Evaluating how Saving for Change groups increase women’s access to credit and helps them invest in their agricultural activities.
Traditional community methods of saving, such as ROSCAS (Revolving Savings and Credit Associations, called tontines in Mali), offer tools to rural villages in which access to financial services is limited. However these groups, operating at the village level in many African, Asian, and Latin American villages, tend to be poorly organized, often lack in transparency, and are subject to misuse. In addition, ROSCAs do not provide a means for borrowing at will because although each member makes a regular deposit to the common fund, only one lottery-selected member is able to keep the proceeds from each meeting.
Community savings groups attempt to overcome the difficulties of the ROSCA model by creating groups of people who can pool their savings in order to have a source of lending funds. Members make savings contributions to the pool, and can also borrow from it. As a self-sustainable and self-replicating mechanism, these savings groups have the potential to reach more remote areas, but it remains to be seen what their impacts will be.
In the rural region of Segou, Mali, the economy is mainly based on subsistence agriculture, with a small presence of commerce and fishing. Principal farm products such as millet, sorghum, rice, and maize are used by households as the main source of consumption and income. With a lack of financial means to hire labor and buy inputs to grow cereals, women’s economic activities are mainly dominated by the production of groundnuts and gardening products and by the making of shea butter. Some women participate in tontines, informal ROSCA groups. However, these groups do not offer loan services, and so new programs, such as the “Savings for Change” program championed by Oxfam America and Freedom from Hunger, are being introduced in the area.
Description of Intervention:
Locally known as Épargner pour le Changement, the Saving for Change methodology is a new form of community savings program which integrates self-managed saving and lending groups with education sessions. Five hundred villages in the Segou region of Mali were selected to participate in the study, and the program is being offered to a random sample of half of the villages. Field agents from local partner NGOs present the concept to village leaders and train self-selected groups of about 20 women each on how to manage their meetings. Group members save a set amount each week and can benefit from short term loans from the group savings fund. Loans are paid back with interest, allowing the fund to accumulate capital both from the weekly contributions and from interest payments. After a pre-determined period members divide the group fund in proportion to their weekly contributions.
For about a year, a field agent provides technical assistance to the newly-formed groups. During the first three months, the agent visits the group once a week, which is followed by a bi-weekly visit for another three months, during which the agent also introduces malaria education, as group meetings are also a space for discussion of community issues and education sessions. During the last six months of the training, the field agent shows up only once a month to monitor groups. A memory-based, oral record-keeping system has been designed for groups to manage meetings autonomously and to ensure transparency.
Program growth is accelerated by training group members who volunteer to start new Saving for Change groups themselves. In order to test the effectiveness of different implementation strategies, we compare two methods for training village replicator agents. In some randomly selected villages, field agents give replicators a pictorial manual and a formal three-day training on how to start and manage groups. In other villages the replicator agents receive no formal training, reducing program costs.
Agriculture is a way of life for most people in Mali. The vast majority of cultivated land is used by small farmers for subsistence agriculture. Previous research has shown that returns to agricultural investment are high, but in practice many farmers do not take on profitable investments. Can microfinance help alleviate constraints to investment among small farmers?
Underinvestment in agricultural inputs such as fertilizer, hybrid seeds, or labor is thought to drive low crop yields in Africa and other parts of the developing world. Several factors may help explain why farmers fail to invest in such potentially profitable inputs. It is possible that they are wary of the riskiness of adopting new agricultural methods or tools—if they invest and their crops still fail, they will have even less money than if they had not invested at all. Farmers may also lack the capital necessary to purchase these inputs, and be unable to obtain credit to finance investment in their farms. Microfinance services are intended to address such constraints, but microfinance institutions often emphasize small business clients and do not structure products to target or facilitate agricultural lending. Can microfinance help alleviate constraints to investment among small farmers?
Context of the Evaluation:
In Mali, agriculture represents 80 percent of employment and about 37 percent of Gross National Product. However the agricultural sector is dominated by subsistence farming supporting single households. This study takes place in the region of Sikasso, within the ‘cercles’ of Bougouni and Yanfolila. In these areas, cash crops like cotton, maize, sorghum, millet and groundnuts are most frequently cultivated. To generate additional income, women in the area often work in the production of shea butter and men in gold-mining.
