COMMUNITY LEARNING AND ACTION FOR SAVINGS

STIMULATION (CLASSE)

VILLAGE SAVINGS & LOAN ASSOCIATIONS

CARE
RWANDA
UPDATED AND NEW FORMAT

PROMISING APPROACHES IN MF/MED SERVICES

FOR VERY POOR PEOPLE

JAN P. MAES
AUGUST 2007

SEEP Network’s Poverty Outreach Working Group’s MF/MED Approaches Targeting

Very Poor People
Case Study No. X

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 TABLE OF CONTENTS

Contents
Executive Summary............................................................................................................1
Acronyms............................................................................................................................3
1. Context ...........................................................................................................................1
1.2. Local context – target area.......................................................................................2
2. Organizational Framework...........................................................................................11
2.1. International Organization.....................................................................................11
2.2. Local organization.................................................................................................14
3. Description of “Very Poor” Target Group....................................................................20
3.1. Individual and Household conditions
........................................................................................................................................20
3.2. Socioeconomic conditions.....................................................................................20
4. Poverty Targeting and Assessment...............................................................................23
4.1. Poverty measurement practices..............................................................................23
4.2. Available Poverty Data..........................................................................................24
4.3. Poverty Targeting...................................................................................................25
5. Products and Services...................................................................................................27
5.1. Financial Products..................................................................................................28
5.2. Microenterprise Development Services.................................................................30
5.3. Non-financial Services...........................................................................................32
5.4. Design and Product Development: .......................................................................35
5.5. Implementation Process ........................................................................................41
......................................................................................................................................43
6. Results...........................................................................................................................44

6.1. Method of measuring results...................................................................................44

6.2. Impact....................................................................................................................44
6.3. Cost Effectiveness and Sustainability ...................................................................48
Executive Summary

This case study describes the CLASSE-Intambwe program of CARE Rwanda, which
started and has evolved since 1999.

CARE International’s Village Savings and Loan (VS&L) approach to microfinance

started with Niger’s Mata Masu Dubara (MMD) program, a self managed system of
financial intermediation. Based solely on member savings and small, self-managed
groups, MMD became a model for replication in several other (mainly but not
exclusively African) countries, including Rwanda. While many of these show variations
on the basic methodology, they adhere to a basic set of principles:
• “Savings-based” financial services: individual savings are the primary source for
credit funds;
• Self-management;
• Simplicity and transparency of operations;
• Flexibility in loan sizes and terms;
• Very low group management costs met through group earnings; and
• Earnings retention in the group and local community.
• Individual Savings and Loan Groups that are sustainable and profitable, providing
high positive real rates of interest on client savings;
• Meeting the basic needs of clients for simple, accessible savings and credit and
insurance facilities;
• Very low cost per client to the program between US$18-30 long-term;
• Programs locally staffed and managed after very short periods of orientation; and
• Spontaneous replication and flexible adaptation of the basic model.

CARE International Rwanda has adapted its own version of the VS&L methodology
known as CLASSE-Intambwe since 1999 in half of the country’s rural Provinces:
Umutara, Gikongoro, Gitarama, Byumba, Butare and Kigali Ngali (Rural Kigali).
CLASSE-Intambwe distinguishes itself from most other VS&L programs because of the
establishment of “Integroupments” (IGs), federative structures of Savings and Loan
Associations (SLAs), that provide a link between SLAs and rural credit unions of the
Union des Bank Populaires du Rwanda. By 2006, CLASSE had helped establish 1,428
SLAs with a total number of 28,806 members.

CARE Rwanda targets poor and very poor people who are not able to access any other
form of traditional formal finance and who belong to the poorest rural communities.
CARE employs geographical targeting (priority to the poorest districts and villages) and
shows a bias towards high-vulnerability groups, especially women and female heads of
households. Usually CLASSE programs target existing associations (often farmers) and
trains them in self-management and basic financial operations (savings, loans, record
keeping).

CARE’s main implementing partners are UBPR (Union des Banques Populaires du
Rwanda, a national network of rural credit unions or “People’s Banks”) and RESAFI

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(Réseau d’Épargne sans Frontières or Savings without Borders Network, a network of
local NGO partners trained in the CLASSE methodology). While RESAFI NGOs have
been predominantly responsible for training, capacity building and advocacy for SLAs,
the UBPR credit unions provided access to a loan fund to respond to the demand for
higher loans than what the SLAs themselves could offer from member savings only. To
facilitate that financial linkage program, SLAs in a given area formed federations, known
as Intergroupments, whose main role consists of evaluating and strengthening loan
applications from SLAs to the local People’s Bank. In order to reduce the risk of the bank
in granting loans without its usual collateral requirement, CARE provides credit lines for
this purpose. Following very high repayment rates, local banks became more confident
and started lending from their own funds in addition to CARE credit lines. IGs have been
a key factor in achieving this success, as they took on some of the roles that loan officers
typically play by screening credit applications before handing them to the Bank, thereby
receiving part of the interest revenue for each loan accepted.

One of the most tangible outcomes of CLASSE is the establishment of a number of self-
managing, financially literate SLAs. Likewise, while most existing associations typically
were not engaged in savings, after the CLASSE intervention, all SLAs were actively
saving. When asked about significant changes as the result of belonging to an SLA, 30 %
of interviewees said that they learned how to manage an enterprise, 17% reported that
they had been able to come out of previous isolation, and 17% had learned how to
manage their resources and savings. More than half of the SLA members interviewed
reported that they did not have to resort anymore to selling their crops immediately after
harvest (and livestock after birth of offspring), but instead were able to meet immediate
financial needs through savings or loans from the SLA. Other reported impacts were:
breaking isolation, empowerment (home, community), improvements in wellbeing
(housing, nutrition, closing, etc.), and increased education of children.

The CLASSE model has the potential to reach very large numbers of the poor, because it
can be implemented in a wide variety of institutional settings, from multi-sector rural
development projects to stand-alone financial services projects, as long as the following
conditions are met:
• There needs to be a wide network of rural-based financial service providers (credit
unions, banks or MFIs, preferably, but perhaps NGOs, too) to provide the professional
financial services (term deposits and loans) that are key to success. Said service providers
should be no more than a day's walk from the ultimate borrowers.
• There must be a competent and sufficiently funded NGO or other organization capable
of creating, nurturing, training and encouraging the institutional development of the
village associations and the regional Inter-Group bodies, who in addition must be capable
of and willing to assist in loan follow-up and recovery.
• The legal and regulatory framework should encourage this type of approach, or at least
not disallow it.

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Acronyms

ASCA Accumulating Savings and Credit Association

BNR Banque National de Rwanda
BPR Banque Populaire (“People’s Bank”) de Rwanda
EICV Enquête Intégrale sur les Conditions de Vie des ménages (Household Living
Conditions Survey)
IG Intergroupment
IGA Income-Generating Activity
MFI Microfinance Institution
OVC Orphans and Vulnerable Children
PPA Participatory Poverty Assessment
PRSP Poverty Reduction Strategy Paper
RMF Rwanda Microfinance Forum
RWF Rwandan Franc
SLA Savings and Loan Association (sometimes called SCA: Savings and Credit
Association
UBPR Union des Banques Populaires de Rwanda
WOCCU World Council of Credit Unions

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1. Context
1.1. Country Socioeconomic and Poverty Data

Table 1.1. Country Statistics

1.1.1. National Currency Rwanda Franc (RWF)
Amount Year
1.1.2. Population (millions) 8,648,248 2006
1.1.3. Population density per square kilometre 328 / sq. km 2006
1.1.4. Percentage urban / rural population 17% / 83% 2005
1.1.5. Inflation 8% 2005 est.
1.1.5. Nominal Exchange Rate (current, X Currency per US$1) 550 2007
1.1.6. PPP Exchange rate 162 2007 est.
1.1.7. HDI value 0.450 2005
1.1.8. HDI ranking 159 2005
1.1.9. GDP/Capita (PPP US$) 1,300 2005 est.
1.1.10. Local currency equivalent of $1/day international poverty line 178 2003
1.1.11. Population below national poverty line (%) 60% 2000
1.1.12. Population living below $1 a day (%) 51.7% 2000
1.1.13. Population living below $2 a day (%) 83.7% 2000
1.1.15. Population growth rate 1.7% 2005
1.1.16. Life expectancy 44.1 2005
1.1.17. HIV prevalence (% ages 15-49) 3.0 % 2005
1.1.18. Malaria cases (per 100,000 people) 200 2000
1.1.19. Population undernourished 37% 2002
1.1.20. Children underweight 30% N/A
Male 71.4% 2004
1.1.21. Adult literacy
Female 59.8% 2004
Male 72% 2004
1.1.22. Net primary enrolment ratio
Female 75% 2004
1.1.23. Net secondary enrolment ratio 25.5% 2005
1.1.24. Physicians per 100,000 people 1.9 2004
1.1.25. Health expenditures per capita (PPP US$) 48 2002
1.1.26. Gender-related development index (GDI) rank 122 2003
1.1.27. Gender-related development index (GDI) value 0.447 2003

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 1.2. Local context – target area
1.2.1. Briefly describe local socioeconomic conditions
1.2.1.1. Geographic reference of location and size of population
Care Rwanda has used the CLASSE-Intambwe methodology for strengthening
Savings and Loan Associations (SLAs) since early 2000 in the following rural
Provinces: Umutara, Gikongoro, Gitarama, Byumba, Butare and Kigali Ngali (Rural
Kigali).

Figure 1. Administrative Map of Rwanda and its Provinces1

Approximately 4 million people or half of Rwanda’s population live in the

abovementioned six target Provinces. Within these Provinces, 28 Districts (housing 2
million people) have been targeted.

1
Note that as part of a recent government decentralization program, local administrative units have been
changed and the original 12 Provinces have been replaced by 5 new (larger) Provinces. Since this change
took only effect in January 2006 and to avoid confusion, the case study will refer to the old administrative
units.

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1.2.1.2. Local population characteristics:

1.2.1.2.1. Ethnic groups

Hutu, Tutsi, Twa

1.2.1.2.2. Most important economic activities

Rwanda is a poor rural country with about 90% of the population engaged in (mainly
subsistence) agriculture. Agriculture constitutes 41% of GDP (2003). Typical crops
are sorghum, cassava, maize, beans, banana, groundnuts, which can be grown for
sale and/or home consumption. Coffee and tea are the main agricultural exports.
Others are traditional cattle herders, and sell milk and meat. Agricultural labor is the
most important source of income for both the poor and very poor. The usual daily
wage for agricultural work is 500 RWF per day. The average of working days per
year is around 72 days. Other sources of income for both poor and very poor
households are manual labor, herding cattle for others, and petty trading.

1.2.1.2.3. Cultural and religious background

Christian 93.5%, traditional African 0.1%, Muslim 4.6%, 1.7% no religious beliefs.

1.2.1.3. Natural resources, economic activities, markets, unemployment

Rwanda is the most densely populated country in Africa and is landlocked with few
natural resources and minimal industry. Each district has typically a market, but most
trade is conducted in the capital, Kigali.
Cattle and milk sales are highest from November (when the rain season starts) to May.
Lowest prices are recorded from July to October (dry season).
Unemployment rate is not available. With most of the population solely engaged in
subsistence agriculture (through own production and/or as casual labor on others’
landholding) and facing land shortages, underemployment is very high, especially for
women.

1.2.1.4. For rural areas only: most important crops and livestock activities, water
supply (irrigation, rain fed), seasons and number of harvests, land availability,
ownership patterns and contracts.
Typical crops are sorghum, cassava, maize, beans, banana, groundnuts, which are
almost exclusively grown for home consumption. Cash crops are coffee, tea, and
pyrethrum. Agricultural productivity is low, mainly due to very low fertilizer use.
One third of farmers do not use manure on their fields.
Approximately half of Rwandan households (especially the less poor) own livestock
(cattle, goats, sheep, pigs). Livestock ownership is one of the most significant
determinants of poverty.
Rwanda has a temperate climate, with two rainy seasons (February to April,
November to January). Less than 1% of arable land is irrigated.
Land is an acute problem insofar as the area of available land is not enough to satisfy
the needs of the rural population. Rwanda has the highest population density in
Africa, with over 303 people per square kilometer in 2001, with certain districts
containing up to 820 people per square kilometer. The rapid increase in population

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 density has resulted in smaller and fragmented farm holdings, an increase in the
number of households who rent land, increasing pressure on marginal land, shorter
fallow periods and longer cultivation periods and growing soil erosion. There has also
been an increase in the uneven distribution of land. In the 1950s 50% of households
had more than 2 ha of land whilst in 2001 almost 60% of households had less than 0.5
ha of land whilst only 6% had more than 2 hectares of land.

