Thursday, August 19, 2010, 04:31 PM - The Solidarity Economy & Microfinance
I work with informal unregistered savings groups. They use their own money (no loans or donations from outside), pool it, put aside some for an emergency fund, lend out to each other or invest. Each group makes its own constitution and policies for membership, attendance, fines, interest rates. I have seen fines for: gossiping, your cell phone going off during a meeting, being late, not knowing the groups' balances, coming to a meeting drunk. Each meeting begins with each member reciting one policy as they get their passbooks. As you can see here, passbooks use stamps so those with limited literacy can understand how much savings they have. If it is all their money and their rules, what do they need others for then? Support in weighing their options, governance issues, financial management, linking to other forms of support. Even then, the support is only for a time. In India, over 3 million groups are linked to financial institutions including banks, coops and rural banks.
Friday, January 1, 2010, 03:31 PM - The Solidarity Economy & Microfinance
Sparking a Savings Revolution
This is the title and gist of a New York Times article at the related link below. It is a tad promotional but outlines well what many have been trying to explain for years. That is, savings is as, if not more important, than loans for supporting women and families in economic security. Loans might give a small business a leg up. Savings give the family a leg up. Savings can help send children to school, buy medicine in an emergency, buy an asset, pay for a sudden burial in a rural area without creating that vicious cycle of debt that we all know too well. Think of your own situation.
I am working with Village Savings and Loans Associates and a team from Oxfam, CRS, CARE and Plan to support these small savings groups to better understand the quality and endurability of these groups. Bill and Melinda Gates Foundation funding. There are tens of thousands of them in existence mainly but not exclusively in Africa. They stem from local rotating schemes run by people themselves. Tiny credit unions. In some areas, they use oral forms of bookkeeping. For families in rural areas it is often the only trusted place to save.
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Thursday, July 16, 2009, 05:20 PM - The Solidarity Economy & Microfinance
In May, I worked with FARM Africa, Ethiopia to develop a base-line for their Rural Women's Empowerment Project. The project uses savings and loan associations, livestock groups and women's rights awareness including community-based legal trainers. In past work, they have found a link between women's own income and assets and her ability to have voice in the household and in the community. We did base-line analysis combining quantitative indicators (eg. # cases brought to social court, women's land title, poverty score of household) with qualitative indicators (focus groups, life-stories, most significant change reported by women themselves). Men in the community were also interviewed. FARM will revisit these indicators in two years and four years to see what changes have occurred and if, indeed, there is a link between women's assets and her ability to contribute and assert her rights.
A draft report is available. Contact me for an electronic copy.
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Wednesday, March 11, 2009, 01:57 PM - The Solidarity Economy & Microfinance
The Decentralized Financial Service Project began in 2003. Phase II aimed to develop and test simple and effective tools and training to strengthen self-governance in community/rural based financial organisations (CBFOs). Through financing of Financial Sector Deepening Trust, I reviewed DFS Phase II with Angela Wambugu from Microsave (Kenya).
The project took a creative approach to training with a focus on accountability and transparency. By the end, members were much better able to hold leaders accountable. In all 225 groups were trained, approximately 5,000 members. DFS used a unique approach to group capacity building focused on member responsibilities and rights. They were able to demonstrate that built capacity in groups to self-manage and self-govern improves the performance of both groups and the institutions that support them.
Even though the results were promising, scale overall was limited and potential to improve upon that really depended on the type of association. The managed ASCA model proved to be the strongest demonstration of lowered costs that resulted in both broadened and deepened outreach (up to 70 km from the outlets). Financial Service Associations (FSA) were largely successful at decentralising services and increasing ownership at the group level. Built group capacity allowed the FSAs to reduce contact time thereby reaching more groups as well as creating groups in areas that would otherwise be too costly to reach. While the methodology shows promise, potential for scale is limited by institutional weaknesses and product rigidities. The Savings and Credit Cooperative was the least successful due largely to a limited ability or mandate to work on the group methodology and other institutional constraints.
Does training groups to be self-managed maximize rural outreach? Yes, particularly for the managed ASCA model. In the other cases, institutional limitations meant that efficiency gains at both group and institutional limit potential for broad outreach. Electronic copies of the report are available on request.
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Monday, October 6, 2008, 02:19 PM - The Solidarity Economy & Microfinance
painting- Adelino Timoteo
FIDES is a microfinance organization (and investor) that supports rural microfinance organizations in Africa and Eastern Europe. While many microfinance programs consider aspects of poverty they rarely look at the households in terms of their coping and asset strategies. How families use animals, jewelry as forms of savings and insurance. How they use social networks and groups. I worked with FIDES to develop a monitoring system that tracks these areas combining the quantitative data that donors & investors demand with qualitative methods for capturing the messiness of coping and asset building strategies.
Three types of analyses are used:
I. Client Poverty Measurement e.g. As of Dec. 2008 22% of Mali clients were likely below the poverty line. This data is generated through a 5 minute survey that uses the same questions from the national household expense surveys.
II. Client Profiling e.g. 42% of female Namibian clients have business assets in their own name. This data describes (in %s) and segments (in quartiles or sections) the client base in terms of social data: gender, poverty, rurality and the nature of their enterprise. Key portfolio data is also included that is relevant to social: retention rate; distribution of savings balances and distribution of loans disbursed as % GNI p.c. This data provides a springboard for further analysis.
III. In-Depth Analysis. Here aspects of household strategies, gender issues are explored in more depth. Due to lack of inheritance property rights, for example, widowhood or divorce can leave women in Namibia and Algeria and their children destitute despite income wealth and position. So we track women's personal assets as well.
In Mali, based on poverty segmentation of the client base, coping and asset-building strategies were explored for different households according to risk profile as the basis for a drought insurance scheme. For a recent paper on the process or for copies of the score-cards for FIDES’ Social Performance Monitoring system contact:
sabrina.beeler@fidesgroup.org
For a copy of a paper on this social performance system presented at the European Conference on Microfinance (Brussels) go to the link below and search "Complex Enough to Capture: Simple Enough to Use: Early Lessons from FIDES' Cross-Country Social Performance System"
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