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Archive for the ‘Microfinance’ Category

Arusha Women's Market. Villagers save at home from one harvest to the next, losing a lot of their savings.

The second afternoon of a three-day strategic planning workshop for a rural credit union in Kilimanjaro region. Five board members and the manager have just completed a pilot market survey in their village. Their board room is spacious and airy – though one wall is missing, and a kid goat sits comfortably under the manager’s chair.

They report back on what they have learned.

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No 'village bank' for us!

NGO projects often discourage villagers from joining more than VSLA or other savings association. Why?

While consulting with MicroSave in 2008 I visited Mazarpara village in Lower Assam with Abhijit Sharma of the Indian Institute of Bank Management (Guwahati). In this economically active but poor village near Guwahati ‘accumulating savings and credit associations’ (ASCAs) started over 3 decades ago. The average household (among 72) held investments (more…)

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In Asia's villages, girls often wear gold. Photo credit: Vincent Johnson

A few years ago, in a small village in Kampong Chhnang, I met Ms. Cheng Yeng. In her early 40s and mother of 3 grown children, Ms. Cheng was clearly an excellent household money manager – bright, articulate, and shrewd. She told me that she uses cash earned after her rice and palm sugar harvests to buy gold, last year at $38.50 per chi.

Yet in the months before the harvest (more…)

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A village finance leader draws a calendar of member cash demand, Cambodia.

The modern view of time is neatly summed up by Max Weber in the The Protestant Ethic and the Spirit of Capitalism. Weber quotes Benjamin Franklin, the sage of American capitalism, on the logic that built the American economy.

“Remember, time is money.”

“He that spends a groat a day idly, spends idly above six pounds a year, which is the price of the use of one hundred pounds.

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Time to take the fish to market.

Microfinance depends vitally on a modern cultural value that drives the global economy: the time-value of money. Microfinance practices work where this value is already well developed. The poorest parts of the world, almost by definition, are those where this value is not well understood.

Take Lawino for example: (more…)

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I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood,
and I, I took the one less traveled by,
And that has made all the difference.
— Robert Frost

Some three decades ago the experts announced that only one source of funds could deliver microfinance services sustainably to billions of the world’s poorest people. That source was Western capital markets and the profit-maximizing investors participating in them.

When F.W. Raiffeisen launched the first microfinance revolution (1864-1945) he used a different source of funds: (more…)

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Field portion, village finance auditing course, Cambodia, 2007

About 8 years ago I visited a small credit cooperative in Cambodia. Its chairman was a cheerful farmer with greying hair and callouses who wore neat business clothes with a krama (a square checked Khmer cloth) flung jauntily over his shoulder. He presented a sheaf of neat hand-written financials to me, with his signature and the treasurer’s jumping boldly off the bottom.

As we visited borrowers (more…)

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As observed by communications theorist Walter Ong, villagers in oral communities often don’t trust written text.

Ong cites a study of community decision-making from 12th century England. (Orality and Literacy, p. 95). Writing already had a long history in England, (more…)

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During one of my quarterly visits to the Far North Credit Union, I was intrigued to discover the note “QF” next to several loans recorded in the cash book.  I was told these were “quick fire” loans, made without any written record and no collateral, to a maximum of $50.  When I asked where the idea had come from, I was told it had been given to them by New Zealand’s credit union pioneer — Colin Smith — during a training workshop.

Formal speaking is a powerful living tradition

Horrified at the idea of a loan of any size being made without a signed contract (and the subsequent default levels!) — and knowing that Colin, a chartered accountant, would never countenance such a thing — I tracked down the origins of their innovation to a presentation he had given on improving members’ experience of the loan

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