1.2.1.5. Occurrence of droughts, floods, natural disasters or conflicts

Lack of water resources for both human and animal consumption is reported as a
significant problem, and droughts occur regularly. Environmental threats include:
deforestation from uncontrolled cutting of trees for fuel; overgrazing; soil exhaustion;
soil erosion.
Various conflicts remain active in Great Lakes region, transcending Rwandan and
other national borders in the area.

1.2.2. Describe government policies aimed at the very poor

1.2.2.1. Social protection schemes by the government.
Health insurance scheme (Mutuelle de Santé)
Even though people traditionally pay for healthcare services through direct out-of-
pocket payments, the so-called “Mutuelles de Santé” health insurance scheme is
rapidly gaining membership across the country.
The annual cost per household is 3,500 FRW ($6) and covers medical consultation,
basic treatment and drugs for common diseases and hospitalization. Some
microfinance programs allow households to borrow without collateral to finance their
annual membership to the Mutuelles. Still, for very poor people the annual premium
can still be prohibitive.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and
affirmative action laws.
There is a law related to women and children protection and matrimonial law related
to heritance for women.
Victim of Genocide Fund has been operating to support children in difficulties.
The Ubudehe program has played a key role in improving access to economic
opportunities for the poorest households.

1.2.2.3. Property and land rights.

With an extremely high population density and excessive partitioning of family
agricultural plots, pressure on land is severe and has resulted in plots that are no longer
viable, resulting in increased food insecurity and a growing number of people without
land.
Customary law does not adequately address land issues and discriminates against
women. However, the government has recently adopted a new land law to ensure
security of land tenure, improve land use, and provide a framework for land markets to
develop. Land registration and formalization of land rights is underway, but this is
expected to be long-term process. The new land law recognizes women’s inheritance

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 rights and requires that the transfer of title deeds is with consent of all family
members. The new law also aims at strengthening the land rights of child headed
households.

1.2.2.4. Local government and non-governmental development programs.

With donor support the government of Rwanda is supporting a localized poverty
reduction process, called 'Ubudehe'. This initiative provides funds (on average $1,250
for each of Rwanda 10,000 cellules – a cellule is the smallest administrative unit) and
capacity building to implement locally designed projects aimed at slashing the
country's high level of poverty.
Multilateral Agencies:
World Bank, European Commission, SIDA, DFID, UNDP, and others.
Non Governmental, Civil Society and Community Based Organizations:
CARE Rwanda, UNICEF, Save the Children, IFAD/OPEP, ADB, Oxfam UK,
Norwegian People Aid, Red Cross, LWF, ADRA and World Relief are among the
most important INGOs in Rwanda.
Most significant Local (Rwandan) NGOs:
CCOAIB (Conseil de Concertation des Organizations d’Appui aux Initiatives de Base)
which is an umbrella of 22 members organizations like SDA( Service au
Developpement des Associations); ARDI(Association Rwandaise pour la Promotion
du Developpement Integre); IMBARAGA( a major labor association ); Reseau des
Femmes (which draws attention to women ‘s political participation); AVEGA
AGAHOZO (provides assistance to widows and orphans of the genocide);
HAGURUKA (focuses primarily on legal advocacy for women and children); Pro-
Femme ( promotion of women socioeconomic reconstruction and building of women
groups institutional capacity).

1.2.2.5. Other

1.2.3. Brief profile of microfinance environment.

Rwanda's financial system is composed of the central bank (Banque Nationale du
Rwanda, or BNR), six commercial banks, a network of 149 people’s banks (Banques
Populaires, essentially credit unions), a few (the exact number is unknown) rival
networks of savings and credit cooperatives ("COOPECs") and other MFIs.

1.2.3.1. List microfinance institutions (other than subject of case study) and other
financial institutions/services accessible by the poor.
Microfinance is relatively new to Rwanda, and is dominated by the Union des
Banques Populaires du Rwanda (UBPR) or People’s Banks, which manages more than
half of all microfinance assets and clients. The UBPR is a network of 149 Banques
Populaires (credit unions), located everywhere in the country, with at least one credit
union in each Sector (equivalent to former District). Their traditional clients are the
middle-poor: the Banques Populaires serve nearly two-thirds of all depositors in the
country. The Banques Populaires are also active in microfinance. However, even
though these People’s Banks were established in 1975 to serve the rural poor, until
recently they did not reach the majority of the rural population, who consist

5
 predominantly of subsistence farmers. Except for the program described in this case
study, these people have little or no access to bank to deposit their savings or obtain
loans. As will be explained further, CARE’s CLASSE-Intambwe methodology has in
fact facilitated access to the People’s Banks by this section of the population.

In addition to the Banques Populaires, many other microfinance initiatives have

started to appear since the late 90s, such as savings and credit cooperatives, small-
scale NGO credit schemes, as well as “traditional” MFIs, such as Duterimbere,
Urwego, RIM and UCT. Most of these initiatives are based in Kigali and other urban
or trade centers. Since early 2000 CARE and other (local) NGOs have also started to
facilitate and train Savings and Loan Associations (SLAs), predominantly in rural
areas of Rwanda. Lastly, there are several informal and traditional microfinance
mechanisms available as well, such as tontines (called Ibimina in Kinyarwanda).

After adopting new regulations for the microfinance industry in 2002, all People’s
Banks and 58 other microfinance organizations applied for registration with the
National Bank of Rwanda. Of these 206 institutions, 112 People’s Banks and nine
other institutions had been approved as of May 2005. Recently (June 2006), the BNR
withdrew licenses from 9 microfinance organizations on grounds that they were at risk
of insolvency. The new regulations created some major difficulties for small MFIs,
such as: a requirement to pay USD 9,300 into a frozen account when applying for
registration.

1.2.3.2. Describe dominant microfinance models and services.

The Banques Populaires and certain “traditional” MFIs represent the bulk of Rwanda’s
microfinance sector. The Banques Populaires provide mainly individual savings and
loan products. Other MFIs also, such as URWEGO (the biggest MFI in Rwanda),
provide a village banking model, with loans guaranteed by the group.

1.2.3.3. Demand versus supply of microfinance services.

According to a recent (2005) assessment2 of the microfinance sector of Rwanda, about
US$ 100 million is mobilized, of which US$ 85 million is extended as credit to MF
clients. It is estimated that 2.1 million people (400,000 households) are in need of
microfinance and currently not served. This represents 25% of the total population and
includes mostly very poor households. More than half of the microfinance sector’s
assets and clients are managed by the UBPR.
More formalized microfinance services were introduced to the country towards the
end of the 1990s. However, currently there are still few microfinance services and
products in the market and MFIs are just starting to invest in market research and
product development. Overall, the financial market depth is still low.
Most MFIs are located in urban areas, while the majority of people live in rural areas.
Within rural areas (especially Eastern Provinces), there are typically very few micro-
financial services available despite vast potential demand, as indicated by the strong
rural interest in accessing credit. However, the actual demand, in other words the

2
Most of the information in this section comes from: Enterprising Solutions Global Consulting. “Rwanda
Microfinance Sector Assessment 2005.”

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percentage of people who are able to receive credit, is low in light of a lack of
knowledge and the fact that income-generating activities are not always profitable.
A recent assessment estimated that 15% of the economically active population has a
savings account in formal financial institutions. Though the percentage of the active
population with access to finance is 21%, hence a bit higher than the access to formal
accounts, it still demonstrates that the majority of the Rwandese has to live without
this basic service. The number of households in need of microfinance and currently
not serviced is 2.1 million people or about 400,000 households.
The Banques Populaires provide mainly individual savings and loan products to the
population mainly in rural areas but asset-based collateral requirements limit low
income clients from accessing its loan products. Therefore, on the lending side clients
tend to be from the middle income market segment. However, approximately 55% of
UBPR clients have saving balances between 1,000 RwF and 10,000 RwF, which are
very low amounts thus the poor are the majority of its savings clients. This suggests
that many low income clients value UBPR savings products. Interviews with key
stakeholders in the microfinance sector indicate that the institution has been gradually
shifting its focus towards the low income population. UBPR’s clientele includes civil
servants as well as farmers.
Coopec Inkingi (60,000 depositors in 2005) and Coopec Ejo Heza (10,000 depositors
in 2005) are newer Savings and Credit Cooperatives, with the former offering loans
starting at 100,000 FRW ($200), while the latter reaches a lower market segment with
loan sizes between 20,000 and 70,000 FRW ($40-140).
Microcredit institutions are concentrated in urban areas, with the major ones (RIM SA,
URWEGO, Duterimbere, Vision Finance, Gitsubizo) with loan sizes ranging
anywhere between 50,000 – 500,000 FRW ($100- 1,000), with monthly interest rates
between 2-3%. The Banques Populaires are spread out in the entire country and while
they have focused traditionally on less poor people (such as salaried people, traders,
and cash crop farmers), they also take up a large share of the microfinance market.
These credit unions mobilize member savings (with 55% of clients having balances
between FRW 1,000 and 10,000) and provide loans at 1.16% interest per month (14%
per year).

1.2.3.4. Depth of microfinance outreach.

In addition to tontines and variants (such as the CARE-assisted savings and loan
associations of this case study), the very poor rely mostly on friends, relatives and
neighbors for their financial needs.

1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.
URWEGO is an urban MFI that provides credit facilities, saving services and business
skill training to poor micro-entrepreneurs in the informal sector who are unable to
access credit through the traditional banking system, because they lack the required
collateral. Initial loans can be as low as $40.

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1.2.4. Poverty
1.2.4.1. Existing Poverty data and geographic areas of the country where extreme
poverty is most concentrated.
51.7% of the population in Rwanda lives below the international ($1/day) poverty line.
The same survey established that 83.7% of the population lived below $2/day.
The Rwandan national poverty line (represented by the cost of a basket of basic goods
and services) and the extreme poverty line (represented by the cost of a basic food
basket only), have been derived from the EICV survey of 2000. These were calculated
respectively at 64,000 RWF and 45,000 RWF per annum per adult equivalent. The
EICV (Household Living Conditions Survey conducted in 2000) established that
60.3% of the adult equivalent population in Rwanda lived below the poverty line and
41.6% in extreme poverty. Using households as the unit, 57% live below the poverty
line. The incidence of poverty is much higher in the rural areas, where 65.7% live
below the poverty line, and 45.8% in extreme poverty.
The following table provides poverty data for each of Rwanda’s Provinces, with the
program target Provinces in blue.

Table 1.3. Poverty Profile by Province (2002)

% of people % of people % of people % of people
Total in extreme below just above high above
Province Population poverty poverty line poverty line poverty line
Gikongoro 492,607 69.7 5.4 4.6 20.2
Butare 722,616 64.4 6.6 4.8 24.2
Ruhengeri 894,179 60.6 5.7 6.4 27.3
Kibuye 467,745 59.9 7.0 7.3 25.8
Kigali Ngali 792,542 59.9 5.3 4.9 29.9
Byumba 712,372 56.1 7.5 2.7 33.6
Cyangugu 609,504 52.9 7.2 6.1 33.9
Gitarama 864,594 44.0 6.1 7.9 42.0
Gisenyi 867,225 42.6 6.3 5.4 45.7
Umutara 423,642 41.9 5.3 5.9 46.9
Kibungo 707,548 39.5 7.1 7.3 46.2
Ville Kigali 608,141 8.3 2.1 2.8 86.7
Average 8,162,715 50.8% 6.0% 5.5% 37.6%
Source : Rwanda Development indicators/ Edition #5: August 2002

The Participatory Poverty Assessment, conducted as part of PRSP, identified six

poverty categories, with characteristics described in the table below. The two bottom
categories (Umutindi nyakujya and Umutindi) are chronically poor, and so are a large
proportion of the next category, the Umukene. Unfortunately no data were found to
correlate these participatory poverty categories with expenditure-based poverty
classifications above (national and international poverty lines), but the majority of the
three bottom PPA categories most probably coincide with those in extreme poverty
(according to national poverty data) and those who are very poor (below the
international $1/day). They face severe and persistent deprivation in multiple
dimensions, and are beggars, casual laborers and very small scale farmers. They lack
land (less than 0.2 ha) and livestock (a few goats at best).

8
Table 1.4. PPA Household Categories and Characteristics.
Category of
Household Characteristics
Household
Umutindi nyakujya Those who need to beg to survive. They have no land or livestock and lack shelter,
(those in abject poverty ) adequate clothing and food. They fall sick often and have no access to medical care. Their
children are malnourished and they cannot afford to send them to school.
The main difference between theumutindiand the umutindi nyakujyais that this group is
Umutindi
physically capable of working on land owned by others, although they themselves have
(the very poor)
either no land or very small landholdings, and no livestock.
Umukene These households have some land and housing. They live on their own labor and produce,
(the poor) and though they have no savings, they can eat, even if the food is not very nutritious.
However they do not have a surplus to sell in the market, their children do not always go to
school and they often have no access to health care.
Umukene wifashije This group shares many of the characteristics of the umukene but, in addition, they have
(the resourceful poor ) small ruminants and their children go to primary school.
Umukungu This group has larger landholdings with fertile soil and enough to eat. They have livestock,
(the food rich) often have paid jobs, and can access health care.
Umukire This group has land and livestock, and often has salaried jobs. They have good housing,
(the money rich ) often own a vehicle, and have enough money to lend and to get credit from the bank. Many
migrate to urban centres.

