Thursday Event: Matched Savings as a Tool for International Development

Leila Seradj — Tue, 13 Oct 2009 14:54:00 -0400

What goes up, as the saying goes, must come down, and for all the splash that the microcredit movement has made in the past decade, it seems that the belief that small loans will provide a pathway out of poverty is revealing some fissures.

A recent Times of London article (World poverty guru "fails" to spread wealth) brought attention to the questions surrounding the movement to which Muhammad Yunus helped to bring awareness. The article cited a recent study conducted by Dean Karlan and Jonathan Zinman in the Philippines, where they discovered that microcredit recipients did not fare better than those not receiving loans.

That's not to say that the advent of microlending has not been a vital and necessary innovation. But it isn't a panacea, and more voices have arisen to ask: what about providing the poor the financial services to which they so often lack access; most notably, a safe place to deposit and save their money?

One innovation that has shown to be particularly promising is that of matched savings. Also known as Individual Development Account programs, the innovation targets individuals providing both an incentive and a place to save, with savings being targeted toward building specific assets (e.g. a small business, a home, or investment in higher education). The World Council of Credit Unions (WOCCU) recently launched a program in Mexico, called MatchSavings.org, which raises funds to match the savings of rural-dwellers in Veracruz through an online-giving platform.

This Thursday, the Global Assets Project will convene a panel to discuss lessons from MatchSavings.org and from the matched savings/IDA movement in both developed and developing countries, as well as to launch its new issue brief, Promoting Savings as a Tool for International Development: Spotlight on WOCCU's MatchSavings.org. WOCCU Executive Vice President Brian Branch will provide remarks, followed by a panel discussion featuring Daryl Collins (Bankable Frontier Associates, and co-author of the much talked-about Portfolios of the Poor), Evelyn Stark (Financial Services for the Poor, Gates Foundation), JD Von Pischke (formerly of Frontier Finance International), and Asset Building Program Director Reid Cramer.

For more information or to RSVP, visit the event page. The event will be held at the New America Foundation's offices in Washington, D.C.

We look forward to seeing you on October 15 at 12:15 pm-- lunch will be provided, and for those unable to make it to D.C., it'll also be webcast (no RSVP necessary).

Girls, Cows and the Way the World Should Be

Jamie Zimmerman — Fri, 11 Jul 2008 16:05:00 -0400

*This blog by Evelyn Stark of CGAP and Jamie Zimmerman originally posted on 7-10-08 at CGAP's new Microfinance Blog site: http://www.cgap.org/p/site/c/template.rc/1.11.1909*

Just released last week and swiftly making its way through the fast lanes of the internet, Nike Foundation's new video for its GirlEffect campaign is stunning and provocative. It resonates with the socially-minded, big hearted idealist in all of us. The video explains how global poverty eradication will come from empowering a girl through micro-credit: the loan enables her to purchase a productive, money making asset (a cow), which quickly snowballs into further financial and social opportunities, more assets, greater social, economic and political empowerment, and into economic development of entire nations and opportunities for all women around the world. You get the picture (but if not - you can watch it here: http://www.girleffect.org/).

At the heart of this new campaign - started by the Nike and NoVo Foundations, with the support of the UN Foundation, Population Council, ICRW, Center for Global Development and Plan International - lies a core and founding ethos in the microfinance movement: empowerment through small loans to women. The powerful message and imagery in this video will likely resonate loudly and emotionally with a large, global audience. But it's also a bit too simplistic in its portrayal of human, social and economic development.

Microcredit may be a catalyst for empowerment, but it will not solve disenfranchisement of girls and women without other mechanisms also working in their favor. These girls need legal empowerment and effective institutions to guarantee such rights. They need access to effective social services such as education and health to fully develop their human capital. They need institutions and systems (at the local and national level) that encourage their empowerment and advancement.

Of course we want and need to support girls to stand up for their rights to be cowherds, MPs, bankers, petty traders or even advertising executives! How we get there from the finance side might just be a microloan for a cow... or, maybe a savings club operating in a safe environment, with a trained mentor such as Population Council and K-Rep found in Kenya; or, a maybe it's a Child Savings Account that matures just in time for secondary school that's needed (see: Xac Bank, Hatton Bank and an experiment in Uganda); or a free goat that might lead to college in the US as it did for Beatrice Birra.

The reality is that the presence of a cow, food cart or other productive asset a microloan can facilitate will not automatically improve a girl's life. Between the microloan to a girl and a world free of poverty, there is a chasm filled with other problems that need to be solved.

The video will be an effective starting point to raise awareness of the potential power of microfinance. But it's also a challenge: what can we do to make it a reality?

international development

Thursday Event: Matched Savings as a Tool for International Development

Girls, Cows and the Way the World Should Be