Village Agents:

Self-Replication and Sustainability of CARE’s Village Savings and Loan Associations

July 2010 I Access Africa Technical Learning Series : No. 1

Introduction Among the poor in sub-Saharan Africa, almost no one has access to even the most basic financial services, including savings, which is what the poor want and need most. High operational costs, the informality of economic activities and the perception that the poor are not credit worthy have discouraged banks from serving rural areas. Yet World Bank data show a strong correlation between the development of a financial sector and reductions in poverty and inequality,1 and experience in Asia and Latin America has demonstrated that the poor are indeed credit worthy. To achieve faster rates of development in Africa, the poor must gain access to 23 Countries: savings, credit and insurance that targets their needs. CARE’s Access Africa Angola, Benin, Burundi, program is designed to provide the poor, even in remote areas, with the Côte d’Ivoire, Eritrea, financial services that can help them improve their lives. Ethiopia, Ghana, In 1991 CARE developed in Niger a self-managed system of Village Savings and Loan Associations (VSLAs) based on small amounts of member savings, with no outside capital investment. The model has grown into a network of more than 55,000 VSLAs in 23 African countries providing more than 1 million members – around 70 percent of them women – with savings, credit and emergency insurance.

Kenya, Liberia, Lesotho, Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, Sierra Leone, South Africa, Somaliland, Tanzania, Uganda, Zambia, Zimbabwe

Through VSLAs, many group members are engaging in income-generating activities for the first time. The loans are used for investments in small businesses, farming and animal husbandry. People become more food secure, are able to buy fertilizer and harvest more food. Others use the loans to meet household obligations such as medical expenses, school fees and even family events such as weddings or funerals.

July 2010 I Access Africa Technical Learning Series : No. 1

Scaling Up VSLAs: The Village-Agent Model

2

With a goal of reaching 30 million of Africa’s poorest people with financial services by 2018, Access Africa has developed a low-cost model designed to ensure the self-replication and sustainability of VSLAs in rural and urban settings across the continent. The engine of this self-replication – experienced VSLA members, called village agents or VAs, who are trained by CARE’s local partners to establish and train new VSLAs for a fee paid by the members of the groups they serve – is now being built into the VSLA model. VAs are men or women who, having participated in a VSLA, understand the methodology and can teach it to others. They must be minimally literate and have good people skills, energy, commitment and leadership qualities. They receive training based on the VSLA guide for field officers (FOs) and support from their supervisors. The training consists of an introduction to training techniques and reinforcement of VSLA procedures. The VAs must be able to “sell” the concept of a VSLA to a community and recruit members to form groups consisting of 15 to 30 members. Rather than being paid by the project, the VAs charge a fee (usually $1 to $2 per training) for training a group to manage their saving and lending activities. Once the VA has achieved a reasonable level of skill and a solid foundation of associations, the FO who trained, mentored and supervised the VA can be relocated to start more VSLAs in a new area, while the VA continues to form new groups until the

Figure: 1

Bukoba Musoma

Tarime Buhemba

Mwanza Ngudu Geita Arusha Moshi Kibondo

Mbulu

Shinyanga

Same

Ndareda Nzega Ndala

Kasulu Kigoma

Kondoa

Singida

Tabora

Uvinza

Manyara Region Tanga

Korogwe

Chake Chake Pangani

Handeni

Chitipa

Manyoni

Karonga

Chisenga

Zanzibar Mpanda

Chilumba

Dodoma

Bagamoyo

Ikola

Dar es Salaam

Kilosa

Tanzania

Morogoro

Rumphi

Kisiju Iringa

Sumbawanga

Nkhata Bay

Ifakara Kasanga

Utete Mohoro

Chunya

Malawi

Kibau

Mbeya

Kilwa Kivinje

Mahenge

Kilwa Masoko

Tukuyu Tunduma

Nkhotakota

Kitgum Liwale

Kasungu

Kotido

Arua Lindi

Nachingwea

Salima

Mchinji

Lilongwe

Kaabong

Moyo Njombe Gulu Mtwara

Moroto

Nebbi Lira

Manda Masasi

Songea Dedza

Mbamba Bay

Katakwi Masindi

Newala

Tunduru

Soroti

Mangochi

Uganda

Matambwe Ntcheu Liwonde

Kumi Mbale

Kamuli

Tororo

Fort Portal

Kampala

Jinja

Zomba

Mwanza

Ibanda

Entebbe Masaka

Blantyre

Mbarara Ngabu

Nsanje

area is saturated (see Figure 1 above). CARE created a broad template envisioning the work of the VAs, but their actual outreach and performance vary from country to country and are described within this document. In 2008 CARE launched Save Up, a three-year, three-country initiative funded by the Bill & Melinda Gates Foundation that aims to test a low-cost methodology of replicating VSLAs across Malawi, Tanzania and Uganda. The purpose of Save Up is to define, refine and test the VA sustainability model for ongoing scaleup and support of VSLAs. The VA model is currently being tested with varying nuances across the Save Up countries to further refine and identify lessons that will be documented and shared in other countries as Access Africa expands across the continent.

Mobilizers, field officers (FOs), communitybased trainers (CBTs) are all terms denoting paid trainers, except in Tanzania where CBTs are VAs

Under Save Up, VAs launch, train and mentor new VSLAs and provide ongoing services to them after CARE has withdrawn. VAs will also link VSLAs with local non-government organizations (NGOs) and with more formal financial institutions as needs arise and with innovations such as mobile money accounts. They will impart additional skills such as training in business management, market access and organizing record-keeping systems. Although training of new groups is the key service of VAs, as financial institutions get involved in providing services to VSLAs, the VAs will likely still have a role – and other sources of fee-based and commission income – in helping those institutions better serve VSLA members. All the services provided by VAs will ensure the sustainability of the VSLAs.

