출처: Daryl Collins, Jonathan Morduch, Stuart Rutherford & Orlanda Ruthven, ^Portfolios of the Poor: How the World’s Poor Live on Two Dollars a Day^, Princeton University Press, 2009.
자료: http://www.portfoliosofthepoor.com/book.asp; 구글도서; ...
OF WHICH
※ 발췌 (excerpts): pdf p. 34~
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Chapter 2
THE DAILY GRIND
Subir was 37 when we met him, and his wife Mumtaz only 29, though their oldest son Iqbal was by then at least 14. They had come to Dhaka, Bangladesh, when Iqbal was a baby, soon after their scrap of land in central Bangladesh was washed away by the great Ganges River. They had three more children, all sons, and Mumtaz was pregnant again and delivered her fifth son midway through the research year (“No more!” she told us). Day by day, Subir and Mumtaz focused on managing life on a dollar a day per head─and sometimes less.
Their strategies, and those of other diarists, are the subject of this chapter. We will see how their money management responds to the challenges of living on income that is both low and uncertain, and how doing so determines much of their financial lives.
( ... ... )
Our opening chapter asserted that is not just the ^low value^, but the ^uncertain timing^ of their incomes that makes money management so important for poor households, and so it was for Subir and Mumataz.
- Institutions such as the United Nations and the World Bank usually focus on explaining why incomes, totaled over the year, are so low, and what can be done to raise them. But the unpredictable ups and downs of income are also an important part of what it is to be poor, and they cause many of the specific challenges faced by the households we came to know.
( ... ... )
Making these uncertain income flows deliver a stable home life was a constant preoccupation for Subir and Mumtaz. Most of the time they succeeded. They never had to beg, but they did skip meals, and the quality of their food varied. ( ... ) Usually, though, they ate twice, and in really bad times just once a day. But at least they ate something every day, and it is a tribute to their resourcefulness that they managed that.
Subir and Mumtaz and their family survived thanks in part to financial tools. The most intensively used tools, however, were not those celebrated by advocates of microfinance for the poor. In the year we spent with them, Subir and Mumtaz did not, for example, seek a “microcredit” loan to fund the expansion of a small business. True, Subir could have earned more if he owned his own rickshaw rather than renting, and a loan would have hastened the purchase. But, as we show below, he had good reasons not to do so. ( ... ... )
- Instead households like that of Subir and Mumtaz borrowed and saved mostly to meet pressing short-term needs: their main objective was cash-flow management. Being able to manage immediate needs is a precondition for considering long-term ambitions─but the way that poor people achieve it has received scant attention from policymakers and others arguing for financial access for the poor.
( ... ... ) As we argued in chapter 1,
the poor households we met actively employ financial tools not ^despite^ being poor but ^because^ they are poor. When it came to managing money, Subir and Mumtaz put a premium on the flexibility and convenience of their financial tools, even though those tools were not always reliable. Their juggling reminds us
that money is fungible─it can be split and combined in a number of ways. We argue in the concluding section that
embracing this flexibility of money can open vistas for financial providers looking for better ways to serve poor households.
Diary households in both the urban and rural areas of all three countries employ
strategies and have portfolios that, no matter how they vary in detail, are similar in
important ways.
- Most important, they are characterized by frequent small-scale transactions. Both saving and borrowing are involved, often with multiple partners and using several different kinds of instruments simultaneously. The result is portfolios with large flows of cash: large relative to the level of outstanding debt or of savings held at any one time. ( ... ... )
- Asset building is an important objective of poor people’s portfolios, and chapter 4 discusses this process further, but in this chapter we suggest that understanding the financial lives of poor households starts with a focus on cash flows rather than balance sheets.
