Entrusted with his community’s extra earnings, Mr. Mkandawire, a farmer in Kasungu, Malawi, traveled two hours by bus to the Opportunity International Bank of Malawi to open his first bank account. When he arrived, there was just one problem: He didn’t have an identification card. Expensive IDs have been one of the barriers that discourage Malawians from using the banking system. Just two percent of the country’s rural population uses the system.
Fortunately, thanks to an innovative bank program, he didn’t need an ID. With his photo, fingerprints, and completed paperwork, the bank was able to issue Mr. Mkandawire a smartcard that provides an efficient ID system for the bank and easier access to banking services for Malawians. Mr. Mkandawire opened his account in less than an hour, and then convinced other farmers to open their own accounts. In addition to improving the security of individual savings, access to banking services has been associated with an increased rate of savings; an African study from the United Nations Capital Development Fund showed that those with access to bank accounts save three times as much as those who saved assets in the form of tradable goods like livestock, grain, and jewelry.
USAID funds innovative programs – including the program at Opportunity International Bank – to improve access to banking services for poor families. Through the bank, Malawians’ savings are cycled back into their communities in the form of loans that help small businesses grow. In Haiti, USAID has partnered with the Bill and Melinda Gates Foundation to create a fund to help Haitians gain access to banking services using their mobile phones.
USAID also works to help countries establish sound financial systems. In Kosovo, USAID’s work led to the establishment of the American Bank of Kosovo, now a privatized, sustainable business.
These efforts help families save for the future and improve their financial stability, and they help economies grow and create jobs.