“Imagine your life without financial services…”
“Imagine your life without financial services…” This started the dialog about the microfinance crisis in India between Lawrence MacDonald and David Roodman on a recent Center for Global Development podcast.
Sometimes we forget how critical financial services are to our everyday lives. What if you couldn’t use a credit card and had to carry cash around all the time? Where would you store money if you didn’t have a savings account? Could you buy a house or a car if you didn’t have access to loans or financing?
Roodman went on to point out that financial services are even more important for poor people who often have volatile incomes that change from day to day and season to season. This makes it even harder for them to save money in the good times so that they have it when they need to expand their business, pay for medical care for a critically ill family member, or celebrate a marriage. It is therefore essential that micro-credit institutions help people with financial services – not just loans.
This discussion sparked my interest in light of Spirit in Action’s most recent Community Grant to help establish the Manyamula Village Savings and Loans Group (MAVISALO) near Mzimba, Malawi. SIA helped this driven, dedicated group with a small grant to start a poultry farm. MAVISALO will soon be able to make small loans to its members through a centralized pool of money made up of business profits and membership fees. The group has already gathered together 35 members and opened a collectively held bank account at the local bank!
Encouraging safe and small investments by group members, MAVISALO members can add additional savings into the centralized pool, which then allows them to apply for larger loans when they need them. However, the group has a wide, holistic goal beyond simply providing financial benefits or getting a good return on investment. Canaan Gondwe, the first President of MAVISALO and long-time SIA Small Business Fund Coordinator, say that, “The biggest goal of the poultry and MAVISALO micro-loan project is to attain a self sufficient life in the lives of poor households; [focusing] in the areas of economic, physical, decision-making (political), and spiritual dimension.”
The Manyamula Village Savings and Loans Group near Mzimba, Malawi
Through this project, SIA isn’t only supporting a wonderful, local, grassroots organization in Malawi, we are also showing that we understand the importance of financial services and value the ability to save money as well as borrow it is times of emergency and celebration.
SIA Small Business Fund – explained: http://spiritinaction.org/sia-sbf-explained/