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Learning How to Schmooze

Tuesday, May 8, 2012
Written by Brian Gately

This past Wednesday night WAM-NY sponsored an event that wasn't directly related to microfinance, per se, but was especially, especially helpful in these times of job scarcity.   For those looking to get into microfinance, the points covered in the presentation were extremely helpful. 

Our special guest speaker was Connie Thanasaoulis-Cerrachio, a career coach and co-founder of SixFigureStart.

The night's topic was "Schmooze or Lose:  Advanced Networking Strategies".    Or as she joked, her blog is entitled "True Confessions of a Corporate Recruiter".   Her approach was not philosophical but very tactical.

Connie worked for Citibank for 15 years and also teaches Professional Development at Columbia University's School of International and Public Affairs (SIPA).   She also was a corporate recruiter at Merrill Lynch and Warner-Lambert (Pfizer) and is a career columnist for CNBC.

So what did she have to say?   Fascinating stuff!

For instance, just to pick some highlights from my notes:
there is a hidden job market out there--before a job is even posted often it is filled by a candidate via word-of-mouth or recommendations;  recruiters like many of us want to do things the easy way and why go to full blown recruiting when you can just fill a job with someone who is readily available and qualified.   That is how she herself got into the recruiting business, via a word-of-mouth reference from a mentor. So you need to network to find out about these hidden opportunities
Women need to be more assertive (need to "step it up") in job interviews and in salary reviews.  Men, less so, since we tend to be assertive anyway.  Too often, women sell themselves short
Concerning salary reviews/performance evaluations, you need to prepare both yourself and your boss.  Strategize and be ready.
Women and perhaps shy men take the first "no" as being final.   Connie asked a colleague how did they have such great success?   They said, well they don't accept "no" until they hear it 7 times
If people don't get back to you, it's not because of you
She has a friend who started www.getraised.com.  It's now a free service and can be very helpful for you to find out how much you're worth and what is the best time of day, the best way to get a raise.  It works.
You need to network with friends, long lost acquaintances, school and work buddies.  You really don't know who others know, and sometimes the connection can be very, very helpful
Networking is based on knowing, liking, and trusting.   Not using.   Remind  yourself in Outlook or somewhere to network at least once a month.  Focusing on what you can do for other people and how you can be helpful is the key.  Also so is doing research, and following up.   LinkedIn is beautiful but can be deceiving.  You need to be real, and be yourself
It's wonderful to have a mentor.  You, however, need to run the relationship.  Make sure to thank people for advice received and keep in communication with them.
Never eat lunch alone...network
Connie likes movies and made references to movies during her talk
You need to be able to give your pitch, your story, out in a concise, clear way, even if awakened at 4 a.m.  (Well, I might not make it here...)

 

 

 

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Connie had her PowerPoint sent out to all the audience. I've very rarely seen a speaker follow up on a promise like this. I was impressed.

 

Connie has a lot of free and interesting stuff on her website which is: www.sixfigurestart.com

* The views expressed in this article are those of the author and may not necessarily represent those of the MFCNY

BASIX, Belly of the Beast

Friday, March 16, 2012
Written by Brian Gately
Review of Livelihood Microfinance from BASIX India Chairman Vijay Mahajan

Last night at Morgan Stanley near Times Square was fascinating.  Our club, Microfinance Club of NY, hosted Vijay Mahajan, the chairman of the Indian organization, BASIX.   It was fascinating not in an ordinary way, but in the special way, to see how an organization is coming back after having its net worth wiped out by political and economic events, and how it is managing to do good in spite of these adversities.

Vijay came from one beast's belly (India, where microfinance is big but beleaguered, to another beast's belly, right here in good ol' NYC.  He's looking for funding opportunities, among other things.

We had a nearly full house last night and what Vijay had to say had us all very interested.  He explained the thinking behind the BASIX strategy and its success story. 

Bryan Wagnerwas our host, of Morgan Stanley.  (Bryan is also a board member of Neighborhood Trust Federal Credit Union in Washington Heights, an MFI right here in NYC.)

First of all, what is BASIX? 

BASIX Social Enterprise Groupin India now has over 1.5 million clients, over 90% being rural poor households and about 10% urban slum dwellers. It has lost over 2 million clients due to the Indian microfinance crisis but may still survive a mass default double its net worth, because it pursued a strategy that focused on livelihood promotion and not just micro-credit.  BASIX has developed a successful line of livelihood promotion packages.   