( ... ... )
Small Balances, Large Cash Flows (p. 38/47)
Though the households we worked with included some that were very poor, none lived
hand to mouth, if we take that phrase to mean that all income is consumed directly and
immediately. ( ... )
- But the finding remains hidden if we look only at asset accumulation. Not surprisingly, the diary households have relatively few financial assets. Year-end asset values tend to be small: a median value of $68 in Bangladesh, $115 in India, and $472 in South Africa. Even adjusting for differences in purchasing power in different countries, these assets are not large, and might lead us to assume that they could sustain little financial activity.
- But what we learned is that data on balances told us little about what happened during the year. The financial diaries were designed specifically to lift the veil on a wide array of financial activities that take place day to day and week to week.
The story is revealed when we look at cash flows rather than balance sheets. During the year, all of the financial diary households pushed and pulled through financial instruments amounts far greater than their year-end net worth.
- By “push” we mean deposit, lend, or repay. By “pull” we mean withdraw, borrow, or accept deposits. ( ... )
- We use the expression “turnover” to mean the total sum of money being “pushed” into instruments plus the money being “pulled” out of them.
- Table 2.1 shows the households’ high turnover in financial instruments. As we describe later, most of the activity runs through informal devices, below the radar screen of regulators and bankers
The high level of financial cash flow is particularly surprising when considered inrelation to income. We might call this ratio the “cash flow intensity of income”: the sum of funds borrowed, paid out, recovered, deposited and withdrawn, divided by income of all sorts.
- In India, households shifted, on average, between 0.75 and 1.75 times their incomes, with high-velocity money movers like rural small traders shifting more than three times their earnings in an average month. In South Africa, the monthly turnover in cash flows was slightly more intense, at about 1.85 times the monthly income.
In general we found that the flows moving through financial instruments are large relative to income even in households with low incomes and small balances.
- In Bangladesh, where rural incomes are lower than urban ones, median turnover in the countryside is nevertheless higher than in the town. In South Africa, the poorer half of the households turned over a bigger multiple of their income than the richer half. ( ... ... )
- The lowest annual turnover of the entire financial diaries sample was $133, more that 3/4 o income. Most households have turnover in excess of $1,000 over the year, and many have much higher.
- This attests to our general notion that lower incomes require more rather than less active financial management.
( ... ... )
Multiple and Uncertain Occupations … (p. 41/50)
Understanding the reasons for high turnovers is the starting point for understanding the
financial lives of these households. ( ... ... )
… and Low Incomes (p. 44/53)
( ... ... )
Unpredictability (p. 45/54)
The first element of the triple whammy that poor households face, then, is low incomes. The second element, the uncertain timing of cash flows, is well brought out by the diary methodology.
( ... ... )
p. /57 ( ... ... ) During May, she and a group of three other sheep intestine sellers formed a savings club, a financial device we’ll talk more about in chapter 4. From Monday to Thursday, each paid in $7.50 a day, and they took turns getting the entire pot of $30. That way they evened out cash flow to help tide them through the lean days.
- the savings club fell apart.
- a temporary government-sponsored job cleaning streets for four weeks while her daughter kept the sheep intestine business running.
- another savings club with three other coworkers in this job. ( ... ... )
Another case of a car driver in Dhaka: ( ... ... )
Case of South African households survive primarily on the basis of the government grants:
- The grants arrive monthly, with no payouts in between. They are regular and relatively predictable, but arrive at intervals that are too long for some recipients and too short for others.
- Those who find the monthly interval too long may pair with another recipient or join a group of recipients to share the grants as they come in. ( ... )
Does a Formal Sector Job Bring Security? (p. 49/58)
( ... ) similar insecurities exist in formal labor. A case from Delhi provides an illustration.
- ( ... ... ) The brothers worked in the finishing sections of export garment factories and received wages at daily or piece rates. As peripheral workers hired by a broker, they faced excessive work at some times and no work at others. They got work through “emergency orders” rather than as core workers in the factory. Variations in their workload were reflected in their income flows.
