Katy Love

ANNEX 1: “The promising practices” case studies series

Savings-led approaches
Pact’s WORTH, CARE, CRS, OXFAM

I. Context:

a. Socioeconomic overview
Pact’s WORTH program addresses the issue of HIV/AIDS and its effects on orphans and
vulnerable children (OVC). Pact works mostly in rural Sub-Saharan Africa, as this is
where AIDS has hit hardest, but also has programs in Nepal.

CARE’s work with Ophavela in Mozambique operates in an agricultural region where

illiteracy is high, AIDS is increasingly becoming a problem, and few women are involved
in microenterprise.

CARE’s MMD program works with rural women in the poorest countries in Africa,
particularly in Niger, and has replicated it in Mozambique, Zimbabwe, Malawi, Zanzibar,
Mali, Eritrea, Rwanda and Uganda.

CRS works in India.

Oxfam’s Banking on the Poor Program (BOP) is in poor, rural areas where malaria kills
more than AIDS.

b. Purpose of intervention
The WORTH program operates on the principle that by empowering women to become
economically self-sufficient, they will be better able to care for the OVC, raising
awareness on HIV/AIDS, and creating community responses to the disease.

CARE’s Ophavela program creates “Accumulating Savings and Credit Associations”

(ASCAs) in rural areas to help families gain access to credit and mobilize their savings. It
responds to a demand for a bottom-up styled, member-owned organization that creates
independent, trained, and sustainable savings and credit groups. It seeks to reduce
vulnerability, increase the levels of assets and create or expand on existing income-
generating activities.

CARE’s MMD program is based on own savings and self-management. Although each
MMD group determines its own bylaws and interest rates, MMD groups tend to operate
in a similar manner. Unlike an MFI that drains money from the community through high
interest rates, the interest is retained at the community level.

CRS links self-help groups (SHGs) to banks by encouraging NGOs to create groups that
give small grants and trainings as incentives. CRS has 2,500 development partnerships
with grassroots organizations in India.
Oxfam’s BOP reaches the poorest of the poor, and is based on the principles of: best
experience, demonstratable impact, large scale, low cost, efficient training and quick
graduation, replication by local institutions, self-propelled group formation, and a
commitment to sharing knowledge.

c. Description of target group/clients/members

The WORTH program targets women in high areas of HIV/AIDS in order to help them
provide for OVC.

CARE’s work in Mozambique (Ophavela) and Niger (MMD) target rural areas, and
MMD targets women exclusively. Ophavela serves the poor living in urban and rural
areas and are mostly engaged in microenterprise.

II. Description of methodology:

a. Summary of design concepts:
Pact’s WORTH’s innovative, replicable, and low-cost initiative fosters economic security
by encouraging women to help themselves and each other through community-controlled
village banks. The model invests in training women in literacy and savings in order to
manage economic security and enhance the abilities of communities to respond to
HIV/AIDS. WORTH is not solely a financial program; it educates women about
HIV/AIDS and builds their confidence through literacy and financial trainings.
Furthermore, WORTH has created an empowerment cycle that builds on women’s
individual skills, creates small groups, and encourages the groups to become involved in
their communities.

CARE sees itself not as a service provider, but as a catalyst. Through Ophavela in
Mozambique and MMD in Niger, CARE established self-sustaining and self-replicating
savings and credit groups in order to reduce the economic vulnerability of its members.
Ophavela creates a group in which all members regularly contribute and one member
each rotation receives the whole pot of funding. The methodology is flexible and is client
driven. By empowering people economically, Ophavela addresses issues like isolation,
inferiority, and powerlessness. Both projects build on traditional credit and savings
practices, and the members own the groups.

MMD operates on the principle that clients need sustainable financial services, which
necessitates the creation of an organization that meets client needs and generates enough
income to cover costs. MMD trains women in income generating activities, and in turn,
the women contribute to savings and a credit fund to make loans to members. Groups of
30 women meet weekly and save in fixed contributions.

CRS promotes the concept that SHG members are good customers to banks; they
generate low rates of non-performing assets, borrow steadily, and have high repayment
rates. Groups deposit surplus savings, which improves bank liquidity. Strong linkages are
formed between SHGs and banks. CRS believes that helping an SHG to financially
develop will allow its members to enjoy social benefits, like community development and
peace building, and helps to prevent emergencies by creating insurance.

Oxfam’s BOP savings-led model trains groups to manage their accounts. It adds pooled
savings, lending at interest and simple record teaching. Local NGOs train groups in a
number of projects. Groups approve loans and there are no restrictions on what loans can
be used for. As women save and borrow, they form solidarity, learn about malaria and
treatment, become involved in communities, liberate themselves from moneylenders (and
therefore empower themselves), and improve their status within their household as
income-generators.

b. Process/steps in implementations:
Pact’s WORTH program is implemented in six steps. Partnerships are established with
local NGOs (which allows WORTH to replicate quickly and remain affordable), which
mobilize communities. Small groups of 15-25 women are created. Participants are self-
trained through books and with the help of literacy volunteers. Groups then create
savings-led banks. WORTH works to build linkages between the different groups by
organizing Empowerment Clusters, led by Empowerment Workers (who mentor and
troubleshoot). Finally, the group graduates and Pact exits to launch new programs.

CARE’s Ophavela program starts with savings and credit agents training the groups.
Then, community trainers are selected and once enough have been trained, Ophavela
withdraws and leaves with the community trainers in charge.

CARE’s MMD program begins with an intensive phase in which the animator trains the
members in basic procedures of savings, credit, interest and fines. The development
phase allows the group to become more self-reliant, and agents visit less frequently. In
the final and maturation phase, groups are independent, and agent conducts a final
evaluation.

