Extreme Microfinance: Savings Groups on the Financial Frontier

Microfinance reaches a slim fraction of people living at the base of the economic pyramid and where it does reach them, services are often clumsy and irrelevant. In many cases, microcredit has merely replaced the high interest rates of moneylenders with slightly lower rates and more rigid demands on lenders’ time. Yet families continue to survive by means of elegant homespun they hide money, wear money, bury money, hand it to neighbors, or convert it to gold, bricks and cattle. They borrow it from friends, neighbors and moneylenders. While these strategies brim with creativity, in the end, they keep families in perpetual debt.Savings groups have recently surfaced as a potent competitor to both microcredit and the moneylender. In savings groups, women make regular deposits into a group fund, and then borrow from that fund. Savings groups represent an organized market for financial services and serve as a powerful catalyst for other kinds of social development. This book examines the formation and impact of savings groups, their limits and flaws, and their economic and social potential. With case studies from around the world, Extreme Microfinance reveals a financial landscape filled with alternatives to predatory and ineffective lending systems.