In Pring Village in Cambodia's Kampong Speu Province, farmers sit in a circle, soaking in the shade of a jackfruit tree. Sprawled out over blue tarps and orange fertilizer bags, they talk about pooling their money to form a savings group.
They want to sidestep outside lenders who charge exorbitant interest rates.
They want to put their savings somewhere safe, instead of hiding it in a suitcase or cupboard.
And they want to keep their money in the community so they can make loans to villagers, and pay for health care, education, farm tools, or extra help. For countless poor people around the world, having a safe place to save and access to that savings when a need arises means a way out of poverty.
"I want to use the money to buy a rice mill," says Ros Dy, a rice and vegetable farmer. "A rice mill is very good to keep in the group."
While an estimated 60 million of the world's self-employed have access to small loans from NGOs or private lenders, at least 200 million more are too poor or live in areas too remote for such services.
Oxfam America is working with local partners in Cambodia, Mali, and Senegal to develop a community finance approach that trains poor people to save what they can and distribute it within their villages—for an investment of about $20 per savings group member.
Oxfam and its partners use this methodology to combat poverty on a large scale with low costs, local control, and an easy-to-replicate format, said Jeffrey Ashe, the manager of the Community Finance program.
"What you want to do is drop that pebble in the water and see the ripples spread," he said.
Adapting to local preferences
How do you to teach the world's poorest people to save when many cannot read or write? Through active participation, Ashe said.
When Oxfam staff traveled to Mali in February to train Senegalese and Malian partners on how to form savings groups, they learned that some Western methods—like drawing on paper with markers—didn't really work too well.
"But if you drew in the dirt, people understood because they could do it themselves," Ashe said.
In May, that theme carried through to Cambodia, where Oxfam staff watched its local partner, the Centre d'Etude et de Développement Agricole Cambodgien (CEDAC), trade stories with villagers as a way to get them talking.
By asking questions and responding through stories, savings groups could decide who got a loan and at what interest rate. And they could establish rules for when money should be repaid.
"It's all very discussion-based," Ashe said. "You ask, ‘What would you like to do with your money? Well, how much would that cost?'"
By June, Oxfam staff and local partners were watching their simple, accessible approach take off.
Already almost 1,000 groups
In West Africa, partners Conseil et Appui pour l'Education a la Base (CAEB) and Le Tonus reported forming more than 200 village savings groups with an average of 24 members each in just six weeks. Some planned on divvying up the cash to individuals at the end of the saving cycle, while others focused on using the money to benefit the whole community—purchasing a grain mill or cultivating vegetables for sale at local markets.
In Cambodia, CEDAC reported plans to retrain its current base of 700 savings groups and add 300 new groups in just one year of using the new methodology. Ashe said CEDAC is in a position to actually accomplish it.
They have plenty of experience pulling communities together. Many of their savings groups are actually farmer associations that focused on specific high-yield agriculture techniques. Others had formed to work as self-help groups. Transitioning intosavings represents a natural progression.
But it can work in the other direction, too. Once a savings group is formed, it can take on other goals, like agriculture, health issues, or literacy. First though, the partners have to build up trust with villagers, said Vincent Wierda, the Community Finance Specialist in Oxfam's East Asia office.
"When it comes to saving together, it's a test of leadership to manage and protect the money jointly," Wierda said. Partners like "CEDAC allow a community to get used to the idea before pooling their money like this."
This is the first step in a long process of community finance, Wierda said. "Within four to six years, most of these villages should have the resources to effect change in their communities."