Table 15: Different types of saving sub-classes used by Female and Male Diarists
Female
Shohoz Shonchoy and Financial Design
The saving balances and saving behavior of the diarists is a function of the remaining income after expenses, the type of saving scheme in which they are involved in, the unexpected situations that occur along the way, and the diarist`s discipline or habit to save. The type of saving arrangement is one of the key factors, as it partially determines the saving behavior and outcome of each person.
The emphasis is then on the type of financial design, that is prevalent in every form of saving mechanism, whether coming from microfinance institutions or the rules that regulate the informal saving groups in the area. Financial design is important as it is what delineates the arrangement between the institution and the people that save their money.
‧
Table 16: Distribution of the Saving Deposits made by Female and Male diarists throughout the study, by institution/Social arrangement.
Female Diarists
Saving Vehicles Number of Deposits
Saving Vehicles Number of Deposits
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
62
As evidenced by the diaries, Shohoz Shonchoy (P9) was the institution with the most savings for both female and male diarists. As seen from Table 16, about 63% (10) of the female diarists in the study deposited money with P9 a total of 1234 times, creating a joint savings balance of 299,321 taka, compared to 47.82% (11) male diarists who had a balance of 329,277 taka, depositing 1930 times.
The logic behind P9 is to allow people to have access to flexible and reliable saving and credit products, which allow them save more money at a faster rate, and to repay debt at a rate which is sustainable for their clients. P9 works in a way where the staff of P9 goes directly to the clients‟ houses in order to retrieve their payments.
Payment on Shohoz Shonchoy is not enforced by the collectors so it is not required to pay back every day. In case somebody cannot pay that day, the collector simply moves on.
Because the collectors at P9 do daily visits, clients start to build up a habit around the daily visits of the staff. Because the collectors are from neighboring areas and known by the community, any sort of asymmetrical relationship and lack of trust is minimized. If somebody does not pay for a long time, it is easier to track and ask about their current situation, and to provide any financial help if needed. As the collectors go to customers directly, it is easier to come up with possible solutions collectively in case somebody faces financial problems. Shohoz Shonchoy puts its emphasis on the financial wellbeing of their clients and puts profits secondary while still remaining sustainable. This differs greatly from the monthly and weekly repayment schedules that other microfinance institutions use for their schemes. The daily periodic collection in which they work, their flexibility and reliability is what allows their clients to increase their capabilities through a fast accumulation of savings.
Compare P9‟s performance to other service providers and saving groups. Microfinance institutions such as Grameen Bank, BRAC and ASA have products in which a person saves the same amount of money on a weekly basis. Weekly savings schemes work, but because the amounts are usually low and the periodicity of withdrawals is only once per week, the total amount of savings grows at a slower pace. The Grameen Bank had the third biggest amount of deposits for women with 392 transactions and a total balance of 46,540 taka, which portrays their flexibility in allowing people to save. Yet, the amount
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
63
of effort spent to save in formal financial institutions is higher because people have to go to a group meeting, or to the bank to make a deposit. The concept of door to door banking, or going to people‟s houses to ask for deposits proves to be a more efficient mechanism for saving money because deposits are built consistently and without much effort by the people saving the money.
Samitis (a type of informal saving group) were also used by the diarists. Rotational informal saving groups, or RoSCAs, work in a way where every week all the people in a group pay a usually small, fixed amount of money. That money is then given to one of the group members and this process is repeated each week in a cyclical manner until the money reaches everybody in the group. RoSCAs are an informal tool that people all over the world use. Even though only 2 of the female diarists and 5 of the male diarists used samitis, the overall amount of money still faired high when compared to other institutions.
Some samitis gave out money around the time of Eid, the Muslim religious festival, where families gather to eat and exchange gifts and various treats with one another. In order to prepare for Eid, people start fattening their cows a couple of months before and to finance it rely on various forms of debt and saving schemes. The Grameen Bank even has a specific loan product given to people for the purpose of fattening cows for Eid. This is an example of how both formal and informal financial institutions design specific considerations for the accumulation of money for a specific occasion, which has the effect of enhancing people‟s ability to do more things.
