VSLA: Field Officer's Training Guide (v2.1, Sharia compliant)
This revised and updated version of the Field Officer’s Training Guide resulted from a pilot project implemented in the West Bank of Palestine over an 18-month period by the Economic and Social Development Center of Palestine (ESDC) and from work done on FSD Zambia’s Master Trainer Programme, also over an 18-month period.
We have written this manual to respond to the need for a record-keeping system that is as simple as possible and suited, in particular, to populations that have a low level of numeracy. In Zambia and Palestine we eliminated monthly service charges in favor of charges levied for the entire period of the loan and added to the principal sum. The borrower then pays down against the total at any meeting. This leads to some complexities when loans are repaid early or late, but these are minor inconveniences when compared to the advantages.
We knew we were on the right track when, working with WeEffect in Palestine and with FSDZ in Zambia, we found that instead of loan calculations being the hardest part of record-keeping, they turned out to be the easiest.
In Palestine we also discovered that instead of loans being disbursed and repaid at a special loan meeting every four weeks, they could easily be disbursed, tracked and repaid at every meeting, because there was no need for service-charge re-calculations every 4 weeks. This responds to one of the main objections that users have expressed over many years: the rule that loans could not be taken when there was ‘money in the box’ if it was not a loan meeting.
These two reforms to loan record-keeping have reduced the cost of training and supervision for Savings Groups (SGs) and we plan to widely promulgate this new approach across the sector as a whole. We discover that we are returning, in a way, to the origins of SG work, and using a traditional way of managing loan repayment. The more we have struggled with the ‘correct’ ways of calculating loan transactions, the more we are drawn to where we started and to a respect for pragmatic methods that work. All we have added is structure and standardization.
What’s new in Version 2.1?
This manual incorporates the following changes:
It is Sharia compliant and can be used by Islamic participants. All that is required is that service charges are not levied by groups that want to be fully Sharia compliant.
Changes to the frequency of loan taking and repayment. In previous versions of the guide we have stuck to monthly loan disbursements and monthly repayments. This was to avoid complications arising from interest calculations and the difficulties of identifying loans that were due for reimbursement. We have changed the repayment section of the passbook to allow disbursement and repayment at any meeting after the first 3 meetings in a cycle. This offers real convenience and usefulness and reduces the risk of having too much money in the box.