The document summarizes Colombia's experience developing strategies to promote financial inclusion and savings among the ultra-poor population. Key strategies discussed include linking conditional cash transfer program payments to savings accounts, promoting savings groups in remote areas, providing financial education programs, and developing microinsurance and village banking programs. The strategies aimed to overcome poverty traps, build assets, and increase access to basic financial services for Colombia's poorest residents.

1. New strategies in building
assets for the ultra poor:
Colombia’s Experience
Carlos Moya
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

2. New strategies for building assets for the
ultra poor: Colombia’s experience
1. Introduction
2. Focus on the ultra poor
3. Promoting savings for CCT recipients
4. Other strategies to promote savings
5. Complementary programs
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

3. Colombia
Area: 1.2m km2
Population: 46m
Rural Population: 25.7%
GDP growth:
Colombia: 5.9%
Latin America: 4.3%
GDP per capita: Population living in poverty:
Colombia: USD$10,000 2008: 46.0%
2011: 34.1%
Adult population without access Population living in extreme
to financial services: poverty:
2006: 53% 2008: 17.8%
2012: 34% 2011: 10.6%

4. Key stakeholders
Regulators Create an enabling
and policy framework
Supervisors
New channels Others
and products (Insurance com- Commercial Volume:
panies, telcos, co Banks Downscale and
mmerce) massify
ARTICULATOR
+ Incentives
Provider
Other Microcredit Reach the
Government NGO bottom of the
Entities pyramid:
Grassroots
Multilateral
R & D, knowledge Organizations
sharing and finance &
innovation Foundations
SEEP 2012 Annual Conference
12/5/2012
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

5. Colombia’s experience:
Banca de las Oportunidades
Promoting financial inclusion through a
public – private partnership:
Government propitiates an adequate regulatory
framework and business climate, and gives
incentives (monetary and in kind) to the
financial services providers
Private operators (banks, financial
companies, cooperatives and microcredit
NGO), increase their geographic outreach and
improve the supply of adequate products and
services for the unattended population.

6. Factors for successful financial inclusion:
Learning from Banca de las Oportunidades
 Based on a win/win/win relationship
 Interventions have to be led by a pro-market
logic: Attractive for the suppliers, profitable and
thus supply would be sustainable.
 It is essential to include the private sector
because they have the expertise on financial
services provision and they have wide
infrastructure: Leverage to have wider impact.
 Incentives (co-finance and/or technical
assistance) from the government catalyse
innovation: Risk mitigation and learning best
practices
12/5/2012

7. New strategies for building assets for the
ultra poor: Colombia’s experience
1. Introduction
2. Focus on the ultra poor
3. Promoting savings for CCT recipients
4. Other strategies to promote savings
5. Complementary programs
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

8. Focus on the Ultra Poor:
Colombia’s government programs
0.5 million
1.5 million families 2.5 million families
Although Banca de las Oportunidades promotes financial
inclusion for several type of beneficiaries, this
presentation focuses on the the ultra poor strategies

9. Focus on the Ultra Poor: Red UNIDOS
Red UNIDOS is the Colombian government’s strategy to
overcome extreme poverty. It provides preferential access to
services to the country’s 1.5 million poorest families. The
strategy involves specific programs to help these families
overcome the main poverty traps, grouped in 9 dimensions:
1 IDENTIFICATION 6 HOUSING
2 INCOME AND WORK 7 FAMILY DYNAMICS
ACCESS TO FINANCIAL
3 EDUCATION 8 SERVICES AND
4 HEALTH SAVINGS
5 NUTRITION 9 ACCESS TO JUSTICE
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

10. Focus on the Ultra Poor: Familias en Acción
CCT program of Colombia created in 2000 (G2P)
National outreach
2.8 million beneficiary families
Subsidies conditioned on nutrition and education
indicators for families with children under 18 years
old
Average payment of USD$90 every two months (6
payments per year)
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

11. New strategies for building assets for the
ultra poor: Colombia’s experience
1. Introduction
2. Focus on the ultra poor
3. Promoting savings for CCT recipients
4. Other strategies to promote savings
5. Complementary programs
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

12. Evolution of CCT payment mechanisms
– 2000 – 2007: Cash Transfers
•
•
•
’
“ ”
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Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

13. Linkage between CCT program and
savings account: Financial inclusion for
the poorest
Savings account as an entry gate to other
financial services which allow graduation
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Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

14. Payments through savings accounts
Determinant factors:
Financial presence in almost ALL municipalities of
the country: Bank agents are essential
Design and development of Electronic Savings
Accounts (Basic accounts): No frills & full fledged
account only for lowest income population
Simplified procedure to open low-balance savings
accounts: Fewer Know Your Client requirements
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Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

15. Payments through savings accounts
Outcomes:
 2.5 million beneficiaries already
banked: with a savings account and
debit card for withdrawals
 Almost US $1 billion paid yearly
through savings accounts
 Convenience for beneficiaries to
withdraw their savings: No long
lines, no displacements to other
municipalities, ability to withdraw
anytime SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

16. Currently: M-banking
 Number of cell phones in Colombia >
population and full mobile signal outreach
 Advances in Colombia to create adequate
business climate for M-banking
 Banks starting to implement M-banking
models, both to reach the unbanked and
operate savings accounts
 Opportunity to use M-banking for CCT
payments: Lower costs, more
efficiency, security and comfort
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

