Catholic Relief Services to Help 300,000 East Africans

The project will help form more than 14,000 savings and lending groups comprised of almost 300,000 members and help the poor improve their quality of life.

NAIROBI, Kenya (CRS) - An $8 million grant from the Bill & Melinda Gates Foundation is enabling Catholic Relief Services (CRS) and local partners to help rural families in Kenya, Tanzania and Uganda increase their savings and gain access to small loans. Based on CRS' Savings and Internal Lending Communities (SILC) methodology, the three-year project will help form more than 14,000 savings and lending groups comprised of almost 300,000 members, with the ultimate aim of improving participants' incomes and quality of life.

Millions of people in eastern Africa live on one dollar a day or even less, and few have access to financial services that can help them increase their financial security and improve their lives. It is difficult for families to amass sufficient savings to pay for basic life necessities, such as educational fees, medical bills, household improvements or emergencies. Many people also face barriers qualifying for business micro loans that could improve their financial standing, enabling them to buy a goat for breeding or set up a small kiosk shop to sell basic goods. By forming SILC groups, poor communities will have a safe place to save and can create their own capital source for internal lending through that pool of savings.

"The beauty of SILC groups is the ability for poor families to help themselves," explains Guy Vanmeenen, CRS' senior technical advisor for microfinance in Africa. "CRS partners train and certify local private service providers, who in turn provide each group with basic training in SILC formation, financial skills and fund management. Members then drive their own development by leveraging limited resources to significantly improve their lives."

Fifteen local partners will help rural communities in six target regions in Kenya, Tanzania and Uganda--where residents have little or no access to a bank or other financial institution--to form microfinance groups with an average of 20 members. According to group-defined policies, members agree to save a set sum of money each week, typically 50 cents to a dollar. Most SILC groups also set up a special emergency fund that members can tap in times of crisis, such as a family illness. As savings build, groups consider member requests for micro loans against the pooled savings, usually ranging from $20 to $40 and paid back with interest. CRS will monitor and measure the performance of each group as it continues to develop a program model that can be sustained long term.

Funding for this CRS project comes from the Bill & Melinda Gates Foundation's Financial Services for the Poor initiative, which works with partners to make savings and other financial services available in developing countries so the poor can better manage life's risks and take advantage of opportunities.

"Access to safe places to save and other financial services can help poor families better manage their financial lives," notes Financial Services for the Poor Program Officer Joyce Lehman. "The community savings and lending approach has been successful at bringing affordable financial services to people with very low incomes living in remote communities. We believe that Catholic Relief Services' SILC groups will open the door to opportunity and increased household financial security for many poor people."

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Catholic Relief Services is the official international humanitarian agency of the U.S. Catholic community. The agency alleviates suffering and provides assistance to people in need in more than 100 countries, without regard to race, religion or nationality. For more information, please visit www.crs.org or www.crsespanol.org.

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Reprinted by Catholic Online with permission of Catholic Relief Services (www.crs.org)