1.2.4.2. Does the target area fall within these extreme poor regions?
CARE Rwanda is present in most Provinces regardless of provincial poverty levels.
Rather than a geographic poverty targeting strategy, CARE attempts to reach existing
associations without access to any form of formal finance.

1.2.4.3. If known, what is the proportion of population in the target area living below
$1-a-day and/or within bottom 50% of people living below the national poverty line?
No data are available beyond National Level. Table 1.3. provides the proportion of
people living in extreme poverty (National Poverty Line definition) for each Province
within the target area. This is the best available data to gauge poverty conditions
compared for each of the Provinces where CLASSE-Intambwe has been implemented
by CARE.

1.2.4.4. Main determinants of poverty.

Poverty is largely a rural phenomenon in Rwanda. Household size/composition and
land holding are major factors associated with poverty. Female headed households are
more likely to be poor than male-headed ones. When one considers gender disparities,
62% of female-headed households live below the poverty line as opposed to 54% of
male-headed households. After the war in 1994, 34% of all households were headed
by widows, mostly as a result of the genocide. The genocide also led to a high number
of child headed households. Other categories of vulnerability are uneducated young
people, large households with only one adult and more than 3 children, households
headed by old people who are above 60 years, orphans, street children and prisoners.
Ill health is highly significant as are long distances to water sources, the lack of safe
water and sanitation, access to health services and damaged or poorly maintained

9
infrastructure.
Land holdings are strongly correlated with poverty. The Rwandan Participatory
Poverty Assessment (PPA, conducted in preparation of the country’s Poverty
Reduction Strategy Paper) revealed that “issues of land in rural areas are so crucial
that they are on top of problems that impoverish people”. Rwanda is a predominantly
agricultural economy, with a high (and rapidly growing) population and small
cultivatable land area (only 0.84 hectares per household in 2002), and land ownership
is highly unequal (the Gini coefficient for land ownership was 0.594 in 2000). A large
majority of agricultural households cultivate less than 0.7 hectares, the figure the
Ministry of Agriculture regards as necessary to feed a typical Rwandan family. 40.5%
of agricultural households in the lowest consumption quintile own less than 0.2
hectares. This number is even higher among female-headed households.
In defining causes of poverty themselves during the PPA participants highlighted ill
health, ignorance, lack of livestock, reliance on insecure agriculture, scarce land,
insecurity and conflict, poor quality housing and absent family members – often in
prison.

10
2. Organizational Framework
2.1. International Organization
2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)
CARE Rwanda, international NGO

2.1.2. Organizational background

2.1.2.1. Mission and vision
CARE’s mission is to serve individuals and families in the poorest communities in the
world. Drawing strength from its global diversity, resources and experience, CARE
promotes innovative solutions and are advocates for global responsibility. Guided by
the aspirations of local communities, CARE pursues its mission with both excellence
and compassion because the people whom CARE serves deserve nothing less.
CARE’s vision is to seek a world of hope, tolerance and social justice where poverty
has been overcome and people live in dignity and security. CARE International will
be a global force and partner of choice within a worldwide movement dedicated to
ending poverty. CARE will be known for its unshakable commitment to the dignity of
people.

2.1.2.2. Brief history

CARE is one of the world's largest private international humanitarian organizations,
committed to helping families in poor communities improve their lives and achieve
lasting victories over poverty. Founded in 1945 to provide relief to survivors of World
War II, CARE quickly became a trusted vehicle for the compassion and generosity of
millions.
CARE International has been operating in Rwanda since 1984. CARE Rwanda’s
mission is to work with individuals and communities to enable them to overcome the
underlying and specific causes of poverty, to achieve positive lasting change and to
live with dignity. In Rwanda, CARE pursues its mission with other partners, be they
local or international.

2.1.2.3. Type of support: funding, capacity building, technical assistance, direct

service provider, other
CARE transfer funds of and builds capacity of local partner organizations, and
provides services directly as well. CARE strives to facilitate lasting change by:

• Strengthening capacity for self-help

• Providing economic opportunity
• Delivering relief in emergencies
• Influencing policy decisions at all levels
• Addressing discrimination in all its forms

11
2.1.3. Development intervention approach
2.1.3.1. Primary target group and development focus
CARE targets individuals and households in the poorest communities in the world. Its
Village Savings and Loans Programs target rural settings, where other microfinance
seldom reach or sustain. In Rwanda, CARE has a geographical coverage of all four
Provinces. The CLASSE-Intambwe microfinance model is implemented in the
majority of these provinces.

2.1.3.2. Specialized in MF/MED or multisectoral

CARE Rwanda’s interventions include:
1) Education (focus on literacy and ‘life skills’ for vulnerable children and youth,
especially girls)
2) Economic Security. Projects and programs under this core component of
interventions target rural and poor people who do not qualify for formal financial
system conditions – 67% of them are illiterate. The approach consists of educating
people about saving, investment, credit management, and IGA (income generating
activities) through CLASSE-Intambwe VSLAs and linkages with People’s Banks.
3) Health and HIV/AIDS (with two main components: prevention of new infections
and care and support to infected and affected people as well as their family members)
4) Environment and land management.
These various programs do not take place in isolation from each other: various
program components are typically combined to provide a poverty alleviation strategy
in response to the needs of specific target groups and their circumstances.

2.1.3.3. MF/MED model

CARE Rwanda aims to address specific and fundamental causes of economic
insecurity of poor people’s livelihoods through support to poor households’
participation in assets building and protection trough emphasis on (1) savings-based
microfinance schemes and (2) participation in high-return agricultural subsectors and
(3) community solidarity based emergency preparedness.
CARE Rwanda’s CLASSE-Intambwe Model is in large part based on CARE’s
original Village Savings and Loan Association (VS&LA) Model, developed initially
by CARE Niger. This approach creates Accumulating Savings and Credit
Associations (ASCAs), self-selected groups of people, who pool their money into a
fund from which members can borrow. The money is paid back with interest, causing
the fund to grow and increasingly meet members’ financial needs. These Savings and
Loan Associations (SLAs) become entirely self-managing and typically open a group
account with a local bank. SLAs usually include between 15 and 30 members. They
receive a training program according to the “CLASSE-Intambwe” methodology. In
contrast to most of CARE’s VS&LA programs worldwide, up to 30 individual SLAs
within a region form an Intergroupment (similar to a federation), which acts as an
intermediary to obtain loans from the local Banque Populaire. Details follow in a later
section.

12
2.1.3.4. Other sectors
While improving the economic security of the most marginalized households is the
primary objective of the CLASSE-Intambwe model, the same SLAs are also involved
in programs related to governance and civil society strengthening, policy advocacy,
disaster assistance, HIV/AIDS and its consequences, and access to basic education.
Program objectives also include increased participation in decision-making processes
by poor people (especially women), both at household and community level. This
includes increasing their knowledge of their rights and responsibilities and assist them
in securing skills to access and participate in economic and decision-making
processes. Some SLA members are involved in CARE’s farming and livestock
extension programs as well as in environment conservation projects.
CARE also employs a multi-faceted approach to assist OVCs by addressing basic
needs (food, shelter, household materials and medical assistance), education (primary
education, vocational training, apprenticeship training and literacy training),
psychosocial support, advocacy, HIV/AIDS prevention/care and support for those
infected in addition to improving their economic security through the CLASSE-
Intambwe methodology.

13
 2.2. Local organization
In savings-led microfinance service programs, the local “institutions” are in fact the
savings groups themselves, in this case the Savings and Loan Associations. These will be
described in detail later. At the same time, CARE Rwanda collaborates with two other
local organizations: RESAFI (an NGO Network) and the Union des Banques Populaires
de Rwanda (UBPR), which are described below according to relevant parameters. While
the former’s main function is to build the capacity of existing associations to become
self-managed SLAs, the Banque Populaire’s main role is to provide deposit and loan
services to SLAs.

A. RESAFI (Réseau d’Épargne sans Frontières, Savings without Borders Network)

A. 2.2.1. Organizational development (S)

Table A.2.2. Institutional Background

Issues Observations
2.2.1.1. Name of the organization or institution RESAFI
2.2.1.2. Geographic area of operation In capital and all Provinces
Non Profit Civil Society
2.2.1.3. Legal structure Organization, network of local
NGOs
2.2.1.4. Registration status Registered with government
2.2.1.5. Regulation status N/A
2.2.1.6. Date established 2003
2.2.1.7. Specialized (MF/MED) or multisectoral MF/MED capacity building
2.2.1.8. Start of MF/MED activities 2001
VS&LA capacity building, BDS,
2.2.1.9. Core business (f.i. credit, savings, …)
advocacy, M&E
2.2.1.10. Business model N/A
2.2.1.11. Target market – MF/MED SLAs, local CBOs
2.2.1.12. Number of clients/participants –
N/A
MF/MED
Executive committee consisting of
2.2.1.13. Number of staff representatives from network NGOs
(12)

RESAFI is a network of 12 local NGOs with expertise in the CLASSE Intambwe

methodology. CARE Rwanda provides these NGOs with financial and technical
assistance to assist them in training and counseling of SLAs, and to represent their
member SLAs at national level. Some of the Intergroupements have also joined this
network. In addition to SLA capacity building, the RESAFI NGOs also facilitate
formation of IGs and assist them with business services and creation of linkages with
local People’s Banks. At the national level, RESAFI advocates on behalf of SLAs and
IGs.

14
A. 2.2.2. Organizational development (S)
A. 2.2.2.1. Mission and vision
RESAFI’s mission is to ensure sustainability and replication of the community saving
and loans methodology initiated by CARE International in Rwanda in 2002, and to
take all necessary actions to expand and consolidate this model through human,
material and financial resources.

A. 2.2.2.2. Brief history

The Savings Network without Borders-Intambwe (RESAFI) was established as a
network in 2003 by local NGO partners of CARE as the result of their involvement in
the CLASSE (Community Learning and Action for Savings Stimulation and
Enhancement) project. RESAFI consists of 12 NGOs with experience in the saving
and loans methodology and capacity building of SLAs in Gikongoro, Gisenyi,
Ruhengeri and Umutara. It is aimed at providing members with technical support in
strategy planning, representing members at the national level, training and counseling
and promoting sharing of experiences. RESAFI has also positioned itself as a service
provider for various other projects by CARE Rwanda

A. 2.2.2.3. Objectives
o To provide technical assistance to SLAs.
o Promote formation of new SLAs.
o To coordinate exchange of experiences on savings and credit among SLAs and
their members.
o To advocate on behalf of the SLAs towards government and bank institutions.
o Provide training and materials to SLAs.
o To collaborate with CARE, the public sector and private sector as a consultative
body community microfinance programs.

A. 2.2.2.4. Organizational culture, leadership, innovation (S, M)

RESAFI is a network of CARE Rwanda NGO partners, whose main role has been to
implement village savings and loan programs through formation, training, technical
assistance and monitoring. Not every member organization is equally strong and
committed. Moreover, RESAFI has not developed to a stage where CARE would have
liked it to see, i.e. a strong, self-sufficient network of NGOs replicating and expanding
the CLASSE-Intambwe approach in Rwanda. Instead, many of the RESAFI NGOs are
dependent on CARE funding to implement CLASSE Intambwe programs, and have
not been very successful in starting new programs and attracting their own donors.

B. Union des Banques Populaires du Rwanda (UBPR)

The Union des Banques Populaires du Rwanda (UBPR) serves 36% of the total
microfinance market and holds 60% of deposits and loans. UBPR is an
apex body of Banques Populaires which was initiated in 1975 by the Rwandan and Swiss
governments. UBPR’s clientele includes civil servants as well as farmers. The network
has been receiving technical assistance and capacity building from a number of partners,
notably from the World Council of Credit Unions (WOCCU).
Traditionally the Banques Populaires only offered passbook savings and these voluntary

15
and fully withdrawable savings remain the most popular savings product. The UBPR
system of 149 Banques Populaires is completely self-funded by member-client savings.
In fact, unlike credit union systems elsewhere in Africa, the Rwandan Banques
Populaires have excess liquidity from savings deposits.
Banques Populaires offer savings and credit to the population mainly in rural areas but its
asset-based collateral requirements limit low income clients from accessing its loan
products, therefore, on the lending side its clients tend to be from the middle income
market segment. A study by WOCCU showed that there on average 16 active savings
accounts for every loan outstanding. Approximately 55% of UBPR clients have saving
balances between 1,000 RwF and 10,000 RwF, which are very low amounts thus the poor
are the majority of its savings clients. This suggests that many low income clients value
UBPR savings products. Interviews with key stakeholders in the microfinance sector
indicate that the institution has been gradually shifting its focus towards the low income
population. This includes its partnership with the CLASSE program, through which it
reaches poor and very poor members of CARE supported SLAs. Through intermediation
by IGs, CLASSE SLAs have been able to apply for loans and so far approximately 25%
of the SLAs have received a loan. The maximum loan size of the first loan was
approximately $930 per SLA.

