How can one get low-income earners to save some part of their income, knowing it's hardly enough for them to live on? What are the other salient benefits of saving? Can anyone put up a compelling argument to favour a culture of saving?
The Consultative Group to Assist the Poor (CGAP) has done studies in Benin, Bosnia, Mexico, the Philippines, and Uganda about this subject, in order to promote formal sector deposit services. For example, in the Philippines (where I am from), it was found that:
Despite widespread skepticism about whether the poor save, available evidence suggests capacity to save among low-income Filipinos... Most people primarily save for emergencies (precautionary motive). The second most important reason for people to save is the education of their children...These findings show that low income households in the Philippines need different types of deposit services to address different needs. Accessible, liquid products allow withdrawals at any time for emergencies, while contractual savings products enable them to accumulate money for specific expenses.
I am going to put a summary of the findings of Dean Yang tomorrow that addresses this to a certain extent. In short, he found that Commitment accounts did lead to a change in savings rates. Great question. I hope to see more research on the topic.
I'll be glad to learn from you. From your profile, your organisation is based in Ifo. I'm in Lagos. However, can we exchange contact information so we could connect either on Yahoo Messenger or Facebook? Here:
There's an update on the CGAP report series, published just yesterday, regarding branchless banking. If you haven't had a chance to review it, you may access this latest focus note here: www.cgap.org/p/site/c/template.rc/1.9.47614/. It covers among others vendors like M-PESA (Kenya and Tanzania) and WIZZIT in South Africa. Hope this helps.