On mange et on épargne

Despite significant increases in the scale of microfinance in recent years, savings services tragically continue to represent only a small part of the whole.

The high costs associated with maintaining formal bank accounts have often been cited as a major barrier to low-income households saving in formal financial institutions. However, a review of fourteen random notes from the Poverty Action Lab on the monetary and non-monetary costs associated with savings found that reducing these costs alone increased account ownership, but did not lead to increased flow savings in most cases. Studies from Kenya, Uganda, Malawi, Sri Lanka… suggest that most people open accounts when offered to do so for free but less than half have actively used it. "Active use" being defined in two or more deposits in the first year of operation.

According to Poverty Action Lab, this finding notably suggests that people may simply not have enough income so that the use of their account be worth it. In the DRC, for example, the National Institute of Statistics maintains that 3 out of 4 households have no possibility of saving.

Yet microfinance practitioners recognize that savings can help clients respond to opportunities as well as emergencies, as well as accumulate resources that can be used to expand their business, renovate their homes, and support themselves. to the needs of their children. coaching.

Moreover, simply considering savings as the part of income that is not spent, the increase in savings implies the reduction of final consumption expenditure. However, for low-income households, food consumption is the item with the highest budget coefficient. The weight of food is higher the lower the standard of living. In the DRC, the National Institute of Statistics maintains that food represents 62.5% of household expenditure.

Thus at low income, saving implies a renunciation of a given level of food consumption whereas the latter is fundamental and linked to survival (Cfr Pyramide de Maslow)

Our Solution is called “On mange et on épargne”. It has the particularity of allowing low-income households to combine food security and the propensity to save. This instrument allows low-income households to buy basic food products (maize, cassava and rice) at 50% less compared to the market price in order to save the remaining 50% in a formal financial institution.

 And through technology, we can facilitate the collection of household savings in the moment they buy our food products using the electronic payment terminal, smartphone or USSD technology.

Our target is mainly composed of poor workers who meet the following characteristics:

They must be household heads
Their household must have of at least 6 people
Their monthly income must not exceed 500 USD

Indeed, when a shock affecting the economy occurs, low-income households are not only the most likely to be affected, but also the least prepared. This is often due to low savings rates and imperfect insurance markets. the poor often do not have a financial cushion to deal with the unexpected. The financial and social protection systems of developing countries generally do not have suitable products enabling poor households to protect themselves against unforeseen risks.

Our solution is a thoughtful and well-tailored instrument that can help improve the resilience of low-income families to cope with and react to unexpected shocks.

Our team is essentially made up of young people coming out of households whose characteristics align with those of our targets.

We know exactly at what time of the month our targets receive their salaries and what they prioritize in their expenses. It is this proximity that allowed us to design this savings incentive instrument and to validate our idea with a less expensive market study.

We already serve about fifty households. They represent about 460 people affected. Their average month income is 285 USD.

Our application for this challenge is motivated by two main reasons:

• The opportunity to join an international network of impact-oriented entrepreneurs like us. We hope that joining this network will  play a big role in our brand image. We also include the fact that it will allow us to expand our circle of acquaintances.

• The possibility of receiving monitoring and evaluation support. Indeed, as a young organization carrying an innovative instrument whose evidences are not yet confirmed, we need to develop a culture activated on the results for our capacity to measure the impact, a necessary condition to move to the ladder