The Savings Led Revolution: Mass-scale, Group Managed Microfinance for the Rural Poor
This paper discusses highly decentralized, non-institutional, under-the-regulatory radar, savings-led alternative approach to microfinance for reaching out to the poor, with a focus on the Saving for Change (SfC) program in Mali and Cambodia.
The SfC is a simple, robust, low-cost model that operates in regions and among communities that MFIs and credit unions scarcely touch. The paper states that the functioning of the model is threatened by suggested improvements such as matching funds, linking the groups to MFIs, and pooling funds of several groups and managing the common fund through an association of groups. It identifies the following challenges:
- Using groups for larger development agenda;
- Introducing new components for group training methodology;
- Involving donors in savings-led microfinance;
- Spreading the idea and leveraging training groups.
The paper states that there is a need for subsidy to scale up this methodology to more villages. Outreach to the poorest and the potential to use these groups as platforms for other services presents a strong case for funding savings-led programs.
