ideas42 Joins with USAID and CGAP to Improve Financial Management for Microentrepreneurs

Date: 
07 Oct 2014
Source: 
ideas42
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Nonprofit behavioral design firm ideas42 has been awarded over USD 1 million by USAID and CGAP to scale up an innovative new tool to help microentrepreneurs in developing countries manage their finances better. The award consists of USD 909,834 provided by the Development Innovation Ventures (DIV) program at the USAID, with an additional USD 100,000 from the Clients at the Center Financial Inclusion Research Fund at CGAP. The objective of this project is to create more effective client-centered financial products that could improve the lives of poor. The mobile phone push notifications tool, which aims to build a better understanding of the financial needs and practices of informal entrepreneurs, will be piloted in India and the Philippines over the next three years in the field in Fall 2015 and will run through March 2017. Building on ideas42’s earlier work with classroom-based rules-of-thumb training, the scale-up pilots will explore how to deliver financial heuristics in an inexpensive, effective way via an SMS and voice-based platform to improve financial management decisions and outcomes for microentrepreneurs.

“Insights from behavioral science can help us understand why people sometimes make financial decisions that appear counter to their own best interests. Our common intuition is that complex situations require complex and very nuanced solutions. But knowledge alone is often not enough to ensure making the right choices. The benefits of financial heuristics are not only that they reduce complex information to a simple and manageable set of choices, but also that they help microentrepreneurs turn an intention for improved financial management of their businesses into a realized action," said Marina Dimova, Vice President at ideas42 and head of the financial heuristics project. 

Countries: 
India, Philippines