Melinda Gates: Helping the Poor Save Money

Earlier this year I met with a group of women in Matela, a small farming village in Tanzania, and we discussed something that's been on all of our minds lately: finding a safe place to save money. The women said their babies were getting sick from malaria, and they could afford the drugs if they saved money over time—but with no access to formal savings accounts, they had a hard time safeguarding cash. So they saved in risky and inefficient ways. They made loans to each other, or bought goats or jewelry, then sold them if they suddenly needed money.

The success of microloans has opened new opportunities for many poor people and has been a crucial factor in reducing poverty. But loans are not enough. Savings accounts could help people in the developing world weather unexpected events, accumulate money to invest in education, increase their productivity and income, and build their financial security. Fortunately, this is a moment of opportunity. Innovation and new policy ideas are uniting in ways that will lower the cost of savings and bring safe financial services to the doorsteps of the poor.

One exciting trend is agent banking, in which stores and post offices serve as banking outlets. Banks still manage and guarantee the deposits, but they rely on the infrastructure of other outlets to deal with clients where there are no bank branches. In the late 1990s in Brazil, a third of the cities and towns had no formal financial services. In 2000 the government began allowing agent banking, and in four years, financial services were available almost everywhere.

The phenomenal growth of mobile phones in the developing world presents another opportunity. M-Pesa, the mobile-phone cash-transfer service in Kenya, has signed up more than 5 million subscribers in two years and recently expanded to Tanzania. This innovation is opening markets and transforming lives. A split-second M-Pesa transaction costs as little as 30 cents and replaces a day of risk and expense just to send someone money or carry earnings home.

At the Gates Foundation, we've committed more than $350 million to make financial services widely accessible to the poor because we're convinced that safe places to save can help break the cycle of poverty. If we all act on this moment, then within a generation, billions of people will have the chance to build up their savings and live the healthy, productive lives that they deserve.