Yale School of Management

Program on Social Enterprise

Harnessing business skills and markets to achieve social objectives.

Financial Inclusion and Economic Citizenship

Yves Moury, Founder and President of the international nonprofit Fundación Capital, opened Social Impact Lab on September 20, 2017 with Alexis de Tocqueville’s idea that history is about the “equality of conditions.”

It was an appropriate way to frame his presentation: Moury recognized the dramatic reduction in extreme poverty over the last thirty years but emphasized the urgent need for refocused momentum. Today, 9% of the world lives in extreme poverty, defined as living on less than $1.90 per day. This is a drop from 44% in 1981. But Moury warned that if radical measures aren’t taken in the next fifteen years, forecasts predict poverty levels will stagnate around 6% to 7% due to high population growth.

Moury was joined at Evans Hall by Ana Pantelic, Director of Business and Partnership Development at Fundación Capital. Together, they reflected critically on the entrenched perspective that poverty is a trap of low assets and low capabilities. Through this lens, development efforts have tended to focus on what the poor lack and what to give them. But Moury and Pantelic disagree with this perspective and approach. Rather, they say: “Social entrepreneurship is about shifting the status quo, about changing systems…it’s not about handouts. It’s not enough to lift poor people out of poverty if they fall back into it.”  Instead, they believe that poverty is defined by exclusion, in particular exclusion from opportunities to transform scarce resources into capital. Their answer is what they term “economic citizenship.”

Fundación Capital’s mission is to help low-income households chart their own way out of poverty by saving and protecting their assets and by accessing formal financial systems. For the poorest and most marginalized communities, the most effective means to do this is often large-scale, government cash transfer programs. These programs became popular in Latin America in the 1990s. Their most common form was conditional cash transfers, made to women and intended for spending on the health and education of their children. In their original form, the programs relied on physical cash being distributed to enrolled participants. Distributing cash on a massive scale proved logistically challenging and women faced pressure to share the money with relatives and neighbors. Fundación Capital’s innovative response was to provide savings-linked cash transfers that deposit funds directly into participants’ bank accounts. This way, transfers are private and efficient to distribute. Providing the means for the poor to open bank accounts also helps the organization meet its goal of integrating marginalized communities into the existing, formal financial system: About the critical importance of savings in economic citizenship, Moury said, “What is useful to us, is useful to the poor.”

Fundación Capital complements savings accounts with financial literacy training, insurance programs, marketing education, and other financial services. Pantelic noted that people in emerging markets generally do have access to these services. Both she and Moury view mobile technology as key to tackling that challenge and scaling access to and use of financial services. Digital infrastructure supersedes physical infrastructure in many of the places where Fundación Capital operates and can help people connect faster and more cheaply than building roads and institutions. Technology also has educational potential that is critical to Fundación Capital’s mission. Inspired by Sugata Mitra’s “Hole in the Wall” experiments, which demonstrated the value of public, village-based technology in children’s education, Fundación Capital gives female leaders tablet computers to circulate to their community to learn about financial inclusion. “The best teacher to the poor is the poor,” Moury says. Before launching that program, naysayers argued that the tablets would be stolen and broken, but Fundación Capital has thousands circulating and less than 1% have been damaged.

Moury believes the private sector is critical to integrating poor and marginalized people into formal financial systems, and to facilitating connections from low-income communities to training services and to markets. Fundación Capital’s many successful programs illustrate the power of this belief, and Moury sees them as stepping stones that can help the poor to navigate out of poverty permanently.

More information can be found at fundacioncapital.org

By Jesse Dubow

MBA 2019