Here is more on BASIX, from its web site: 

The Holding Company of the BASIX Group is called Bhartiya Samruddhi Investments and Consulting Services (BASICS Ltd.) which started operations in 1996 as India’s first “new generation livelihood promotion institution”. It set up two fund based companies – Bhartiya Samruddhi Finance Ltd, a micro-finance NBFC in 1996 and Krishna Bhima Samruddhi Local Area Bank Ltd in 2001. Both were among the first in class.  

BASICS Ltd also started providing fee-based business right from the outset by offering consulting services in microfinance and livelihood promotion,  training, HRD and institutional development  (ID) and  information technology (IT) applications for microfinance and livelihoods.

Indian Grameen Services, Section 25 not for profit company forms the research and development arm of BASIX. Besides carrying out research and development in the area of livelihood promotion, it also designs and develops financial products for extending credit, evolving distribution channels for delivery of its services and developing necessary systems for service delivery such as accounting and MIS.

Vijay is also the chair of the Executive Committee for CGAP, the Consultative Group to Assist the Poor, a part of the World Bank.

Our moderator was Duncan Goldie-Scot, director, Microfinance Club of NY.  He pioneered the use of mobile payments in microfinance institutions in East Africa, through his not-for-profit company Mobile Microfinance Ltd.  He co-founded and is now a director of Musoni BV, a new MFI operating in Kenya.  It is the first MFI that is 100% cashless: all disbursements and repayments use mobile payment services such as M-PESA.

Here are some photos an extracts from my notes of last night:

Times Square last night...Morgan Stanley, the venue, is just up the street.
Here it is, right on Broadway between 47th and 48th Streets. We were on the 4th floor.
Patti Darwin (left) and Archana Shah, both of Morgan Stanley (Archana is also with Wam) help check people in. I think I found the slowest subway in town and arrived 15 minutes late.
Vijay Mahajan
The place was packed.
There were cookies and Cokes in back.
Let's start out with the bad news first. There were some greedy MFIs in India that caused the government to (over)react. Some MFIs were getting over 9% return on assets. (Banks get somewhere between 0.5 and 1.5% return on assets, as a comparison.) So BASIX got hit with adverse political action, as well as being affected by the economic downturn of 2008 and subsequently. The man on the left is Duncan Goldie-Scot, our moderator.
Here's a better view of him.
More info on BASIX. Much of it has to due with agriculture and helping farmers use less fertilizer and get more yield, and aggregate their selling.
More on the ag side.
Also a project is to work with smaller banks.
In fact, to have a bank in each village.
After the talk, people came right up to engage the speaker and moderator.
There was quite a line to talk to Vijay.
Earlier Darline (left) and Asad (right) were networking.
Last but not least, our host was Morgan Stanley, here represented by Bryan Wagner, Executive Director (center). As I mentioned above Bryan is a board member of Neighborhood Trust Federal Credit Union. (In 1999 on a tour I was helping to conduct at the credit union, an official from the credit union told us Dominican immigrants had actually dug up money they'd buried in Central Park to deposit in the credit union since now they had a depository.)
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Here's more from my notes about Vijay's talk:

Vijay mentioned that to be successful you have to go beyond the world of loans.  He differs somewhat with his colleague and friend Muhammad Yunus on this.  He believes Grameen is too stuck on lending.  Vijay said we don't need to replicate but to innovate.

Microcredit, if you're above the poverty line, helps you get richer.  If you are below the poverty line, it can help you get poorer.  Lots of damage has been done and we need to do better.   He and his staff, when they commissioned a study on how microfinance is helping their clients, were at first in denial when they realized that things weren't all that rosy, especially for the poorer ones.   Once they got over the denial part, they worked on offering more than just loans, to include insurance, agricultural advice, advice on managing risk.   He said that microcredit without microinsurance is a sin.   The $150,000 they have paid out in insurance claims has meant a lot more than what they have given out in loans.

He asked, "How do you conduct a meeting when no one is literate?  How do you keep books?"    He is a fan of regulation, to a certain point.   Every financial transaction with the poor, he pointed out, begins and ends with cash.  All require cash in and cash out.

In ag extension work it's important to test the soil, which is cheap and easy to do and can save very much on fertilizer.

India has a problem in that it's sexier for young people, even if they have to be manual laborers, to migrate from the farm to the city.  So, their approach is "go if you must, but get some basic training, so you can earn more than just the minimum".

