Group Savings and Loans
CARE has implemented the Group Savings and Loan (GS&L) methodology, a community managed micro finance (CMMF) scheme whose approach is to increase the economic resilience of micro entrepreneurs. Its basic principle is that members of a self-selected group form an association and save money by contributing regularly to a fund, governed by the group itself. Members save at a rate matching their capacity, thus lowering the threshold of entry for the poor. The core of the model is investment of the savings into a loan fund from which members can borrow, repaying with a service charge. Members take out loans in amounts closely aligned to their actual needs and opportunities. Such lending allows members to earn substantial interest on their savings. The cycle of savings and lending is time bound and at the end of an agreed period, maybe up to a year, the accumulated savings and service charge earnings are shared out amongst the members in proportion to the amount that each saved throughout the cycle, plus interest earned.
The approach promotes saving first and credit/loans second. GS&L also functions as a business incubator by linking, informing, sharing information and linking the more cautious or inexperienced participants with peers within the group who are experienced micro-entrepreneurs operating in the same environment, with the same constraints. The program targets both potential and existing micro entrepreneurs. These are the poorer sections of the economically active populations in rural areas, who cannot access credit easily from commercial banks and the conventional micro financial institutions. CARE implements GS&L projects in five Provinces: Nyanza, Western, Nairobi, Eastern and North Eastern, and includes Nairobi’s Kibera slums of Nairobi. CARE in partnership with the Financial Sector Deepening Trust (FSD) is working on strategies for a national roll out of the GS&L methodology, with FSD currently funding GS&L expansion specifically in Nyanza and the greater Marsabit district in Eastern Kenya. CARE is also working on modalities on improving GS&L service delivery in the informal settlements, targeting youths and women:
Banking on Change (BOC) - GS & L Linkages
Women Enterpreneur Development - GS & L Business Training