CRS first selects “promoters,” who encourage women to save. Promoters find the poorest
people, and organize and motivate them by organizing groups. The groups have four
development stages: savings, interlending, linkages, and sustainability. They train groups
in lending methodology and instruct them in savings and record keeping. Once the groups
are stable, promoters link them to a local bank with the capacity to provide credit and
savings services.

BOP, with the help of local NGOs, first identifies partners and NGOs hire a manager and
several animators. Partners, animators, and managers area trained from 1-3 weeks.
Animators will then work with fifteen groups with fifteen members in the first year.
Within the second year, four to six group leaders are trained as “village agents.” These
agents will replace the animators, but animators will continue to monitor performance
and conduct evaluation. Oxfam staff visits partners quarterly. Finally, Oxfam typically
exits within three years, once groups can operate independently. Oxfam’s other goals
include attempting to develop the Oxfam CF team, to mobilize funding, and launch BOPs
in pilot phase countries.
 c. Methods of measuring results:
CARE has not begun to properly evaluate MMD.

Evaluation is key to Oxfam and BOP. BOP will monitor and collect data when it designs
and implements an evaluation system. Group animators will collect data monthly on
indicators, and after three months, animators will track the progress of groups through
their training, monitoring, and graduation phases. The BOP manager will also track
measures of efficiency every three months. Oxfam will collect data from a random
sampling of groups on their baseline and follow-up data on financial indicators.

III. Results
The WORTH model has successfully increased literacy and savings rates, as well as the
number of women in business, the ability for rural women to acquire capital, and has
empowered women in the decision-making process. In Kenya, 5,000 women have been
involved with WORTH.

Ophavela was only recently begun in 2001, but thus far, it appears to have a positive
impact, as 69 groups have been formed. Because the methodology is so flexible, it is
highly replicable and is done by village trainers. Both Ophavela and MMD have been
successful in rural areas.

CARE’s MMD program graduates groups quickly, increases literacy, and provides
training at low costs through community agents. CARE’s model is easily replicable
because of its decentralized system, and has helped to create 5,000 women’s groups with
162,000 members. Savings has tended to increase, on average, up to 250% annually. The
majority of groups (over 95%) continue after graduation from CARE’s program. CARE
believes it owes its success to the fact that MMD provides a high return on savings that
simultaneously allows use of funds. This method increases morale because members
borrow their own money.

For CRS, sustainability is a key component. When members receive benefits, groups will
sustain themselves. The simplicity of the model adds to its ability to sustain itself. SHGs
have proven to increase self-confidence, increase assets, and decrease moneylender rates.
Groups help each other save, too.

Oxfam’s BOP will have tested the pilot project by October 2007, and intends to expand
in order to reach 1,000,000 poor. It is highly replicable by NGOs that lack financial
sophistication to become MFIs. Most groups operate autonomously within two years of
group formation.

IV. Resources required/cost to institution

Because of its success and extremely low-cost, Pact’s WORTH is expanding rapidly, and
is on target to deliver the program to 195,000 households in nine nations in Africa and
Asia. In Nepal, for instance, programs (including overhead, curriculum, technical
support, etc) cost $1 per head per month.

Ophavela required funding for the creation of a local NGO to implement projects.

MMD’s costs arise from several issues, including: isolation of areas, low productive
capacity, small loan sizes with high fixed costs, seasonality of cash, and the risk of
natural disaster. Costs in the early stages of the program were over $1,000 per group (and
$33 per member), but now programs cost between $18 and $25 per member. All groups
are immediately self-funded, so subsidies are not needed and there are no operating costs.

CRS’s cost per group ranges from $0 when volunteers and group members form new
groups to $100-200 when an NGO’s assistance is needed. The cost per member is
approximately $6-12.

Oxfam’s model with simple methodology is low cost because it gradates trained groups
quickly, trains new groups with staff resources, and empowers successful leaders to take
on more responsibility. Approximately $10-40 is spent per member as compared to the
start up costs for an MFI, which range from $200-400 per borrower. Because the program
relies on local animators and village agents, the costs are low.

V. Challenges/pitfalls/lessons learned
Ophavela’s largest challenges in project implementation are the dispersed nature of the
population, low level of cash incomes, and the seasonality of activities. With MMD,
groups were often not able to accumulate enough savings for their credit needs.

One of the challenges for CARE’s MMD program is that CARE staff implements the
programs directly and there are no partners. Moreover, the funds grow slowly (but
steadily), large loans cannot be made, expanding services to non-members can be
difficult, and dealing with cash surpluses and shortages can be difficult for the groups.
Finally, since MMD operates outside the regulated sector, linkages to banks are difficult
to form, but CARE is working to create networks tot overcome this. The MMD program
seems to work well in rural, landlocked environments.

CRS is concerned that with their model, NGOs may become a bottleneck to information,
members will be unable to exit the groups, and that the poorest continue to be overlooked
in the self-help groups (as mostly middle poor join). They also are faced with inconsistent
quality, training and monitoring, and the fact that groups can be dependent on staff for
longer time periods.

BOP’s major flaw is that as the group size is relatively small, loans could fail with a
natural disaster (while larger financial institutions easily absorb losses). As the risk of
natural disasters do indeed create a large risk, locals cope with these realities by saving in
animals that can be sold, or buying expensive items like jewelry.
 VI. Contact information/sources of information
Jeffrey Ashe, Oxfam America
William J. Grant & Hugh C. Allen, CARE’s MMD
Kim Wilson, CRS
Gabrielle Athmer, g.athmer@chello.nl, CARE
Marcia Odell, model@pacthq.org, Pact WORTH
Mark Pickens (mwp2102@columbia.edu), Pact WORTH
Erica Tubbs (etubbs@pacthq.org), Pact WORTH