1 / 25

Community-managed micro-finance

Community-managed micro-finance. Rationale and performance. Most Vulnerable. DTL. Income. Target Group Analysis - Most Vulnerable. Most Vulnerable: Provisioning Response. DTL. Provisioning. Appropriate Response - Most Vulnerable. Vulnerable: Savings Response. Low Risk Strategy.

angus
Download Presentation

Community-managed micro-finance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Community-managed micro-finance Rationale and performance

  2. Most Vulnerable DTL Income Target Group Analysis - Most Vulnerable

  3. Most Vulnerable: Provisioning Response DTL Provisioning Appropriate Response - Most Vulnerable

  4. Vulnerable: Savings Response. Low Risk Strategy Savings Consumption Target Group Analysis - Vulnerable DTL

  5. Less/Least Vulnerable (typical MFI client) DTL Target Group Analysis - Least Vulnerable

  6. Savings Least vulnerable. Multiple sources of income. Fewer, larger transactions Most vulnerable. Unreliable and intermittent sources of income. Many small transactions Low-risk product preference Managed risk product preference Insurance Credit Products - Purpose and user preference Emergencies/basic needs Asset protection Predictable costs (education/rent etc) Planned investment (business/agriculture) Emergencies (catastrophes, death, ill-health) Asset protection Emergencies/basic needs Predictable costs Debt repayment Planned investment

  7. Preference - Where Ugandans save money

  8. Why Ugandans save

  9. Preference - Where Ugandans borrow money

  10. Why Ugandans borrow

  11. What is a community-managed micro-finance institution? • A CMMFI is self-managed and independent • A CMMFI is a small-scale community-based institution that mobilises and manages its own savings, providing interest-bearing loans to members and offering a limited form of financial insurance • Unlike ROSCAs, members can save in variable amounts and borrow, when needed, for varying periods of time • A CMMFI is usually time-bound – it shares out member equity once a year in proportion to savings

  12. Here’s one….

  13. And here’s another….

  14. What does a CMMFI allow you to do? • Save all the time (in varying amounts) • Borrow when you need it (in amounts that are useful and for varying periods of time) • Pay when you can (within a given period)

  15. Background – Where do CMMFIs work best? • CMMFIs work everywhere, but they work, at a modest scale, in remote rural areas and amongst the very poor, where MFIs find it hard to operate profitably, or at all. • CMMFIs work where credit demand is weak and debt-service capacity extremely limited and there are no institutional savings options.

  16. Here…. ….And here…

  17. Background – What do CMMFIs do? • CMMFIs create local pools of capital, providing access to useful lump sums: • to meet predictable expenses • to facilitate household cash-flow management • to make short-term investments in IGAs • To mitigate shocks to livelihoods

  18. Background – What don’t CMMFIs do? • CMMFIs do not provide large amounts of investment capital for permanently established enterprises that seek substantial growth and need long-term loans.

  19. CMMFIs worldwide – CARE, Oxfam, CRS, World Vision 01/08 India 1,250,000 ± Niger 196,000 ± Uganda 125,000 Mali 110,000 Ethiopia 100,000 Zimbabwe 90,000 Tanzania 93,000 Mozambique 30,000 Cambodia 29,000 Kenya 25,000 Rwanda 25,000 Bangladesh 22,000 Ecuador 20,000 Malawi 17,000 Afghanistan 10,000 SA/Lesotho 10,000 Swaziland 10,000 Sierra Leone 6,000 Angola 6,000 Eritrea 6,000 Senegal 3,500 Zambia 1,000 Total : participants worldwide 2,184,500

  20. Long-term performance and survival – Zanzibar, Mali & Niger • Zanzibar (CARE) • 254% growth in 4 years (44 >157 groups) 37% compounded annual increase. • 12% total dropout over 4 years • 53% return on average savings of $89 ($135) • Average ending Association net worth $4,000 • Mali (Oxfam) • Self-financing, managed replication. 33% compounded annual increase • Niger (CARE) • Average 8-year survival rate 96% • Average 15-year survival rate 94%+

  21. Why We Do it - Livelihood Impact • Large increase in assets, mainly controlled by women • Improved nutrition, access to medical services and education • Increased stability of household enterprises • Increase in number of IGAs • Improved social status/social capital • Improved intra-family relationships

  22. Costs • Cost per CMMF client • €15-50 in Africa, • €5-25 in Asia • Cost per MFI client • €100-400 in Africa • €80-200 in Asia

  23. CMMF Issues –Challenges and opportunities • External pressure to capitalise and link to banks/MFIs • External pressure to federate • ‘Polyvalent’ training approach • Tendency to be used as a ‘beast of burden’

  24. Upside of CMMFIs • Safe • Flexible • Simple and transparent • Accessible • Frequent opportunities to save • Save in variable amounts • Regular opportunities to borrow • Repay in variable amounts • Incremental debt, proportionate to capacity • Savings (asset) based, not credit (debt)

  25. Downside of CMMFIs • Limited pool of capital • Limited range of savings, insurance and lending products • Requires annual distribution to maintain transparency and safety (causes disruptions in loan access and size)

More Related