Archive for the ‘Solutions for the Poorest’ Category

Making Progress Through Savings

June 14, 2012

Kimberly Davies is a program officer on Grameen Foundation’s Financial Services team.

Traveling to the field and talking with clients is the favorite part of my job.  I’ve worked in microfinance for five years and think daily about the poor women and families whom we support. Working with partner organizations and meeting clients face-to-face not only reminds me of why I’m in this field – it also helps me better understand the poor’s demand for financial services and the many challenges involved in providing those services.

It has been really exciting to see the progress of our microsavings project in India.  The first time I visited our partner organization Cashpor Micro Credit – a poverty-focused microfinance institution (MFI) in Varanasi, India – it was not yet offering savings products to its clients. This was partly due to complex Indian regulations requiring MFIs to work with banks to provide savings. Since then, Cashpor partnered with ICICI Bank and Eko Technologies (a tech provider that enables savings via the mobile phone) to launch a new savings product in the summer of 2011.

Microsavings accounts provide poor parents with a safe place to save for their children's future.

Microsavings accounts provide poor parents with a safe place to save for their children’s future.

Since the launch, Cashpor has added about 250 new savers every day, and currently has more than 60,000 savings accounts. Cashpor’s clients have spoken loud and clear about their desire to save. Clients told us during my last visit that they wanted their own safe savings accounts, but I wasn’t sure what the real demand truly was. It’s also challenging to offer convenient services to clients, because some do not have cell phones, most can’t read and many are even numerically illiterate. These challenges, on top of others, were things that I knew would take time to navigate.

However, the huge demand does make sense. A safe place to save is critical for families, because it helps them smooth consumption during times of sporadic income, or prepare for an emergency or a planned lifetime event. Of course, people want convenient tools to help them better manage their lives. In the United States, we have access to so many financial tools in our everyday life – various savings accounts we can access at any time, insurance, loans, locked CDs that yield a safe and consistent interest rate, etc. You name it, we have it. The poor want these same tools.

Truly moving out of poverty is a huge task. Though tools like the Progress Out of Poverty Index® can measure the likelihood that an MFI’s client base is poor and track its movement out of poverty over time, this is a complex thing to measure, because forces such as natural disasters and family illnesses can prevent people from moving out of poverty or cause them to slip back into poverty. These uncontrollable forces make the use of easily accessible and affordable financial tools – such as savings accounts – all the more important to the poor.

Again and again, I’ve seen with my own eyes and heard with my own ears how access to financial services has improved the lives of poor people and their families. I look forward to seeing Cashpor’s savings program grow even more over the next year, as they help more women and families in need.

Giving India’s Poor a New Way to Save

January 5, 2012

Santosh Daniel is the project manager for Grameen Foundation’s Microsavings Initiative in India.

Anju Jaiswal lives in a remote village of Dheena in the state of Uttar Pradesh, India, where she and her husband, Ghanshyam, own a small kirana, or grocery.  Using a loan from Cashpor, a local microfinance institution (MFI), Anju is able to stock her family’s store with vegetables, provisions and other essential household items.  Her store serves the surrounding agricultural community, which can make earning a regular income challenging as most of her clients have seasonal farm jobs.  She uses most of the income she earns from the store to feed her family, often leaving very little for savings.  When the family is able to save, they keep their savings at home, like many other poor households.

For poor, rural households like Anju’s, opening a savings account poses several challenges.  The nearest Cashpor branch, for example, is 10 kilometers (about 6 miles) from Anju’s home, which means she would have to spend valuable time away from her business to go there.  In addition, the prospect of opening a savings account can be overwhelming for households that tend to have little schooling and low literacy skills.

On the other side of Uttar Pradesh, another Cashpor client, Sangeeta, lives with her husband and in-laws.  Sangeeta and her husband work in the family business in the remote village of Chaubeypur, making cardboard boxes used for packing sweets.  Though her husband has a bank account with one of the national banks, it’s often difficult for him to go to the nearest branch to deposit his savings because of distance and time constraints.  In fact, his account has been dormant for the past year and a half.

