Quick Microsavings Tour in Foreign Policy

A recent op-ed in the Boston Globe argues that microlending "doesn't actually do much to fight poverty" and that it may be time to "think macro rather than micro." Maybe the hype surrounding microcredit as a panacea for everything from poverty to discrimination is undeserved. But debunking the whole bottom-up, micro approach on the basis of two unpublished papers is not just premature, but dangerous. Macro, trickle-down development policies have rather effectively kept billions of people poor for decades. In comparison, the microfinance field is young, evolving, and ripe with innovation. Lending to the poor is just one facet of microfinance. And helping the poor save, before or along with providing credit, might be the missing piece to help solve the poverty puzzle.

That's from an article in Foreign Policy by Shweta Banerjee. Leaving aside some of the peculiar logic---macro policy changes actually have lifted hundreds of millions of people out of poverty in India and China---this article takes the reader on an excellent whistle-stop tour of microsavings programs in developing countries. Highly recommended.For more on the World Council of Credit Unions MatchSavings program in Mexico, see this paper by Banerjee and Jamie Zimmerman. Or watch this:As a small donor, MatchSavings is the kind of program I could get excited about, a way to support the delivery of financial services to poor people---and a way of getting money to them without deciding how they should use it---without putting them in debt. One import question that Banerjee does not answer is how poor the beneficiaries are. My impression is that credit unions in developing countries today tend not to cater to those below the poverty line.