Reply to Nicholas Kristof: Microcredit, microsavings? Microfinance.

> Posted by Elisabeth Rhyne
Kudos to Nicholas Kristof, long an advocate for microfinance, for spotlighting the importance of offering the poor a safe place to save their money as well as access to credit. Kristof, however, casts microcredit and microsavings as separate and or even opposing activities, when in fact they are two sides of one coin–both  part of the full range of financial services that microfinance practitioners increasingly seek to provide.
“Microcredit” became “microfinance” 15 years ago precisely because the industry recognized the importance of savings as an asset-building strategy. This shift was not easy, because only sound financial institutions can provide the level of safety that the guardians of the assets of low-income people deserve.  The best microfinance institutions around the world have worked hard to obtain licenses for deposit-taking, and to do so they have had to become formal financial institutions. 
BancoSol in Bolivia and Mibanco in Peru (both members of the ACCION  International family) are excellent examples of organizations that started as NGOs and are now commercial banks, changing form so that they could offer savings accounts as part of a full range of financial services, which also includes money transfers and microinsurance. Banco Sol now has nearly twice as many savers (235,000) as borrowers (120,000).
“Microcredit” has been a dated term for more than 15 years, at least among practitioners.  We’re about microfinance–provision of a suite of financial services to help the world’s poor build and preserve wealth and manage risk.