SAVING FOR CHANGE

Mass Sale, Group Managed

Microfinance for the Rural Poor

Microcredit Summit Nairobi

April 10, 2010

CHALLENGE OF REACHING THE POOREST

Microfinance a success • 150 million worldwide But:• 80% or more not reached• rural poor largely left outBecause:• Delivery costs too high• Credit needs too small• Only 1/5 need credit• All need savings

Saving for Change Reaches those Left Out (Focus/Scale/Impact)

• Starts with saving• Highly profitable (for

members) • Vast scale • Simple/Low cost • Builds on local

capacity/knowledge• Delivery by NGOs• Self-replicating• Survives• No external fund• Constant learning

CREDIT LED MICROFINANCE

Microfinance Institution

Bank

Credit Union

Loan

Borrower

Loan with Interest

SAVE

$

BORROW

$

SAVE AND REPAY

$ + $

$

DISTRIBUTE FUNDS AT END OF CYCLE

GROUP LEADERS CREATE NEW GROUPS

$ + $

$

Group 1 Group 2

Surprising Findings:• Poor not “too poor to save” but

their savings lose value • Enough savings among members

for most needsFindings:

• Very few groups disband• 85% of fund on loan• Model virtually fraud proof • Robust groups survive crisis

UNDERLYING PRINCIPLES

0

100000

200000

300000

400000

500000

600000

Apr 05 Dec 05 Dec 06 Dec 07 Jun 09 Jun 10 Jun 11

Mem

ber

s

Mali Cambodia Total

316,219

543,000Increase in membership in 5 years

Current Savings lose 20% per year

HomeAnimalsJewelryTontines

Remittances

Money LendersSuppliers

MFIs

Current Lending Costs money

SfC Model

More savings

20%-40%

More Income

Income Generating Activities

Social Capital

Mali: Chronic Food Insecurity

• Mali 171 of 173 HDI• 1/3 rural households food insecure• 58% of rural households below $1 per day• 28% villages food crisis

Average SfC group member • Illiterate woman• Had malaria past year• 5 children• Hungry part of the year

SAVING FOR CHANGE CREATED A

NEW MARKET FOR MF IN MALI

• 10% had MFI or Credit union loan (In new areas < 1%)

• 19% members of tontines (ROSCAS)

• Now 80% to 90%have access to improved financial services in a village within two years

Mali Snapshot

22 Members

$312 Total group Fund (26% returned as dividends)

$15.Size of

average loan(Most $5 to

$50)

99.8%Loan

repayment rate

WHAT MEMBERS VALUE MOST

Solidarity and Mutual

Assistance39%

Savings and Loans27%

Malaria education

18%

Increased Income

5%

Others11%

Member Satisfaction with SfC

0% 20% 40% 60% 80% 100%

Loan sizes are adequate

I understand the records

I can get a loan when needed

Loans are shared fairly

Group functions harmoniously

I know how much I have saved

Secure place to save

It is worth my time

Mali Cambodia

SfC Impact on Food Security• Opens investment opportunities in trading and

agriculture• With more business more money more food available

and more money to buy it. • When fund divided often used for food and seeds• Less short term fluctuations in Income/reduces risks• Reaches the poorest/ women heads of household• With more prosperity less need to migrate• Many groups purchase grain to use and resell during

the hungry season• Hunger now less likely

Social Impact• Extends women’s social networks• Empowerment• Increased women’s’ role in the community• Increases confidence, leadership• Enhanced cooperation, mutual assistance, and

solidarity among members and communities. • Enhanced a “woman’s ability to manage her nuclear

sub-unit of the household”. • Less stress and increased family harmony• Helps households headed by women, a growing

trend in Mali, are also benefiting from the program.

. •  

power

Group Assets $

Change

Household

Village

To sum up

• Saving for Change will not “eradicate poverty,” drought and declining soil quality, endemic malaria and lack of markets and infrastructure also factor in, but the lives of women members and their families have improved.

• Saving for Change provides a more stable platform that allows for the accumulation of assets and reduces the need to sell assets in emergencies. SfC is a key leverage point to promote sustainable development in vulnerable villages.

To Introduce SfC to New Region over Three Years

With $400,000 investment ($25 per member)• 300 villages with SfC• 800 groups, 16,000 members

Includes:• Local partner costs• Costs of NGO selection, training, supervision,

monitoring and evaluation

To Introduce SfC to New Region over Three Years

With $400,000 investment ($25 per member)• 300 villages with SfC• 800 groups, 16,000 members

Includes:• Local partner costs• Costs of NGO selection, training, supervision,

monitoring and evaluation

How it Works

• NGO team of ten animators and coordinator recruited and trained

• Each animator assigned 30 villages• Over three years each animator trains one groups

in twenty villages• In each village trains one to three replicating

agents who train rest of groups in the village• Over three years animators train 200 groups,

replicating agents train 600 groups• Replicating agents train/support additional groups

in future.

Following Procedure insures Quality at Low Cost

• Careful selection of partners• Joint hiring of coordinator and animators• Tight MIS• Simple manuals• Clear ambitious performance expectations• Constant learning and improvement

Oxfam America has SfC teams in Senegal/Mali,

Cambodia, El Salvador to provide this

assistance.

How much does it cost? For five million dollars:• 2,500 villages ($2,000 per village)• 200,000 group members• 10,000 groups• Four to five years• Sufficient “critical mass” to attract more

donors/government. • Potential demand 40,000 to 50,000 groups in country

of 10 to 15 million inhabitants

A mass scale/low cost/locally controlled/locally financed

strategy for food security is the key