Catalyzing Capacity for Problem Solving
In Just six years, membership in local savings groups in some of the world's poorest regions has burgeoned from one million to ten million people spread across 65 countries, an extraordinary growth rate for a global social movement.
Members of savings groups agree to contribute small savings on a regular basis to a communal fund, and they agree to loan money to each other when need arises. They augment the fund by agreeing to pay small amounts of interest on the loan, and small fees for late or missed deposits. There are no administrative bureaucracies, no subsidies and no institutional support. Once the groups are established, they operate with virtually no outside help.
The task of aid workers is not to provide services, asserts Jeffrey Ashe, a fellow at the Carsey School of Public Policy at the University of New Hampshire and a research fellow in Global Development and Environment at Tufts University. "It's to catalyze the capacity of people in poor communities to resolve their own problems." In fact, he says, many savings groups around the world have not only maintained their existence for financial purposes, but have developed the social capital and cohesion that has allowed them to expand their reach to community needs in agriculture, health, education, and business literacy.
Ashe is the author, with his colleague Kyla Jagger Neilan, of In Their Own Hands: How Savings Groups Are Revolutionizing Development. It's an inspiring account of achievement and innovation. People experienced with local culture, called animators, helped the groups organize and practice inclusive conversation and reflection that let them develop their own rules and practices.
Frances Moore Lappe, co-founder of The Small Plane Institute, an international organization devoted to fostering conditions for inclusive democracies, says successful societies have distributed power, transparency in human relationships, and a culture of mutual accountability, all characteristics that are embodied in savings groups. "I see the beginning of self organizing power to meet deep human needs: for connection, for meaning, and for power itself, for power understood as our capacity to create ad make an imprint," she wrote in a forward to the book.
Ashe, a pioneer of microfinance, spent decades helping people in impoverished urban areas in Africa, India and Central America, get small loans to start small businesses and earn money to support their families. He received the first Presidential Award for Excellence in Microfinance from former President Clinton. Despite microfinance successes, Ashe realized it wasn't reaching extremely poor people in rural areas, and people in regions disrupted by conflict and economic collapse. He had learned from experience that very poor people can save, and that people can learn the mechanics of financial operations and record keeping without having had formal schooling. For instance, seeds, pebbles and twigs can be used to tally outstanding loans and interest.
He launched and led the Oxfam America Saving for Change initiative that catalyzed savings groups among some 650,000 women in Mali, Senegal, Cambodia, El Salvador and Guatemala. The work scaled rapidly because with minimal outside help, members of successful groups helped others start their own savings groups. Ashe and colleagues focused on women savers, because women generally manage households and care for the needs of children¸ and women in African countries traditionally worked together in some way to survive on tiny sums of money. Local NGO workers who understood cultural contexts helped group members design their own procedures, meeting and contribution schedules, and election of officers.
Interestingly, the same design and organizational processes were successful in Guatemala, where men had traditionally opposed collective action by women. Eventually women who organized savings groups there discovered transformative power in supportive relationships. They turned their energy to safety from domestic abuse and other human rights issues, and won elections to public office. In Mali, sustainable savings groups worked on such local needs as preventing soil depletion and improved agricultural practices.
Listen to tomorrow's PlexusCall (details below) to learn more about what savings groups have achieved, how they scaled up, and prospects for future growth of savings initiatives in financially underserved populations in the U.S. Ashe was the founder and director of Working Capital, a group based microlending program that operated in Delaware, New England and Florida, and was for several years the nation's largest micro-lender.