MICROCAPITAL STORY: Following Strategic Review, the Gates Foundation to Focus on Microsavings Within Microfinance Initiative

The Bill and Melinda Gates Foundation, a charitable organization that was created in 2000 with an endowment of USD 35.9 billion, plans to direct hundreds of millions of dollars to promoting savings programs designed for the poor over the coming years, reports the Wall Street Journal. Following a review of its existing microfinance grants and a broader study of its financial services strategy, the Gates Foundation decided to focus its efforts on promoting savings in the developing world. While no specific amount was reported, Bob Christen, the director of the Gates Foundation’s financial services for the poor program, stated “we’re going to focus very heavily on using our resources and our voice to put savings back on the world agenda”. Although estimates of access to savings for the poor vary, savings penetration rates are as low as six percent in the developing world.

According to the Wall Street Journal, the Gates Foundation grants will be directed to establishing rural savings programs, including research, training and technology. The Gates Foundation also plans to encourage governmental support for microsavings programs, including funding Central Bank education programs. The Gates Foundation will initially focus on countries that have existing infrastructure for establishing microsavings programs, such as Brazil, the Philippines, Mexico, South Africa and India. According to a spokeswoman for the foundation, the organization recently granted Oxfam International USD 11.7 million to initiate training and group-savings schemes in Mali and Cambodia. The long-term geographical focus of the Gates Foundation’s microsavings work is expected to be in Africa.

The Gates Foundation launched its Financial Services for the Poor initiative in 2005 under the scope of its Global Development Program. Within this initiative, the Gates Foundation has awarded approximately USD 300 million related to microfinance services, including loans and insurance. MicroCapital has reported on the Gates Foundation’s involvement in microfinance in the past, including a speech by Bill Gates promoting microfinance in April 2008, a USD 34 million grant to International Labour Organization in December 2007; the appointment of its microfinance head in April 2007; and a USD 15.4 million grant to Opportunity International, a USD 24 million grant to the Consultative Group to Assist the Poor, and USD 29 million in grants and loans to ProCredit microfinance institutions in February 2007.