Grameen Foundation Launching New Initiative to Give Poor People Safe Access to Savings Accounts
Efforts Will Focus on Microfinance Institutions in Ethiopia, India and the Philippines
January 12, 2010 - Grameen Foundation today announced a new initiative designed to expand safe access to formal savings accounts for poor people, especially those living on less than $1.25 per day. The Microsavings Initiative, which is supported by a $9.78 million three-year grant from the Bill & Melinda Gates Foundation, will work with microfinance institutions (MFIs) in Ethiopia, India and the Philippines to test and refine models that can be used by other institutions to provide savings options for people living at the very bottom of the economic ladder.
The microfinance institutions that Grameen Foundation will be supporting through this project are Amhara Credit and Saving Institution (ACSI), Ethiopia’s largest MFI and one of the largest in Sub-Saharan Africa; CASHPOR Microcredit Company, one of the leading MFIs in India which works in the relatively underserved northern part of the country; and CARD Bank, the largest MFI in the Philippines. The initiative aims to create 1.45 million new savers at these institutions over the next three years.
“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 such the Grameen Generalized System pioneered by the Grameen Bank has 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.”
Microfinance institutions will also be able to mobilize these funds to support their lending programs, rather than relying exclusively on loans from commercial banks and philanthropic grants. CGAP estimates that roughly 2.7 billion people in developing countries—72 percent of all adults—lack access to a formal savings account. This can be attributed both to regulatory restrictions and to an inability to effectively reach poor people with appropriate savings products. Grameen Bank, which holds approximately $1 billion in deposits from its clients and non-clients, is among the leading microfinance institutions in offering robust savings products to its clients, and as a result runs its operations without any external commercial or grant funding.
ACSI is already reaching roughly 560,000 clients with savings accounts, while CARD Bank is serving more than 250,000. CASHPOR in India will begin offering savings using a “banking correspondent” mechanism, the only legal way it can offer savings services to its clients, where CASHPOR serves as an intermediary for an established commercial bank.
The Microsavings Initiative is being spearheaded by Grameen Foundation’s Solutions for the Poorest (SfP) group which focuses on expanding financial services and business opportunities for very poor households that enable them to address the vulnerability and volatility of their economic lives.
This grant to Grameen Foundation is part of the Gates Foundation’s Financial Services for the Poor initiative, which is working 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.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people access financial services and technology solutions by providing financing, technology support and management strategies to the local organizations that serve them. It also spearheads technology initiatives that create new microbusiness opportunities for the poor, provide telecommunications access for the world's rural poor, and improve their access to health and agriculture information and other services. Founded in 1997, Grameen Foundation has offices in Washington, D.C., Seattle, Washington, Hong Kong, Ghana and the Philippines. Dr. Muhammad Yunus, the founder of Grameen Bank and the 2006 Nobel Peace Prize Laureate, is a founding member of its board of directors, and now serves as director emeritus. For more information, please visit www.grameenfoundation.org.