Saving Groups

Contrary to popular belief, poor people can save money. And with rural villagers, just a small amount of capital is sufficient to make a major change in the quality of their lives. Heifer initiated saving groups makes it possible for villagers to achieve important objectives such as paying for their children to complete high school or to meet other unforeseen emergencies.

Small Heifer micro-credit loans similarly often provide the small amount of capital a villager needs to obtain the inputs to plant the next crop or to build a small coop in which to start raising chickens.

Unfortunately, opportunities for villagers to obtain a very small or “micro” loan are often quite limited for several reasons. First, with only a primary education, understanding the official bank procedures is not easy for many villagers. Also poor families often lack the collateral needed to guarantee a loan. Finally, even if they do understand the application procedures and have the needed collateral, the amount of money they want to borrow is often so small that a commercial bank is not interested.

For urgent expenses or to obtain funds for agriculture production, farmers can obtain small loans from the informal market, but the interest rates are a usurious five percent per month or more.

That is why the Heifer savings programs and micro-credit loans have been such a great success. Some of the Heifer micro-credit programs provide cash directly to individual villagers for specific projects (see the section on small scale corn and rice mills). In other situations, Heifer establishes a revolving fund from which villagers can borrow, e.g. to purchase livestock. Heifer loans carry an interest charge which is about one tenth of the informal market rate.

Heifer in Action

As many hilltribe villages do not have title to the land on which they live and farm, for them obtaining loans from banks is particularly difficult. To overcome that difficulty, in Ban Nong Khao, a Lahu hilltribe village in Pangmapha District, Mae Hongson Province Heifer arranged for the establishment of a micro credit scheme. Under that scheme, the poorest of the villagers area the first to get a loan. In typical Heifer fashion, administration of the program is delegated to the community as much as possible: the villagers themselves, rather than Heifer staff, identify the individuals most in need of a loan.