Let’s get serious. Is there REALLY anything particularly special about savings groups? Some people think they see something special, but hard to measure, happening in groups. They try to describe it with words like empowerment or community.
But lots of people, even some savings group promotors, don’t necessarily see the specialness. For them, savings groups are just an efficient way to bring millions of people closer to this year’s hot developmental objective, Financial Inclusion.
When they find something better, especially something that will get rural people signed on with banks, then they will drop Savings Groups like a hot yam.
I’ve thought about this a lot, and I think that for most savings group members savings groups really are special. That’s because, at their center, the very essence of savings groups is that they are about saving, and saving in itself is special.
Saving is not just another financial transaction. It’s much more than that. Saving is a world view. It’s a way that people can live their life in between times when they are filling out a deposit slip, or having their passbook stamped.
Saving is what our parents, teachers, and religious leaders told us to do when we were young. Saving means forgoing pleasures now, in exchange for greater pleasures or security or satisfaction in the future. My mom said, “Eat your broccoli, and then you can have desert.” That’s saving! My teachers had a similar message: work on my term paper now, don’t wait until it’s due.
The Bible is full of admonitions to save: “The rich ruleth over the poor, and the borrower is servant to the lender” in Proverbs; St. Paul in Corinthians said, “On the first day of the week each one of you is to put aside and save, as he may prosper.”
The culture I grew up in is permeated with the concept of saving. I’ve always loved the adage “Use it up, Wear it out, Make it do, Do without.” America’s favorite philosophers were big on saving, and didn’t like borrowing. Benjamin Franklin: “Rather go to bed with out dinner than to rise in debt,” and, of course, “A penny saved is a penny earned.” Or Ogden Nash: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” Or Thomas Jefferson: “Never spend your money before you have it.” Or Aesop: “It is thrifty to prepare today for the wants of tomorrow.” And so on. In fact, look around the internet for quotes around saving and borrowing: you will find fifty quotes admonishing people to save, for every one that says anything good about borrowing.
I’ve always liked the image of people having an Angel on one shoulder giving us good advice, and a Devil on the other giving us bad advice. In many ways, the Angel is telling us to save, to forego pleasures to have a better tomorrow - and the Devil is telling us, “No, don’t worry! Tomorrow will take care of itself. Here’s a credit card with your name already printed on it! Have a good time!”
The credit-savings tension is everywhere, and it shows up especially in the biggest issue of this century, combating climate change. The Credit Devil says, “Aw, don’t be a sucker. Saving is for losers. Just dig up the coal, pump the oil, that’ll create lots of jobs, Al Gore is pompous, and we can spend the money on consumer electronics!” The Savings Angel says, “No, no! Don’t listen to him! We need to leave 80% of the coal in the ground if our children are to have a chance for growing up on a livable planet!”
We all know what is right. We all know that we have to forego pleasures and ease today to have a better tomorrow for ourselves and our children. But it’s so hard to do that sometimes. It’s hard for me to forego today’s pleasures, and I’m relatively well off. I know that it is much harder for people living with fewer advantages than I have. And that’s what is special about savings groups: commitment saving, support in saving when it gets hard. Groups are an amplifier for the Saving Angel’s voice, telling us to do the right thing.
Originally published 27th February 2013 by Paul Rippey
Reader Comments (5)
Paul - Wonderful post. Financial inclusion is of course microfinance repackaged to cleanse itself of the sins of Compartamos and SKS. But, with this new term come new stakeholders, all to the good. No longer is microfinance in the sole custody of specialized institutions (MFIs). It belongs to everyone, from the snootiest IT firms relaying money from point a to point b to the humblest of savings groups. I think your essay perfectly captures the beauty of the latter. These groups do reflect the essence of the homilies that help us all get ahead. Thank you.
Wed, February 27, 2013 | Kim Wilson (Kimberley.Wilson@Tufts.edu)
Thank you, Paul. Thought provoking as ever. Henceforth (a good Biblical word) I shall picture you in Charlton Heston style bringing down the tablets from Mount Sinai and laying waste golden calves and other idolatrous images. Seriously, I am concerned with your analogy about debt and the devil. I think this goes too far. Savings groups need to lend out members' money to one another otherwise they won't get a return and thus encourage both group cohesion and more savings. The one exception to this may be illiquidity preference and, even then, I would have thought people are more likely to prefer safer ways of storing their money. In this context, the work that Ignacio Mas is doing on "me-to-me" stores of e-money and its release on pre-set dates will be most interesting. I absolutely disagree with Kim Wilson's comment that "financial inclusion is microfinance repackaged to cleanse itself..." Sorry, Kim, but this is miles wide of the mark. The FSD operations in East Africa are trying hard to get across important messages about financial access (and its various components of which proximity is but one) and how use and quality of use in its various contexts are all elements of financial inclusion. Fall down on any one of these and you undermine inclusion. Just "microfinance repackaged..." Hardly!
Fri, March 1, 2013 | Ian Robinson
I always love reading Paul and Kim's posts here. Always provocative, never boring!
While I think there can be good reasons to take on debt, I tend to agree with the devil and the debt analogy. It fits the current situation here in South Africa to a "T". It is downright scary.....One of our group members was so severely indebted to just about everyone from loan sharks to family to her group, that she talked about suicide and then disappeared for a couple days....everyone feared the worst, but luckily she turned up - alive, but very stressed out.
An excellent article was written about unsecured consumer lending here in South Africa, http://dailymaverick.co.za/article/2012-11-07-todays-loan-shark-feeding-frenzy-tomorrows-revolution here's the link. Not sure if I can post a link here, but I'll give it a whirl and see if it takes.
TGIF friends, and enjoy your weekend wherever you are.
Fri, March 1, 2013 | Jill Thompson (firstname.lastname@example.org)
Ian, I put credit in opposition to saving, but of course it is much more nuanced than that.
I considered using the terms "Dionysian" and "Apollonian" rather than "devil" and "angel". Apollo (savings) and Dionysus (debt) were not opposites - in fact, they were brothers, and so are saving and credit. Stuart Rutherford conflated the two also, calling savings "saving up" and credit "saving down". I do understand that credit and saving often go hand in hand.
I'll let Kim defend herself. I disagreed with her, but in the other direction from you. I think she is being too kind to the "Financial Inclusion" movement, or meme, or fad, or whatever it is. I want people to have the financial services they need, but am I the only person left who is suspicious of banks? I mean, people, hello?? Paying obscene bonuses while foreclosing on home loans that should never have been made?? Helping Greece get deeper in debt it could never get out of?? Manipulating LIBOR?!? Do we really not have any reservations about using donor money to lead millions of trusting people into "Formal Financial Services"?
Well, there I go again. I'm not being very nuanced, am I?
Best to you.
Fri, March 1, 2013 | Paul Rippey
Creating and owning assets can be a transformational and liberatory experience for the empovrished, no doubt. That loans can offer a chance for this seems plausible. That individual saving accounts lead to this, not neccesary in every context. I would also add that asset-building is not neccesarily an individual neither a monetarized practice. Also, for the empovrished, building new assets might be secondary as to protect existing ones from disspossesion or degradation. Good example of all of this is Kim reflections on soil building by Kim Wilson on his post "A Double Wealth." The work i am doing wiht MAPLE Microdevelopment and indingeous Mapuche communities in Chile focuses precisely in creating a savings and loan method that could generate local social, economic and environemntal returns in a financially sustainable manner, or in other words, enable "holistic asset-building" processes that combine individual(or familial) and collective goals.
Sat, March 2, 2013 | ignacio krell (email@example.com)