ALTmf

Interview with Lauren Hendricks of CARE's Access Africa program

CLICK HERE Podcast 4 Lauren Hendricks

Welcome back. 

I've been traveling and haven't had time to report on "the news", but I do want to give a shout out to the Financial Access Initiative website. I think the discipline and rigor that the FAI is bringing to impact evaluation is very welcome. Their site is full of interesting links and articles, and whether you agree or not with everything they say, they are making people re-examine ideas and think about things newly, and that can only be beneficial. Check it out.

This time the podcast has no news, chatter or sound effects. Instead, the whole podcast is dedicated to a lively interview with Lauren Hendricks of CARE's Access Africa program. Lauren talks about the origins of Access Africa; how it set its ambitious goal of reaching 30 million savings group members; the different types of linkages that Access Africa is hoping to create; and how MIS information can provide insights into other phenomena in the regions where CARE is working and how data can be exciting to "us microfinance nerds". Enjoy!

More soon. Your comments are always welcome at contactALTmf@gmail.com . Thanks for listening. 

Time to take a deep breath?

There is no question that the advent of Savings Groups represents a new and promising approach to bringing financial services to poor people. It certainly seems like they work, like they are a good thing for just about everyone, like they are better in many ways than old approaches, and like they are worthy of support for massive expansion.

But for those of us who have been working around microfinance for a few years or decades, all this sounds familiar. Weren’t we saying the same things about microcredit in the 1980’s and ’90’s? And then… didn’t things turn a little, uh, sour?

Remember what happened? Back in the microcredit days, we needed institutions to get scale, and because the institutions needed a lot of nurturing, we started focusing on the role of clients as income sources for institutions. We put more emphasis on the client as a commercial market than on how the institutions could serve the clients. We believed convenient claims, like "microfinance alleviates poverty", and "borrowers start micro-businesses with their micro-loans", with very little evidence other than a few anecdotes. 

If I had to mark the moment in which microcredit began to get weird, it was when MFI managers started greeting each other at conferences with the question, “How many clients do you have”? The clients had become objects, counters in a game between big firms. Well-funded development programs and projects grew up to help MFIs with their marketing, help them find investors, help them build their brands, helped them "go to scale" – and the clients got lost in the shuffle. We never celebrated when people got free of debt and left an MFI; instead, we tried to "reduce dropouts". Microcredit became more and more about institutional performance, and less and less about what happened to poor people.

 

Something similar – not identical – to what happened in microcredit may be starting to happen with Savings Groups: there is beginning to be a pervasive and unchallenged belief that more people in savings groups is always a good thing, and that group membership is always good for members. As in microcredit, implementing organizations are defining their success almost exclusively by their outreach. Here's a warning sign: some countries may be on their way to saturation in savings group formation, but existing programs are expanding into areas that are already served, and new entrants are launching programs in those countries, sometimes with very little coordination, and in some cases building portfolios by offering more attractive but perhaps less developmental terms – for instance, giving away cash boxes in areas where other practitioners have been patiently working to have their groups pay for their boxes.

Let’s slow down and breathe deeply for a moment. 

We all love Savings Groups in part because so far as anyone can tell, they are low risk. But low risk does not mean no risk. As we expand, we are likely to follow the same pattern as the expansion of microcredit. We’ll pick the low hanging fruit of entrepreneurial, eager, alert, healthy members first, and everything will go well. As we go deeper and deeper, we’ll be attracting members who are poorer, not as confident, more likely to be sick, more burdened by the many calls on their resources that people in poverty have, and frankly, our field staff, driven by a mandate for outreach, will find ways to include members who are reluctant to join – who come half-heartedly to the first meetings, and may drop out during the year. We’ll be struggling to reduce drop-outs, forgetting that for poor people in the wrong institution, dropping out may be escaping.

Poor people have had enough ups and downs in their lives that they do not need any more failures –  and dropping out of a group is a failure, whatever else happens. If we set people up to take risks that they are not ready for, what are we doing for them?

And, as we experiment with new products and approaches, as we link and federate and add-on and incentivize and simplify and complicate, arrange and rearrange and rearrange, not all of our innovations will work. While Savings Groups are relatively safe, some of the variations I have seen have a lot more risk, on the face of it.

