Helping Mickles Make Muckles: Designing Suitable Swaps For The Poor

This paper highlights the need for financial services by both urban and rural poor. The author presents three salient characteristics of how the poor manage their finances:

• Poor people can and want to save;
• Poor people often need large sums of cash;
• Large sums of money required can be accessed as withdrawals from aggregated small deposits or as loans repaid in small instalments.

The author discusses models that are used by the poor to convert their small savings into large sums of cash:

• Depositing small amounts with a collector;
• Taking a loan against future savings;
• Groups where savings are deposited and accessed as loans or as withdrawal;
• From MFIs.

Drawing from his personal experience, the paper explains the importance of flexibility in rural financial services. The author explains the Safesave model that offers three services:

• Save and withdraw;
• Advance against savings;
• Long-term deposit.

The paper concludes that to make financial services for the poor more convenient, the following need to be done:

• Allowing sums to be paid in and taken out locally and quickly;
• Recognizing that though clients may accept group formation as a price worth paying for a service, they will prefer an individual service;
• Making the services open to all poor people.