Page last updated at 00:02 GMT, Thursday, 25 February 2010

Saving holds key to women's empowerment

By Saroj Pathirana
BBC Sinhala Service

Sumitra using a bottle-cap straightener at home in India
Sumitra's bottle-cap straightening business has allowed her to start saving

Once upon a time, Sumitra used to roam the streets of the Indian city of Ahmedabad, collecting discarded caps which could be recycled and sold back to manufacturers such as Coca-Cola.

She would spend the whole day sifting through the rubbish collecting the caps in return for a few hundred rupees - about $2.

Then in 2006, Sumitra was introduced to a microfinance initiative which provided her with a small loan to start her own business.

Four years on, she employs five women, and is the proud owner of six bottle-cap straightening machines which process 50kg of caps a day.

After paying the salaries of her employees, her business makes a small profit that Sumitra saves every month - a move that she says has transformed her life and that of her family.

Changing emphasis

Sumitra got the small loan from the Vikas Centre for Microfinance Development, one of the oldest clients of the non-profit organisation Friends of Women's World Banking, India (FWWB), a network member of Women's World Banking (WWB) which helps lift women out of poverty.

Loans or credit were the model for the first 30 years of microfinance. Savings is the future
Mary Ellen Iskenderian, Women's World Banking

They work closely with microfinance institutions, or MFIs, which provide a credit lifeline to millions of deprived people in some of the poorest countries of the world.

Now, after a few decades of providing small loans, they want more people to do the same as Sumitra and start saving.

"As the microfinance industry matures, we are seeing the beginning of a major shift from a focus on credit to an emphasis on savings," says Mary Ellen Iskenderian, the president of WWB.

"Loans or credit were the model for the first 30 years of microfinance. Savings is the future.

"We will continue to look for new and innovative ways to increase global access to savings products and services for the poor," she adds.

WWB is holding a series of leadership workshops across South Asia in conjunction with the MFIs that have been working hard to empower people in poorer societies, especially women.

WWB is planning to create innovative savings products and services, apart from small loans, for nearly seven million low-income people in Asia, Latin America and Africa during the next 10 years.

The initiative has just received the backing of the Bill and Melinda Gates foundation, which has pledged $8.5m (£5.5m) to the project.

Sri Lanka's war widows

Some individual partners of the network have already jumped on the savings bandwagon. Sri Lanka's Hatton National Bank (HNB) is one of them.

HNB has been at the forefront of Sri Lanka's micro-loan and agricultural loan industry for more than 20 years. But now it is also looking at changing its product and clientele.

Sri Lnkan forces in a tank fighting in the north
Sri Lankan forces defeated the Tamil Tigers last year

The bank wants to help tens of thousands of war widows - women whose husbands were killed in the conflict between the government and the recently-defeated Tamil Tigers.

HNB is targeting these women as potential clients, as soon as resettlement is completed in the former war zone.

Here, too, the emphasis has shifted much more to saving, says HNB's Vishva Gunawardena.

"What we have been doing is opening up a savings account for the customers to make their deposits."

Greater control

Women are being encouraged to take more control, not just of their savings, but of the way the microcredit system is actually run.

The fact that the industry has a majority of women clients should also be reflected in the leadership, says the president of WWB, Mary Ellen Iskenderian.

US Secretary of State Hillary Clinton
Hillary Clinton says empowering women is a foreign policy issue

Recognising the importance of empowering women, the US has also begun integrating women's issues into its Global Health Initiative and Global Food Security Initiative.

In a recent speech, US Secretary of State Hillary Clinton said she recognised the need to make women's empowerment a foreign-policy priority.

"It is why we are launching women's entrepreneurial efforts in Latin America. It is why we are working with religious leaders in Afghanistan and Pakistan to increase access to information about family planning and preventive health care," she said.

"We are doing all of these things because we have seen that when women and girls have the tools to stay healthy and the opportunity to contribute to their families' well-being, they flourish and so do the people around them."

Saving pays

Back in Ahmedabad, Sumitra says her life has been completely changed, thanks to the business she now runs and the money she has managed to put away.

Sumitra's husband became ill during the 2006 monsoon, and was in desperate need of medication.

Without her income, Sumitra would not have been able to afford the medicines that saved his life.

The business has also enabled Sumitra to help her son get started in his own business, while her daughter is in her first year of college, studying finance.

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