“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” – Margaret Mead, American anthropologist

I never doubted that the small group of thoughtful, committed people who came together two years ago to form the Manyamula Village Savings and Loans (MAVISALO) group in Malawi could change their community.

In explaining how small groups can achieve big things, author Henry Hemming looks to the power of giving. “Groups that last longer consist of members who make an equal contribution, creating fellowship, camaraderie and value.” With everyone giving, people can achieve more together than they can on their own.

Collective action to achieve a greater good was the reason for starting MAVISALO.

Pet shows us his farm, which he was able to expand with a small MAVISALO loan. (Malawi, 2011)

One of the great needs in Manyamula Village was access to capital; money to start and improve businesses and farms, money to pay for school and medical fees. The most common way of addressing this need, commercial micro-finance with high interest rates, is usually counterproductive.

Instead, people in Manyamula were ready with their own solution: a locally managed and collectively run savings and loans group. SIA responded to this enthusiasm with an initial grant for an income-generating poultry project and information about starting the cooperative.

Two years later MAVISALO is growing, thriving, and learning. They are continually improving access to credit, encouraging savings, serving others in the community, and creating fellowship among group members.

Improving Individual Lives

MAVISALO Treasurer with chicken feed for poultry project

Canaan Gondwe, in his annual report of MAVISALO’s progress, shared some of the “eminent and noticeable successes and impacts on livelihood” among individual group members:

• Easy access to financial services
• Creation of self-employment among members
• Increased asset creation (i.e. better houses, motorcycles, bicycles, livestock)
• Food secure households
• Members afford medical bills in private clinics
• Members support their children with school fees

Business Investments

Tanya with MAVISALO group members in 2011 – all wearing the MAVISALO cloth uniform.

The group has also made a collective investment in a cloth project as another way to increase their loan fund. Together they agreed on a cloth to buy and then purchased the fabric in bulk at a wholesale discount. Cloth pieces were sold to members at retail price with profit going back into the group’s loan fund.

Through this process they increased the amount available to loan to group members and also created a de facto uniform for group members!

Audit

Always looking at ways to improve and be transparent, MAVISALO hosted two officials from the Ministry of Industry and Trade and the COMSIP Cooperative Union to audit their books.

Canaan reports that, “it was quite an enriching encounter for us for the first time to have auditors and look at our records in a comprehensive way. Their remark after a review was an impressive one, such that at national level they want us at the MAVISALO Cooperative to train many other community groups in effective and transparent recording. 

A page out of the MAVISALO expenditure records book.

“They were satisfied with our member filing system, cash receipts, payment vouchers, reporting, photography, and development of relevant forms for use.”

Perhaps most importantly for the small groups potential to achieve great things, the auditors also, “were surprised at the unity of the members and the way the Cooperative provides its services to the community.” Yes!

Congratulations to MAVISALO for all your accomplishments in 2012! I am confident that this year will provide many more opportunities for your small (but growing) group to achieve big things and change the world.

With a loan of $2, Biti Rose started making and selling a local version of doughnuts, which she initially sold for 2 cents each. “People really liked my doughnuts,” she noted, and soon she was making several dollars a day in profit.

Harriet Mbambo sells doughnuts in the Manyamula Village market.

Sounds like Nicholas Kristof of the New York Times is describing someone in the Manyamula Village Savings and Loans (MAVISALO) group!

Even though Biti Rose isn’t directly involved with Spirit in Action, this article and the wonderful accompanying video do a great job in describing the village bank programs like MAVISALO. Kristof claims that “These “village savings and loans” are among the hottest ideas in development work,” and at Spirit in Action, we couldn’t agree more!

I encourage you watch the video here: http://nyti.ms/N1LP6Q and read Kristof’s full article here: http://www.nytimes.com/2012/07/05/opinion/doughnuts-defeating-poverty.html

** I’ll be on a vacation backpacking in the Sierra Nevada mountains next week. I’ll be back with a new blog post on July 24th!

Read more about Manyamula Village Savings and Loans here:

MAVISALO: A national model in Malawi

More than Wealth: Justice

Local Loans in Malawi

This week a book review I wrote was posted on the international aid website whydev.org. My review below explores why micro-savings is well poised to alleviate poverty. Micro-savings groups are something I hope Spirit in Action will promote more in the future, modeled on the success of the Manyamula Savings and Loans group.

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Moleen Mtonga gives testimony about her butchery shop (Malawi).

