To many it comes as a surprise to hear that the poor in low-income countries save or borrow. 1 However, we have seen that the poor constantly engage in a host of different small-scale financial transactions – informally. So, there would be a demand for microfinance provided that its services are superior to what the poor get from moneylenders, savings clubs and ROSCAs. The multitude of financial instruments in the informal economy reflects a multitude of day-to-day situations. A MFI that effectively meets this demand has to be flexible and offer products and services that respond to life cycle events, emergencies and the occasional income-generating opportunity. 2 Equity Bank in Kenya, for example, offers