Project Model
Savings Groups An effective approach for helping families to increase their economic resilience
Primary target group Savings Groups are used with community members (including older children) living below the poverty line, selected on trust by other group members to join a savings group for one year, who are able to commit to regular small savings.
What is this approach? Savings Groups is an approach that has been used by over four million groups to facilitate savings and credit in a small-scale and sustainable way. By facilitating savings and access to micro-credit, savings groups enable community members to plan ahead, to cope with household emergencies and to develop their livelihoods.
When would this project model be used? Savings Groups are used in relatively stable urban or rural contexts with few financial services and where WV can support a field officer to train savings group members.
Table of Contents Acronyms............................................................................................................................................................ 3 Savings Group project model......................................................................................................................... 4 1.
What is the Savings Group project model about? ....................................................................................4 1.1. What are the issues/problems that the project was developed to address? .................................4 1.2. What are the main features of the model?............................................................................................4 1.3. What are the expected benefits or impacts of this model?...............................................................6 1.4. How does the project model contribute to WV’s ministry goal and specific child well-being outcomes, and reflect WV strategies? ................................................................................................................6 2. Context Considerations .................................................................................................................................7 2.1 In which contexts is the project model likely to work best? ..................................................................7 2.2 In which contexts should this model not be considered?........................................................................7 2.3 What questions should field staff ask when adapting this model, and are there particular context factors relating to this project model that they should consider? ................................................................8 3. Who are the key target groups and beneficiaries of this model? ..........................................................8 3.1 Target group(s) ...........................................................................................................................................8 3.2 Who are the intended primary beneficiaries?.......................................................................................8 3.3 Life cycle stages to which the model contributes................................................................................8 3.4 How will the model include/impact the most vulnerable? .................................................................9 4. How does the project model work?............................................................................................................9 4.1 Overview of approach/methodology......................................................................................................9 4.2 What local level partners could be involved? .....................................................................................11 4.3 Partner capacity considerations.............................................................................................................12 4.4 How does the model promote the empowerment of partners and project participants? .......12 5. Project DME....................................................................................................................................................12 5.1 What are the goal and outcomes that will be sustained as a result of this project model? .....12 5.2 Sample logframe for this project model...............................................................................................13 5.3 Recommended monitoring methods ....................................................................................................14 5.4 Advocacy component(s)..........................................................................................................................14 5.5 Critical assumptions and risk management .........................................................................................14 5.6 Sustainability...............................................................................................................................................15 6. Protection and equity considerations ........................................................................................................16 6.1 How can child protection be promoted in the implementation of this project model?............16 6.2 How can the model promote equitable access to and control of resources, opportunities, and benefits from a gender perspective as well as other perspectives, such as disability, ethnicity, faith and more?.......................................................................................................................................................16 7. Project management ......................................................................................................................................17 7.1 National office support required for project implementation and success..................................17 7.2 Technical expertise needed ....................................................................................................................17 7.3 Guidelines for staffing ..............................................................................................................................18 7.4 Guidelines for resources needed for project implementation........................................................18 7.5 Critical success factors for the model..................................................................................................19 8. Any necessary tools.......................................................................................................................................21 9. Linkages and integration ...............................................................................................................................21 9.1 Child sponsorship .....................................................................................................................................21 9.2 Enabling project models ..........................................................................................................................21
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Appendices .......................................................................................................................................................23 Appendix A: VSLA Field Officer Training Guide.................................................................................................23 Appendix B: VSLA Village Agent Training Guide ................................................................................................23 Appendix C: Savings Group impact studies..........................................................................................................23 Appendix D: Child well-being and microfinance studies ...................................................................................23 Appendix E: Project timeline ...................................................................................................................................23 Appendix F: Project timeline by LEAP and Critical Path ...................................................................................23 Appendix G: Programme level budget option .....................................................................................................23 Appendix H: National consolidated budget .........................................................................................................23 Appendix I: Illustrative logframe .............................................................................................................................23 Appendix J: Guidelines on staffing ..........................................................................................................................23 Appendix K: VSL Management Information System (MIS) ................................................................................23 Appendix L: VSL Aggregator Tool (for consolidating data)..............................................................................23 Appendix M: Ratios and explanation of ratios.....................................................................................................23
Acronyms ADP ASCA CBO CGAP CRS CSLA CWB DADD DPO ED FGD GOED M&E MFI MIS OVC PAR PPI SACOSS VSL VSLA
Area Development Programme Accumulating Savings and Credit Associations Community-based Organisation Consultative Group Assisting the Poor Catholic Relief Services Community Savings and Loan Associations Child Well-being Do, Assure, Don’t Do Disabled Person’s Organisation Economic Development Focus Group Discussion Global Office of Economic Development Monitoring and Evaluation Microfinance Institution Management Information Systems Orphans and Vulnerable Children Portfolio at Risk Progressing Out of Poverty Index Savings and Credit Cooperative Societies Village Savings and Loans Village Savings and Loans Association
© World Vision International 2012. All rights reserved. No portion of this publication may be reproduced in any form, except for brief excerpts in reviews, without prior permission of the publisher. Published by Integrated Ministry on behalf of World Vision International.
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Savings Group project model 1.
What is the Savings Group project model about? A savings group is a group of people who save together in a safe, convenient and flexible way. Savings groups are owned, managed and operated by the members, using a simple, transparent method whereby groups accumulate and convert small amounts of cash into savings. The group’s savings can be lent as credit to earn additional income, kept in a safe place for emergencies, or both. Savings group projects are low cost (requiring only facilitation staff and a small operating budget). They are community led and therefore, sustainable. The Savings Group project model is an approach based on the Village Savings and Loans Associations (VSLA) methodology, and it is strongly recommended that this methodology is followed, including the VSLA Field Officer Training Guide (See Appendix A). The training guide was originally developed in Maradi, Niger, by CARE International in 1991 and has now been used with 4.6 million savings group members in 54 countries worldwide. 1 Savings groups are managed by their members and facilitated by World Vision (WV) and its partners. Savings groups are not facilitated by Vision Fund. A short video describing this project model is also available online at, http://vimeo.com/wvedcop/albums, or by clicking on this link, ED Video Albums.