“Is there any one member of this group going for a loan from FINCA again? No! No! Is there any member who is going for micro-loan? No!” Such was the dialog I heard in Malawi from a local savings and loans group (called MAVISALO) discussing micro-loans. Where I had expected to hear great stories of micro-loan organisations empowering people and solving problems, instead I heard tones of disgust. David Roodman’s Due Diligence: An impertinent inquiry into microfinance finds little compelling evidence that micro-loans alleviate poverty or empower people, two of the most common themes in micro-credit marketing.

In one of the appendices, Roodman poses a critical question, “how far should nonprofits go in misrepresenting what they do in order to fund it? It is not an easy question: what if honesty reduces funding?” (loc. 3859). The marketing success of microfinance, and the surge of commercial, governmental, and individual financing that follows, clearly clashed with my experiences in Malawi.

The marketing of micro-credit succeeds for a number of reasons. On one hand is the appeal, especially in North America, of stories of individual “bootstrap” entrepreneurship. These stories are fed to us through loan agents who are trained to create stories of everyone being an entrepreneur and single loans that lead to successful businesses. On the other hand, the micro-credit fundraising model creates an impression of an “unmediated” loan (loc. 3434), where donors/investors feel they are making a one-to-one, direct human connection.

“If people continue to channel billions to the best storytellers,” Roodman says of investors, “they will continue to distort the very thing they mean to support. But if they recognize how their choices have been part of the problem, then they can become part of the solution” (loc. 3456). Can NGOs use the stories as part of a solution that both accurately represents their relationships with aid recipients and also provides assistance that is beneficial?

Throughout the book, Roodman points to the potential of micro-savings to address the financial needs of the poor, especially for protection against financial shock. Indeed, saving seems to emerge as a bright spot in the midst of tepid evaluations of micro-credit, especially considering that “Whatever credit can do, savings can, too. Both can finance investment, pay for consumption, and help a family through health crises” (loc. 1382). While Roodman’s examination of micro-credit research shows benefits only in very specific situations, “the one high-quality study of micro-savings does find economic gains” (loc. 1857). It seems, then, that micro-savings has the potential to both provide a better poverty-reducing vehicle to the poor and tell a better story to donors.

Let’s consider how can we take the elements of successful micro-credit marketing and begin to market self-help and village savings groups. To start, we have to acknowledge that savings programs have an inherently different narrative from micro-credit; it’s not a story of giving a loan or other object directly to another person. Most likely, the NGO costs for establishing and supporting savings groups are paying for infrastructure to keep money safe, and salaries of savings agents. Yet, several aspects of micro-savings, especially when provided through self-help groups, seem poised to allow NGOs to tell the great “lifting out of poverty” narrative that has been applied to micro-credit with more accuracy. The work of micro-savings has less leeway for misrepresentation – either people are saving, or they aren’t – we don’t have to ever know how people spend their money or if their business is successful.

Here are some points gleaned from Roodman, which help craft an honest story about micro-savings that still lends itself to donor impulses:

• Savings actually can reach the poorest of the poor (loc. 1190). One of the best lines of the book is a poor woman in rural Niger saying that micro-credit “is for rich people” (loc. 1205).
• People want to save (loc. 3364) and don’t want to be in debt (loc. 1384). Giving people services that help them do what they want is better for them and a better story.
• Savings programs seem to help women more than men (loc. 2233; 2809). Women are sympathetic story characters and are chosen for many loans programs.
• Savings groups, which unlike micro-finance institutions (MFIs) can be flexible and reliable, are more likely to empower members (loc. 2476; 2820; 3616). Also empowering, self-help groups foster a sense of group ownership (loc. 2855).
• Savings can improve the impact of micro-credit (loc. 1531), improving the stories told by MFIs that provide both services.

Of course, the reality of the world makes it unrealistic to expect that any single service will eliminate poverty. Part of the truth in marketing is not just telling a more real story but also sharing a more complex story. Promoting micro-savings programs and stories alongside the many narratives of micro-credit and entrepreneurs can subtly prod donors to consider a wider context of financial services and a wider understanding of life and economic needs of the global poor. While Roodman shares a discouraging overview of micro-credit, there is a more hopeful story of micro-savings as a way to protect against shock and, yes, cover business expenses for entrepreneurs. I came back from Malawi wary of micro-credit and large MFIs but enthusiastic about local groups cropping up to help people move away from loans and towards saving.

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If you are interested in micro-finance and evaluating its impact, I would highly encourage you to read David Roodman’s book.