- Their combined monthly wage fluctuated between $85 and $53 and stopped completely for four months in the middle of the research year. For two of these months they were in their village, but it took them two months to find work after they came back to Indira Camp. ( ... )
- Before they left Delhi, the brothers had managed, between them, to remit an average of $26 per month to their village, but after returning to Delhi they sent nothing, and this neglect made them very anxious. They had also borrowed money, first to get home, then to cover their stay, and then to get back to Delhi, a debt of over $100, most of it with interest. Only by the goodwill of their landlord and a grocery store manager, both acknowledging their good payment record in the past, were the brothers able to sustain themselves into a fifth month, when work finally came their way. By that time they had accumulated debts of $120. Somnath paid a bribe of $4 to get his job back, but only three months later, lost it again. When he received his final salary, Somnath managed a small remittance of $11 to his wife and child, the first since he had left Delhi for the village seven months earlier.
- ( ... ... )
( ... ) In South Africa, however, labor laws are much more rigorously enforced, and when households do manage to find a waged job, they tend to have a fairly reliable source of income. Even grant recipient households could depend on regular monthly grant income.
- In our study, these households were able to “leverage” their more regular sources of income to engage in larger-scale financial intermediation: with a regular income, they were more comfortable taking on higher levels of debt and lenders were more willing to provide loans.
- ( ... ... )
Like a small start-up business, a poor household may indicate financial health by carrying a certain level of debt. A start-up business needs to take on debt in order to invest and grow. Likewise, poor households need to access debt so they can weather interruptions that may threaten their investments in the long term. Accessing debt can prevent a family from lowering its nutritional intake or pulling children from school in an
emergency.
( ... ... ) However, much of the high debt situations in the South African financial diaries developed through borrowing outside of the formal financial sector, beyond the scope of regulatory policy.
- Many grant recipients did not increase debt through formal lenders, who would require a payslip, but through informal debt at a local store or with a local trader. Moreover, in many instances debt did not arise from reckless consumption, but from stretching too small an income over too many mouths to feed, a matter of meeting basic needs between payments.
- ( ... ... )
Partners in Money Management (p. 52/62)
In the portfolios of our diary households, common patterns emerge. One is that most transactions are carried out with “informal” partners rather than with formal institutions like banks and insurance companies. The partners are often neighbors, who seldom keep documentation of agreements, and certainly nothing that would hold up in court.
This doesn’t mean that poor households are simply at the mercy of grasping moneylenders.
Far from it: the most frequent partners are friends or relatives offering interest-free loans. Turning back to the financial portfolio of Subir and Mumtaz, we note a number of kinds of loans in table 2.2.
- Subir, an affable man with lots of charm, managed to borrow often and without owing interest. In just two months─November and December 1999─he borrowed five times, all from neighbors and colleagues, and Mumtaz borrowed once, from her sister. The sums were tiny: none of them exceeded four dollars, and all were quickly paid back from rickshaw income.
- Small as they are, interestfree loans like these, which featured in many of our diaries, did the job they were intended to do─they ensured that the household members ate something each day. They constitute one of the two core elements of managing money for everyday survival, and as such they deserve more of our attention when we are thinking about how to improve financial services for the poor.
The other core element is
small-scale savings. Every household we met made some attempt to save.
- All the older members of Subir and Mumtaz’s household, for example, saved at home in some way: Mumtaz in a locked box in a drawer in the cupboard, Subir in a cloth bag tied into the roof timbers, and son Iqbal ( ... ... )
- Often they had small savings at home even as they took loans, and this behavior offers us another insight. [:] Poor households less often choose between alternative instruments (say, loans and saving) than they maximize access to both in a world where nothing fits perfectly and access is constrained.
- Spending money is patched together from various sources─a bit from savings, another bit from a moneylender loan, another from an interest-free loan, and so forth.
The tools used for informal saving and borrowing are generally close at hand (savings hidden in the hut, loans from nearby neighbors) and flexible (that is, without strictly fixed terms or payment schedules), two hallmarks of desirable cash management tools.
