a feasibility study - columbia sipa...final report 27 may 2008 ... having the vision and motivation...

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A Feasibility Study: Strengthening local savings and credit models to promote economic recovery in post‐conflict Central African Republic

FINAL REPORT 27 May 2008

PREPARED BY: Dana Boggess Jason Chau Erich Cripton Joanna Friedman Solveigh Volk

School of International & Public Affairs Columbia University

Programme des Nations Unies pour le Développement

République CentrafricaineUnité – Dignité ‐ Travail

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Acknowledgments We would like to acknowledge all of the individuals and organizations that supported the execution of our study. In particular, the team would like to thank the United Nations Development Programme (UNDP) in the Central African Republic for providing financial, logistical, and technical assistance. Specifically, we acknowledge the contributions of Mr. Toby Lanzer, UN Resident Coordinator / UNDP Resident Representative, as well as Mr. Davide Stefanini, former Microfinance Technical Advisor, and Mr. Dominique Malo, National Microfinance Expert. We also thank the entire UNDP team in Bangui for facilitating our field missions and research. The team would also like to recognize the Economic and Political Development (EPD) and Human Rights Concentrations at Columbia University’s School of International and Public Affairs for making the workshop possible. We are especially appreciative of Professors Jacqueline Klopp, Interim Director of the EPD Concentration, and Eugenia McGill, Director of the Workshop in Applied Development, for supporting the execution of this study. We also acknowledge fellow SIPA student Joseph Rubagumya for his research on savings‐led microfinance models. We thank our Faculty Advisor, Mr. Jeffrey Ashe, Manager of Community Finance at Oxfam America, who provided extensive technical expertise and guidance throughout the course of our research. Additionally, one of our own team members, Joanna Friedman, deserves special recognition for having the vision and motivation to build upon her internship experience last summer by developing this project in collaboration with the UNDP, thus giving us all the opportunity to be introduced to the Central African Republic. Finally, and most importantly, the team would like to thank the numerous individuals who voluntarily met with us to share their stories. Vive la tontine! Dana Boggess Jason Chau Erich Cripton Joanna Friedman Solveigh Volk New York, May 2008

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Table of Contents LIST of ACRONYMS .................................................................................................................. 4 EXECUTIVE SUMMARY............................................................................................................. 5 I. COUNTRY CONTEXT .............................................................................................................. 6

The CAR: A humanitarian emergency ..........................................................................................6 Deteriorating socio‐economic development ...............................................................................7 The financial sector in the CAR.....................................................................................................8

II. CONCEPTUAL FOUNDATIONS............................................................................................. 10 What is a tontine?......................................................................................................................10 Savings‐led microfinance ...........................................................................................................11 Relevance of savings‐led microfinance in the CAR.....................................................................13

III. STUDY OVERVIEW............................................................................................................. 14 Rationale ....................................................................................................................................14 Objectives ...................................................................................................................................15 Methodology ..............................................................................................................................15

IV. FINDINGS.......................................................................................................................... 18 Overview of findings...................................................................................................................18 Operational / structural characteristics .....................................................................................18 Purpose: Why join a tontine? .....................................................................................................20 Scope of saving...........................................................................................................................21 Regional variations.....................................................................................................................22 Opportunities for intervention ...................................................................................................23

V. PROPOSED PROJECT DESIGN.............................................................................................. 26 Critical theme and overarching strategy....................................................................................26 Goal and objectives ....................................................................................................................26 Approach ....................................................................................................................................27 Target locations .........................................................................................................................28 Activities, implementation plan, and budget .............................................................................29 Monitoring & Evaluation............................................................................................................33 Critical success factors ...............................................................................................................34 Caveats.......................................................................................................................................35

VI. LONG‐TERM RECOMMENDATIONS ................................................................................... 36 REFERENCES .......................................................................................................................... 37

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APEMF Association professionnelle des établissements de microfinance APRD Armée populaire pour la restauration de la démocratie ASCA / AECR Accumulating Savings and Credit Association / Associations d’Epargne et de

Crédit à Roulement ASSOMESCA Association des Oeuvres Médicales des Eglises pour la Santé en Centrafrique CAR / RCA Central African Republic / République Centrafricaine CEDIFOD Centre de Documentation, d’Information et de Formation pour le

