The Changing Face of Microfinance

By Rory Bruce, VisionFund.

e-MFP has always been pleased to publish guest blogs – from members, partners, those working on a particular topic (like that of the European Microfinance Award), and friends. Here, Rory Bruce – Global Resource Development & Management Director of VisionFund – observes a move among humanitarian agencies as they step into the financial inclusion space, reflects on his takeaways from EMW2024 and some of the innovations and changes within the sector that were discussed.

Although the provision of finance to refugees and migrants was the key theme at the November 2024 European Microfinance Week in Luxembourg, climate adaptation and climate finance were critical in almost every seminar. Critical to that conversation was the role that financial inclusion agencies like VisionFund play in supporting vulnerable people and their communities as they adapt to climate challenges.

 A few selected trends that struck me from the event are:

There is an apparent broadening of the sector away from just solely microfinance players to a wider financial inclusion scope, propelled in part by the helpful contributions of humanitarian agencies into the financial inclusion space. This was particularly evident in the space of disaster response intervention, how we provide better financial services to enable the financial inclusion of vulnerable groups, especially in this case for refugees and migrants. Since 2019, VisionFund Uganda has developed and delivered access to finance for South Sudanese refugees in West Nile, Northern Uganda in partnership with Humanitarian actors, through a savings group linkage loan called Finance Accelerating Savings Group Transformation (FAST). I was proud to see VisionFund Uganda’s work with refugees recognised as a semi-finalist for the European Microfinance Award 2024 (on ‘Advancing Financial Inclusion for Refugees and Forcibly Displaced People’, with the ultimate winner being RUFI, an MFI also prioritising refugees in Northern Uganda.

For agencies like VisionFund, a move towards a broader financial inclusion in partnership with humanitarian and development agencies is welcome and underpins much of VisionFund’s current and future plans.

I believe there is a growing recognition that with humanitarian needs increasing amidst a reduction in available humanitarian funds, that new solutions are needed to meet this gap – and financial inclusion strategies are critical to that.

This need and shift came across clearly during the week, seen through the lens of the theme of financial inclusion of refugees and migrants. Traditionally, working with refugees has been seen as a humanitarian function; it is clear that this is now a financial inclusion sector opportunity and responsibility, and we need to have solutions to bring into that.

For VisionFund, this is being enabled by our position as part of World Vision. As a partnership, we represent a wide spectrum of solutions, from World Vision’s extensive life savings assistance work of cash and food distribution with key partners like the World Food Programme, all the way through to the insurance, savings, and credit that VisionFund brings to build household resilience.

I saw a broadening of the players at this year’s European Microfinance Week. This is good news – a wider variety of actors in that financial inclusion space, enables a wider assortment of products to support vulnerable people. For refugees, this broadening goes beyond just credit, to savings solutions and insurance solutions.

The complexity of climate-related challenges facing VisionFund clients is considerable. The need for adaptation strategies in response and working with humanitarian actors is key, and this was clearly an area that many financial inclusion players discussed and wrestled with at European Microfinance week. VisionFund has partnered with the World Food Programme (WFP) in both Malawi and Zambia to deliver FAST loans to savings group members who are also WFP beneficiaries. This blended finance approach in regions that are under increasing pressure due to prolonged drought, is providing alternative tools for savings group members to build resiliency in a tough period. As VisionFund increases its focus on developing climate adaptation approaches, I was pleased to meet, face to face, the Just Institute – who are supporting us on this journey.

I was pleased to join a panel during the week in Luxembourg with our Impact Evaluation partner 60 Decibels, in which we focused on how financial institutions like VisionFund shape governance mechanisms through client voices. The client voices (survey insights) that VisionFund tracks through internal studies and through 60Db studies have a high level of visibility even up to Board Impact Committee level. They are analysed, tracked and translated into actionable insights which become part of the performance management system to KPI’s of VisionFund MFI leadership. We’re seeing a positive feedback loop there, where the qualitative comments from our clients in surveys are now influencing boards and then looping back down to MFIs in the form of performance management.

This was a highly effective week with like-minded partners, with lots to learn, lots to share from our experience at VisionFund, and excitement on how we can contribute further in 2025 on our learnings and innovations around insurance solutions.

Rory Bruce is the Global Resource Development & Management Director of VisionFund, the financial empowerment and livelihoods arm of World Vision.