Table B.2.2. Institutional Background of Union des Banques Populaires de Rwanda

Issues Observations
Name of the organization or institution Union des Banque Populaires de Rwanda
Nationwide, 148 People’s Banks, at least one
Geographic area of operation
in each district
Legal structure Credit Union
Registration status Registered by BNR
Regulation status Regulated by BNR
Date established 1974
Specialized (MF/MED) or multisectoral Financial Services (savings and loans)
Start of MF/MED activities 1974
Core business (f.i. credit, savings, …) Savings, Loans
Business model Credit Union
Target market – MF Rural and urban savers
Number of clients/participants – MF/MED 398,799
Civil servants (17%), teachers (6%); traders
Types of clients/participants (16%); farmers (28%); small entrepreneurs
(4%); other (29%)
Number of staff 805

B.2.2.2. Organizational development

B. 2.2.2.1. Mission and vision
To develop savings and loans products, promote economic and social wellbeing in
partnership with its shareholders, and to serve the community at large.
Subsistence farming is still a way of life for many and the government is keen to
encourage a move away from this, towards more commercial farming. In order to get
involved in more value-add activities the rural communities need access to micro-

16
financing.

B.2.2.2.2. Brief history

In 1975, an agreement was signed between Switzerland and Rwanda to encourage
increased access to savings and credit facilities for Rwanda’s rural population. 11
years later, 148 small financial institutions from Rwanda's 110 districts merged to
form the Union des Banques Populaires du Rwanda (UBPR). Today, UBPR
provides Rwanda's rural communities with access to banking services and micro-
financing. Working closely with international development organizations (such
as USAID) and NGO’s, UBPR also educates these communities about added-value
activities and export opportunities.

B.2.2.2.3. Objectives
1) to provide members with an opportunity to deposit their savings in regulated and
safe conditions;
2) to offer credit to members to meet their economic needs and to be paid back
according to fixed terms established in a loan contract ;
3) to admit hardworking and earnest low-income people as members ;
4) to promote a spirit of initiative and local work through prudent use of credit and
savings
5) to combat usury and speculation.

B.2.2.2.4. Organizational culture, leadership, innovation

Even though UBPR has experienced significant challenges to reach the rural poor and
provide them with appropriate financial services, it has made significant efforts to
reach the very poor and vulnerable populations. This is exemplified by its partnership
with CARE and AVEGA among others.

B.2.2.2.5. Organizational structure, roles and responsibilities (diagram may be helpful)

The Union des Banques Populaires de Rwanda is a network of credit unions spread
out over the entire country, and also includes a central financing facility.

B.2.2.2.6. General qualifications of staff

Thanks in part to training provided by WOCCU, managers and loan officers have been
trained to upgrade their skills and to employ a new credit methodology to combat
problems with high loan delinquency rates. WOCCU Rwanda program trained trainers
within the UBPR technical assistance department and Banque Populaire managers, as
well staff and board members on proper credit administration. The management of
UBPR and WOCCU Rwanda has worked to develop criteria and prerequisites for staff
positions; for example, all potential Banque Populaire managers must have a
university diploma in a relevant field such as accounting or finance. Also, volunteer
board members have been trained in their roles with an emphasis on supervising staff
rather than being involved in operations.
Within the partnership with CARE, BP credit officers work with the SLA/IG to
analyze income project proposals and elaborate repayment plans.

17
B.2.2.2.7. Training/sensitization (of staff, managers, board) related to poverty outreach
Professional training provided by CARE to the personnel of partner people’s banks.
Such training, which aims to give them technical expertise, is likely to have a long-
term positive impact regarding the future management of people’s banks, and in terms
of innovation of products developed by them.
The staff of participating BPs attend annual trainings organized by UBPR and CARE
to discuss specific circumstances and needs of the new clientele of SLAs who are
much poorer than typical BP members. In addition to this training, which is attended
by BP managers and credit officers, UBPR regional representatives monitor and
support implementation.
CARE signed Memoranda of Understanding with the UBPR partners who are
involved with CLASSE and has provided training and guidance to loan officers on
extending credit to SLAs.

B.2.2.2.8. Governance
The bank is governed by a 12-member Board.

2.2.3. MF and MED services

2.2.3.1. MF model and products/services.
The following products and services are available to regular Banque Populaire
members and are not all available to CARE SLAs.
Savings: mandatory passbook savings, term deposits, retirement savings, home
purchase savings.
Loans: agriculture, livestock, trade, transport, equipment loans (12-13% interest);
emergency credit, salary advance loans, lines of credit.
Microcredit: to individual microentrepreneurs (14% annual interest rate) as well as
solidarity groups (13% annual interest rate).
Funds transfer: domestic and international (Western Union).
Foreign exchange.
Automated Teller Machines (ATM).

2.2.3.2. Description of main target group (if not the very poor).
Very poor people are only a small but growing minority of the People’s Banks’
customers. The following represents a client distribution according to professional
background: civil servants (17%), teachers (6%); traders (16%); farmers (28%); small
entrepreneurs (4%); other (29%).
BPR members are predominantly wage earners and salaried people. Average monthly
household incomes were reported to be around $300 in 2002 and $700 in 2004. Even
though the rural poor were the intended target group of BPR, smallholders and very
poor people were not reached, because loan products were not adapted to their needs.
However, there has been a gradual increase in the number of farmer members recently
(17% in 2004 versus only 5% in 2002).

18
 By end 2004 the 149 Banques Populaires within the UBPR were serving a total of
377,253 member-clients.

2.2.3.3. Selection and/or eligibility criteria

No formal selection or targeting is employed by the Banques Populaires, but they have
a large number of different financial products to suit the needs of different categories
of clients.

2.2.3.4. Use of poverty assessment tool

The Banque Populaires do not use a poverty tool, but agree to work with the
Intergroupments, who represent SLAs. All CLASSE SLAs open a bank account with
their local Banque Populaire. Selection takes place by CARE staff who target existing
associations to be transformed into SLAs according to the CLASSE-Intambwe
methodology. See below for more details on targeting.

2.2.4. Resources and external assistance

After the war in 1994, when the bank was at the brink of bankruptcy, the World Bank
provided capital to make the entire UBPR system solvent again. In terms of
concessionary lending, IFAD provided a $400,000 line of credit to UBPR. The African
Development Bank also partners with UBPR in the form of a line of credit targeted at
women in Butare and Kigongoro provinces.
As of December 31, 2003, the value of deposits was RWF 20.1 billion, yet the value of
loans was only RWF 11.9 billion. UBPR lent some of this excess to the banking system
at a rate of 10-12 percent.
UBPR’s consolidated balance sheet for 2004 shows a total of approximately US$ 60
million in assets, of which approximately one fourth is held as equity and two thirds is
provided by member deposits. The remainder consists of loans from other banks and
NGOs.
CARE Rwanda has also provided funds earmarked for loans to SLAs. These CARE
Credit Funds amounted approximately $265,000 by 2007.

2.2.5. Relationships (networks, partnerships, other institutions)

2.2.5.1. Networks
UBPR is a member of the World Council of Credit Unions (WOCCU), and maintains
several partnerships with NGOs, such as CARE. These partnerships are typically
agreed between individual People’s Banks and NGOs directly.

2.2.5.2. Partnerships
N/A except for CARE

2.2.5.3. Other institutions

N/A

19
3. Description of “Very Poor” Target Group

3.1. Individual and Household conditions

3.1.1. Gender
69% are women

3.1.2. Age
76% are between 20 and 45 years old, 4% are 20 years old or below, and 20% are above
45 years old.

3.1.3. Disability and chronic disease

CARE Rwanda has also introduced the CLASSE-Intambwe model (in combination with
healthcare, food security and other programs) to people living with HIV/AIDS, as well as
orphans and vulnerable children, and community volunteers who act as mentors for child-
headed families. Almost 100 SLAs consist exclusively of people living with HIV/AIDS.
This has had mixed results: food security remains a serious challenge for many people
living with HIV/AIDS, and this has seriously impeded their ability to save on a regular
basis.

3.1.4. Culture or religion

catholic/protestant

3.1.5. Ethnicity
Hutu, Tutsi, Twa

3.1.6. Membership to socioeconomic groups, such as caste and class

SLAs are formed from existing associations. After the civil war the government
encouraged people to form associations based on a common economic activity. CARE
works with poor associations who have no access to financial institutions. Those who do
not belong to existing associations are usually not reached by CLASSE-Intambwe.

3.1.7. Household type, composition, marital status

Average household size is 7 members.
67% married, 4% divorced, 6% single, and 23% widows.

3.1.8. Literacy
47% are illiterate

3.1.9. Education
52% no education, 42% primary education, 6% secondary education (this is roughly the
same in other CLASSE projects)

3.2. Socioeconomic conditions

3.2.1. Refugee or IDP status

20
No known data. However, several CLASSE target areas are resettlement areas for
returning refugees.

3.2.2. Economic conditions (F, C)

Most of the following data were taken from a baseline study of the Umutara CLASSE
project.

3.2.2.1. Underemployment
Majority are subsistence households as well as small cash crop farmers.

3.2.2.2. Income Sources

Majority (61%) sell crops to obtain cash, even though many are not food self-
sufficient.
22% sell livestock for cash.
7% work for others (mostly agricultural labor)
5% engage in petty trading (other than farm products).
33% have more than one income source.

3.2.2.3. Land ownership

88% own land, on average 3.8 hectares. Majority received land from government after
resettlement. No data available for other than Umutara CLASSE projects.

3.2.2.4. Asset ownership

In addition to land, important assets owned by the poor are goats and cows.

3.2.2.5. Income level

N/A

3.2.2.6. Food Conditions

33% have up to 1 meal per day, 64% have 1 to 2 meals per day, and 3% have 3 meals
a day.

3.2.2.7. Children’s schooling

93% of households with school-age children send their children to school, but of these
households 45% had children who dropped out prematurely (during primary school),
mostly because they could not afford it anymore.

3.2.2.8. Bank account?

5% of SLA members had a personal bank account.

3.2.2.9. Does person or household save cash?

21% of SLA members were able to save at times.

3.2.2.10. Access to Healthcare

5% of people relied on selling agricultural produce to pay for health-related expenses,

21
 and 14% on selling animals. Another 16% took out a loan. 65% belong to a local
health insurance “mutuelle”.

3.2.3. Geographic conditions

3.2.3.1. Rural/urban, remoteness from trading centers and roads, population density
Almost exclusively rural. Within targeted rural Provinces, CLASSE reaches most
Districts and within Districts the poorest Sectors are targeted

3.2.3.2. Access to markets

Varies from place to place. Local markets are usually available in each District.\

3.2.3.3. Access to banks

There is at least one Banque Populaire in each District. However, the vast majority of
CLASSE participants did not have access before the program.

3.2.3.1. Access to doctors and clinics

Most rural Rwandan households have to walk distances up to 10 miles and more to
reach a health center or doctor.

3.2.4. Major vulnerabilities and risks encountered by target group (F, C)

Loss of an income-earning household member (through chronic disease or death) is one
of the severest events that can happen to an already vulnerable household. Another major
vulnerability results from the potential loss of livestock or crops due to drought, pest, etc.
In case of such catastrophes most people have no choice but to resort to selling their
assets. To cope with future sickness people can become members of the Mutuelles, a
government health insurance scheme (described above) which has become very popular.

22
4. Poverty Targeting and Assessment

4.1. Poverty measurement practices

4.1.1. Poverty data collection
4.1.1.1. Which poverty indicators are collected?
Client poverty is not assessed routinely. However, several funded projects have
required baseline and end-of-project measurement of certain client data, such as age,
gender, main source of income, land ownership, meals consumer per day, education,
etc. While some might be strong indicators of poverty, poverty data as such as not
obtained.