- Convenience has also been taken to heart by the microfinance providers operating in our Bangladesh study areas.
- When we first met them, Subir and Mumtaz told us that they had decided not to join a microfinance institution (an “NGO” to them) because their main need was to save, not borrow. If they borrowed, they might not be able to make the regular weekly repayments.
- But then they heard about an NGO where borrowing wasn’t compulsory, and joined it, at first just to save. They used the savings account primarily to patch gaps in their cash flow, saving small sums when they could, and drawing down the balance when they needed to for food, travel costs, medicine, and the like. This account provided them with useful liquidity in times of need: they withdrew sums of $10, $5, and $4.60.
When, later in the year, they grew comfortable with Mumtaz’s NGO, they began to borrow from it. They might have put their NGO loan toward the purchase of a rickshaw for Subir ( ... ).
Such microlending to support microenterprise or self-employment has been a leading premise of the microcredit movement.
But the couple decided that buying a rickshaw was too risky because they had nowhere safe to park it at night.
- Instead, they used the loan to (1) stock up with rice, (2) bought a wooden cupboard (their only piece of furniture apart from an old bedstead), and (3) lent $20 to a fellow rickshaw driver at a nominal 17.5 percent interest per month, a loan that was repaid three months later with about half the interest honored and the rest forgiven.
- In short, they used the funds mainly for basic consumption needs for themselves and others.
- The couple’s behavior with their NGO loan should make us think carefully before we conclude that loans for poor people are of little value, or may even be a dangerous temptation to fall into deep debt, unless they are used for working assets.
- Rightly or wrongly, Subir and Mumtaz believed that there were other constraints, besides the lack of capital, to their buying a productive asset─in this case the risk of loss. They may have been too timid, but they also saw other good uses for the loan: a stock of food, a piece of furniture, and the chance to strengthen a financial relationship with a colleague and make some money at the same time.
Against the backdrop of small-scale do-it-yourself saving and frequent interestfree borrowing, the couple engaged in a wide range of other deals to bridge gaps between income and expenses. They took goods on credit from two grocery shops and a restaurant. ( ... ... )
Through vigilance and energy, Subir and Mumtaz managed to keep their family fed. The process was never easy and required tools that were flexible and easy to access.
- The informal sector has proved to be the best provider of those tools so far, and the challenge for the formal sector is whether it can do better, with services that are just as flexible and convenient, but also more reliable and more liquid.
- It might be tempting to learn “tools of the trade” by watching the local moneylender, but as the next section describes, the most important providers of loans are not moneylenders but friends and neighbors.
Small-Scale Lending and Borrowing (p. 56/65)
To manage day to day, the diary households patched and stretched their savings and their loans, a strategy that was called into play whenever an employer failed to pay on time, a spell of unemployment hit, or a visitor suddenly arrived, to name just a handful of
- Perhaps because saving is something that an individual or a household can do without involving others, virtually every diary household saved. In Bangladesh, for example, not a single one of the 42 households, even the very poorest, was without some form of do-it-yourself saving.
- And yet for none of these households was saving-at-home a sufficient strategy: all of them had to turn to others in their community to bolster their capacity to manage their money. So while saving was the most ubiquitous instrument, much more cash flowed through loans. ( ... )
Overwhelmingly, the loans were taken locally, in the “informal market."
- In Bangladesh, 88 percent of all borrowing deals were informal, a figure that climbs to 92 percent for the poorest part of the sample.
- In India, 94 percent of all borrowing was informal, which, again, climbs to 97 percent among the poorest respondents. Of all respondents in the poorest category in India, only one household had borrowed from anything but an informal source, and that was from a microfinance institution.
- But the term informal “market” is misleading here, because in all three countries most of these loans were interest-free. ( ... ... )
After home savings, interest-free borrowing was by far the most frequently used financial instrument in all three countries.
