Village Savings and Loan programs work by focusing on the resources, initiative, accountability and social support that are present in vulnerable communities. Instead of waiting for money from the outside to begin their work, groups of 15-30 members make weekly savings deposits into a group fund. They manage the fund themselves, make decisions about who can receive loans and what the terms are, and hold each other accountable for the repayment of their loans. Group members need each other to be successful and repay the loans so money is then available for themselves and other members in new rounds of lending. This kind of accountability leads to very high repayment rates.
World Renew plays the role of a catalyst, encouraging groups to form, helping them to develop group rules, and providing training in group process, money management, and leadership. Often group meetings are the place where members learn about other ways to improve their families and communities. In some countries, World Renew provides seed funding to the savings groups after a designated savings goal has been reached, and in other contexts loans from the partner are available, either at the beginning in order to build up the fund, or later in the program when some member businesses have grown to a point where a larger boost of capital is needed to expand. In every country, groups manage the funds themselves, and initial savings is a requirement.
Kohima Daring, World Renew staff member in Bangladesh, cites 2 Kings 4 as the Biblical model for the self-help primary groups that have been so successful in Bangladesh. “Elisha is approached by a woman at the end of her rope: her husband has just died and creditors have come to take her children into slavery. She begs Elisha to help her, probably hoping that he would pay off her debts. But Elisha instead asks ‘what do you have?’ The woman is taken aback: she only has one jar of oil to her name. Elisha then instructs her to pour out this oil into all her empty containers. To the woman’s delight, the oil flows in abundance. She fills up so many jars that she can sell them and live off the profit.”