1.1. What are the issues/problems that the project was developed to address?
The project model was developed to address the root causes of lack of capital, inability to save, exclusion from existing financial services or dependence on WV for the purchase of business and agricultural inputs, identified within communities. Specific issues and problems the project addresses: o Community members have irregular income, more cash in some months than is required for subsistence, but not enough to survive in other months. o The community is in a remote area and some distance from banks and financial institutions. o Community members do not meet the criteria of microfinance institutions. o Communities are locked into cycles of dependency and believe they have no money to save. o Community members are not resilient to economic shocks and household emergencies and continue to need assistance. o There are low literacy levels and people are intimidated by formal financial services. 1.2. What are the main features of the model?
The main features of savings groups:
1
April 2011, VSLA World Report. www.vsla.net
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o Focused on savings as accumulated capital, not credit: Members save their own money and borrow from this pool of capital. There is no external injection of capital. o Voluntary: Members self-select and participation is voluntary. This is important for establishing trust which has implications for motivation, the durability of the group and the safety of members’ money. Groups can choose not to select people they know they cannot trust with their money. o Self-managed: Money is handled solely by the groups themselves and all net fee income remains their property. Most of the cash is usually out on loan to other members, which minimises the cash management requirement and decreases the risk of loss. o Time bound: The activities of the savings group run in cycles of no longer than one year, at which time all or part of the accumulated savings and loan profits are shared out to the members according to the amount they have saved. The group can then re-form and start another cycle. This ensures that the group fund never becomes too large to manage, thereby minimising fraud. It also provides an exit and entry point for new members. o Group size: Savings groups are composed of 10 to 25 members. This strikes a balance between being big enough to create a useful pool of capital and small enough to keep meetings manageable. o Use of Village Savings and Loan Association (VSLA) materials: The project model recommends the VSLA Field Officer Training Guide (see Appendix A) for a detailed training guide. Savings groups should not deviate from this proven methodology. o Training: A field officer facilitates the savings groups, coaching them through the process from inception to savings management and loan management through to the share-out meeting. The table on page 8 of the VSLA Field Officer Training Guide (Appendix A) provides a summary of the training and supervision schedule which lasts for 9 to 12 months. It is imperative that the carefully designed schedule of the savings group methodology not be disrupted, suspended or terminated before the end of the training cycle. Failure to complete the training cycle and to instil a culture of discipline, consistency and transparency within the savings group undermines the entire effort. o Recording: Savings groups use a transparent memory-based system where members recall the ending cash and loan balances. They each have a passbook, where savings (shares) are recorded using a rubber stamp indicating the number of shares. This method is easy to use, maximises participation and minimises fraud. o Self-replicating: The ultimate goal of the Savings Group project model is for local village agents (drawn from successful savings groups) to take over the role of promoting and training new groups. Savings groups are designed to be independent after the first share-out (9-12 months). After graduating, savings groups may benefit from having a village agent or field officer acting as a mentor and guide if confusion or conflict arise. o Sustainable: Savings groups acquire the skills to manage their activities during a well-structured training cycle and through experience. They become fully independent and institutionally sustainable at the end of a one-year training cycle. From the outset, savings group members are trained with the expectation that the involvement of WV is limited and in the long run, savings groups will need to pay village agents for training and resourcing received. o Independent: Savings groups should not be merged with community-based organisations or cooperatives because it dilutes the proven savings group
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methodology by introducing additional goals and activities. This can overwhelm the savings group meetings and money management systems. For example, cooperatives rely on a management committee because their activities are more complex. Since the key internal control of savings groups is members’ memorisation of loan fund and account balances as well as approval of loans, fraud and other irregularities can occur with an elite management group. Savings group members are free to access financial services from microfinance institutions and other sources on an individual-decision basis. Savings groups should not be established with a direct link to a microfinance institution. Section 9.2 provides guidelines and cautions on creating linkages between savings groups, microfinance institutions and complimentary projects. 1.3. What are the expected benefits or impacts of this model?
Savings groups empower people to save in small regular amounts, with no external injection of capital. Members borrow from their combined savings. As a result, members are able to manage cash-flow and have access to a larger lump sum through micro-loans and the end-of-cycle share-out (when the group fund is shared out among members). Members typically use the lump sum for school fees, medical costs for their children, lifecycle events, emergencies or investment in agriculture and other income-generating activities. Savings groups have both economic impacts, as members are more resilient to cope with emergencies and economic shocks, as well as social empowerment, as group solidarity builds social capital for longer-lasting empowerment. See Appendix C for a summary of studies demonstrating the impact of savings groups. 1.4. How does the project model contribute to WV’s ministry goal and
specific child well-being outcomes, and reflect WV strategies? Savings is a necessary component of household economic well-being. There is overwhelming evidence that increasing household assets, such as savings, has a positive impact on all the identified areas of child well-being 2 . According to the World Vision Theory of Change household economic well-being is a necessary component for child well-being. ‘The child cannot be viewed in isolation, and family level change is critical . . . families’ economic well-being needs to be assured’ 3 . With improved economic well-being, families can send children to school longer, pay for better healthcare, protect them better against disaster and hardships, feed them more and better food, and construct safer homes for them. Savings add to a household’s resilience in any circumstance. The primary child well-being outcome to which the Savings Group project model contributes is, ‘parents or caregivers provide well for their children’: o Savings groups enable families to accumulate savings and access emergency loans, so they can better manage their cash flow and acquire better food and shelter for their children. o Financial security (to which savings groups contribute) reduces the need for parents or caregivers to rely on child labour, allowing children more time for play and development and parents more time and energy for nurturing positive relationships with their children.
2 3
See Appendix D for a summary of these findings. World Vision Theory of Change, p8.