July 2010 I Access Africa Technical Learning Series : No. 1

Save Up is expected to reach a total of 300,000 VSLA members, 100,000 from each of the countries, 70 percent of them women. The goal of Save Up is to define the essential components of a cost-effective institutional model to develop, support, sustain and scale up high-quality, savings-led groups by implementing national strategies for scale-up in three countries. Using lessons learned and models developed through the threecountry pilot, CARE will design a flexible program, adaptable to local contexts, to scale up savings-led groups and provide enhanced access to a suite of financial services in multiple countries in sub-Saharan Africa.

3

Although specifics from country to country vary, the broad outlines of developing and monitoring the progress of VAs include: • • • • • •

Identification and selection Training Outreach Performance Remuneration Sustainability

Table 1 shows some of the Save Up targets projected for August 2011. As of June 2010, many of these targets have already been achieved.

Table 1: 2011 Save Up Targets Tanzania

Malawi

Uganda

Area covered

16 districts across 4 northern regions

All regions

14 districts across west, southwest and east regions

CARE staff

44

6

9

VSLA paid trainers

32 mobilizers hired by CARE

6 IPOs, 8 FOs each = 48 FOs

13 IPOs, 172 CBTs

(56% are women)

(31% are women)

(10% are women)

12 per mobilizer = 384

12 per FO = 576

Approx. 23 per CBT = 4,000

# of groups to be formed by paid trainers

July 2010 I Access Africa Technical Learning Series : No. 1

# of VAs

4

384

576

516

(45% are women)

(45% are women)

(% who are women not yet known)

When VA is selected

During 8-week group training

During first 3 months after groups formed

After 2,468 groups are formed

# of training days for VA

5 days

5 days

7 weeks during 1 year membership in a VSLA + 3 days as a VA

# of groups to be formed by VAs

11 per VA = 4,224

8 per VA = 4,608

2 per VA = 1,032

VA fee for service

$2.50 per visit = $40

$1 per visit = $15 per year

To be determined

($50 per year)

Total # of groups to be formed under project

4,608

5,184

Average # of members per group

22

Projected VSLA membership in 3 years

5,032 (does not include VA groups)

20

25

101,376

103,680

125,800

(70% are women)

(70% are women)

(67% are women)

Note: Mobilizers, field officers (FOs), community-based trainers (CBTs), are all terms denoting paid trainers, except in Tanzania where CBTs are VAs. IPOs = implementing partner organizations.

The following section is a narrative of the variations in the VA models that are being employed under CARE’s Save Up project in Tanzania, Malawi and Uganda.

Save Up in

Tanzania

Implementation Dates: March 2009 – August 2011 Figure: 2

Bukoba Musoma

Tarime Buhemba

Mwanza Ngudu Geita Arusha Moshi Kibondo

Mbulu

Shinyanga

Same

Ndareda Nzega Ndala

Kasulu Kigoma

Singida

Tabora

Uvinza

Manyara Kondoa Region Tanga

Korogwe

Chake Chake Pangani

Handeni Manyoni

Zanzibar Mpanda

Dodoma

Bagamoyo

Ikola

Dar es Salaam

Kilosa

Tanzania

Morogoro Kisiju

Iringa

Sumbawanga

Ifakara Kasanga

Utete Mohoro

Chunya Kibau

Mbeya

Kilwa Kivinje

Mahenge

Kilwa Masoko

Tukuyu Tunduma

Njombe Liwale Lindi Nachingwea

Mtwara

Manda Masasi

Songea Mbamba Bay

Newala

Tunduru Matambwe

CARE Tanzania envisions that once the VAs are identified and trained, VSLAs will pay them to carry out the work previously performed by CARE staff: supporting groups technically, forming and training new groups and monitoring performance.

CARE Tanzania is one of 9 countries that implements VSL programming directly through paid staff.

CARE Tanzania’s Save Up project is working in 16 districts in four regions organized into a so-called Northern zone. The area is large enough to offer scope for the creation of many VSLA groups. And since the area was new to CARE, the period from January to March 2009 was spent hiring mobilizers and sensitizing communities about the project and its goals. At the community sensitization meetings, the mobilizers explained the entire Save Up process, including the fact that one VA will be selected from each group to form new groups.

July 2010 I Access Africa Technical Learning Series : No. 1

CARE Tanzania has been implementing the VSLA methodology since 2000 with CARE staff assisted by VAs, called community-based trainers (CBTs). Unlike the other two country offices that subcontracted implementing partner organizations (IPOs) for VSL program implementation, CARE Tanzania, with project funds, directly hired 32 mobilizers (18 women and 14 men) and four technical officers (TOs) (two women, two men) to implement Save Up. This may explain why more CARE Tanzania staffs are involved in Save Up than is the case in the other two countries (see Figure 2 right and Table 2 opposite).

5

Table 2: CARE Tanzania staff for Save Up #

Position

Description of Responsibilities

1

Economic development program coordinator

Overall program coordinator and supervision

1

VSLA sector coordinator

Strategic support to projects, technical support and linkage to other sector initiatives and to national and international level microfinance stakeholders and policy forums

1

Project manager

Management and supervision of field activities

32

Mobilizers

Mobilization, supervision and capacity strengthening of VSL groups, CBTs and Apex associations

4

Technical officers (regional supervisors)

Supervision of field activities and technical support to field staff, CBTs and Apex organizations

1

Monitoring and Evaluation/ Management Information Systems Officer (M&E /MIS)

Quality control, data compilation, analysis, documentation and dissemination

2

Data entry clerks

MIS of the project in a particular region, manage data from field, audit, entry, report preparation and report submission

1

Project accountant

Financial management, administration, accounting and reporting

1

Project driver

Transportation of program staff and vehicle maintenance

44 total staff members

Within the 2½-year project period, each of the 32 mobilizers forms 12 groups for a total of 384 groups. Out of each of these 384 groups, one member is selected as a VA for a total of 384 VAs. Each of the 384 VAs will go on to form 11 groups for a total of 4,224 groups who are able to save, access credit and partake in emergency insurance. It is expected that at least 70 percent of these group members will be women.

In Tanzania, village agents are called communitybased trainers, or CBTs.