Développement CMCA Crédit Mutuelle de la Centrafrique COOPI Cooperazione Internazionale CRS Catholic Relief Services DRC Danish Refugee Council ERSP Economic Reform Support Program EU European Union FCFA Franc Communauté Financière Africaine (Central African Franc) FDPC/FDC Front démocratique pour le peuple centrafricain GDP Gross domestic product HDPT Humanitarian Development Partnership Team HDI Human Development Index ICVA International Council of Voluntary Agencies IMF International Monetary Fund IPHD International Partnership for Human Development MFI Microfinance institution MPRD Mouvement pour la paix, la reconstruction et le développement NGO Non‐governmental organization PM Project Manager PPP Purchasing power parity PSE/IFS Program of Support for the Emergence of an Inclusive Financial Sector in the

Central African Republic RoSCA Rotating Savings and Credit Association SfC Saving for Change (Oxfam) SILC Saving and Internal Lending Communities (Catholic Relief Services) SIPA School of International and Public Affairs (Columbia University) SRSA Swedish Rescue Services Agency UCACEC L’Union Centrafricaine des Caisses d’Epargne et de Crédit UFDR Union des forces démocratiques pour le rassemblement UFR Union des forces républicaines UN United Nations UNCDF United Nations Capital Development Fund UNDP / PNUD United Nations Development Programme / Programme des Nation Unies pour

le Développement UNHCR United Nations High Commissioner for Refugees UNICEF United Nations Children’s Fund VS&L Village Savings & Loan model (CARE) VSLA Village Savings and Loan Association WFP World Food Program WTO World Trade Organization

LIST of ACRONYMS

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The Central African Republic (CAR) is emerging from a decade of intense socio‐political turmoil, fueled largely by internal power struggles and further aggravated by persisting regional insecurities along its borders with Chad, the Democratic Republic of the Congo, and the Sudan. These sustained conflicts have devastated civilian livelihoods and caused a massive deterioration in the socio‐economic conditions in what was already one of the least developed countries in the world. Interventions that revitalize economic activity, reinforce social cohesion, and ultimately restore livelihoods can establish a foundation for sustainable peace and development. Despite poor infrastructure, disconnected markets, and an underdeveloped financial sector, some level of economic activity persists in early recovery areas, driven largely by individual entrepreneurial spirit as well as the utilization of traditional savings and credit strategies. These strategies take the form of tontines, groups in which individuals pool savings to acquire the lump sums that they need for both consumption and investment. These groups serve as both economic safety nets and social insurance mechanisms. These structures are pervasive throughout the CAR, even in post‐conflict areas. Consequently, improving and enhancing the capacity and influence of these traditional savings and credit groups provides an opportunity to contribute to economic recovery. In November 2007, UNDP CAR recruited a team of five graduate student consultants from Columbia University’s School of International and Public Affairs to conduct a feasibility study to explore potential opportunities to support tontines. The study documents the existing format, scale, pervasiveness, strengths and weaknesses of tontines in five target cities, leading to the design of a pilot project. The goal of this pilot project is to contribute to the restoration of economic safety nets and income generating activities in post‐conflict areas of the CAR, which will be realized through the achievement of three objectives:

- To increase the funds accumulated by tontines through improved governance and structural innovation

- To increase awareness of and engagement in the tontine model and to promote local innovation by facilitating knowledge‐sharing among tontines

- To increase access to physical and knowledge capital to support income generating activities

The pilot project aims to reach 96 tontines (approximately 3,000 beneficiaries) in two target cities. Noting the tremendous resilience, diversity and innovation inherent in tontines in the CAR, the project looks to build upon existing strengths and best practices, while bringing groups together to share knowledge, collaborate, and benefit from economies of scale. Responding to the lack of NGO activity in the rural areas of CAR, the project will aim to establish a modest local NGO, which will facilitate the organization of a federation of tontines in order to build cohesion and interaction among, as well as recognition of, these local savings and credit groups.