The challenge and the opportunity for those of us working in Savings Groups is to remember to focus on what the group members need and want.  That’s why the various studies that are happening now are incredibly important. They can help keep us focused on what is actually happening. Hats off to the agencies - CARE, Oxfam, CRS and their partners - participating in the Gates-funded studies, and to Gates itself, to Aga Khan Foundation, its many collaborators, and the MasterCard Foundation for the studies on platforms and linkages that are just starting, and to DFS for the study of COSAMO about to come out of Kenya. We will learn a lot from these, and it will be very surprising if there are no surprises!

Savings groups are not about AKF or CARE or VSL or Oxfam or CRS -- all of these organizations contain great people, but organizations have to eat also, and they have egos, and old conversations that drive present actions. We need to keep our eyes and minds open. We have an opportunity to find out what’s happening, be objective and constructive, and maybe inflect the course of history and make a difference in the lives of millions of poor people. It’s a very exciting time, and a very noble cause – but let's be at least a little concerned the next time we find ourselves asking colleagues, “How many members do you have?”

--Paul Rippey

Do you agree? Disagree? Or wonder what I’m talking about? Write to me directly at ContactALTmf@gmail.com, or post a comment below.

Interview with Guy Vanmeenen, News about CGAP publications, and more

CLICK HERE Podcast 3 Guy Vanmeenen

CLICK HERE Podcast 3 Guy Vanmeenen short version

Welcome back to ALTmf dot com.

ALTmf is a forum for sharing information and discussing alternatives to traditional microfinance. Its initial emphasis is on community managed savings groups. These are being promoted in many countries by organizations like CARE, CRS, Oxfam America, Aga Khan Foundation and dozens, if not hundreds of national NGOs. 

 

ALTmf is an independent site, designed to be a forum for sharing information and discussing alternatives to traditional microfinance, starting with savings groups.

As this site grows, you can guide its evolution. If you would like to contact ALTmf, it’s easy. Just write to ContactALTmf@gmail.com. Thanks for your support. We’ve now had visitors from sixteen countries on four continents. The US is in first place by far – we’ve had hits from ten states. And I realize the podcast format is a bit harder overseas where there is less bandwidth, so I am going to expand the program notes, so that people who for whatever reason can’t download the podcast, can still read a lot of the text. 

For this third podcast, I’m delighted to offer you an interview with Guy Vanmeenen of CRS. NEW: If you don't have the time or the bandwidth for the loooooooong version of the podcast (44 minutes), there is now a short version that mostly just has the interview with Guy Vanmeenen (31 minutes). Just click on the button above that you choose.

First though, a reminder about the SEEP Savings led Financial Services Working Group site. The working group is a member-led forum for knowledge sharing among savings-led microfinance practitioners. 

SAVINGS GROUPS IN THE NEWS

Savings as a part of microfinance is getting some important press, and if you haven’t seen it, there’s a great article by Nicholas Kristof of the New York Times.  

Kristof throws some flowers at CRS in particular (he also mentions CARE, Oxfam and the Gates Foundation). He says, 

“Some people in the development world argue that microlending has been oversold, and there has been a bit of a backlash against it lately — including a “no pago” movement here in Nicaragua. This “don’t pay” effort has been orchestrated by the leftist government of President Daniel Ortega.

I don’t agree with the criticisms of microloans, for I’ve seen how tiny loans can truly transform people’s lives by giving them the means to start small businesses. Even so, there’s evidence that the most powerful element of microfinance is microsavings, not microloans.”

It’s good to see the reaction to Kristof’s article. For instance, my good friend Beth Rhyne blogs that “Microcredit has been a dated term for more than 15 years, at least among practitioners.  We’re about microfinance–provision of a suite of financial services to help the world’s poor build and preserve wealth and manage risk.”

TWO NEW CGAP PUBLICATIONS

There are two very interesting CGAP publications that have recently come out. 

BRIEF ON MOROCCO:  First, there’s a CGAP Brief by Xavier Reille, called “The Rise, Fall, and Recovery of the Microfinance Sector in Morocco”. Reille documents the crisis that hit Moroccan MFIs over the last few years. MFIs got into a lending frenzy, and increased their portfolios rapidly both by making more loans, often to people who already had MFI loans, and larger loans. Reille says that from 2003 to 2007, according to the MIX, MFI loan portfolios multiplied 11 times and client outreach multiplied four times. If you do the math – that is, they lent 11 times more money to 4 times more people - the average debt burden was growing very fast – it nearly tripled in four years.

