Saving through mutual funds, not ‘committees’

Historically, Pakistan has had a dismal saving rate — well below its regional peers. This, however, does not necessarily signify a low propensity to save. Many Pakistanis, especially women, use an age-old, informal saving mechanism known as a “committee”, whereby a group of people pool money each month and the entirety of it goes to one of the participants. The process recurs every month until all the partakers get the sum once. Committees help people use social ties to save money for expenditures that require a sizable amount of money, well beyond one’s monthly take-home income. Likewise, they are also used as a financing tool, where a person takes the lump-sum money in the earlier months and then pays it off with monthly contributions.