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Day One in Arusha: Should financial services be consolidated?

by on Oct 5, 2011  |  posted in Savings  |  0 Comments
[caption id="attachment_328" align="alignleft" width="176" caption="Image by Community Friend"][/caption] This is the question I posed to you in the blog world at the end of my last post.  When I asked this during a small group discussion at the Arusha Savings Groups Summit, the response was a slight pause, a discussion leader saying “Yes, I think we do quite incorrectly think that way,” followed by a number of nods.  This suggests a few things to me: 1.     We are often very insulated in the way we think about and provide financial services and products 2.     We should be less insulated in the way we think about financial service provision. 3.     Linkages to other services providers (financial and non-financial) should be encouraged and facilitated in many (though not all) cases. To be fair, when I say “we” I certainly don’t mean everyone in this industry, but my impression is that the above statements do apply to a wide array of institutions and programs. I look forward to hearing comments of people with examples to the contrary! We spent about an hour on morning of the first day of the conference in a series of small, four-person discussion groups, talking (and drawing!) about what inspires us about savings groups, and how these groups can be improved, both individually and collectively, as an industry.  Stuart Rutherford pointed out during the group synthesis of the small discussions that most groups were inspired by the social aspects of savings groups, such as empowerment, solidarity, and inclusion, but wanted to see improvements on the financial aspects.  My groups did discuss both social and financial outcomes as inspiring and needing improvement, but his point was well taken.  Some of the most commonly needed improvements were safety/security, general financial education, and networking (linkages to other services and instruments). On the latter point, I am interested to hear a debate that will take place on Day Two of the summit on whether savings groups should have more of a focus on linkages to other financial offerings. As stated above, my instinct is that yes, in some cases they should, but I also see the danger in changing a system that so far, seems to be working fine on its own.
Another topic where there seems to be great disagreement is the role of local and national governments in savings groups. While a number of people were advocating for greater protections and stronger enabling environments, at least a few people pointed out that government interference would be just that: interference!  My gut feeling is that in many countries—certainly not all—governments have a way of finding out about things that are working (i.e. microfinance), wanting a piece (dividends, interest, taxes) and breaking it (i.e. Andhra Pradesh).  Safety is a big concern for savings groups; there are countless stories of lock-boxes containing months of savings being stolen, and no doubt there is fear among many members and potential members that having their wealth explicitly known in the community can make them a target for theft and violence.  But these were problems long before savings groups came around. If governments had the capacity (or perhaps the interest?) to improve security and safety, they would have. What should the role of governments be in savings groups (or other informal financial institutions)?  Should formalization be a goal? What do you think? __ For more liveblogging of the Arusha conference, check out Savings-Revolution.orgTo be a part of the savings revolution stateside, join us at the SEEP Annual Conference  in Washington, D.C. for a track of workshops and plenary sessions devoted to helping you learn how to reach the poor with savings services. 

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