In a CGAP microfinance blog post yesterday, Meritxell Martinez highlighted the recent assertion that microfinance may have little impact on education spending. But she followed up by highlighting three Global Assets Project reports, citing our work as highlighting promising ideas and research in microfinance that could have a beneficial impact on education outcomes.
What does she cite?
- Savings-Linked Conditional Cash Transfers: Conditional cash transfers (CCTs)—the linking of government payments with desired behavior (school attendance, health checkups, etc.)—have been around for over a decade. But payment methods are often messy, sometimes even as piles of cash-stuffed envelopes transported by trucks to beneficiaries in remote locations. In their issue brief (and a presentation last month at the World Bank) Jamie Zimmerman and Yves Moury argue that we should take advantage of the growing momentum surrounding CCTs to connect the unbanked to financial services, by linking CCT payments to savings accounts. A few youth-oriented CCT programs have already begun doing so; Mexico’s Jóvenes con Oportunidades, for example, has led to demonstrable rises in school attendance and graduation rates.
- Matched Savings: “The poor can save.” We’ve heard this mantra repeatedly, ever since the publication of Stuart Rutherford’s seminal The Poor and their Money, and Rutherford’s Portfolios of the Poor co-author Daryl Collins repeatedly emphasized this at our October panel discussion on matched savings. But even if the propensity to save isn’t an issue, matched savings programs and policies can provide a valuable gateway to financial services for the unbanked, and spur the habit of lifelong saving and asset building.
- Children’s Savings Accounts (CSAs): Why offer savings products to children? Savings products for young people have multiple outcomes. They of course can they be used to cultivate the habit of savings among younger generations. But CSA products, programs, and policies can likewise be designed with the intention of facilitating socio-economic development outcomes, such as furthering educational goals and enhancing health outcomes (the SUUBI Program in Uganda, spearheaded by Columbia University Professor and Global Assets Project Research Fellow Fred Ssewamala, has shown promising resutls in this respect).The Global Assets Project is already involved in the design of a CSA pilot in Nigeria’s Bayelsa state, and with funding from the MasterCard Foundation, is collaborating with partners in the research and design of youth savings accounts in Africa, Asia, and Latin America.
Citing Harvard econoimst and behavioral economics expert Sendhil Mullainathan, Martinez suggests that perhaps part of the reason why problems have arisen in the field microfinance recently is not because we’re lending to the wrong clients, but because we may not be offering all the right products. In that bundle of financial services, savings products should certainly be among them.