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The secondary child well-being outcomes to which the Savings Group project model contributes are: ‘children and their caregivers access essential health services’ and ‘children are protected from infection, disease, and injury’. Savings groups enhance the ability of parents to invest in and improve housing (including latrines), bed nets and in paying for health-related services. The Savings Group project also contributes to the child well-being outcome ‘children access and complete basic education’ because savings groups enable parents to afford large, lump-sum expenditures, such paying for school supplies, uniforms and transportation costs. This Savings Group project model aligns with the Economic Development sector strategy ‘Do, Assure, Don’t Do’ (DADD). It is also informed by the strategy of VisionFund, which encourages the development of savings groups by WV programmes in order to reach clients that are either not accessible to microfinance institutions or are not yet ready for microfinance. This Savings Group project model specifically addresses these Dos in the Economic Development DADD: o Facilitate access to savings and credit, especially among women. o Prepare youth for economic and agriculture opportunities by helping youth cultivate a savings habit, personal discipline, social capital, leadership and financial management skills, and by building capital for entrepreneurial opportunities. o Build social capital by bringing people together around a common purpose and enabling them to build relationships and trust, which encourages them to meet one another’s needs for social protection and cash flow management. 2.
Context Considerations
2.1 In which contexts is the project model likely to work best? After nearly two decades of experience by non-governmental organisations, the savings group methodology has proven to be widely applicable and effective in various social, geographic and economic settings. Savings groups are likely to work best in places, and among groups, where formal financial services are inaccessible or not suited to their needs. Savings groups have been successful in both urban and rural settings. In urban settings with higher levels of literacy, savings groups often use financial ledgers.
2.2 In which contexts should this model not be considered? Savings groups have limited savings and borrowing options compared to microfinance institutions and banks and the micro-loan sizes or terms are typically not attractive to the non-poor. o Frequent migration: The Savings Group project model is based on a clear, consistent and repetitive methodology. The model also promotes building trust through consistent and reliable participation by members. As such, this project model is not recommended for individuals who migrate frequently. o Conflict or poor security environments: The savings group methodology has worked in several post-conflict areas, including Eritrea, Mozambique, Rwanda, Sierra Leone and Afghanistan. In general, however, implementation in conflict areas should be considered very cautiously. Savings groups cannot function properly if poor security prevents the members and field officers from attending meetings. Savings group members living in high-theft areas have reported that being seen with the group
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cash box puts them in grave danger. Where groups at such risk are in urban or periurban areas, they have overcome this problem by using a bank account rather than the cash box. Access to, and application of, mobile technology options will soon expand and impact group dynamics and extend participation options.
2.3 What questions should field staff ask when adapting this model, and are there particular context factors relating to this project model that they should consider? The standard operating procedures of savings groups have proven to be effective in various local contexts and with different participants. As such, programmes are encouraged to follow the VSLA Field Officer Training Guide and adhere to the savings group methodology. Field officers can then work with group members to develop their own schedule based on local considerations such as transportation, geography, economic and climactic cycles. During the preparatory phase, venues, timing and engaging self-selected participants is of the utmost importance. The preparatory phase should be adapted to local conditions. Another adaptation that may be required is terminology. For example, savings groups in Bangladesh use local names for the social fund, based on familiar charitable concepts of Islam. 3.
Who are the key target groups and beneficiaries of this model?
3.1 Target group(s)
Savings groups serve people who do not have access to basic financial services, the extreme poor, those who are marginalised and discriminated against, and those living in remote areas. For WV, this target group includes women, especially female-headed households, youth and people with disabilities. The target group also includes households supporting registered children and orphans and vulnerable children (OVC), young girls and boys, ethnic minorities and marginalised people. Where savings groups are promoted among existing programme beneficiaries, project staff must emphasise that participation in a savings group is completely voluntary and not linked to any benefits provided by other WV projects. Otherwise, disinterested individuals may join the savings group with false expectations and negatively affect the group. Field officers should not interfere with members’ self-selection but support voluntary participation and member self-selection. 3.2 Who are the intended primary beneficiaries?
The primary beneficiaries of savings groups are those who are below the poverty line and who either do not qualify for microfinance, or are in remote rural areas where it is not viable to provide microfinance. 3.3 Life cycle stages to which the model contributes
Savings groups are available for everyone in the community. Because of this, parents and caregivers are likely to have children across all stages of the lifecycle and the project will benefit children of all ages. There are also successful examples of savings groups where the members are children. 4
4
http://www.youtube.com/worldvisionstory#p/a/u/0/8LjNjKwkVPY
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3.4 How will the model include/impact the most vulnerable?
Savings groups are formed voluntarily through individual initiative (self-selection). The most vulnerable can choose to join. If required, the most vulnerable can form their own group if other groups exclude them. Features that address the most vulnerable include: o Savings: A safe and convenient place and mechanism to save while mitigating risks and costs. Savings are a less risky product for the vulnerable poor than borrowing from financial institutions. o Insurance and social fund: An optional form of social insurance providing access to emergency loans in times of need or funds for community projects. o Credit: Small loans from the savings group on flexible terms, for investment, consumption or emergency purposes. 4.
How does the project model work?
4.1 Overview of approach/methodology
o Group formation and training: Group formation and training occurs in the first cycle of a savings group and lasts 9-12 months. There are four phases; preparatory, intensive, development and maturity. Each successive phase progressively matures the group, leading to increased self-reliance and fewer visits and less assistance from the field officer. 5 o Group management: Groups are participatory and democratic. Each savings group has a five-person management committee elected for one cycle (9-12 months). Savings groups also develop a constitution that contains the social fund, share-purchase, and savings and loan policies of the group. Each member has one vote in electing the management committee and developing the constitution. Savings groups ensure that their members memorise the basic features of the constitution. 6 o Savings deposits buy shares: When members deposit savings, it is called a share, indicating that members are shareholders of their own savings group. The share-value is decided by the group at a value that is acceptable to all members for the term of the cycle. At each meeting, every member must purchase between one and five shares only. The maximum share is limited, to maintain the power balance, avoid a well-off member taking over the group or someone being excluded because they cannot contribute as much as others. o Loans: Savings are maintained in a loan fund from which members can borrow in small amounts, not greater than three times their individual savings. Anyone needing a loan from group funds puts forward their proposal to the group and approval of the loan rests with the group. Loans are repaid with a service charge determined by the group and set for the term of the cycle. In setting the service charge, groups should consider their goal. Higher charges encourage greater savings, better distribution of money and faster repayment, but may discourage borrowing. Lower fees favour active borrowers, but may discourage savings. When repaying loans, borrowers must, at the very least, pay the monthly service charge and whatever additional amount of principal they are able. 7
5 See Section 7.4 and The VSLA Field Officer Training Guide in Appendix A for full details of the modules of training for each phase. Page 8 of the guide gives a useful timeline by training stage. 6 See page 20 and page 36 of the VSLA Field Officer Training Guide in Appendix A for development of a group constitution and a sample. 7 See page 18 of the VSLA Field Officer Training Guide in Appendix A for this and other rules.
