Connecting microenterprise practitioners in a global learning community
Savings for Low-income Earners
Replies to This Discussion
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Permalink Reply by korir peter kipkurui on -
life towards success starts with sacrifice.thats all i can put it.
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Permalink Reply by SILAS WILBERT NG'HABI on
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Small Income earners can mobilize their resources in groups of say 20 to 30 memebers and small sums of money about half a dollar or a third dollar. It is important for the microfinance practictioners to encourage them to form groups and train them on the importance of savings. The have resources eventhough very fragile, that is why it is important for them to save small amounts on weekly intervals. We have examples from Eastern Africa of women mobile themselves in such groups puting their savings of less a dollar on daily basis and they give access to loans on 'cash go rounds'. This however, lack assurance since they have joined on mutual understanding and whenever there is crisit - a sick member of death the circle is tested. ...What next? The microfinance practictioners shouls intervene and assist such groups with training and teaching them other social insurance models.
Another famous model is village savings and loan associations (VSLA), this works better with support on training of small income eraners on group formation, leadership, formulation of bylaws, record keeping (prefered memory-based recording than book-keeping) and social insurance funds. Here the support from not-for-profit microfinance institutions is crucial to develop capacities of such loa income earners populations....
Please welcome if you have other questions.
Silas Ng'habi-Tanzania
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Permalink Reply by Olubunmi 'K Fawunmi on -
Hi Silas,
I really appreciate your mail. Thank you for taking your time to send me so much useful information. I will be in touch as other questions arise.
Thank you again.
Olubunmi.
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Permalink Reply by SILAS WILBERT NG'HABI on
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Dear Olubunmi,
My pleasure to hear from you,
Welcome,
Silas
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Permalink Reply by Dheeraj Pao on -
Dear Olubunmi ,besides many things ,one of the most important element of making people however poor is HABIT,yes its the cultivation of saving habit which will make people save and build huge capital,you can also term it as habit led saving cum growth.See we need to factor in human nature for being successfull ,where in comes the role of educating,motivating and encouragement , Habit after all is a important tool just as important as money and enterprise.Habits can make people sleep with blankets at 45 degree C temperatures, once the habit is forms people will know how to and from where to save.
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Permalink Reply by Olubunmi 'K Fawunmi on
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Hi Dheeraj,
Thank you for your mail. I agree with you that one needs to help people form a good habit of saving. This will ensure that they have enough to spare when investment opportunities come calling.
Can you share any techiques that will appeal to low-income earners and encourage them to save? I have thought about having them save as little as possible and watching it grow over time. What else can serve as an incentive?
Again, I'm interested in learning about tools for record keeping, either to be used by my organisation, or the currently poor, themselves. This has to be simple enough for them to use it. Any ideas?
Thank you very much for sharing.
Olubunmi.
Dheeraj Pao said:Dear Olubunmi ,besides many things ,one of the most important element of making people however poor is HABIT,yes its the cultivation of saving habit which will make people save and build huge capital,you can also term it as habit led saving cum growth.See we need to factor in human nature for being successfull ,where in comes the role of educating,motivating and encouragement , Habit after all is a important tool just as important as money and enterprise.Habits can make people sleep with blankets at 45 degree C temperatures, once the habit is forms people will know how to and from where to save.
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Permalink Reply by Dheeraj Pao on
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well the best technique is to give them options from the heart and soul i.e.the best return investment/income options with full details of how ,when,where,how much,what all to do ,what budget ,how much financial assistance and where from ,goals and targets tuned best to persons capability and liking, and not just giving them name of schemes or a booklet to read well about record tell mme what kind exactly
Olubunmi 'K Fawunmi said:
Hi Dheeraj,
Thank you for your mail. I agree with you that one needs to help people form a good habit of saving. This will ensure that they have enough to spare when investment opportunities come calling.
Can you share any techiques that will appeal to low-income earners and encourage them to save? I have thought about having them save as little as possible and watching it grow over time. What else can serve as an incentive?
Again, I'm interested in learning about tools for record keeping, either to be used by my organisation, or the currently poor, themselves. This has to be simple enough for them to use it. Any ideas?
Thank you very much for sharing.
Olubunmi.
Dheeraj Pao said:Dear Olubunmi ,besides many things ,one of the most important element of making people however poor is HABIT,yes its the cultivation of saving habit which will make people save and build huge capital,you can also term it as habit led saving cum growth.See we need to factor in human nature for being successfull ,where in comes the role of educating,motivating and encouragement , Habit after all is a important tool just as important as money and enterprise.Habits can make people sleep with blankets at 45 degree C temperatures, once the habit is forms people will know how to and from where to save.
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Permalink Reply by GODWIN-XAVIER AYEEBO on -
The micro finance organizations should go to their(low-income earners) houses, working places, daily or periodically to collect the little that they are prepared to save that day.
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Permalink Reply by Olubunmi 'K Fawunmi on
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Thank you, Godwin-Xavier. Now, about a system for record-keeping, can you propose something?
GODWIN-XAVIER AYEEBO said:
The micro finance organizations should go to their(low-income earners) houses, working places, daily or periodically to collect the little that they are prepared to save that day.
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Permalink Reply by Hassan Rashid Del Campo Nicholas on -
I think this is hard question to tackle because there are so many variables, known and unknown, that would determine whether or not a low-income earner has the capacity and/or will to save (regularly).
One strategy that I often share with my clients (that I had learned to do as a broke college student) is to "micro save" - saving very small amounts, but frequently. Often low-income earners get in traps because of cash flow issues. Instead of saving $100 at the end or beginning of every month it might behoove them to divvy that amount in much smaller "payments" throughout the month so the financial impact on everyday and future financial transactions isn't felt as hard as one lump sum.
I was raised and currently work in a society that is new to a "culture of saving". In fact I am from a society that encourages spending. With that said, in my case and for what's specific and unique to my community, capacity to save doesn't seem as much as the problem then willingness to save. At this moment my organization is promoting an accelerated savings account - one in which the acceleration of interest over the short-term is the incentive. The program is called "Get Paid to Save" aka Ramp-UP and as the name implies participants are rewarded for saving regularly with abnormally high interest. We like to couple the account with pre- and on-going financial education that emphasizes the need to have a monetary cushion for all of life's surprises.
This is a very interesting question and I would like to marinate on it more...
Cheers
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Permalink Reply by H Joshi on -
For overcoming these problems, there are Business Correspondents who are collaborating with banks and providing financial services for outreached ones. These BCs work as a minor bank in these villages where it is very difficult for people to save a dollar in a week. with the help of banking transactions via mobile, customers are able to save some amount of money so that at the time of distress sale, they don't have to sell their marketed surplus esp in case of agricultural farmers. For educating his child, a poor farmer is now accepting the concept of opening no-frills account via these BCs in a bank, and there by saving some amount of money for future needs.
In other words he is coming towards living a sustainable life. There are endless benefits of opening an account in banks as we all know, so we should encourage these BCs which are working for Financial Inclusion and also others who are tying up with these BCs for a noble cause.
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