respect, openness, excellence & collaboration
2016
annual report Photo credit: Jon Warren, World Vision
Contents
2016 by the Numbers ...........................................................3 Message from the Executive Director and Chair .................5 MCWG Members .................................................................6 MCWG’s Global Footprint ..................................................8 Member Stories from the Field ...........................................10 Responsible Microfinance ...................................................14 MCWG Peer Groups ..........................................................17 Partnering for Collaborative Development ........................18 Innovation in Financial Inclusion ........................................20 Thank You to Our Supporters ..............................................23
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Message from the Executive Director and Chair The ten CEOs that comprise the Microfinance CEO Working Group (MCWG or “the Working Group”) are
driving their organizations toward high standards in the delivery of responsible financial services and innovations and raising the bar for the microfinance sector as a whole. Jointly, this unique collection serves more than 89 million low-income clients across 87 countries, including more than 82.5 million clients through its 260 local affiliates and partners in 73 countries, as well as 6.5 million clients in 51 countries via savings groups. MCWG members include those with concentrated regional presence throughout Africa, Asia, Europe, Latin America and the Caribbean, and the Middle East, and those with strong global operations. Since its inception in 2011, the MCWG has worked to drive the industry toward best practices for responsible, client-centered delivery of financial services by encouraging its local partners to lead by example. This commitment has been demonstrated by its willingness to support major social performance efforts led by groups such as the Social Performance Task Force (SPTF) and the Smart Campaign. In 2016, MCWG members sought ways to coordinate efforts where it made strategic sense and facilitated greater outreach and engagement with clients. In August, Opportunity International and VisionFund International partnered to expand financial services to the unbanked in the Democratic Republic of the Congo. In December, Grameen Foundation and Freedom from Hunger combined to become one unified force “to expand financial inclusion, enhance health, strengthen resilience, and improve livelihoods for people in poor, rural communities around the world.” Additionally, through a new initiative called Partnering for Collaborative Development, the CEOs aspired to achieve greater collaboration by harnessing the collective expertise of local partner organizations to move the needle on financial inclusion in certain countries. Uganda was selected as the pilot country as eight of the ten members have a presence there and the government has made strides to expand financial inclusion. We began this effort with conversations with key stakeholders and concluded the year preparing for our first major conference, Committing to Action: Accelerating Financial Inclusion through Partnership, held January 17-18, 2017, in Uganda. This event brought together more than 100 participants to discuss the challenges and opportunities to reach unserved and underserved populations. Finally, the CEOs decided to add a new member: Jesse Fripp of the Aga Khan Agency for Microfinance (AKAM). The AKAM membership began officially in early 2017 and expands our collective footprint around the world. This report summarizes key achievements of the MCWG and its members, and recognizes our donors and contributors, to whom we are grateful. We would also like to thank the members of our seven Peer Groups, as well as our team of interns from The Fletcher School of Law and Diplomacy at Tufts University, James Madison University, University of Illinois at Urbana–Champaign, University of Notre Dame, and Yale University, whose hard work provided more than 750 hours of support to the Working Group staff. In cooperation,
Sharlene Brown Executive Director, MCWG
Rupert W. Scofield President, FINCA International and Chair, MCWG
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MCWG Members
Shameran Abed Director, Microfinance BRAC
Scott Brown President and CEO VisionFund International
Maria Cavalcanti President and CEO Pro Mujer
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Vicki Escarra Global CEO Opportunity International
Jesse C. Fripp General Manager Aga Khan Agency for Microfinance
Steve Hollingworth President and CEO Grameen Foundation
Mary Ellen Iskenderian President and CEO Women’s World Banking
Christian Pennotti Director CARE USA, Access Africa
Michael Schlein President and CEO Accion
Rupert W. Scofield President FINCA International
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MCWG’s Global Footprint Since 2011, the MCWG has provided a forum for members to advocate on behalf of the microfinance sector, develop industry standards, and share best practices in an effort to help each organization improve their services and expand their reach. The Working Group seeks to expand financial inclusion by leveraging members’ expertise in the delivery of microfinance services and collaborating with those best positioned to scale access to quality financial services. Members and local partners work with more than 89 million clients in 87 countries, providing them with financial services as well as other support to help them succeed and lift their families out of poverty.
