SAVING FOR CHANGE

In late 2004, I was hired to introduce savings groups to Oxfam America’s Community Finance Department as the department’s director. I worked hard to ensure that Oxfam’s version of “community finance” reached populations that financial institutions, even the most innovative microfinance institutions, had scarcely touched. Saving for Change, our name for this model, was designed to support Oxfam’s work to “right the wrongs of poverty, hunger, and injustice.” Oxfam’s focus is on the world’s poorest communities, with an approach to work through local partner organizations. My colleagues and I at Oxfam, along with Kathleen Stack and her colleagues at Freedom from Hunger, another advocate for self-help solutions to end hunger, developed Saving for Change. Saving for Change capitalized on the unique skills of local nonprofits (NGOs): outreach, training, and hands-on support. This program set local grassroots nonprofits at the heart of our design and built on what they already did so well: delivering services and training in poor and often remote villages.

Our mission was to develop a locally controlled, easily accessible, scalable approach to improving financial inclusion to reach a population that microfinance as it is traditionally conceived never will. No money can be made on weekly savings deposits of twenty-five cents and fifty dollar loans, the scale of the transactions that the poor most often need. We calculated that in Mali alone, a country with a population of nearly sixteen million, the potential market for savings group membership was substantially greater than one million members, just counting women, who were the target for Saving for Change membership. We chose to target women because Saving for Change was more than just a better way to save and borrow—we wanted to provide opportunities for women to develop their organizational and leadership skills in a forum where they could discuss issues of importance to them.

Eight years later, nearly 450,000 women had joined Saving for Change groups in Mali, in addition to the 143,000 villagers in Mali who had joined similar projects sponsored by CARE, the 40,000 who were part of Plan International projects, and the 30,000 who had joined groups trained by CRS. By early 2014, a total of 695,589 savings group members were trained in Mali among the four organizations. To put this in perspective, this figure is larger than the entire population of Boston, and it puts savings group membership in Mali into the top ranks of microfinance outreach worldwide—this was financial inclusion without financial institutions.

Speaking just of the Saving for Change part of this expansion into Mali, we achieved this level of outreach (450,000) with a staff that never exceeded 203 people. This included a staff of trainers (animators) and their supervisors working for ten local NGOs and a team of four Malians who made up the technical unit. The number of staff working with groups is now one-third of that number, with virtually no sign that the groups are faltering. The groups were taught to manage themselves and to share what they had learned, and so they did. While the ratio of staff to borrowers is typically 1 to 300 for a financial institution, the ratio for Saving for Change in Mali was 1 to 2,000 during the high-growth stage. Since village volunteers increasingly took the lead for training and supporting groups, this ratio has grown to about six thousand group members for every NGO staff person.

Savings groups are hardly a perfect solution, and some groups function better than others. One limitation is that the amount that each group can save and distribute each year is small—about $500 in countries like Mali—so loan size is limited. Another limitation is that it takes a lot of time and effort to meet every week. Members do not seem to mind in the dry season, when there is more time and a savings group meeting is the perfect excuse to get together, but time is limited when the rains come and all are busy in the fields. There is also always the chance that someone with higher status will have an easier time getting a loan.

With that said, 95 percent of the groups trained in Mali since 2005 continue today. Despite these problems, groups have been able to resolve their difficulties, and they keep coming back week after week and year after year.

Joining a savings group will not lift many out of poverty—no development initiative can deliver on that promise—but regular savings and a reserve of cash can help reduce life’s uncertainties.