"...the problem is often not just a low income, but an unpredictable one. Living on $2 a day frequently means living for ten days on $20 earned on a single day. The task of smoothing consumption is made more complicated if there is nowhere to store money safely. [Change is afoot, including support from Gates Foundation encouraging microfinance organizations to...] "help broaden the microfinance business model to include savings". It will take more than good intentions and a recognition that the poor want places to deposit the money they squirrel away to make microsavings work. Part of the problem with trying to mobilise deposits from poor people is simple economics. It is hard to make a profit from customers who make lots of tiny deposits without massively trimming transaction costs. The widespread use of mobile phones by poor people in developing countries may provide one answer..."Very compelling financial service innovations indeed!
11 March 2010
Microsavings ~ Expanding Microfinance Services
Excellent to read The Economist piece on A better mattress ~ Microfinance focuses on lending. Now the industry is turning to deposits. For the very poor...