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89 Million Clients Served
East Asia & Pacific - 9 million Europe & Central Asia - 600,000 Latin America & the Caribbean - 12 million Middle East & North Africa - 2 million South Asia - 40 million Sub-Saharan Africa - 25 million Figures have been rounded.
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Member Stories from the Field
Photo credit: John Rae
Thanks to her loan from DAWN, an Accion partner in Myanmar, tea shop owner Daw Thein Thein Win no longer needs to rely on high-interest moneylenders for financing. Instead, she can now buy milk and other supplies from the wholesale market and still have enough money left over to set something aside for her children’s education.
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Accion
BRAC BRAC client Ruth Monger is a group leader of her village organization, a women’s group based in Jacobtown, Liberia — an area that was hit hard by the Ebola crisis of 2014. Ruth was a key source of support for her group during and after the crisis, even helping other members to make payments when they were unable to do so. Photo credit: Emily Coppel
After his group’s lock box was stolen violently from his home in Tanzania, CARE savings group member Mussa Kisepo convinced the other members to open a group bank account and deposit their savings after each meeting to ensure the security of their money. As treasurer, Mussa and his wife Mwanaidi now have peace of mind that their savings will not be stolen, and that their household is safe from the threat of robbery. The couple also has a joint account at the same bank to save the income they earn from their small business.
CARE
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With help from a series of loans from FINCA, Julia Maria Ixchop Us De Ventura grew her street-based food business into a thriving restaurant inside a Guatemalan market. The income from the business has helped her and her husband pay their children’s school fees, renovate their home, and support their aging parents.
FINCA
Opportunity International Agapito Amador, a yucca farmer from Nicaragua, worked with an Opportunity International agronomist to learn new farming techniques, significantly increasing his yield. As an Opportunity International client, he was also connected to a processing plant that helped him utilize his entire harvest.
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VisionFund International VisionFund International client Grace Graka began with a loan to purchase 100 chickens and now owns a 31bedroom hotel. She has also given back to her community in Zambia by funding a women’s ward at the hospital and building girls’ dormitories for a school.
For Haifaa Tyre, the empty lot next to her home in Lebanon presented an opportunity to improve her family’s living circumstances. The loan she received from Women’s World Banking network member Al Majmoua helped her expand her vegetable growing business, which enabled her to afford university tuition fees for two of her children and build three extra rooms above her house.
Women’s World Banking
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Responsible Microfinance Responsible microfinance, particularly the areas of client protection, pricing transparency, and social performance, is raising standards for the sector and creating tools that will better serve clients, investors, and other stakeholders. Since its inception, the MCWG has supported the development and adoption of industry standards that promote the delivery of high-quality financial services to the traditionally excluded. In 2013, the Working Group concluded a “beta testing” of the Social Performance Task Force (SPTF) Universal Standards for Social Performance Management — the first large-scale review of the finalized standards — gathering inputs from 21 local partners. These results were incorporated into CERISE’s Social Performance Indicators Tool (SPI4), one of the most widely used assessment tools for double bottom line microfinance institutions. Responsible delivery of microfinance services continues to be a top priority for the MCWG and its members. The Working Group routinely tracks local partners that complete assessments, sharing this data with SPTF in an effort to continuously improve the SPI4 product. Within the past three years: • 74 local partners have conducted a SPI4 • 77 local partners have conducted a Social Rating (SR) or Microfinance Institutional Rating (MIR) •103 unique MFIs have conducted a SR/MIR and/or a SPI4
Smart Campaign Certification As part of its commitment to responsible microfinance, the MCWG is a strong supporter of the Smart Campaign and its Client Protection Certification Program. This global initiative is committed to embedding client protection practices into the institutional fabric of the financial inclusion sector, helping to strengthen and elevate it as a model of responsible financial services provision around the world. The Smart Campaign provides institutions with the tools and resources they need to deliver transparent, respectful, and prudent financial services to clients. Smart Campaign certified organizations have submitted to extensive audits, site visits, and in-person interviews to meet rigorous industry standards on client protection. The Working Group has been at the forefront of this initiative, with local partners constituting more than half of all certified organizations. Of the 35 million clients served by Smart Certified organizations through 2016, 21.9 million – 62 percent – were under the umbrella of MCWG local partners. In 2016,14 MCWG local partners with a total reach of 8.4 million clients achieved Smart Campaign Certification.
