Jun 1 2012

How bank accounts can help empower families in poverty

Did you know that about half of the world’s people ñ more than 2.5 billion adults ñ do not have a bank account?

Jayamma in India withdraws money from her bank account

Jayamma withdraws money from her sponsored child’s bank account in India in this 2011 photo. Her child’s name is Nagalakshmi.

The World Bank arrived at that estimate recently, according to this Bloomberg Businessweek article. Many of these people live in the communities CFCA serves.

Poverty and a lack of required documentation are some reasons why many of these families have never even set foot inside a bank.

“It’s very rare for sponsored friends and their families to have a bank account of their own,” said Jose Rodriguez, CFCA project director for Colombia and Bolivia.

Sponsored children, the aging and their families usually live and work within their countries’ informal economies.

Their income is often seasonal and comes from cash-based, small-scale sources.

Sponsorship and microfinancing

In some countries such as India and Kenya, sponsorship benefits in some projects are distributed through bank accounts to the mothers of sponsored children.

Because these children are under 18, their mothers manage these accounts under the supervision of CFCA staff until the children are of age.

“These bank accounts become tools for families to save and access sponsorship benefits,” Jose said.

CFCA staff members help families get the required documentation such as birth certificates for the sponsored child.

(Related link: Read more about the challenges of obtaining birth certificates in Kenya.)

Bank accounts can also facilitate CFCA livelihood programs, which are designed to help families generate sustainable income for themselves.

CFCA sponsored youth, Nagalakshmi, in India

Nagalakshmi, sponsored through CFCA.

(Programs may include skills training, business development training, access to loans, savings to create a loan fund, income-generating activities and individual empowerment to help members develop livelihoods based on skills.)

Capital to launch these livelihood programs are often provided through savings and loan cooperatives created by sponsored friends and their families.

In order to access those micro-loans, however, the parents of sponsored children often need to have bank accounts.

By opening these bank accounts, Jose said, families are seeing their active, participatory role in the sponsorship program. Meanwhile, CFCA staffers are affirming their position as supporters to the families, assisting in their development.

Jose said bank accounts are a tangible way of restoring dignity to mothers as they join a part of society they’ve historically been excluded from ñ the “banked” society.

“To be able to say to that mom, ‘Here’s your bankbook,’ that’s really powerful for everybody, I think,” Jose said.

“This is sometimes the first time those moms have even gone into a bank.”‘

‘Faces of CFCA’ for June

Tom Zidon with his sponsored child Selena (CFCA)

For the month of June, we’d like to highlight this photo in our “Faces of CFCA” Facebook photo album!

Tom Zidon, right, met Selena on a mission awareness trip to Nicaragua in 2009. She is now one of his sponsored children!

To submit your photos to be included in our Facebook album, simply email a .jpg photo file (the higher the resolution, the better) to socialmedia@cfcausa.org.

Include your name and your preferred form of contact (phone, email, etc.) in case we have any questions about your submission.

Thanks for your support!

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