SAVINGS

All Federations in the SDI network are collectives of slum-dweller women whose central activity is the operation of savings and credit schemes. Whenever a Federation enters a community, be it in Accra or in Orissa, the first thing it does is form saving and credit groups. This is the most basic and essential building block of the entire structure of the SDI mobilisation strategy. When a women's savings collective in an area is strong, then entire federation is strong.

Women Federation leaders collect savings on a daily basis. This strengthens the federations because of the bonds it creates. As members of SDI Federations say - daily savings is a ritual that is not just about collecting money, it is about collecting people, about collecting information about their lives and about learning how best to support them.

The entire savings process is designed to maximise contact that people have with each other. When people interact with each other on a daily basis - whether it be over savings or loans or an impending demolition - their sense of being a community intensifies. Economic and social networks are formed around their shared identity as members of the urban poor class.

Apart from encouraging savings, these women's collectives also issue crisis/consumption and income generation loans. The point here is that the urban poor need access to cheap credit. They are completely excluded from the formal financial market and are thus forced to borrow from moneylenders who charge very high rates of interest. Very often they are caught in vicious cycles of debt, which are extremely difficult to escape. Therefore, offering cheap credit fulfils a critical need/gap for the urban poor, and is an important entry point for Federations while entering a community and mobilising its members.

There are neither minimum savings requirements nor rules controlling what people can borrow money for - as long as the need is genuine and legitimate and it enables a person to slowly come out of his or her poverty. Again, there is no fixed repayment schedule or installments, but the only insistence is that there must be a daily repayment. This process is entirely geared towards building trust and creating strong bonds within the community. There are no penalties for repayment delays or defaults but renewed attempts to lift a family out of its poverty,

Trust is built up by a system which allows a person to take a loan for almost any purpose whatsoever - whether it is to buy one's freedom as a prostitute from the brothel-owner or to get a husband out of jail on bail. The idea is that people should not dip into their slowly growing savings when they face a crisis, but to take small affordable loans that they can pay back depending on their capacity. In fact, contrary to prevailing micro-credit logic, most Federations in the SDI network are very clear that they will not punish those people who cannot repay immediately. Instead, after finding out the reason for the delay, they will issue a second loan. And a third. And this will continue until the person and their family is strong enough and supported enough to start earning an adequate income. After all, local Federation leaders ought to be living on the same street. Once they see that the person has the ability to stand on her own feet, they will visit her every day to ensure that she repays.

What is also at the core of SDI's daily savings and credit strategy is that in every country they are entirely run and managed by women. As a rule of thumb, every ten to fifteen households are assigned one leader to visit their homes and make collections every day. The idea is that the leader gets to know all about the situation of her member's household and this helps her in determining the creditworthiness, the repayment schedule and the degree of urgency of each member. She presents this information back to the savings group and together they decide on giving a loan.

There are two critical points here. First, that the loan proposal, proposal vetting, loan sanctioning and collections are all dealt with in a highly decentralised manner to maximise people's participation in the credit program. It also allows the community to look upon the money as their own and it being their responsibility to look after the funds.

Second these savings and loan schemes develop women's management capacities and their confidence in operating and handling such an important system. Thus it also serves as an important aim to recognise women's contributions as managers of money and public decision-makers. In fact, savings and credit activities - apart from their clear financial benefits - serve as a means to bring women out of the home and into the public sphere in a manner rarely resented by men.

At a purely economic level SDI effectiveness to mobilize savings can be measured in numerical terms: how many savings schemes, how many savers, how much money saved, borrowed and repaid, how much capital geared up through savings. But from a developmental value the basic equity inherent in savings is the cohesion, understanding, trust and confidence generated through Federation type community savings and loans. One of the most important indicators for SDI is just how deeply and broadly a culture of trust has grown in a given city or country as a result of the emergence and support of networks of savings collectives.

This creation of trust and cooperation does not emerge overnight. It also does not emerge out of thin air. It grows out of practice. The first challenge is always at street or settlement level - the actual creation of savings collectives. This can only happen when women come together and begin to save in practice. Systems and procedures, training and workshops might contribute to the creation of situations conducive to sound financial transactions but they do not create trust. Trust and associated collective action comes when groups of women actually begin to support one another through crises, using loans and scheduling of repayments as their tools. The next challenge is the creation of trust between two or more communities and/or collectives. This is when Federations begin to emerge and communities of the urban poor come together through mutual circumstances and through a willingness to share the risks (not only financial) at city or national level that any single collective might face. A simultaneous widening of trust occurs when the circle is broadened to include professionals, local and state authorities, and even private institutions. The solidarity, capacity and trust built through savings and loans at settlement level is clearly the great replicator. It also creates the basis for an attendant willingness to share and to spread risk. These may be regarded as the two critical ingredients necessary for the innovations and "thinking and acting" outside of the box that is often needed to take pro-poor development to scale.

Savings have real economic value as well, in the form of leverage. This discussion has been thoroughly addressed. The fact that it does not receive mention in this report does not mean that the basic economic value of savings is not recognized.