This essay is a selection from the special edition of UnPoverty by Mark Lutz. The new edition has been released in celebration of Opportunity International’s 50th Anniversary, featuring new chapters from leaders throughout Opportunity’s history. To receive a copy, simply make a donation of any size to Opportunity and we’ll send it to you.
The board of Opportunity’s partner Zambuko Trust in Zimbabwe had a special guest one evening. Theresa, her hair gray, her dress modest and traditional, strode to the microphone with her natural confidence. The board chair introduced her as one of Zambuko’s most successful clients.
Theresa began by thanking the board for all the support Zambuko had provided. “Now there is something I want to ask you to do. I want you to become a bank.”
One of the board members spoke up, “Why should we become a bank?” she asked. “Our job is to provide loans to those who can’t get them anywhere else.”
“That’s right,” Theresa responded. “When I was poor and needed money, I tried to go to Barclay’s Bank and ask for a loan. They wouldn’t let me in the door. Now that I am successful, they want me to deposit my savings with them. But I want to deposit my surpluses with you, so they can be used to help people who are struggling just like I used to be.”
With Theresa’s request ringing in my ears, I traveled to Ghana to visit our partner there, Sinapi Aba Trust. I asked the team to take me to the central market in Kumasi to meet some of their clients. While visiting Efia Opoku, who sold vegetables, I noticed a young man holding a tin can and a ledger book approach her. She reached into an apron pocket, pulled out some crumpled bills and put them in his can. He wrote down some numbers next to her name in the ledger.
After he left, I asked Efia about the transaction. She told me that the young man was a “susu” collector. Susu means “plan” in the Twi language. The young man had come to collect her planned savings. He would collect savings from many vendors throughout the market and deposit them all into one account at the bank. He kept track of the totals for each customer in his ledger. At the beginning of the week, when she needed to restock her shelves, she would make a withdrawal and buy more vegetables.
I asked Efia how much she earned in interest on her savings. She stared back at me, not understanding the question. I repeated it, and the translator tried again. Finally, the Sinapi Aba loan officer stepped in to help me out: “Try asking her how much she pays the susu man to collect her savings.”
I asked the question.
She told me she deposited the same amount every working day. Each month the collector would keep one payment as a service fee. She worked six or seven days a week, so she made roughly 25 deposits a month. One of those went to the collector. She was paying 4 percent per month for someone to collect her savings.
I asked Efia why she would pay someone to collect her savings. Wouldn’t she have more if she just took the money home?
“No,” she said, laughing. “If I take the money home, my husband will want some. My relatives will know I have money and ask for some. And I can’t say no to them. By the end of the week, I would have no money left. I couldn’t buy more produce to sell.”
As I left Ghana, I kept thinking about all the “market mamas” giving money each day to the susu collectors. I admired their discipline but worried about what it cost them. Theresa had shown me that successful loan clients needed a place to save their profits. Efia had shown me that market vendors needed a place to save daily and were willing to pay for the privilege. Would it be possible to set up a financial institution that provided both services at the same time? Could we organize a bank around the cash flows of people living in poverty, receiving deposits from those who needed to save every day and lending that money out to those who needed to borrow?
We found the right person to help us test out this idea. Francis Pelekamoyo is one of the most trusted financiers in Malawi, having served as governor of the Central Bank. He wanted to make the financial system work for the people who had been shut out of it. We asked Rodger Voorhies, who had set up the Opportunity partner in Poland, to work with Francis and a team of Malawians and expatriates to set up a bank that provided both savings and loans for people in poverty.
I followed the progress of the Opportunity International Bank of Malawi closely. One of their biggest challenges was establishing the identity of the clients. Malawi had no national identification system, and people living in poverty had no need for driver’s licenses or passports. Francis and Rodger decided on a high-tech solution that had a greater impact on our clients than we imagined—fingerprint readers and smart cards.
Tawendi Chipata best represents the impact of high-touch, high-tech solutions for first-time banking clients. As she approached the Opportunity International Bank of Malawi, Tawendi wondered whether the trip would be worth it. Her former employers, the embassy couple she had served for five years as a domestic servant, had highly recommended that she set up a savings account and deposit the money they had given her as a final bonus. Tawendi doubted that a bank would want to open an account for someone who worked as a domestic servant.
Tawendi’s shoulders sagged under the weight she carried: her husband’s life slowly slipping away as AIDS continued to ravage his body; her three children needing food, clothes and school fees; her need to find a new job to pay for all these expenses.
As she stepped into the entrance of the bank, Tawendi saw the security guard. She looked down at her worn apron covering her old skirt. She wondered if the guard would even let her in the door. Summoning her courage, she threw her shoulders back and stepped into the entryway. The guard stepped in front of her, but instead of blocking the door, he opened it for her, saying, “You are most welcome,” as she stepped inside.
It took a minute for Tawendi’s eyes to adjust from the bright sunlight to the dim lights inside. What she saw then surprised her even more than the guard’s actions—a bank lobby full of people that looked like her—vendors from the market, farmers taking a break from their fields, young women with babies strapped to their backs.
A young woman in a bank uniform appeared at her side. “How can I help you?” she asked.
“Ahh, I have some money that I want to save here,” Tawendi replied. “Do you have an account with us?” the young woman asked.
“No, but the family I used to work for said I should come here and save my money.”
“Oh, I’m glad to hear that. Let me show you how to set up an account with us.”
