Arya Iranpour, is the Communications Officer for Trickle Up
Last week’s Cashless Conversations panel on the meaning of financial inclusion briefly touched on hope, a concept often overlooked and underrepresented, but nonetheless important in breaking the cycle of poverty and especially true when working with the poorest and most vulnerable. As Ester Duflo explains, we need to understand the incredible psychological strain the poorest face on a daily basis. They must forgo even the most basic of opportunities with potentially large benefits for fear of losing the little they already possess. They live on the margin, and make decisions based on the day-to-day rather than thinking of the long-term implications. Ms. Duflo goes on to show that if provided “…with the mental space to think about more than just scraping by” their mental health dramatically improves and the rates of depression are cut sharply.
Is that a good enough reason to work with those who live in conditions of ultrapoverty? As Trickle Up’s Jo Sanson suggests, though working with this population requires more effort from the development community (both in terms of resources, but also the true commitment to finding the poorest of the poor), when change does happen it tends to be more significant. And this change is not just seen in the metrics surrounding health, nutrition and starting viable businesses. “It might sound corny, but the importance of hope and motivation cannot be underestimated for people whose circumstances have long beaten down these attributes.”
So, when we talk about financial inclusion, hope shouldn’t get lost in the numbers. After all, having hope enables you to know where you want to go. It is the first step to planning how exactly you are going to get there, regardless of the money in your pocket.
Sources:
The Economist, “Hope Springs a Trap” May 12th, 2012 http://www.economist.com/node/21554506
Sanson, Jo. “The Poverty Paradox,” Monthly Developments. September 2012 / Vol 30 / Issue 9 http://www.trickleup.org/media/publications/povertyparadox/The-Poverty-Paradox.cfm
Categories: MasterCard in the Community
Tags: Cashless Conversation, Financial inclusion, Hope, Trickle Up, ultrapoverty, Unbanked, Underserved
3 Comments
In addition to not getting lost in the numbers, there’s another, more important, caution. Namely, not to get caught in the trap of defining Financial Inclusion solely in terms of forcing non-traditional consumers into formal relationships with traditional banks. The countries that are experiencing the most success with financial inclusion are recognizing that banks cannot or will not reach out to consumers currently without bank accounts. They also recognize that bank accounts are a fairly mediocre commodity and can be provided through innovative relationships with retail shopkeepers as agents and correspondents, facilitated by mobile telephony.
A terrific post Arya! I work at MasterCard managing our strategy of how to use our capabilities to solve government needs. This year I have been traveling around the world talking with governments and partners to understand better how we can play a role in addressing the very population you mentioned. Hope is indeed not discussed as often as it should be but I do not believe it is underestimated. The solution of providing hope is a significant challenge with billions financially excluded – but it’s exciting to see the innovation and commitment that is driving toward providing the basic need of financial services. From mobile solutions to agent banking models, new ideas are emerging all the time. While traveling, I also have had the pleasure of talking with many “financially excluded” people in places like Colombia, Mexico, India, Nigeria and South Africa. Their stories are compelling and certainly motivate us to develop solutions that create hope. Thanks again for your post!
Thank you Jim and Brandt for your comments!
Jim, I agree, traditional consumer relationships do not necessarily work when in comes to ensuring financial inclusion, especially when working with the ultrapoor. For example, Trickle Up implements our program through local partner organization who better understand local traditions and the “lay of the land”, and can therefore provide participants with the most appropriate solution to their individual and community needs.