July 2010 I Access Africa Technical Learning Series : No. 1

Identification and Selection of VAs

6

The selection of VAs is a process that begins when the first groups are formed by the mobilizers. After the mobilizers form the groups, they begin to train the group members in the VSL methodology, including lessons on drafting of a constitution, how to save, borrow, repay and share-out (graduate) at the end of the cycle – one training lesson per week for eight weeks. During the training, the mobilizer identifies two or three capable people who are willing to be VAs who then take over the responsibility of forming groups. Usually, there is no competition within the groups for the job of VA, and there are clear criteria to which candidates must conform. Candidates for the position of VA must: • • • • •

Be active group participants Attend the meetings and trainings regularly Be able to guide others Be willing to volunteer for small compensation Have minimum reading and writing skills

After the seventh week of training, the mobilizer has identified the probable VA candidates from the group. The mobilizer then asks the group (minus the In Tanzania, VSLAs VA candidates) what they think about the candidates. He or she probes to have, on average, see if they would be acceptable. In most cases the groups agree with the 22 members. mobilizer’s suggestions because the identified people have worked well with the other members and gained their support. However, occasionally a group objects to the mobilizer’s choice, because, for example, they say the person drinks too much or has family problems. In such a scenario, the mobilizer has to take the group feedback into consideration and identify another candidate that will be well respected in the community. Once the candidates are approved by the group, the mobilizer reviews the tasks of a VA with the candidates and asks each of them if he or she is willing to be a VA. The mobilizer then selects one; usually those who are chosen accept. To deploy the newly selected VAs, mobilizers assign a geographic area where each will form groups. At the same time, the VAs continue to attend their own original group meetings. Often, they hold a leadership role in these groups such as a secretary or chairperson. By August 2009, 256 VAs had been chosen (eight per mobilizer), 140 men and 116 women (45 percent women).

VSL programming was introduced in Tanzania by CARE in 2001.

Training of VAs At the time they were chosen, the 256 VAs had already undergone eight weeks of training within their original groups. Before embarking on the process of forming new groups, the VAs received more intensive training from the mobilizers as per the training manual. (The manual used in Tanzania is a 58-page Swahili translation of the “Village Saving and Loan Associations (VSLAs): Village Agent Guide,” version 1; 24th March 2009). CARE Tanzania has

After the 256 VAs were selected, they were divided into four groups of 64 each for intensive training. The training takes five consecutive days and is clients through VSL conducted by the four TOs. The TOs, who also supervise the mobilizers, have programming. vast experience with VSLAs. The training is carried out using a variety of methodologies to ensure the full participation of every VA trainee. Practical sessions are organized to enable participants to experience the feel of the work they will perform in the field. The methodologies include games, interactive group discussions, lectures and quizzes. During these sessions VAs practice how to conduct sensitization meetings, how to introduce the VSL methodology to a community, how to train groups using the eight lessons provided in the manual, how to supervise and collect data from the groups. During the training period VAs also visit and observe existing VSL groups. Upon successful completion of training, the VAs were provided with bicycles from IPOs to help them reach their communities.

Outreach of the VAs First year: March 2009 – March 2010 Starting in July 2009 each of the 256 VAs was expected to form at minimum two groups per quarter in communities that meet CARE’s criteria for implementing VSLAs (the rural poor with limited access to financial services). The wards from which the VAs are identified are selected on the basis of geography and population density, rather than political considerations driven by local authorities.

July 2010 I Access Africa Technical Learning Series : No. 1

reached over 300,000

7

Rollout schedule per VA: July – Sept. 2009: two groups Oct. – Dec. 2009: two groups Jan. – March 2010: two groups April – June 2010: three groups July – September 2010: two groups Each of the 256 VAs has a goal to form 11 groups for a total of 2,816 groups by September 2010. According to the above rollout schedule, the VAs are usually assigned to form two groups each quarter. However, sometimes the VAs encounter high demand for their services. In such cases, the VAs prefer to enlist the groups and begin training more than their goal of two groups. Thus, by March 2010, some VAs had worked with 9 or 10 groups. As of April 20, 2010, the actual number of groups formed by VAs was 1,097 encompassing approximately 74 percent of the goal of 40,000 members envisioned during the first year.

Second year: April, 2010 – April 2011 In the second year, the same 32 mobilizers will each form four new groups for a total of 128 new groups. The same VA identification and selection process noted above will be repeated whereby each mobilizer will identify and train one VA from each group formed for a total of 128 VAs. With the previous 256 VAs already identified, the overall goal of creating 384 VAs is reached. The 128 new VAs will be assigned to specific areas in which each will form 11 groups from July 2010 to June 2011. This brings the total groups formed the second year to 1,408. The process of forming groups consists of community mobilization, group formation, training and supervising the groups within one year. VAs do not determine the gender make-up of the groups, but as of March 2010, 73 percent of the members of groups formed in Tanzania were women.

CARE Tanzania first introduced the VA model in 2002 in Zanzibar.

July 2010 I Access Africa Technical Learning Series : No. 1

During the eight-week period of intensive training and supervision of the groups, the job of a VA takes a lot of time. If he or she has formed six groups every week over the course of eight weeks, each group has to be trained. This sometimes means two training sessions per day. But since people need to farm during the rainy seasons (October-December and March-May), during these periods CARE advises VAs to work on their farms in the morning and hold training sessions and meetings with their groups in the late afternoon.

8

After the eight-week training period, the VA visits each group once a month for supervision and continued guidance. Data collection is conducted by the VA on a quarterly basis. After the first year CARE envisions that the VAs will continue to support the groups they have formed. Other communities will see the benefits of a VSLA and ask the VAs for help in forming new groups. Eventually everyone who needs VSLA services in these areas will be connected to a group. The reality is that groups may continue to seek support from the VAs, but the specific support needed is unknown as is the VA’s capacity to deliver the potentially varying support.

During the first year CARE’s approach was to place an average of one VA in a ward consisting of three villages. In the second year, the 128 newly recruited VAs were placed in other wards, also consisting of three villages, thus extending the formation of VSLAs. The goal is to allow VAs to cover a large area rather than concentrating in one small area. Although it would have been easier to use the first group of 256 VAs to continue to form VSLAs in their present areas, this would not have expanded the program over a large enough geographical area.