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o Transactions: There is no savings group record keeping ledger. Only the starting and closing balances of the group social fund and loan fund are recorded at each meeting, mainly through memorisation. All transactions are performed at meetings in front of all the members of the group to promote transparency and accountability. To ensure that transactions do not take place outside of group meetings, cash and passbooks are locked in a cash box secured with three padlocks. The three keys are held by three group members, who are not part of the management committee, to ensure that no transactions occur outside the group meeting. o Passbook: All members have an individual passbook. Savings deposits, called ‘sharepurchases’ are recorded with a rubber stamp in the front half of the passbook, while loans are tracked through simple records in the back of the passbook. o Social fund: Groups may opt to form a social fund. A social fund is a form of insurance for the group and provides grants for emergency assistance, educational costs or funeral expenses. The social fund may be used for group members or members may vote to use it on a project that benefits the entire community. For example, WV facilitated savings groups in Swaziland have used the social fund to support OVCs which is helping tackle the impact of HIV and AIDS. o Share-out: At the end of every cycle, the accumulated savings and earnings (from service charges and penalties) are shared out among members proportionate to the number of shares each member has contributed. The share-out provides an entry and exit point for members and allows the opportunity for adjusting or changing rules, members, rates or savings amounts, and resolving any outstanding issues. It builds member confidence, because members have an immediate verification that their money is safe and the process is profitable. All members are given their passbooks and their share-out money is placed directly in their hands. After the visual example of the success of the savings group share-out, field officers typically report a surge of interest in savings groups, with local leaders promoting savings groups and potential members asking to be trained. This serves as an ‘action audit’ to ensure that funds are well managed by the savings group, minimising risks of fraud. There is a natural tendency for successful, first-cycle groups to not want to do the share-out. Group members, particularly the most dynamic and successful ones, will be justifiably proud of the savings that they have mobilised over the first year. Members may perceive the share-out as unnecessary or, even worse, starting all over from nothing. However, field experience by CARE and the VSLA have shown that savings groups that do not liquidate assets regularly inevitably have operational irregularities, internal conflict, a drop in member confidence and, ultimately, a limited lifespan (about three years). If the group wishes to establish seed capital to initiate the next cycle, they may do so by having all members, including new members, contributing the same amount. It can be more than five shares on this one occasion. o Process for moving onto a new cycle: After the share-out, members who do not wish to continue may leave the savings group and new members can join. The new cycle can either be started with the loan fund from zero or, to initiate lending activities with a useful amount of money on hand, members can contribute an initial amount above the usual five share limit. If they decide to go above the limit, all members must agree to contribute the same amount.
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4.2 What local level partners could be involved?
TABLE 1: Recommended partners
Potential partner Local village leaders
Government departments with a remit related to savings groups Disabled persons organisations (DPOs) Mature savings groups
Priority for partnering (Essential, Desirable) Essential
Essential
Partner role Involvement is essential for building local ownership. Leaders may be involved in contacting potential savings group members, raising awareness about savings groups and supporting the establishment of groups. Their role will depend upon the policy of the department and may include involvement in registering groups, auditing and business promotion.
Desirable
Inclusion of people with disabilities
Essential
Village agents are selected from mature savings groups to support existing groups and establish new groups on a fee-for-service basis from the groups who benefit. Members may choose to borrow from MFIs or established savings groups (more than two-years old).They may borrow from MFIs according to the guidance in Section 9. Local non-governmental organisations may have projects that support people to save, budget or increase their income or assets. Projects may choose to partner with these organisations to enable members to develop their savings group or support their livelihoods.
Microfinance institutions Banks
Optional
Non-governmental organisations Community-based organisations
Desirable
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4.3 Partner capacity considerations
TABLE 2: Partnering capacity context Partnering capacity context (Refer to Step 5 of Critical Path) No or very few organisations (mobilise) Weak organisations (build capacity)
Strong organisations, not child-focused or not networked (catalyse) Established childfocused partnerships (join)
Guidance regarding ways of working to implement this project model in these contexts In this context, savings groups will be mobilised by field officers. Field officers need to identify key community stakeholders and gain their support. Local government representatives are particularly important in this context. Identify any existing organisations, such as community-based organisations that may not have experience in savings groups but have local influence and common goals around improving the well-being of children. The organisations can play a role in mobilising savings groups. If there are strong organisations with expertise in savings groups, they can play a role in specific aspects of the project, such as forming, training, monitoring or evaluating the impact of savings groups. In this partnering context, there may be organisations with proven capacity in the savings group methodology and a shared vision for child well-being. These partners can play a role by providing training, ongoing support and monitoring the savings groups. WV should ensure that the partner fully adheres to and is committed to the carefully designed and well tested methodology of this savings group approach. A way of analysing the partners commitment to savings groups is to consider the partner’s track record in this methodology, such as the number of savings groups they are supporting and the length of their operational experience.
4.4 How does the model promote the empowerment of partners and
project participants? For very poor individuals and households, credit-based models such as microfinance, are inherently risky and may increase household vulnerability and anxiety. 8 Poor households often become over-indebted in periods of low cash-flow, acquiring relatively large, expensive, long-term debt when what they really need is a mechanism to help them manage when household expenses exceed income. Savings groups offer participants a safe place to save and a way of managing their cash flow and accumulating assets. This flexibility, as well as self-ownership and the self-management of operations, promotes the empowerment of the poor and financially excluded.
