When it comes to nerding it up on how the world’s poorest actually manage on extremely small incomes, Portfolios of the Poor is a real achievement: a meticulous reconstruction of the entire financial life of several hundred people living on less than $2/day in three developing countries.
I haven’t quite finished it, so this is no review (you can find a good one here.) But it doesn’t take long to zero in on one amazing finding from the research: every poor household they studied had savings of one kind or another. Even the poorest. The instruments may almost always be informal, the sums may be tiny. But for people dealing with income that isn’t just small but also discontinuous and unpredictable, saving is an absolute necessity.
Portfolios of the Poor is yet another part of the mounting indictment on the conceptual muddle in the old-time microcredit movement, and another part of the now burgeoning case to reimagine credit as one part – and far from the most important part – of a much wider microfinance movement where improved access to microsavings mechanisms play the leading role.
Because not everyone needs a loan. But everyone needs a safe place to save.