Moroccan MFIs engaged in rampant reckless lending, and I have often quoted the definition of reckless lending given by South Africa’s Micro Finance Regulatory Committee. They defined reckless lending like this: Loans made in reliance on the borrower’s collateral, without proper evaluation of, or reliance on, the borrower’s independent ability to repay, with the possible or even intended result of foreclosure or the need to refinance under duress.

Inevitably, over a short period, repayments collapsed, the PAR at 30 days for the industry, which had been under one percent for years, shot up to 10%. Reille says,

The response of the Moroccan microfinance sector has been swift and timely. The government organized the acquisition of Zakoura by the Fondation des Banques Populaires, in record time to restore confidence and avoid contagion effects on loan delinquency. Lenders also have been cooperative. Local commercial banks have maintained their credit allocations, and DFIs have not called their loans. At the same time, MFIs have slowed down their growth considerably and reduced their balance sheet size. Total assets shrank by 1.2 percent in 2008 and by 7 percent during the first six months of 2009.12 As a result, MFIs’ cash position has reached record levels (over 15 percent at the end of 2008), and large MFIs are not expecting liquidity shortages until mid 2010.

MFIs also have put in place an aggressive recovery plan, including, in some cases, senior management changes. MFIs are tightening their credit processes, putting together teams dedicated solely to loan recovery, and taking judicial action against delinquent borrowers.

Now, it is impossible not to be struck by how similar this situation is to the crisis that hit the banking sector in the US and the rest of the world, and much of the solution has been the same. Zakoura Foundation was too big to fail, so the government helped it be absorbed by another large MFI, resulting in a new entity which is even MORE too big to fail. The Moroccan Central Bank helped engineer enough cash injections to keep the MFIs from going under, and the MFIs turned the screws on clients, many of whom should never have been given loans. One wonders if the story will end with the MFIs paying their managers big bonuses.

DOES MICROFINANCE REALLY HELP CLIENTS? Then a second CGAP publication is a Focus Note by Rich Rosenberg. He alludes to some recently completed Randomized Control studies. I’m quoting: 

So far the few published RCT studies of microfinance have been able to track short- term results only. Two that looked at standard microcredit clients over a short period (12–18 months) found no evidence of improvements in household income or consumption, although they did find some other possible benefits 

He concludes: For now, it seems an honest summary of the evidence to say that we simply do not know yet whether microcredit or other forms of microfinance are helping to lift millions out of poverty.

Then he goes on to cite the work of Collins, Morduch, Rutherford, and Ruthven in Portfolios of the Poor: How the world’s poor live on less than $2 a day. He points out that people appear to use financial services not for investment, except in some rare cases,  but rather for income smoothing. 

These are two remarkable statements to be coming out of CGAP: there is no evidence, yet, that microcredit alleviates poverty; and micro-loans seldom are used for investment in small enterprises, and are used much more for simple income smoothing. 

Wow! We really are in a new world of microfinance! It is said that a prophet has no honor in his own country, but I want to take a second to honor some friends of mine, people who now seem prophetic, some of whom have appeared and will appear on ALT mf, who have been saying exactly the same thing for years. You know who you are!

STEVIE WONDER TO ML KING: I have a musical break, Stevie Wonder singing happy birthday to Martin Luther King, and I’m posting this on January 18, which is the US holiday honoring Dr King. In 1963, King said, “Human salvation lies in the hands of the creatively maladjusted.” I love that. So, if you are creatively maladjusted, and I know some of our listeners are, good for you! Get busy! You have a lot of responsibility!

NEW THEME SONG: I also want to talk about the new theme music here that we played at the beginning of the podcast – it’s a song by Pete Seeger called Arrange and Rearrange. I love the song, and it’s remarkable that Pete wrote that in his 80’s. The version I’m using was recorded when Pete was 89. When I heard it, I thought that would be a perfect theme for this podcast – 

Maybe the biggest change will come

When we don't have to change much at all.



When maniacs holler, "GROW, GROW, GROW!"


We can choose to stay small.

Thanks much to Pete and his people for permission to use that song, and thanks to Pete Seeger for all the wonderful music he has given us over eight decades. I first heard Pete live when I was in High School and I’ve loved his music ever since. I think he would love savings groups if he got to know them.

