Pundits | Kristoff's Sparking a Savings Revolution

Nicholas Kristoff writes from Nicaragua in Sparking a Savings Revolution via NYTimes

In talking about the importance of savings in poor countries and also lack of access to banking, Nicholas Kristoff emphasizes the importance of savings, while challenging the spending decisions of poor people.

Research suggests that the world’s poorest families (typically the men in those families) spend about 20 percent of their incomes on a combination of alcohol, cigarettes, prostitution, soft drinks and extravagant festivals.

One Nicaragua woman estimates that if a man earns $150 working in the mountains as a day laborer, he spends $50 on alcohol and women, and brings $100 home to support his family.

Socorro Machado says that formerly her family bought a $1.75 bottle of Coke every day. Now just once a week. She saves $5 for herself and $5 for her son, so he can buy a computer.  Consider the impact of spending on Coke in poor countries, if this is the math.

Catholic Relief Services is promoting a savings program, which is not new based on their website.

Kristoff achnowledges the questioning of microloan efficacy in the development world but says he’s clear on the benefits. I see the pushback, too, on microfinance, and we’ll delve into the topic deeply in 2010. Read about No Pago movement in Nicaragua.

When I heard Dr. Yunus speak in NYC Sept. 2010, he agreed that some of the microlenders were charging exhorbitant interest. More to come on this subject. Anne