ADA aims to strengthen the autonomy and competencies of inclusive finance players, including microfinance institutions and microfinance networks, to positively impact the lives of thousands of people since 1994. ADA has been one of the many driving forces behind the Microinsurance Network (MiN) since the early days. We sat down with Matthew Genazzini, Head of ADA’s Technical Support for MFIs Unit, to find out more about their work and ambitions.
MiN: What is ADA’s main focus?
Matthew: ADA’s main focus is financial inclusion and all that goes with it. We work at micro, meso and macro level to promote financial inclusion and support a variety of institutions in the sector. The main focus of my work is to support microfinance institutions through capacity building and product development, including micro-credit, insurance and savings.
We work mainly in West Africa, Central America and South East Asia, as well as LDCs and the priority countries identified by the Luxembourg government. But we also look elsewhere for opportunities to learn and apply those learnings to projects in our target countries.
MiN: Tell us about some of your current microinsurance projects and initiatives.
Matthew: We’ve got several innovative projects at the moment, including helping migrant workers in the Middle East access insurance through their remittances. We’re also working with a new insurance broker called Serinsa, initiated by the Microfinance Network of Central America and the Caribbean (REDCAMIF) to help low-income families and businesses protect themselves against risk.. In Burkina Faso we’ve invested in an insurance company to develop the insurance products provided by the largest MFI in the country. In addition to all this, our work in promoting the Key Performance Indicators (KPIs) for Microinsurance has always been important and shouldn’t be forgotten.
MiN: ADA has been a long-standing member of the MiN - why did you join, and what role did you play in the early days?
Matthew: ADA has always been a highly active member - we helped drive the agenda and research, as well as providing finance for the CGAP working group at the beginning. In 2008 the working group became a project housed by ADA, and it took off from there until the MiN became an independent entity in 2012.
MiN: Why is it so important for ADA and the MiN to be based in Luxembourg?
Matthew: Luxembourg has positioned itself as one of the centres of inclusive finance and has put a lot of resources into it. You just have to look at the six entities housed here in the Maison de la Microfinance where we are sitting – of which 5 are financed by the Ministry of Foreign and European Affairs. This close proximity facilitates not only collaboration amongst ourselves in the Maison, but also, with Luxembourg being a financial centre in Europe, it is easy to collaborate with other financial institutions enabling easy access to key insights and knowledge that can be shared and applied with our target countries.
MiN: What is ADA’s take on the main challenges and opportunities in the microinsurance market at the moment?
Matthew: FinTech and mobile are massive opportunities. For microinsurance to become a success, it has to be able to leverage other financial transactions, such as the remittances, to reduce costs and increase efficiency.
Regulation is always a big challenge - it can stamp on innovation but is important to protect clients so it’s important to have the right balance. In many of our projects, we at the forefront of innovation and proposing new models, and regulation is playing catch-up.
ADA’s Central America project shows how to reach scale and impact large numbers, using the power of the regional networks which represent over 100 MFIs to create much bigger potential. It gives the broker much more negotiating power vis-à-vis the insurance companies, but even so there are significant challenges - especially given the high level of commission that MFIs in Latin America expect to make from selling insurance.
MiN: What are some of the key lessons you have learned over the years?
Matthew: I have rarely bought insurance voluntarily - it’s almost always because I have to buy it. What does that tell you? Scale is much more easily reached if insurance is mandatory!