The poor in the developed world need access to financial services too

November 5, 2013

In an article that ran in the Times on October 28 (“Microcredit for Americans“), Jonathan Morduch made a bold statement, one we were glad to hear:

Families in rural Africa are more like U.S. families than everyone wants to believe,” said Jonathan J. Morduch, the executive director of the Financial Access Initiative at New York University, who has studied microcredit and is taking a close look at the financial lives of low- and moderate-income Americans. “The hidden inequality in America is about fundamental security, the ability to plan.”

Similarly, the article mentions many more ways in which low-income families in the developing world are not that different from those in the United States—few options for credit, often at exorbitant rates; unpredictable and unstable incomes; little or no safety net; a desire to save for the future but unsure of how to when income does not cover the bills. Lack of documentation can be a significant barrier, whether property titles or collateral or credit history.

Security does not come with just a loan or credit. Anywhere they are in the world, be it a hypermodern city or a rural village, the poor globally need a full suite of services – credit, savings, insurance and pensions to build the stability that allows families to prosper.