Details of the Intervention:
Soro Yiriwaso is a Malian microfinance institution whose mission is to increase economic opportunities for poor Malians, especially women, by offering durable financial services. At the start of the study, Soro Yiriwaso did not offer financial services in any of the study villages. Out of the main 200 study villages, Soro Yiriwaso began operations in 90 randomly selected villages. In these villages, officers promoted the ‘Prêt de campagne’ product, a group agricultural loan offered to women who form an association specifically for the purpose of receiving and managing the money. The loans averaged around 32,235 Francs CFA (65 USD), and were offered at the start of the planting season, to be repaid with interest after harvest.
Grants Treatment: A randomly selected group of farmers from the villages that were not offered the ‘Prêt de campagne’ product, as well as those from the ‘loan’ treatment group who did not receive a loan were provided with a grant of 40,000 Francs CFA (80 USD). These grants were given to both men and women before the planting season, with no restrictions on how and when they could spend the money.
Savings Treatment: Another randomly selected group of farmers from the villages that were not offered the ‘Prêt de campagne’ product were offered a savings product designed jointly by Soro Yiriwaso and IPA. The savings product required women to decide on a target savings amount and deposit plan immediately after the harvest season, but they were only allowed to withdraw savings at the beginning of the next planting season. A small non-cash bonus was given to women to incentivize adherence to the savings plan.
Fertilizer Treatment: In order to evaluate the returns to fertilizers, and why small-holder farmers do not use more fertilizers on their plots, 23 separate villages were randomly selected to receive grants of different amounts of fertilizer. Women farmers who cultivated rice in these villages were assigned to receive one of three different quantities of fertilizer: no fertilizer, the officially recommended quantity, or half of this recommended quantity.
Farmers face many challenges as they try to grow and sell enough crops to support their families. Uncertain rainfall, potential crop failure due to natural distasters or disease, unpredictable crop prices, and shaky land tenure all contribute to the difficulties and risks inherent in farming. Improvements in the production processes and productivity of farmland could help many poor families achieve a better life. The Alatona zone is one of the most disadvantaged zones in Mali. The main livelihood sources of the population in the zone are rain-fed agriculture, pastoralism, and wage labor in the Office du Niger.
The Alatona Irrigation Project is a component of the MCC Compact in Mali, and like the larger mission of MCC, the AIP seeks to reduce poverty through economic growth. The AIP is focused on increasing production and productivity, increasing farmer's income, improving land tenure security, modernizing irrigated production systems and mitigating the uncertainty from subsistence rain-fed agriculture. AIP seeks to develop roughly 14,000 hectares of net irrigated land in the Alatona perimeter, representing an almost 20% increase of "drought-proof" cropland and a 7% increase of the country's total stock of fully or partially irrigated land. The AIP will introduce innovative agricultural, land tenure, and water management practices, as well as policy and organizational reforms aimed at realizing the Office du Niger's potential to serve as an engine of rural growth for Mali.
The AIP project will create an additional 14,000 hectares of irrigated land in the Office du Niger (ON) zone. Project affected people currently residing or tending land in the project zone will be given 5 hectare plots and new settlers wishing to move to the area will be required to purchase plots of 5 hectare or greater. Women will have access to 500 m² market gardens. Institutions and management processes will be improved relative to comparable institutions in existing ON areas. One such example is land titles: all farmers in the Alatona will be given full land titles for their land, including rights to sell the land. This feature of the intervention will increase property rights and security for AIP farmers in contrast to the short or longer-run lease system currently used by the ON. Farmer organizations will also be encouraged and supported to maximize local capacities.
Additionally, water management and the collection of water fees will be administered through local farmer associations; whereas in existing ON areas, the ON is directly responsible for the collection of water fees. Financial services including starter kits (fertilizer, seeds) for the PAP concessions and agricultural credit will also be developed in the area. Finally, since AIP land is sold to beneficiaries, the land revenues may provide opportunities during and most likely after the Compact period for subsequent development of the zone.