the systemic approach - cgap€¦ · consumer lobby fights for transparent pricing competitors urge...

The Systemic Approach A Framework for Sustainable Change

Webinar18 June 2019

© CGAP 2019

CGAP advocates a systemic approach to

financial inclusion that:

▪ Considers all aspects of a market system, and

▪ Nudges market actors to take up missing or weak

market functions.

▪ A Market Systems Approach to Financial Inclusion:

Guidelines for Funders (2015)

▪ Measuring Market Development Handbook (2017)

▪ Face-to-Face and virtual training opportunities (ongoing)

2

More information and resources:.https://www.cgap.org/topics/collections/market-systems-approach

https://www.cgap.org/topics/collections/market-systems-approach

www.gateway.academy/funders

Free eLearning for Funders and Implementers

3

How can we

design for

and monitor

systemic change?

© CGAP 2019

5

Agenda

1 Defining Systemic Change

2 The AAER Framework: Philippines and Kenya

3 Q&A

© CGAP 2019

Molly Tolzmann

Washington, DC

6

Speakers

Alice Negre

London

© CGAP 2019

1. This is an audio broadcast. Attendee microphones will

remain muted during the entire webinar session.

2. To ask questions during the webinar, please use the

chat box on the right-hand side of the Webex session.

Please submit your question at any time during the

webinar presentation.

3. To ensure your question is seen by the moderator, select

“All Participants” from the drop down menu when

sending your question.

4. The webinar recording will be emailed to all attendees

and registrants.

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Logistics

© CGAP 2019

Systemic changeChanging the system dynamics

Photo: Md Mahabub Hossain Khan, CGAP Annual Photo Contest

© CGAP 2019

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SUPPLY DEMAND

What is a system?

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

What is a system?

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

What is a system?

Functions that

shape, inform

and enable

supply-demand

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

RULES

What is a system?

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

RULES

What is a system?

Formal rules

and informal

norms / practices

that shape

supply-demand

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

RULES

What is a non-performing system?

SPEAKING:

© CGAP 2019

15

SUPPLY DEMAND

SUPPORT

FUNCTIONS

RULES

How do you change a system?

FIX

FIX

FIXFIX

FIX

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

SUPPORT

FUNCTIONS

RULES

How do you change a system?

FIX

FIX

FIXFIX

FIX

SPEAKING:

A change in the

system is not

necessarily

systemic

change!

© CGAP 2019

17Adapted from Owen Barder, Center for Global Development

Changing the system requires changing

where the equilibrium settles.

SPEAKING:

Rob Ricigliano – Omidyar Group

Systems are not broken.

They do exactly what they are

designed to do.

SPEAKING:

© CGAP 2019

Q&APlease submit your

comments and questions

using the chat box on to

right. Please send to “all

participants” to ensure

everyone sees your

question. Thank you!

19

© CGAP 2019

AAER FrameworkAdopt-Adapt-Expand-Respond

Photo: Wim Opmeer, CGAP Annual Photo Contest

© CGAP 2019

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What do we want to see happening?

Systemic change

▪ Uptake and ownership of an

innovation

▪ That is sustained and

improved over time

▪ And impacting the other

functions in the system, to

stabilize or augment the

impact of the innovation.

▪ Sustainability

▪ Scale

SPEAKING:

© CGAP 2019

ADOPT

RESPOND

EXPAND

ADAPT

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Unpacking systemic change with AAER

▪ Sustainability

▪ Scale

Partner level Beyond partner

SPEAKING:

Photo: Kelvin Kariithi, CGAP Annual Photo Contest

AAER IN ACTION

M-Shwari, Kenya

© CGAP 2019

M-Shwari:

▪ Combined savings and loans product, using M-Pesa

▪ Launched in 2013 by and

▪ Facilitated by

Download full case study:http://www.fsdafrica.org/news/now-out-the-art-of-

market-facilitation-fsd-network-impact-case-studies/

24SPEAKING:

http://www.fsdafrica.org/news/now-out-the-art-of-market-facilitation-fsd-network-impact-case-studies/

© CGAP 2019

ADOPT

Initial changes in attitude and behavior:

▪ CBA changed its business model and attitude towards mass market

▪ Strong ownership: CBA invested $12 million; FSDK $650k

Partner adopts initial innovation:

▪ 7.2 million people opened M-Shwari accounts in the first 24 months

25SPEAKING:

© CGAP 2019

SPEAKING:

ADOPT

ADOPT

RESPOND

EXPAND

ADAPT

The initial pro-poor

innovation is taken up and

is viable.