4.1.1.2. What poverty assessment tool is used?

N/A

4.1.1.3. When and how often are poverty data collected?

N/A

4.1.1.4. Which clients are measured?

N/A

4.1.2. Use of poverty data

4.1.2.1. What, if any, are poverty categories distinguished by poverty data?
N/A

4.1.2.2. How are each of these categories defined?

N/A

4.1.2.3. How are poverty data used by organization?

4.1.2.3.1. For client monitoring?
N/A

4.1.2.3.2. For client screening?

N/A

4.1.2.3.3. For client targeting?

N/A

4.1.2.3.4. For impact monitoring/assessment?

N/A

4.1.2.3.5. For other uses?

N/A

23
 4.2. Available Poverty Data
4.2.1. Poverty distribution results by internal poverty data collection method
N/A

4.2.2. Poverty data from a recent poverty and/or impact assessment study
A study done in Nshili District in Gikongoro Province, where CARE Rwanda is assisting
68 SLAs (with slightly over 1,000 members) provides the only data on the proportions of
CLASSE SLA members according to the various Participatory Poverty Assessment
poverty categories.

Table 4.1. PPA Poverty Category Distribution of CLASSE VSLA members in Nshili
District (Gikongoro Province) compared to Gikongoro Province overall.3
CLASSE SLA Distribution for Nshile Banque
Members Gikongoro Province Populaire clients
PA Poverty Category
Umutindi nyakujya (those in abject poverty ) 0% 13% 0%
Umutindi (the very poor) 9% 2% 0%
Umukene (the poor) 17% 43% 0%
Umukene wifashije (the resourceful poor ) 74% 33% 29%
Umukungu (the food rich) 0% 6% 53%
Umukire (the money rich ) 0% 4% 18%
Data for Nshile CLASSE SLA members and Banque Populaire clients were obtained by
CARE during a survey in 2005. According to Table 1.3. (national poverty statistics), 70%
of people in Gikongoro are extreme poor, and another 5% live below the national poverty
line. If the assumption could be made that the PPA poverty ranking data could be
superimposed on the data of the national poverty survey, then the three bottom PPA
categories (the abject poor, very poor and poor, who make up 58% of Gikongoro’s
population) as well as approximately 1/3 of the next category (12% is approx. 1/3 of the
33% resourceful poor) would belong to the extreme poor as defined by the national
poverty survey. In other words, at least 26% of the CLASSE SLA members in Nshile
(which might not be representative for all of Gikongoro Province) are extreme poor,
whereas it is impossible to determine what proportion of the remaining 74% are extreme
poor or poor. Note that the CLASSE program members are significantly poorer than
clients of the Banque Populaire in Nshile District.
Without attempting to relate the relative poverty categories of the PPA to the absolute
national poverty data, the picture based on PPA poverty categories looks as follows:
1) 9% of CLASSE members in Nshile district belong to the Umutindi or ‘very poor’. This
group is physically capable of working on land owned by others, although they
themselves have either no land or very small landholdings, and no livestock.
2) 17% of CLASSE members in Nshile district belong to the Umukene or ‘poor’. These
households have some land and housing. They live on their own labor and produce, and
though they have no savings, they can eat, even if the food is not very nutritious.

3
The distribution for Gikongoro is based on based on a PPA sample of 6,505 people. See Annex 3 for more
details.

24
However they do not have a surplus to sell in the market, their children do not always go
to school and they often have no access to health care.
3) The majority (74%) of CLASSE members in Nshile district belong to the Umukene
wifashije or the ‘resourceful poor’. This group shares many of the characteristics of the
Umukene but, in addition, they have small ruminants and their children go to primary
school.

4.2.3. Poverty Data obtained through use of USAID certified poverty tool
4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was
used: $1 a day or bottom 50% below poverty line?
N/A

4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample size
and selection…
N/A

4.2.3.3. Poverty results: proportion of very poor clients versus poor clients
N/A

4.2.4. Interpretation of Poverty data

4.2.4.1. Comparison between internal and USAID poverty tool data
4.2.4.2. Organization’s own interpretation of poverty outreach
Now that CLASSE-Intambwe has been well established, CARE Rwanda has begun to
expand its outreach to very vulnerable populations, especially those infected and
affected by HIV/AIDS. This includes not only people living with HIV/AIDS, but also
child-headed households and Nkundabanas, volunteer mentors for child-headed
households.

4.3. Poverty Targeting

4.3.1. Does the organization use a poverty targeting tool?
Geographic targeting: poorest districts within selected Provinces; most vulnerable sectors
within the selected districts; most vulnerable cellules within the selected sectors.
Within geographic target area, typically already existing associations are targeted,
especially if they are excluded from the formal financial system (which is almost always
the case).
Furthermore, associations are targeted based on criteria pertaining to poverty of their
members:
 households with less than 0.5 hectares of land
 Isolation and/or self exclusion
 Difficulty to afford school fees and medical costs
 Limited social capital
 Small land (> 0.5 ha)
 No livestock
 No access to credit.
Some programs specifically target widows and female-headed households; people living
with HIV/AIDS; orphans and other vulnerable children (OVCs).

25
Since for the most part existing associations are targeted, some of the most vulnerable
people might not be reached, however, as they are more likely to be excluded by these
groups and/or might exclude themselves.

4.3.2. What is the client poverty target level?

Geographic targeting: poorest districts within selected Provinces; most vulnerable sectors
within the selected districts; most vulnerable cellules within the selected sectors.
Within geographic target area, typically already existing associations are targeted,
especially if they are excluded from the formal financial system (which is almost always
the case). Furthermore, associations are targeted based on criteria pertaining to poverty of
their members: households with less than 0.5 hectares of land, widows and female-
headed households; people living with HIV/AIDS; orphans and other vulnerable children
(OVCs).
Since for the most part existing associations are targeted, some of the most vulnerable
people might not be reached, however, as they are more likely to be excluded by these
groups and/or might exclude themselves.

4.3.3. Staff use of poverty targeting (S, F)

4.3.3.1. Training/sensitization (of staff, managers, board) related to poverty outreach

4.3.3.2. Staff incentive schemes

Probably the most important incentive for BP credit officers in serving very poor
clients is the existence of the Intergroupments. The Intergroupments are trained to
review credit applications from their SLA members before they are submitted to a
Bank’s loan officer. This significantly reduces the work and risk taken on by loan
officers. Moreover, loans to SLAs are guaranteed by funds provided to the Banks by
CARE.
Repayment rates have been consistently high and have helped the Bank gain
confidence in lending to SLAs and use its own funds in addition to CARE guarantee
loan funds.

4.3.4. Issues with poverty targeting (S,F)

N/A

26
5. Products and Services
The CLASSE (Community Learning and Action for Saving Stimulation and
Enhancement) methodology, also referred to as INTAMBWE (which means weekly steps
in Kinyarwanda) is a replication of the CARE Village Savings and Loans (VSL)
methodology with some local adaptations.
The purpose of a Savings and Loan Association (SLA) is to provide savings and simple
insurance facilities for a group that does not have access to financial services, but when
the amount of money saved by the membership is sufficient, any of them can borrow
from this source and must repay the loan with interest. SLAs are autonomous and self-
managing. All transactions are carried out at meetings in front of the SLA, to ensure
transparency and accountability. To ensure that transactions do not take place outside
group meetings, a lockable cash box fitted with three padlocks is employed, to prevent
unauthorized cash movement and the risk that records might be tampered with.
SLAs meet weekly basis. SLAs are comprised of a General Assembly and a
Management Committee. Each member has one vote. The Management Committee of a
SLA consists of 5 people: a Chairperson, Secretary, Treasurer and two Money Counters.
Anyone needing a loan puts forward his or her request publicly to the Association.
Approval of the loan rests with the General Assembly and may be immediately disbursed.
Loans are provided for purposes that are agreed to by the Association, as noted in its by-
laws.
The Associations set their own loan terms. During the first cycle it is normally the case
that loan terms do not exceed three months and in fact are usually even shorter, but this
may change in subsequent cycles. The size of a loan available to a member can be linked
to the total value of his/her shares. Interest is charged on loans and falls due every four
weeks/month. It must be paid at that time, regardless of the length of loan term. The
amount of interest charged varies from Association to Association, as they decide this
among themselves. Typical interest rates vary between 5% and 10% monthly, with a
typical loan duration of three months. The loans size depends on available savings;
saving capacity of group members and the needs of the borrower but on average
individual loans range around $4-8 and rarely exceed $30.

SLAs also create a Social Fund to which all members contribute a fixed amount on a
regular basis. The amount of this monthly savings is different for each SLA as it is
decided by its members themselves. The Social Fund can be used for a number of
purposes: emergency assistance, educational costs for orphans, funeral expenses etc.
Often, SLAs decide to let members use the social fund to pay for their health insurance
(“Mutuelle”) premium, which they pay back without interest and after a repayment
period agreed upon by all members. Social funds can also be distributed in the form of
grants to SLA members. The Social Fund acts as a type of informal insurance and is
extended to a member in the event of unexpected costs, like funeral and educational
expenses.

CLASSE is more than just access to financial services (savings, loans); there is also
(growing) focus on enterprise services. One of the most important innovations of
CLASSE is the introduction of Intergroupments (a type of federation), which represents a
number of SLAs (in general between 20 and 30) and connects these same SLAs to credit

27
extended by the local People’s Bank. CARE made these credit funds available to support
these microentrepreneurs. The IGs carry out a first screening of project (loan) proposals
prepared by SLAs, monitor and supervise the SLAs, perform a follow-up of the project
implementation and, in case of delinquency, execute the credit recovery. By fulfilling all
these tasks the IGs facilitate their SLAs to access to external financial services. As the
CLASSE SLAs matured, their members wanted larger loans than their internal sources
could provide. The local People’s Bank opens a term deposit account for each linked
SLA, and groups are able to deposit their savings accounts with the bank. SLAs are also
able to apply for and receive, as a group, loans from the bank. The group intermediates
the loan to specific group members and is responsible for repayment of the loan. Until
now these loans come out a CARE established credit fund, but the plan for the future is to
have the BPs lend to SLAs from their own mobilized funds. Since the linkage program
started in late 2003, over 25 percent of SLAs have received loans from their local Bank
Populaire.

5.1. Financial Products

Table 5.1. Microfinance Product Details
Product Features and Policies
5.1.1. microcredit
5.1.1.1. Individual or group product
5.1.1.2. Loan terms (maturity, interest
rate, interest type, flexibility)
5.1.1.3. Loan source
5.1.1.4. Loan use
Individual members can apply for loans from
SLA. SLA can borrow as a group from BP.
SLA loan terms are decided by SLA members
(the general assembly). Typical loans are for
one or two months, at a 10% monthly interest
rate.
BP Loan terms: up to one year with monthly
or quarterly repayments. The first loan is for a
maximum amount of $920, with a monthly
1.08% interest rate, declining balance.
Individual loans are from SLA accumulated
member savings; SLA loans are taken from
credit line provided by CARE to local BP.
Individual loans by SLA members are
typically for IGAs only.
Purpose of loans by SLA from BP is
restricted to income-generating projects.
Loans for non-income-generating purposes
(consumption, education, health insurance
etc. ) are normally taken from Social Fund

28
 Product Features and Policies
5.1.1.5. Loan size (first loan, average
loan, maximum loan size)
5.1.1.6. Meeting requirement and
frequency
5.1.1.7. Mandatory savings requirement group fund.
and amount
5.1.1.8. Collateral requirement
5.1.1.9. Other eligibility requirements
5.1.1.10. Loan default policy
5.1.1.11. Repayment flexibility
5.1.1.12. Other
5.1.2. microsavings
5.1.2.1. Individual or group
5.1.2.2. Savings Type
5.1.2.3. Deposit/collection location
5.1.2.4. Deposit frequency, amounts,
flexibility
5.1.2.5. Meeting requirement and
frequency
5.1.2.6. Savings terms (interest rate,
minimum deposit, …)
5.1.2.7. Withdrawal and savings use
policies
5.1.2.8. Record keeping and accounting
29
Individual loans from SLA vary depending
on each SLA ranging typically between $4-8,
and usually do not exceed $30.
For loans from BP by SLA, the first loan is
$920 max, with consecutive loans up to
$2,750.
Average loan is $590.
SLAs meet on a weekly basis.
Mandatory savings by each SLA member to
The BP requires 25% of borrowed amount in
SLA savings.
Group solidarity principle. For BP loans, 25%
of the loan amount needs to be in SLA bank
account.
SLA loan applications with BP must be
accompanied with business plan and
evaluated for creditworthiness by IG.
In case a loan is not repaid by SLA member,
her savings will be taken as well as goods
purchased by loan to extent possible.
In case of non-repayment by SLA the BP will
seize the 25% mandatory savings, and as
needed, additional accumulated savings or
assets purchased by the loan.
N/A
N/A
SLA group savings is loan fund
Mandatory, equal amount for each member
Lockbox, bank account
Weekly, amount varies for each SLA
Weekly
No interest on savings as such, but everyone
shares in the interest revenue (typically 10%
per month) on loans from fund.
Interest rate on savings with BP is 4.5% per
year
No withdrawal of individual savings, unless
distribution when group disbands.
SLA keeps written records; members have
passbooks.
 Product Features and Policies
SLA savings deposited in a bank savings
5.1.2.9. Investment of deposits
account accumulate interest earnings.
5.1.2.10. Other N/A
5.1.3. microinsurance
5.1.3.1. Microinsurance Type N/A
5.1.3.2. Group or individual product N/A
5.1.3.3. Term N/A
5.1.3.4. Eligibility requirements N/A
5.1.3.5. Renewal requirements N/A
5.1.3.6. Rejection rate N/A
5.1.3.7. Voluntary or compulsory N/A
5.1.3.8. Product coverage (benefits) N/A
5.1.3.9. Key exclusions N/A
5.1.3.10. Pricing – premiums N/A
5.1.3.11. Pricing – co-payments and N/A
deductibles
5.1.3.12. Pricing – other fees N/A
5.1.4. microgrants
Microgrants for business start-up have been
5.1.4.1. Individual or group product offered in limited cases, i.e. for SLAs
composed of people with HIV/AIDS
5.1.4.2. Amount (and number of grants) N/A
5.1.4.3. Eligibility requirements N/A
5.1.4.4. Grant use and other conditions N/A
5.1.4.5. Savings requirement or matched N/A
savings arrangement
5.1.4.6. Straight grant, no interest or N/A
partial repayment
5.1.4.7. Other N/A