Project DME
5.
5.1 What are the goal and outcomes that will be sustained as a result of this
project model?
o Savings group project goal: Increased economic capacity of parents or caregivers to provide well for their children.
8
Dichter, Thomas. (2007). A Second Look at Microfinance: The Sequence of Growth and Credit in Economic History, Development Briefing Paper No.1, CATO Development Institute.
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o Outcome 1: Parents or caregivers have increased economic resilience. When parents save on a regular basis, they have their own money which they can draw upon when their expenses exceed their income. These savings, plus access to an emergency loan, provide a cushion during economic shocks and times of hardship, such as sickness or personal disaster. Savings groups may also have a social insurance fund, which members can borrow from during emergencies. o Outcome 2: Parents or caregivers have sustained access to financial resources to start or develop their livelihoods. At the end of a savings cycle, members receive a lump sum of their accumulated savings plus a share of the service charge that members have paid on the loans. Members can use this sum to make productive investments to generate more income. In subsequent savings group cycles, they can continue to finance their business by borrowing from the group and by putting aside their profits as savings. 5.2 Sample logframe for this project model
The diagram below shows the logic of this project model. The indicators shown below illustrate the types of indicators that can be used. An illustrative logframe including a range of potential indicators is provided in Appendix I. See the Compendium of Indicators for Measuring Child Well-being for further details of these indicators.
Project goal Increased economic capacity of caregivers to provide well for their children
% of parents or caregivers who are able to provide children in the HH, aged 5-18 years, with three important items, through their own means*
Outcome 1 To increase the economic resilience of caregivers in savings groups % of HHs who faced a disaster in the past 12 months and were able to employ an effective disaster-risk reduction or positive coping strategy*
Output 1.1 Savings groups are formed and trained, enabling caregivers to save money for loans and emergencies
Output 1.2 Savings groups continue to operate after the first shareout without active involvement of trainers
Output 1.3 New savings groups are formed with the support of village agents * This indicator is part of the Compendium of Indicators for Measuring Child Well-being
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5.3 Recommended monitoring methods
Performance indicators for savings groups are generated continuously throughout the project. This is done through routine data collection by field officers. The data is consolidated into a simple management information system (MIS) (see Appendix K and L). More information is provided in Section 8. 5.4 Advocacy component(s)
Issues identified through savings groups’ discussions should feed into the overall local level advocacy response to economic injustice and exclusion. For example, savings group members may encounter barriers to doing business. Working groups can support these savings group members by lobbying for policies and regulations that favour smallholder agriculture and micro-enterprises. Incomes from savings groups enable people who were previously excluded to participate more meaningfully in civil society. For example, savings group members can open a group bank account, access a microfinance or purchase health or education services which they previously could not afford. The working groups can capitalise on these gains by supporting members to address gaps they identify in local services. 5.5 Critical assumptions and risk management
TABLE 4: Risk mitigation Critical assumptions The rate of participation is one person per household Parents or caregivers have equitable decision-making authority in household finances.
9
Importance (high, medium) High
High
A valid baseline study was done.
High
Savings group project staff know how to use PPI
Medium
Management response If savings groups have many members from one household, it can interfere with democratic decision-making. This parameter can be given to groups as a standard group rule. The programme team should connect with their gender point person in the national or regional office for advice on gender norms and power dynamics that could affect the success of the project and to prevent harm. The gender point person can make recommendations of how the model can be appropriately adapted for their specific context. The baseline study needs to include all the indicators which will be used in the savings group project. PPI (Progressing out of Poverty Index) is a poverty assessment tool which is simple and cost effective and recommended by VisionFund and the Economic development CoP, was sponsored by microfinance resourcing bodies CGAP, Grameen and Ford Foundation. PPIs are specific to the country. National offices need to check whether there is a PPI tool for their country. 9 Assistance in using the PPI can be obtained from PPI staff by contacting
[email protected] or within the World Vision partnership, the VisionFund International PPI specialist Refilwe Mokoena.
http://progressoutofpoverty.org/
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The project keeps sufficient records to report on these industry standard indicators
High
Sufficient capacity and interest of experienced savings group members to become village agents
High
Village agents are funded by saving groups to undertake this function
Indicators need to be reported on in a standardised way for aggregation. The VSLA database (Appendix K and L) provides a mechanism for data entry and consolidation of results. It is highly recommended that projects keep these records so they can report on the savings group results and so WV can benchmark its performance and identify areas for improvement. The indicators can be reported on Savix, http://savingsgroups.com/research/ratios, (an information exchange for savings groups worldwide), enabling comparison and trend analysis. In some savings groups, village agents are unpaid. However, some form of compensation may be required to motivate and recompense village agents for their time and expenses. To be ready for this stage, a savings group project needs to prepare members for self-reliance from the outset, including a longterm user pays approach to training services provided by village agents. 10 If the project lacks mature savings groups from which to draw village agents, the project needs to return to the fundamentals of group formation and training. Alternatively, groups may require more time to reach this level of maturity before considering village agents.