‧
Table 17: Distribution of Saving Withdrawals made Diarists by Institution/Social arrangement
Total Sum Average Per
Total Sum Average Per
P9 also was the institution with the most amount of saving withdrawals and total amount of money withdrawn by only 10 (43.47%) of the male diarists and 7 (43.75%) of female diarists. Because savings are built up faster in the P9 model, people‟s agency to rely on their savings when in need also increases. The saving scheme used by P9 indirectly increases diarists‟ capabilities as they have more access to capital, which allows them “to do and to be” more things. Financial design therefore plays a big role in shaping people‟s capabilities.
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
65
Twenty two percent of the male diarists relied on a money guard to keep their money safe.
Money guards can take different forms. For example, male diarist Samu took one savings withdrawal from a cement shop, where he had previously deposited 300,000 taka he had earned from the sale of a land he used to own. He withdrew the money for construction work on his home. This transaction was part saving, part advance on the purchase of goods as when he deposited it, he knew that he would buy goods with it, and had hoped for a good price. As stated earlier, Bishnu received 23,200taka from his elder daughter‟s husband for the marriage of his daughter. He withdrew the money in order to pay for the wedding expenses.
Money guards could also be used for secrecy. For example, diarist Prossim was weary of depositing money in the bank because he was afraid his wife might find out about it.
Therefore, he deposited money with one of his friends. He holds a bank account in Agrani bank but thinks that it is not wise to deposit the money in the bank account because if his family members know about it, they might reproach and ask him to share it with them. He also did not disclose information about his Agrani Bank account until the money guard issue. As time went by and the diaries developed, trust was built and more information came to light, showing another one of the advantages of using financial diaries.
‧
preferences. This can be tricky as the choices people make do not necessarily imply that there were different alternative options available to them, and that they were not obliged to pick one specific option. Therefore, what we were interested in are the relative differences in how female and male diarists spend their income. What we were looking for was if there were any aggregated patterns in their choices. We then compared the individual expenses they had with their aggregated incomes (including transfers and gifts) in order to delineate how are the diarists different, from a financial point of view. From this point of view it is easier to understand the ways in which different people are affected by poverty in many different ways. We then look at the distribution of the different expense classes for both female and male diarists, and outline some of the main expenditure classes.Table 18: Female Diarists by their Main and Secondary Occupation, Income per Capita, Total Expenses and Total Income Balance
Name HH
sari seller farming, expatriate
‧
housewife veg seller, farming
office cook garments worker
Anicca 4 3-generation office cook dressmakin g
296 0.22 17121 20935 3814 18013 892
Toska 2 widow and daughter
labourer 560 0.24 11270 21310 10040 21142 9872
Table 19: Male Diarists by their Main and Secondary Occupation, Income per Capita, Total Expenses and Total Income Balance
Name HH
Shusom 5 3-generation shopkeeper labourer, musician
466 4.83 937834 900025 -37809 1082584 144750
Abdulla 7 3-generation expatriate
fisherman brick breaking 449 0.88 341676 158400 -183276 306658 -35018
Mohammed 9 3-generation farmer 437 1.07 321067 335815 14748 356100 35033
‧
labourer domestic labour, odd jobs
The tables above show the people with the largest amount of expenses at the top, and the people with the lowest expenses at the bottom. We again see a drastic difference when looking at income before and after accounting for gifts and transfers. About 37% (6) of the female diarists and 39% (9) of the male diarists had negative balances when comparing the total value of incomes, transfers and gifts with expenses. Without taking into consideration gifts and transfers, the total amount rises to 88% (14) for women and 52% (12) for men 13. Again, we see the importance of social resources in allowing people to have more access to resources.
13 Note that incomes and expenses are derived at different times. The balances don‟t take into consideration the debts and savings arrangement individual diarists have, which would alter the total balance.