EXECUTIVE SUMMARY

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The CAR: A humanitarian emergency In the CAR, security and economic recovery are inherently linked. The political, economic and social dynamics relating to security directly affect the ability of the population of the CAR to reconstruct their livelihoods following conflict, displacement and destruction of physical and social assets. The current political and security situation in the CAR is the by‐product of a long and troubled history of oppressive rule, first as a part of the French colonial empire, then under a succession of autocratic leaders, and finally enduring numerous internal rebellions and coup d’etats, beginning in 1966. Francois Bozizé declared himself President following the most recent successful coup in March 2003. Though widely criticized by the international community, his ascension to power appeared to signify a general return to order and stability following the seven years of internal armed conflict that marked the term of deposed President Ange‐Félix Patassé.1 Still, the Government has been unable to exert effective control in the northwest and the northeast along the borders with Chad and the Sudan. A significant part of these remote and vulnerable rural areas remains under the de facto control of armed factions.2 The lack of governmental authority and military enforcement in these frontier areas enables the free movement of persons and weaponry, creating a significant security threat.3 Armed groups have used gender‐based violence and rape as tools of war.4 Sporadic reprisals by Government military forces, and in particular the Presidential Guard, often employ equally violent activities against the civilian population, including the razing of villages.5 There is growing international and domestic pressure on the Government to end the conflict and to facilitate a lasting peace. In 2007 the Government signed peace agreements with two of the main rebel groups in the northeast, the Front démocratique pour le peuple centrafricain (FDPC) and the Union des forces démocratiques pour le rassemblement (UFDR).6 On 9 May 2008 the Government signed a ceasefire and peace agreement with one of the key rebel groups operating in the northwest, the Armée populaire pour la restauration de la démocratie (APRD). The presence of a multidimensional United Nations‐European Union (UN‐EU) peacekeeping force in eastern Chad and northeastern CAR, authorized by UN Security Council Resolution 1778, has also been welcomed by the Government. UNDP CAR received funding from the UN Peacebuilding Fund to support an “Inclusive Political Dialogue” in 2008 between the Government and opposition groups. UNDP CAR hopes that such a dialogue will contribute to

1 United Nations Department of Peacekeeping Situation Centre Country Profile, April 2007; ICVA, 10‐17 May 2007 2 Key armed groups in the northeast, particularly around Birao and Ndele, include the FDPC (also known as the FDC), the UFDR and the MPRD. The APRD and the UFR are active in the northwest, specifically around Paoua and Ngaoundaye 3 United Nations Department of Peacekeeping Situation Centre Country Profile, April 2007 4 SRSA, 27 January – 16 February 2007 5 DRC Protection Report Jan‐Mar 2008 6 Economist Intelligence Unit Country Report, September 2007

I. COUNTRY CONTEXT

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roadmaps for the peace agreements.7 While the initial peace agreements have led to a reduction in rebel activity, armed road bandits (“coupeurs de route” or “zaraguinas”) continue to maintain a presence and instill fear in these northern regions, employing tactics such as pillaging and burning villages, kidnapping children, and even direct violence. Although the composition of these groups remains unclear, armed road bandits are perceived by both the population and the humanitarian community as the greatest threat to security in the north.8 The most severe consequences of the persisting hostilities have been the mass displacement of civilian populations, the disruption of market activity and the resulting negative impact on livelihoods. Until as recently as January 2007, entire villages moved to and from the bush at night or for days at a time to escape the armed bandits, and some individuals and families have not yet returned.9

The continued insurrections and banditry have made humanitarian access difficult and development projects particularly challenging in the conflict‐affected north. Owing to these constraints the country has yet to embark on a comprehensive recovery process. However, as the majority of the

population has slowly begun returning home,10 UN agencies and humanitarian organizations11 have responded by initiating basic reconstruction and rehabilitation activities. Deteriorating socio‐economic development Over the past twenty years the population of the CAR has faced increasing economic insecurity which has contributed to massive deterioration in the socio‐economic situation. The persistent instability and conflict has exacerbated the downward trend in human development,12 and led to increasing levels of overall poverty. The CAR is one of the least developed countries in the world: in 2006 it ranked 172 out of 177 countries according to the Human Development Index (HDI), and it trails the rest of sub‐Saharan Africa in most key socio‐economic human development indicators. 13

7 UNDP CAR, Peacebuilding Fund Emergency Window, Central African Republic: Inclusive Political Dialogue, July 2007 8 DRC Protection Report Jan‐Mar 2008 9 HDPT, “Bulletin d’information #38”, 12‐19 November 2007 10 Ibid 11 e.g. Assomesca, UNICEF, UNHCR, WFP 12 The HDI of the CAR has demonstrated steady decline over the past 20 years, from 0.387 (1985) to 0.384 (1990) to 0.367 (1995) to 0.366 (2001) to 0.353 (2004). See: Human Development Report 2006, Africa Development Fund ERSP 2007‐8 13 The HDI of the CAR is 0.353; the HDI of sub‐Saharan Africa is 0.494. See: Africa Development Fund ERSP 2007‐8

“We only have profits if we buy large quantities [of grain for local resale]. Sometimes we must go to [the regional market of] Betoko. I have already been robbed twice by the zaraguinas on [that] road.”