5.6 Sustainability
Savings groups are financially sustainable by design as they are financed by the members. Savings groups acquire the skills to manage their activities during a well-structured training cycle. The aim is that they become fully independent and organisationally sustainable at the end of the one-year training cycle. A well-managed savings group is an extremely costeffective tool for mobilising groups and providing basic financial services in extremely poor and remote areas. The Savings Group project model requires minimal physical infrastructure. Savings groups buy their own cash box, passbooks and group records from the start. 11 Alternatively, projects may provide a starter cash box and materials to help launch new groups. After the end of the first cycle they can use part of their earnings to purchase their own box and pass along the starter box to a new group. This helps eliminate any financial barriers to starting a new group. The village agent approach promotes the sustainability and spontaneous formation of savings groups beyond the initial project implementation. Field officers directly format and train new groups in areas where savings groups are new and unknown. However, as savings groups mature, the field officer transitions into a training-of-trainer role, supervising and coaching village agents. Village agents promote and train new groups and offer support and occasional audit roles to existing groups as requested. Savings group members identify potential village agents. These are individuals who stand out as natural motivators, are able to facilitate disciplined meetings, have demonstrated literacy and numeracy, and have expressed a strong desire to train saving group members. 12
See page 32 of the VSLA Field Officer Training Guide (Appendix 1) for recommended VA fees. VSLA Field Officer Training Guide (Appendix A). See Annex 3 of the guide for the recommended savings group startup kit. 12 VSLA Field Officer Training Guide (Appendix A). Section 5 of the guide provides details of the role, selection, training, motivation and supervision of village agents. 10 11
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Savings group members learn that they are expected to pay village agents a fee for any future training. The project should not pay a salary or fee to village agents. At the end of year two in the project timeline, village agents are recruited. After their training, village agents undertake primary responsibility for the promotion and training of new groups in years three and four. Village agents are trained by field officers using the VSLA Programme Field Guide for Village Agents (Appendix B). 6.
Protection and equity considerations
6.1 How can child protection be promoted in the implementation of this
project model?
Child protection is promoted through the combination of increased community cohesion and support, and household resilience and protection of assets. Staff should assess the risks to children and take actions to minimise any potential risks. o Develop criteria for selecting and screening volunteers, including those with partner organisations, especially in regards to protection issues. o Develop preparedness plans for serious abuse or exploitation of children in target communities (WV level 1 child protection incidents). o Train volunteers on the basics of child protection, such as what are child abuse, exploitation and neglect, and how are these issues manifest in the community. o Train volunteers how to recognise signs of abuse, neglect and exploitation, and train them how to respond. Report and refer effectively and in timely manner under the WVI Child Protection Definitions and Response Protocol available here. o Communicate to community members (including children) what are inappropriate and appropriate behaviours towards children by WV staff and volunteers. o Establish a reporting and response mechanism with communities (including children) for concerned parties to report inappropriate behaviour towards children by WV staff, volunteers or community health workers. o Establish child safe partnerships with healthcare providers and services (for referrals of child protection incidents). 6.2
How can the model promote equitable access to and control of resources, opportunities, and benefits from a gender perspective as well as other perspectives, such as disability, ethnicity, faith and more? Savings groups promote equitable access to and control over resources from a gender perspective. Membership is open both to women and men. Mixed gender groups should be encouraged to guarantee a minimum level of female participation in the management committee. Typically, at least two or three members of the management committee, including the chairperson, must be female. This encourages greater female participation in procedures and decision making and also sends an important message to potential participants of the equal status of male and female members of the savings group. The rules and social solidarity of savings groups prevents dominating spouses from imposing their decisions on the spouse that is in the savings group. A person saving alone is vulnerable to unequal power relationships in their family, but as part of the savings group they have the power of a community group to support them. People with disabilities may encounter barriers to participation in savings groups. For example discrimination, inaccessible communication methods, inaccessible facilities and
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means of transportation, illiteracy and lack of capacity may prevent people with disabilities from participating. The savings group field officer can raise community awareness and find ways of overcoming these barriers so people with disabilities can be included in mainstream savings groups. 7.
Project management
7.1 National office support required for project implementation and success
If there is expertise in the national office in the savings group methodology, it is anticipated that they would provide training and guidance in establishing the groups. If a national level rollout of savings groups is planned, the national office will need to develop a strategy, including staffing, budget and timeline. The staffing structure (see Appendix J) in this model includes options for implementation at the project level through a single field officer. The field officer would report to the programme team leader or to someone in the national office. WV has successfully implemented savings groups in a number of countries, and has savings group expertise among its staff. Specific training is needed and could be provided through the Economic Development Community of Practice (CoP) and its economic development subject matter experts. The Economic Development CoP has a network of savings group expertise including Dr. Frederick Christopher, the WV global champion and technical specialist in the savings group methodology,
[email protected]. The Economic Development CoP has a library of documents, training videos and case studies, which can be accessed through the CoP link for economic development on www.wvcentral.org. Other resources include WV’s Global Technical Resource Network (GTRN) or a partner with expertise and experience in the VSLA savings group methodology. 7.2 Technical expertise needed
The fundamental activity of the project model is the promotion and facilitation of savings groups. This activity may be undertaken directly by the programme team through field officers or through local level partners that are carefully selected (see Section 4.3 Partner Capacity Considerations). Partners may be community-based organisations with whom WV works to start or expand savings groups to new target communities. Alternatively, partners may be national-level, expert organisations who could support and train WV staff to facilitate savings groups. Whether the programme decides to promote and facilitate savings groups directly through field officers, or to work with local partners, it is important that the programme team acquire some implementation experience, either through a pilot project or a parallel direct implementation. Appendix F shows how the timeline is implemented at each stage of WV’s Development Programme Approach. It is also strongly recommended that the programme team follow the full training outlined in the VSLA Programme Field Guide (see Appendix A). The savings group methodology is based on two decades of practical implementation experience by CARE, Catholic Relief Services (CRS) and others. Many of these studies are cited in Appendix C and can be found in the document library, http://savingsrevolution.org/doclib/. Deviating from it can result in fraud, loss of funds and fractured relationships.
