Going to the Barricades for Microsavings Mobilization: A View of the Real Costs from the Trenches

Publication Date: Jul 2003
Published by: MicroBanking Bulletin
Document Type: Journal Article

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Do MFIs give as much importance to microsavings as they give to microcredit?

This paper discusses the feasibility of offering microsavings products by microfinance institutions. The author quotes from a preliminary investigation of the savings structure of 85 credit unions in Guatemala, Bolivia, Ecuador, Romania and the Philippines in 2001 and states that of the 2.4 million savers, 94 percent of had a savings balance of only US$ 33, way below the US$ 500 figure used by many researchers.

• The feasibility of microsavings mobilization rests on two fundamental variables: operating costs and savings volume.
• An indisputable linkage exists between operating efficiency and the economies of scale of volume.
• The only way microsavings services can be offered in a cost-effective way is by capturing the needed volume from other "wealthier" niches of the marketplace.

• The principal volume of savings deposit funding does not come from the poorest of the poor. It comes from "upstream" member-clients who save because they want to save.
• The salary expenses of credit unions are modest in comparison to other MFIs.

• People need and want micro savings services.
• Credit unions have shown that micro-savings mobilization is a financial service that is feasible.