The median age in India is 26.   In 18 years, 2030, these kids will grow up to either be a positive or negative influence on the country, depending on what we do now.   "Our demographic divide will become a demographic disaster otherwise", is what Vijay said.

Poor people understand crop insurance.  Some people think of insurance as long term savings, but it is not.  It is risk management.

When I asked him about how CGAP is helping their efforts in India, he said that CGAP is knowledge-based, but is not regulatory nor the police.  You can write papers but politicians are slow to respond. 

He spoke some about BASIX's financial crisis.  It has no net worth.  They are working with 19 banks...April 2 is a crucial date.   He said there's a lot in the microfinance ecologies but the other players are slow to help out the key players when things go wrong.  This shouldn't be.

He compared Grameen to Gandhi.   They are both minimalist.  But if Gandhi were still around, he would have evolved.  Grameen needs to evolve.  Things change.

And that was our evening!

* The views expressed in this article are those of the author and may not necessarily represent those of the MFCNY

Sources & Consequences of Microfinance

Friday, March 9, 2012
Written by Brian Gately
Review of Sources & Consequences of Microfinance: A Discussion with David Roodman and Microfinance Experts

Last night was super!  It was a double wammy, with both the Microfinance Club of New York and Women Advancing Microfinance, the two clubs I belong to, sponsoring a fascinating standing-room only evening where we got to hear experts speak on the status of microfinance today.

Our host was Moody's Corporation, their headquarters at 7 World Trade Center, downtown Manhattan.   Jody Rasch, Senior Vice President, Social Performance Group of Moody's started us off.

Our first speaker was David Roodman, the author of Due Diligence, his book on microfinance which confronts bottom-line questions about the impacts of microfinance and how it should be supported.  The book was a collaborative effort.  He wrote it via the Microfinance Open Book Blog, where he shared questions, discoveries, and draft chapters.

Other speakers included CJ Juhasz who is the Chief Investment Officer of Women's World Banking Asset Management, a subsidiary of WWB, and has $30MM in investment capital.   Prior to her current position CJ worked for Deutsche Bank and Merrill Lynch.   Her bio says that she began her career as a military police platoon leader in the US Army.  (Never would've guessed!)   She also served on our club's (MFNCY) board as Treasurer from 2006-10.  She's a graduate of West Point and has an MBA from Stanford.

Another speaker was Camilla Nestor of the Grameen Foundation.  Before joining Grameen she worked for the same place my wife Louisa is working, Citibank.  Camilla worked in the bank's Structured Corporate Finance Department.  Before Citi, Camilla worked in the Balkans and elsewhere in microfinance.   She's a professor at Columbia University's School of International & Public Affairs (SIPA).

Chuck Waterfieldalso spoke.  He is CEO of MF Transparency and has 25 years' experience in microfinance including starting MFIs in Haiti and Bolivia.  He also worked for CARE  International.   He founded Microfinance Transparency in 2008 to promote transparent pricing in the global microfinance industry.  He is well known for having developed Microfin, the most popular financial planning software in the microfinance industry.   He is also on the faculty at SIPA.   He had been on the faculty of the Boulder Microfinance Training Program and at Southern New Hampshire University's Microenterprise Development Institute for 8 years.  (I, too, was at the Boulder Instititute in 1995 as a student, and then as a visiting professor in 1996.  And also I taught credit union subjects for a period of years on a semi-annual basis at Southern New Hampshire University through a separate program.)

Paul DiLeowas our moderator.   Paul has pioneered the mobilization of private capital for the microfinance industry.  He headed Shorebank's international business for 5 years. and launched, in 2003, the Gray Ghost Microfinance Fund, the first private, for-profit microfinance fund, which he continues to manage.   He started his career at the US Treasury and the New York Fed, and has a masters from Boston University.

 

Here are some photos and extracts from my notes from last night.