It complements rather than contrasts with the households’ attempts to save at home, because interest-free borrowing and lending is in
essence a way of harnessing the savings power of a neighborhood or family network to address the cash-flow problems of its individual members.
- ( ... )
- Better-off people might manage money on an everyday basis with a credit card. For the poor households in our study, the main strategy was to turn to each other, using one-on-one lending and borrowing between friends, family, and neighbors.
- 대부분의 융자는 며칠, 몇 주, 한두 달 내에 상환.
These interest-free borrowings and lendings were ubiquitous among the households in all three samples. ( ... ... )
Interest-free borrowing and interest-free lending relate to each other in interesting ways. [:] "reciprocal" lending or borrowing vs. "obligatory" lending. ( ... ... )
To smooth their consumption, then, poor people often lean on those around them with marginally more resources, and this is true not only in purely cash transactions, but also in groceries taken on credit, in rent payments delayed, and in advances taken against wages. All these transactions have in common that the advance (whether in goods, services, or payment for labor) is given within an existing relationship that reduces the risk to both borrower and lender.
Interest-free transactions between households in the informal network are not confined to borrowing and lending. In all three countries, there is a well-established tradition of “moneyguarding”─storing cash for others seeking a safe haven for savings or for cash that needs to be kept aside for some later purpose. ( ... ... )
The Full Triple Whammy (p. 60/69)
( ... ... )
Conclusions (p. 70/79)
( ... ... )
Having more assets would certainly help the households in our study, adding a cushion in difficult times and creating resources for major investments. ( ... ... ) But we should beware of looking through only the asset-building lens when planning improvements in financial services for the poor: the diaries show that the challenges and
priorities of the households are, in many ways, more fundamental.
Even when financial growth is low or absent year on year,
just having access to basic financial services can have a fundamental impact, one that may be as important as asset-building.
- This is because when incomes are low, financial strategies need to focus in large part on coping with the irregularity and unpredictability of income in order to get food on the table and address other basics.
- If that focus is not in place, hunger and other forms of deprivation loom, and the household can slip quickly into destitution.
- The diaries reveal what one-off surveys tend to miss: poor-household incomes are not merely low but awkwardly timed, and the financial services used to address this irregularity in incomes are imperfect. This chapter has been devoted to the consequences of this triple whammy.
Not surprisingly, poor households put a great deal of effort into “cash-flow management”<m->making sure that money’s on hand when needed to meet basic expenses.
- In the rich world, a household’s portfolio of financial instruments is usually managed on the basis of risk and return.
- The portfolios of poor households are instead managed to ensure that money can be obtained in the desired amounts at the desired times. Money is scarce and its supply erratic, so dealing with cash flow is usually more urgent than calculating the best mix of return and risk.
- If wealthy households can indulge in a slow and steady style of financial management not unlike that of an established company, poor households tend to look more like start-up companies, judiciously allocating cash on hand and constantly looking out for new funds.
Cash-flow analysis, rather than balance-sheet analysis, is the way to begin understanding their financial lives. These financial efforts, though, would have been hidden had we only looked at the accumulation of household assets from one year to the next. Year-opening and year-end balances may scarcely differ, but in the months between all manner of financial tools are used intensively.
Richer people manage their basic cash flow using a wide range of reliable devices: credit cards, debit cards, checks, automatic teller machines, and the like. But even they can run into cash-flow problems, so it is not surprising that poor households, who lack the luxury of such services, have to work even harder to manage their money.
- Patching cash-flow mismatches between income and expenditure is ideally done through saving and dissaving, but, because appropriate vehicles are hard to find, poor households more often turn to small-scale borrowing and lending with friends, relatives, neighbors, and employers.
- It is often hard work, and it can carry high costs─some of which are social and psychological and not just economic.
