PACT’s Women’s Empowerment Program in Nepal
This paper describes a savings and literacy led alternative to financial institution building that Pact developed in Nepal. The Women’s Empowerment Program created a microfinance model based on building equity in the groups rather than incurring debt to a microfinance institution. The concept was similar in spirit to the growth of early credit unions, with the project’s core objective being the development of well managed, member controlled savings and lending institutions. However, the WEP groups only have 21 members on average; they are all women; literacy training is built in; leadership is from within the group and they operate completely below the radar screens of the regulatory system. The groups do not borrow from a central facility; each group loans its own savings to its members.
The WEP only ran for four years. Within that time they trained and supported 6,500 groups with 130,000 members. This impressive outreach was possible because Pact built heavily on existing groups and worked through 240 local organizations – NGOs, cooperatives and MFIs. They also relied on literacy volunteers to run the classes rather than hire instructors, which kept the costs down. There has been spontaneous replication of the system and over 800 new groups have been created without Pact support.
Despite the region’s extreme poverty, the women participating in WEP mobilized $1,180,000 from savings, retained interest earnings and fund-raising events between June 1999 and June 2001. 82 % of groups keep their own records without outside assistance. In the final year of the project, Pact staff concentrated on training 1,500 of the strongest savings and credit groups to become village banks. This project is interesting because of its opposite approach to most microfinance developments which have focused on developing more centrally controlled and better managed institutions to reach scale and cover costs. WEP is about decentralization and local control and community capacity building.