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7.3 Guidelines for staffing
Appendix J outlines options for savings group project staff; key responsibilities, qualifications and experience. Please note that small projects do not need all staff positions. Savings groups can be started with a single field officer at the programme level, reporting to the programme team leader. As groups and the number of field officers grow, supervisors will be needed, and potentially, a national-level savings group project manager. Any of these positions could be employed directly by WV, or be sourced and managed through a partnering arrangement with a local level partner. 7.4 Guidelines for resources needed for project implementation
Appendix G provides a sample budget for project-level implementation. However the levels and unit costs of resources (staffing in particular), should be based on local conditions, outreach and the staffing structure. Typically, programmes initiating a project in which field officers are managed by the programme or the cluster manager, can expect an approximate budget of $7,400 in the first year. As the number of field officers grows, a supervisor may be appointed to manage three to six field officers at a cluster or zonal level, and if resources allow, a national-level project manager may be appointed. To show these aggregated resources for a national office, a sample national-level budget is provided in Appendix H. It is expected that initially staffing costs can be funded through programmes with sponsorship. Long-term, savings groups are resourced by village agents on a fee-for-service basis. The project is designed to be low budget, using almost no equipment and using efficient staffing ratios. o Timeline: Appendix E provides a timeline for a four-year project moving from savings group formation, to training graduated savings group leaders as village agents who mobilise and train successive groups. The timeline matches the budget and presumes direct implementation by specialised field officers employed by WV or local level partners. In year four, field officers will either transition out of their direct role and facilitate the work of independent village agents, or start new savings groups in other areas. If the project continues for the life of the programme (continuing to start new groups and train village agents), the programme can build the capacity of a local organisation to continue to promote and provide minimal support to new savings groups after WV phases out. o Group schedule: The group schedule is the anchor of the entire project timeline. The savings and lending activities of a savings group are time-bound and the savings group operates in annual cycles of no more than one year. The first cycle is a training cycle of 36 to 52 weeks. The process described below is based on the VSLA Field Officer Training Guide (see Appendix A). The period of each phase can be lengthened according to the agreed group cycle. During the training cycle, the savings group will meet weekly or fortnightly but may decide to meet more or less frequently in subsequent cycles. The field officer trains one group at a time and does not attempt to combine several groups into one training session. This practice interrupts group formation and often leads to the training focusing on a small management team who are expected to train their members. The training cycle is implemented in the following four phases: Preparatory phase: The preparatory phase lasts one to two weeks. During this phase, the project staff, such as field officers, the project manager and supervisors, provide general information to key community stakeholders and prospective savings group members.
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Intensive phase: The intensive phase lasts 12 weeks and includes six of the six training modules delivered by the field officer. This phase is initiated with an intensive training period of one week, during which the field officer delivers the first four training modules. The savings group self-selects its members, elects its leaders, adopts its constitution, and establishes the rules and procedures that govern financial activities. Subsequently, regular savings meetings and activities ensue. The field officer attends all meetings during this phase and is actively involved in guiding procedures. Development phase: The development phase lasts 12 weeks. During this phase, the field officer visits three times during loan meetings but does not take an active role, only observing quietly and speaking only if rules are broken or mistakes made. This phase is crucial to gradually develop the confidence and autonomy of the savings group to meet independently without the field officer. Maturity phase: The maturity phase lasts 12 weeks and involves two visits from the field officer. Basically, the savings group is now functioning independently. One of the visits is a supervisory visit to verify that the group is operating smoothly. If the group is ready to be independent, the field officer makes a second visit at the time of the last meeting of the cycle to facilitate share-out procedures and celebrate the group’s graduation. If the savings group needs additional training or supervision, the cycle can be extended. o Training requirements through the project timeline: The fundamental capacity building activity is the training of field officers. Training for field officers covering the basics requires four to five days and should be delivered by the project manager or an expert partner. Other project staff including the project manager, data administrator and supervisor should complete a training-of-trainers course covering the savings group methodology, strategy, planning, monitoring and maintenance of the management information system. A brief, one to two day refresher training is recommended early in the pilot project, immediately after periods of expansion and following waves of new group formation. It is imperative that weaknesses and procedural mistakes be recognised and corrected by the project manager or supervisor early in the cycle, before they become entrenched in the working culture of field officers and savings groups. In addition, an annual dedicated training for the professional development of field officers should be provided. Supervisors reserve one half-day each week for the review of a specific training module and continue this exercise until they are satisfied that the field officers have internalised the material of all seven training modules in the VSLA Programme Field Guide (see Appendix A). Supervisors also reserve one half-day per month for a staff meeting where they review project performance reports from the savings group and the field officer. 7.5 Critical success factors for the model
o Don’t Do: The field officer should never touch the savings groups’ money, make any mark on members’ passbooks or hold the passbooks between meetings. The field officer should never perform any of the savings groups’ transactions. While the field officer may be inclined to help weak groups by performing certain transactions for them, this has serious adverse effects on savings groups’ selfreliance, sustainability and ultimately the members’ confidence in the system. It is better to let a savings group fail than to create an artificial group that seems to function but only does so because of WV involvement.
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WV and programme level staff should never provide loan capital to the savings groups or its members. Donating goods and items to groups also disorganises the social network and undermines self-determination. WV should never make participation in another project or microfinance institution a requirement for membership in a savings group. Nor should membership in a savings group be a pre-condition for joining a microfinance institution or participating in another project. Where savings group member voluntarily choose to borrow from an MFI or other financial institution, see Section 9.2 for best practice guidelines. Savings group projects should not deviate from the savings group methodology as described in this project model and in the VSLA Programme Field Guide. VisionFund and its affiliate microfinance institutions do not manage or facilitate savings groups. Savings groups are managed by its members. Facilitation is the role of WV and its partners. o Operational culture of discipline, transparency and consistency: Disciplined, transparent and consistent operating procedures are integral to the sustainability of savings groups. These principles can only be established through equally disciplined, transparent and reliable field staff. Savings groups work with their members’ own money, so fraud and loss is devastating to community relationships. o Implementation by specialised field officers: The project model recommends that savings groups are facilitated through specialised field officers that do not have competing responsibilities or demands for their time. The sustainability of the project depends on well trained, disciplined, reliable and motivated field officers that will transmit an ethos of discipline, consistency and transparency to the savings groups. High staff turnover and unmotivated staff will have adverse effects on the project timeline, the facilitation of the training cycle, the sustainability of the groups and the overall project. o Community support: The support of community leaders is an important, if not crucial, factor in the community’s adoption and confidence in the model. The preparatory phase must be undertaken sincerely, patiently and strategically to ensure the participation and engagement of local leaders and potential participants. o Continuous review of training modules at the local level: Continuous review of the training modules by supervisors and field officers at the local level will ensure proper procedures are internalised and mistakes and weaknesses are quickly corrected. o Field officer’s consolidated guide to savings group meeting procedures: The field officer’s consolidated guide to savings group meeting procedures is the single most important document in the project and should be laminated and carried by field officers and village agents to all meetings. Attempts to memorise procedures will lead to the repetition and entrenchment of mistakes. Rather than memorising the guide, field officers and village agents should constantly refer the guide as they lead savings groups’ through meetings and standard operating procedures. 13 o Member ownership, sustainability, autonomy and self-selection: WV’s objective is to develop autonomous groups. The principles of self-reliance and member ownership must be emphasised from the very beginning. Field officers need to emphasise that savings groups will become independent of the field officer after the first share-out, and that in the long term, WV will phase out and village agents will take over. Field officers and supervisors offer training and facilitation, but they should never manage the savings groups’ affairs or perform any transactions on behalf of the groups’ members. Savings groups need not be homogeneous, but members must have knowledge, 13
(See Appendix A, VSLA Field Officer Training Guide Annex 4,
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confidence and trust in each other. This cannot be achieved through individual targeting and forced group formation but only through a genuine process of member self-selection. 8.