17. Evolving towards M-banking
At the beginning Then Now
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Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

18. Promotion of savings culture
• for CCT beneficiaries who opened accounts (project with
Fundación Capital, supported by Ford Foundation)
Objectives Tools
• Transform part of informal
Financial Education
savings into formal financial (Aims to change financial
savings behavior)
• Increase savings and, in the Monetary Incentive to promote
long term, accumulation of formal savings
liquid assets
Joint Intervention: Financial
• Facilitate financial Education + Monetary
transactions through secure Incentive
and efficient means
Project Evaluation
Measuring impact of increasing savings on improving families’ wellbeing
Evaluate the relative importance of Monetary Incentive vs. Financial
Education to motivate savings

19. Mothers’ (beneficiaries’) opinions
 “I learned to have entrepreneurship to create my own business, I
learned that savings is the most adequate way to achieve goals and
life projects and to improve my wellbeing”
 “I’m doing savings plans to be able to finish my house”
 “It is important to know how to manage the money borrowed to avoid
(negative) consequences”
 “I learned that it is important to make a good analysis of credits and
conditions to avoid future failures”
 “Because I learned here a lot about why it is important to save for our
future and unforeseen needs”
 “Because in the courses we learn that it is important to save for the
future”.
 “We learn to save and to assure a future for our families”
THEY ANSWERED AS “VERY LIKELY” WHEN ASKED ABOUT THE
POSSIBILITY OF LEAVING PART OF THE SUBSIDY RECEIVED
FROM CCT - FAMILIAS EN ACCION
IN THEIR BANK ACCOUNT.

20. New strategies for building assets for the
ultra poor: Colombia’s experience
1. Introduction
2. Focus on the ultra poor
3. Promoting Savings for CCT recipients
4. Other strategies to promote savings
5. Complementary programs
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

21. Savings Groups
Promotion of savings culture and access to basic financial
services for the population in extreme poverty, in remote areas of
the country.
Results:
Promotion of savings culture
Practical Financial Education
Construction of social capital
Social Cohesion
Concept Number
Villages 34
Groups 2,000
Total Members 31,200
Av. Assets / member US $60
Average credit size US $50
GRADUATION: Project with funding from AFI to graduate group participants to
the formal financial system with adequate savings products.

22. Technical Assistance on microsavings
Technical Assistance has been given to 6 banks and 12
cooperatives to help them design and develop adequate
savings products for the low income population and
microentrepreneurs (US$4.7m)

23. Financial education programs
Programs to improve capacity of lowest income population
to manage their personal finances, providing complete
information about the benefits and principles of using
financial services (savings, credit, microinsurance) and
basic concepts such as budget and financial planning
 Microfinance Opportunities: Bring to Colombia the
Financial Education Global Program of Microfinance
Opportunities
 Program to promote Savings Culture among CCT
recipients: Financial Education to enhance savings habits
 Project with Central Bank (Banco de la República) and
Ministry of Education to include financial education on
school
 Design strategies for massive outreach (radio, TV and
cell phone) to reach more people at low costs.

24. New strategies for building assets for the
ultra poor: Colombia’s experience
1. Introduction
2. Focus on the ultra poor
3. Promoting Savings for CCT recipients
4. Other strategies to promote savings
5. Complementary programs
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

25. Microinsurance
Promote the development and use of adequate instruments to
mitigate the adverse effect of economic shocks, natural disasters
and emergencies, for the lowest income population.
 Demand study to identify the needs of the
population in extreme poverty and determine
the elements to design an adequate
microinsurance that suits them
 Pilot project to give life and funerary
microinsurances to 50.000 families in
extreme poverty (Red Unidos): Currently
under implementation, with perspective to
expand to 1.5 million beneficiaries of Red
Unidos, based on results.
 Development of specialized microinsurance
products: crops, property and against
disasters
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

26. Credit: Village Banking
Methodology that uses mutual / group guarantees to increase
access to credit for unbanked low income people living in
remote areas
Main results to July 2012
Groups formed 2.000
Number of municipalities 54
Participants 42,000
Average credit per participant ($) US$ 200
Average savings per participant($) US $30
SEEP 2012 Annual Conference
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

27. Lessons learned
 It is important to establish a National Policy for Financial Inclusion,
with commitment at the highest level for its implementation
 Public - Private Partnership: Commitment by both government and
network (private operators) is key to achieve specific goals
 Must be a win – win - win scenario: Attractive business for the
supply side and adequate and affordable products for the demand
side and consequently for the government
 Follow up goals' achievements and impact assessment: Data is
necessary for policymaking
 Important to involve major actors (such as commercial banks) in
order to have a strong impact and transform the market
SEEP 2012 Annual Conference
12/5/2012
Building Inclusive Markets: Impact Through Financial and Enterprise Solutions

28. Contact Information
cmoyafranco@hotmail.com
Web Sites
www.bancadelasoportunidades.gov.co
www.dps.gov.co
www.anspe.gov.co
www.fundacioncapital.org
Building Inclusive
12/5/2012 Markets: Impact Through Financial and
Enterprise Solutions 2012