No, I’m not saying that bankers are pigs!
I’m reading One Day in Life by Manlio Argueta right now. It’s set in rural El Salvador and one thing that has caught my attention is a conversation between Lupe and her husband José. José says, “You know Lupe, these pigs are a lot of grief and the money we get for them doesn’t even cover their feed.” Lupe explains, “The pigs have been our savings for gifts for the children at Christmas. That’s why I always keep a little herd, so even though they’re a lot of work we always make a little something selling them… These pigs are sure are enough to drive you crazy, but they’re our only little hope for when the children ask for something that we can’t deny them.”
Before starting my book-from-every-country project, I hadn’t ever thought about the problems that lack of bank access can pose for the very poor. How do you save for the future without a bank? In Lupe’s case, her bank account takes the form of pigs, even though she may lose money in the process. It’s not just El Salvador where livestock are a form of savings. In Vanuatu pigs are practically a form of currency and are an important status symbol (learned from Getting Stoned with Savages). Cattle seem to play a similar role in Botswana (Learned from Far and Beyon’).
When I traveled in Ecuador a few years ago, I noticed a surprising number of houses under construction, though little current construction seemed to be going on. I wondered whether perhaps it was a sign of economic gains that so many people were building new, larger houses. I never quite figured it out. Then a year ago I read Poor Economics, (a fascinating book book that I highly recommend!) and learned that rather than saving up and building a house all at once, many poorer people build onto their houses a few bricks at a time, whenever they have a bit of spare money to invest.
Poor Economics also taught me about groups of people coming together and acting as a system for saving to make larger purchases. Essentially, the group meets periodically and each member of the group is required to put in a certain amount of money each week or month. Then the total collection is then given to one of the members on a rotating basis. This system has the added benefit of being a social network, as well as an economic one.
I’m fascinated by the creativity and variety of the solutions that people have found for the universal problem of how to save for the future. Of course, most of these systems have some drawbacks. What if your pig dies? What if your savings group disbands before its your turn to get the money?
Technology is opening up new solutions, in particular, cell phone banking which is accessible to many more people than traditional banking. M-Pesa, a cell phone banking system in Kenya, had 17 million accounts as of 2012, more than one-third the total population of Kenya! This article from the BBC is a few years old, but gives a nice overview: http://www.bbc.co.uk/news/business-11793290. There are all sorts of potential benefits, including reduced opportunity for corruption, protection from theft, and reliability.
I never thought that my book-from-every-country project would teach me so much about banking!