5.2. Microenterprise Development Services

Table 5.2. MED Service Details
Service Types and Features
5.2.1. Training
5.2.1.1. Financial literacy RESAFI to SLAs
5.2.1.2. Business planning and
CARE to IGs
management
5.2.1.3. Marketing CARE to IGs
5.2.1.4. Recordkeeping and
RESAFI to SLAs
bookkeeping
5.2.1.5. Skill development CARE to IGs & SLAs
5.2.1.6. Technical assistance CARE to IGs

30
 Service Types and Features
5.2.1.7. Training method CARE to SLAs
5.2.1.8. Other? N/A
5.2.1.9. Costs to client No cost
5.2.2. Business Consultancy and Advisory Services
5.2.2.1. Individual or group sessions CARE & BP to SLAs
5.2.2.2. Frequency ?
5.2.2.3. Topics ?
5.2.2.4. Confidence Building CARE to IGs & SLAs
5.2.2.5. Other N/A
5.2.2.6. Costs to client No cost
5.2.3. Market Linkages
5.2.3.1. Input supply BP to SLAs
5.2.3.2. Marketing Assistance CARE to IGs
5.2.3.3. Market Information CARE to SLAs
5.2.3.4. Producer organizations CARE to IGs & SLAs
5.2.3.5. Business linkage promotion CARE to IGs
5.2.3.6. Quality Control N/A
5.2.3.7. Other N/A
5.2.3.8. Costs to client No cost
5.2.4. Other
5.2.4.1. Employment generation N/A
5.2.4.2. Technology development N/A

Training:
SLA management and savings: When CARE (or partner local NGO) field staff first
approach existing associations, these have received very little or no previous training and
members do not yet save together. CARE starts by explaining how SLAs are organized
and what the benefits as well as requirements are to become an SLA. Each association
then elects its management committee and starts saving on a weekly basis in an amount
decided by the members themselves. Rather than training each SLA individually, each
SLA within a limited geographic area sends two representatives (its president and an
advisor) to an intensive training phase, during which they learn about the role of the
management committee, loan procedures, interest and penalties, internal rules, problem
solving and conflict resolution. During the eight month training period, the CLASSE
Intambwe trainer pays 6 visits to each participating SLA. Each SLA decides on a
common savings goal and learns the basic procedures of savings, credit and payment of
interest and fines. The group graduates after eight months after a formal evaluation
(audit committee working properly, internal rules and regulations followed, regular
savings, loan disbursement and cashbook keeping) by the CLASSE Intambwe trainer.

Training on Selection, Planning and Management of Income-Generating Activities:

The SPM training module was first designed and implemented by CARE Zimbabwe to
impart basic business literacy training and sound business practices. At the same time, it
has enough flexibility to encourage participation and allow for the incorporation of

31
contextual examples. The sessions help participants map and identify appropriate
business opportunities in the market environment, manage costs, fix prices and market
products.

Business counseling: the SLAs typically cite business counseling as the most valuable
service received from the IG. IG members spend a lot of time and effort in helping SLAs
to identify market opportunities, do a feasibility analysis, write a business plan and
submit a loan application to the BP. Once a loan received the IG representative remains
actively involved by providing further assistance to the SLA in management, marketing,
accounting and other enterprise activities.

Access to new Markets: Certain IGs have been able to establish linkages with private
sector players and traders. Some IGs have market coordinators who have been
instrumental in helping SLAs gain access to new markets for their produce, such as
grains, beans, tomatoes, honey, handicrafts. Both SLAs and IGs use cell phones to
access market information and negotiate better prices.

5.3. Non-financial Services

Table 5.3. Non-financial Services Details

Service Types and Features
5.3.1. Nutrition
By CARE through WFP within programs
Food aid distribution
targeting PLWHAs; limited supply
Food security: home gardens CARE for programs targeting PLWHAs

5.3.2. Health and Sanitation

HIV awareness and mainstreaming
Home Based Care and ARV access
Access to the government run Health
Insurance system
Nkundabana model
5.3.3. Education
CARE
CARE (for HIV programs)
SLAs often decide to use part of the Social
Fund to help each household pay for the
annual premium ($7 per household)
Volunteer members to assist OVCs and
CHHs

5.3.4. Social Capital Development

SLA formation and training CARE and local NGO partners
IG formation and training CARE

32
 Service Types and Features

5.3.5. Other

For its HIV/AIDS programming, CARE advocates a twin-track approach, combining

economic development opportunities with HIV/AIDS prevention, care and treatment
services. In order to develop some synergy with economic initiatives, it was envisaged
that the project would work closely with Community Learning and Action for Savings
Stimulation and Enhancement of Business (CLASSE-B).

The main non-financial services/activities included: capacity building of PLWHA

associations through management training; training community volunteers from PLWHA
associations to provide home-based care (HBC) and facilitate ARV access and
adherence; funding case managers attached to health centres in the project area, as part of
CARE's case management system, to ensure a continuum of care and support for
PLWHA; information, education and communication (IEC) on HIV/AIDS by the
community volunteers to PLWHA and their family members; one-day ARV literacy
sessions for 1 448 PLWHA and their carers; facilitating CD4 count testing for 1 406
PLWHA; supporting 737 PLWHA for anti-retroviral therapy enrolment and access;
registering PLWHA households with the government's health insurance scheme; and
supporting bedridden PLWHA requiring emergency assistance, including transportation
to hospital, assistance with the payment of hospital fees, treatment of opportunistic
infections, food assistance and HBC hygiene kits.

5.3.6. Empowerment and confidence building

Savings and Loan Associations are designed to build the confidence of members, by
encouraging them to save, take small loans to start or expand new income activities, and
collectively reach certain savings goals (such as purchase of a goat for each member,
etc.). In addition, SLAs open a bank account and learn about bank procedures, while
many also manage to receive a bank loan.
SLA members set their own rules, including weekly savings amount and internal interest
rate for loans from the group fund.

5.3.7. Graduation of very poor clients into mainstream MF/MED services

SLA training takes usually 8 months, after which an SLA graduates. Each SLA opens a
bank account with a local Banque Populaire, and once graduated, SLAs manage their
own activities and money. At that time, SLAs are also able to apply for a bank loan if
they can produce a sound business plan and loan application. Not every SLA desires or is

33
capable to apply for a bank loan. In addition to the SLA itself, many of its members also
open individual accounts with the BP.

34
 5.4. Design and Product Development:
5.4.1. Program rationale/ theory of change?
The main goal of the project is to contribute to the reduction of poverty of rural
communities by educating people on savings mobilization (as well as access to loans)
and promotion of income generating activities.

5.4.1.1. Main issues and challenges of very poor clients which the organization seeks
to address
1 People who live in many rural areas and urban slums, and in particular those who
are very poor, have a difficult time gaining access to appropriate microfinance
products, even when there is a well developed microfinance sector. Besides, most
MFIs do not offer savings services, but emphasize credit. Village Savings and Loan
Programs emphasize savings, which are of particular value to the very poor whose
livelihoods are more vulnerable than the better-off. The poorest people need to focus
on asset accumulation and protection before shouldering debt to manage market-based
investments.
Village Savings and Loan Associations, based in the community, are complementary
to MFIs, tending to serve the very poor whose income is less reliable, but also offering
useful services to the economically secure. The two approaches are not an either-or
proposition. MFIs attempt to intermediate large pools of capital to finance growth
investments. SLAs, on the other hand, provide people, no matter how remote or poor,
with a means to intermediate small amounts of local capital on very flexible terms and
to transact frequently. Problems of sustainability, high transaction costs, low
familiarity between clients and institution staff, and weak incentives to save are
resolved. But members of SLAs can still be clients with banks or MFIs, with potential
benefits to such financial institutions. As a matter of fact, CLASSE-Intambwe has
successfully established Linkages between the Banques Populaires (Credit Union) and
SLAs, augmenting community-based access to savings and loan facilities by capital
supplied by the Banques Populaires.
Village Savings and Loans is a very low-cost system, based mainly on voluntary
administration. It has minimal capital costs and no recurrent expenses. As a result,
interest earned on loans (which can be very high) is retained by the SLA. Since the
SLA is owned by its members, the effect is not only to retain earnings locally, but to
allocate these earnings, almost in full, to the entire membership.
The link to external credit by the Banques Populaires is rather unusual, and was in
response to the demand by members for bigger loans. Once SLA members manage to
reduce their vulnerability and gradually build up savings, some SLAs are ready to take
a loan from the BP to undertake income generating activities, whether as a group or by
individual members. The additional advantage from the partnership with the UBPR is
that each SLA has a savings account.
In addition to this rationale underlying the VS&L methodology in general, CARE
Rwanda program staff adds the following:

35
Poor people are isolated and do not believe in their capacity to contribute to the own
development. In their isolation they cannot be involved in community socio-economic
activities, they are excluded from financial services and have difficulty satisfying to
their basic needs (health, food, school fees, housing and clothing);
Whereas the VS&L methodology has helped SLS members improve their livelihood
security, there is a limit with their small savings. As long as they become skilled in
small economic activities investment, they need more investment capital which they
cannot sufficiently obtain from their own saved money and they need technical
support to grow their small enterprises;
It is difficult to change community mindset and to convince poor people that they have
capacity to change their lives, as long as there are other interventions creating
dependence through transfer of assets, money and food.

5.4.1.2. Intended outcomes and impacts

To improve economic security of the most marginalized households by gradually
building up stable savings levels and increasing household income trough increased
and improved economic activities. If this financial strategy is successful, SLA
members will be able to increase their assets (livestock, shelter, tools, savings…);
improve access to basic livelihood goods and services (housing, education, food,
clothing and healthcare). Enterprises are expected to gradually become more stable
and profitable, while their owners (microentrepreneurs) improve their management
skills and increase their income diversification.

CLASSE projects allow beneficiaries to gain experience in savings mobilization and

loan management. This system has permitted CLASSE association members to
establish social solidarity, credit histories/reputation, and financial credibility, while
providing themselves for their basic needs for financial services. The overall objective
is to expand economic opportunities in rural areas through improved access to
financial services, especially for women.
The conventional view that credit is the most important service that an MFI can offer
is challenged by the VS&LA methodology, which responds to the observation that
many poor people and especially very poor people prefer to build and protect their
assets through savings and insurance rather than increase their risk exposure by taking
out loans.

The SLAs are also intended as entry points to connect economic security interventions
with those that aim to prevent new HIV infections and promote community solidarity
for care and support to persons living with HIV/AIDS.

In CARE Rwanda’s program staff’s own words:

In the short term, the outcomes at client level are independent behavior; new initiative
for business; improved self esteem and participation in socio-economic activities;
At household level the outcomes are household socio-economic security including
food security, health, clothing and housing, education for children and gender equity;

36
 At micro enterprise level the outcomes are increased financial capital and diversified
business with innovations and technology;
At community level the outcomes are social cohesion, synergy, participation in
community development, advocacy ability for community well being.
The impact expected in the long term is poverty reduction with community
participation and gender equity.

