As part of their 2014 Campaign Commitment, Carsey School of Public Policy co-hosted a learning event on Thursday, December 11th with us to share the value of starting and scaling up savings groups. William Maddocks (Carsey School of Public Policy) facilitated an engaging discussion, featuring Jong-Hyon Shin (Fundación Capital in the Dominican Republic), and Jeffrey Ashe (The Carsey School of Public Policy).
We would like to thank the panelists as well as the E-workshop attendees, especially those who participated to the Q&A session. We invite you to comment on this post to continue the discussion about savings groups and other breakthroughs financial inclusion. Please click on the links below to explore the session content.
Listen to the E-Workshop RECORDING
Have a look at the E-Workshop SLIDES
Review the E-Workshop QUESTIONS
A savings group replication agent trains a new group. She is using the all-oral curriculum which makes it possible for communities with low or no literacy levels to create and run a savings group with complete autonomy.
Summary of the E-Workshop
The E-workshop focused on two main issues:
- A 2-hour training method to create new savings groups
- The link between savings groups and conditional cash transfers.
Jong-Hyon presented her own experience in the Dominican Republic, and Jeff talked about the takeaways from his research in West Africa.
The live discussion with participants also touched on a wide range of topics, including the benefits and challenges of youth savings groups, the role of religious institutions in supporting the savings group movement, and the benefits of bank linkages for both the commercial banks and savings groups members. Check out the full recording of the session available here.
A youth savings group in Mali. Photo courtesy of Jeffrey Ashe.
Takeaways from the panelists
Jong-Hyon Shin (Fundación Capital) : Group quality: 2 hour vs classic VSLA?
Without doubt, the groups trained by classical VSLA enjoy higher quality than the groups trained in 2 hours. There are 2-hour groups saving as much as the conventional groups, but it is true that the group quality is not even, while the conventional groups demonstrate rather consistent performance. 2-hour training can get the groups to start saving, but it’s not enough to build a strong group. I believe that a group should have at least 3-5 subsequent monitoring visits in its first cycle. This is why I am working with PROSOLI, Dominican Republic’s CCTs, in which the group members will have a periodic visits from their trainers. Another measure to complement 2-hour training is to pay attention to the selection of members. When the members are sufficiently interested, and there is a mutual trust within the group, chances for subsequent intervention drops dramatically. In sum, it is ideal to have groups trained by costly and labor intensive conventional methodology, but if we are to achieve the scale, simple training may not be an undesirable option.
Jeff Ashe (Author of In Their Own Hands: how Savings Groups are revolutionizing development)
Two and a half billion people worldwide need a better way to save and borrow. Savings groups provide an alternative, safe and convenient place to save and easy access to small loans; an approach to mitigating poverty that is uniquely scalable because it is based on catalyzing the capacity of people to mobilize their own resources with only transitory outside help. The cost: a dollar per person and trending downward as what is learned in one village spreads virally to neighboring villages. Within ten years, savings groups with 100 million members could improve the lot of the poor in a million villages, at a cost of less than one percent of what these countries will receive in foreign aid. The extraordinary growth, success and durability of savings groups are due to following these principles:
- Start with a vision of scale and design for viral replication – multiple groups in thousands of villages in a single country
- Less is more, and the simpler the better
- Build on what is already in place
- Be sustainable – 89% of groups worldwide are saving and lending without outside support
- No giveaways – giveaways keep control in our hands, not theirs
- Keep costs low – the problems of poverty are vast
- Insist on local control, the key to building skills and lowering costs.
- Embrace learning and innovation
Are savings groups the silver bullet for eradicating poverty? No development effort can deliver on that promise – but savings groups are perhaps the best and most practical place to begin. The strategy of savings groups is based on an awareness that good ideas spread as they always have: through talking with neighbors and helping one another. We will judge ourselves successful when development passes from our hands to theirs.
The map of the Savings for Change (SfC) program shows the rapid expansion of savings groups in Mali over the last 6 years. Red dots are groups 5-6 years, yellow is 3-4 years, and green are groups only 1-2 years old. SfC is a program run in partnership by Oxfam America and Freedom from Hunger.
To learn more about savings groups, we invite you to read Jeff’s book (In Their Own Hands) and Jong’s blog.
E-Workshops are hosted by the 100 Million Project of the Microcredit Summit Campaign and strive to feature the work of organizations who have announced Campaign Commitments to take specific, measurable and time-bound actions that demonstrate their commitment to the end of extreme poverty.
Join Fundación Capital and the Carsey School of Public Policy in the global coalition to help 100 million families lift themselves out of extreme poverty. State your Campaign Commitment today by contacting us at firstname.lastname@example.org.