Making Progress Through Savings

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June 14, 2012

Kimberly Davies is a program officer on Grameen Foundation’s Financial Services team.

Traveling to the field and talking with clients is the favorite part of my job.  I’ve worked in microfinance for five years and think daily about the poor women and families whom we support. Working with partner organizations and meeting clients face-to-face not only reminds me of why I’m in this field – it also helps me better understand the poor’s demand for financial services and the many challenges involved in providing those services.

It has been really exciting to see the progress of our microsavings project in India.  The first time I visited our partner organization Cashpor Micro Credit – a poverty-focused microfinance institution (MFI) in Varanasi, India – it was not yet offering savings products to its clients. This was partly due to complex Indian regulations requiring MFIs to work with banks to provide savings. Since then, Cashpor partnered with ICICI Bank and Eko Technologies (a tech provider that enables savings via the mobile phone) to launch a new savings product in the summer of 2011.

Microsavings accounts provide poor parents with a safe place to save for their children's future. Microsavings accounts provide poor parents with a safe place to save for their children's future.

Since the launch, Cashpor has added about 250 new savers every day, and currently has more than 60,000 savings accounts. Cashpor’s clients have spoken loud and clear about their desire to save. Clients told us during my last visit that they wanted their own safe savings accounts, but I wasn’t sure what the real demand truly was. It’s also challenging to offer convenient services to clients, because some do not have cell phones, most can’t read and many are even numerically illiterate. These challenges, on top of others, were things that I knew would take time to navigate.

However, the huge demand does make sense. A safe place to save is critical for families, because it helps them smooth consumption during times of sporadic income, or prepare for an emergency or a planned lifetime event. Of course, people want convenient tools to help them better manage their lives. In the United States, we have access to so many financial tools in our everyday life – various savings accounts we can access at any time, insurance, loans, locked CDs that yield a safe and consistent interest rate, etc. You name it, we have it. The poor want these same tools.

Truly moving out of poverty is a huge task. Though tools like the Progress Out of Poverty Index® can measure the likelihood that an MFI’s client base is poor and track its movement out of poverty over time, this is a complex thing to measure, because forces such as natural disasters and family illnesses can prevent people from moving out of poverty or cause them to slip back into poverty. These uncontrollable forces make the use of easily accessible and affordable financial tools – such as savings accounts – all the more important to the poor.

Again and again, I’ve seen with my own eyes and heard with my own ears how access to financial services has improved the lives of poor people and their families. I look forward to seeing Cashpor’s savings program grow even more over the next year, as they help more women and families in need.

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