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Savings and Internal Lending Communities in (SILC) in Uganda - Program Review
by J. K. Beijuka and S. Odele in 2007World Region: Africa
SILC is a savings-led program that CRS uses to provide financial services to the poor/poorest. CRS implements the program through different partners with the broad aim of supporting the poor to diversify their income generating activities. To do so, CRS supported communities in Bundibugyo, Kasese, and Kyenjojo to develop Savings and Internal Lending Communities (SILC) as a pilot program. Before roll out, CRS commissioned MicroSave to carry out an evaluation of the program to assess its achievements, its challenges and from the lessons learned, make recommendations for expansion. The evaluation focused on six thematic areas (human and spiritual, financial, physical, social, political and natural). The methodology used during the evaluation exercise was mainly qualitative in approach, which was used to obtain primary data. Some basic quantitative analysis was also carried out based on secondary data and information provided by CRS.
The program helped SILC group members to acquire skills in savings, credit, and record keeping. SILC groups are becoming increasingly popular because of the following reasons:
- The Social Fund component, a mutual fund that members build up that is readily available to solve emergencies and domestic problems.
- The money is kept by the group members themselves.
- Accessibility to credit and savings, in a transparent and immediate manner. Members do not have to wait for others to pay their loans so as to obtain another loan.
- Transactions are completed in a single meeting.
- The loan terms and conditions, interest rates, charges, the loan amount, loan term, and repayment frequency are agreed upon in the meeting.
- Documentation is very simple and easy to manage (one all purpose register).
- Earned interest stays within the group and does not go to any other intermediate party.
Because of easy accessibility of savings and credit services, some SILC members have used their savings and credit to build permanent houses and purchase land, household furniture, livestock and domestic items such as china plates, mattresses and quality sauce pans. Based on this, the program has not only enabled the SILC group members to strengthen their financial asset base but have also helped group members to diversify their income generating activities and build up physical capital.
In line with CRS microfinance mission to serve the poorest clients, honor the dignity of their work, the program facilitated members to save and have access to loans in a group setting and practiced participatory management. For those groups that had gone through the first cycle and shared out, the average profitability on savings was 38% showing that there was a high return on savings under the SILC program. More members were joining existing groups and new ones were being formed. This coupled with a reasonably low dropout rate indicated that there is high growth potential and demand for the program. Financial transactions in terms of accountability and transparency were highly appreciated.
The types of assets highly regarded by the community were livestock, poultry, land, buildings, furniture, motor vehicles, produce and “wives and children”. Generally the assets were income generating and contributed
to preexisting assets in the community. However, it was a challenge to measure the change in individual or community wealth and attribute it directly to the SILC program. This is partly because most SILC groups are still relatively new but also because there were other savings and credit coping mechanisms used in the community before the SILC program.
The SILC program built and supported new social bonds and understanding between individual group members. Members are bound together by the rules and regulations in their respective constitutions. Regular group meetings exposed them to new ideas and compliance to the rules and regulations promoted discipline. As they meet, the members greet, learn and understand more about each other. They support one another and work hard to achieve higher incomes. Social injustices especially discrimination of women were addressed (through group interventions and awareness some now have peaceful homes). The SILC program increased social cohesion which helped to address common issues or conflicts within the community and the groups. Members also make friends, share problems and devise means to cope with the problems, all of which are commendable and must continue in the expansion program.
The involvement of SILC group leaders in conducting meetings and encouraging member’s participation in decision making significantly contributed to the strengthening of their leadership skills. To a limited extent SILC members and officials have been involved in positions of responsibilities at different level of the community such as being elected to District Councils and Church Committees.
There was lower impact on the Natural Assets indicator. While SILC members appreciated environmental protection issues such as tree planting, and wetlands protection. There were no organizational structures or programmatic activities to support the protection of the natural environment.
Several issues impacted on the SILC program implementation, these included: (i) There were insufficient funds for transport resulting in groups especially in remote areas not being regularly visited by either Field Agents or Supervisors; in some groups there was insufficient compliance with group rules and regulations and partial completion of records. This appears to be a structural issue, which particularly affects remote groups. (ii) Despite clear job descriptions with reporting policies Field Agents and Supervisors were unclear about reporting mechanisms as well as on who trained whom, who supervises whom and who reports to whom; (iii) There was a lack of feedback between CRS and its partners in terms of providing reports and updating information on all stakeholders and preparation of program budgets. (iv) The reputation risk associated with potential failure of some groups that were involved under the pilot phase, but were not included in the expansion program for operational reasons; (v) accumulation of significant cash amounts towards the share out.
Overall, the analysis of the six thematic areas indicates the pilot program achieved most of the intended objectives. With a focus on addressing some of the issues raised in the report, SILC program expansion is recommended. CRS should consider revisiting the clustering of the groups to include those that were under the pilot program as many of these groups were not yet ready to be independent of their Field Agents given the success so far achieved is attributed by many groups, at least partly to the involvement of their Field Agents.