Thanks to Grameen Foundation's Microsavings Initiative and the work of its partners Cashpor (a local microfinance institution) and ICICI Bank, Sangeeta is now able to save a little each week to provide security for her future.

Thanks to Grameen Foundation's Microsavings Initiative and the work of its partners Cashpor (a local microfinance institution) and ICICI Bank, Sangeeta is now able to save a little each week to provide security for her future.

Poor, rural households face three common challenges when it comes to banking with a formal institution:

  1. Many of them don’t use existing bank services because they’re too far away and don’t offer the services they need
  2. They typically have very small sums to deposit, making the long trip to the bank not worth the time they lose
  3. They are intimidated by documentation required for opening accounts because of low literacy and lack of self-confidence

To meet these challenges, Cashpor – in collaboration with ICICI Bank and Grameen Foundation – began in June 2011 offering the Apna Savings Account to more than 379,000 female clients, as well as non-clients, living in Uttar Pradesh and Bihar.  To date, Cashpor has enrolled more than 15,000 new savings customers – including Anju and Sangeeta – in more than 140 branches in five districts.  The demand for Apna (which means “ours” in Hindi) has been extremely high, with 300 to 500 new savers being added daily.

The savings product is designed to help the client overcome the challenges above.  Staff members conduct new-client enrollment via mobile phones, using the phone number as the account number.  Cashpor savings officers travel to clients to take their savings deposits (which clients can also make using their mobile phone), much as they do with traditional micro-credit clients. Deposits are then automatically updated, so clients can immediately check their balance using their phones.  Clients also can deposit, withdraw and send remittances through their phone using their mobile savings accounts.

As the project has grown, the partners have faced a few challenges in implementing the mobile savings account.  The biggest obstacle has been overcoming the cultural barriers in India to women owning a mobile phone, which is seen as a tool of the young and not respectable for Cashpor’s clientele, who are largely in the 31-45 age group.  However, when one group member decides to use the phone, we’ve seen that it is a powerful example to the others in the group.  In fact, 80 percent of Cashpor’s customers do have access to a phone (either their own phone or one they share with the rest of the household), so the potential for them using this savings account is large.  Current Cashpor clients and also non-clients are also expressing a strong willingness to buy a phone so that they can have access to formal-sector financial services.

For many women, having a savings account provides security. The savings provide a safety net for emergencies or household purchases, which is critical for poor women, who sometimes find it difficult to own property or assets.  At first, Cashpor’s clients feared their husbands would be able to check their balances on their phones, but now they’re realizing that saving with Cashpor provides more, not less, security for their savings.

The lives of Anju, Sangeeta and others who’ve taken up the new savings service have changed for the better. Grameen Foundation and its partners are working to bring safe, reliable savings accounts to poor women in rural India, provide quality customer service and use innovative approaches that will create a sustainable change in the lives of millions of poor women and their families.

Tackling the Challenges of Offering Voluntary Savings to the Poor

December 23, 2011

Leo Tobias is Grameen Foundation’s Technology Program Manager of the Solutions for the Poorest Microsavings Initiative.

Offering savings programs for the poor can be challenging. First, the microfinance institutions (MFIs) that want to offer these services are competing with a variety of alternatives, such as home-based savings (under mattresses, in strongboxes, etc.), or keeping money with relatives or neighbors. Second, offering savings products fundamentally changes the relationship between the MFI and its customers.  When clients only want loans, making that the primary purpose for their interactions with the MFI, there is a standard process. Taking voluntary customer deposits radically changes that relationship, to one that is initiated by the customer and that involves varying amounts of deposits or withdrawals. In other words, the customer interaction is less predictable.  At any time of the day or night, the customer can ask for her balance and withdraw from it.

A loan officer from CASHPOR in India processes loan payments on her mobile phone.

