User:DogbrainPDX/Savings Group

Savings Groups are community-based groups, most frequently found in sub-Saharan Africa but also existing in other regions, that provide basic financial services for their members. They are typically composed of 15 to 25 self-selected individuals. Members meet regularly on a schedule they choose, weekly, fortnightly or monthly.

Saving: At each meeting all members are expected to save some money. In some variants of savings group methodology, every member saves the same amount, set by the group. However, the group may change the saving amount during the year, to reflect the ups and downs of the local economy. In other variants, members save through the purchase of shares. The share-price is decided by the group; at each meeting, every member has the opportunity to buy one or several shares.

Borrowing: Savings are maintained in a loan fund from which members can borrow in small amounts. Groups fix conditions on what members may borrow for, and often set a maximum ratio of loan size to a member’s savings. Loans are for periods set by the group, and the group also decides on how much flexibility it will provide members concerning when instalments are due. Almost all groups charge interest, or a service charge, determined by the group.

Administration: Groups elect officers democratically, and usually hold annual elections. Most groups write a constitution defining their procedures as part of their training. Usually a treasurer or record-keeper records member savings and loans, in passbooks or a central ledger, or both. Some programs, however, have developed memory-based systems that require no paper record keeping at all.

Many groups have a locking box to keep records and any money that has not been lent out. The box typically has three locks, with the three keys being held by different members, chosen by the group. Some groups open bank accounts to keep excess liquidity securely.

Annual cycles: Groups operate in annual cycles. At the end of every cycle, the accumulated savings and interest earnings are shared out amongst the membership. Usually members get their savings back, and then the interest is distributed according to a formula chosen by the group. The annual share-out resolves any outstanding issues and builds member confidence in the group, because they have an immediate verification that their money is safe and that the process is profitable.

After the first annual share-out, most groups immediately begin another cycle of saving and borrowing. Members may decide to make an exceptional savings contribution right after share-out to re-capitalise the loan fund. The share-out is also an appropriate time to revise the group constitution, and for members to leave or join the group.

Social Fund: Many SGs also have a social fund that serves a variety of emergency and social purposes. The social fund is kept as a separate fund and contributions are normally the same from each member. Any member may request a grant or no-cost loan from the social fund; approval rests with the group and funds may be disbursed immediately. The social fund is not intended to grow, but to be set at a level that covers the minimum emergency needs of the group.

Other Activities: Many groups have additional activities that add value to the financial services. Sometimes these activities, particularly training, are provided by outside agencies. Other times the group itself chooses to start a social or income-generating activity. Some groups create more complex financial schemes, involving additional funds, or financial linkages to other agencies, or other groups.

Features common to all groups: While there is great variation in procedures, there is a minimum set of conditions for a modern Savings Group:

•	Voluntary membership •	Democratic decision making •	Transparent financial transactions and management •	Emphasis on savings •	Annual distribution

The place of Savings Groups in the Financial System. Savings groups have the potential to reach the many hundreds of millions of people who are too poor or live in difficult to access areas, and so are not served by other financial services, whether from banks or MFIs. For this reason, they are being actively promoted by leading development agencies – including CARE, CRS, Oxfam America, AKF, World Vision – and their partners, and the number of savings group members has grown rapidly to about three million people, mostly in Africa, but with increasing numbers in Asia, and a few (so far) in Latin America.

Savings Groups are complementary to other financial services, and some people choose to belong to a savings group at the same time they avail themselves of services from other providers.

Savings group members generally say they like these things about their groups:

•	Proximity: groups meet in the villages where people live, and going to meetings does not require leaving other responsibilities to go into a town to a bank or MFI office.

•	Opportunity to save safely: most poor people, even the very poor, express a preference for access to safe savings over access to credit.

•	Transparency: members trust their groups, because they personally choose the management committee, and witness all financial transactions.

•	Economy: Members appreciate that the interest and fees they pay stay in the group, rather than leaving the village to pay the operating costs of an MFI or bank.

•	Other services: groups provide other services – training, linkages, social and moral support - to members, which often are as important to members as the financial services.

Facilitating Agencies: The role of facilitating agencies is to train the groups to manage their own transactions independently. This training generally takes about 12 months after which time groups usually need no external support. Where other types of training (especially literacy) are provided, the training period can be as long as two years but this is less common; however, many facilitating agencies maintain contact with groups indefinitely because they provide a platform for other services that the agency wants to provide. Facilitating agencies train groups over a short period of time (between 1 week and two months) and supervise procedures and routine operations over a period of between 9 and 12 months. The frequency of these supervision visits diminishes as time goes on and the groups demonstrate their ability to run an organised, disciplined meeting and maintain accurate records.

Training covers all aspects of group functioning from formation to developing a group constitution, to electing group officers to meeting procedures, including saving, lending, and record keeping. Generally, a standard set of meeting procedures are introduced and it is the trainer's main responsibility throughout the period of supervision to ensure that procedures are followed. Facilitating agencies use a wide variety of models to bring training to groups, ranging from training by agency staff, to subcontracting through local partners, relying in part on volunteer trainers, or setting up trainers as independent contractors who charge a fee for training services to the groups. Agencies in a country sometimes create coordinating committees of savings group implementers to avoid too much geographic concentration and harmonize methodologies. Variations

There are numerous variations in approaches by facilitating agencies, in the operations of groups, and in linkages and other services.

Savings groups are called by different names, depending on the facilitating agency. CARE International calls the Village Savings and Loan Associations, CRS refers to them as Savings or Internal Lending Communities (SILCs) , Oxfam calls them Saving for Change Groups , CARE in Kenya and their donor partner the Financial Deepening Trust calls them Group Savings and Loans or GSLs , and Aga Khan Foundation refers to them as Community Based Savings Groups (CBSGs).