Initial changes in attitude and behavior:

▪ CBA changed its business model and attitude towards mass market

▪ Strong ownership: CBA invested $12 million; FSDK $650k

Partner adopts initial innovation:

▪ 7.2 million people opened M-Shwari accounts in the first 24 months

26

© CGAP 2019

CBA institutionalizes and continues to improve the innovation:

▪ Revised credit scorecard → 30% of clients below poverty line (up from 19%)

▪ Additional services based on M-Shwari (LockSave)

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ADAPT

SPEAKING:

© CGAP 2019

SPEAKING:

ADOPT

RESPOND

EXPAND

ADAPT

Partners incorporate and

build on the initial change

CBA institutionalizes and continues to improve the innovation:

▪ Revised credit scorecard → 30% of clients below poverty line (up from 19%)

▪ Additional services based on M-Shwari (LockSave)

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ADAPT

© CGAP 2019

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EXPAND

SPEAKING:

Competing products launched in Kenya:

CBA launches similar product in other countries:

© CGAP 2019

ADOPT

RESPOND

EXPAND

ADAPT

Competing market actors copy

and/or add to the innovation

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EXPAND

SPEAKING:

Competing products launched in Kenya:

CBA launches similar product in other countries:

© CGAP 2019

SPEAKING:

M-Shwari catalyzes wider innovation:

▪ Consumer lobby fights for transparent pricing

▪ Competitors urge regulator to curb dominance

▪ Regulatory respond around pricing and interoperability

▪ Non financial service providers build on M-Shwari to

develop their services. e.g. Hello Doctor

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RESPOND

© CGAP 2019

ADOPT

RESPOND

EXPAND

ADAPT

SPEAKING:

Non-competing actors adjust

their practices.

M-Shwari catalyzes wider innovation:

▪ Consumer lobby fights for transparent pricing

▪ Competitors urge regulator to curb dominance

▪ Regulatory respond around pricing and interoperability

▪ Non financial service providers build on M-Shwari to

develop their services. e.g. Hello Doctor

32

RESPOND

© CGAP 2019

ADOPTInitial innovation

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M-Shwari: AAER Summary

CBA changes behavior re:

mass market and launches a

new viable product: M-Shwari

SPEAKING:

© CGAP 2019


ADAPTSustained change of the

partner

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CBA continues to improve the

product




SPEAKING:

© CGAP 2019

SPEAKING:


EXPANDPushing the boundaries

of the innovation


partner

35



product

Competing actors launch

similar products, in Kenya

and beyond




© CGAP 2019

SPEAKING:


RESPONDDiffusion of the innovation


of the innovation


partner

36


Regulators, consumer protection

associations, other service

providers respond to the change


product

Competing actors launch

similar products, in Kenya

and beyond




© CGAP 2019




of the innovation


partner

37

Innovation Scale-up

SCALE

Towards Scale

SPEAKING:

© CGAP 2019




of the innovation


partner

38

SU

STA

INA

BIL

ITY

Towards sustainability

SPEAKING:

© CGAP 2019






everyone sees your


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AAER IN ACTION

USAID in the

Philippines

Photo: David Leprozo Jr, CGAP Annual Photo Contest

© CGAP 2019

Early 1990s:

▪ Restrictive regulations and heavy state

involvement through directed credit

▪ Reform process stalled

▪ Low capacity of rural banks and lack of

interest for low-income population

Rural financial services in the Philippines

41SPEAKING:

© CGAP 2019

Early 1990s:

