Gates Foundation Grants Signal New Movement Toward Savings Accounts For The Poor

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13th January 2010, 10:17pm - Views: 744






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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

People Feature Bill & Melinda Gates Foundation 3 image

      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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