SAVINGS GROUPS AND GENDER EQUITY:  In more news, the IRC reports that they are carrying out a test in Burundi to see whether raising awareness about gender equity, combined with economic resources, can reduce vulnerability to domestic violence.

So as part of this test, IRC is working with 25 VSLA groups in Makamba Province of Burundi. They describe the test like this:

Fifty percent of the participants were assigned to a control group that participates in the VSLA component of the project only and 50 percent were assigned to an intervention group that participates in a “gender- based violence discussion group” series in addition to the VSLA groups. The organized discussion group series addresses issues of women’s empowerment, and participants are encouraged to invite their spouses to attend. The dual objectives of this program are to increase the amount of economic resources available to women as well as their control over those resources. The intent is, as female authority increases, women’s vulnerability to domestic violence decreases. Therefore, when evaluated, this program’s success will measure both 1) an increase in women’s economic resources (both groups); and 2) women’s increased role in household decision-making (the intervention group).

Very interesting test, and many people will be curious to see the results.

INTERVIEW WITH GUY VANMEENEN

Then I go on to the interview with Guy Vanmeenen. I interviewed Guy in Arlington Virginia on November 4th 2009.

Guy Vanmeenen is Catholic Relief Services’ Senior Technical Advisor for microfinance in Africa. He provides strategic leadership and technical guidance to staff and partners across Africa implementing the agency’s microfinance strategy. Guy is responsible for strengthening the capabilities of CRS and partner staff, reviewing and adapting best practices in rural finance, and working with the regional team to integrate microfinance activities into other CRS programs.

In addition, he developed CRS’s Savings and internal Lending Communities – SILC – model, and supported its roll out in 23 African countries.

Guy joined CRS in 1996 as microfinance program manager in Lebanon. In 1998, he became regional technical advisor for mf in East Africa, and later added the West African region, and eventually started supporting CRS’s microfinance activities across the continent. During this time he helped the agency develop its strategy framework for microfinance through 2010.

Previously, Guy worked for the United Nations industrial Development Organization in Morocco where he helped the government support private sector development through policy initiatives and by promoting activities such as small enterprise development and solar technology.

He also has experience in both exporting and sales.

I started by asking Guy about the SILC program, and … but here, you need to listen to the podcast!

SEE YOU NEXT TIME

That’s it. Look for another podcast soon, and remember that Human salvation lies in the hands of the creatively maladjusted. Thanks for listening.

To use the site: Read the blog postings on this page. Look at the other pages listed to the right under the "Navigate" banner. And of course, listen to the podcast: just click on one of the boxes at the top of this post: either CLICK HERE Podcast 3 Guy Vanmeenen or CLICK HERE Podcast 3 Guy Vanmeenen Short Vserion and in principle, you will start hearing the podcast. Otherwise, right click to download it for listening later on your computer or MP3 player.

Interview with Jeffrey Ashe, News about savings groups, and more

CLICK HERE Podcast 2 Jeff Ashe

Welcome back to ALTmf dot com.

ALTmf is a forum for sharing information and discussing alternatives to traditional microfinance. Its initial emphasis is on community managed savings groups. These are being promoted in many countries by organizations like CARE, CRS, Oxfam America, World Vision, Aga Khan Foundation and dozens, if not hundreds of national NGOs. 

 

 This second post features an interview with Jeffrey Ashe, of Oxfam America. Jeff has an extraordinarily rich and varied background in bringing financial services to the poor. In this podcast, he talks about the long trail that led him to savings groups, and what makes Oxfam’s Saving for Change program distinctive, and distinctly well adapted to the areas it works in.

 

I also have some news from savings groups around the world, including some good outrage at one point. And, a small joke segment right before the interview. That is a joke. Not a real phone call.

 

Please note that a new section to the site has been added: a page on “What are Savings Groups?”

 

Also, here’s a shout out to the SEEP Savings led Financial Services Working Group site. This is a member-led  forum for knowledge sharing among savings-led microfinance practitioners. And I believe if you are reading this, you qualify for the SEEP site. You can join online discussions on topics of interest to the sector and find document collections and general program data on member’s programs.  Note that SEEP membership is not required to access these resources, although if you aren’t a member you will have to get a temporary password. You’ll figure it out. Check it out!

http://members.seepnetwork.org/SupportingPages/Login.aspx

 

 

Please leave comments - it's SO easy to do! Click on the word "comments", and follow the simple instructions. Praise, criticism, suggestions, requests - everything is welcome.

