| Where does saving fit into micro-finance systems ? |
|Part two: The question of savings in micro-finance systems|
Few questions linked to the issue of M-F systems provoke as much debate as savings. In the small world of operators, the resulting controversies are sometimes quite bitter. What is it all about?
Generally speaking, according to pure financial logic, a banking system operates on bases of intermediation, the savings collected being redistributed in the form of credit. It is therefore a priori logical to design a credit system on the basis of savings collected beforehand.
Things are, however, not so simple. In reality, micro-finance protocols vary. To take only the two most striking alternatives, one approach focuses on credit, in which savings occur only after the institution has been operating for a while, whereas a second, whilst also focusing on credit, makes the collecting of savings a prerequisite.
A system is not chosen the way a product is picked off a shelf. It is its context which should guide the way it is elaborated. There are therefore objective criteria for and against the mobilization of savings, which we will review below.
However, the elaboration of technical protocols also depend on other factors, which are not linked to contexts, and therefore "exogenous". Operators, and sometimes also founders, are in fact conveyors of concepts. At least three different approaches can be differentiated:
- Certain operators have their roots in the cooperative movement of the North. They rely on the credibility that their level of development implies in order to promote financial cooperativism. Their skills and knowledge rest on their own past history. Plainly in these conditions their motivation as operators lies in replicating the model from which they have emerged. In this case, awarding credit is generally preceded by collecting savings.
This transfer of skills and knowledge is conveyed by operators, but it is sometimes encouraged by founders, who are also sometimes conveyors of ideas. It is true that there is always a tendency to replicate a mechanism which has proved its worth.
- Certain types of micro-finance projects, notably integrated projects, do not necessarily aim to set up a financial system. This can be seen for example in Cambodia where certain NGOs see savings as a way of getting the members used to "managing their budgets properly". According to each case, this may mean channeling the use of the added value induced by the credit towards spending on health, schooling...
- Others approach the question from a resolutely financial angle. These authors, for example, "financial theory suggests that the application of an improved conceptual framework for savings will make the development of the financial market progress." According to this point of view, financial projects should be evaluated more using the criterion of savings.
There are thus several interpretations of the role of savings, reflecting both the diversity of practitioners and of situations. Hence the sense of a certain amount of confusion over the objectives sought, with "exogenous" factors sometimes overtaking ''endogenous" ones.
It is therefore important to recall what the objective parameters (the endogenous factors) influencing technical choices might be.