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Clients Served by Smart Campaign Certified MFIs (in Millions)
Number of Smart Campaign Certified MFIs
37 13.1
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11.5 21.9
39 25
13.5
Through 2015
Through 2015
Through 2016
All Others
All Others
MCWG Local Partners
MCWG Local Partners
Through 2016
Smart Certified MCWG Local Partners, 2016 Local Partner
Country
MCWG Member
AgroInvest*
Serbia
VisionFund International
Banco Pichincha (Pichincha Microfinanzas, formerly CREDIFE)
Ecuador
Accion and Freedom from Hunger**
Banco Popular*
Honduras
Accion
BRAC Bangladesh
Bangladesh
BRAC
COOPROGRESO
Ecuador
Freedom from Hunger**
FINCA Georgia
Georgia
FINCA
FINCA Kosovo
Kosovo
FINCA
Fundación Boliviana para el Desarrollo (FUBODE)
Bolivia
VisionFund International
Fundación Paraguaya*
Paraguay
Accion
Opportunity International Colombia S.A. Compañia de Financiamiento (OICCF)
Colombia
Opportunity International
Pro Mujer Nicaragua*
Nicaragua
Pro Mujer
Te Creemos (formerly FINCA Mexico)*
Mexico
FINCA
VisionFund Cambodia
Cambodia
VisionFund International
VisionFund Ecuador (formerly Fondo de Ecuador Desarrollo Microempresarial (FODEMI) *Funded by the MCWG through the IFC grant. **Freedom from Hunger merged with Grameen Foundation in 2016.
VisionFund International
Through a three-year grant from the International Finance Corporation (IFC), the MCWG’s Accelerating Responsible Microfinance project sponsored Smart Campaign certification for four local partners in 2016.
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The Model Legal Framework In addition to encouraging local partners to undergo Smart Certification, the MCWG also worked with central banks to strengthen client protection regulations. In collaboration with the Model Legal Framework Task Force, which is comprised of the legal teams from Accion and New Perimeter, DLA Piper’s global pro bono initiative, as well as the Smart Campaign, the Working Group has developed the Model Legal Framework for Financial Consumer Protection (MLF), which is promoted widely among key stakeholders in several markets. Since its publication in April 2015, the MLF has been disseminated to more than 560 financial inclusion stakeholders worldwide, including more than 200 regulators and bank supervisors. In 2016, the Task Force participated in 12 events across seven countries, training more than 270 financial inclusion stakeholders, including more than 100 regulators and bank supervisors, on the MLF and the Smart Campaign’s underlying Client Protection Principles. In March, the MCWG joined several industry voices to discourage interest rate caps being considered by the Central Bank of Nigeria (CBN), and endorsed the creation of client protection regulations. These efforts ultimately contributed to the CBN’s decision not to impose interest rate caps and instead work on a body of consumer protection regulations.
clients have always come “Our first, and this achievement confirms the success of our program’s mission to provide financial services to the poor in a way that is responsible and responsive to their needs.
