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Financial Inclusion Equity Council Publications

Since April 2023, the Financial Inclusion Equity Council (FIEC) has transitioned its secretariat from the Center for Financial Inclusion (CFI) to Cerise+SPTF. Under the new arrangement, FIEC will work closely with Cerise+SPTF’s Social Investor Working Group to further deepen collaboration and discussion among investors in identifying new opportunities for inclusive growth through financial services in a world of increasing disruption and uncertainty. Learn more

FIEC provides guidelines, articles, and case studies that aim at strengthening the global implementation of responsible investment practices to help advance the lives of low-income people. You'll find below some of the FIEC's most important publications.

Over-indebtedness and Microfinance: Constructing an Early Warning Index

This study examines the conditions that can lead to over-indebtedness and crisis in microfinance in order to create an early warning system for such events. This system constructs a composite index for predicting an over-indebtedness crisis in the microfinance industry, using macro-level, microfinance market, firm-level, and household-level indicators. Leveraging an industry consultation process, Daniel and Sam have consolidated investors’ own emerging principles and procedures in assessing potential buyers, and used the findings to produce a Conceptual Framework for Buyer Selection in financial inclusion equity exits.

This framework serves as a resource for investors embarking on an equity sale, providing them with a concrete, industry-recognized framework to evaluate an exit. Additionally, it can guide investor discussions with external organizations that assist them in exit trajectories (investment banks, advisory firms, etc.); assist new categories of impact investors that have little experience in exits; and serve as a guide to potential buyers to help understand selection criteria and prevent interested (but unsuitable) buyers from spending time on a futile due diligence process.

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The Growth in Commercial Microfinance: 2005-2008

This study is the second update of the original 2004 CMEF study, Characteristics of Equity Investment in Microfinance, and seeks to illustrate the changes in growth, expansion and maturity of the commercial microfinance industry between 2005 and 2008. The study quantifies the explosive organic growth, particularly in Asia, in terms of equity, assets, number of borrowers and depositors in the industry.

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The Practice of Corporate Governance in Microfinance Institutions

The Governance Guidelines have since been widely used and highly regarded as an excellent source for governance information within the microfinance industry. Over the past seven years, much has changed in the field of microfinance, and good governance has become increasingly important. The Council has therefore updated this reference document to reflect new thinking and resources that have emerged in the microfinance industry around governance since the original version was published. While the original guidelines have not altered significantly, new or expanded guidance is provided in the areas of legal structures and formal documentation, social performance management, alignment of incentives, responsible exits, risk and crisis management.

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Caveat Venditor: Towards a Conceptual Framework for Buyer Selection in Responsible Microfinance Exits

This paper goes beyond raising questions, and seeks to provide a template to help investors navigate the complex terrain of “responsible exits.” The paper is co-authored by Daniel Rozas and Sam Mendelson and is part of a joint research project on buyer selection in responsible exits of NpM, Netherlands Platform for Inclusive Finance, along with the Financial Inclusion Equity Council (FIEC) and the European Microfinance Platform (e-MFP). Caveat Venditor focuses on one particularly tricky part of the exit process – selecting a buyer that is suitable for the microfinance institution (MFI), its staff, and ultimately its clients.

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How to IPO Successfully and Responsibly: Lessons From Indian Financial Inclusion Institutions

Initial public offerings (IPOs) are widely viewed as markers of commercial success. However, in the financial inclusion industry, IPOs are sometimes viewed with suspicion, if not alarm. This paper examines the 2016 IPOs of two Indian microlenders – Equitas Holdings and Ujjivan Financial Services – and how “hardwiring” their missions into their operations and corporate culture helped drive their success. The experience of these two companies suggests how a responsible financial services company can position itself to go public while maintaining its social mission.

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Offshore Financial Centers for Financial Inclusion

The words “offshore” and “tax-haven” are often taboo rhetoric within the investment space. In this paper, the FIEC, with support from CFI, explores why and how equity impact investors use offshore vehicles. Our findings reveal that offshore vehicles offer key operational, legal, tax and reputational advantages and are a key part of the impact investment landscape.

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Valuing Microfinance Institutions

While the valuation of microfinance institutions (MFIs) may be more of an art than a science, the practice within the equity investment community remains opaque, inconsistent and overly complex. This paper summarizes the challenges impact investors face when valuing MFIs–from which methodologies to use and what assumptions to make, to how to factor in the social mission and fintechs. There is an urgent need for more shared, comparable and reliable data to effectively benchmark impact investments.

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