Banking with the poor
by Vincent Obiro Orute
Poor households, with access to savings, credit, and other financial services,
are more resilient and better placed to cope with the everyday crisis they face
in life.
Even the most rigorous economic studies carried out within Arusha and its
environs have proved that micro finance can smooth consumption levels and
significantly reduce the need to sell assets to meet basic needs. With access to
micro finance, poor house holds can build their businesses and Purchase assets,
improve their living conditions, keep their families well fed and healthy,
educate their children, develop respect for themselves both at home and in their
community, secure a political voice, and involve themselves in the development
process.
Access to credit allows poor households to take advantage of economic
opportunities. While Increased earnings are by no means automatic, studies have
overwhelmingly shown that reliable sources of credit provide a fundamental basis
for planning and expanding business activities. Many studies have also shown
that clients who join and stay in micro finance programs have better economic
conditions than non clients, suggesting that micro finance programs contribute
to these improvements. Studies carried out in Arusha have also shown that over a
long period of time many clients who had over the years been living on less than
a Dollar a day do graduate out of "poverty"
By reducing vulnerability and increasing earnings and savings, financial
services allow poor households to make the transformation from "every day
survival" "to planning for the future".
Through micro finance, poor households are able to send more children to school
for longer periods and to make greater investments in their children's
education.
Increased earnings from financial services lead to better nutrition and better
living conditions, which translates into a lower incidence of illness. Increased
earnings also mean that clients may seek out and pay for health care services
when needed, rather than go without or wait until their health seriously
deteriorates. Micro finance programs have generally targeted poor women.
By providing access to financial services only through women, making women
responsible for loans, ensuring repayment through women, maintaining savings
accounts for women, providing insurance coverage through women, micro finance
programs send a strong message to poor households as well as communities. Many
qualitative and quantitative studies have shown how access to financial services
has improved the status of women within the family and the community at large.
Women have become more assertive and confident.
In areas such as Maasailand where women's mobility is strictly regulated, women
have become more visible and are able to negotiate on the public sphere.
Women now own assets, including land and housing, and play a leading role in
decision making process. In some micro finance programs that have been active
over many years, there are even reports of declining levels of violence against
women owing to their Political and Economic empowerment.
Although access to financial services opens up possibilities of improving the
economic conditions of poor households, in some cases this is not automatically
the case. Instances have been observed where clients are left worse off.
Ill advised credit can lead to too much debt. Sustainable financial services
that improve the conditions of poor households depend on a clear vision of
sustainability, on careful program design, on efficient operations, and very
importantly, on constantly trying to understand and meet client needs.
Orutev@yahoo.com
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