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Stuart Rutherford


Title: PowerPoint Presentation Author: Stuart Rutherford Last modified by: Stuart Rutherford Created Date: 11/1/2004 12:54:27 AM Document presentation format – PowerPoint PPT presentation

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Title: Stuart Rutherford

IDPM Manchester SafeSave Bangladesh
Stuart Rutherford
in praise of General Purpose Microfinance for
the poor
If youre very poor
  • your income is small, and probably irregular and
    unreliable as well
  • you often need to spend money at times when you
    have little of it to hand
  • At such times you can
  • go without
  • sell hard-to-replace assets
  • or
  • draw on past income or future income through
    savings or loans
  • thats what financial services are for

Arguably, the very poor need financial services
even more intensely than the non-poor
Financial diaries
  • fortnightly interviews with selected poor
    households for at least a year, to collect data
    and commentary on their transactions, especially
    their financial transactions
  • diaries completed for 300 households in
    Bangladesh, India and South Africa work in
    Malawi is about to begin

Financial diaries some key findings
  • poor households even the poorest - are usually
    active money managers, running portfolios of
    transactions and relationships
  • most of their transactions take place in the
    informal market (even where, as in Bangladesh,
    MFIs are common)
  • they seek to save as well as to borrow, although
    opportunities to save are few moneyguards are
    used for modest sums, and clubs like ASCAs and
    ROSCAs are used to build larger sums
  • loans are the workhorses of poor-owned
    portfolios loans usually have to do the work
    that specialist instruments do in rich
    portfolios insurance, building assets for old
    age, dealing with emergencies and large
    anticipated expenditures (loans for
    microenterprises are important for a minority of

Some comments from diarists
  • India I hate having to borrow and I hate having
    to lend to others. But what can you do? You cant
    run life without borrowing. Its not possible for
    people like us.
  • Bangladesh How do we keep track of all these
    transactions? Thats easy. This stuff burns
    itself into your memory. It keeps you awake at
  • South Africa I would do anything to avoid
    failing to pay into my three stokvels each week.
    I would die of shame. I might as well die how
    would I survive without them?

A stokvel is a kind of ASCA, used to build lump
sums for consumption use and to set aside cash
for funerals
Lipi found that the open passbook savings
account allowed her to manage day-to-day spending
  • Lipi saved a little every week into her Grameen
    passbook savings
  • and withdrew regularly to meet a wide range of
    everyday needs
  • food shortfalls school fees short-term loans
    to others making her own Grameen loan repayments
    and GPS deposits helping to buy gold earrings
    buying bamboo to make mats for sale doctors
    fees for her son
  • the service has helped her build up over 100 in
    a the GPS long-term savings account

Mahenoor used her Grameen loans to stabilise her
household rather than start or run a business
  • We watched as Mahenoor took 6 loans or loan
    top-ups from Grameen
  • she spent the first on food-stocksthe next
    paid for her father-in-laws funeralwith the
    third they paid off an expensive older loannext
    they bought food-stocks againthe fifth was used
    to buy medicine for her husbandthe last paid a
    years school fees for the two boys

  • for the research into the financial behaviour of
    poor people see
  • for Grameen II see their website and look for the MicroSave
    series of Grameen II Briefing Notes also
    available on the MicroSave website