When Ed, the community manager, sent me a link to the “New Microfinance Handbook”, I opened it, saw that it was a 533 page reference tome, and promptly set it aside promising myself I would read it, ahem, “later”.
Wow, what a surprise! My hat’s off to the authors for taking what could be very dry material and making it readable. The personal stories really help to imagine what these people’s lives are like and how they save and invest.
Did you know it is common throughout the world for people to create “savings groups” where each individual contributes a fixed amount every week and one person takes the whole sum to use on a large purchase or emergency? It’s clever in that it forces the individual to save (or face shame amongst their peers) and relatively secure because the money isn’t “saved”, it is collected from everyone and given to a single person each time, usually in a fixed order by lottery. It’s flexible in that members can negotiate to exchange places with another in the lottery if they need the money sooner. What a great idea!
This is just one of many ways the poor have developed to manage their uncertain finances. It is important to understand these methods in order to better serve them with microfinance products. OK, that was a good pep talk. Back to the tome…