How much credit should banks extend to the BOP? Are insurance policies appropriate financial instruments for low-income communities? For the last few weeks, the editorial page of South Africa’s Business Day has taken up the debate. On the one hand, the paper reports on expanded access to credit in poor townships. A few days later, the editors urged “credit caution.”

Yesterday, the debate moved from credit to insurance. According to the paper:

The industry is proposing affordable short-term householders' and cellphone owners' policies that would provide basic risk cover. The target is to raise those in the lowest income brackets with short-term insurance from 0,2% to 6% over the next three years. There are also proposals for affordable death and disability products that would extend such cover to 1.7-million more low-income earners in the next decade.

While praising the proposal, the editors urge caution – how much insurance do low-income South Africans really need? I think the editors make some valid points, and I’m interested to see how this debate plays out in the paper in the coming weeks.