- Sustained demand for the savings model from rural women, with older groups showing strong sustainability
- Increasing commitment amongst savings groups to saving larger amounts over time
One of the weirder phenomena that I’ve experienced lately during visits to Savings Groups is IGA frenzy, or the idea that everyone should borrow for an Income Generating Activity, or IGA. Trainers assume that every member is raising chickens, weaving, planting cabbages, selling mangos, or doing some other activity that “needs a loan”, and that all they have to do is borrow from their group, invest in the activity, and then get rich. Sounds good, but it isn’t. Three reasons:
The Bogota Forum on Savings Groups, the first event of its kind in Latin America took place in Bogota, Colombia from December 4th to the 6th with the participation of over 200 practitioners eager to share and learn from experiences in Latin America and beyond. Participants brought great enthusiasm for a methodology that is starting to gain momentum in the region, especially thanks to the government of Colombia’s commitment (through the Banca de las Oportunidades) to expand Savings Groups as a means of reaching vulnerable populations. The 70,000 men and women reached by IED VITAL in Colombia, in partnership with the Banca de las Oportunidades, stand as an inspiration and a point of reference for smaller, yet growing programs in the region.
Local innovation is inspiring. Here is another resource - Afrigadget - as a follow up to Honey Bee, brought to my attention by one of our bloggers. I am posting on local innovation because I have seen how creative savings groups and their members can be. How can we encourage more?
Lack of traction with formal financial services is often attributed to an insufficiently granular understanding of client needs. I think the bigger failure is in not knowing how to distil the mass of research we continue to produce into compelling products.
Of course, there is always an element of conceit whenever one proposes any kind of new development intervention, even if it is something as mundane as a new financial service offering. And if the proposed service relates to microsavings, I can imagine how naive one must appear to so many doers and experts who for several decades now have focused on the credit side of things
A post on SR earlier this year highlights how savings groups in a set of communities rarely considered the timing of their share-outs.
Why is it that we organizers cling to the idea of a share-out at all? A stock refrain arrives: “the action audit”; “members join because of the share-out.” Let me challenge both of these rejoinders. First, using cash to clear the books is an antiquated way of keeping track of money. It is exactly the kind of primitive thinking keeps members from building their funds to a meaningful size to produce meaningful loans.
I had the pleasure of meeting these two ladies, Mary and Didaciene, a couple of years ago in a savings group in Rwanda. When the two women shared about why they were in their group, I wrote down their words (as
I came across this clever video on Duncan Green’s excellent Poverty to Power blog.
It goes well with the previous post, “Please shut your marketing mouth”.
Watch this video, and read the previous post. If they make you uncomfortable, then ask yourself if you are using your Savings Group program to raise funds by exploiting stereotypes. If you are doing that, please stop. It just hurts everyone.