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~Shameran Abed Director, Microfinance, BRAC Photo credit: Shehzad Noorani
In 2016, BRAC Bangladesh became the first microfinance provider in the country — and the largest in the world — to achieve Smart Certification. Founded in 1972, BRAC is the world’s largest development organization, dedicated to empowering people living in poverty. BRAC’s client-focused microfinance program operates in seven countries including Bangladesh, where it impacts the lives of nearly seven million people. In order to achieve certification, BRAC Bangladesh underwent an extensive audit (conducted by microfinance rating agency and licensed Smart Certifier Microfinanza Rating) of their policies and practices for adherence to the Smart Campaign’s Client Protection Principles. This covers issues including transparency, fair and respectful treatment, responsible pricing, and prevention of over-indebtedness. The process included thorough document review, an onsite visit, and interviews with BRAC’s management, staff, and clients.
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MCWG Peer Groups MCWG leverages the expertise of more than 40 senior staffers across member organizations. Participants meet regularly (both in-person and virtually) to collaborate on projects, share best practices, and discuss concerns related to specific areas of microfinance. These seven Peer Groups work closely with the Working Group staff, helping to establish goals and drive the agenda of the MCWG. • Digital Financial Services Peer Group • Finance/Tax Peer Group • Human Resources Peer Group • Microfinance Communications Council • Model Legal Framework Task Force • Risk Peer Group • Social Performance Peer Group
Thanks to the efforts of the Microfinance Communications Council (MCC), in 2016 the MCWG became a hosting partner of the Month of Microfinance, a grassroots movement focused on client-centered microfinance. In April, the MCC hosted a panel discussion at FINCA’s Washington, D.C. headquarters. 2020 Vision: The Future of Microfinance was led by MCWG Executive Director Sharlene Brown and featured leaders from four member organizations: Rupert W. Scofield, President of FINCA International; Mary Ellen Iskenderian, President and CEO of Women’s World Banking; Kathleen Stack, Executive Vice President, Global Programs of Grameen Foundation and former Interim CEO of Freedom from Hunger; and Scott Brown, President and CEO of VisionFund International.
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Partnering for Collaborative Development in Uganda In 2016, the Working Group announced the launch of its new Partnering for Collaborative Development program, which will focus on work in three countries over the next four years. Uganda was selected to be the first focus country due to its government’s commitment to financial inclusion and the significant MCWG representation there — eight members have local partners present, reaching 2.7 million clients. The program will incorporate both a top-down regulatory review of the consumer protection framework and a bottom-up programmatic approach. The Working Group conducted research to better understand the status of financial inclusion in Uganda and determine why and where there are pockets of exclusion. By forming strategic alliances with local partners, the MCWG hopes to alleviate or eliminate these pockets of exclusion while continuing to support the adoption of strong consumer protection standards and practices. In August, the Working Group hosted a meeting of Ugandan stakeholders to share the initial research findings and key themes, gather feedback on results to date, and identify the priorities and challenges of the individual institutions. Sixteen CEOs and senior leaders attended, representing local partners of Accion, BRAC, CARE, FINCA, Grameen Foundation, Opportunity International, VisionFund International, and Women’s World Banking. As the pilot moves forward, the MCWG and its local partners will continue to identify specific programmatic efforts to advance financial inclusion and financial consumer protection in Uganda.
(L-R) Michael Schlein, President and CEO of Accion; Rupert W. Scofield, President of FINCA International; Bridget Dougherty, Project Manager of MCWG; Sharlene Brown, Executive Director of MCWG; Kathleen Stack, Executive Vice President, Global Programs of Grameen Foundation; Scott Brown, President and CEO of VisionFund International; Shameran Abed, Director, Microfinance of BRAC.
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In January 2017, the Working Group, in collaboration with the Association of Microfinance Institutions Uganda (AMFIU) and the Smart Campaign, hosted Committing to Action: Accelerating Financial Inclusion through Partnership, a two-day meeting in Kampala, Uganda, which gathered more than 100 of the country’s financial inclusion stakeholders and experts. Attendees included representatives from the Bank of Uganda, the Ministry of Finance, UNCDF, FSD Uganda, the Smart Campaign, AMFIU, Stanbic Bank, and USAID, as well as executives from Accion, BRAC, FINCA International, Grameen Foundation, and VisionFund International. Agenda topics included ecosystem interventions, increasing the number of women on staff and as clients, digital solutions, product development for rural outreach and agriculture, and advancing financial consumer protection practice and regulation.
