The Partnership: Scaling-up and Deepening Impact
This partnership between Barclays, CARE International, and Plan International focuses on savings-led community finance initiatives. This microfinance methodology is effective in meeting the needs of the poor providing a way to manage their money and increase their ability to deal with life emergencies. The partnership has 3 main objectives:
1) Outreach: Make use of savings-led community approaches to reach clients who are excluded from or have limited access to formal or informal financial services
2) Impact: Achieve positive socio-economic impact on poor people through the provision of basic financial services within communities that enable people to manage their household finances, and through development of new add-on services (such as enterprise training) and improvement of existing savings-led community finance methodology; and
3) Inclusion: Target and reach new or existing clients to improve their level of financial inclusion through the use and testing of informal and formal financial services, channels, and products tailored to the requirements of communities.
The partnership will deliver savings-led community finance projects in 11 countries across Africa, Asia, and South America, all ranked as 'low' or 'medium' on the UNDP Human Development Index (2007/2008). Plan International is leading projects in Tanzania, Zambia, and Indonesia, while CARE is leading projects in Uganda, Mozambique, Peru, and Vietnam. In India, CARE and Plan are both leading projects, enabling the partnership to learn from both organizations' expertise and trial innovations in different geographies. In Kenya, Ghana, and Egypt their country offices are jointly implementing projects and share knowledge and resources.
Approach: Savings-Led Community Finance, Tailored to Local Needs
The central component of the partnership is savings-led community finance. The basic principles of the methodology enable individuals in a community to join together in self-governing groups to save regularly and access small loans from a group fund. The partnership is employing similar principles across projects, with approaches adapted to meet local demographic, geographic and socio-economic conditions. In Africa the methodology will be based predominately on the Village Savings and Loans model. In Asia and South America, slightly different approaches will be implemented, for example linking with microfinance institutions and projects will build and improve upon existing models, such as Self-Help Groups (SHGs) in India, and draw on learning from other savings-led initiatives.
As groups mature and become operationally self-dependent, opportunities for them to become clients of formal financial institutions will be explored. In a number of countries, Plan and CARE will work with Barclays to develop products and channels that meet community needs and have the potential to become sustainable in the long term.
A Unique and Differentiated Partnership
This initiative is unique both in its pioneering cross-sectoral partnership model and in its focus on improving community finance methodology and innovation to drive scalability, sustainability, and cost effectiveness.
There are three key elements:
1) Partnership Model: Each party is playing an active role in shaping and delivering the initiative, as opposed to the more common donor-delivery partner relationship. It is making use of the experience and established delivery structures of CARE and Plan to promote and train community groups, combined with the financial expertise of Barclays to support financial education and to trial financial products. Accenture Development Partnerships, a not-for-profit unit of Accenture, assisted in the initial set-up of the partnership and continue to have an advisory role on the partnership's steering committee.
2) Approach to methodology: The partnership will systematically identify and test improvements to the methodology. The insights obtained from structured monitoring, evaluation, and learning will help maximize the potential of savings-led community finance.
3) Inclusion: A willingness to try new concepts and technology while focusing on providing appropriate products and channels to clients will allow the partnership to conduct ground-breaking research into ways of linking the formal and informal financial sectors.
What the Partnership Aims to Achieve
The expected outcomes can be closely linked to the objectives and are:
Provision of direct access to financial services for up to 400,000 new clients in 11 developing countries in Africa, Asia and South America
- Improved quality of life for clients through the provision of basic financial services (predominantly individual savings and loans) that enable them to buy basic necessities and capital items, access health and education services, cope with emergencies and invest in income generating activities.
- Understanding of the extent to which add-ons improve the socio-economic impact of community- based finance
- Have suitable insights on the methodology, including best ways for reaching high and cost efficient scale-up; the use of village agents to make methodology more sustainable in the long-term; and the extent to which community-based finance can counteract marginalization
Understanding of the extent to which linking informal savings groups with formal financial institutions is beneficial for clients and financial institutions, by having tested linkages with around 10% of clients in mature groups and products, services, and channels in approximately 2-4 countries.
The success of the partnership will be measured by:
- The number of people reached with basic financial services
- The improvement of the socio-economic status of direct and indirect beneficiaries of the program
- An increase in the social and political status of women and the level of control they have over household income
- The cost effectiveness of community managed finance projects
- Improvements to established methodology
- The introduction of new ways to link savings-led community groups with formal financial institutions.
Despite progress in reducing poverty in the developing world over recent decades, too many families still lack necessities such as food, water and healthcare. Access to even the most basic financial services can help households increase their incomes and reduce their vulnerability to emergencies such as illness and natural disaster.
Community-based financial services tailored to the needs of poor and vulnerable households are having a measurable impact in reducing poverty, and improving general wellbeing and empowerment, particularly when offered to women. Yet millions of people are still without access to such services, especially young people and those in rural areas.
About the Partners
Barclays is a major global financial services provider engaged in retail and commercial banking, with an extensive international presence in Europe, the USA, Africa and Asia. Investing in the community is an important part of Barclays sustainability strategy, for more information visit www.barclays.com/community
CARE International is one of the world's leading international relief and development organizations, reaching more than 59 million people in more than 70 countries, For more information visit www.careinternational.org.uk
Plan International is one of the oldest and largest children's development organizations in the world, working in 48 developing countries to promote child rights and lift millions of children out of poverty. Plan works with more than 3,500,000 families and their communities each year. For more information visit www.plan-uk.org
For more information on the partnership please see www.barclays.com/bankingonchange