Team: Brian Gee '04, Ruchi Rastogi '05, Nam Kwok '05, and Rebecca Stich '04
Project: Institutional strategy for remittances
Supervisor: Professors William Duggan and Donald Waite, International Microfinance Consulting Lab
Women's World Banking (WWB) is an international network of microfinance institutions (MFIs). The WWB network aims to have a major impact on expanding the economic assets, participation, and power of low-income women as entrepreneurs and economic agents by opening their access to finance, knowledge, and markets. To accomplish this, WWB offers its network members technical assistance, financial products and services, policy change advocacy and assistance, and linkages to other MFIs to promote learning among network members.
Accessing capital flows
Microfinance institutions in many countries, especially in Latin America and the Caribbean, have recently begun exploring ways to tap into remittances sent by expatriate laborers to their home countries. Remittances represent capital flows of tens of billions of dollars worldwide, often being sent to poor families by relatives. Given the size of the market, it is believed that remittances might serve both as a source of capital for microfinance institutions and as a way to reach potential clients who are currently un-banked. Several WWB network members have started offering remittance products or have raised the possibility with WWB of entering this market. As part of the International Microfinance Consulting Lab class, the team analyzed the market for WWB to develop an institutional strategy for entrance into this growing market.
Regional market assessment
In previous research, WWB had found that the remittance market varied widely by region. The team researched each region more fully, exploring current remittance providers and products, the size of the market, available technology and infrastructure in the region, and the capacity of WWB network members in the region. Through this process, the team was able to select target countries most appropriate for the introduction of an MFI-based remittance product. The team then conducted interviews with potential partners and competitors to assess how best to position a remittance product for success in select markets. The team was also able to interview a limited number of local MFIs about what remittance products might best suit the needs of their clients.
Developing a remittances strategy
The team was able to present WWB with more detailed information and a strategy for including remittances into WWB's network members' product lines. Some of the information the team gathered challenged WWB's ideas about possible opportunities and challenges facing network members in this market. For the team, the project offered a lesson in decision-making with incomplete information and finding creative solutions. Because many remittances are sent informally, market sizing must rely on a number of sources of partial data to estimate an approximate remittance flow. In addition, many MFIs work in rural areas with limited telecommunications. Nonetheless, a representative of one MFI in India pointed out that the post office had telegraph lines into almost every village and are sometimes used to transmit wire transfers.