VA Performance From June 2009 until the end of the project in August 2011, the mobilizers supervise the VAs. During the course of the week, the mobilizer visits VAs to make sure they are doing their job according to the program. Mobilizers train VAs in how to accurately collect the MIS data from their groups and ensure that VAs are passing along the necessary skills to their groups. After each VA forms at least two groups (in other words, when they have demonstrated their commitment), they are given a bicycle to cover their territory.

July 2010 I Access Africa Technical Learning Series : No. 1

The maximum distance that a VA can cover is 10 to 15 kms, and it usually takes VAs about 2½ hours by bicycle to travel this distance. If a group is located at such a distance, the VA must make ample time before the group meeting begins to travel to the location of the meeting and also ensure that the trip back is not made too late. This takes up much of the VA’s day. If a VA is receiving requests for groups to be formed in areas further than 10 to 15 kms away, it may be advantageous to select a new VA for the distant areas for more productive group formation, ongoing monitoring and the VA’s overall income-generating productivity.

9

In late 2009, around 48 VAs (19 percent of the total) were removed from their jobs because they were not performing well or had moved away. By March 2010 these VAs were all replaced. However, before the 48 VAs were replaced, 208 VAs each formed an average of five groups in the first three quarters (two groups per quarter) for a total of 1,097 groups, or 88 percent of the quarter’s goal. After the 48 replacement VAs were selected and trained, the 256 VAs formed three groups each in the last quarter (April – June 2010) for a total of 768 groups.

The MIS is a performance evaluation tool developed by CARE, VSL Associates and other savings-led microfinance implemeters. This tool helps analyse the performance of a VSLA

CARE expects that by July or August 2010, depending on when the groups were formed, some will be graduating or becoming independent. After graduation, if the groups wish to re-form, the VAs will continue to support, supervise and counsel them. When there is a conflict among the group members, they can call the VA and he or she will try to harmonize the situation. The VAs expect to continue providing these types of services at a fee to the groups.

across 4 categories: client satisfaction, financial performance, operating efficiency at group level and operating efficiency at facilitating agency level.

Remuneration and Revenue At the initial community sensitization meeting, the mobilizer discusses the amount the VA will earn: about $2.50 for each visit he or she makes to a group during the eight weeks of training and, from then on, once a month for a total of between 16 and 20 visits per year, or about $40 to $50 per year, per group. CARE Tanzania estimates that 90 percent of the groups agreed to pay their VAs, although some refused. The issue of non-payment can be resolved through proper awareness raising and further clarification as to why the VAs need to be paid. Since some VSLA members are accustomed to receiving free services from donor-supported programs, it can be difficult to convince them to pay VA fees. In some cases people may pay in kind: perhaps a chicken, eggs, some maize or even offering to do work on the VA’s farm in lieu of payment. Even if groups refuse to pay the VA, he or she usually forgives them. Since they are from the same area, they are willing to help their communities.

July 2010 I Access Africa Technical Learning Series : No. 1

Achievements for First Year: March 2009 – April 2010

10

In Tanzania, the period from January 2009 to March 2009 was spent hiring mobilizers. Then, at the initial community sensitization meetings, the mobilizers explained the entire Save Up process, including the fact that one VA will be selected from each group to form new groups. To make up for the three months’ delay at the start of the project, CARE Tanzania plans to recruit an additional number of VAs during the last year of the project (2011). In three months (April – June 2009), the 32 mobilizers each formed eight groups of between 15 and 30 members (70 percent of them women) for a total of 256 groups. The mobilizers then collected MIS savings group performance data from these groups.

Sustainability VAs will continue to support all the groups they have formed. In addition, as new communities see the benefits of VSLAs for their neighbors, they will ask the VAs to help them form new groups.

One possible means of ensuring the sustainability of VSLAs is through the development of an Apex organization. Apex organizations are registered organizations comprised of, and owned by, VSLAs that exist to represent the interests of VSLA members. They are legal entities capable of entering into contracts; they have elected officials and are governed by an annual general meeting of members. CARE Tanzania had already formed four VSL Apex organizations (JOCDO in Zanzibar, PESACA in Pemba, JUMIMAKI in Kisarawe and RUCDO in Kibaha) in connection with earlier VSLA projects.2 These Apexes were formed from the affiliation of VSLAs and are registered as NGOs. They continue the work of VSL programming in rural areas after CARE withdraws by supporting existing member VSLAs, forming new VSLAs and supervising the work of VAs. They are democratically governed under the authority of a general assembly comprised of representatives of dues-paying member VSLAs. For Save Up in Tanzania, the Apex process is still under discussion. CARE employed a consultant in Tanzania to study how Apex organizations might be formed under the Save Up project. CARE Tanzania envisions that Save Up would form an Apex similar to those described above in each of the 16 project districts. Since the inception of Save Up, several discussions have occurred between CARE Tanzania and CARE Access Africa. Together they are working to identify the best operational model that can lead to the sustainability of VSLAs in the project areas.

One aspect that became clear during the technical consultations is that the Apex institutions will not include the direct provision of financial services to VSLAs, such as: 1) Raising deposits, deposit guarantees, share capital or other forms of investment capital from member VSLAs 2) Intermediation of loan capital, whereby a loan is taken by the Apex in order to make loans to VSLAs 3) The development of an insurance scheme whereby the Apex will collect and manage a pool of premiums

“CARE Tanzania’s Save Up project is working in 16 districts in four regions organized into a so-called Northern zone. The area is large enough to offer scope for the creation of many VSLA groups. And since the area was new to CARE, the period from January to March 2009 was spent hiring mobilizers and sensitizing communities about the project and its goals.”

