SILC Innovations Research Brief 5: An Evaluation of Household Impact Among Fee-for-Service Savings Groups
Catholic Relief Services developed the model of Savings and Internal Lending Communities (SILC) for user-owned, self-managed savings and credit groups. A SILC typically comprises 15–30 self-selecting members, and offers frequent, convenient and safe opportunities to save. It helps members build useful lump sums that become available at a predetermined time and allows them to access small loans or emergency grants for investment and consumption.
Funded by the Bill & Melinda Gates Foundation from 2008 to 2012, SILC Innovations is a pilot project within CRS’ broader SILC program. SILC Innovations aims to establish local entrepreneurial capacity for sustaining the spread of the savings-group model beyond the funding period. In the project design, the Field Agents (FA) responsible for forming and supporting SILC groups are recruited and paid by the project for up to one year. The FAs then undergo an examination process to become certified as Private Service Providers (PSP), who offer their SILC services to communities on a long-term, fee-for-service basis, with no further project funding. As of March 2012, the project serves more than 350,000 savings-group members, mostly rural villagers, across the three pilot countries of Kenya, Tanzania and Uganda.
PSP and FA households showed comparable results on many welfare indicators, including income and income sources.
PSP households were more active as entrepreneurs, with deeper investment in enterprise, including some higher-risk ventures. FA households seemed to favor a more conservative route, with greater emphasis on subsistence cultivation.
PSP households took on significantly higher levels of credit, and showed greater likelihood to engage effectively with formal and semiformal finance for both credit and savings, as compared with FA households.
PSP households were more likely to have both savings and credit linked to business activity.
Sources of economic stress varied somewhat. PSP households experienced more losses related to business ventures, while FA households had more difficulty managing health crises and life-cycle events.
PSP households emerged as significantly more active, in terms of mobilizing the community and questioning the views of leaders.
Collective evidence suggests that PSP households may favor longer-term livelihood strategies, with more risk and less immediate material payoff, as compared with FA households.