- For poor households, then, having alternative sources of reliable, convenient, reasonably priced financial tools would make a big difference. In this context, it is notable, and even surprising, that helping them with cash-flow management has received limited attention in microfinance strategies.
In recent years, business experts have made the case that
the world’s poor constitute an enormous and largely untapped market for goods and services, a next frontier for retail business. Marketers eye billions of dollars' worth of soaps, radios, mobile phones, and financial services to be sold to customers like our diary households if only retailers can develop the right products and marketing strategies.
- If you take the view that the poor constitute a viable market─that there is a “fortune at the bottom of the pyramid,” as C. K. Prahalad has put it─product development starts with a recognition of households’ financial ups and downs.
- Seeing that the poor could not afford many of their existing products, multinationals like Proctor and Gamble and Unilever found a solution by selling single-serve packets of shampoo to poor households in India. The single-serve packages, costing a few cents each, turned out to be a popular option for people lacking the daily cash flow to easily purchase large bottles of shampoo, regular-sized tins of tea, 200-count bottles of aspirin, and the like.
- The innovation did not reside in the nature of the products. There is nothing special about the shampoo itself. Rather, it came from discovering a way to suit payments to patterns of household cash flows. The insight arose from understanding the financial lives of the poor and responding effectively to their needs.
What features are needed for a mass market in
tools for cash-flow management for the poor? Our priority list would start with basic reliability and flexibility:
- services that are rule-bound, transparent, and simple to understand. Loans that are disbursed on the date promised, in the amount agreed upon, and at a standard price. Savings accounts that allow ready access and convenient withdrawals, with deposits and withdrawals made in any value. Insurance contracts that pay out quickly and with little haggling when needs arise.
- These qualities are demanded (and often taken for granted) by the world’s richer households, but they are no less important for the world’s poor.
The diaries show that informal financial mechanisms tend to be quite flexible, but not always reliable. Microfinance services, on the other hand, tend to be reliable, but not always flexible. One element of inflexibility in microfinance is the insistence by some lenders that all loans be invested in businesses. They do so partly because they believe that an important part of their mission is to foster economic development through business growth, and partly because they fear that loans cannot be repaid without revenue from business.
- The diaries show, however, that poor households need to borrow for a wide range of needs, not just business, and that they are prepared to find ways of repaying loans from ordinary household cash flow. For the diary households, today’s reality is that so-called business loans are already being used for many nonbusiness purposes, as chapter 6 will show.
- Embracing the notion that households seek loans for general purposes will open up possibilities for innovation and expansion for microfinance providers.
There are other simple ways to make loans more flexible.
- One idea common in informal lending (and sometimes in microfinance lending) is allowing penalty-free grace periods when cash-flow problems hit.
- Another idea, introduced by Grameen Bank in the past few years, is to allow borrowers to “top up” their loans (by borrowing again what they have repaid) part way through the repayment schedule, to increase liquidity. We return to this example in chapter 6.
- Another important path is the development of loans with a range of terms, including short-term “emergency loans.”
Yet another innovation is to offer loans secured against liquid assets commonly held by the poor, since the security allows for more flexibility in repayment schedules.
- Here, the experience of India’s banks is again instructive. Indian banks have fulfilled their obligation to lend to “priority sectors” (the poor) mainly by lending to jointly liable groups of poor customers (building on the pioneering work of the Grameen Bank).
- But the banks are also lending against deposits and gold, to individuals, at rates slightly higher than to joint liability groups but on more flexible terms. A 2003 study of five rural banks showed that such loans, while small in terms of dollars disbursed, account for 25-35 percent of all accounts. ( ... ... )
- ( ... ... )
These features─small frequent payments, flexible schedules, and loans against small-scale physical and financial assets─are the ones we highlight for the specific task discussed in this chapter: managing money on a day-to-day basis. We do not dwell here on features important for the other key money-management tasks we have identified<m->risk management and building lump sums: these will be discussed in the next two chapters.
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