Village Bank : an exemple of women empowerment

Some of you have may lend to women borrowers gathered in groups called "Village Bank", or "Banc Villageois" in French, the following is the story of this system in Senegal.

In 1984, in a plane going to La Paz, John Hatch outlined a project in which poor people gathered in a group were directly in charge of their financial service program. The main idea was to provide small loan to poorest families, especially women, for helping them to start small businesses. Such as what Grameen Bank was already doing in Bangladesh.
Village Banking has been designed to be a fully democratic system: leaders are elected, everyone vote for new members and all main decisions.

Eleven years after John Hatch's journey, the Catholic Relief Service and the Caritas-Thiès joined their force to bring this concept into Senegal to help poor women.
The Caritas-Thiès was already helping women farmer in countryside with very small loans for preventing them going to Dakar to make retail during the dry season.
Indeed, these women have to leave their family to bring some money from the main city when they cannot cultivate. Unfortunately, those loans were too small and were not able to help them that much.
In march 1995, Caritas-Thiès and CRS have decided to test Village Banking on 5 groups of 50 women around Thiès and Diourbel for a test period of 3 and a half-year.
They selected women in rural region, most of them made retails for all kinds of goods.
Each Village Bank (VB) was composed of 5 groups of 10 women called “Solidarity group”.
So there were two levels of guarantee: The Solidarity Group and then the Village Banking. Each member ensured the loan of every other member.
The loan system was pretty simple:

• Loan amount: between 20,000 and 150,000 CFA Francs (around today 40 and 300 Dollars)
• Loan term: 6 month, each period is called a “cycle”
• Loan interest: 15%, but 7% was gave back to the Group as saving. This saving was used inside the Village Bank either for women neeeded small 1-month loan either to help women having serious issues.

At the end of the test period, the reimbursement rate was 100% and women began to create solidarity beyond the loan program: each time one of them had a problem (hospitalization, theft, natural distaer…) the group saving was use to help her.
Furthemore, social pressure, or the cost of social embarrassment, was a key motivator to push lender to pay back their loans.

So it has been decided to extend the project and to expand it in Kolda and Ziguinchor regions, which are both in Casamance area.
These region are really rural and, at the time, population was suffering from war.

After 10 years, the project was a complete success but it could not be sustainable as a “program” anymore.
In 2005, they decided to convert the project into a sustainable MFI: CAURIE-MF.
CAURIE-MF stands for Coopérative Autonome pour le Renforcement des Initiatives Economiques par la MicroFinance (Independent Credit Union for the Reinforcement of Economic Initiatives by Microfinance) and its missions are to: « Offer microfinance services adapted to impoverished micro-entrepreneurs, primarily women, based on the principles of ‘credit for the poor’ and on microfinance best practices, all while investing in order to become financially independent.” (http://www.kiva.org/partners/105)

Nowadays in Senegal, CAURIE-MF maintains the basics of the system: Village Banks are still exclusively composed by women (99% of CAURIE-MF’s Borrowers are women) divided into group of solidarity, 6 months loan term and the minimal loan amount is now of 50.000 CFA Francs.
Every borrower has her own passebook for loans and savings and has to sign (or put her footprint) on the waiver:




Otherwise, in respond of an increasing demand, CAURIE-MF now offers new kinds of loan for both VB and individuals with longer term (maximum 24 months) and higher amount (2,000,000 CFA Francs).

CAURIE-MF is still aiming to help the poorest in Senegal, 54% of their new women borrowers live under the Poverty Line.

Last year CAURIE-MF lends more than 8 Billions Francs to 1.072 Village Banks and 745 individuals… with still a 100% reimbursement rate!
That’s a success story

You can join friends of CAURIE-MF on this page: http://www.kiva.org/team/amis_de_caurie_mf or learn more about CAURIE-MF on: http://www.CAURIE-MF-mf.com/