 

 

If you are diffident about posting something, you can contact ALTmf directly. That's also easy: you just write to contactALTmf@gmail.com . As the site grows and evolves, I count on you to guide its future evolution. 

 

To use the site: Read the blog postings on this page. Look at the other pages listed to the right under the "Navigate" banner. And of course, listen to the podcast: just click on the box at the top of this post labeled "Podcast 2 Jeff Ashe" and in principle, you will start hearing the interview. Otherwise, right click to download it for listening later on your computer or MP3 player.

 

--Paul Rippey

 

 

ALTmf #2

Show Notes and Links

0:00: Intro

1:24: SEEP site

2:00: Matchsavings.org

2:28: News about VSLAs, 

2:43: Replacing missing in lost box in Katine village Uganda

3:00: Ghanaian VSLAs, channeling government money, statistics and cost per member

4:51: Build Africa

5:05: CARE Uganda recruitment

5:11: CARE Canada recruitment

5:20: New America Foundation

5:30: IRC UK high cost per member

6:52:  Hugh Allen devfinance posting

7:16: University of New Hampshire GHAMFIN course

7:48: Musical break

8:35: CRS Savings and Internal Lending Community Document

9:03: MicroSave SILC evaluation from Uganda (Podcast erroneously says Kenya)

9:22: Slideshow on youth SILC savings groups in Rwanda

9:55: Food for Education funds going to form SILCs in Mali

10:32: Testimonial from reintegrated prisoner, member of a SILC, in Rwanda

11:42: Oxfam video

11:50:  Treehugger article about Oxfam Saving for Change and Oxfam publication Suffering the Science: Climate Change, People and Poverty

13:22: Two IPA studies, in Mali and Morocco - savings groups v. MFIs.

13:49: Joke phone call, new asset class

15:11: Intro to Jeffrey Ashe interview

16:46: Interview

40:02: Closing

40:50: End

First Post: Interview with Hugh Allen, news from Uganda, and more...

CLICK HERE Podcast 1 Hugh Allen

Welcome to ALTmf dot com!

ALTmf is a forum for sharing information and discussing alternatives to traditional microfinance. Its initial emphasis is on community managed savings groups. These are being promoted in many countries by organizations like CARE, CRS, Oxfam America, World Vision, Aga Khan Foundation and dozens, if not hundreds of national NGOs. 

 In this first post, I am delighted to be able to share an interview with Hugh Allen, who I am confident has done more to promote savings groups than anyone else. Hugh talks about how he discovered savings groups in the sands of Niger, what he thinks their place is in the financial system and in the household economy, and what's next for him.

I also have some news - all from Uganda this week - including some questions about why group members in Katine sub-county, Soroti, are still keeping money in lock boxes even after a spate of robberies.

Please leave comments - it's SO easy to do! Click on the word "comments", and follow the simple instructions. Praise, criticism, suggestions, requests - everything is welcome.

If you are diffident about posting something, you can contact ALTmf directly. That's also easy: you just write to  contactALTmf@gmail.com

The site will grow and evolve in the coming weeks and months. This is a start. I hope you enjoy the little taste of what is to come, and I count on you to guide the future evolution. 

To use the site: Read the blog postings on this page. Look at the other pages listed to the right under the "Navigate" banner. And of course, listen to the podcast: just click on the box at the top of this post labeled "Podcast 1 Hugh Allen" and in principle, you will start hearing the interview. Otherwise, right click to download it for listening later on your computer or MP3 player.

--Paul Rippey

ALTmf #1

Show notes and links

0:00-0:57: Welcome and introduction to the site 
0:58-1:33: Introduction to the news

1:34-1:54: CARE Uganda recruitment  

1:55-7:41: Invisible children, Kiva, "selfish Western hearts"

7:42-16:38: Katine Sub-county, Guardian, Barclays, CARE, Uweso 

16:38-17:11: Sum up the news and mention Saving for Change and SILC. 

17:12-18:35: Intro to Hugh Allen interview 

18:36-37:21: Hugh Allen interview 

37:22-37:47: Closing