The Microsavings Initiative, a three year project funded by the Bill & Melinda Gates Foundation , was launched in November 2009 with a goal of reaching 1.45 million new savers in Asia and Africa by the end of 2012. Grameen Foundation’s Solutions for the Poorest team recognizes savings as an essential tool for households to manage risk and build assets. Improving access to savings will not only support the poorest – those living on less than $1.25 per day – but also will strengthen MFIs by creating a steady and more cost-effective funding stream for their loan portfolio.
Poor people do save. They employ a wide variety of informal means (such as hiding cash or purchasing livestock) because most poor people do not have access to formal savings accounts in banks or other regulated financial institutions, for a number of reasons:
• There may not be branches close to them
• There may be laws that prohibit unregulated institutions from collecting savings
• Because they’re unfamiliar with the institutions, they may not trust MFIs as a safe places to save
The Microsavings Initiative is addressing these issues and others to ensure poor and very poor households do have access to safe, convenient savings accounts that will significantly increase the ability of the poor to move out of poverty.
On the Ground with Local Partners
Working with CARD Bank in the Philippines, CASHPOR in India, and ACSI in Ethiopia, Grameen Foundation employs a holistic approach that provides the framework and tools to help these MFIs build and offer safe, convenient and accessible poverty-focused savings programs, while building sound financial, organizational, and institutional practices that transform the MFIs from credit-led to market-led organizations.
Working with subject-matter experts, we integrate work across a number of organizational disciplines, including Marketing, Information Technology, Human Capital, Financial Education, Social Performance, Internal Audit, and Financial Risk Management.
For example, using Grameen’s Progress Out of Poverty Index™ (PPI™), we are able to perform market segmentation, enabling us to develop and market client-driven savings products while ensuring that each MFI is staying true to their social mission. We also work with each MFI to help them build marketing capacity, enabling them to conduct market research, develop market-driven products, and create branding and promotional strategies.
In addition, we work with MFIs to incorporate innovative delivery channels into the savings process, including savings officers and texting hubs, and new savings software applications on mobile phones, ATMs, and more. We work with MFIs to enhance existing internal controls and liquidity management, helping to build sound financial management practices and ensure the long term sustainability and growth of each institution.