Savings Groups and Consumer Protection: Risk Mitigation through Community-Based Structures
Over the last two decades, Catholic Relief Services (CRS) has promoted Savings Groups – referred to as Savings and Internal Lending Communities, or SILCs – reaching about 3.8 million members across 58 countries. The program model is based on an innovative fee-for-service delivery channel that trains and certifies Private Service Providers (PSPs), local social entrepreneurs who form and train Savings Groups for a fee paid by the group. The fees charged by the PSP are negotiated with each group, in exchange for standardized group training as well as ongoing support services that may include assistance with end-of-cycle share-outs, loan recovery, conflict resolution and supplemental training offered by development organizations.
As the portfolio of a PSP grows, it can be challenging for them to provide adequate support to an ever-increasing number of groups. Several of the 39 PSPs certified by a CRS project in Togo found that, given their time limitations and travel distances between groups, their portfolios required more support than they could provide. To allow them to devote more time to supporting new Savings Groups – and to further foster the independence and autonomy of the more mature groups in their portfolio – some PSPs have facilitated the establishment of SILC Committees, representative bodies composed of multiple groups in a given area.
A recent risk assessment of Savings Groups in Burkina Faso, Madagascar, Rwanda and Tanzania (Wheaton 2018) identifies the main risks to which Savings Groups are exposed, including group dissolution, multiple membership, conflict between members, inadequate training and support services, governance, savings and lending policies, and the security of members and group assets. This case study explores the role that SILC Committees in Togo play in mitigating some of these identified risks.
The emerging experience in Togo suggests that community-based approaches are a promising consumer protection mechanism for Savings Groups. While the sustainability of SILC Committees is not yet clear, they have demonstrated the potential for Savings Groups to come together to make decisions, solve problems, and take collective action.