Microfinance in Africa
CARE is one of the world’s largest humanitarian organizations and brings savings-led financial services to more people in Africa than any other international non-governmental organization. They recently released their second major report on the state of microfinance in Africa.
Their report, called “Microfinance in Africa: Closing The Gap“, explains how community-based savings groups, known as village savings and loan associations (VSLAs), offer an effective, sustainable way to begin meeting the enormous unmet demand for financial services in Africa’s poorest communities.
At the same time, VSLAs offer millions of participants the financial know-how they need to begin seeking vital financial services from formal financial institutions.
CARE VSLAs are open to everyone, but focus on women because experience shows their success creates lasting, beneficial change for entire families and communities. CARE’s VSLAs are typically built by women living on less that $2 per day who collectively save pennies each week, then make small loans to each other to help finance small businesses.
CARE offers VSLA members one year of intensive training in managing money, but no direct capital investment. Because VSLAs are self-contained and operated by their own members, they are sustainable and replicable in communities where traditional financial institutions cannot operate.
Senators Michael Bennet (D-Colo.) and John Boozman (R-Ark.) are exploring legislation to improve U.S. microfinance programs. The CARE report urges the adoption of policies promoting financial inclusion for women, and to target such efforts at countries and communities where poverty and discrimination have created the greatest need.
“When poor women have a place to save money, or take a loan to start a small business, they can lift themselves, their families and entire communities out of poverty,” says Lauren Hendricks, executive director of CARE’s Access Africa. “For financial inclusion to become reality, women must be at the center of policies and outreach.”