Tuesday, March 13, 2007

Ice cream man meets microfinance savings

Another operation that I have envisioned is a savings collection system. I see it as a combination of the ideas of Susu collectors, old-style film drop off kiosks, mobile banking vans and perhaps ice cream trucks.

I think the poor have a greater need for safe savings as opposed to credit, which currently dominates financial services to the poor. From a financial health point of view I would rather have a poor family save and earn interest as opposed to taking on debt and paying interest.

I have seen success in Ghana through Susu collectors. Even large commercial banks in Ghana are trying to harness the power of Susu collectors. The daily savings mechanism allows them to remove the temptation to spend the money themselves or, perhaps an even larger issue in a number of countries, it prevents the money being available for relatives to borrow or 'share'.

The drop box could be placed in area that would both promote ease of deposits as well as security. The drop box would help to lower the transaction costs that are often high for microcredit institutions. I think the security issues could easily be resolved.

The mobile banking units would have to be associated with a reputable bank. They would follow a circuit to pick up from the deposit boxes and then provide some basic financial services. There are a number of successful models and mobile units, both by mini car engineers and armored car manufactures.

All of these points would need to be further discussed and refined but I think the core concept would work. I realize it is much more complicated than this outline as well. But I put it out there for discussion.

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