Savings and Needs in East Africa: An Infinite Variety

The poor save for a variety of reasons, most of which have underlying risk protection and management dimensions. Risks that the poor face can be categorised as:

• Lifecycle risks: These tend to have a certain degree of predictability that makes planning and managing them more feasible;
• Structural risks: Tend to be long-term or permanent changes in the national or international economy. In East Africa, as in many other developing countries, some of the most conspicuous structural factors are strongly linked to the implementation of structural adjustment programmes. Also, includes seasonal factors that affect income and expenditure;
• Crisis risks: Requires the adoption of either short-term or long-term strategies which may include sale of productive assets or permanent downward revision of household consumption budget.

Notes that the poor employ a wide range of risk management strategies, including investments in human, physical, financial and social assets.

Responding to the needs of the poor in this context by financial service provision requires close attention to:

• The needs of micro-clients';
• Their current financial coping mechanisms (which are usually in the informal sector);
• The constraints in these current coping mechanisms;
• Profitability in service delivery.