July 2010 I Access Africa Technical Learning Series : No. 1

Before Apexes are piloted under Save Up Tanzania, CARE has requested that the consultant draw lessons from existing Apexes and help with the development of a business plan for Save Up Tanzania Apexes. The guidance will help Save Up Tanzania determine how Apex institutions can support the development of VSLAs without jeopardizing their access to the elements listed above. Hence, the Apex institutions developed by the project will follow a facilitator model in which they will arrange for, rather than provide, financial services in exchange for a fee or commission.

11

Save Up in

Malawi

Implementation Dates: August 2008 – August 2011 The Save Up project in Malawi will enable CARE to take its savings-led model to scale by working through six Malawian IPOs who form groups, choose VAs from the groups and train them to establish more groups with a goal of reaching 100,000 group members in three years.

Chitipa Karonga

Chisenga

Figure 3

Chilumba

Rumphi

July 2010 I Access Africa Technical Learning Series : No. 1

Nkhata Bay

12

The project covers all regions of Malawi: Two IPOs work in the Northern region, two in the Central region and two in the Eastern region, which also includes part of the Southern region. Save Up is being implemented in areas that were completely new to both the IPOs and to CARE because the project is conducting a randomized control trial that requires that there be no other VSLA activities (past or present) in the study’s control areas. The project also seeks to record the exact number of groups formed by Save Up in areas where there are no groups formed by other projects. CARE estimates that more than 70 percent of Save Up group members in Malawi are women.

Malawi Nkhotakota Kasungu

Salima

Mchinji

Lilongwe

Dedza Mangochi Ntcheu Liwonde

Zomba

Mwanza Blantyre

Ngabu

Nsanje

Save Up Project Implementers The six IPOs in Malawi are based in local administrative offices called traditional authorities. Formerly these IPOs focused on issues such as food security, nutrition and HIV. The IPOs received funding from CARE to hire staff and purchase equipment such as motorbikes, bicycles and supplies to implement VSLA programming. Most of the IPOs hired new staff for Save Up, though some used staff that had completed other programs. Each of the six IPOs has eight FOs based in the communities for a total of 48 FOs. Out of this total only 31 percent are women. One reason for the low percentage of women is that in some areas the hilly terrain can be a challenge for women travelling by motorbike.

Table 3: CARE Malawi staff for Save Up #

Position

Description of Responsibilities

1

VSLA country coordinator

Partner capacity assessment, project design, grant approval, partner liaison, strategic and technical coordination of VSL programming for the country office

2

Principal technical advisors

Technical support to partners on VSLA methodology, supervise partners

1

Senior technical advisor (M&E/MIS)

Technical advice on project monitoring and evaluation, guide partners in implementation of MIS

1

Grants manager

Guide partner on finance-related issues, monitor the financial performance of the project and provides advice

1

Driver

Drives Save Up staff to various locations

6 total staff members

Goals for Three-Year Project Period: August 2008 – August 2011 Each FO is tasked to form 12 groups for a total of 576 groups. Out of each of the 576 groups, one VA is chosen creating a total of 576 VAs. Each of the VAs will go on to form eight groups, for a total of 4,608 groups.

Identification and Selection of VAs

July 2010 I Access Africa Technical Learning Series : No. 1

When an FO arrives in a community for the first time, he or she explains to the village chief the need to meet with the community. The chief notifies the community, they come together and the FO sells the VSLA idea to the community. A few communities were not interested at first, so the FO targeted a neighboring community. When the original community saw what was happening with their neighbors they, too, asked to join.

13

During the first 36 weeks, the group goes through seven training sessions of different lengths, but the group starts saving on the fourth day of the first week. They take loans and repay them; and, after 36 weeks, they share out the savings and the interest they have earned, depending on the number of shares each member bought. Hence, the training takes place while the members are already conducting transactions.

In Malawi, VSL groups have, on average, 20 members.

Choosing the right person to be a VA is crucial, since this person will be responsible for forming and mentoring new groups, which is the core of the Save Up process. FOs need to observe the members of the groups they form to see which individuals are most active, committed and capable. The criteria for choosing a VA include: • • • • • • • • •

Must be able to read and write (usually there are several literate individuals in a group) Has permanent status in the community Speaks the local language Hard-working Embodies leadership traits Good inter-personal skills Can easily mobilize the community; has facilitation skills Is willing to volunteer even though the pay is low Is accepted by the community

During the first three months of the nine-month cycle, the FOs tell their groups that they are going to be choosing one VA from each group. The FO identifies one or two good candidates. Before these people are informed that they are candidates, the FO asks the local leaders to assess their performance and character. The VA must be someone whose behavior is known to the community. Once the local leaders have decided on an individual, they contact that person and ask if he or she is willing to serve. The local leaders take the lead in this process so that the community does not feel that the FO has been the one to identify the VA. Once the local leaders endorse this individual, they formally introduce the new VA to the community.

Training of VAs

July 2010 I Access Africa Technical Learning Series : No. 1

All VAs, especially women, need to plan carefully to balance their new work with their family responsibilities. In Malawi, the rainy months (November – February) are peak farming season and the most difficult time for VA activities. After the rains VAs can perform much better.

14

Training of the VAs started in August 2009 a time of year when they are not busy with farming. The training takes five consecutive full days. Although the 576 new VAs are from different areas, they are brought together for training. Each of the six IPOs has a cohort of 96 VAs that is divided into three groups of 32 for a total of 18 groups trained across all the IPOs. The “Village Saving and Loan Associations (VSLAs): Village Agent Guide, Access Africa,” version 1; 24th March 2009, has been condensed to 44 pages and translated into Chichewa and Tumbuka for training and use by the VAs. Upon successful completion of training, the VAs were provided with bicycles from IPOs to help them reach their communities.

Outreach of the VAs By the time the last of the groups of VAs were being trained in 2009, the rainy season was starting and people were planting their crops. Although some of the newly trained VAs immediately started forming their own groups, others waited until March or April after the farming season had ended. The VAs whose training ended just before the rainy season found it very difficult to find the time to form groups until the planting phase was finished, as they too were busy planting on their land. Moreover, they would have found few people available to learn about VSLAs and join groups at this time. In Malawi, therefore, the ideal period for forming new groups is between April and October. During the first year each of the 576 VAs formed eight groups for a total of 4,608 groups. In April 2010 some VAs said they will form even more than eight groups because demand is so high. But CARE advised them to stick to a maximum of eight groups – two groups per month – so that they can monitor them adequately and maintain quality.

