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Financial services for the urban poor : South Africa's E Plan


  • Paulson, Jo Ann
  • McAndrews, James


Much of the research on financial services in low-income countries has focused on micro-credit programs. Much less attention has been paid to the design of depository services, although many more low-income people use depository services than get access to credit. Having access to depository services is important for household well-being: to safeguard funds, to save for large purchases, and as insurance against unexpected expenditures. Economic reform programs in recent years have encouraged banks to push up nominal interest rates to keep deposit rates positive in real terms, and to motivate savings in financial assets. But once deposit rates are positive in real terms, banks typically increase minimum deposit size or find other ways to discourage small depositors because of the high costs of maintaining and servicing low-balance accounts. Traditional passbook savings accounts, the main product used by low-income households, are being phased out because of high costs. After South Africa's move to democracy in 1994, it was politically imperative that the country's major financial institutions help redress the historically weak system of services for low-income people. The authors describe one of the more interesting experiments. In 1993 Standard Bank of South Africa created an affiliate, called E Bank, to deliver basic banking services to the urban poor. E Bank provides a package of financial services designed specifically for low-income clients, offering greater convenience for the user while keeping under control the costs to the bank of providing services. E Bank combines the innovative technology of modified ATM services with staff available to help all clients. By rethinking the needs of the basic banking customer, E Bank was able to bundle services valued by poorer clients to justify a fee high enough to cover costs.

Suggested Citation

  • Paulson, Jo Ann & McAndrews, James, 1998. "Financial services for the urban poor : South Africa's E Plan," Policy Research Working Paper Series 2016, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2016

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    Cited by:

    1. Claessens, Stijn, 2006. "Access to financial services: a review of the issues and public policy objectives," Journal of Financial Transformation, Capco Institute, vol. 17, pages 16-19.
    2. Andrie Schoombee, 2000. "Getting South African banks to serve micro-entrepreneurs: An analysis of policy options," Development Southern Africa, Taylor & Francis Journals, vol. 17(5), pages 751-767.
    3. Gregory N. Price, 2003. "South African Apartheid, Black-White Inequality, And Economic Growth: Implications For Reparations," South African Journal of Economics, Economic Society of South Africa, vol. 71(3), pages 611-630, September.
    4. Stijn Claessens & Erik Feijen, 2006. "Financial Sector Development and the Millennium Development Goals," World Bank Publications, The World Bank, number 7145, April.
    5. Jones, Gareth A. & Dallimore, Anthea, 2009. "Wither participatory banking?: experiences with village banks in South Africa," LSE Research Online Documents on Economics 23354, London School of Economics and Political Science, LSE Library.


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