Matthews (MAVISALO's Secretary) giving us one of his big smiles.

“COMSIP…” called out Matthews, holding his hand in the air. “…Chop!” responded the fifty people gathered in the meeting room, as they brought down their hands in a chopping motion. The group is the Manyamula Village Savings and Loans organization, or MAVISALO, which Boyd and I visited last summer. And COMSIP is a Malawian government program designed to reduce (chop!) poverty by promoting a culture of saving. After the cheer, a feeling of enthusiasm remained in the room as the group settled down to start the meeting.

I held this exuberance in my mind as I read Canaan Gondwe’s most recent report on MAVISALO’s progress. MAVISALO, which already works to encourage savings among members and provide local loans at reasonable rates, is growing rapidly. They recently welcomed 80 new members for a total of 130 members!

Capacity Building and Training

In addition to the initial “seed money” from Spirit in Action, MAVISALO also was awarded an $800 grant from COMSIP (Community Savings and Investment Promotion) for training in financial literacy management and business management. Some of the topics covered at the recent training for MAVISALO members were:

COMSIP training for MAVISALO members

• Savings mobilization
• Credit management
• Monitoring of financial operations
• Business idea generation
• Business planning, records, and evaluation
• Market research and marketing
• Product costing
• Planning for profit

“These trainings have impacted on the members positively,” wrote Canaan in his report, “in that members will operate their small enterprises with skill and positive attitude.” Many of these topics are also covered in the Small Business Fund program training and so MAVISALO members who are not involved with SBF also have a chance to learn these skills. Also, everyone who has received some training in the past can review, refresh, and evaluate their current business models. The MAVISALO Executive Team is working to certify the group as an official COMSIP Cooperative, which will open up even more opportunities for leadership building, business training, and community grants.

All this is part of creating a stable, prosperous, rural economy in Manyamula Village through locally led education and entrepreneurship. Canaan closed his report with a few words of encouragement, echoing that hopefulness of the group “chopping” together, “All is well as we work together to alleviate the suffering of many poor households.”

**Click on photos for a full-sized version.

**Don’t miss the video about our visit to Manyamula Village, Malawi posted below!

At the end of last year, Canaan Gondwe, a SIA partner living in rural Malawi, gathered together forty-one other people to form the Manyamula Village Savings and Loans group (MAVISALO). They applied for and received a small grant from SIA to start a poultry house that would serve as the start-up capital for their loan fund. Members also bought member shares of about USD$6.50 each to join the group.

Tanya with MAVISALO members, July 2011

Since their start in 2010, MAVISALO has generated USD$950 from three rounds of broiler chickens and has given out 40 loans, totaling over USD$8,000. Their repayment rate is 98.8%.

Also, because the program is community-based, the interest generated from the loans (at the rate of 5% per month) goes back into the loan fund so that more people have the opportunity to borrow and expand their businesses. “Members of MAVISALO are able to save through shares given to their local-based institution and also they are able to access loans for their economic empowerment,” explains Gondwe.

Building Community

When I visited Manyamula this past July, I saw that MAVISALO was about more than just economic empowerment and loans. The whole group meets once a month to review their constitution and address any concerns. At these meetings, they work entirely through consensus agreement so that everyone is included in the discussion. Also, since they work together in the poultry house, sharing shifts to watch over the baby chicks, they are building a strong team where everyone contributes.

Hear testimonies from the members and encouragement from the leaders, in this video, featuring the MAVISALO group!

The Value of Local Leadership

As an outsider and a visitor, I know that I only got to see a presentation about the program, rather than live with that program. Indeed, since this was my first time to Malawi, I was learning about the culture as I was there. However, rather than be overwhelmed by my uncertainties, I surrendered to the experience and, in the end, came away so grateful for the local leadership of the project. I appreciated that SIA is built on trust of the local leadership, relying on their knowledge of the village context of business and credit.

During the visit, I built a stronger relationship with Canaan Gondwe and I came away so grateful for his leadership and community involvement. He is able to make this savings and loans group successful by adapting it to fit local realities, especially as the program continues to grow, expand, and face challenges. I also saw how much time and effort he was giving to the program. Before, I pushed aside his requests for funds to cover administrative costs, but now I am working with him to define the administrative responsibilities and explore how SIA and MAVISALO might adequately compensate him and others for their energy and expertise, so that the program can continue to thrive.

Related Posts:

• More than Wealth: Justice
• MAVISALO’s Chicken House
• What’s it like in Rural Malawi?