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Innovation in Financial Inclusion For the MCWG and its members, the delivery of microfinance services that meet the needs of those at the bottom of the economic pyramid is essential to achieving financial inclusion. As part of their efforts to reach this goal, members have developed a variety of digital tools and innovative solutions designed to reach underserved populations with high-quality financial services and programs.
Accion
Photo credit: John Rae
BRAC In Bangladesh, BRAC’s app-based cash collection system has provided 8,500 tablets to credit officers, enabling them to do cash collection in the field. This paperless process will save time and money — an estimated $1 million per year — and allow credit officers to serve clients better by having information readily available.
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Through its seed-stage impact investing initiative Venture Lab, Accion partners with emerging fintech startups such as Tienda Pago, a mobile platform that provides short-term working capital for small businesses. Tools like this enable entrepreneurs to make larger purchases and keep their shelves fully stocked and their businesses growing.
FINCA FINCA Zambia’s agent network equips local merchants and shopkeepers with devices that connect to FINCA bank accounts easily and securely through biometric fingerprints, allowing them to provide basic banking services in areas where FINCA does not have a presence. This program was awarded the Governor’s Award for Innovation in July 2016.
Grameen Foundation Grameen Foundation India (GFI), in partnership with Sonata Microfinance and mobile payments provider Oxigen, completed a pilot of an initiative that has enabled more than 23,000 rural women to date to repay microloans via mobile phone. This reduces travel time to local bank branches and raises financial and digital literacy. In addition, Sonata Microfinance was able to improve its efficiency, better manage cash flow, and reduce security risks for its loan officers.
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Opportunity International Opportunity International’s EduFinance program uses an innovative approach to target quality improvements in education through a “self-improving school system” framework. School leaders and teachers self-select into clusters to exchange insights and experiences with the common goal of improving education quality. Opportunity International provides resources and support through Education Specialists, local education experts that lead professional development training sessions, and self-assessment tools that guide school development. This commitment to education was recognized when Opportunity Bank of Uganda was named one of three finalists for the 2016 European Microfinance Award for Microfinance and Access to Education.
VisionFund International Originally developed to assist people in the Philippines in the aftermath of Typhoon Haiyan, in 2016 VisionFunds’ Financial Disaster Risk Management program was extended to assist families devastated by particularly severe El Niño weather patterns in Africa. Designed to help individuals rebuild their livelihoods and restore their independence in the wake of a natural disaster, the program uses grant aid along with additional commercial funding to scale recovery response. In recognition of its Asian Region Disaster Insurance Scheme, VisionFund International was awarded the Asian Development Bank’s Civil Society Partnership Award for 2016.
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Thank You to Our Supporters
The MCWG relies on funding from grants, donations, and in-kind contributions to advance its mission of promoting responsible, client-centered financial services. The Working Group would like to thank the following supporters for their generosity in 2016. 23
Major Supporters
Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people’s health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people — especially those with the fewest resources — have access to the opportunities they need to succeed in school and life. Based in Seattle, Washington, the foundation is led by CEO Sue Desmond-Hellmann and Co-chair William H. Gates Sr., under the direction of Bill and Melinda Gates and Warren Buffett. www.gatesfoundation.org
Citi Inclusive Finance is a specialist team that works across Citi businesses globally to develop solutions that enable the bank, its clients and partners to expand access to financial services and advance economic progress in underserved market segments. Urbanization, digitization and globalization are presenting new opportunities to accelerate the pace of financial inclusion. Leveraging cross-sector partnerships and innovative approaches, Inclusive Finance embeds investments that make a social impact into Citi’s core businesses to the benefit of clients and communities. Learn more at www.citiinclusivefinance.com.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information visit www.ifc.org.
