Thank you for making us aware of the purchase of six Opportunity International banks to My Bucks On reading the memos these are my conclusion. My Bucks has three years to hide under the Opportunity brand and promises to meet Smart Campaign standards within five years. Opportunity International is a Christian based organization committed to improving the lot of the poor; My Bucks according to your piece has its roots in payday lending and maximizing profits for investors. Then there is the issue of the lack of transparency of My Bucks operations. Will they meet the Smart Campaign standards in five years? Let's hold our breath but miracles do happen. The promise of all this is that My Bucks will reach borrowers by the many millions not the 700,000 the Opportunity Banks by doing micro lending profitably. This may or may not happen, but at what cost to the borrowers? I remember that Catholic Relief Services got out of the micro lending business in 2005 concluding that putting people in debt and charging them for the privilege was inconsistent with their Catholic principles. CRS has since become a major player in the Savings Group movement. Of course Compartamos started as a Catholic non-profit in Mexico and according to what I heard recently in Baja California Compartamos is using the same strong armed collection strategy as PayDay lending in the USA with interest compounded each time the loan is rolled over. Like you, Chuck, I got into the microcredit business in its infancy when our commitment was to the poor - although we were charging a flat 24% or 36% on the loans which, although high, seems paltry compared to PayDay loans.
Of course there is an alternative to this distressing trend, distressing especially for those of us who were there from the start. Let's take the statistics form Opportunity's Kenya Bank with its 410,285 savers and 73,337 borrowers and compare it with the Oxfam America/Freedom from Hunger Saving for Change program in Mali with its 450,000 Savings Group members with around 300,000 of these current borrowers. All are women with three quarters living at the $1.25 a day level. These groups manage and largely distribute $10,000,000 every year with a return on savings of about 40% distributed to the members by each group according to how much each saved. All this was accomplished with a team of 20 trainers between 2005 and 2006, 85 trainers between 2007 and 2008 and 207 trainers between 2008 and 2011 with half that number in 2012 and about 20 thereafter. The total cost - around $8,000,000. According to reports (this needs to be confirmed) most all of these groups are still saving and lending and groups are self-replicating on their own. An MFI would require a full time permanent staff of 1,000 to 1,500 or more to reach this same number.
Makes you think about what is the most viable path to serving the poor - through extracting profits off the backs of the poor or returning substantial savings to the poor. Are Savings Groups the perfect solution - of course not. Do Savings Groups catapult the poor out of poverty no but neither does micro-finance with those benefiting most those who were furthest ahead when they took out their first loan. Savings Groups do, however, mitigate the uncertainty of living on the edge of survival for some 12 million worldwide while reaching a population more rural and far poorer than microfinance.
For more on Savings Groups see www.intheirownhands.com
Jeff
jaashe@aol.com
From: Chuck Waterfield chuck.waterfield@gmail.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com>
To: MFP <microfinancepractice@yahoogroups.com>
Sent: Tue, Jun 21, 2016 9:36 am
Subject: [MFP] Controversial blogs on Opportunity and MyBucks partnership
Posted by: jaashe@aol.com
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