Good governance for Member-Owned Institutions in Remote Rural Areas
Savings and Spider Plants: What is good governance for Member-Owned Institutions in Remote Rural Areas? This is a thematic cross-cutting article based on seven institutional case-studies in Africa, Asia and Latin America. This article is part of a larger FORD Foundation-funded, Coady Institute study on member-owned institutions. For access to the other articles go to the related link.
• Members are more likely to safeguard money that they perceive as their own rather than as external capital.
• Member-ownership did not guarantee trust or patronage if services were not competitive or flexible enough.
• Small autonomous groups and larger MOIs seem to have the strongest forms of governance and accountability. Small associations keep transactions simple and use witness-style governance, local norms for organizing and, often, oral bookkeeping. Complex reporting requirements can threaten groups’ ability to keep their own records or to supervise others to do so.
• Large sophisticated networks or cooperatives are able to effectively combine internal controls with external regulation and supervision including audits. Their success depended on finding creative ways to decentralize decision-making and member input.
• There is a trade-off between product diversity and member ownership. The complexity of products affects the complexity of governance and members’ ability to oversee.
• Being localized and networked at the same time proves quite challenging for governance because there are two overlapping governance structures. This model can be the worst of two worlds lacking the flexibility of localized as well as the standardization required to control risks.
• Village-based models that use local governance structures are an effective way to ensure wide outreach and local ownership. However, it is more likely that local power structures are making use of the MOI than the other way around. How these governance structures can be held accountable is the key to this model.
Click on related link for a copy of the paper.
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A Gold Thread: Building Assets and Courage among SEWA's Microfinance Members
This article talks about the links between the "practical" livelihood interests of women and the broader "strategic" interests such as power shifts and policy change. There are necessary links between the two that I have seen demonstrated through the work at Self Employed Women's Association Bank and SEWA Association.
This women's association/union for the self-employed is comprised of over 800,000 women in India. It is an inspiring story of organizing, microfinance and advocacy through the visionary leadership of founder Ela Bhatt.
Through the Coady Institute, I worked with SEWA Bank on developing a training program for financial literacy of members, management of self help groups and strategic planning for district-level associations. These training materials are also available in English and Gujurati upon request. www.sewa.org
For a copy of the article please contact me.
Remote Rural Finance and Selfish Genes
Selfish genes is a good metaphor for small, informal financial associations. At their best, they are self-replicating and adaptive. This was a paper that I wrote for the Microcredit Summit in Halifax November 2006 based on our early work with the FORD Foundation study on remote, rural member-owned finance. I argue that there are different routes to overcoming the limitations of being small. Achieving scale is one route but there are others including self-replication of associations or linkages with other institutions (that allow them to stay small and flexible).
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