The Katalysis North/South Development Partnership, based in Stockton, California, creates partnerships with local non-governmental organizations (NGOs) in Central America which in turn provide services for microenterprise development, sustainable agriculture and community banking to low-income participants. After four years of operation they have been highly successful with a 98.4-percent repayment rate. Katalysis currently has four partner agencies: the organization for Women's Enterprise Development (ODEF) in Honduras, the Belize Enterprise for Sustained Technology (BEST), the Cooperative Association for Western Rural Development (CDRO) and Women in Development (MUDE) both in Guatemala. Katalysis institutional support includes training in strategic planning, employee management, board development and fundraising. The four local partner NGOs provide programmatic and technical assistance.
At the end of the training, women elect a board of directors and set the rules of governance. The board members--President, Vice President, Secretary, Treasurer and one or two additional members--receive individual training. The board manages the bank, oversees meetings (weekly or biweekly), collects loans and savings payments and works to resolve problems as they arise.
After forming a board, the bank receives its first loan from the partner NGO. The treasurer and the president, with the assistance of an NGO staff member, disburse loans to bank members. Bank treasurers are responsible for financial administration of individual loans, but these are also tracked by partner staff. Interest has already been deducted from the loans that members receive. Loans are used for working capital or invested in other fixed assets.
Members make their loan payments at regular membership meetings. The banks then pay the partner NGO on a monthly basis. The first loan cycle lasts for 16 to 24 weeks depending on the NGO. Once bank members fully repay their loan capital, and the bank repays the partner NGO, the bank become eligible for a second cycle loan.
Banks invest their savings in a variety of ways depending on what risks board members will take. Risk-taking banks lend to community bank members and other local individuals or groups at commercial interest rates. More conservative banks put their savings in group savings accounts at local commercial banks.
Ideally, at the end of the loan cycles (approximately three years), each bank will have built up enough savings (at least as much as the last loan received), to become an independent financial institution, with members' savings as the bank capital. The bank can then decide to terminate activities, continue as a self-managed and independent community bank, or move into a higher-level credit program.
Weekly meetings provide more than an opportunity to collect payments and savings; they are a forum for group exchange, self-evaluation and ongoing training. For many women, the meetings are the most important aspect of the community bank. At meetings, women get to know their neighbors and form an alternative support network. They also gain leadership and organizational skills.
Evaluations conducted in 1992 and 1993 show positive results. All bank members interviewed at ODEF and MUDE stated that their training had been useful; 64 percent could cite tangible ways in which they applied their training. Of those interviewed at ODEF, 55 percent were keeping an up-to-date financial register and, at MUDE, 27 percent. These results fall short of targets but reflect a significant change in the lives of women, most of whom have limited literacy and numeracy skills. Interviews at ODEF show that the average increase in women's income since they joined the project was 48 percent. At MUDE, the increase was 62 percent. In both agencies, 14 percent of members either lost or did not gain income.
All women interviewed said the savings plan was useful. Many were saving for the first time. Internal surveys revealed that women tend to spend their savings to improve family nutrition, purchase medicine, ameliorate sanitary conditions in their homes and send young children to school. Many women reported gaining more respect from family and community members as a result of their newfound skills. This respect has in turn led to higher levels of community involvement and action. A number of women have now become members of school boards and community councils, or have organized around specific community issues such as clean-up campaigns or reforestation projects.
Katalysis North/South Development Partnership
827 Valencia St., Suite 102
San Francisco, CA 94110 USA.
Tel: (415) 824-2243
Fax: (415) 824-8387