– Female tontine member Bossangoa, Mar 2008

“We only have profits if we buy large quantities [of grain for local resale]. Sometimes we must go to [the regional market of] Betoko. I have already been robbed twice by the zaraguinas on [that] road.”

– Female tontine member Bossangoa, Mar 2008

37%47%(girls)

47%65%Net primary school enrollment (boys)

1355683Maternal mortality (per 100,000 births)

220211Child mortality (per 1,000 births)

42.749Life expectancy (years)

20031988Indicator

37%47%(girls)





20031988Indicator

37%47%(girls)





20031988Indicator

Table 1. Deterioration of Human Development Indicators

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Instability has particularly damaged the primary sector, which accounts for 60% of GDP and employs about 80% of the workforce.14 The mass destruction of means of production and infrastructure, the disorganization of service delivery and commodity distribution channels, and the internal displacement of large percentages of the population have caused a precipitous decline in agricultural production, which had contributed 50% of GDP15 and provided employment and income to more than 95% of the rural population.16 Consequently, economic insecurity is most acute in rural areas, and particularly for rural women, owing to limited opportunities for access to the labor market and education.17

Table 2. Socio‐economic human development index indicators (based on 2005 figures)18

Social Indicator Economic Indicator Life expectancy (years) 43.7 GDP/capita (PPP US$) 1,224

Men 42.3 Men19 1,530 Women 45.0 Women 933

Adult literacy (% of pop.) 48.6 GDP/capita (US$)20 380 Men 64.8 % population living on < $1/day21 66.6% Women 33.5 % population living on < $2/day 84.0%

% population < age 15 42.7 Female economic activity22 70.3

The situation in the CAR is at the nexus of humanitarian relief, early recovery and long‐term development activities. Rural economic recovery will depend heavily on the rehabilitation of the agricultural sector and rural infrastructure, the creation of income‐generating opportunities, and the provision of financial services for small business development and expansion.23 The financial sector in the CAR Developing and increasing access to financial services can contribute to the accumulation of personal assets and the resurgence of markets. A 2006 report by the United Nations Development Program (UNDP) and the United Nations Capital Development Fund (UNCDF) noted that approximately 80% of the urban population and 62% of the rural population in the CAR seeks to procure credit for productive investments, although less than 1% of the population has access to formal financial products and services.24 In order to narrow the gap in supply and demand resulting from this highly underdeveloped financial services sector,25 an emerging 14 Africa Development Fund ERSP 2007‐8 15 WTO Trade Policy Review: Report by the Secretariat CAR 2007 16 WTO Trade Policy Review: Report by CAR 2007 17 55.8% of women older than 10 years have never been to school, compared with 33% of men. Further, the activity rate of women in the labor market is 58% compared to 74.5% of men. See: United Nations DP/DCP/CAF/2 31 July 2006 18 Human Development Report 2007/8 19 Wage data is not available. Using a 0.75 ratio for female nonagricultural wage to the male nonagricultural wage 20 IMF (2007), World Economic Outlook October 2007, estimates 21 Based on 1990‐2005 data 22 Wage data is not available. Using a 0.75 ratio for female nonagricultural wage to the male nonagricultural wage 23 WTO Trade Policy Review: Report by the Secretariat CAR 2007 24 UNCDF and UNDP, PSE/IFS 2006 25 There are currently 3 banks with a total of 5 branches in the CAR, equaling 1 bank per 630,000 persons in the CAR compared with regional average of 1 bank per 110,000‐126,000 persons. Ministère des Finance et du Budget (RCA), August 2006

