MEDIA RELEASE PR37834
Gates Foundation Grants Signal New Movement Toward Savings Accounts for the Poor
SEATTLE, Jan. 13 /PRNewswire-AsiaNet/ --
Using Tactics from Motorbikes to Smartphones, Savings
Initiatives to Help Bring Financial Security to Millions of Poor People in
the Developing World
The Bill & Melinda Gates Foundation today announced $38 million in new
grants designed to help some of the world's leading microfinance institutions
(MFIs) provide the poor with safe, affordable places to save their money. Six
grants will help 18 MFIs, which currently focus on microcredit, expand their
portfolios and make savings accounts available to an initial 11 million poor
people across 12 countries in Africa, Asia, and Latin America over five
years. The grants will create new ways for the poor to make deposits and
withdrawals, expand the availability of existing savings products, and fund
savings-focused marketing campaigns.
"This signature package of grants represents our first bold effort with
the microfinance community to provide poor people safe places to save their
money," said Bob Christen, director of Financial Services for the Poor at the
Bill & Melinda Gates Foundation. "We see it as a major step to drive change
and help broaden the microfinance business model to include savings."
Microfinance has improved the lives of millions of poor people by
offering small loans. Few of these institutions have offered savings
accounts, and more than 90 percent of the world's poor still lack access to
financial services and resort to risky, expensive, and inefficient ways to
save. A National Bureau of Economic Research report suggests that poor
households with access to savings accounts are more likely to invest in
education, increase productivity and income, and reduce vulnerability to
illness and other unexpected events.
Providing access to safe, affordable savings accounts has been a
challenge because of the high costs for both banks and customers. For banks,
the costs of physical buildings, with dedicated bank tellers, are expensive,
especially in remote areas or where there is a limited number of clients with
small deposits. Poor clients often live far from banks so the cost to reach a
branch may exceed the amount of their deposits.
"Despite conventional wisdom, poor people actually do save, even if it's
just pennies each day, but there have been very few accessible and safe
options available to them until recently, when breakthroughs pioneered by the
Grameen Bank have shown what is possible," said Alex Counts, president of
Grameen Foundation. "Microfinance institutions, because of their established
relationships in these communities and ability to bring the transaction to
the client, are well-placed to provide safe access to formal savings
accounts."
The grants will use a variety of approaches to offer savings accounts to
poor people. ShoreBank International, for example, will broaden its reach by
sending staff on motorbikes with handheld devices to rural clients in India.
Women's World Banking will revamp its savings products to make them better
fit the needs of the poor and fund marketing campaigns in the Dominican
Republic. The Grameen Foundation will work with its partner MFIs to ensure
they have the business systems and staff to manage emerging client savings
programs.
This announcement follows the foundation's one-year review of proposals
from leading microfinance networks worldwide. Applicants were evaluated on a
range of criteria, including institutional ability to work in multiple
countries, previous success in providing microcredit, and willingness to make
savings a priority. Lessons from each project will be documented and shared
with grantees and the microfinance community.
"The poor have surprisingly sophisticated financial lives and present a
rapidly emerging business opportunity for banking in the developing world,"
said Jonathan Morduch, professor at New York University and co-author of
Portfolios of the Poor. "Savings initiatives like these help strengthen and
expand financial institutions, enabling them to overcome significant barriers
and provide affordable savings accounts to the poor in a sustainable manner."
To date, the foundation's Financial Services for the Poor initiative,
which is part of the Global Development Program, has committed $470 million
to make financial services widely accessible to the poor and help break the
cycle of poverty. The initiative works with a wide range of public and
private partners to harness technology and innovation to bring quality,
affordable savings accounts and other financial services to the doorsteps of
the poor in the developing world. The foundation believes that setting aside
small sums in a safe place allows people to guard against risks, build
assets, and provide opportunities for the next generation.
This announcement includes the following grants:
Grantee: ACCION International
Grant amount: $5.8 million
Institutions: BancoSol, Bolivia; Finamerica, Colombia; third institution
to be selected
This grant will reach one million new clients in five years. It will help
bring savings products to a broader set of clients through a variety of
means, including agent banking, mobile banks, and providing access to savings
accounts over mobile phones.
Press Contact
Bruce J. MacDonald, +1.617.616.1546, bmacdonald@accion.org
Grantee: FINCA
Grant amount: $5.4 million
Institutions: FINCA Uganda, FINCA Ecuador, and FINCA Democratic Republic
of the Congo
This grant will reach more than 372,000 new savers in five years. FINCA
is well known for its village banking model, where groups gather to receive
and repay loans, and discuss loan management. With this grant, FINCA will
begin to offer savings to these groups, as well as individual clients through
"micro branches" located in rural areas.
