which are too poor to access the benefits from development interventions such as microfinance and assists them to access mainstream development services. As of 2015, the program cost around US$35 million a year.

<span class="mw-page-title-main">Kashf Foundation</span> Non-profit organization

Kashf Foundation is a non-profit organization, founded by Roshaneh Zafar in 1996. Kashf is regarded as the first microfinance institution (MFI) of Pakistan that uses village banking methodology in microcredit to alleviate poverty by providing affordable financial and non-financial services to low income households - particularly for women, to build their capacity and enhance their economic role. With headquarters in Lahore, Punjab, Kashf have regional offices in five major cities and over 200 branches across Pakistan.

References

  1. ↑ "Consultative Group to Assist the Poor (CGAP)". Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (in German). Retrieved 2024-09-20.
  2. ↑ "Consultative Group to Assist the Poor (CGAP) | Devex". www.devex.com. Retrieved 2024-09-20.
  3. ↑ "Jason Lamb of Gates Foundation Named New Chair of CGAP's Executive Committee | GlobeNewswire by notified". kommunikasjon.ntb.no (in Norwegian). Retrieved 2024-09-20.
  4. ↑ CGAP (2019-05-24). "Jason Lamb of Gates Foundation Named New Chair of CGAP's Executive Committee". GlobeNewswire News Room. Retrieved 2024-09-20.
  5. ↑ "The Consultative Group to Assist the Poor" (PDF). Retrieved 2024-09-20.
  6. ↑ "CGAP Phase IV | Mid-Term Evaluation" (PDF).
  7. ↑ "Advancing financial access for the world's poor annual report 2008 (Inglês)". www.worldbank.org. Retrieved 2024-09-20.
  8. 1 2 "Access to finance for the poor annual report 2010 (Inglês)". www.worldbank.org. Retrieved 2024-09-20.
  9. ↑ "About". Better Than Cash Alliance. Retrieved 2024-09-20.
  10. ↑ "Alliance for Financial Inclusion - About". Alliance for Financial Inclusion - About. 2019-07-08. Retrieved 2024-09-20.
  11. ↑ "Alliance for Financial Inclusion - About". Alliance for Financial Inclusion - About. 2019-07-08. Retrieved 2024-09-20.
  12. ↑ "Programm zur Unterstützung der Partnerschaft Making Finance Work for Africa – MFW4A". www.giz.de (in German). Retrieved 2024-09-20.
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