Any necessary tools o VSLA Programme Field Guide (see Appendices A and B): This is a detailed training guide which is an essential companion to the project model, for use by field officers, supervisors and village agents. Experience in this approach in several countries in Africa and Asia has shown excellent results in terms of simplicity, transparency and safety. The most current versions are available in English, French and Spanish, and the 1997 version is also available in Arabic and Portuguese thru this link: http://vsla.net/programmetool/programmeguides. o VSLA management information system (see Appendices K and L): The VSLA management information system (MIS) is recommended by the Savings Group project model as the primary tool for continuously monitoring savings groups. Users should register on the VSLA website, www.vsla.net, and check for updates regularly. Project performance data generated from the savings groups is collected by the field officer on key indicators. Examples of collected data are, the number of members, savings mobilised and amount lent. 14 The Aggregator tool (see Appendix L) automatically imports, aggregates and tabulates the data from the MIS. 15 Reports on the ratios of savings group performance can be generated for countries, regions and globally and compared on the Savings Group Information Exchange, http://savingsgroups.com/analysis. See Appendix M for an explanation of ratios.
9.
Linkages and integration
9.1 Child sponsorship
There is likely to be an overlap between the families self-selecting for savings groups and the children registered for child sponsorship. Care needs to be taken that access to savings group is not viewed as in any way conditional or linked to registration in child sponsorship or other forms of exclusive benefits. It is not recommended to combine child sponsorship monitoring with group meetings, as it may confuse participants about the objective of savings groups. Care should be taken to ensure that group meeting times and locations are determined by group decision and not by child sponsorship activities. Overlap with child sponsorship monitoring activities while seemingly efficient, could undermine group selfdetermination and result in loss of motivation or weak attendance. 9.2 Enabling project models
o Caution on creating linkages between savings groups and other projects: Savings groups are popular, participatory and dynamic groups. They are a cost-effective instrument for social mobilisation in extremely poor and remote areas. As a result, national offices and programmes may regard these groups as an effective entry for an integrated programme, training and community education. However, participation in any workshop or information session must be entirely voluntary and should not interfere with savings groups meeting procedures or overload the members of the group. The imposition of additional sessions or training requires members 14
Appendix A, VSLA Field Officer Training Guide (page 52-52) provides the definition of data which is included in the VSL MIS
15
To open the MIS, the user must have their macros enabled.
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to spend more time at meetings and increases their cost of participation. This may adversely affect the dynamism and sustainability of the group. For the same reason, members who want to join savings and credit cooperative societies or community-based organisations should feel free to do so, but groups should not be merged into cooperatives, community-based organisations or savings and credit cooperative societies. This would fundamentally change the structure of the savings group, overwhelm its systems and weaken bonds between members, which are foundational to the savings group. o Linkage with microfinance institutions: WV should maintain a healthy relationship with local financial institutions, including banks and microfinance institutions. Local representatives must be assured and convinced that savings groups are not competitors. Rather, savings groups provide a different financial service. There is no restriction against members of a savings group also being clients of a microfinance institution or bank. However, experience has shown that modifying the savings basis of a savings group and introducing external credit early in the life of the savings group breaks down motivation and causes the group to disintegrate. This also happens if the savings group, as an entity, borrows from a microfinance institution. The principles below should be followed: The microfinance institution should not lend to savings groups for at least two years, allowing sufficient time for members to develop experience and confidence in managing their own money. External credit can become the main focus of the savings groups if they receive external credit early in their life. The microfinance institution should never become involved operationally in the savings group. The savings group only lends money to its members and does not provide information about this to the microfinance institution. Members’ savings should not be used as collateral for an external loan. The first loan taken by a savings group should not exceed half the total value of all member shares. In subsequent cycles the loan should never be equal to more than the value of the previous cycle’s share-out amount. Loans to savings groups should be reimbursable on flexible terms, either at the end of an annual cycle as a single payment, or in varying amounts throughout the loan repayment period. o Financial education provided through savings groups: Basic financial education may provide participants with the tools to manage household assets and savings group activities more effectively. Such education needs to take into account the varying abilities and interests of a heterogeneous group. The forced integration of a standardised curriculum is not recommended but, as with all additional activities, staff should listen to what savings group members want, and respond appropriately, rather than imposing their own ideas.
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Appendices Appendix A: VSLA Field Officer Training Guide Appendix B: VSLA Village Agent Training Guide Appendix C: Savings Group impact studies Appendix D: Child well-being and microfinance studies Appendix E: Project timeline Appendix F: Project timeline by LEAP and Critical Path Appendix G: Programme level budget option Appendix H: National consolidated budget Appendix I: Illustrative logframe Appendix J: Guidelines on staffing Appendix K: VSL Management Information System (MIS) Appendix L: VSL Aggregator Tool (for consolidating data) Appendix M: Ratios and explanation of ratios
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