5.4.1.3. How are products and inputs designed to achieve those intended impacts?
To achieve the intended impact, programs have been designed at three levels:
Enabling environment: With CLASSE-Intambwe methodology, participants change
their dependence behavior, get out of their isolation, initiate economic activities from
their own savings, participate in community socio-economic life, and become proud of
new skills and capacity to manage small economic activities, to contribute to
household incomes resources for basic need satisfaction.
Access to capital: With linkage to financial services, SLAs can invest more than their
accumulated savings to improve their business and household incomes. With this
linkage the community also learns about the use of financial services, loans and
economic activities management through their networks ( IGs). In addition to IGs
intermediation for financial services, they are in charge of advocacy for their SLAs
and represent them for community development plans.
Business development services: to increase microenterprise diversification and
technology \ by and for community; integration/participation in country economic
system.

5.4.2. Concept development

5.4.2.1. Client Survey Demand/Needs assessment
After identifying who the very poor are, individual questionnaires and focus group
discussions are held.
The main findings are following:
The poorest households work for others to survive; they cannot save assets or money
because to meet their immediate financial needs they are always obliged to sell what
they have gained (“decapitalisation”) or to work for others and not for enough money;
They do not have land and livestock; When they are not isolated by the community,
they isolate themselves feeling not eligible to attend community meetings or to
collaborate with neighbors; they cannot pay for health services and their children do
not go to school; they do not believe in their capacity and skills, they lack confidence.

5.4.2.2. Competition analysis

Very few microfinance institutions or banks target the very poor in rural areas. In
addition to the UBPR, Coopec Inkingi (60,000 depositors in 2005) and Coopec Ejo
Heza (10,000 depositors in 2005) are recent entrants, with the former offering loans
starting at 100,000 FRW ($200), while the latter reaches a lower market segment with
loan sizes between 20,000 and 70,000 FRW ($40-140).
CARE’s competitors in delivering financial services to very poor people should be
MFIs but they face challenges to reach them. Often they cannot afford the technical

37
 support and non-financial services needed by this target group. The only interventions
with a focus on very poor are from CARITAS and other religious organisations (food
and assets distribution); GTZ (community infrastructure); some international and local
NGOs (seeds , livestock and grants distribution).

5.4.2.3. Self-assessment
CARE Rwanda and the Economic Security Program conduct periodic external
assessments as well as internal strategic reviews. Some of the lessons learned during
the last five years were the need to better reach the most vulnerable section of the
population, especially people living with HIV/AIDS, child-headed households and
other vulnerable children. This has become a major focus in the last few years and has
required some adaptations to the program:
1) Need to build up food security first
2) Need for access to healthcare, health insurance and ARVs.
3) Need for adaptations to the CLASSE-Intambwe methodology, such as more
flexible and/or lower savings and loan requirements. In some cases, enterprise
grants have been given or savings matched with an equal grant.
4) Another lesson learned points to the need to facilitate better access to markets and
profitable enterprise opportunities. Intergroupments might slowly evolve into rural
business centres that can provided such services.

5.4.3. Product/Service design4

5.4.3.1. Product/service design process
CARE’s VS&L approach started with the MMD program in Niger and has always
been built around the idea that the capabilities that allow for success are already
available in most African villages, so long as the methodology is transparent, simple
and not too labour intensive. The program is designed to ensure the sustainability of
very small-scale autonomous village institutions, VS&Las, that are capable of saving
enough to satisfy a limited but vital set of borrowing and insurance requirements.
Financial service programs that encourage “savings up” (save first) are far more
attractive to the very poor than “savings down” (borrow first) because they provide the
enabling psychological conditions that facilitate the acceptance and management of
investment risk.

5.4.3.2. New versus modified products/services for very poor clients

CARE did not develop a new financial service, but adapted traditional savings and
credit associations. CARE Niger looked at ROSCAs and ASCAs in designing MMD.
ASCAs were relatively unknown in Niger, although ROSCAs were common. CARE
opted to follow an ASCA model, which was built on local savings traditions and also
matched clients’ expressed needs, derived from market surveys, interviews, and the
trial and error of product testing. The decision was arrived at without much formal
knowledge of precedent and practice elsewhere. The advantages of flexibility and

4
Most of the content in this section is taken from “CARE International’s Village Savings & Loan
Programmes in Africa. Micro Finance for the Rural Poor that Works” (Hugh Allen, 2002)

38
matching supply and demand were felt to be significant to a degree that made it
worthwhile to confront the challenges.

In his work ‘The Poor and their Money’, Rutherford lists a number of criteria that
define appropriate financial services for the poor. They are reproduced in the box
below. CARE’s VS&L methodology meets all of these criteria.

Good financial services require:

Products that suit the poor’s capacity to save and their needs for lump sums so
that they can:
• Save, or repay, in small sums of varied value as frequently as possible
• access lump sums (through withdrawals or through loans) when they need
them; in the short term for some consumption and emergency needs, in the
medium term for investment opportunities and some recurrent life-cycle needs
and in the longer term for other life-cycle and insurance needs like marriage,
health care, education and old age

Product delivery systems that are convenient for the poor and
• are local, frequent, quick and flexible
• are not burdened with paperwork and other transaction costs
• are transparent in a way that is easy for illiterate people to grasp

Institutions adapted to delivering good products that are

• Committed to serving the poor
• Cost-effective

5.4.3.2. Risk assessment and product design

The basic VS&L model poses relatively little risk on the implementing organization,
just because of its informal rather than institutional nature. The potential risks within
the SLA are theft or other types of fraud by some members, but this is largely
prevented through the use of a lock box, access to a savings account for depositing
excess cash and a strong and transparent governance system. Risk of non-repayment in
case of loans taken from the group savings fund is also low, because of the social
control that exists among the members who are from the same community.
Risk of overindebtness is reduced, because the internal savings fund only allows small
loans to be taken by individual members. However, this risk is increased through
access to external credit from the Banques Populaires. To reduce the risk of non-
repayment, the initial loan size is kept below $1,000 for a SLA. In addition, SLAs are
required to keep 25% of the loan amount in their savings account during the loan
period. The risk for the BPs is virtually nil, because loans to SLAs are guaranteed by
CARE’s credit fund.

5.4.3.1. Prototype development and testing

39
5.4.4. Pilot testing
The savings and credit methodology in Niger was rather experimental from the start,
especially because, in her own words, the Project Manager “..had no clue of microfinance
at all.” The methodology evolved over time, but even from the start based its activities
on groups of up to 30 women meeting weekly, saving their money and providing interest-
bearing loans as group capital became available. In the beginning, the groups were loose
informal associations of women and the methodology was highly flexible. As the project
began to grow in the first year, CARE realised the necessity for more formal structures
and instituted a training program that specified the roles and responsibilities of group
officers and the general assembly and helped each group to develop its own set of
internal regulations. The project experimented briefly with using symbols as a substitute
for formal written records, but rapidly abandoned it realising that in order for the groups
to continue once the CARE trainers were no longer working with them, it was important
to have a system that the group itself could continue. A significant proportion of the
groups had no literate or numerate members capable of maintaining record books so
CARE developed a methodology that did not rely on written records.

5.4.5. Rollout
Whereas CARE Rwanda and its partner NGOs (belonging to RESAFI) have started using
the methodology in certain regions, often thereafter the IGs become instrumental in
training new associations to become SLAs using the same CLASSE Intambwe model.
Expansion is driven by the demand for services by new associations, once a critical mass
of groups has been developed and news spreads. Limitations to growth are rather posed
by insufficient capacity of the IGs and RESAFI NGOs to service more SLAs.

5.4.5. Product/Service review and assessment

N/A

5.4.6. The Product Development Cost

5.4.6.1. Total cost
N/A

5.4.6.2. How were they funded?

Product development took place gradually in several countries and adaptations were
made as the program grew in outreach.

5.4.6.3. Outsourcing during the development process

N/A

40
 5.5. Implementation Process
5.5.1. Process
SLAs meet and save every week, and borrow and repay loans every four weeks. SLA
promotion and training is implemented in four phases. (adapted from VS&LA
program guide: operations manual)
• The Preparatory Phase: This three-week phase provides general information to local
leaders and prospective SLAs and/or members. This is necessary before a field officer
starts to train associations.
• The Intensive Phase: This phase lasts for about three months. It starts off with five
consecutive meetings over a two-week period in which the SLA elects its leaders,
establishes its constitution and sets out the rules that govern financial activities. It then
continues to meetings in which the SLA learns to manage savings, loan and Social
Fund transactions. The field officer attends all meetings during this phase and is
actively involved in facilitating procedures.
• The Development Phase: During this phase the field officer visits less frequently and
is less active in SLA meetings. This phase lasts for about 5 months.
• The Maturity Phase: This phase lasts up to 18 weeks and involves three visits. Two
of these are supervision visits, to check that the SLA is running without any outside
help. If the SLA needs additional training or supervision, the cycle can be extended as
needed. If the SLA is ready to be independent, the field officer makes a third visit at
the time of the last meeting of the cycle to celebrate the SLA’s independence.

The linkage between a Banque Populaire and SLAs was made at the District level
through the creation of an Intergroupment (IGs), a federation formed by a number of
CLASSE-Intambwe member associations in a certain geographic locality. Since the
UBPR covers the entire country and has viable infrastructure even in rural areas, it
was the partner of choice, as it was able to inspire confidence regarding the risk of
theft, and to provide professional financial control. Management of the financial
linkage is governed by a memorandum of understanding (MoU) between CARE in
The intention is that the “CARE credit fund” made available to the people’s banks will
be gradually replaced by the people’s banks own funds at a level of 50 percent at the
end of the first year and 100 percent after the second year, but only if an evaluation so
recommends and all parties concerned agree. If need be, the funds may be transferred
to other districts to re-create the same arrangements. Members of SLAs may also
become members of a partner people’s bank, on an associative or individual basis, if
they so wish.

See diagram on next page for further details on how the process works.

41
Linkage between Savings and Loan Associations, Inter -Group
Bodies, Individual Peoples’ Banks and the Union of Peoples’
Banks in Rwanda
1
CARE UBPR
2

10 3 5
Inter - Groupment

9
13
7 8

SLA
12 Peoples’
SLA 11 Banks
SLA 6

Nature of Responsibilities :
1. CARE provides UBPR with a revolving credit fund entitled “CARE Credit
Fund ”
2. UBPR manages the “CARE Credit Fund ”
3. UBPR exercises financial control over the «CARE Credit Fund» at the BP level
4. CARE supports the inter-group bodies through training
5. The BPs provide financial reports on the credit fund to UBPR
6. The SLA opens a term deposit account in its peoples’ bank
7. The SLA submits a loan application dossier to its Inter-Group body
8. The Inter -group body analyses the SLA loan application
9. The Inter -Group body submits approved loan dossiers to the peoples’ bank
10. CARE organizes, structures and trains the SLAs
11. The BPs grant the loan from the Credit Fund to the SLAs
12. The SLAs repay their loans to the BPs
13. The BPs grant 30% of interest received on the Credit Fund to the Inter -Group
Body

42
5.5.2. Logistics
One of the most important logistical requirements is to build capacity locally, first for
local partner NGOs, then for the IGs. Other logistical issues are to make sure that local
authorities are aware and approve the intervention, that all members of a community are
aware of the program and get a chance to obtain more information. The approach tends to
focus for the most part on existing associations, in part because of the easy logistic, but at
the expense of not always reaching the most marginalized members of society.

5.5.3. Information System

Most SLAs keep written records for accounting purposes (savings, loans, interest, fees).
These data are collected by IGs and then further transferred to CARE. The IGs also
collect monthly SLA reports on income activities which they forward to CARE. Data
gathering and analysis for VS&L programs are still in infancy and data are rarely used for
management decision-making. There is no mechanism as yet available that performs the
dual purpose of improving management capacity or permitting meaningful comparison
between one program and another. CARE and other savings-led microfinance promoters
are developing a set of ratios and standards of financial performance that enable
programs to assess their own effectiveness vis-à-vis peers and to enable the industry as a
whole to assess the cost-effectiveness of VS&L.

43
6. Results

6.1. Method of measuring results

6.1.1. Type of data
Number of participants
Percentage of women
Number of SLAs
Weekly savings per group
Cumulative savings per group
Cumulative social funds per group
Cumulative loans outstanding
Average loan
Reimbursement rate

6.1.2. Data analysis and use

The database used to be organized in a quite heavy way and it was not user-friendly. The
database didn’t present a summary of the main indicators which would be very useful in
order to monitor SLA performance over time and make comparisons among regions,
projects, or target groups. The system has been completely overhauled recently and has
become much more user-friendly.

