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Recap & Response: Inclusive Finance and Entrepreneurial Responses

On September 23, 2016, CAPP-USA and Fordham University co-sponsored a conference called “Pope Francis’ Call for Escaping Poverty: Practical Examples and New Proposals.” The conference examined the definition and measurement of poverty and proposed specific, practical efforts which operationalize Pope Francis’ insistence that people “be dignified agents of their own destiny.” What follows is the latest in a series of posts authored by graduate students in Fordham University’s International Political Economy & Development Program that offer a summary and response to a topic discussed at the conference.

Philanthrocapitalism; what is it? The session on “Inclusive Finance and Entrepreneurial Responses” carefully unpacked this idea via three disparate and diverse perspectives. The panel consisted of Robert A. Annibale, Global Director of Citi Community Development and Citi Inclusive Finance, Eduardo J.M. Maia de Alemeida of the Inter-American Development Bank, and Josef Bonnici, former Governor of the Bank of Malta.

Annibale began the session by discussing the role of corporate initiatives that engender financial inclusion. Citi’s programs run the gamut from micro-finance abroad intended to protect those on the fringe from predatory lending practices, to themed bonds with a social conscious. Bonnici followed with a moral imperative towards philanthrocapitalism, citing that “1% of the population holds 25% of the income.” His solution is a Voluntary Solidarity Fund made up of high-net worth individuals. Capital would go towards micro-finance initiatives as well as a dignified approach to lifting those marginalized out of poverty through education and mentoring. Lastly, the call for “goodwill brokers” was heard as Almeida’s discussion on development finance advocated that financing just isn’t enough. Political will and coordination, effective and unbiased interventions as well as execution capacity and innovation are key components necessary for brokering goodwill. Almeida ended his presentation with a bold challenge. He urged the Vatican towards goodwill, asking them to use their $63 million in profit to start a Vatican Bank Development Finance Fund.

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Following the panel a lively discussion ensued. While philanthrocapitalism is a universally accepted precept, how to go about it, is not widely agreed upon. Building upon a culture of philanthropy was a common theme that ran throughout the discussion. Annibale suggested that corporations engage in corporate social responsibility by taking their cues from the ethical leaders of the moment. Almeida touted embracing new technological trends and the rising popularity of crowd funding; a financial tool that is easily accessible by smart phone in many developing countries.

The pervasive question for me was; how can you change philanthropy from a sidebar to a priority when your main obligation is to your shareholders? A common counterpoint was, who would and should accept the financial risk of inclusive development, and how should it be allocated? At which point, there was no discussion of comparative risk tolerance. Most likely because corporations and individuals alike, have a higher risk tolerance for the stock market than for inclusive development. However, it wasn’t the unanswered questions that cultivated the most poignancy in this complex discussion of how to achieve inclusive finance through entrepreneurial responses. It was His Eminence Theodore Cardinal McCarrick simple request at the beginning of the discussion, “Don’t forget the poor.” A request not meant to answer the hard questions posed during the panel, but to create a meditative point of reference when tackling them.

Erika Cox is a first-year student in Fordham University’s Graduate Program in International Political Economy & Development.

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