Savings and Internal Lending Communities
More than 1.5 million poor people in 43 countries are accessing small loans from each other via groups, rather than from traditional microfinance institutions. These CRS-initiated savings groups, called Savings and Internal Lending Communities, or SILC, pool resources and make small loans available to group members. CRS has found that poor and vulnerable people can save small amounts each week, and by grouping these amounts through savings groups, they can reap big rewards.
Relying solely on accumulated group savings, SILC members can access needed financial services, including loans and savings. The average return on their savings investment is 29%. SILC provides numerous benefits: Farmers can expand their crop production, purchase livestock, improve their homes, or start a small business. When faced with an emergency, they can tap into a low- to no-interest loan through a special social fund set up by each group.
As groups mature, SILC members receive financial education and learn marketing and basic business skills so they can save, invest, and grow their money. SILC not only teaches financial literacy but can become a platform for teaching life skills and a venue for new initiatives, such as improved farming techniques. An independent evaluation in Kenya and Tanzania found SILC to be a cost-effective way to improve vulnerable households’ access to safe, nutritious food.
The social bonds created among SILC members foster trust and confidence within communities, and give them a voice in how the group operates. People living with HIV have gone on to become SILC chairpersons and treasurers. This added authority in their villages has helped reduce the stigma they had experienced. These self-selected and self-governed groups can be tailored to target the needs of specific populations, including caregivers, vulnerable children, and at-risk adolescent girls.