A loan officer from CASHPOR in India processes loan payments on her mobile phone.

Grameen Foundation’s Microsavings team has found that poor customers all want to have easy and convenient access to their funds.  The MFIs we work with face common technology challenges involved with providing such access.

In this post on the CGAP Technology Blog, Leo Tobias, our technology program manager for the Grameen Foundation Microsavings Initiative, discusses two of the major technology challenges facing MFIs.

The Value of Group Savings and Lending to the Poorest People

December 21, 2011

This is a guest post from Sudarshan Behera, Field Executive for our Livelihood Pathways for the Poorest project in Gaya, India.

Sugia Devi was a changed woman on November 7, 2011. She had just left the free cataract clinic in Bodhgaya in India’s northern state of Bihar and was grateful for her improved eyesight. She couldn’t wait to thank the people who had made it possible: the members of her adapted self-help group (ASHG).

Sugia Devi and her husband

Sugia Devi and her husband.

The group is part of Livelihood Pathways for the Poorest, a joint project of Grameen Foundation’s Solutions for the Poorest group and BASIX/The Livelihood School that is designed to enhance the skills of the ultra-poor, link them to income-generating activities and build their savings habits.

Sugia lives in Khaneta village with her husband and her son, and his family. When she first heard about the ASHG in August, her husband did not want her to join the program because of mistrust and a lack of understanding about the benefits of participation. She persisted and began attending meetings and saving a small amount each week. Starting with an initial deposit of 10 rupees (about 2 cents), by November she had saved 130 rupees (about $2.40). But it still wasn’t enough to pay her fare to get to the free clinic in Bodhgaya some 30 kilometres (19 miles) away.

That’s when Sugia turned to the members of her ASHG. In addition to providing a safe place to save, the groups also provide its members with quick access to short-term loans. Sugia’s group members approved her loan of 100 rupees, enabling her to cover her transportation costs for her operation.

Today, Sugia’s husband has a better appreciation for the value of the self-help groups, while she knows that her family can rely on the group when they need help. As her husband noted, before the ASHG, the family would have had to borrow from moneylenders who typically don’t lend less than 500 rupees (about $9), at very high interest rates.

Sugia has recovered from her operation, and now Friday – the day her ASHG meets – has a special importance in her life.

Building Skills, Building Confidence: How Ultra-Poor Women in India Are Taking a Step Toward Self-Reliance

November 10, 2011

This is a guest post by Avinash Kumar, a staff member of The Livelihood School of BASIX who is working with Grameen Foundation as the project manager for the Livelihood Pathways for the Poorest project in Gaya, India.

Asha Devi’s eyes sparkled as she rolled agarbatti (“incense sticks” in Hindi) for the first time. Asha is a member of an adapted self help-group (ASHG) in Pali, a village in India’s Bihar state, where the Livelihood Pathways for the Poorest, a joint project of Grameen Foundation’s Solutions for the Poorest group and BASIX/The Livelihood School, is being implemented. The sparkle in Asha’s eyes reflects newfound self-confidence and pride that by selling handmade agarbatti, she will be able to supplement her family’s income.

Women from the program hold up their newly-rolled agarbatti (incense sticks) during training

Nearly 100 women from six village ASHGs participated in our week long training. Agarbatti rolling, which is a common activity in almost all of the villages in the Gaya district of Bihar, is one of two income-generating activities being promoted through the project. These activities require simple skills and provide modest increases in income to help households meet their immediate consumption needs. As the clients’ confidence levels and skills increase, the project team will transition them into entrepreneurial income-generating activities, such as poultry farming and goat rearing, which require higher initial capital investment and skill sets but can significantly help fill income gaps throughout the year.