6.2. Impact
6.2.1. Poverty Impact
Most of the data in this section are taken from a draft evaluation report on the CLASSE
project in Umutara Province.
One of the most tangible outcomes of the project is the establishment of a number of self-
managing, financially literate SLAs. Most of the CLASSE SLAs were formed by
training existing associations (often farmers’ associations), but some were formed as part
of the project itself. In most projects, the original target number of SLAs was exceeded,
as new SLAs formed spontaneously in areas where CARE trained the original ones.
While most existing associations typically were not engaged in savings, after the
CLASSE intervention, all SLAs were actively saving.
Existing associations have been reluctant to accept new members during the CLASSE
project. Instead, interested individuals were encouraged to form their own SLAs,
sometimes with the support of existing ones.
The immediate outcome for SLAs includes the growth of their revenues, thanks to the
leverage provided by loans received, learning to set up small income-generating projects
and securing of their assets.
Most SLAs and their members in Umutara formulated their main goal in terms of
ownership of animals (goats especially) and most of them were found to have achieved
this goal. Accumulated savings per member after 2 years was on average 5,729 RWF or
approximately $10. In addition, members had collectively saved on average $33 in their
SLA Social Fund. On average, each SLA member had been able to take out two loans,

44
for an average loan size around $10. When asked about significant changes as the result
of belonging to an SLA, 30 % said that they learned how to manage an enterprise, 17%
reported that they had been able to come out of previous isolation, and 17% had learned
how to manage their resources and savings.
More than half of the SLA members interviewed reported that they did not have to resort
anymore to selling their crops immediately after harvest (and livestock after birth of
offspring), but instead were able to meet immediate financial needs through savings or
loans from the SLA.
According to several evaluation reports, the main findings and impact were: Breaking
isolation, empowerment (home, community), improvements in wellbeing (housing,
nutrition, closing, etc.), education of children etc.. Also, stories such as the following, “I
have a goat thanks to a loan received from the SLA. I can easily pay my children’s school
fees, I buy fashionable clothes, and I no longer ask my husband for money to buy salt…”
were told to evaluators by nearly all the SLA members they interviewed. In addition to
income growth, establishment of the linkage also encourages the majority of association
members to open bank accounts.
Before CLASSE-Intambwe very few SLAs had a bank account compared with a current
level of approximately 90 percent. SLA members are also gradually opening personal
accounts to keep their own personal funds safe. Therefore, the financial linkage has
definitely led to interactive stimulation between banks and rural populations.
Participating people’s banks have begun to see their membership rise, and their aim of re-
injecting the savings collected into the rural economic circuit is gradually taking shape
and is actually being achieved.

6.2.2. Client satisfaction and feedback

Client satisfaction surveys as such are not usually done, but the UBPR and individual
BPs conduct regular meetings with IG representatives to obtain feedback and resolve
issues. One of the major issues currently under discussion is how the BP can meet the
increased demand for loans, using its own funds rather than CARE credit funds, while at
the same time maintaining the IG services and finding a sustainable mechanism to pay for
those services.

Ingoboka SLA (near Nyagatare town)

This Savings and Loan Association (comprising of 10 women and 6 men) received
CLASSE-Intambwe training in 2004. They were already an established group before, but
did engage in savings or income activities. Through the training they learned how to save
regularly and how to establish a bank account and get access to credit.
Then they set a collective goal to save enough to purchase for one goat for each member,
which they accomplished in less than a year. Meanwhile, they have also started taking out
small credits from their internal account, to do such businesses like small shops, petty
trading, village phone service, sorghum beer production… The SLA holds weekly
meetings and everyone saves 150 FRW (0.30 USD) a week (increased from the initial
100 FRW) to contribute to the internal loan fund and 50 FRW (also weekly) for the social

45
fund. Internal loans are at 10% monthly interest. They also grant loans to non-members
(relatives for the most part) at a 15% interest rate.
Social Fund is to help members in case of need (such as sickness, hospitalization, death
of a family member). They decide jointly how much is needed in relation to the
emergency and whether receiver needs to pay back the amount or not. Some are standard
amounts; f.i. in case of death of a family member, the person will receive 5,000 FRW.
They also applied and received their first loan from the Bank, for an amount of 500,000
FRW (almost $1,000), to buy four young bulls to fatten and sell afterwards. Nine of the
16 SLA members have also opened individual accounts with the bank.

Another SLA in Gatsibo District (15 kms out of Nyagatare)

The majority of the members are women in this SLA. They formed their own association
in 2003, more than a year before they heard about the CLASSE-Intambwe training, and at
the time all members were landless agricultural laborers in their village.
In 2004 they received training from CARE in Intambwe and SPM. At first they saved a
weekly amount of RWF 100, currently they save RFW 200. They also extend internal
loans at 10% interest per month, for a maximum of three months. Examples of internal
loan use: banana, sorghum selling, etc… They achieved their first collective objective to
purchase a goat for everyone, and currently they are saving to build an iron roof on each
member’s house. They also saved enough money to build a house for the association,
which they are currently renting out for a monthly fee of 2,500 FRW.
At first, the internal loans were rather small; for instance one female member borrowed
just 2,000 FRW ($4) for buying sorghum to make beer and sell it. Her most recent loan
from internal loan fund was for 40,000 FRW.
They also received a bank loan, for 500,000 FRW, which was used to purchase several
agricultural commodities with this (sorghum, maize, beans) after harvest to store and sell
once the price had reached a maximum three months later. Then they went into another
such cycle during the second half of the year. Profits were deposited on the group
account and repayment had been easy. They are applying for a new loan, to do the same,
but at a bigger scale.
They say that the IG has been very important, as they trained them in savings, taking out
small loans, and ultimately in bank procedures and obtaining a bank loan. The IG also
facilitates discussion among different SLAs to exchange experiences and ideas.
These SLA members had no land before, but all of them were able to buy land (up to 1
ha) in recent years from the profits of their SLA income activities. They grow crops for
own consumption as well as for sale. Five of the SLA members have also opened an
individual account with the BP, but none has obtained a loan from the bank.

Abarwanyanzara SLA
In 2001, they were already joined together as an association cultivating
sorghum/potatoes/maize. Currently they have 17 members, of whom 5 are female and 12

46
male. They grow these crops on common land as an association, but each household also
has a small plot for its own cultivation.
In November 2003 they became an CLASSE Intambwe trained SLA, and they started
saving regularly: 50 FRW/week, which they have raised by now to 100 FRW/week. They
also started taking loans of the savings fund, and each member has taken several loans
since the beginning. They wait until they had/have saved 100,000 FRW to start lending
internally. So far, 39 loans have been disbursed among the members. The duration of the
loan is usually for three months at an interest rate of 10% per month. Initially, max loan
size was 5,000 FRW ($10), which has by now been raised to 12,000 FRW ($24).
Individual loan size depends on the need and capacity to repay by the borrower.
Their total savings now is FRW 345,000 (almost $700), which is after subtracting the
cost of a goat for each household, which they achieved in the past. They also built a
meeting house, which is where we are interviewing.
They also took out a bank loan to enhance their own loan fund, and reduced the internal
loan interest rate to 5% per month. At the time of the interview, almost each member had
an outstanding loan.
A quick poll of loan use:
10,000 by F(emale), goat with two young
10,000 by M, also goat
20,000 by M, lease of land for cultivation
5,000 by F, goat
50,000 by M, to improve house
5,000 by F, goat
40,000 by M, to improve house
50,000 by M, to make banana and sorghum beer
35,000 by M, to buy bicycle for business
20,000 by M, to add land (lease?) to expand his coffee plantation
20,000 by M, also to add land for coffee
10,000 by M, for camera (wedding photography, etc.)
70,000 by M, for cow
100,000 by M, for grocery shop stocking
30,000 by F, to buy cow
Part of the bank loan is used to support a collective income activity. First bank loan was
for 400,000 FRW, 12 month, 14% interest rate, to grow potatoes and sorghum on the 3.5
ha common plot. The loan was paid back on quarterly installments. Second bank loan
was for same amount (although they would have liked 500,000) and same activity.

47
 6.3. Cost Effectiveness and Sustainability
6.3.1. Scale and replicability
CARE studies have shown that 95% of groups continue to operate 2 years after achieving
independence. Because there is no need to create a formal institution to deliver services
to a dependent clientele, VS&L programs are cheap and they do not call for specialized
staff and sophisticated technologies. In addition, there is a steady growth in spontaneous
replication without any external input.

6.3.1.1. Strategy for scale?

By 2006, CLASSE had helped form 1,428 SLAs with a total number of 28,806
members. The VS&L model has the potential to reach very large numbers of the poor,
because it can be implemented in a wide variety of institutional settings, from multi-
sector rural development projects to stand-alone financial services projects. CARE’s
VS&L methodology has been replicated in 21 countries worldwide, 17 of them in
Africa. Successful implementation does not need highly trained experts, large budgets
and long time frames to reach sustainability. Furthermore, financial services groups
formed through this model provide the basic building blocks on which future
integration into the formal financial sector through networks and federations may be
possible.

6.3.1.2. Replicability of program or service

Those wishing to emulate or adapt CARE's CLASSE-Intambwe methodology to affect
poverty-reduction in their own countries should be aware of the preconditions
necessary for it to work properly:
• There needs to be a wide network of rural-based financial service providers (credit
unions, banks or MFIs, preferably, but perhaps NGOs, too) to provide the professional
financial services (term deposits and loans) that are key to success. Said service
providers should be no more than a day's walk from the ultimate borrowers.
• There must be a competent and sufficiently funded NGO or other organization
capable of creating, nurturing, training and encouraging the institutional development
of the village associations and the regional Inter-Group bodies, who in addition must
be capable of and willing to assist in loan follow-up and recovery.
• The legal and regulatory framework should encourage this type of approach, or at
least not disallow it.

Extract from from “CARE International’s Village Savings & Loan Programmes in
Africa. Micro Finance for the Rural Poor that Works” (Hugh Allen, 2002)
An important aspect of growth has been the whole question of replication after CARE
ceases operations in a given location or when the project comes to an end. One of the
major criticisms of MMD by proponents of standard MFI approaches to microfinance
has been the question of how continued program growth can be achieved in the
absence of a professional cadre of trained trainers linked to a hub or central system
typical of most MFI back-offices. MMD has pioneered an approach that is based on
Village Agents and at the present time most of the new MMD groups are created by
Village Agents selected from the communities themselves.

48
 The way this works is that MMD goes to a given area where there is expected to be
significant demand and trains a limited number of groups to create awareness and to
develop market demand. It then selects a number of women from the groups who
have the capacity and interest to train other groups. The program then advertises these
women’s services and groups who want to be trained negotiate an agreement with
them to be paid a fee (approximately $1 per meeting) for the entire training cycle. This
system arose when MMD programmers noticed that informal training was taking place
between groups. Rather than suppress this activity MMD decided to use it as the basis
for auto-replication in the future. Its basic attitude has been that if spontaneous and
informal training is going to happen, it might as well be done properly. Currently,
CARE has trained over 600 Village Agents in Niger. One challenge of the Village
Agent system has been monitoring the number of groups created by a Village Agent
once CARE is no longer monitoring the agent. While CARE has realized the
importance of enumerating these groups for the sake of documenting real outreach and
impact, its current program work load, priorities, and funding realities have kept it
from doing so.

6.3.2. Financial and operational self-sufficiency (if applicable)

Where data exists, it applies to the Savings and Loan Associations, and not to the
Banques Populaires, for whom the SLAs represent only a small minority of its total
membership.
Comment: See attached a recent set of financial ratios for Savings-Led Financial
Services. Most of these have not yet been calculated by CARE Rwanda, but it might still
be possible to do so for certain key indicators.

6.3.2.1. Financial expense ratio

N/A

6.3.2.1. Operational expense ratio

N/A

6.3.2.1. Cost per client

$38

6.3.2.1. Clients per staff member

85 SLAs or approximately 1,300 SLA members per field officer

6.3.2.1. Average loan balance per borrower

N/A

6.3.2.1. Average savings balance per saver

N/A

6.3.2.1. Portfolio at risk

N/A

49
 6.3.2.1. Tailoring of product/service
N/A
6.3.2.1. Other?
N/A

6.3.3. Cost-effectiveness of non-financial services?

N/A

6.3.4. Strategies to cover/reduce costs?

The average cost per client for CARE’s VS&L programs worldwide varies between $25
and $40. For Rwanda the cost is $38, but does not include expenses related to
establishing the external credit linkage.
This is a very low cost compared to the cost (per client) incurred to set up MFIs. Cost-
efficiency is so high, because the model does not require buildings, equipment and
professionals, because the groups manage their own financial services. Most of the actual
costs relate to training, capacity building, and monitoring.

On the other hand, the linkage to external credit is not yet financially sustainable, because
the credit funds are still owned by CARE, while the services provided by the IGs are not
sufficiently compensated. In future, the plan is for the BPs to use their own funds for
lending to SLAs and for the SLAs somehow to pay fees for services directly to the IGs.

50