Microfinance Practice: Re: [MFP] Beyond microfinance and savings groups, another approach to our work

@jeff

Thought u would find www.moneyfellows.com to be of interest.

It is an Egyptian online Rosca.

Best

Jami

On Sat, Apr 18, 2020 at 5:28 PM jaashe@aol.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com> wrote:

Chuck,

Good to hear Microfinance Practice is still in operation.

I've been working on on a different approach to add to what we do. Instead of making microloans, or even training savings groups according to a standardized model we would instead build on informal savings circles - tandas, susus, cucubales, dhikutis, etc. The number who are part of these groups dwarfs our efforts.

I was intrigued how these groups worked and contracted my grad students to profile ROSCAs in ten immigrant communities. This research is summarized in a report written by Kim Wilson and me,  https://mangotree.org/Resource/How-to-Achieve-the-American-Dream-on-an-Immigrants-Income

What we learned was that these groups were far more prevalent, sophisticated and varied than I thought and that they mobilize an astounding amount of money. These amounts range from thirty dollars per week (Latina room cleaners in Des Moines, Iowa) up to two thousand dollars per month (Bangladeshi convenience store owners in Boston.) At the lower level payouts are used for paying the rent, food, fixing the car and medical expenses, At the higher levels they are the major source of capital for starting and growing businesses and buying houses. Whether they save little or a lot they send part of their payouts to their relatives back home as remittances.. The quarter of a billion immigrants living in rich countries send home about a trillion dollars per year to millions of villages and towns back home.. In contrast, all the development assistance combined totals 175 billion with only a small part of this used for local development and much of even this amount used to cover the costs of the development intermediaries.

We concluded that there is a vast invisible financial system thriving in immigrant communities across the developed world that has achieved all it has without any help from us or formal financial institutions. These savings circles provide usable amounts of capital (usually) without interest. The ROSCA systems they used are copies of the ROSCAS they used in their home villages. We learned that the same village traditions of hard work, frugality, disciplined savings, mutual accountability and support that enable villagers to survive enable immigrants to thrive. We heard time and again that when immigrants settle in what was once a declining neighborhood, within a decade or so businesses are thriving, houses are being fixed up as school attendance increases and crime decreases.

So what does this mean for us? ROSCAS in immigrants communities and in villages across the world vary greatly in their quality and inclusiveness. We propose a simple, low cost way for improving the effectiveness of these informal financial systems. We will meet with the leaders of these groups both in villages and in immigrant communities and ask for their solutions to three issues

How to spread the best ways of organizing and managing these groups.
How they could reach out to the poorest and youth and help them organize their own groups serving as their mentors
How they could set up local organizations to better channel remittances so that at least some of these resources could be directed to adding to the amount saved in local savings circles and be invested in local businesses and farms, improving community infrastructure and helping the destitute. (In our interviews we found that at least some immigrants are already doing this on their own.)

We are proposing identifying and networking the best of those organizing these groups and provide them with a small stipend ("Genius Award") so that they have time to carry out the three point plan sketched out above. They frequently meet virtually and face to face with others selected as "community geniuses" to learn from and encourage each other. The job of us outsider would be to listen and help structure the meetings, synthesize what was being learned, replicate the model in other areas and countries and report to donors.

I calculate that in a poor country like Mali a stipend of twenty dollars per month, delivered predictably through their cell phones would be sufficient. In other countries the monthly stipend could range up to fifty dollars per month. Each would support activities in their own villages and a cluster of nearby villages.

Your thoughts? Want to try this out?

Contact me at jeffaashe@gmail.com,

Jeff

-----Original Message-----
From: Chuck Waterfield chuck.waterfield@gmail.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com>
To: MicrofinancePractice@yahoogroups.com
Sent: Sat, Apr 18, 2020 10:42 am
Subject: Re: [MFP] Instant loan offer

This person just subscribed to MFP today. His first (and only) message is to push money. He has now been banned, because that is not at all what MFP is for. His membership lasted about 1 hour.

Chuck Waterfield

MFP Founder

On Apr 18, 2020, 9:42 AM -0400, Dr Bullock Jones drbullock.jones@yahoo.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com>, wrote:

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