CHAPTER 1

Guiding Principles for Saving for Change

After years of promoting savings groups, I have identified nine principles that explain why the number of savings groups has grown so quickly, how they have replicated organically, and why these groups survive in the face of economic and political crises, armed insurgencies, drought, and hyperinflation. These same principles could be applied to any development initiative attempting to reach not just hundreds but thousands—even millions—of people at minimum cost in a way that is robust enough to continue long after outside staffing and funding has ended.

Start With a Vision of Scale, and Design for Viral Replication

Sir Fazle Hasan Abed, the founder of Bangladesh-based BRAC, the world’s largest NGO, said, “Small is beautiful, but big is necessary.” Every rural community is unique, but our task was to build a “good enough” intervention that could be duplicated widely. The sign of a well-implemented good idea is that others adopt it as their own. In Mali, well over half of the groups currently in place were trained by volunteers. Recall the conversation with Sali Coulibaly.

Less Is More, and the Simpler the Better

The key is to introduce a new idea and get out of the way as soon as those you are assisting can do it themselves. With too many visits and too much help, the groups remain dependent. My team developed a solution that met villagers’ needs and was to be run by women in rural communities who had little or no formal schooling. For them, sticks, seeds, and pebbles were used to quickly tally outstanding loans, a system that proved to be far more accurate than written records. Simplicity translates into scale, low cost, and the spread of ideas by word of mouth.

Build on What Is Already in Place

Savings groups improve on traditional revolving savings groups—ROSCAs—which are already widely understood in the communities where we work. While savings groups and ROSCAs share the requirement that groups select their members, save regularly, and hold each other accountable, savings groups add variable savings, taking out loans when and in the amounts desired, improved record keeping, charging interest on small loans, and greater transparency. I knew we were on the right track when, after a few minutes of describing Saving for Change to a woman in Senegal, she responded, “I understand how this works. It’s like a tontine, only better.”

Be Sustainable

While many development programs have no lasting impact, approximately 95 percent of the Saving for Change groups in Mali, some of them trained almost ten years ago, are still saving and lending. Most are visited only every few months or not at all. While operating independently, these groups have survived a coup, an insurgency in the north, a major drought, skyrocketing food prices, influxes of displaced people, and faltering institutions, so there is little reason to believe they will weaken in the future.

Keep Costs Low

There are never enough resources. For an initiative to grow quickly and organically, costs must be low. For Saving for Change in Mali, support totaled $1,500 per village, which included training several groups and then progressively less frequent monitoring over three years. The documented impact justifies the modest cost—a decrease in chronic hunger, increased assets, more savings, reaching the poorest, and word-of-mouth replication within the village and neighboring villages as volunteers from established groups trained groups on their own account.

No Giveaways

Dependency kills innovation and restricts the viral spread of ideas. Alfred Hamadziripi, the Zimbabwean director of the CARE Village Savings and Loan Association (VSLA) program, told me of the disastrous first months of the program in his country. Each group received a matching grant equivalent to the amount they saved. The groups saved, received the match, and disbanded. Their motivation was to receive a handout, not the disciplined business of mobilizing and managing their own savings. CARE dropped the matching requirement in Zimbabwe, and the number of groups soared. In Saving for Change, the “no-giveaway” rule also means that groups pay for accounting forms and cashboxes. If there are no giveaways, those who choose to join groups fully recognize that the eventual success (or failure) of the venture is entirely in their own hands.

Insist on Local Control

Garnering local ownership can be a challenge, but it is a necessity. Local control allows the community to drive instead of only being along for the ride. The genius of savings group programs is that they can be carried out by local NGOs that devolve the responsibility for training more groups to volunteers. If groups depend on the presence of an outside staff person, they will disband when the outsider leaves.

Establish High Performance Standards and Insist on Meeting These Standards

Meeting high performance standards must matter in development work as much as it does in the business world. Know the targets that you want to reach and ensure that you get there. For example, each team of ten paid animators and a supervisor is tasked to introduce Saving for Change to three hundred villages with a combined population of three hundred thousand inhabitants. There were clear objectives for each team and each paid staff person. Each team was required to facilitate the training of eight hundred groups, of which two hundred were trained by the staff—one per village—and the remaining six hundred were trained by volunteer replicating agents who would train and support more groups after the staff was reassigned to another cluster of villages. Once objectives are clear, achieving them is much easier.

Embrace Learning and Innovation

Allowing for local control and respecting community input means constant improvement. Innovations from one village can spread only if the model is flexible and everyone involved is committed to learning. Using the principles of appreciative inquiry, NGO staff were periodically brought together and went through an exercise in which they were asked to define success in specific terms—a growing savings rate, excellent record keeping, and high attendance at meetings, among others. They were asked to rate how well the groups they were working with were meeting these objectives and then to come up with a plan for improving performance in any areas that lagged. Finally, to bridge the gap between planning and action, staff members were asked to commit to a specific action when they got on their motorcycles the next day to start to resolve this issue and to specify how success would be measured.

These principles are remarkably simple. In essence, each reflects the title of this book: In Their Own Hands: How Savings Groups Are Revolutionizing Development. If we truly believe that “they know how” and that our presence is to serve as a transitory catalyst of change, then the rest follows—scale, simplicity, building on what is there, sustainability, low cost, no giveaways, local control, setting standards, and embracing learning. I believe that this is the surest path to reaching the more than two billion people who could benefit and underpins my assertion that improving the lives of the poor need not be as complicated and costly as we once feared.