Village Banks in Mali: A Successful Project of Self-Help Promotion

Publication Date: Feb 2001
Published by:
Deutsche Stiftung für internationale Entwicklung (DSE)
D+C Development and Cooperation,
P.O. Box, D-60268
Frankfurt, Germany.
E-mail: HDBrauer@cs.com
Document Type: Case Study

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Can self-help lead to sustainability?

In this paper, the author presents the experiences of village banks in three regions of Mali that were established with German assistance to mobilize savings and to provide micro credit. In 1999, there were more than 150 village banks and 8 higher-level associations in the three project regions.

Some of the key characteristics of the banks presented are:

• Self-administration: The village banks are based on the principle of self-administration. The villagers themselves decide on the founding of a bank and elect its staff from among their own people.
• Geographical expansion: The banks have almost 65,000 members through which an estimated 500,000 people are reached.
• Orientation on poverty: In 1998, the average loan level, which is one of the relevant indicators of the share of poor households benefiting from the project, was equivalent of about DM 180 for all village banks. The villagers use mostly short-term loans (3-6 months) and the provide the collateral by 'social pressure' and assets such as goats, bicycles and farming equipment.
• Self-sustainability: The banks mobilize savings totalling DM 4.4 million per year. These savings are the main source of refinancing (about two-thirds) for the overall annual loan volume of DM 6.70 million. The village banks usually have repayment rates of 95 percent, an indication of their efficiency in allocating loans and the sustainability of their goal achievement.