To reach communities currently not served/underserved by microfinance, Oxfam America has developed a highly decentralized, locally-controlled solution that represents a departure from mainstream microfinance. Instead of extending the reach of institutional lenders, Saving for Change takes the opposite tack. It promotes the training of thousands autonomous saving and lending groups. These groups efficiently mobilize the 'under the mattress' savings from the village and lend it at interest to those who need it with the profits growing the group fund. 'Viral replication' is the key to the cost effectiveness of this model. The surprising finding is that villagers are not too poor to save, and there is enough underutilized savings in even the poorest village to meet most needs. Saving for Change is successful because it builds on long established traditions of village saving and lending and uses NGOs already delivering non-financial services in these villages to bring Saving for Change to the villages.
With its funding from Gates, Oxfam America will expand Saving for Change from 95,000 to 347,000 women group members in Mali and from 49,000 to 180,000 women and men group members in Cambodia. Both projects will become the largest microfinance initiatives in their respective countries and the only ones reaching the rural poor at scale. In addition, the Gates grant will fund world class research in Mali to see how and if SfC improves the lives of village women and their families. Gates funding will underwrite feasibility studies in Latin America as the first step to bringing savings led microfinance to the region as well as the upgrading of the SfC methodology through Oxfam's partnership with Freedom from Hunger.
The actions listed below will be carried out by the Oxfam America and Freedom from Hunger staff from their respective offices:
2008 - 2010:
- Participate in CGI
- Hold various fundraising initiatives
- Build Boston-based Community Finance team by adding research and financial support capacity
- Plan and carry out first worldwide conference on savings led microfinance
- Launch of expansion plan funded by Gates into new regions in 2,000 villages
- Launch of research by a team of anthropologists and a random control trial study in 600 villages
- Strengthen Oxfam Technical team to support expansion into new regions
- Develop manuals and training protocols for 'replicating agents' (women group members selected to train 80% of the new groups in the Mali expansion as volunteers or paid for by the groups)
- Carry out scoping study for introducing LED solar-powered lighting to replace kerosene, seek funding for pilot
- Carry out scoping study for introducing water harvesting to extend growing season, seek funding for pilot
- Train partners in new management information system (MIS)
- Develop expansion plan
- Launch research on effectiveness of village-level group trainers and on depth of outreach
- Launch study of interface between saving and lending groups and the system for rice intensification and agricultural marketing
- Launch large-scale expansion in Cambodia to 2,000 new villages
- Build country initiatives to scale
- Complete research that documents the performance of the model
- Complete research documenting the impact of Saving for Change
- Hold major international conference on savings led microfinance
Microfinance is a development success story, yet half a billion families, five times more than those borrowing from all microfinance institutions today, lack access to even the most basic financial services. Except for densely populated countries like Bangladesh, India, and Indonesia, it is too expensive for institutional lenders to serve the rural poor who live in scattered villages in Africa and Asia and the poorest countries of Latin America.