Work with Savings Groups  
 

Overview of Savings groups (PCR—Poupanças e Credíto Rotativo)

How the groups work:

Savings groups function as small informal banks where members deposit their savings, and are able to take out small short-term loans from the group.  Saving groups run for a determined length of time set by the group, usually between 8-12 months.  At the end of the cycle, each member receives what he/she deposited in savings, plus a percentage of the profits of the groups made from interest and fees.

FH does not give the groups any money to start up. The groups are loaned cashboxes and other material to start up. At the end of the cycle, the group either has to purchase the material or return it to FH.  FH only provides technical training in the methodology and support.

All the money used within the groups comes from the group themselves. They lend out their own savings or earnings. Usually loans are only made to members with the interest of 10%. Groups can give loans to non-members, but usually at a higher interest (eg 25%). We generally discourage lending to non-members as it is difficult to recuperate the loan and interest.

Generally groups consist of 7-30 members. Each group has a president, secretary, treasurer, and two money counters. The groups are self-selecting as trust is a foundational ingredient in the groups. However, most of our groups are linked with FH’s agriculture extension groups.  Most groups are mixed with both men and women.

Groups usually meet every week or every two weeks. And each group develops regulations to help assure smooth operations. The regulations usually cover such topics as: criteria for becoming a member,  the minimum weekly savings deposit  amount,  Fees that a member must pay if he shows up late to a meeting, or does not pay back his loan in time.

There are three funds that are managed: Savings, Interest/Fees, and Social Fund. Each fund is controlled separately. The Social Fund belongs to the group and is used to buy material for the group such a notebooks, calculators, etc. It also serves as an emergency fund for members. When a member has a sick child, for example, they are able to get a loan from out of the social fund. The loans from the social fund do not carry interest.

Why Saving Groups??

Problem:

l      Little or no access to banking services—for many the nearest commercial bank is several hours, and not accessible to rural populations

l      Difficult for individuals to save money at home (easy access, pressures from family, etc) and little available for emergencies

l      Little access to credit for small business ventures

How these savings groups are meeting the needs of the rural poor:

l      Provides a safe place to save money and accountability.

l      Provides access to credit for small business ventures

l      Provides these services at their scale and close to home

l      Provides a safety net and support in case of illnesses and emergencies

Our First Year:

l      We have seen 63 groups formed in four districts, with 754  members

l      We have about 17 staff trained to form and assist these groups

l      The pilot project has 4 pastors assisting 7 groups bringing Biblical messages.

l      Most groups plan to distribute their funds between October and December.

Examples of uses of credit:

Seeds, corn to resell, bicycle parts for bike repair business, dried fish for resale, inventory for their small store.

Examples of some uses of their savings:

Purchase of seeds,  expansion of their field,  household items like pots, plates,  material to build improved house, chapas for their roof, cement for floors, goats to raise, TV.