The venue, Moody's. Downtown New York.
View from the 20th Floor of Moody's, where our session was, looking at the WTC memorial pools.
Bronze plaque just outside our meeting room. "Credit: Man's Confidence In Man."
Clara Lipson, our club's (MFCNY) co-secretary, helps sign people in. She is also on the steering committee for WAM and has worked in microfinance in Nepal, Mongolia, and Malawi, as well as many other places. She is also on the advisory committee of Pro Mujer.
Before we started it was a good time to network.
Jody Rasch, a MFCNY member, was our host and kicked the evening off. He explained that Moody’s Investor Services believes the microfinance industry needs a methodology for evaluating how MFIs execute their social mission. “We need to look at how microfinance institutions operate, not just at their financials.” Jody Rasch is Senior Vice President of analytical Data Management at Moody’s Investor Services.
Our evening's agenda.
The meeting room was filled to over-capacity. The event went over its allotted time a little since the topic was so interesting.
David Roodman started, explaining some about his book, Due Diligence.
Better view of the book.
In the history of microfinance section he mentions both Friedrich Raiffeisen, the man who had the original idea of credit unions (Germany) and Desjardins, the Quebecker who brought the idea to the USA just over 100 years ago.
About statistics, he made the point that unless you do a randomized trial, your research can be very misleading.
He went into his three "development" themes. (More on this below.)
His major point is that there is TOO MUCH capital in microfinance. This slide and the subsequent one about India (even more so) show a precipitous drop-off on the number of microfinance loans after ca. 2008. (The above slide de is for Morocco, Nicaragua and Bosnia. The next one, for India, showed an even starker fall-off.)
Our next speaker was CJ Juhasz. She was grateful to Roodman for having taken the trouble to look at the microfinance situation so much in depth, in his book. One of her points was that women are very, very important to microfinance. We need more data collection to hold institutions accountable, more products (namely savings and insurance, education, home improvement loans...). Building leadership and good governance is very important.
Camilla Nestor was the next speaker. For too long, she points out, credit has been the only tool used--and that's a problem. Grameen is now starting to address more client needs, including a mobile phone application. (More on this below.) b
Chuck Waterfield was next. He spoke about balancing impact with profits. He brought up SKS in India and Compartamos in Mexico.
One of Chuck's slides.
Live and learn.
It seems so simple. But...you need to analyze what the reality is in each country.
Short term small dollar amount loans cost more. This is not news. How each country's distribution falls is news, and how each MFI in that country compares to the overall distribution also is.
Per Chuck's graph, only in Mexico, Brazil, Colombia and the Philippines do short term loan interest rates in MFIs surpass 5% a month (60% nominally per year).
One of the conclusions of Chuck's talk.
Compartamos in Mexico was wildly profitable for some. (Not the clients.)
Chuck likes this one.
Our panel, all together.
A better view of Paul DiLeo, left, our moderator. He did a really great job.
There was good interaction among the panelists.
You could tell they were passionate about microfinance.
But there were light-hearted moments, too.
Absolutely.
There was also lively discussion after the Q&A at the end of the session.
They had to, finally, kick us out.
Time to leave. It was a great evening!
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Here are some more extracts from my notes:

Paul DiLeo:  

In his introduction for David Roodman Paul pointed out that microfinance does good and some cases harm.  It didn't deserve the incredible accolades it got at first nor the barbs it got later when it matured.

David Roodman:  

In microfinance there are 4 points of view:  Clients, History, MFIs and Staff, and Academia. 

The core of his book came from recognition of several definitions of successful "development", as: escape from poverty, freedom,  and transformation (Schumpeter's "Creative Destruction")

Microfinance needs to play to its strength.   Clients need more sewing machines and less candy = more microbusinesses started.  Microfinance helps them along this path. 

Microfinance both increases and decreases freedom for clients.  It's not empowering, for example, to be someone's comaker.

He said there is too much capital in microfinance, giving it a provocative role.

CJ Juhasz:  

She countered David's assertion about too much capital by suggesting that yes, maybe, but it's the wrong type.  What we need is smart capital, patient capital. 

We have to look at increasing women's access.  We are getting lazy in identifying profitable clients.   We need to be more rigorous.

Camilla Nestor:

She agreed with CJ.  Credit has been the only tool used--a problem.  [In response to a question from me about Fonkoze, she said thatFonkoze was so impressive to her, and doesn't have this problem of relying too much on credit.  She said that Fonkoze was 7 years ahead of the curve on taking a holistic approach to client needs.] 

Camilla spoke about a new service they have at Grameen Foundation, a Mobile Money Incubator being rolled out in Uganda with the collaboration of CGAP.   This is new.  It's mobile phone money.

Concerning the demand for credit, Camilla said that this goes DOWN when clients have access to checking accounts (demand deposits).  Once mobile payments were introduced, the need for working capital goes down since the business cycle shortens.  They have 30,000 clients now.  It took 1 1/2 years to iron out the wrinkles but lowering the minimum deposit needed really helped the program take off.

