villagefinance

Last month, CGAP hosted an international virtual conference on multiple borrowing and over-indebtedness. The conference generated a list of potential solutions to the problem — which did not include the delivery of safe, flexible savings services.

Why is no one acknowledging how important it is to offer quality savings accounts to poor people to reduce overindebtedness? Is it that some people at the forum genuinely have no idea what it would be like to have to pay for: their children’s primary education — not by saving, but by borrowing; health emergencies — not by saving, but by borrowing; their family’s food security — not by saving, but by borrowing; their social and reciprocity obligations in a traditional society — not by saving, but by borrowing; their consumer purchases — never by saving, always by borrowing.

Of course savings inclusion is no ‘magic bullet’ — but savings reduce household risk. Savings help poor people who are aware of their situation — and most are very aware — to steer clear of overindebtedness.

Watching the microfinance world from the standpoint of a practitioner for the past 12 years, I have found that the most tragic aspect has been how ‘the forgotten half of microfinance’ was first remembered, then acknowledged to be absolutely critical, then placed on the ‘to do’ list — and then, year after agonizing year, pushed further and further down it.

There are a lot of excuses, but really it is just procrastination at its worst. Safe, flexible savings for all are both possible and necessary. And it’s high time we delivered.