‧
Table 20: Distribution of Expense Classes for Female Diarists
Expenses
‧
Table 21: Distribution of Expense Classes by Male Diarists
Expenses Class Number of Transaction
From comparing the aggregated values in their consumption, we see that shop stocks are the highest expense class recorded for both female and male diarists during the study.
Looking closer, shop stocks were only bought by 25% of the female diarists and 21.73%
of the male diarists. Shop owners‟ revenue and expenses happen almost daily. The expenses on shop stocks represent such a high amount, because there is a constant
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
71
demand for goods, like in the case of male diarist Habib who sells newspapers every day.
In contrast to most of the other diarists, their money inflows and outflows are more or less predictable as they do not need to look for different types of income generating activities.
The expense classes reported by all of the male diarists were food, treats on things like tea, tobacco and betel nut, medical expenses, communication, transport and clothes. The expense classes in which all of the female diarists engaged in were food, home maintenance, medical expenses, clothes, transport and expenses on treats. All but one female diarist (Inorik) spent money on toiletries, fees, utilities and buying fuel.
Food is the second biggest expense class for all of the male diarists and third for all of the female diarists. Women‟s house maintenance costs are higher than the amount they spent on food, whereas all of the men collectively spent more on food than on their houses, which was reported by 82.60% of them. Indeed, gradual improvements and repairs in their homes is the highest amount of investment that diarists undertook, denoting their interests for improving their livelihood conditions.
Excluding food, the expense class with the highest number of transactions for men was Treats, with over 9000 recorded transactions. Male diarists spent almost the same amount of money on treats like tobacco, betel nut and tea, than how much they spent on medicine.
On the contrary, for the female diarists, medicine represented the third highest expense class, and it was twice as high in value than the money they used for buying treats. Not all the transactions for treats were consumed directly by the diarists themselves. Twelve (75%) of the women spent a total of 4,167 taka on their children for entertainment, and treats such as toys and candies a total of 92 times. The most expensive item was a 1,200 taka fee for a picnic to a daughter bought by Sila. Other than that, most treats are for biscuits and cakes for children.
The consumption pattern for treats is different for women than for men, and this mostly depends on the socially acceptable items that each gender is supposed to eat. For female diarists, the total value of betel nut eaten was 31,514 taka (about 40% of the total), bought 1,172 times by 11 women who consumed it more than once. In broad terms,
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
72
expenses on treats (excluding betel nut) were 37,766 taka, bought 1,486 times by all but one of the female diarists, with an average expenditure of 25 taka. Most of the times that women bought cigars they reported giving them to somebody else, mostly a male counterpart. In contrast, male diarist spent 195,886 taka (about 60% of the total spent on treats) on various combinations of tea, bread (pan) and cigarettes, with an average expenditure of 31.32 taka. A total 7 men bought cigars and biris (traditional South Asian cigars) 448 times, worth 5,513 taka.
All but one of the female diarists had to pay for bureaucratic fees, compared to 65.21% of the male diarists. The diarists bring attention to the fact that being poor is expensive.
Living in poverty is expensive in the sense that people are always spending a lot of their efforts in order to achieve their goals, whether that means commuting from one place to another in order to get a stamp or pay a fee, looking for availability of day jobs, or going to microfinance meetings. This expensiveness is driven by uncertainty which is in turn a function of factors like inadequate institutions, unreliable labor markets, weather conditions and so on. To tackle this uncertainty, people are constantly rely on each other, and on whatever tools are available to them in order to cope with daily life.
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
73
Chapter 5 Conclusion
Poverty can be imagined as a chaotic system. Chaotic complex systems work in a way where small changes to initial conditions can result in large differences at a later state. By this we do not only mean the initial conditions of being born in a family with a low income in a country with a colonized past. In the context of somebody who lives in poverty, being short on cash on days when a doctor or a medicine is needed can eventually turn into a serious disease or death. People living in poverty are constantly in a hustle to smooth their consumption and make ends meet. The unpredictability that we see in people‟s lives is a function of how irregular deriving an income is and the baseline support they receive from the different types of social and financial resources they have at their disposal.