VA Performance The eight groups formed by each of the 576 VAs are located within a radius of about five kms. Some villages are large enough that they can have more than one group. Often, four villages yield eight groups. VAs provide seven training sessions to the new groups over the course of 36 weeks. At the end of 36 weeks (nine months) the groups share out their savings and interest earned. Most people in Malawi prefer to share out between October and November so that members can buy farm equipment, seeds and supplies for the upcoming planting season. Ideally, therefore, group savings should start in January to share out in October. Depending on their group constitutions, some groups prefer to share out after 12 months. It is up to the VA to arrange with group members how they will allocate time in their busy work schedules for training, which takes 1½ to two hours per session. CARE Malawi has found that mobilizing people into groups during the rainy season is a challenge, but, interestingly, once a group is formed, people tend to find the time to receive training. The position of VA is demanding, but it can confer considerable prestige. On a field trip to areas with VSLAs in April 2010, one female VA remarked to CARE staff, “Previously I was nobody in the community. Nobody knew me. Now I am very well known and respected. People are even coming to me from across the border in Zambia to help them form groups.”

During the initial community meetings, the FOs discussed the communities’ views on the issue of supporting the VAs financially and how much the communities could afford to pay. FOs are involved from the beginning in the issue of the VAs’ fee for services because paying VAs is a new concept for most communities and the FOs must explain why it is necessary. The FO should discuss this issue with groups during cluster meetings before the VAs begin training the groups so that the groups are aware of the payment before training starts. The group and the VA should sign an agreement regarding the VA’s fee. The communities agreed on about $1 per visit (one visit per training session of the seven sessions plus eight monitoring visits after initial training) for about seven weekly visits, or about $15 per year per group. However, in communities where the FO has not properly introduced the VA and explained the fee-for-service system, it is sometimes a challenge to convince the community to pay the VA. But in areas where the FO introduced the VA and explained the requirement that the community support him or her, communities are very willing to pay. So in cases where a community is not willing to pay, CARE asks the FO to continue to meet with the community to explain the fee-for-service system.

July 2010 I Access Africa Technical Learning Series : No. 1

Remuneration and Revenue

15

Achievements for the First Two Years: August 2008 – August 2010 After project start up and staffing between August 2008 to March 2009, the first IPOs implemented their Save Up projects starting in March 2009 and the last ones in August 2009. In March 2009 CARE conducted five days of training with the FOs. Then the FOs began their work by conducting community sensitization meetings to explain the entire concept of VSLAs, which was new to the communities. By April 20, 2010, nearly all of the 48 FOs had formed eight groups, for a total of 384 groups. During the second year, each of 48 FOs will form four groups. This will make a total of 576 groups over two years. By June 2010, a total of 538 of the 576 envisioned VAs had been chosen. Forty-two percent of the VAs are women, although married women must ask the consent of their husbands before they leave home and receive training.

Sustainability The VA model is designed to ensure sustainability because the VA remains in the communities. Even after CARE’s involvement ends, as more and more people express interest in joining VSLAs, the VAs’ work continues as they form new groups and train them. All VSLAs are expected to be self-managed and sustainable once they master the VSLA methodology. In addition CARE expects some locally based partner organizations to continue their contacts with the VSLAs as they work on other programs. CARE is seeking ways to make the VAs known to other organizations working in these areas so that they can serve as links to other interventions. Such institutions may need to pay a commission to the VAs for providing the service of linking communities to them.

July 2010 I Access Africa Technical Learning Series : No. 1

In Malawi, CARE will help establish clusters, or networks, of VAs managed by cluster committees. These structures will work together to discuss issues concerning VAs as well as communities. They will provide support to groups as well as to VAs so that both have a way to resolve issues.

16

Save Up in

Uganda

Implementation Dates: November 2008 – August 2011 Kaabong

Moyo Kitgum

Kotido

Arua Gulu

Moroto

Nebbi Lira

Katakwi Masindi Soroti

Uganda

Kumi Mbale

Kamuli

Tororo

Fort Portal

Kampala Ibanda

Jinja

Entebbe Masaka Mbarara

Figure: 4

To implement the Save Up project, CARE Uganda began working with 13 IPOs in May and June 2009 and the last ones came on board in August 2009. These In Uganda, an FO IPOs were already executing programs in communities across 14 districts in four is called a CBT. regions of the country: Southwest, West, Central (urban Kampala) and East. Once CARE ascertained the IPOs’ capacities, they each received a sub-grant from project funds based on the goals each IPO set with CARE for the project implementation. During the project period, the IPOs’ CBTs, their supervisors and managers are paid by the project. The 13 IPOs have a total of 172 CBTs, about 10 percent of whom are women. On average, each IPO has 13 CBTs, depending on their VSLA formation goal. The CBTs have bicycles provided by the project to reach the groups they form, which can be up to 10 kms from their home areas. Ideally, the CBTs should be living in the communities where they work, but since Save Up is using randomized control trials, in some localities CARE had to request that the IPOs relocate their staffs from their home communities to areas deemed suitable for implementation under the study.

July 2010 I Access Africa Technical Learning Series : No. 1

CARE Uganda’s vision of the Save Up project differs significantly from that of the two other countries. In Uganda, most VSLAs are formed by CBTs from partner organizations and not by VAs. The VA component will be introduced toward the end of the second year and VAs will only be selected from a group after they have had at least one year’s experience as VSLA members. In addition, the number of groups the VAs in Uganda will form is relatively small and is not counted in the overall goal of 100,000 members across Uganda under the Save Up project.

