Every Wednesday, we highlight an article, book or a blog in our “What We’re Reading” series. We feature works that are noteworthy, inspiring, educational or relevant to the work we do at Opportunity. We welcome your comments in the comment field below–tell us what you’re reading, or respond to the piece we’ve highlighted. The following post by Opportunity’s program manager, Annsley Scruton-Wilson, uses a 2009 article in The Economist as the catalyst for an examination of the potential impact of access to financial services for our clients in developing countries…

In late September 2009, The Economist published an article linking the effects of climate change to chronic poverty in the developing world. It indicated: “Poor countries are particularly prone to flooding… climate change is overwhelming the social and other arrangements that in the past allowed countries and people to cope with floods. National budgets can ill afford the cost of improving defenses.” This article underlines the potential impact of changes in weather as well as the need to provide innovative microfinance products to those most affected.

One only has to go as far as Brazil to imagine the effects on a potential client: Lena lived in the busy metropolis of Saõ Paulo. Working as an entrepreneur with her own candy cart, she made enough to get by. Her husband worked odd jobs, and together, they supported three little girls. When the floods came, as they do every year, there are a few scenarios for what might have happened to Lena:

Scenario A:

Because of her limited education, Lena had never learned the benefits of saving with a bank, and she lost all the Brazilian reais that had been tucked into a corner of her mattress. Unfortunately, she had not yet converted her paper money to the plasticized type offered by the government. Without savings, she was forced into prostitution and lost her husband and family.

Scenario B:

Lena was fortunate to be an Opportunity client. Despite her little formal education, she learned about the importance of saving with a bank when she took out a loan for her side business. Not only was her money safe from the gang-members that patrolled her favela, it was spared a quick and watery drowning. By the time that m-banking, or mobile phone banking, was available in Brazil, Lena was able to complete transactions electronically on her phone. Along with other Brazilian women in her poor community, she joined the ranks of wealthy Brazilians who were moving in a cashless, as opposed to a cash-based, society. Through her loan officer, she learned that electronic banking was one of the safest forms of keeping her family alive, especially in the unpredictable changes in weather that continued to hit Saõ Paulo.

Lena, although not an actual client, represents a thousand women like herself who work with Opportunity International. With electronic and cashless banking, clients can get the financial leg up that will make the huge different in this new environment of rapidly changing climates. Opportunity is not looking to just provide a band-aid solution, but they are actually encouraging poor clients to join the cashless society that is occurring all around them. That’s why Opportunity’s work is so vital. Electronic banking products can “waterproof” the life savings of a family and save them from the floods of poverty.

By Annsley Scruton-Wilson, Program Manager