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Microfinance in the Central African Republic
Helping families to cope with crisis, by providing access to three basic financial services – savings, credit and insurance. Mercy Corps is training community-managed Village Savings and Loans Associations to help families save for a rainy day and access credit to help them build for the future.
January 2010 - October 2011
Charity information: Mercy Corps Europe
The Central African Republic is one of the poorest countries in the world, ranking 159th out of 169 countries on the UNDP Human Development Index. 67% of the population lives on less than $1 per day and 84% lives on less than $2 per day. A severe lack of access to credit, lack of financial resources to cushion families against external shocks and a lack of secure places to save contribute significantly to these pervasive levels of poverty.
Mercy Corps is helping to provide access to three basic financial services - savings, credit and insurance - in the Central African Republic, by facilitating the creation of Village Savings and Loan Associations (a type of microfinance managed by communities). Members meet on a weekly basis to lodge their savings. After 5 weeks of saving, members can take out a loan of up to three times the value of their savings. Members then repay the association within three months.
To create, train and support 169 new Voluntary Savings and Loan Associations
Activities» Train organisations in management techniques, leadership and elections, insurance funds, savings and credit policies, record keeping.
What success will look like
169 VSLAs to complete the 8 module training program, 3,500 people to become members of operational VSLAs. Meeting attendance, average savings and loan funds to be monitored.
The aim of the VSLA methodology is to ensure the sustainability of self-managed microfinance services at the community level. After an intense period of training and technical support, the associations will be able to run independently. Following Mercy Corps’ pilot project, 90% of the associations trained have continued to function, with an average savings of $40 per member.
Local authorities may feel threatened by Mercy Corps' activities geared toward strengthening civil society voices and consequently could be either unsupportive or disruptive its activities. Informational meetings will be held with local traditional and administrative authorities in order to raise awareness of the project and secure their support. Mercy Corps will keep local authorities informed of all project activities.
Six-monthly reports will be distributed to donors throughout the project. Mercy Corps will collect qualitative data through focus groups and individual interviews throughout the project to better understand the impact of the project on participants’ lives (e.g., changes in household assets etc).
Budget - Project Cost: £112,000Loading graph....
Amount Heading Description £68,165 Staff costs and travel Staff employed to train savings clubs and travel £19,812 Equipment vehicle hire, computers £10,819 Local office costs insurance, rent, electricity £13,204 Other costs/services Project activity costs, training manuals, audit, evaluation, administrative support
The project will be implemented in Nana Mambéré and Ombella Mpoko Prefectures in Central African Republic, with a focus on communities located along and near the main road between Bangui and the Cameroonian border. Nana Mambéré Prefecture has been selected in recognition of the economic importance of Bouar as a regional anchor of development as well as its proximity to Cameroon, through which much of the country’s trade passes.
The project will benefit 7,200 households (43,200 individuals including 7,200 direct beneficiaries and 36,000 indirect beneficiaries) through increased economic well-being. The wider community will also benefit from beneficiaries’ increased income generating activities and the consequent stimulation of the local economy.
Mercy Corps is one of the few organisations currently working in CAR that focuses on development rather than humanitarian assistance. With a head office in the capital, Bangui, and sub-offices located in three regional capitals – Bouar, Bambari and Bangassou – Mercy Corps is able to provide assistance to a large segment of the CAR population.
Read more about the Charity running this project.
John Hanson served as a Peace Corps Volunteer (PCV) in Central African Republic (CAR) from April 1992 until May 1996 and now runs Mercy Corps in CAR.