Savings Group Loans
Since 2014, VisionFund has been working on ways to support community savings groups through new lending practices, allowing communities to grow their economic activities.
Loans to Savings Groups
Savings groups are owned, managed, and operated by the members, using a simple, transparent method where groups accumulate and convert small amounts of cash into savings.
In many areas where VisionFund works, communities are too remote, and people live too far below the poverty line for banks to meet their needs. Savings groups fill the void left by formal banking institutions by giving group members access to financial security.
Savings groups are owned, managed, and operated by the members, using a simple, transparent method where groups accumulate and convert small amounts of cash into savings. The group’s savings are then lent as credit to the group’s entrepreneurs to earn additional income.
Loans to Savings Groups
After two cycles savings groups are mature and established in their savings habits. And, as members grow their small businesses, there is a need for more capital than what is available through the group alone.
In the first cycle, most savings group members use the funds to invest in small income generating activities, such as chicken or livestock raising or a small retail shop, as well as paying for household needs. With each cycle, members scale up their own economic activities for a better income.
After two cycles savings groups are mature and established in their savings habits. And, as members grow their small businesses, there is a need for more capital than what is available through the group alone.
To strengthen savings groups to meet their members’ growing needs, VisionFund is infusing capital into savings group through a unique program called FAST: Finance Accelerating Savings Group Transformation.
Savings Group Loans
FAST – Finance Accelerating Savings Group Transformation
VisionFund seeks to alleviate poverty through FAST, targeting the most vulnerable: women, living in rural communities. Through our partnership with World Vision, savings groups are lent capital to grow their businesses and livelihoods, bringing dignity and well-being, and breaking the cycle of intergenerational poverty.
Distinctive elements:
There are four key elements that make VisionFund’s FAST program distinct with the end goal of enabling women to create secure futures for their children.
Loans to mature groups
- Loan is to the group, members guarantee each other
- Group is beyond their second cycle and at least in their third year together
- Group has good record keeping (passbooks, group ledger in order)
- 100% of group members agree to take the loan
- 75% of group members plan to take a loan and invest in income generating activities
- Group has completed financial literacy training
- Group continues with their normal borrowing and lending procedures – just now with a bit more money
Staffing: Field Officers from the local community
- Field officers live in the community, they gain trust because they understand the local culture and customs
- Many field officers are former World Vision volunteers
- Field Officers work alongside World Vision colleagues in World Vision AP offices
- Preferentially hiring women as field officers, builds rapport and deeper engagement with our clients, 73% of whom are women.
Digital solutions: mobile money and digital onboarding
1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone
- The operation is paperless with reduced need for paper or physical branch locations
- Mobile money: loans are cashless – funds are disbursed and repaid via mobile phone
- Greater safety for women, not having to walk long distances to a branch office
- Staff do not need to carry cash, less risk and greater safety
- Digital onboarding: Groups are registered at their group meeting place, no need to travel to or from the branch
- GIS mapping for real time data tracking
Embedded Education
VisionFund’s Embedded Education reinforces foundational World Vision trainings and programs and includes these topics: traditional financial literacy training, expanded modules including child and maternal health, child protection, women’s economic empowerment, and Empowered Worldview with three more topics developed in FY 22.
VisionFund Savings Group Loans
Learn how VisionFund is providing savings groups with loans that are enabling members to grow their businesses in new ways.
Resources
VisionFund Malawi Impact Survey for Saving Group Loans
To evaluate the targeting and efficacy of the program, an initial study was conducted in Malawi to determine whether we were reaching the intended client group and whether the microcredit product had the intended impact. Research organisation 60_Decibels conducted the survey; responses were collected between June and July 2021 from 357 participants, 88% of them women. A follow-up survey will be done December 2021.
Contextual and Financial Assessment of Savings Groups in West Nile, Uganda
The assessment report includes results and business opportunities in West Nile that merit providing financial services to host population and refugees, especially in those areas where there is currently limited or no presence of formal financial institutions.