17

Table 4: CARE Uganda staff for Save Up #

Position

Description of Responsibilities

1

VSLA country coordinator

Provides strategic leadership to all VSL projects, supervising the lead advisors, acting as senior advisor and manager for the funds provided for VSLA implementers, and ensuring that lessons learned are integrated into implementation plans through constant contact between the lead VSL advisors, ensures wider integration of the consolidated VSLA methodology into the programs of CARE Uganda

1

Grants coordinator

Assesses financial capacity of IPOs, disbursement and monitoring of resources and ensuring proper accountability of funds both at the project and IPO levels, deals with other financial matters of the program, including accounts and audit

1

Lead M&E/MIS specialist

Provides overall strategic direction and facilitation in the adherence to VSL programming M&E and MIS systems, ensures wider integration of M&E systems into VSL programs of CARE Uganda and cross fertilization of lessons

1

Lead advisor

Oversees project implementation

3

Regional VSL advisors

Work directly with the implementing partners

1

M&E officer

Responsible for M&E /MIS activities at the IPO levels, including the provision of relevant technical support to the IPOs, data consolidation, verification and capacity building of partners

1

Driver

Drives Save Up staff to various locations

9 total staff members

Goals for Project Period: August 2008 – August 2011 CARE Uganda’s goal is to reach 100,000 group members through paid trainers. On average, each group has 25 members. Each IPO CBT is expected to form an average of 24 groups, but the goals vary according to a number of factors, such as the capacity of the organization in terms of the systems, procedures and human resources they have in place, the scope of their existing activities and their prior experience in VSLA.

July 2010 I Access Africa Technical Learning Series : No. 1

Identification and Selection of VAs

18

By April 2010, each of the 172 CBTs had formed about 14 groups for a total of 2,468 groups. At this point each of the CBTs will identify three VAs from among the groups they have formed for a total of 516 VAs. They will train them and mentor them as they establish new groups. Each of the 516 VAs will form two new groups for a total of around 1,032 groups. CARE Uganda sees this phase of the project as its exit strategy: Once these groups are formed, CARE’s support should no longer be needed in these communities.

CARE Uganda builds capacity of locally based organizations to implement VSL programming.

The VA process begins during the initial community mobilization when the CBTs explain that after a year they would each choose 3 VAs from among their groups. They explain the selection criteria for the VAs and the type of person who will become a VA so that the group members know that some people will be chosen for the job. However, since each CBT chooses only three VAs from all of his or her 14 groups, not every group will produce a VA.

CARE Uganda defines a VA as someone who has participated in a VSLA for at least one year. In general, group members tend to have little schooling, only basic literacy and numeracy and little capacity to internalize complex issues. However, spending a year working with the VSLA methodology enables them to understand what its challenges and benefits are and to explain them to others. After one year the group members will have experienced In Uganda, VSL the entire VSLA process: They will have seen the sensitization of a new community, groups have, they will have interacted with the CBTs, they will understand the job requirements on average, of a VA, they will have seen what it takes to form a group and mentor it through 25 members. the savings cycle, they will have seen the share-out process and witnessed people’s enthusiasm on receiving the interest their investments have earned. They will have confidence, knowledge and understanding, and other community members will look up to them because they have fully participated in a group. They will have benefitted from the group to the point where they can stand up and sell the concept to anyone, with confidence. In Uganda, therefore, VAs must: Be VSLA members who have completed one cycle Be residents of the villages where they will be working Be willing to do the work for little remuneration Have the capacity to train and mentor a group Demonstrate leadership skills Have the ability to link their groups with other service providers in the community

Once the CBT has VA candidates in mind, he or she discusses them with the groups, the communities, the community leadership and the IPO management.

Training of VAs As group members, the VAs have already undergone training and participated in their groups’ development during the seven weeks of intensive training, followed by the development phase and the maturity phase of the savings cycle, which can take between eight and 12 months. The training of the new VAs takes three days and is not as extensive as the training received by CBTs because the VAs, having been group members, understand how the methodology works. Each CBT will train his or her VAs in mobilizing, facilitating, training and providing ongoing support to a group.

July 2010 I Access Africa Technical Learning Series : No. 1

• • • • • •

19

Outreach of the VAs During the initial community mobilizations, when each of the 172 CBTs told their groups that, after a year, they would choose a total of three VAs from their groups, they also informed them that the VAs will, in turn, form, train and mentor their own groups and will be expected to be paid by the groups they form. The CBTs explain that the demand for VSLAs is very high and the VA model will enable the number of groups to grow exponentially. The IPOs estimate that a community with about 4,000 households has the potential to yield 25 groups. Low-income, vulnerable and financially marginalized communities will continue to be targeted by the VAs. By August 2011, the end of the project, each of the 516 VAs will have formed two groups (total: 1,032 groups).

VA Performance CARE Uganda gives the VAs a smaller number of groups to form because they cannot be full-time like the CBTs, who are paid staff. Since the VAs have their own home responsibilities and farms, they use their mornings to do their agricultural work and mobilize groups in the afternoons or on Sundays. Bicycles will be provided for the VAs from the IPOs’ project budgets to help the VAs reach their communities.

Remuneration and Revenue

July 2010 I Access Africa Technical Learning Series : No. 1

CARE Uganda, together with the IPOs, the communities, as well as from the lessons from CARE Malawi and CARE Tanzania Save Up projects that are beginning to emerge, will determine the fees to be paid to the VAs by their groups at the time the VAs start their work. The price may vary according to how far each VA has to travel. However, it will not always be easy to convince groups that they need to pay their VA because in some areas where other organizations are doing VSLA projects and providing the funds, people have become accustomed to handouts.

20

Achievements for the First Year and a Half: November 2008 – April 2010 As of late April 2010 the CBTs had started identifying VAs and will soon start training them. It is not yet known what percentage of the VAs will be women because some turnover is expected during the training process as it becomes clear whether or not each is up to the job. By March 2010, the CBTs had formed 2,468 groups. During the remainder of the project they will form an additional 1,532 groups. Taking a different approach to VAs from the other two Save Up countries, CARE Uganda decided to roll out VAs only in the second quarter of year two, April 2010. The groups that will be formed by the VAs will not count towards to goal of reaching 100,000 members.

