CGAP will work with India's second largest bank, ICICI, and microfinance provider SKS to develop a franchise model and pilot it in under-served areas in rural India. We will provide technical guidance for this effort and fund an expert consultant to work with the two institutions on packaging their systems, adapting them as necessary, and training franchisees.
Access to financial services enables the poor to increase incomes and reduce their vulnerability to the external shocks that are part of their daily existence. Microfinance - savings, loans, money transfers and insurance - can help poor households to move from everyday survival to planning for the future, investing in better nutrition, improved living conditions, and children's health and education. But today only a small proportion of people who could be making use of these services have access to them. The major obstacle to scaling up microfinance is capacity - both human and institutional - not funding. Microfinance providers worldwide have developed efficient ways to offer financial services to millions of poor people. These providers have adapted products and systems to their local context and, in some cases, have used them to provide microfinance services across borders as well. Bangladesh-based Grameen Bank and BRAC, for example, have used their institutional models to create and sustain vibrant microfinance operations with underserved populations in many countries.
By replicating and adapting models that have been successful in other countries, nearly one hundred thousand new micro-enterprises have been created in record time in Afghanistan. Microfinance providers have disbursed .4 million in loans - mostly to women - to help them establish their own businesses. In addition, the microfinance sector employs over 1,500 Afghans, two-thirds of whom are women. A loan repayment rate of nearly one hundred percent reflects the demand for services and acts as a guarantee that future clients will be able to access microfinance services. A similar effort has been undertaken in Sri Lanka in the wake of last year's devastating tsunami, where thousands of families are using small loans to rebuild homes and livelihoods. These dramatic examples illustrate the potential for successful microfinance models beyond post-conflict/post-disaster situations to provide the financial services that can help poor people to become self reliant.
Housed at the World Bank, CGAP is a consortium of public and private development agencies and other donors working together to expand financial services for the poor.