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Numbers don't lie

By Chris Hufstader
Amadou Doumbia in his office in Kati, Mali. His records show that saving and loan groups can succeed without capital from banks or other institutions.

Amadou Doumbia was in his office in Kati, Mali, looking at a chart of numbers on the wall. On the left side of the chart were figures for the Saving for Change saving and loan groups in the areas served by his social service organization TONUS. On the right side were the figures for another type of microfinance group TONUS manages, which makes loans with capital provided by non-governmental organizations and financial institutions. The chart tracked the numbers of participants, deposits, the total value and number of loans, and repayment rates over the first eight months of 2006.

An interesting comparison

  • On the one hand, women in the Saving for Change groups save up and then loan each other their own money, an unusual savings-led approach to microfinance Oxfam initiated in Mali in 2005.
  • On the other, the capital comes from outside the community, and goes back out to the microfinance institution along with the interest paid by the women. This is the more classic, credit-led approach pursued by thousands of organizations in scores of countries.

TONUS initiated the credit-led groups in 1997.

Sitting behind his desk, cluttered with papers and files wilting in the heat and humidity of Mali’s August rainy season, Doumbia had gone over the figures a thousand times. He kept coming to the same conclusion, and it was one that made him smile: Despite having to save their own money, Saving for Change works for poor women.

At first glance, "surprising results"

"In the first eight months, the SFC groups had 3,427 members, and the credit microfinance groups had 1,983 members after eight years," he said. By the end of August 2006, the trend had continued: 5,894 Saving for Change members and 2,144 credit group members.

Not only did Saving for Change have more participants, but the groups were performing better. "The number of participants is higher, the repayment rate is higher. There is a lower total of overdue loans," he said. "The voluntary savings are as much as the credit groups have saved in eight years."

Doumbia said he was at first surprised at these results. "When we started SFC I did not think we would see these results by helping women make loans with their own money. The savings rate is a lot lower in the classic, credit-led finance system, and since we began that in 1997 we have not seen much saving. So at the beginning we were worried because we did not have outside capital, and women had to save their own money."

But after just a few weeks, he could see a big difference in the performance of Saving for Change. "One month into it I was impressed," he said. "Since then I have been watching the stats. I held a meeting with the credit-led finance team to show them the results so far. It has now been almost nine months and the savings are almost the same as the credit-led finance system—about 8 million CFA francs (about $14,500) for Saving for Change groups versus 9 million CFA ($16,300) in savings for the credit program after eight years."

Since August of 2006 the trend has continued. By the end of March 2007 the Saving for Change groups savings had jumped to over $186,000, just over five times the amount saved by the credit groups over eight years. Savings for Change groups have twice as much money loaned out and working in the community, and a repayment rate over 99 percent.

Organizing is key to success

The numbers in this case do not lie, and they prove something significant: Poor people can save money. Doumbia says that the higher rate and amount of voluntary savings can be attributed to the organization of the Saving for Change groups, not necessarily the participants’ level of income. To Doumbia, this shows a weakness in the credit-led system: "Their savings are low, not due to lack of money, but because the system does not work as well," he said.

Doumbia says the women make it all possible. "The Savings for Change women are at the center of the program," Doumbia said. "It all starts with them. They mobilize their own savings, pay back their loans, and manage the groups."

Savings vs. credit

  Saving for Change Groups April 2005 - March 2007 Credit-Led Finance Groups October 1997 - March 2007
Group members 12,410 2,248
Total deposits $186,432 $34,431
Outstanding loans $112,914 $55,938
Number of overdue loans 4 86
Amount of overdue dept $280 $5,206
Repayment rate 99.75% 90.70%