It has become increasingly clear that the most important element of microfinance isn’t lending, but savings. That lesson was taught to me by SEWA in India, Kashf in Pakistan and Grameen in Bangladesh. Only some poor people will benefit from the chance to borrow, but almost all will benefit from the chance to save. That’s also [...] (More here)
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Can you imagine paying 40% a year to save your money at a bank? That's exactly what happens in some parts of the world. Nicholas Kristof speaks of how micro savings and not micro credit may by the most important aspect of microfinance. Not only is this more impactful, it might actually be more achieveable, I think. Several years ago and even now, I was/am able to fund a savings account in the United States for $10 (or less!?). I subsequently opted to put the bulk of my savings elsewhere, but that $10 deposit continues to exist in a savings account which has been collecting interest ever since.
So, why can't "regular" banks continue to lend as they are used to, but allow for micro savings from the poor? The obvious answer might be discrimination and a desire to put up a more prestigious appearance--having poor or impoverished people at banking centers might turn off more fortunate account holders... One would hope we can get passed that sort of thinking.
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