Adrian Dincsoy - 2014 Conference on Global and European Trends in Financial Education in Istanbul


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This presentation by Adrian Dincsoy was made during session 3 at the High-level Conference on Global and European Trends in Financial Education held on 22-23 May 2014 in Istanbul, which explored the role(s) of the private and not-for-profit sectors in financial education, financial literacy and innovation for young people and financial education for migrant workers and their families. Find out more at

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Adrian Dincsoy - 2014 Conference on Global and European Trends in Financial Education in Istanbul

  1. 1. Page 1 Financial Literacy for Remittances and Diaspora Investment -A Last Mile Challenge for Technical Cooperation Adrian Dincsoy Sector Project Migration & Development (GIZ) High-level conference on global and European trends in financial education 22-23 May 2014 - Istanbul
  2. 2. Page 223.05.2014 SV Migration & Entwicklung, GIZ Studies show both positive and negative effects of remittances on housholds and economies. Therefore technical cooperation aims at fostering positive and minimizing negative effects to increase the development impact of remittances. Practical Technical Cooperation First Mile: Remittances Last Mile: Practical TC Concepts Sustainable Development The Challenge for development organisations and technical cooperation:  How can we use the accumulated knowledge about remittances to design effective technical cooperation projects that leverage remittances for development? ?
  3. 3. Page 3 FReDI’s Purpose:  To support the design of projects linking financial literacy, remittances and diaspora investments FReDI’s Goals:  To contribute to increased financial inclusion of migrants and their families  To link remittance flows to financial products  To foster migrant savings and diaspora investments in country of origin Methodology  About 50 projects that use financial literacy in the remittances context from around the world were screened. FReDI –A Last Mile Enabler FReDI, comissioned by GIZ and eMFP, is a collection of practical methods for technical cooperation organizations to help them design effective projects linking financial literacy, remittances and diaspora investments.
  4. 4. Page 4 Financial Literacy Increasing Awareness and Competition in the Remittance Market Product Design for Financial Institutions (FIs) Converting Senders & Recipients into Clients of FIs Business Development and Entrepeneurship Diaspora Investments in the Country of Origin Build Asset Base and Better Manager Financial Risk Empower Migrants and Reduce Vulnerability + = It was found that projects combine financial literacy components with remittance components and that they tend to be mutually reinforcing. A combination of the two creates five methods presented in the handbook. SV Migration & Entwicklung, GIZ 23.05.2014 Means to an End Means Method End
  5. 5. Page 5 Increasing awareness and competition in the remittance market  High remittance prices are a main issue identified by the international community regarding remittances (G20, Global Remittances Working Group)  The Handbook focused on remittance price comparison websites  The main objectives are providing migrants with accurate information and reducing transfer costs  The main components:  Development of the website  Marketing of the website  Consultation with stakeholders Method 1: Financial Literacy + … Lowering the costs of remittances and including them into the formal financial sector can put additional money in the pockets of migrants and their families – (price) transparency, awareness and ultimately competition are prerequisites. 23.05.2014
  6. 6. Page 6 Product Design for Financial Institutions  A wide range of projects with two main objectives  Assisting (M)FIs to introduce or improve remittance services  Designing and launching remittance- linked products  The main components:  Product development, including IT and Partnerships  Linking activities between FIs and Money Transfer Operators (MTOs)  Development of marketing campaigns/specific marketing material  Staff training for participating FI(s) Method 2: Financial Literacy + … Supporting the “supply-side” in understanding and catering the financial needs of remittances senders/recipients in order to improve access to formal financial services (remittances services, savings, loans, insurances) 23.05.2014
  7. 7. Page 723.05.2014 Converting remittance senders and recipients into clients of financial institutions  Focuses on the demand side i.e. flip side of Method 2 and has two main objectives:  Providing financial education to migrants and their families  Increasing the use of financial products/services by migrants and their families  The main components:  Financial education for remittance senders and recipients (one-on-one and classroom)  Training of trainers  Linking remittance senders and recipients to financial institutions Method 3: Financial Literacy + … Supporting the “demand-side” in understanding formal financial services in order to improve access adequate formal financial services (remittances services, savings, loans, insurances)
  8. 8. Page 823.05.2014 Remittances to promote business development and entrepreneurship  The main objective is to channel remittances towards the creation of MSME/family enterprises  The main components:  Market research or feasibility study of business opportunities  Entrepreneurship trainings for remittance senders and/or remittance recipients  Linking enterprises of remittance recipients to MFIs to obtain loans  Development of marketing campaign/specific marketing materials Method 4: Financial Literacy + … Focus is on channeling remittances to MSMEs in combination with entrepreneurship and general financial literacy training in order to promote business development and entrepreneurship amongst transnational families.
  9. 9. Page 9 Investing remittances in investment projects in country of origin  Investments are too large for individual investors and therefore structured in relatively complex vehicles (debt/equity/mezzanine possible)  The main components:  Institutionalizing migrant activities  Investing in the country of origin mainly in existing and start-up (medium and large) businesses and cooperatives, diaspora bonds  Entrepreneurship training  Method 5 potentially carries high rewards and high risks for migrants Method 5: Financial Literacy + … The main objective is to provide asset building and income generating investment vehicles to migrants and their families and thereby supporting entrepreneurs and the economy in the country of origin.
  10. 10. Page 10 FReDI in Action  Country: Uzbekistan (Remittances >10% of GDP)  Goal: Enhance financial literacy among and the use of formal financial services amongst remittances recipients.  FReDI: Method 3 (Converting Remittance Senders and Recipients into Clients of Financial Institutions)  Training of Trainers  1 on 1 financial literacy education to recipients  Cooperation with private banks to offer products  Partners:  Inter-American Dialogue (IAD) .  Five banks in Uzbekistan.  Cost: ~ 40.000 $US financed by BMZ (Germany)  Result / Sustainability:  4,635 clients educated, 15% opend account  Pilot banks interested to continue the initiative individually; aiming to develop proper strategies  Central Bank interested in scaling up Financial Literacy nation-wide Financial Literacy Education in Uzbekistan
  11. 11. Page 11  Including financial education adds value as it strengthens the results of the various remittances interventions.  The reverse is also true: financial literacy projects not linked to other activities are less effective to realize development objectives.  Reaching (financial) sustainability can be challenging, in particular for Methods 1, 4, 5.  One should be aware of the complexity of Methods 4 and 5. More research and pilots are needed to increase their cost-effectiveness, development impact and sustainability. Conclusions
  12. 12. Page 12 Contact FReDI Type presentation title here23/05/2014 … give feedback … dissemination activities … project proposals … engage in discussions E-mail: Website: Thank you!