▪ Restrictive regulations and heavy state

involvement through directed credit

▪ Reform process stalled

▪ Low capacity of rural banks and lack of

interest for low-income population

Rural financial services in the Philippines

Early 2000s:

▪ Enabling regulations

▪ Authorities keep innovating

▪ 170+ rural banks involved in microfinance

42SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

Analysis: System Performance

Financial

services

Limited and

unsustainable

financial services

in rural areas

SPEAKING:

© CGAP 2019

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SUPPLY DEMAND

Analysis: System Performance

Financial

services

Limited and

unsustainable

financial services

in rural areas

Financial sector

policy

Largely due

to inadequate

policy

SPEAKING:

© CGAP 2019

ADOPTPro-poor innovation introduced & local ownership

USAID programs: TA to the Council

New policy adopted, after

years of blockade

ADOPT

RESPOND

EXPAND

ADAPT

New, evidence based and consultative,

policy making process

Data vs. dogma:

providing evidence

Working groups:

promoting consultation

Innovation

45SPEAKING:

© CGAP 2019

ADAPTSustained behavior change of the partner

Became a standard for financial

sector reforms

New, evidence based and consultative

policy making process

Process widely accepted by private and

public sector

No additional

USAID support

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ADOPT

RESPOND

EXPAND

ADAPT

SPEAKING:

© CGAP 2019

New banking act, incorporating microfinance

New microfinance regulations

Reform of the cooperative sector

etc.

EXPANDOther actors copy/add diversity

Policy formulation only set the tone for reform. To truly

change the environment, policy needs to be

implemented.

Continued USAID support: technical assistance to the

national credit council to support other govt agencies

Central BankMinistry of

Finance

Cooperative Devt

Authority

Other

agencies

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ADOPT

RESPOND

EXPAND

ADAPT

SPEAKING:

© CGAP 2019

RESPONDNon-competing actors adjust their practices

USAID support:

technical assistance

to rural banks

From zero banks in the late 1990s

to 170 rural banks today serving

2.6 million micro-customers

New policy

adopted

48

ADOPT

RESPOND

EXPAND

ADAPT

SPEAKING:

© CGAP 2019

SPEAKING:


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Philippines Case Study: AAER Summary

New policy, adopted thanks to

new, evidence-based and

consultative process

SCALE

SU

STA

INA

BIL

ITY

© CGAP 2019

SPEAKING:



partner

50


New reform process became a

standard for financial sector

reforms, increasing likelihood of

market resilience




SCALE

SU

STA

INA

BIL

ITY

© CGAP 2019

SPEAKING:



of the innovation


partner

51





market resilience

Other policy makers adapted their

regulations to fully implement the

new policy




SCALE

SU

STA

INA

BIL

ITY

© CGAP 2019

SPEAKING:




of the innovation


partner

52


Retailers started to serve low-

income population, and played an

active role in the policy process




market resilience

Other policy makers adapted their

regulations to fully implement the

new policy




SCALE

SU

STA

INA

BIL

ITY

© CGAP 2019

ADOPT

RESPOND

EXPAND

ADAPT

Are non-

competing actors

sufficiently

informed /

incentivized / able

to adjust their

practices? How?

Will partners

incorporate

and build on

the initial

change? How?

Are competing

market actors

sufficiently

informed,

incentivized and

able to copy/adapt

the innovation?

Will the

innovation be

tested and

taken up?

How?

53

Using AAER to articulate the program vision

Always ask:

?

?

SPEAKING:

© CGAP 2019

ADOPT

RESPOND

EXPAND

ADAPT

?

Are non-

competing

actors

adjusting their

practices?

Are partners

building on

the initial

change?

?

Are competing

market actors

copying /

adapting the

innovation?

Has the

innovation

been taken

up and is it

viable?

54

Using AAER to monitor if change is happening

SPEAKING:

© CGAP 2019






everyone sees your


55

Molly Tolzmann

Washington, DC

[email protected]

Alice Negre

London

[email protected]

www.cgap.org

the systemic approach - cgap€¦ · consumer lobby fights for transparent pricing competitors urge...

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