The agarbatti rolling training was unique not only because it was the first time women from the poorest families were receiving it, but also because it was the first time local women were given a leadership role to train their fellow community members. The experience of having a local woman train them in this skill helped increase the participants’ confidence, leaving them optimistic about their prospects and ability to contribute to their families’ income. While agarbatti rolling is common in the region, many of the households participating in our project had never done it because they live in relative isolation, making it more difficult for them to access agarbatti agents and vice-versa. Instead, they have depended largely on wage labor from agriculture production, construction work and road building.

Faced with very unpredictable and insecure income sources, these families have not had the luxury of time nor the opportunity to experiment with an entrepreneurial activity. In fact, these households often lack the necessary self-confidence to take up and learn a new activity, even such low-skill ones as agarbatti rolling. One of the aspects of the project is building the self-confidence of the members and, which, thus far, has been successful.

This training is the beginning of a change in this aspect of these women’s lives. As their self-confidence grows and they see their income rise, this positive change cycle will encourage them to seek out other opportunities. As they move forward, our team will work with them to continue on this path.

Helping the Poorest Access Resources, Training, Financial Services

November 2, 2011

Luckshmi Sivalingam, Program Officer for Grameen Foundation’s Solutions for the Poorest program, oversees the Livelihood Pathways for the Poorest (LPP) project in India.

One week last August, after slogging barefoot through a kilometer of muddy fields and monsoon rains, my colleagues from The Livelihood School at BASIX India and I reached our first ASHG (adapted self-help group) meeting of the week. We were greeted with warm smiles from the female members of one of the strongest ASHGs developed through the Livelihood Pathways for the Poorest (LPP) project in Bihar, India, to date. Trust levels and self-confidence are slowly building, as are savings habits among our members. Our project has two main goals: identifying and building a diverse and stable group of livelihood activities that will generate increased income throughout the year, and providing immediate and long-term socio-economic support for the group members and their families.

We have been working with the local government since May to link poor households to various support programs, including child and women’s healthcare and work for unskilled laborers. (The 2005 Mahatma Gandhi Rural Employment Guarantee Act guarantees 100 days of wage labor for adults in rural communities who are willing to do unskilled manual work or the equivalent in wages.)  Though the households in our project were eligible to receive these government programs, they either didn’t have the required proof of identification (India is one year into a national ID campaign that many hope will alleviate this problem) or were not aware of them. With our help, they now appreciate the immediate, tangible benefits of engaging in the government programs, as they begin to gradually access and experience the much-needed services that are rightfully theirs. Since we began our discussions with the local government, our target villages have been assessed to see which eligible households lack job cards; the ones that do are currently being processed. In addition, the households will each receive one to two fruit saplings for planting next month.

Participants in one of the LPP project's Adapted Self-Help Groups, or ASHGs, discuss the importance of savings.

Participants in one of the LPP project's Adapted Self-Help Groups, or ASHGs, discuss the importance of savings.

Understanding our clients’ thinking and the conditioning caused by a lifetime of chronic poverty is one of the most challenging aspects of this work. Our ready access in the developed world to the conveniences of modern life can limit our ability as practitioners to relate to and understand the very different reality of the poor we are seeking to help – a reality that can be a painful one. Living and interacting with them provides us with a window into the challenges of their daily lives, and shapes our own understanding of their needs and the context in which they live. It also helps us to understand the rationale behind the difficult daily decisions they must make – how to feed themselves and their families, what they must forego for the survival of their children and what sacrifices must be borne by the entire household, regardless of age. Designing a methodology, products and services to create “livelihood pathways for the poorest” will be a process of testing and retesting these next two years.

 

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LPP Pilot Project Focuses on Helping the Very Poor

October 27, 2011

Luckshmi Sivalingam, Program Officer for Grameen Foundation’s Solutions for the Poorest program, oversees the Livelihood Pathways for the Poorest (LPP) project, and has been working with the field team in Gaya since April 2010 to design the livelihood and financial products, services and methodology making up the integrated livelihoods model. We’ve posted an introduction to her blog post featured at CGAP below, with a link to the full post following it.