The financial diaries in this study helped to outline the importance of social and financial resources in building or diminishing one‟s capabilities and the different ways in which the rules pertaining to each type of specific resource affect women and men differently.
For women, being deprived of the same opportunities as men due to the overarching patriarchal structure of society partly determines the specific ways in which they can do and be different things. Support (or lack thereof) coming from social resources has a great effect in determining the extent to which one can develop. Inorik had a harder time than Panna partly because Inorik‟s own family did not support her and repeatedly tried to undermine her. It led Inorik to eventually find support in unexpected places with the hijras, who are also considered outcasts by society, and are undermined because of their gender.
One type of resource available to the diarist was debt. Social and financial debt are important resources because they allow people to have access to capital which they individually would not have access to. Financial debt allowed Panna to send a son abroad who now remits back periodically. Social debt allowed Namam and Habib to engage in their respective businesses. Yet financial debt can also lead to problems like stress and
‧ 國
立 政 治 大 學
‧
N a
tio na
l C h engchi U ni ve rs it y
74
over-indebtedness, perpetrating poverty cycles like in the case of Sila. In the case of social debt, not paying back a debt breaks reciprocal cycles and might mean the loosing of face and trust from neighbors and shop keepers, which hurts individual agency in the long run.
P9 provides an example of the importance that rules have in creating positive financial resources for people. Financial institutions like Shohoz Shonchoy can help to design and create competing ways of being and doing. Periodically going to the clients‟ houses and asking them if they have anything they would like to contribute to their balances helps to reinforce positive cycles of wealth accumulation. By creating flexible, reliable and periodic services that increase the savings of people, the potential to be and to do different things rises as they have greater monetary resources to draw on. Even if the amount contributed is minimal, this form of door to door banking helps by slowly adding gradual small increments to the client‟s savings balance. Because it taps into the small pocket money that otherwise would have been spent on something else, people‟s usages of money changes as their resources increase. With bigger savings, people‟s agency also increases. This is an example of how changes in material resources bring about changes in people‟s power to choose over their capabilities.
One of the biggest issues that the poor face involves having access to financial and social resources that are flexible, and that meet their needs in a timely manner. Yet these resources are bounded by the unspoken rules embedded in society. Without new rules, the agency and outcomes of people will not expand into greater opportunities or capabilities. Poverty alleviation policies that emphasize a periodic and flexible change to the way wealth is accumulated (like the case of P9) are more likely to create gradual positive outcomes in people‟s lives.
From the point of view of policy makers and social entrepreneurs, active participation by the people in designing the type of arrangement needed is extremely important, as people know their needs best. Financial diaries help us understand the dynamics and everyday financial reality of the poor. By understanding their lives it becomes possible to design human-centered solutions which can then complement and enhance their capabilities. ‟
‧
Alkire, Sabina. (2014). Measuring Acute Poverty in the Developing World: Robustness and Scope of the Multidimensional Poverty Index. World Development, 59, 251-274.
Anderson, Jamie, & Wajiha, Ahmed. (2015). Early Insights from Financial Diaries of Smallholder Households. Focus Note 102. Washington, D.C.: CGAP.
Banerjee, Abhijit, & Duflo, Esther (2007). The Economic Lives of the Poor. The Journal of Economic Perspectives, 21(1), 141–167.
Banerjee, Abhijit, Duflo, Esther, Glennerster, Rachel, & Kinnan, Cynthia. (2014). The Miracle of Microfinance? Evidence from a Randomized evaluation. American Economic Journal:
Banerjee, Abhijit, Duflo, Esther, Glennerster, Rachel, & Kinnan, Cynthia. (2014). The Miracle of Microfinance? Evidence from a Randomized evaluation. American Economic Journal: