Create Savings Accounts and Bring Financial Security to the World’s Poorest | Bill & Melinda Gates Foundation
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Seattle, November 16, 2010 -- Melinda French Gates, co-chair of the Bill & Melinda Gates Foundation, today hailed a historic moment that will help bring financial services, particularly savings accounts, to hundreds of millions of people living on less than $2 a day. Speaking at the foundation-hosted Global Savings Forum in Seattle, the first global gathering focused on the role of savings in the developing world, Gates urged leaders in government, banking, mobile communications, and international development to work together to build a new kind of financial infrastructure to bring savings to the poor. She also pledged $500 million from the foundation over the next five years to expand savings.
“This is an amazing moment. The stage is set for incredible breakthroughs,” Gates told nearly 200 influential world leaders who gathered for the two-day forum. “As last week’s statement on savings by the G20 proves, financial inclusion is on the global agenda at the highest level. And innovations are happening so fast that, for the first time, the world has the opportunity to provide even the poorest people with access to financial services.”
Savings accounts are in great demand by the poor in the developing world. Research shows that when they are offered side by side with loans, people chose savings over loans at rates of up to 12:1. In one study, Malawian farmers who were given the option to put aside some of their earnings toward the next planting season increased their farming inputs by 64 percent, resulting in 54 percent higher farm revenues, and 30 percent higher day-to-day expenditures. New research also shows that safe savings options can empower women, help people manage risks, like illness and job loss, and increase investment in livelihoods. Still, less than 10 percent of the world’s 2.5 billion poor have access to formal financial tools.
“Savings doesn’t just help people mitigate the risks posed by a medical emergency or a bad crop,” said Gates. “It also gives them the ability to marshal their resources to build something better for themselves and their children. It allows them to fund their own businesses, to look ahead with confidence. Savings helps families to take the giant leap from reacting to events to planning for a healthier, happier future.”
Gates was joined by influential leaders who discussed the vital role financial services play in improving the lives of the poor, including Her Royal Highness Princess Máxima of the Netherlands, U.N. Secretary General's Special Advocate for Inclusive Finance for Development.
“I am a strong believer in the power of financial inclusion,” said Princess Máxima. “When financial services are provided properly, they can help people grow their businesses, shield themselves against unforeseen shocks and make better lives. And I cannot stress enough the importance of savings accounts. Savings is a debt-free way to make investments and take advantage of opportunities, whether starting a business or sending a child to school.”
As a part of the foundation’s $500 million pledge, Gates announced a package of six new grants totaling $40 million. The grants support projects and partnerships to improve access to savings and other financial services, including:
- Expansion of bank and microfinance services to include savings accounts
- Implementation of new approaches to reach the poor with savings, such as branchless banking and mobile money
- Research to identify how people use formal and informal financial tools, including savings, credit, insurance, and payment services, and to analyze the impact of financial services on the lives of the poor
“Technologies like mobile phones are powering a next-generation banking system,” said Chris Locke, managing director of the GSMA Development Fund. “We now have the opportunity to put this to work for the developing world, offering the poorest people tools to manage their assets and build financial security.”
Other leaders who joined Gates included Janamitra Devan, vice president and head of network, financial, and private sector development for the World Bank–International Finance Corporation (IFC); Njuguna Ndung’u, governor of the Central Bank of Kenya and steering committee chair of the Alliance for Financial Inclusion (AFI); Chris De Noose, managing director, World Savings Banks Institute; Yongbeom Kim, director general of Global Financial Architecture Bureau in the Presidential Committee for the G20 Summit; and Luis Urrutia, president, Financial Action Task Force.
The foundation’s Financial Services for the Poor initiative is working with a wide range of public and private partners to harness technology and innovation to bring quality, affordable, and safe savings accounts and other financial services to the doorsteps of the poor in the developing world. Since 2006, Financial Services for the Poor has already committed more than $530 million to explore ways to increase access to financial services.
This announcement includes the following grants.
World Savings Bank Institute (WSBI) (2010-2011)
Doubling Savings for the Poor: $600,000
WSBI will work with major savings banks in developing countries to double the number of savings accounts held by poor people. Building on a $20 million grant to WSBI given in 2008, the program will identify and define viable projects that could be supported to offer affordable, accessible, and sustainable savings accounts with approximately 10 additional WSBI member banks.
Dirk Smet, +32 2 211 11 90
Vodacom Tanzania Limited (VTL) (2010-2012)
M-PESA Tanzania Acceleration Opportunity: $4.8 million
This program aims to increase awareness and usage of the mobile money service, M-PESA, in Tanzania, reaching at least 2 million people in 18 months. It looks to improve the lives of millions of Tanzanians, much like M-PESA is doing in Kenya.
Mwamvita Makamba, +255 754 706 642
ShoreBank International, Ltd. (2010-2012)
bKash Mobile Money Platform: $10 million
This project will work with BRAC Bank Limited to build bKash, a scalable mobile money platform that will allow poor Bangladeshis to store, transfer, and receive money safely via their mobile phones. Within five years, the project aims to bring 17.5 million poor people into the formal financial system for the first time ever.
Nicholas Molodyko, +1 312 881 5806
Consultative Group to Assist the Poor (CGAP)/International Bank for Reconstruction and Development (IBRD) (2010-2013)
CGAP II Technology Program: $6 million
Building on a major grant in 2006, this program will promote the use of branchless banking to increase the number of poor people with access to financial services, particularly savings. Co-funded by the United Kingdom’s Department for International Development and the World Bank, the program includes an innovation fund to support promising approaches and advises banks, microfinance institutions, telecommunication providers, and financial regulators on effective design and regulation.
Jeanette Thomas, +1 202 473 8869 or +1 202 744 4829
World Bank (2010-2014)
Global Financial Inclusion Survey: $11.4 million
This program will include 10 financial questions in an existing Gallup global poll to generate first-of-a-kind baseline data on financial inclusion levels across 150 countries. The survey will be issued every three years to measure and track specific data on people’s use and access to formal and informal banking, and financial tools.
Merrell Tuck-Primdahl, +1 202 473 9516
Yale University/Innovations for Poverty Action (2010-2014)
The Microsavings & Payments Innovation Initiative (MPII): $7 million
The MPII will strengthen understanding of the financial needs of the poor, and the economic benefits of financial products by launching more than 20 studies to identify the best ways to reach the poor with savings products and money transfer services. To support this effort and build capacity in developing countries, the program looks to expand its research network to include at least 15 more developing country researchers worldwide.
Dorie Baker, +1 203 432 8553