For the next half hour, the bank officer worked with Tawendi, setting up her new account. Tawendi learned that when she wanted to get money back, she could come to the bank, or she could go to one of the many cash machines located in different parts of the city. She was amazed by the process of giving her fingerprints. She put each finger on a little glass rectangle, and a picture of the little lines on her fingers showed up on a screen. Then they took her picture. She left the building with a plastic card that had the name of the bank, her name, her picture and some numbers on it. She had seen cards like this on billboards but never imagined she would have one for herself. As soon as she got home, she hid it in her kitchen under a sack of cornmeal. “No one will find it there,” she thought.
A few weeks later, Tawendi’s husband succumbed in his fight with AIDS. A few days after the funeral, the brothers of her late husband came to visit. They carried out a practice prescribed in the Old Testament that had become corrupted over time: When a married man dies, his brothers are supposed to take responsibility to care for his wife and children. In more recent times, especially in urban areas, brothers come to take responsibility for their deceased brother’s assets but leave the wife and children to fend for themselves.
The brothers came and took almost all that Tawendi and her husband had owned—the mat that she slept on, the few pieces of furniture, the food stored away. One brother picked up the sack of cornmeal and found the bank card underneath. Tawendi looked on in shock as he picked it up and put it in his pocket.
A few days later, one of the brothers returned. He gave Tawendi her bank card. “We tried to use it, but they said that our fingerprints did not match the card and that only you could use it. We need you to come to the bank with us so we can have the money.” Tawendi refused. An argument ensued, but she held her ground. When the brother finally left, Tawendi rushed to the bank with her card. She came to the teller, put her fingers on the scanner and received access to the account. She was relieved to find that the full amount she had deposited was still there. She withdrew a small amount to buy food.
A few months later, Tawendi was invited to a kitchen circle, a gathering of women in one woman’s kitchen. They were celebrating a young woman who would soon get married. The older women passed on their advice to the young bride-to-be. When it came to Tawendi’s turn, she pulled out her card from the Opportunity International Bank of Malawi and said, “Get yourself an account at this bank. It’s the only place where you can be sure your money will be safe.” Tawendi then told them how the bank had protected her savings when her brothers-in-law tried to take it.
The young bride took Tawendi’s advice, as did many of the other women from the kitchen circle. Soon women from all parts of Tawendi’s neighborhood had set up their own savings accounts.
Tawendi’s experience matched that of many others in Malawi living in similar circumstances. Having a safe place to save their money, and having access to that money, made a huge difference in their ability to cope with life’s challenges. They could save up for a wedding or their children’s education. They could set money aside for medical expenses or repairs on their home. They could establish a relationship with a bank that would provide them with credit to start or expand an income-generating venture.
As Tawendi’s story echoed around the kitchen circles of Malawi, the lobby of the bank filled to the bursting point every open hour, crowded with people coming to open new accounts. The bank’s management team got creative in finding low-cost ways to expand, first building branch offices using discarded shipping containers, then setting up mobile branches (trucks with ATMs attached) that would serve rural areas. After seven years of operations, the bank had 216,000 savers who had deposited $32 million. Those deposits supported loans of $28 million to more than 45,000 active borrowers. Opportunity International Bank of Malawi proved that people like Tawendi were good savers and borrowers and could form the backbone of a thriving bank.
When Opportunity International Bank started operations in Malawi, it was the only bank in the country serving this market. Now there are 17 banks in the country competing to provide low-cost, sustainable services to those with very low incomes.
Tawendi’s example inspired us as we set up banks in Africa, Asia,
Eastern Europe and Latin America. This inspiration also has been passed down in my own family. I was recently babysitting my grandson, and he told me about things he would like to buy in the future. I asked him how he would pay for them. He told me he was saving his money in a bank. He then ran to his room and brought back a replica of the Opportunity International Bank of Malawi mobile branch truck, something I had given his mother years ago.
On the back of the truck is a picture of a woman smiling and holding a bank card in the same way that Tawendi held up her card as she told her kitchen circle how important it is to have a safe place to save your money.
Opportunity has been relentless in seeking scale and impact, pioneering new solutions relevant to the needs we hear from those living in poverty and that address the massive size of the problem. Building banks where no one else was willing to build was a pioneering solution, leading others to follow suit. Eventually, it became apparent that spending philanthropic dollars on meeting banking regulations and capital requirements was no longer the most strategic use of those funds. While retaining active stakes in many of the institutions we created, we launched an aggressive effort to recruit, equip and support local banks and microfinance institutions to partner with us. Today, Opportunity provides the training, expertise and guarantees to our bank partners, while they provide the loans and savings accounts.
Through our new asset-light, partner-heavy model, we now work with 72 local financial institutions that released $2.3 billion to the poor in 2020, leveraging about 10 times the amount of our own capital. We don’t have to build the tracks anymore, but we need to make sure we’re reaching the neediest people and communities. By focusing on finance, training and support solutions for groups still unable to earn a sustainable livelihood for their families, we make a way for partners to come along on this risky journey. And risk is a constant challenge to the poor and those who serve them.
Even with access to loans and a small nest egg in place, these hardworking and disciplined savers remained vulnerable to the typical shocks of life—illness, accidents, natural disasters and a host of other emergencies. Any one of these could entirely wipe out the progress they had made in their exit from poverty. Though they may not have understood how insurance works, or ever heard the term, they knew they needed it. But they wanted something more reliable than counting on their neighbor for money to buy medicine for a sick child in exchange for the chicken and vegetables they had given that neighbor when a thief broke in and stole all their food. Bartering and exchanging favors was a necessary way of life, but along with access to loans and savings accounts, we discovered that financial inclusion for the poor includes insurance.