They are just now looking at insurance for clients, starting with farmers (ag workers).

Chuck Waterfield:

He spoke, as I said, about balancing impact and profits.  He's got friends--has been involved with at one time--Compartamos.   There is no one price for microfinance.   How does your institution fit on the overall curve for your country?   Short term smaller dollar amount loans cost more. 

His organization looks at responsible pricing.

And that was the evening!   Very interesting.

* The views expressed in this article are those of the author and may not necessarily represent those of the MFCNY

London conference: Surviving the Liquidity Crisis and Ensuring Sustainable Growth Investments in Microfinance

Thursday, August 27, 2009
Written by Clara Lipson

I was invited to attend the London conference on July 8th as a member of the board of the Microfinance Club of New York, courtesy of the organizers Hanson Wade. The sessions and subsequent discussions were very professional and highly information. The event drew 120 participants from European banks (Standard Chartered, a sponsor), microfinance investment funds (Blue Orchard), and MFIs from India and Africa. The speakers were all key microfinance practitioners. Some highlights from the presentations: - Gavin McLean from White & Case noted that the investor base in microfinance is growing due to the social investment sector and the familiarity with microfinance as an asset class is gaining momentum. He also noted that investors are turning away from overly complicated structured products and want less complex investment vehicles. Furthermore, there are changing regulations in the EU that will make it more attractive for investments. For example, there are new capital requirements where originator/sponsor of an instrument must retain 5% sake in the transaction, and securitizations will play an important part in microfinance where most deals are in the US $100 M - $150 M range.

- Nick O’Donohoe, Global Head of Research at JPMorgan noted that benchmarking is key to determining valuations; by knowing your subsector, it can drive a premium or a discount. MFIs have a double bottom line driven by both social and financial objectives and he is skeptical the approach can optimize a risk adjusted return. While the social impact can be measured, the double bottom line may cause higher cost structures while also attracting cheaper funding. IRRs for equity funds is 15-20%. In the emerging markets they are more typically 30-35%. So, there is a need to make a tradeoff. Higher lending rates charged by MFIs vs. traditional banks explains higher margins. The top 45 MFIs charge interest rates of 24.4% on average, (except Comportamos with 68.5%), while emerging markets are at 6.1%. Comparisons also noted, as follows: Operating costs: MFI banks=14%, EM banks= 10.9%. Leverage (equity to asset ratio): Top 45 MFIs=19.4%; EM banks=10.9%. Lower default rates of MFIs (due to frequent customer contact) results in better asset quality. Valuations are determined on price/book value and price/earnings ratios, transaction size (investors pay more for higher stake) and income growth. Projected 2009 valuations for EM banks average 18x earnings, as compared with LIFI’s 14x earnings. LIFIs have outperformed traditional banks: Since Sept. 2008, LIFI Index stands at 120 vs. 66 for traditional banks.

- Christian Speckhardt of responsAbility (Zurich) has US$800 million under management, mostly in MF debt and equity; invested in 200 MFIs globally. Cost of debt has not increased much, although credit margins have widened in the fall of 2008. FX volatility can have great impact on cost of debt if not hedged. Refinancing rates are expected to be low. Many MIVs are sitting on cash (20-25%), and there are still inflows into MIVs, and can invest in 350 MFIs at present. While there are some US$30 million in redemptions, some US$100 has flowed into the fund. He noted that if MIVs can be defined as asset class, then more money will flow in.

- Chuck Waterfield, CEO & Founder of Transparency noted that some activities are now blurring the line between moneylending and microfinance. Non-transparent pricing creates a money imperfection, impeding competition and consumer choice. Should a $100 that costs $200 to operate be made to a microfinance borrower? He cited the President Obama initiative that calls for simple, transparent and accurate information for borrowers/consumers.

