Informal Microfinance and Household Resilience
INFORMAL MICROFINANCE AND HOUSEHOLD RESILIENCE
Tuesday, 19 November, 2013
Presenters: Jacques Kaboré, Savings and Internal Lending Communities Coordinator, Catholic Relief Services, Burkina Faso; Rasoa Tiana, Village Savings and Loans Coordinator, Strengthening and Accessing Livelihood Opportunities for Household Impact (SALOHI) Program, CARE International, Madagascar ; Moderator: Tom Remington, Agriculture Advisor for Africa, Catholic Relief Services
Without capital, no enterprise, including smallholder farmers, could fund its operations or build its asset base. Developing more sustainable access to financial services for marginal farmers in rural areas can have a significant impact on income and food security. Formal microfinance is important, but rural or marginal farmers often face challenges associated with access, high transaction costs, unfamiliarity with institution staff and weak incentives to save. Informal microfinance such as Village Savings and Loans Associations (VSLAs) and Savings and Internal Lending Communities (SILCS) offer additional opportunities to provide intermediate small amounts of local capital on flexible terms and to transact frequently at very low cost, at the same time significantly impacting household resilience.
This session focused on two programs implemented in Madagascar and Burkina Faso. The discussion highlighted different methods of implementation, VSLAs and SILCs incorporating the Private Service Providers (PSP) model, specifically with a view to sustainability and evidence of enhanced household resilience.
Potential challenges discussed included the weakness of microfinance institutions (MFI) and mistrust between banks and MFIs, regulation of SILCs, and a disconnect between the value chains women want and what is actually promoted.