Closing the Gap in Access to Financial Services for Low-Income Workers

Authors

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  Chhavi Ghuliani

  Managing Director, Partnership Development, BSR

  

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  Chhavi Ghuliani

  Managing Director, Partnership Development, BSR

  

  New York

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  Chhavi oversees BSR’s relationships with governments and foundations in North America, where he seeks to create cross-sector partnerships between the private sector and donors to accelerate progress towards the Sustainable Development Goals.

  Prior to joining BSR, Chhavi worked for a socially responsible investment firm, where he combined financial and environmental, social, and governance (ESG) analysis to make sustainable investment recommendations. He also spent several years as an operations manager for Oracle’s Asia-Pacific and Americas regions, opening a new operation in India. He also developed a CSR strategy for a spirits company in Mexico, developed sustainability reports for companies in India and Saudi Arabia, and worked as a freelance CSR consultant for the Institute of Public Health. He speaks English, Spanish, and Hindi.

  Chhavi holds an M.B.A. from the Wharton School of Business and an M.A. in International Studies from the Lauder Institute of the University of Pennsylvania. He holds a B.A. in English and Computer Science from Rutgers University.

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Chhavi Ghuliani, Manager, Partnership Development and Research

Although the garment industry offers many people in the developing world a regular wage and steady employment, the lack of access to financial products and services for low-income workers remains a significant challenge to sustainable development. When speaking recently at the Women’s World Banking conference in Amman, Jordan, I was reminded of this gap, and of the opportunity for financial institutions to reach an untapped market by creating products and services that are relevant to this population.

At the conference, I discussed BSR’s HERfinance initiative, which aims to bring low-income workers into the formal financial system and help them better manage their incomes. On my panel, I shared the initial results from more than 400 one-on-one surveys that we conducted with garment factory workers in India, which revealed that they were still largely outside of the formal financial system, and provided data on the kind of financial products and services they need most. For example, only about 14 percent of the individuals we surveyed said they had any personal debt, while more than 60 percent said they send money home to their families. Their salaries are stored in cash or gold, and they rely on friends or acquaintances to carry their wages home to their families in neighboring villages, which exposes them to loss or theft.

Nadine Chehade from the Consultative Group to Assist the Poor (CGAP) also presented household-level research on the financial needs of low-income people in Mexico, which complemented our HERfinance research. It was clear to both of us that even for the people in the room—most of whom work for microfinance institutions that have been pioneers in creating and promoting products targeted at low-income women—there is a lack of knowledge around the financial needs, behaviors, and aspirations of low-income salaried workers. This gap has prevented financial institutions from creating products and services that are appropriate for and accessible to this group.

Historically, microfinance has meant microcredit, which helps women from poor households start or grow their own enterprises. But women who work in garment factories do so because they prefer a regular, salaried wage to the uncertainty that comes from self-employment or working in the informal economy. Therefore, low-income salaried workers are less interested in receiving credit. Rather, they are looking for a safe, convenient place to store their incomes, as well as access to financial services such as remittances and low-cost insurance.

The community-based financial institutions that attended the Women’s World Banking conference are well-suited to fill this gap because they understand how to design products for low-income women. However, in many cases, regulation prevents these institutions from taking deposits and, therefore, mainstream banks must also be part of the solution. Only when that happens will we reach the scale necessary to help low-income workers build assets and save for the future and help our society build an inclusive economy that empowers people to improve their lives and achieve their aspirations.