Sunita Devi, a participant in Grameen Foundation's Livelihood Pathways for the Poorest Pilot

Before Grameen Foundation’s Livelihood Pathways for the Poorest Pilot could begin its mission of serving the most impoverished and underprivileged families in Gaya, India, our team faced three critical questions: “Who are the ‘very poor’?  What does poverty look like in their context, and what are its propagators?  What do the very poor need to propel them on a pathway out of poverty?”

Our field team held meetings with villages and their leaders using an “interactive and inclusive method of rural appraisal, whereby the community members themselves define what poverty means in their own context and categorize individuals according to local definitions.”   Through these discussions, household surveys and use of the Progress out of Poverty Index® (PPI®), a selection criteria for identifying a community’s poorest households was created. Working in partnership with BASIX India’s The Livelihood School, the selection tool is being used to “ensure the inclusion of households currently excluded from microfinance services and government social welfare” in our pilot program.

To learn more about how Livelihood Pathways for the Poorest Program is servicing the selected 200 “very poor” households through “financial services and livelihood support,” please read Luckshmi’s full post on the blog of the Consultative Group to Assist the Poor (CGAP).

Seeing Is Believing

August 29, 2011

Luckshmi Sivalingam is a program officer in Grameen Foundation’s Solutions for the Poorest initiative, where she is managing a pilot program to expand income opportunities for the very poorest people in India.

After what seemed would be a third year of dry spells during the critical monsoon season, the rains have finally come in Gaya district of Bihar, India. Agriculture is one of the primary revenue sources for both farmers and wage earners like the 200 households that Grameen Foundation is reaching through the Integrated Livelihoods Model for the Poorest (ILM) pilot project being implemented in partnership with BASIX/The Livelihood School. The rains bring increased wage-earning opportunities, which translates into enhanced income and food security for most poor rural households.

The rains have finally come in the Gaya district of Bihar, India

To lessen the risks that come with erratic income-generating opportunities, Grameen Foundation’s Solutions for the Poorest (SfP) team is trying to gradually enhance the skills of the primary breadwinners of the households participating in the initiative, and connect them to more stable livelihood activities. These activities include supplementary income-generating opportunities that are often seasonal and low-skill, as well as entrepreneurial or productive activities that have a higher income-generating potential and often require increased skill sets and start-up capital.

Through our project, we are promoting livelihoods by first enhancing existing supplementary income-generating activities or introducing new ones that can rapidly increase household income and enhance our clients’ self-confidence and trust in our project team and partners. Next, we will introduce new, entrepreneurial livelihoods that generate higher incomes and can sufficiently fill the gaps in income that the rural poor often experience throughout the year. Examples include rearing goats, poultry farming and selling vegetables. By using this approach, we move away from creating an immediate dependency on credit to meet daily consumption needs and avoid disrupting clients’ existing livelihoods.

Over the past month in Gaya, we’ve held “exposure visits” for our clients to enhance their understanding of both the supplemental income-generating and entrepreneurial livelihood activities. These visits enable clients to visit another location to observe and learn from the other community’s activities and experience. Most importantly, they are able to see the various processes and participants involved in the entire chain of activities we will link households to. This deepens their understanding of the benefits and challenges of each activity and better informs their decision to commit to the “right” livelihoods for themselves and their households.

Two weeks ago, our clients visited the neighboring village of Orr, where they met with women of the same socio-economic background who have successfully engaged in “kitchen gardening.” This method of small-scale vegetable production involves very little or no land, and mostly organic inputs. Home-grown vegetables significantly increase nutritional levels while also contributing to income, as families can sell excess produce. Our clients also received a demonstration on gunny-bag gardening, which is essentially a garden in a bag that grows along creepers against the walls and roof of the house.

Before the visit, our clients doubted whether they had the capacity to start new activities, but after seeing how successful their peers have been, they said, “Now that we have seen them do it, we know we can do it too! And, we are ready to start!” Seeing really is believing.