Oct 06, 2017 09:40 PM

Gates Foundation Harnesses Chinese Private Sector to Bring Financial Services to World’s Poor

Jane Xing, deputy director and head of private sector engagement at the Bill & Melinda Gates Foundation’s China Office.
Jane Xing, deputy director and head of private sector engagement at the Bill & Melinda Gates Foundation’s China Office.

The Bill & Melinda Gates Foundation — the world’s largest private charitable foundation, with an endowment of over $40 billion — opened its China office more than 10 years ago. During its initial years in China, the foundation focused on domestic issues such as HIV prevention and tuberculosis control. But in recent years, it has begun partnering with local firms to carry out global development projects in other countries.

Level One, which seeks to bring financial services to the poor, is one such project. Along with firms including Huawei Technologies Co. Ltd., the Gates Foundation is helping to bring digital financial services to countries including Uganda, Tanzania, Nigeria, and Kenya. The project seeks to leverage mobile and digital payment technologies to make financial services available to more people.

Supporters of financial inclusion say bringing an estimated 2 billion people into the formal financial system is necessary for global prosperity, and that informal systems make transactions expensive and risky. Critics say that lack of financial knowledge can lead to over-indebtedness and that more accessible financial services does not address the root causes of poverty.

Caixin spoke with Jane Xing, deputy director for Program Related Investment at the Bill & Melinda Gates Foundation’s China Office, to learn about how the foundation’s mandate has changed over the years and how it allocates resources and evaluates risks.

Caixin: Can you speak about how the Gates Foundation’s strategy has changed over the past decade in China?

Xing: For the first few years, we were mostly focused on domestic and health-related programs, such as HIV prevention, tuberculosis and tobacco control.

Over the course of our presence in China in recent years, especially in the most recent five years, our strategic focus in China has expanded to include leveraging China’s growing role on the global stage and increasing capacity for innovation to contribute to improved global health and development outcomes. Since China has so much experience with domestic poverty alleviation, we wanted to leverage this experience for other countries. This is when we started to think about how the foundation could work to bring Chinese capacity, including private sector players, to other countries. China’s development approach uses economic development as a main driver to achieve poverty-reduction goals. In this way, it is very different from Western approaches that have a stronger emphasis on aid.

What is the process for deciding which projects to focus on and how to allocate time and money?

The belief of the foundation is that every life has equal value. But the tricky part is how to translate this into what the foundation’s role should be. Even as the world’s largest private foundation, the resources we have are far from enough compared to the problems we are addressing.

In many senses, our strategic planning is similar to processes in the corporate world. You can think of a Venn diagram where one circle represents the biggest development needs and the other circle represents what we as a foundation are good at. In terms of need, we want to not only look at the symptoms of the problem, but also at the systemic drivers that are causing it.

For example, with financial services, the symptom is that poor people do not have access to financial-service products. But what’s stopping them are regulatory challenges, technology and infrastructure challenges, and lack of service providers that are thinking about what the right products for this group of people are. With our Level One project, we try to create a bigger vision to address these problems in a holistic way.

Why prioritize banking and payment services?

The most direct motivation for promoting inclusive finance is the idea that “it’s expensive being poor.” Poor people have a harder time accessing banking services and matching their needs with their incomes–an impediment for lifting themselves out of poverty. For example, if someone needs to see a doctor, they can’t just cut off a piece of the cow they own to pay for health services. Digital financial services allow poor people to better manage their money and fulfill their commitments.

What are the risks to inclusive finance?

For every strategy and every investment, we have to consider the risks. But rather than shy away from risks, the source of our funding allows us to take risks that private enterprises or governments can’t or won’t.

We are charting unknown territory and trying to solve problems that have not been solved before. There is no guarantee that what we try is going to work. While there is a culture of tolerating risks, the foundation also emphasizes tracking and measuring tangible results.

The Gates Foundation launched its first annual data report, called “Goalkeepers,” in September. Has the data collected for the report resulted in any strategic changes for the China office?

The Goalkeepers report is created as a means to track and communicate progress we are making, as well as to highlight the challenges and opportunities ahead on way of achieving the Sustainable Development Goals (SDGs). It’s not necessarily meant to change our strategy, but rather to highlight in an unambiguous way whether we are on track to achieve the goals. This is not only important for the foundation, but also for the rest of the development community.

Partly due to the complex nature of development work, sometimes people would have a tendency to feel satisfied about just doing good, and are not as deliberate as the private sector in defining performance metrics and tracking results. But we want to encourage development organizations to think harder about the tangible results they want to achieve.

What have been some challenges in carrying out your work with Chinese partners in Africa?

Using our private sector engagement work as an example: What appears to be a simple act of bringing investments to Africa is actually very complicated, in particular in our priority sectors such as health and agriculture. The goal of serving the poorer population and small-holder farmers in Africa adds another layer of complexity. Individual investments are rarely enough. The investment environment is more complex in African countries and a lot of the enablers for successful sector development are missing.

For an agricultural investment project, we need to think about where the quality inputs come from and which markets the products will serve. If domestic demand is not sufficient in the short term, then we would need to consider how to access the export market from Africa. If we take a diary processing investment as an example, to ensure supply of high quality milk inputs, we would need to work through challenges in farming practice, feed supply, animal disease control and animal health produces access, etc. So, essentially, we need to pretty much address the entire value chain bottlenecks.

Therefore, we are also working on building a better enabling environment for development impact focused investments, as well as creating more innovative funding mechanisms that will better support investments in priority sectors such as health and agriculture in Africa.

How does the Gates Foundation ensure the impact it is making is sustainable?

We think of ourselves as a catalytic philanthropic organization. We enter each program area and build each strategy with a goal of sustainability. This is also why partnership is core to the foundation’s strategy. Our partners span from government agencies, international organizations, research institutes, NGOs and private enterprises. Each of them brings their unique resources and capacity for shaping truly sustainable solutions. Our resources then can be used to take risk that others are not in position to take to prove the concept or address market failures so we can truly catalyze change for the better.

Caixin Hot Pot is a regular feature that introduces you to the colorful array of players in today’s China — from the leaders of top U.S. companies doing business here to the migrant woman selling noodles from a pushcart.

Contact reporter Liu Xiao (

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