Community Savings Funds: providing access to basic financial services in marginalised rural areas of Mexico

The Community Savings Funds (CSFs) promoted by the Ministry of Agriculture in Mexico seek to provide marginalized community groups with a simple mechanism that allows them to save and administer their own funds securely, efficiently, and profitably, according to their own needs and priorities. Specially trained promoters help set up CSFs for a period of one year—using a standardized Toolkit—after which they are expected to work autonomously.

The CSF Project does not focus exclusively on providing credit for productive activities. People in marginalized rural areas have many consumption needs at different times of the year which often do not coincide with the times when returns from productive activities are available. In response to this need, the vast majority of CSFs have decided to grant credit for consumption requirements. This has proven very attractive to members—so much so that many members choose to take credit to meet consumption needs rather than withdraw from their savings.

The Administrative Toolkit is a standardized, yet flexible, kit used by every CSF for adequate record-keeping. CSFs receive no seed capital or external financial support other than training. The main service a CSF provides is, as its name indicates, savings collection. CSF members generally set a minimum amount of systematic savings that must be deposited by each member either weekly or fortnightly. Members themselves determine both the amount and the frequency of deposits. Keeping the cash safe is risky in a marginalized rural setting. Given that reliable financial intermediaries are generally not available in these areas, CSFs’ surplus income is either lent out to non-members; kept in a safe deposit box with 2–3 different locks, for which an equal number of members have one key; deposited in a bank account whenever a member happens to go to the nearest town; or kept by the treasurer in case someone has a need for an emergency loan.

The CSFs are currently outwith the provisions of the Popular Savings & Credit Law, passed in 2001, to regulate non-bank financial institutions that take deposits but reforms are underway. The Ministry of Agriculture realizes that it is short-sighted to pursue a strategy that promotes the unregulated proliferation of autonomous CSFs. So rather than promoting hundreds of CSFs in remote villages—whose follow-up by individual promoters would be very difficult—the new strategy envisages the creation of CSFs networks by linking new or existing CSFs to each other to form a formal financial intermediary in its own right, particularly in areas where no such services exist. Another option is to work through already established farmer organizations with an interest in providing financial services to their members, subsequently constituting themselves as a formal financial intermediary if they are willing and able to do so, or identifying existing formal financial intermediaries that are interested in incorporating CSFs as clients or members or turning them into a branch or service desk.

  • Resource type
  • Author Zapata, G.
  • Year of Publication2002
  • Region
  • Country
  • LanguageEnglish
  • Number of pages25 pp.
  • EditionJournal of Microfinance

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