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CHAPTER 6 IMPLICATIONS AND POLICY RECOMMENDATIONS The findings from the Financial Diaries suggest that those who participated in the study lead complex economic lives and used financial tools to manage their cash flow and accumulate useful lump sums. The data suggest that the financial tools they used were largely home based, or provided by friends and family. There was limited activity with financial service providers (FSPs). This report discussed these issues within a particular framework—the income segmentation framework. That framework highlighted the importance of the level of and variation in income in understanding the behavior of the respondents. The framework can also help us think about the implications of this study. The data show clearly that the respondents who were in the two low-income segments were extremely poor and not making ends meet. Policy-makers and FSPs should collaborate to identify cost effective ways to get money into the hands of the people in these two segments. This could be through government-to-person cash transfer programs; grant programs funded by international NGOs or church networks; or even crowd-sourced funds. This would have two beneficial effects. First, it would increase the resources of the individuals targeted and undoubtedly have an impact on their well-being. Second, it would create a reason for people in this segment to start interacting with the formal financial service system, because we propose that the money grants be transferred to the intended recipients through the formal financial system. With respect to the higher-income segments, FSPs need to recognize that the people in these segments are handling considerable sums of cash, and they could benefit from financial services that meet their basic cash flow management needs. For those with low-variation in their incomes, especially those running micro-retail businesses, there is an opportunity to offer them small loans. For those with more varied incomes, good savings services might be more appropriate. In either case, FSPs need to also focus on building a relationship with people in these segments. They are not currently using the services of FSPs very extensively, and part of the reason for that is that they do not like having to pay fees and interest, and they do not trust FSPs to give them a fair deal. Go To Menu 45

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