I recently was asked to read a draft of an academic paper on the pitfalls of microcredit and the virtues of savings groups. The paper tidily summed up the false assumptions of microcredit, all in hindsight of course, which included: poor people use loans to build their businesses; poor people are entrepreneurial; credit is the key ingredient to micro-business growth. And so on.
Today, I used my smart phone to pound tiny nails into a wall. The procedure worked well enough to hang a small picture, but it cracked my phone case.
I wasn’t trying to go digital by using a mobile device. I simply could not find the proper tool – a hammer. The episode made me think that going hammer-lite would be silly for a pounding task. I really needed a hammer. If I were trying to tighten a screw, a task I just had to do on a door handle, I suppose I could go screw-driver lite. I could try to wedge a tag of the broken phone casing into the screw’s octagonal chamber, then give it a twist. It might work. But an Allen wrench might work better.
So, in financial inclusion why are we trying to go “cash lite?” Cash can be a sturdy pair of pliers that turn income into neat, countable paper stacks – one pushed into the desk drawer for buying groceries and another plopped into a tin for evenings out. Cash can also be a wrench, torqued just so, to help us make sure that we have enough coins to pay the parking attendant or enough paper to pay ourselves when we feel the need to devise a personal austerity plan.
I have four friends who lost their homes during the financial crisis, or who are in danger of losing them. In every case, they say, “We were naive. We shouldn’t have taken the mortgage (or the second mortgage). But it seemed like a good idea at the time. It was our fault, but it was also the banker’s fault. They misled us.”
Four families, losing their homes.
The banks took the money and ran.
Here’s a great short video on the Saving for Change project in Mali produced by the Bureau for Applied Research and Anthropology of the University of Arizona.
It’s one of the best videos I’ve ever seen. It shows real conflicts, real results, real process. Savings Groups are sometimes messy and this video doesn’t mind showing that. Plus, it’s well produced and entertaining! I especially like the part around 8:20, where group members discuss their business with a lot of passion!
There is a global movement committed to do things differently. From the collective impact movement in North America to the “Doing Development Differently” agenda, we’ve learned that we have to operate more like the entrepreneurs we are working to support.
Here’s a link to an excellent review of In Their Own Hands: How Savings Groups are Revolutionizing Development, by Jeffrey Ashe and Kyla Jagger Neilan - just published in the Enterprise Development and Microfinance journal. It begins:
The spread and success of savings groups may not be news for
financial inclusion and enterprise development practitioners.
However, in their recent book – In Their Own Hands: How Savings
Groups are Revolutionizing Development – microfinance and savings
group pioneer Jeffrey Ashe and colleague Kyla Jagger Neilan inspire us with the vision, the history, the statistics, and the stories of savings groups, a simple mechanism that is catalysing poverty reduction for millions worldwide.
Does the review make you want to read the book?
Good! You can get it here.
The categories of the marketplace that Francis is referring to are things like profit and loss, return on investment, market share, business cases, and financial inclusion.
We have, maybe unknowingly, maybe indifferently, often let these categories become the sole points of reference for discussions of what is
Why Financial Inclusion May Well Depend on Cyber ID Data: Digital IDs are quick and cost-effective – but more data on unbanked customers is needed
Among the obstacles to digital financial inclusion is the challenge of serving people who lack traditional identity data. But as Trulioo founder Stephen Ufford explains, our online activity creates a digital footprint that can be used to identify us quickly and cost-effectively. He describes how Trulioo is
Tiger and Shark are both convinced they are the Most Strongest of All Animals.
Crab tells Tiger that he overheard Shark bragging about how he could beat anyone! Outraged, Tiger runs down to the beach, and bellows to Shark that he is ready to fight to show the world who really is the Most Strongest.
Here’s a good question to ask when one encounters a savings group: “Would I save my own money in it”?
I’ve used the following two videos in workshops to illustrate the point - I would personally save in one of these groups, but in the other, I’d be afraid that I’d never find my money again. Too many hands touching it, nobody checking the record keeper. The other meeting is just about perfect.
The next three posts are all April Fools jokes. There is no board game about Impact Evaluation, I (Paul Rippey) did not write a book called In My Own Hands, and to the best of my knowledge, there are no savings groups in North Korea. (And, if you saw the April First Today’s Revolutionary, let me be clear that Poutine is NOT a wonder food recommended by doctors for a variety of healh issues). These were all jokes.
I learned today that there is a backlash going on against April Fools Jokes on the Internet. If I am sitting with you and tell you an April Fools Joke, I will make sure that you get that it is a joke before I leave you. But that’s not possible on the interenet. I know some of you read the posts quickly (like I myself do) and believed them. Also, the whole April Fools thing isn’t practiced the same way in different cultures. It would be easy for some of our readers, who come from nearly 100 countries, to misinterpret.
I’m not sure we should do April Fools jokes on Savings Revolution. We’ve got a year to figure that out! In the meantime, thank you for reading the serious stuff!
If rigorous impact evaluation can improve the lives of poor people in developing countries, why couldn´t it improve yours? But few of us have the time or inclination to fill in the necessary questionnaires, the discipline to refrain from polluting behaviors that can get in the way of precise measurement, and the patience to wait a couple of years to get the results. Gamification may hold the answer: if it makes you do and buy things online that you otherwise wouldn´t do and buy, why not gamify your self-improvement research?
I am thrilled to announce the publication of In My Own Hands: How Three Decades of Work in Pro-Poor Finance brought me Real Estate, a Stock Portfolio, and Diamond Elite Status on Delta Airlines. This is a book I had to write. It shows how my work bringing financial services to the world’s poorest people led my family and me to live in beautiful villas, send the children to private schools, and attend sumptuous conferences in cities from Frankfurt to Seattle, Washington to Cape Town. For young people with a passion to make people’s lives better, the book is full of useful hints on loopholes in US tax law, maximizing reimbursables, and managing household help.