Melinda Gates pledges $500 mn more for world’s poor

WASHINGTON - Melinda Gates, co-chair of the Bill & Melinda Gates Foundation, Thursday pledged another $500 million for the world’s poor as she hailed a historic moment that will help bring financial services, particularly savings accounts, to hundreds of millions of people living on less than $2 a day.

Speaking at the foundation-hosted Global Savings Forum in Seattle, the first global gathering focused on the role of savings in the developing world, Gates urged leaders in government, banking, mobile communications, and international development to work together to build a new kind of financial infrastructure to bring savings to the poor.

“This is an amazing moment. The stage is set for incredible breakthroughs,” Gates told nearly 200 influential world leaders who gathered for the two-day forum.

“As last week’s statement on savings by the G20 proves, financial inclusion is on the global agenda at the highest level. And innovations are happening so fast that, for the first time, the world has the opportunity to provide even the poorest people with access to financial services.”

Savings accounts are in great demand by the poor in the developing world. Research shows that when they are offered side by side with loans, people chose savings over loans at rates of up to 12:1, a foundation statement said.

In one study, Malawian farmers who were given the option to put aside some of their earnings toward the next planting season increased their farming inputs by 64 percent, resulting in 54 percent higher farm revenues, and 30 percent higher day-to-day expenditures.

New research also shows that safe savings options can empower women, help people manage risks, like illness and job loss, and increase investment in livelihoods. Still, less than 10 percent of the world’s 2.5 billion poor have access to formal financial tools.

“Savings doesn’t just help people mitigate the risks posed by a medical emergency or a bad crop,” said Gates. “It also gives them the ability to marshal their resources to build something better for themselves and their children”.

“It allows them to fund their own businesses, to look ahead with confidence. Savings helps families to take the giant leap from reacting to events to planning for a healthier, happier future.”

Gates was joined by influential leaders who discussed the vital role financial services play in improving the lives of the poor, including Princess Mxima of the Netherlands, the UN secretary general’s special advocate for inclusive finance for development.

“I am a strong believer in the power of financial inclusion,” said Mxima. “When financial services are provided properly, they can help people grow their businesses, shield themselves against unforeseen shocks and make better lives.”

“And I cannot stress enough the importance of savings accounts. Savings is a debt-free way to make investments and take advantage of opportunities, whether starting a business or sending a child to school,” Maxima added.

As a part of the foundation’s $500 million pledge, Gates announced a package of six new grants totalling $40 million. The grants support projects and partnerships to improve access to savings and other financial services, including:

* Expansion of bank and microfinance services to include savings accounts

* Implementation of new approaches to reach the poor with savings, such as branchless banking and mobile money

* Research to identify how people use formal and informal financial tools, including savings, credit, insurance, and payment services, and to analyze the impact of financial services on the lives of the poor.