Starting and Improving a Savings and Credit Programme

Starting a Savings and Credit Programme:

In general, the NGO is advised to start with formulating a mission statement clearly underlining why a S&C scheme should exist. The function of such a statement is also to give direction to the NGO as to the postion of the scheme vis-a-vis other programme components.

A second step is to formulate the objectives of the S&C scheme, setting measurable goals and translating the mission statement into tangible targets. Scheme promoters and potential clients need to be very clear about the objectives of the scheme.

Third, it may be necessary to conduct a market survey to have reliable data on which to base the initial decision to implement the conceived idea. A feasibility study may be needed as a further study to enable the NGO to arrive ar concrete decision making. Onlyafter these preperations a well sustained decision can be arrived at. If positive, policy formulation is needed where legal aspects are to be incorporated. Also working procedures are to be designed and agreed upon.

Securing budgets and resource mobilization are the next step. Only then actual implementation can start.

Crucial is the step-by-step application of the preperation. A possible and in most cases suitable way of doing so, is to try to ake use of the following model of a market survey.

Step 1:
Objective. What are the purposes and goals of sertting up a savings and credit programme? IS it the best intervention to service the needs of the clients?
Step 2:
Methodology. How are these needs going to be established? What kind of information should be available?
Step 3:
Survey, focusing on the target group or potential clients. What are the profile and exact need of the clients?
Step 4:
Areas and facilities. Which areas are most prominent or promising for credit delivery? What facilities for credit are already available?
Step 5:
External factors. How is the market situation? Do potential clients have experience with borrowing and repaying loans?
Step 6:
Internal factors. Is the NGO capabe of judging the viability of the credit repuests? Can it provide back-up services wherever needed?
Step 7:
Questionnaires and samples. Is it possible to conduct a so-called 'dry-run' of the programme?
Step 8:
Conclusions. Does all the collected information really endorse the decision to start a programme?
If the market survey is convincing enough to continue, the next logical step wuld be to conduct a feasibility study. Whereas a market survey focuses on the potential of starting a savings and credit programme, the purpose of a feasibility study is to see if all necessary resources are available and can be utilized and to assess the financial viability of the project.

Improving a S&C Programme

Improving a S&C programme needs a continuous proces of change, which would consist of the following steps:

Step 1:
Review or evaluation of the present programme. If the results would show to be unsatisfying, in relation to targets formulated in line with agreed policy, the next step would be -
Step 2:
Decision to change. This has to be an internal decision on the part of the NGO, where all NGO staff must be convinced of the need.
Step 3:
Formulation of Objectives of Change. A change process should be based on clear objectives and targets.
Step 4:
Formulation of a working plan. This working plan should, amongst others, include the following -
  1. Sensitising board of directors, management, staff and last but not the least, clients.
  2. Adjusting structure, procedures and policies.
  3. Training of staff and clients.
  4. Budget requirements
Step 5:
Implementation of the working plan. In principle, this should be done by the management and staff. It might be considered, though, to hire experienced outside support to do so on a temporary basis.
Step 6:
Monitoring and evaluation: Again it is suggested to look into the usefulness of hiring an outside 'change monitor' to assist in the process. Experience indicates that involving outsiders may add to the quality of the process.

Adopted from a donar agency's credit policies

Hari Srinivas - hsrinivas@gdrc.org
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