Ownership and sustainability: Lessons on group-based financial services from South Asia
✍ Scribed by Lynn Bennett; Mike Goldberg; Pamela Hunte
- Publisher
- John Wiley and Sons
- Year
- 1996
- Tongue
- English
- Weight
- 1011 KB
- Volume
- 8
- Category
- Article
- ISSN
- 0954-1748
No coin nor oath required. For personal study only.
✦ Synopsis
This study of rural group-based financial service projects of five NGOs in South Asia illustrates a great degree of variation between the different systems in structure, function and success rates. In the area of accessibility, all five systems have been quite successful in reaching the rural poor-especially non-literate women. However, results concerningfinancial sustainability of the groups are not so clear cut. The two systems in which the NGO helped groups to form their own parallel financial institution (e.g. a co-operative or village bank) achieved financial sustainability than those systems where the NGO linked groups with existing local financial institutions. But the main factor behind the success of parallel systems the central concept of client ownership. This has resulted in high degrees of loan recovery due to the fact that all or most of the loan funds are internally generated and therefore owned by the group members rather than externally obtained from donors. In addition, social intermediation in the sense of investment in capacity building at the group level (management, accounting, etc.) is a crucial step towards sustainability. Despite the importance of achieving sustainability, the authors conclude that subsidies do have a role to play-especially in harsh socio-economic environments where costs are necessarily high. However, subsidies should be utilized to develop group members' abilities to assume the responsibilities of ownership-rather supporting a welfare approach.
'This research was carried out to provide input on how participatory approaches could contribute to improved performance in the Bank's microfinance projects for a chapter in the World Bank Pariiciparion