Just recently, Luke and I have started our lecture circuit. We're basically going around giving an hour-long empowerment speech, talking about how to find a good idea for a business. The real meat of the presentation is a series of questions, which are designed to help people think about a potential business beyond just "my neighbor is selling second-hand clothes, so I guess I could sell second-hand clothes."
The questions are interesting/appropriate enough (and, as it turns out, are shared royalty-free, meaning that we are not, in fact, stealing intellectual property). Some tease out whether there is demand for a certain product, others focus more on the methods of production. All in all, they're pretty good, and have gone over well in our early trial runs. Especially the strong Obama-themed closing ("Yes You Can Start A Business").
There is some talk about planning, which we are still getting the kinks out of, mostly because it gets into more detail than it probably should, given that it's mostly verbal and brief. Apart from trying to anticipate sales and major expenses, there is a bit of talk on how to plan for unexpected events. If you wanted to get super literal about everything, you might take issue with "planning" for something that takes you by surprise. In fact, the real take-away is just that you cannot always plan for the unexpected, but having some savings can help you to smooth out your consumption, maybe lessen the impact.
All of which got us thinking about the Bulgarian socialist who scolded us in Florence for going to Africa to trick people into becoming pawns of the global financial industry. Honestly, the exact details of his argument are lost in the haze of alcohol fumes and cheap cigarette smoke that followed him around, but I think it was based on the premise that lending needy people money only to charge them interest is immoral.
To be sure, we've heard plenty of stories about the failings of microfinance. Of banks who only lend against collateral, then move to collect the collateral if you're even a day late in repaying. Or loans to people without good plans for the money, who end up having to sell assets just to repay the loan. Generally, banks pushing microfinance on anyone they can find, using coercive repayment methods, and generally focusing on profits, without much thought to actually helping the recipients (not that I have a problem with that, per se. I'm not a big believer in counting on profit-making companies to save the world). So it's not like we see microcredit as a panacea for the problems of the world's poor.
I'm really not sure, but I think savings are, on the whole, a good thing. Just having that little nest egg to fall back on, maybe save yourself from borrowing to pay school fees or to take care of a sick kid. Even if you can count on annual inflation in the double digits, each and every year. All of which reminds me of an article I saw a while back about a guy trying to make good by providing financial services to poor people in Southern California, by way of his network of check cashing stores. The moral, I think, being that access to financial services is a good thing, even if banks aren't looking out for your best interests.
One last thought. If I learned anything during the six months I spent in Argentina eating steak, drinking wine and waiting for my professors to stop striking long enough to hold a class or two, it's that our impeccable development advice is (a) always right, until it turns out to be a bit wrong, and (b) particularly prone to faddish thinking. That, plus all the trouble that we have gotten ourselves into, again, with financial bubbles premised on the idea that financial products (tech stocks, real estate, whatevs) are really different this time around. I guess I'm just wondering how much do these concerns apply to microfinance, which seems to be the newest, sexiest and best way to help the poor, if you buy into all the hype. Especially given the somewhat mixed performance of microfinance here in Uganda, this is what I've been thinking about the last few weeks...