A Savings and Lending Community Empowers Rural Households

A mother asks a SILC group for a loan to pay for the treatment of her sick baby.

Throughout Madagascar most families struggle with financial instability. Eighty percent of families work as farmers generating seasonal, unreliable income. In southwestern Tulear II District, the arid climate puts even greater stress on a farmer’s income.

As part of its initiative of health promotion and sustainability, the USAID Mikolo Project set up Savings and Internal Lending Communities (SILCs) in rural villages of Madagascar. The objective was to empower group members to become more financially literate and flexible. Members have their individual personal savings in addition to the group savings fund that members can borrow from.

SILC Ezaka, the all-female SILC group in the town of Ankililoaka, has distinguished itself with its significant internal savings fund and the resulting social impact. USAID Mikolo technicians reported their credit at 1,282,117 ariary (USD$400) at the end of the 2015 to 2016 cycle, and a savings fund of $409. Members decided to invest their savings to increase output; they bought two tons of rice in January 2016 (summer harvest) and sold it in April, boosting their savings to $622.

Ultimately, the SILC groups promote financial independence and can help members better manage their family’s resources. USAID Mikolo technicians educate these groups on how to tie their financial security to their health security. Families building resources and stability can have better access to health care, such as drugs, treatment, family planning, and disease prevention, as well as funds for home improvements and personal hygiene.

In addition, those families are freed from the idea that every day must be spent in the rice fields in order to make a living, and were able to visit the community health center when sick or for antenatal care. SILC loans can be used to pay for health emergencies or to improve living conditions. Maria, a mother of three and member of the SILC Ezaka group, took out a loan to renovate her home. She said:

“Our house was literally crumbling. Since the purchase of a new tin roof and the renovation of the walls, my whole family is healthier. The indoor air has improved a lot, my children don’t get respiratory illnesses, and we no longer have to worry about the weather. I’m happy and proud to be part of this group.”

This model SILC group grew significantly in June 2016, with a savings of $971 and nine new members who had seen the positive impact SILC had on the lives of others in their community. Not only are they improving their own lives, but they are showing others that women have the power to lead themselves out of poverty. The USAID Mikolo Project worked to strengthen the existing SILC groups and to educate new ones all over Madagascar to be sustainable and internally supported.