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Community Supporters Domini Impact Investments LLC is an SEC-registered investment adviser that specializes exclusively in responsible investing. We serve individual and institutional investors who wish to create positive social and environmental outcomes while seeking competitive financial returns. www.domini.com
The Evangelical Lutheran Church in America (ELCA) is one of the largest Christian denominations in the United States, with more than 3.7 million members in more than 9,300 congregations across the 50 states and in the Caribbean region. Known as the church of “God’s work. Our hands,” the ELCA emphasizes the saving grace of God through faith in Jesus Christ, unity among Christians and service in the world. The ELCA’s roots are in the writings of the German church reformer Martin Luther. For more information, visit www.elca.org. Trillium Asset Management is the oldest investment advisor focused exclusively on sustainable and responsible investing. Trillium manages over $2 billion in assets for clients including individuals, foundations, endowments, religious institutions, and other non-profits. Trillium leverages the power of stock ownership to promote social and environmental change while providing both impact and performance to our investors. To learn more please visit www.trilliuminvest.com.
ELCA
Community Supporter Profiles For nearly 30 years the Evangelical Lutheran Church in America (ELCA) has been supporting innovative solutions that get at the root causes of hunger and poverty worldwide. In walking alongside companion churches and organizations in supporting their long-term, sustainable development projects, the work of the MCWG was a natural fit for ELCA’s goals. “The work that the MCWG and its members are doing helps to lay the groundwork so that the operational context is more amenable to the microfinance projects we support around the world, enabling our companion churches and organizations to have greater impact in these areas.” ~Rebecca Duerst, Director of Diakonia (International Development and Disaster Response), Global Mission Program, ELCA
“The mission of the MCWG is in direct alignment with Trillium’s charitable giving goals and values, and we are proud to help support the work of the organization.”
Trillium
For 35 years, Trillium Asset Management has provided a space for clients to invest their money in alignment with their values. Trillium’s clients have a strong interest in improving economic outcomes for those at the bottom of the pyramid, particularly women, which Trillium sees as sound investments.
~Cheryl I. Smith, Managing Partner & Portfolio Manager, Trillium Asset Management
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Pro Bono Partners New Perimeter, DLA Piper’s global pro bono initiative’s vision is to harness the skills and talents of DLA Piper lawyers to further a more just world for all. New Perimeter provides long-term pro bono legal assistance in under-served regions around the world to support access to justice, social and economic development, and sound legal institutions. New Perimeter aims to support women’s advancement as an overarching goal. www.newperimeter.com
Vanguard Communications is a Hispanic woman-owned public relations and social marketing firm with more than 30 years of experience working to improve lives in diverse communities. With this milestone in our sights, the 40+ person team and expanded network are as passionate as ever about using communications to create measurable social impact. www.vancomm.com
Secretariat
The Center for Financial Inclusion at Accion (CFI) currently serves as the Secretariat of the Microfinance CEO Working Group. CFI is an action-oriented think tank that engages and challenges the industry to better serve, protect and empower clients. We develop insights, advocate on behalf of clients and collaborate with stakeholders to achieve a comprehensive vision for financial inclusion. We are dedicated to enabling three billion people underserved by the current financial sector to improve their lives. www.centerforfinancialinclusion.org
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Acknowledgements
The Microfinance CEO Working Group would like to acknowledge Sharlene Brown, Bridget Dougherty, Neal Kennedy, Virginia Moore, Susan Patterson, and the Microfinance Communications Council members for their valuable contributions to this report.
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Through its core values of respect, openness, excellence, and collaboration, the Microfinance CEO Working Group’s (MCWG) goal is to support the positive development of its member organizations and the microfinance industry at large so the field can reach its full potential of bringing financial and related services to those who have been traditionally excluded. Members advocate in favor of responsible microfinance practices and commit to upholding their organizations to the highest standards.