- David Fitzherbert, MD of Grassroots Capital Management noted the firm invests strictly in MF equity with exit projections of at least 5-7 years. They are invested in 45 MFIs in 25 countries. To date, they have undertaken 13 exits with an average return of 30% (based on Grassroots’ calculations). Their IRR target is 25% at MFI level with exit valuations of 2.5 x book value. Basic IRR model is driven by growth rate and exit assumptions; and operating costs. Also, social performance is critical to Grassroots and they monitor social indicators (e.g. running water, construction materials of house, access to sanitation. Further noted that investors want to see measurable social returns. Discussion: The MFI industry has a balance sheet of US$200 billion, which will grow. There will be more IPOs; commercial banks will start investing in MFIs (MIVs) as will other financial players. Reinsurance players are interested in MF, they are already selling insurance products. Nick noted that concern for investors is whether industry can grow and credit quality as well as political risk addressed to mitigate investor concerns. Xavier noted tat valuations have not gone down since the financial crisis started, but credit quality and incomes at MFIs are declining. There are pools of money which are interested in investing in MFIs. Valuations are still good in Tier 2 & Tier 3. While no dividends are paid, MFIs can generate cash in years 5-7; but they should re-invest in accordance with their social mission. The conference also afforded good opportunities to speak with other participants, such as Brian Cox of MFX Solutions who noted that the firm has secured $13 million to manage global currency risk for the microfinance industry, using modern hedging instruments. I also spoke with Inci Yalman and Hande Yazman of Stand Chartered, which is actively supportive of microfinance, adding value to both investors and MFIs, especially given its reach in developing markets. Ms. Yalman and Yazman would like to connect with the MFCNY for possible future collaboration. The organizers will be holding Microfinance for Institutional Investors conference in Washington DC on September 21-23, 2009. Clara Lipson Indepedent Consultant and Board Member, Microfinance Club of NY

Note: More information on conference available at: http://www.hansonwade.com/events/investments-in-microfinance/index.shtml

The truth about living on $2 a day

Friday, July 10, 2009
Written by Caitlin Weaver

Caitlin Weaver is the Deputy Managing Director of the Financial Access Initiative.

Billions of people around the world live on less than $2 a day—an amount most of us could likely dig out of our couch cushions. It’s hard to imagine what it would be like to scrape by on so small an income, and easy to assume that it would be nearly impossible to put food on the table every day, much less save and plan for the future.

In 1999 Stuart Rutherford began research in Bangladesh that challenged this assumption. Rutherford met with families in villages and slums every two weeks over the course of a year and creating detailed “financial diaries” that tracked penny-by-penny how these families managed their money. Orlanda Ruthven and Daryl Collins replicated his approach in India and South Africa.

What Rutherford and others found is that poor families were managing to put food on the table, keep a roof over their heads, plan for medical emergencies, and even save for retirement. His work in Bangladesh, along with the financial diaries from India and South Africa, are featured in the new book Portfolios of the Poor: How the World’s Poor Live on $2 a Day. (Full disclosure: I work for the Financial Access Initiative, led by Jonathan Morduch who is one of the book’s co-authors.)

The stories and data from Portfolios of the Poor offer new thinking about how the world’s poorest communities manage their financial lives. The financial diaries show that the poor are not living hand-to-mouth, but that most of them save and borrow with an eye to the future, and maintain complex financial lives because they are poor, not in spite of it.

The households also demonstrate that being poor isn’t just about living on one or two dollars a day, but about dealing with the fact that these are just averages—on some days you have more and some days much less. Coping with the ups and downs is an overlooked but fundamental challenge for poor households. And above all, it becomes clear that the real tragedy of poverty is not just that the poor have limited resources, but that they lack the financial tools to squeeze all they can from what they have.

The researchers got to know Hamid and Khadeja, a Bangladeshi couple who are active money managers despite their limited income of $70 per month; Nomsa, an elderly South African woman who cares for her four grandchildren on a limited government stipend; and Sandeep from Delhi, an outgoing fellow who uses his huge acquaintanceship to develop a host of informal financial partnerships, borrowing from friends and neighbors.

While many of the households in Portfolios of the Poor use microfinance, the overall evidence from the book suggests that it’s time for new vision for the sector —one that includes microloans for a range of purposes beyond starting or investing in a business. A sample of the households who are customers of Grameen Bank divert half of their business loans to things like putting food on the table, paying down debt, and paying schools fees and medical expenses. The diaries also reveal how households create self-discipline devices (like rule-bound savings clubs) to protect their savings strategies in the face of temptation, an insight that aligns with new research at the overlap of psychology and economics.

Understanding how the poor manage their financial lives provides the foundation upon which to build policy agendas that meaningfully confront persistent inequalities. The insights gained from the financial diaries also provide a starting point for imagining new business models that serve those living on one or two dollars a day. Policymakers and financial institutions should take note: Portfolios of the Poor shows that the poor can and do use financial tools, and that they are willing to pay for them if they are well-designed and delivered.

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