CARE International's Village Savings and Loan Programmes in Africa
This monograph describes the experience of the MMD programme and examines in lesser detail the evolution of several other CARE projects in Africa that follow the same basic approach. CARE wants to share its experience with a wider audience. While looking at the specific ways in which CARE’s programmes have evolved, it seeks to draw conclusions about the strengths and weaknesses of the methodology and its potential for broader application worldwide. Its ultimate purpose is to help practitioners abandon their fear that by doing something simple and effective they may be doing something wrong.
Over the past decade, CARE International in Niger has developed and implemented Mata Masu Dubara (MMD)1, a self managed system of the purest form of financial intermediation. Based solely on member savings and small, self-managed groups, MMD is now a membership based programme servicing approximately 162,000 rural women in one of the poorest countries in Africa. MMD is not a single institution but rather an amalgamation of nearly 5,500 stand-alone groups, each with about 30 members,
operating in almost identical ways.
In 1999, CARE started to promote the MMD programme’s Village Saving and Loan (VS&L) methodology outside of Niger and there are now programmes operating in Eritrea, Ghana, Malawi, Mali, Mozambique, Rwanda, Uganda, Zambia, Zanzibar and Zimbabwe. Several of these will be described in more detail later in this paper. Similar programmes are also under way in India, Cambodia, Nicaragua, and Ecuador. While many of these are smaller in scale and each has its own distinct variation on the basic methodology, most of them stick to the basic set of principles.
CARE believes that the VS&L methodology has the potential to create a revolution in rural microfinance in the developing world, especially in Africa. It offers a solution to the problems of sustainability and institutional instability that for years have bedevilled practitioners who have attempted to create rural financial intermediaries. In Africa, and indeed worldwide, success has been very limited because in general the scale and structure of individual programmes has been defined by the need to build MFIs and less to provide services to the enormous numbers of the rural poor. The hunt for financial sustainability has skewed the products offered towards urban areas and away from the poorest as loan sizes and interest rates rise steadily upwards to satisfy the anxiety of the MFI to break even. As Gabrielle Athmer notes in her recent very eloquent paper7, “…Currently the thousands of MFI reach less than two percent of the poor and even fewer of the very poor. Most of the MFIs are heavily subsidised. The number of MFIs able to combine financial sustainability and a substantial outreach is limited to a few dozen…” The President of Freedom from Hunger8 puts the challenge in a nutshell: “….our thinking should rather start with the market we seek to serve, the very poor, rather than with the product we have to sell or the institutions we have to build to sell it.”