Tuesday, March 16, 2010

Launching the FAB Campaign

Financial Access at Birth. A crazy, audacious idea. We can't even get Americans to agree on a health care plan, yet here is a group of people proposing that every child in the world should start life with $100 in a savings account!

The idea sprang from Professor Bhagwan Chowdhry at UCLA. If you meet Bhagwan, he does not strike you as a dreamer or a schemer. Yet he shares this idea with evangelical persistence. While not a panacea to all that plagues the poor, such a simple idea could help with education or starting a small business. As pioneers in microcredit have shown, even small loans can make a big difference. Nobel prize winner Muhammad Yunus started his first village loans with $27.

Perhaps as importantly, a FAB account would be an important step toward broader financial inclusion. Access to financial services often begins with a bank account. It can also be a source of individual empowerment- leading to further savings, independence, and a source of start up funds.

If you are interested in more info, read the full proposal at Fast Company and the write up in the Economist. And if you like the idea, please take a minute to register your support at the FAB site.
Note: Bhagwan and I are both members of the Faculty Council of the Center for Financial Inclusion at Accion International.


Anonymous said...

Paul -

Sounds intriguing. The summary at FastCompany does not discuss potential interaction with population growth. Is this seen as a non-issue? or is there a way to neutralize any perceived incentive to have children?

Dan Hudnut

Joost Bonsen said...

Fantastic idea. Perhaps generalize a bit and include:

(1) Participation rights to per capita income streams -- e.g. like the Alaska Permanent Fund which dispenses oil-related income to all residents annually -- http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

(2) Participation rights to assets privatized from State holdings -- i.e. do the "Voucher Privatization" correctly by dispersing 1/20th shares every year for 20 years. Singapore apparently did something like this with privatizing the transit co and Chile has a pension system that has some of these qualities too (set up by the brother of Presidente Pinera)