1. Stuart Rutherford IDPM Manchester & SafeSave Bangladesh www.safesave.org in praise of General Purpose Microfinance for the poor

2. or:  draw on past income or future income through savings or loans …that’s what financial services are for At such times you can:  go without  sell hard-to-replace assets  your income is small, and probably irregular and unreliable as well  you often need to spend money at times when you have little of it to hand If you’re very poor… Arguably, the very poor need financial services even more intensely than the non-poor

3.  fortnightly interviews with selected poor households for at least a year, to collect data and commentary on their transactions, especially their financial transactions  diaries completed for 300 households in Bangladesh, India and South Africa: work in Malawi is about to begin Financial diaries

4.  poor households – even the poorest - are usually active money managers, running portfolios of transactions and relationships  most of their transactions take place in the informal market (even where, as in Bangladesh, MFIs are common)  they seek to save as well as to borrow, although opportunities to save are few: moneyguards are used for modest sums, and clubs like ASCAs and ROSCAs are used to build larger sums  loans are the workhorses of poor-owned portfolios: loans usually have to do the work that specialist instruments do in rich portfolios: insurance, building assets for old age, dealing with emergencies and large anticipated expenditures (loans for microenterprises are important for a minority of households) Financial diaries: some key findings

5.  India: I hate having to borrow and I hate having to lend to others. But what can you do? You can’t run life without borrowing. It’s not possible for people like us.  Bangladesh: How do we keep track of all these transactions? That’s easy. This stuff burns itself into your memory. It keeps you awake at night.  South Africa: I would do anything to avoid failing to pay into my three stokvels* each week. I would die of shame. I might as well die – how would I survive without them? Some comments from diarists * A stokvel is a kind of ASCA, used to build lump sums for consumption use and to set aside cash for funerals

6. Lipi: found that the open passbook savings account allowed her to manage day-to-day spending  Lipi saved a little every week into her Grameen passbook savings  and withdrew regularly to meet a wide range of everyday needs:  food shortfalls; school fees; short-term loans to others; making her own Grameen loan repayments and GPS deposits; helping to buy gold earrings; buying bamboo to make mats for sale; doctor’s fees for her son  the service has helped her build up over $100 in a the GPS long-term savings account

7. Mahenoor: used her Grameen loans to stabilise her household rather than start or run a business  We watched as Mahenoor took 6 loans or loan ‘top-ups’ from Grameen  she spent the first on food-stocks; the next paid for her father-in-law’s funeral; with the third they paid off an expensive older loan; next they bought food-stocks again; the fifth was used to buy medicine for her husband; the last paid a year’s school fees for the two boys

8. References for the research into the financial behaviour of poor people see www.financialdiaries.com for Grameen II: see their website www.grameen-info.org/ and look for the MicroSave series of ‘Grameen II Briefing Notes’ also available on the MicroSave website www.microsave.org