The Feasibility Study

Our first step was to make sure the needs we had identified resonated with the women we wanted to reach. Mamadou and I traveled to Mali to conduct a feasibility study in mid-2004.

We set out with local Stromme staff to a nearby village with a permanent market. With its proximity to Bamako and its central square overflowing with market women display­ing goods piled on brightly colored cloths spread out on the ground, this village was a hub of economic activity that we wouldn’t find everywhere. Outside Bamako and a few other hubs, the majority of Mali’s cities are barely more than large towns. Most of the country is made up of small villages, often clustered within walking distance of a larger village that holds a regular market, as many sellers transport their goods by donkey cart, by bicycle, or on foot, balanced on a woman’s head.

The Stromme staff, working through village leaders, had organized a group of about fifty women in a circle of chairs and benches set up under a frayed canvas roof.

“Are any of you part of a tontine?” I asked the group. More than half of the women raised their hands.

“How many tontines are represented here?” I asked. There were five. We asked the members of each tontine to sit together and then asked them to explain how each group was organized.

We were surprised by how diverse they were. In two of the tontines, the women simply made weekly payments to a group fund, eventually redistributing the amount they had saved back to each member. According to Stuart Rutherford, a scholar on financial models of the poor, individual savers use groups such as this to “create some gentle peer pressure to help ensure the savings get made.”¹⁴

Two other tontines operated like the ROSCAs, which I expected. Each member contributed a fixed amount every meeting, with a different member receiving the entire sum collected at that meeting until all had received the payout once. ROSCAs replace the risk of storing cash over time (a potential pitfall for the first type of tontine) with the risk that if you are last in line those ahead of you may lose the incen­tive to continue contributing to later payouts. Rutherford notes that saving over time, receiving rotating payouts from a group, and taking out a loan all serve the same function: the user is able to control when she has a large lump sum of cash on hand, created out of small, regular payments.¹⁵

The fifth tontine used the cash it collected to buy large cans of oil and other commodities in bulk that it could resell at a profit. This buying and selling club functioned like the other groups in that it helped its members commit to saving

regular, small amounts of money that might otherwise have been spent on small purchases—an extra half-kilo of rice here or a cup of tea there—until the money accumulated into a usefully large sum.

We were impressed by the variety of financial instruments used by Malian women. The three types of tontines were fine­tuned to fit different people’s needs and comfort with risk. Portfolios of the Poor, a landmark book exploring the strate­gies poor people employ to survive on tiny sums of money, makes the point that the less money you have to work with, and the less reliable or steady your income, the less secure your ability to store cash, then the more precisely you must manage every aspect of your finances: “If you are poor, man­aging your money well is absolutely central to your life.”¹⁶ Income must be carefully divided among everyday needs such as food, healthcare, and education as well as investments in business and agriculture to ensure future income. All this while somehow preserving quick access to the larger sums of cash (usually under fifty dollars) necessary for coping with emergencies—emergencies that are, of course, compounded by poverty: a preventable illness, for example, can become an untreatable catastrophe if you cannot afford preventive care.¹⁷ To make our program worthwhile, we would need to understand and build on the careful, complex financial strat­egies already in use.

“What’s missing?” I asked the group. The response was immediate. They wanted a way to access flexible amounts of money immediately without putting their long-term sav­ings in danger. With credit, they would have the money they needed right away but pay interest. With savings, they would pay with patience. Saving for Change, we posited, would give members access to the upfront cash they wanted in the form of short-term loans while they built assets through conve­nient, weekly savings. Putting aside a bit of money every week is less of a burden if members know they can take out loans when they need money. When the fund is divided at the end of the cycle, each woman would receive all that she had saved plus her share of all the interest collected.

We explained the Saving for Change method, drawing dia­grams on the ground with sticks and piling pebbles to illus­trate savings and loan payments. “You would keep your own records,” I remember Mamadou concluding. “You would elect your own group officers. You decide on your own rules. All the records and decisions are left with the group. You decide how much you will save each week, how much interest you will charge, and what you will do if someone misses a pay­ment. We train you on the basic structure and offer support to make sure your groups run smoothly. What do you think?”

“When can we start?” several people responded. We had to explain that this was just a feasibility study to gauge inter­est and to see whether the idea would work. I explained that measuring local interest and getting feedback for a project is a crucial first step in its design. If the program did indeed launch, we would send trainers to work with them a few months later. Mamadou told them that what we had learned from talking to them that day was that many women in rural Mali already have the skills to organize groups and manage their own finances. We would add to what they already knew.

As Mamadou and I traveled back to Bamako, we talked about how member ownership would be key to success. I remembered the mantra, “Dependency is not empowering.” How far could we go to avoid dependency and increase own­ership? “Tontines have spread from village to village, from market to market, long before roads, mass communication, and NGOs showed up,” I said. “How can our program spread like that?” We needed to provide groups with the tools and training that would enable them to manage themselves. Our staff would need to be teachers and grassroots organizers, not financial managers. We would need an exit strategy so that groups would have no alternative except to function on their own: the trainers could work in a region for a few years orga­nizing independent groups and then move on to train groups in new regions.

Looking back, I am proud to say that this “in their own hands” strategy worked. After the first year of training, most groups were visited only once every quarter, some even less frequently. Six years later, we could report that 95 percent of the groups trained in the first two years were still functioning, while closer to 98 percent of the groups formed later contin­ued to save and lend.¹⁹