Press Contact
Diane Jones, +1.202.352.6475, djones@villagebanking.org
Grantee: Grameen Foundation
Grant amount: $9.8 million
Institutions: Amhara Credit and Savings Institution, Ethiopia; the Center
for Agriculture and Rural Development (CARD), the Philippines; Cashpor
MicroCredit, India
This grant will transform three MFIs in Ethiopia, the Philippines, and
India into savings-led institutions that will serve 3.6 million new savers
within five years. The Grameen Foundation will:
- Work with Amhara Credit and Savings Institution, which already has an
extensive branch network in Ethiopia, to increase its ability to provide
savings to target groups.
- Work with NGO Cashpor MicroCredit in India to match it with a savings
bank, bringing the bank's savings products to the NGO's locations.
- Help CARD market its existing savings products in the Philippines and
bring those products to more people using new point-of-service devices
and by launching a partnership with an ATM network.
Press Contact
Liselle Yorke, +1.202.628.3560, ext. 128, lyorke@grameenfoundation.org
Grantee: ShoreBank International
Grant amount: $5.5 million
Institutions: Krishna Bhima Samrudhi Local Area Bank, India; Khushhali
Bank, Pakistan; National Rural Support Programme Microfinance Bank, Pakistan;
BRAC Bank, Bangladesh
This grant will deliver savings products and services to 1.5 million
people across South Asia in countries that contain 25 percent of the world's
population. ShoreBank will:
- Work with Krishna Bhima Samrudhi Local Area Bank in India, which is
already offering credit and savings to the poor, to broaden its reach by
sending messengers on motorbikes with handheld devices to rural clients.
- Work with Khushhali Bank in Pakistan, which mainly serves semi-urban
areas, to introduce a portfolio of savings products tailored to the
poor.
- Create management and business process systems, and train staff to help
the National Rural Support Programme Microfinance Bank in Pakistan offer
savings to its clients.
- Help BRAC Bank in Bangladesh explore ways to reach the rural poor with
savings.
Press Contact
Brian J. Berg, +1.773.420.4664 or +1.312.282.8260, brian_berg@sbk.com
Grantee: Women's World Banking (WWB)
Grant amount: $8.5 million
Institutions: Banco ADOPEM, the Dominican Republic; WWB Colombia; Kenya
Women Finance Trust, Kenya; Kashf Microfinance Bank, Pakistan
This grant will reach 3.5 million people in five years by supporting the
activities of four WWB flagship network members. WWB will:
- Assist Banco ADOPEM in revamping its savings products to make them
better fit the needs of the poor.
- Support WWB Colombia, a newly regulated institution, in mobilizing and
managing savings by launching new products, new delivery channels and a
new marketing approach.
- Help Kenya Women Finance Trust, which is currently credit-only, conduct
market research and product development to create services and products
tailored to the poor.
- Work with Kashf Microfinance Bank to place online banking kiosks in
Kashf Foundation branches so the foundation's clients, all women, can
gain access to savings accounts for the first time.
WWB will also launch a TV serial drama in the Dominican Republic to bring
attention to the benefits of savings. WWB will work with the design firm IDEO
to design a new product, service, or distribution solution by exploring
customers' perceptions of making deposits through correspondent banking, ATMs
and mobile phones.
Press Contact
John Keaten, +1.212.784.5701, John@GroupGordon.com
Grantee: World Vision
Grant amount: $3.3 million
Institution: WISDOM, Ethiopia
This grant will offer savings accounts to more than 600,000 rural farmers
and the poor in Ethiopia through mobile technologies. It will mobilize
savings officers using PDAs and traveling by motorbike to enable client
transactions in communities surrounding branch offices.
Press Contact
Rachel Wolff, +1.253.394.2214, rwolff@worldvision.org
Bill & Melinda Gates Foundation
Guided by the belief that every life has equal value, the Bill & Melinda
Gates Foundation works to help all people lead healthy, productive lives. In
developing countries, it focuses on improving people's health and giving them
the chance to lift themselves out of hunger and extreme poverty. In the
United States, it seeks to ensure that all people-especially those with the
fewest resources-have access to the opportunities they need to succeed in
school and life. Based in Seattle, Washington, the foundation is led by CEO
Jeff Raikes and Co-chair William H. Gates Sr., under the direction of Bill
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SOURCE: Bill & Melinda Gates Foundation
CONTACT: Bill & Melinda Gates Foundation
+1-206-709-3400
media@gatesfoundation.org
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