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Microfinance: Savings to Lend

By Patrick Carney

A simple microfinance approach that pools member savings to make loans in the community is improving economies in some of the poorest countries in the world. Now, Catholic Relief Services is celebrating 1 million members served by Savings and Internal Lending Communities, or SILC.

Members of the Ushindi Savings and Internal Lending Community near Malindi, Kenya.

In their first month, 21 members of the Ushindi Savings and Internal Lending Community near Malindi, Kenya, saved about $85. They had already given out 12 loans to support microbusinesses. Photo by Debbie DeVoe/CRS

Here's how SILC works.

Find poor communities in need of an economic boost. Organize small groups of 25 to 40 people and provide training on how they can save their money. Teach them how to pool their resources and make small loans to local member businesses that are looking to grow. Attend an 8- to 12-week training program. Start the lending process.

Without access to credit, people in many poor countries don't have the capital to grow their businesses and earn income to pay for food and school fees, let alone have a chance to put money into savings. With SILC loans from their neighbors, they can expand a small business—and support their families.

Each week as the businesses grow, members can repay their loans with interest, and the small lending community makes a profit. Now, the businesses have more money to loan, and the cycle continues.

After 1 year of making small loans, CRS steps away. With training under their belt, the savings communities are 100 percent autonomous and in a position to continue their savings groups for decades. They set their own rules and govern themselves. That's what makes the programs so successful.

With your help—and at a cost of as little as $18 per person—more than 1 million people have benefited from CRS-supported savings programs by receiving an annual return of 25 to 40 percent on their investment.

To ensure the program lives on, SILC participants often include their children in the savings groups to show them the power of savings at an early age. The children also enhance their math and financial management skills by helping out with the ledger and handling financial documents.

SILC allows people in the poorest parts of the world who have just a few weeks of training to learn long-term solutions to poverty. Because of your support of CRS microfinance programs, the dream of being able to provide for themselves and their families is now a reality for more than a million people.

Read more about this innovative CRS savings program.

Patrick Carney is a CRS writer, editor and web producer. He is based in Baltimore, Maryland.

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