CBR SVK – Sepone, Vilabouly, Nong Lessons learned from: Village Saving Funds for PWD (VSFs) - Project Timeframe: Sept Dec Village Saving Funds implemented from May 2008 to Dec Main partner: 3 districts’ Office Labor and Social Welfare - Role of HI: methodology, training, technical advisory - Role of partner: liaise with local authorities; facilitate the establishment of VSF, assist in periodic monitoring - 1 project officer trained in microfinance for 6-8 VSF; methodology: « ILO handbook on village banking » months for adaptation to local context, preparation of training materials, operational materials, and monitoring forms; direct cost for setting up 1 VSF: 1000$ excluding seed money.

Background PWD need access to small loans for IGA; there were no microfinance sources in target villages. Why VSF instead of direct loans? Advantages: mobilize/organize community resources (money and people); credit & savings; build capacity of community; through membership to VSF, PWD can also improve social participation; they may also have the opportunity to play a role in the VSF’s management committee and gain status in community. Limitations: initial capital of VSF is often small at the beginning: high competition to get loans; only few loans of limited size. Sustainability of VSF: in good situations (good loan repayment, interest rate enough to cover operational costs and loan default, transparent management, good saving rate in village) VSF can last long and grow; they are self-managed by the community, so they do not have to rely to permanent external support. Potentially they may borrow money from a district bank to overcome their capital constraints. They could become a permament source of microfinance and empowerment for PWD.

Results Results: 4 VSF are functioning well: growing membership and savings; good loan repayment; good support from village authorities; they only need to strengthen their accounting skills. BUT: impact on PWD is questionable: Only a few PWD participating in the VSF had real access to credit; competition to get loans is big and wealthiest members tend to get preference, because their families have a higher loan repayment capability. There is the risk that, when a VSF exists, the PWD members of the VSF lose any interest in participating to Self Help Groups (SHGs); when interviewed, some PWD living in a village where both a SHG and VSF existed, tended to confuse the two, showing a greater awareness of VSF than the SHG. Very poor PWDs (+-40%) do not participate to the VSF (no savings, little potential to engage in IGA); this is not too much of a problem from an “economic” point of view (they are too vulnerable to apply for loans in any case), but it risks to deepen their social exclusion. Measure of effectiveness: Monthly monitoring of following parameters: VSF: standard village banking parameters: membership; savings; outstanding loans; loans repayment, etc. PWD: % PWD members of VSF; % PWD members participating to VSF meetings; % PWD members who save; % PWD who applied to a loan and % of PWD who got it; repayment rate of PWD loanees. Periodic structures interviews to: PWD member and non member of VSF; VSF members without disabilities; interview focus on potential and actual advantages that PWD get from VSF.

Necessary Conditions Contextual requirements for creation of VSF: enough savings to constitute a minimum initial capital; demand of credit vs need for grants; opportunities for IGA; support from village authorities; enough people with sufficient education to constitute the management committee. Financial and human resource requisites: 1 project officer trained in microfinance for 6-8 VSF direct cost for setting up 1 VSF: 1000$ excluding seed money Technical expertise: medium understanding of saving led microfinance and village banking operations.

Obstacles: VSF loan terms exclude poor PWD. Most PWD/households are capable to engage in traditional on-the-farm income generating activities (ex raise live stock) generate sufficient income to repay a loan; VSF have full autonomy in deciding the loan terms All VSF decided to provide loans for 3 months, extendable to 6; this time is often much shorter than the time requested by most on-the-farm IGA to generate income; Many PWD are excluded by product design (loans terms) issue: loans are accessible only by those capable to repay them out of their ordinary income.

Conclusion VSF have been functioning well but: Have mostly benefited people without disabilities; no PWD is part of the management committee, so PWD have not directly benefited from training and capacity building delivered by the project; Have not met the needs of poor PWD; Risk to weaken the SHGs if participation of PWD to VSF is low. Project has decided not to create new VSF, but to define an alternative strategy: Establish a Saving and Credit Fund within existing self help groups (SHG SCF); the fund would belongs to the SHG and all SHG members participate to it; funds to provide loans will come from SHG members savings and by project support (interest free loan to the SHG); If the SHG SCF develop well and reach a good level of autonomy, the project will propose to open the SCF to people without disabilities and to transform the fund into a Village Saving and Credit Fund (VSF).

Conclusion A PWD SHG SCF is expected to have the following advantages over the VSF: Project training and follow up will be focused on building the capacity of PWD; SCF savings and credit rules can be defined so as to take into account the socio- economic status, needs and constraints of PWD; Project financial support to the SCF will benefit PWD only Ensure participation of all SHG members to the fund; those who can not take loans will have the opportunity to learn from other PWD’s IGA The fund itself will respond to SHG members immediate needs and therefore encourage participation to the SHG itself; increased solidarity among PWD will translate into peer to peer support among PWD undertaking IGA However, the following factors may limit the implementation of SHG SCF: Only a few PWD may have the potential to be trained to manage the fund and the bookkeeping; Regular support and follow up from project staff is necessary, at least for the first 6 months of implementation; a max of 6 SHG SCF can be supported by one field staff.