Savings and Asset Building at CGI Part II: Working Group Session II – Financial Services for the Poor
There is still much to learn about the financial tools needed to help the world's poor mitigate risks and build assets in order to build an economic base and contribute to long-term economic development. This session primarily focused on "building assets in the developing world."
Sylvia Matthews , director of Global Development at the Bill and Melinda Gates Foundation opened the second working group session stating that 2.3 billion with no access to financial services for the poor, even though evidence suggests they would make perfect customers. She asked her panelists: "What do people need, what works, what are some solutions and how do we reach scale?" Again, asset building and asset protection products reigned supreme:
Bob Rubin, the first Director of National Economic Council, then Secretary of the Treasury, and now a Director at Citigroup, Inc remarked on the health of the financial system and impact on financial services for the poor. "We need to stem the crisis of confidence in the US now, but we also need to put into place effective responses to longer-term problems the country faces, like healthcare, education and economic opportunities for the poor."
When I walked around yesterday's CGI exchange, getting a convention-style glimpse into the organizations and corporations making commitments to poverty alleviation this year, I was particularly excited to see not only institutions focused on financial services for the poor, but particular, savings and asset-building. Yes, the actual word - asset-building - at the CGI. Considered by some as an inaccessible term to describe wealth creation opportunities for the poor, I am thrilled to see it permeate the global microfinance field (as I assumed it would). Oweesta, the CDFI running IDA and other asset intervention work in native American communities in the USA, seems the only organization focused on empowerment of native communities, and if carrying the AB message in all of their materials. And Oxfam, who have been running a Gates-funded Savings for Change program (informal rotating savings groups mobilizing deposits for those still completely untouched by formal microfinance) for a few years around the world, have added the term asset building to the September version of the program's one pager.
Last night, in the few minutes we weren’t talking about the financial crisis and the impending bailout, President Clinton waxed political on the potential for energy investment in the United States. According to the President, the near-certain reality of approving legislation liberalizing off-shore drilling should be seen as a political opportunity for progressives interested in sustainable environment and combating climate change. But if we’re going to “give” drilling to the right, the left should negotiate hard for the environment, including:
In the United States and many developed nations, banks offering savings to children as a means of social and economic inclusion and empowerment may seem tired tradition of the thrift era that has long passed. Gone are the days of widespread school banking programs once so common in the US. And in the very few developed nations where efforts to provide children social and/or economic opportunity through financial inclusion exist, they typically come in the form of social policy (UK's Child Trust Fund, Singapore's Baby Bonus, USA's ASPIRE Act). In developing nations, however, we're witnessing a wholly different phenomenon: financial institutions are, out of their own volition and with no push from the government, choosing to target the child market segment.
Last month, I argued that USAID inaptly named a three-day virtual conference on savings as "The Forgotten Half of Microfinance." Instead, I posited:
"As someone working on asset building and financial inclusion for the poor (and/or their cross-fertilization in the development field), I would contend that the hosts got it wrong when chose the title for this event. Indeed, "savings" is not "forgotten" at all. Though perhaps traditionally underemphasized, I would argue that, on the contrary, savings is the in fact the "next big thing" in financial interventions."
Looks like I got this one right.
The question in the headline was the theme of a conference I attended last month that suggested strongly that no they should not. The conference hosted by the New Economics Foundation, a UK-based "think and do tank" provided statistics, charts and graphs to show us explicitly that indeed happiness is not necessarily linked with material wealth and increased consumption. We all nodded and agreed -- yes we certainly understood that of course a good life does not have to cost the earth. I mean, who wouldn't prefer a meal cooked from a home garden to a meal cooked at a five-star steak house? And then the challenge was put to us -- so how do you convince everyone else of this so as to lower our collective footprint and begin to heal the earth?
Many discussions were had with some of the best thinkers on the topics of economics, sustainability, and climate change among other areas of expertise to contemplate this basic yet in some ways complex question. And all the while I kept struggling with this question. One that I often struggle with: Why should people care? Why should people care about the earth? And more pointedly, because of the work I do, why should people care about climate change? After all, climate change is this somewhat amorphous concept -- I'm not experiencing anything profoundly life-threatening because of climate change. (Or at least that's what it feels like. . .)
I consider my cell phone an asset. With all those hi-tech capabilities packed into a little handset, it keeps me simultaneously connected, productive, on-time, en route, entertained and informed. And I'm not alone - more than 3 billion people around the world (almost half of the global population) have a cell phone. But what if this gadget that seems capable of reaching almost anybody and doing almost anything could also provide a mechanism for savings and asset building for individuals around the world? Despite seemingly limitless potential and enthusiasm for such an innovation, it will unfortunately be some time before this is a reality.