Sustainability A primary role of the CBTs and VAs is to build the groups’ capacity for independence. It is expected that many groups, having undergone a year of training and mentoring, will be able to continue functioning successfully without CARE and without a VA. In Uganda, experience has shown that this is the case. The groups may make some changes, but they continue as VSLAs. In the experience of CARE Uganda, when project funds come to an end, some CBTs who are being paid by the project become VAs on a fee-for-training basis and continue to form new groups. The first role of the VA is to promote the VSLA methodology. But in future, the groups may need other services such as agricultural technical support, health services, HIV sensitization or education about child care. The VA will be in a position to link the groups to those other service providers in their communities – whether NGOs, government agencies or community-based organizations. According to CARE Uganda’s past experience, after the project ends, the IPOs may continue promoting VSLAs without CARE’s funding. The goals will probably not be as high as when there was funding, but the communities usually continue to solicit the IPOs. This works best when an IPO is involved rather than an individual VA because the communities tend to trust organizations more than individuals.

July 2010 I Access Africa Technical Learning Series : No. 1

CARE Uganda plans for the IPOs who remain active in these communities to play the role of supporting institutions or cluster committees that, because they have a lot of experience working with these communities, will be able to provide a variety of services.

21

Looking Ahead The lessons learned and the findings captured to date from CARE’s Save Up project will be applied to ensure outputs and improve outcomes during the remaining year of implementation. For example, implementing partners will work with local leaders to ensure that communities clearly understand the role of the VAs. In addition, CARE will be exploring a number of avenues for procuring the VSLA toolkits from local suppliers at a cost affordable to the groups and in a way that will be sustainable for VAs in the future. The VA approach has many advantages in terms of reaching large numbers of people effectively and efficiently with the VSLA model. Another invaluable aspect of this approach is the cultivation of leadership and empowerment among the VAs themselves – women and men at the grassroots level. Despite the low financial rewards, the opportunity to be trained and work as a VA provides ample scope for personal growth and accomplishment, respect throughout a wide community and new skills in the hands-on application of democracy, good governance and transparency. The capacity building provided to VAs is likely to have an effect on many aspects of development in the communities served. CARE’s Save Up project is scheduled to end in August 2011. At that time, it is expected that more than 300,000 people in Tanzania, Malawi and Uganda will be saving money, earning interest and taking out loans from nearly 15,000 VSLAs formed by the project. Most of these VSLAs will have been formed, trained and will continue to be mentored by more than 1,400 VAs who will continue to spread the VSLA approach and methodology in their areas until the localities are saturated; in other words, until every interested woman and man in these areas has access to financial services, mainly through membership in a VSLA. The VA approach is an innovative, highly promising way to reach more and more people with VSLAs, but it is still unproven. Research tools are currently being developed to track and, as far as possible, quantify the performance of the VAs across all three countries along the six key characteristics described in this report:

July 2010 I Access Africa Technical Learning Series : No. 1

• • • • • •

22

Identification and selection Training and certification Outreach Performance Remuneration and revenue Sustainability

When the research has been completed, we will present Save Up experiences and make recommendations for the next steps to take in meeting the goals of CARE’s Access Africa program – to reach 30 million of Africa’s poorest people with financial services by 2018. Stay tuned!

1 Beck, Thorsten, Asli Demirguc-Kunt, and Ross Levine, (2006): Finance, Inequality and Poverty: Cross-Country Evidence. Draft. World Bank.

There are now 17 new Apexes that have formed under the Ongeza Akiba project funded by the Financial Sector Deepening in Tanzania program.

2

CARE’s VSL Programming Data

(as of March 2010)

VSL PROGRAMMING SINCE

# OF VSLAs

# OF VSLA Members

Angola

2008

122

2,198

Benin

2008

265

5,426

Burundi

2005

4,335

101,600

Côte d’Ivoire

2007

572

16,794

Eritea

2008

245

4,168

Ethiopia

2004

3,116

55,508

Ghana

2008

580

13,168

Kenya

2004

7,607

153,362

Liberia

2009

17

421

Madagascar

2007

231

4,998

Malawi

1999

1,453

23,340

Mali

2000

3,177

94,217

Mozambique

1993

2,385

43,124

Niger

1991

7,656+

204,069 (plus 200,000 in spontaneously formed groups)

Rwanda

2000

5,148

106,025

Sierra Leone

2006

619

18,810

South Africa/Lesotho

2004/2006

1,443

13,710

Tanzania

2001

13,963

309,128

Uganda

2005

11,122

263,614

Zambia

2001

59

1,144

Zimbabwe

2000

16,251

127,000

80,366 Total VSLAs 1,561,824 VSLA Clients Average # of Members per VSLA = 19

Headquarters CARE USA 151 Ellis Street Atlanta, GA 30303-2440 T) 404-681-2552 F) 404-589-2650 ACCESS AFRICA Program Office CARE Tanzania P.O. Box 10242 (mailing) Plot No 101 Kinondoni Road (physical) Dar-Es-Salaam Tanzania

July 2010 I Access Africa Technical Learning Series : No. 1

www.care.org

24

CARE’s Save Up Initiative is funded by:

Editorial Credits Author: Kristin Helmore, Editor: Sybil Chidiac Photo Credits Cover, Pages 19 and 21: Ami Vitale/CARE; Pages 2, 9, 12 and 17: Brendan Bannon/CARE; Pages 5, 8, 13 and 23: Allen Clinton/CARE; Pages 16 and 22: Phil Borges/CARE; Page 20: Jake Herrle/CARE. CARE is an Equal Opportunity Employer and Affirmative Action Employer (AA/M/F/D/V) dedicated to workplace diversity. CARE® and CARE Package® are registered marks of CARE. Copyright ©2010 by Cooperative for Assistance and Relief Everywhere, Inc. (CARE). All rights reserved. Unless otherwise indicated, all photos ©CARE. CARE®, CARE Package®, I Am Powerful®, She Has The Power To Change Her World. You Have the Power to Help Her Do It.® and Defending Dignity. Fighting Poverty.® are registered marks of CARE.