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microfinance sector has arisen as an alternative mechanism to meet market demand. The 2007‐2011 UN Country Program Document for the Central African Republic reaffirmed the need for the establishment of stable macroeconomic and sectoral development policies in order to create and foster an enabling business environment and included recommendations for initiatives to promote sustainable microfinance and microenterprise activities. In May 2005 UNDP and UNCDF undertook a Preparatory Assistance Program to provide technical services to support the nascent post‐conflict microfinance sector in the CAR.26 This Program facilitated the restructuring of an institutional framework to support and enable future microfinance initiatives, and established a dedicated Microfinance Unit within the Ministry of Finance and Budget, a National Microfinance Committee, and a Professional Association of Microfinance Institutions (APEMF). Following the completion of the Preparatory Assistance Program in May 2007, the Government of the CAR created a national microfinance strategy with support from UNDP and UNCDF, with the objective of expanding and strengthening existing microfinance programming. The Program of Support for the Emergence of an Inclusive Financial Sector in the CAR (PSE/IFS) was officially launched on 17 October 2007. At the institutional level, the National Microfinance Committee and the APEMF are working to identify and regulate microfinance institutions (MFIs) and semi‐formal savings and credit institutions. The UNCDF “Inclusive Financial Sector” strategy seeks to encourage the growth and reach of new and existing microfinance and banking institutions.27 The staff of the Microfinance Project of UNDP CAR, after supporting the growth of these institutional bodies, has focused on operational support to the existing MFIs: L’Union Centrafricaine des Caisses d’Epargne et de Crédit (UCACEC) and Crédit Mutuelle de la Centrafrique (CMCA). The Microfinance Project has collaborated most closely with UCACEC to finance and procure materials for the General Management office in Bangui, to support rural awareness‐raising campaigns, and provide innovative management tools for UCACEC credit unions. The Microfinance Project staff has also accompanied the UCACEC management team on monitoring (including audits and staff training) trips to their rural branches. In this early recovery context, UNDP’s support to existing informal MFIs is necessarily personalized due to a lack of both capable microfinance actors and adequate national regulatory, monitoring and support capacity. In addition the Microfinance Project staff must also focus on providing technical assistance and building the capacity of local MFIs, if they are to provide greater access to financial products and services over the long term in a sustainable manner. Owing to the limitations of the formal financial sector, the importance of semi‐formal savings and credit institutions in bridging the gap in access to financial products and services cannot be understated, although these institutions also exhibit constraints, notably in terms of their limited geographic and operational reach into rural areas. Currently there are 36 cooperatives or

26 UNDP CAR “Information Brief”; UNCDF and UNDP, PSE/IFS 2006 27 Personal communication with faculty advisor Jeffrey Ashe and UNCDF Deputy Director of Inclusive Finance John Tucker, New York, 13 March 2008.

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associations offering basic savings and credit services, of which twelve are organized by the networks UCACEC or CMCA. In total these organizations serve a client base of approximately 34,000, and reach only 4 out of 20 prefectures.

The majority of people, particularly in rural areas and specifically women, rely on traditional savings and credit strategies in order to gain access to capital and assets to support their economic activities. These informal financial groups are extremely prevalent and represent a significant mechanism by which persons who are unable to access formal financial

instruments can save, borrow and generate income. Approximately 70% of women in the CAR28 belong to these tontines in which women contribute small amounts of savings, usually on a weekly, bi‐weekly, or monthly basis, in order to benefit from a rotating lump‐sum payout.29 Thus, even in the absence of a thriving or inclusive formal financial sector, the people of the CAR actively mobilize savings; a country‐wide diagnostic study of microfinance reported that average daily household saving amounts to 600 FCFA or US$ 1.34. Tontines represent a powerful mechanism for financial intermediation, social cohesion and insurance against the negative impacts of risks such as illness, accidents and death, and play a particularly significant role in early recovery and post‐conflict areas.

What is a tontine? Tontines are a form of financial intermediation that exists across Africa in the absence of more formal financial institutions. This group‐based method of saving enables individuals to accumulate useful lump sums of money that they might not otherwise be able to raise on their own. These groups also provide an economic safety net by pooling risk. In the case of an emergency, the group can provide insurance from the central fund or through impromptu contributions. Additionally, tontines contribute to social cohesion by bringing women together on a regular basis while promoting trust and cooperation. Similar mechanisms can be found all over the world, and are generally referred to as Rotating Savings and Credit Associations (RoSCAs) or Accumulating Savings and Credit Associations (ASCAs). RoSCAs are sometimes called the “poor man's bank,” in which “money is not idle for long but changes hands rapidly” satisfying both the consumption and production needs of rural

28 Koyadondri and Malo, 2006 29 UNCDF and UNDP, PSE/IFS 2006

II. CONCEPTUAL FOUNDATIONS

Local savings and credit mechanisms

Savings and Credit Institutions

Microfinance Institutions

Banks

Numerous tontines, moneylenders, etc.

Formal

Three banks with five branches in total

Semi‐formal

Two credit union networks (UCACEC, CMCA)

Various local caissesd’epargne et du credit

InformalLocal savings and credit mechanisms



Banks

Numerous tontines, moneylenders, etc.

Formal

Three banks with five branches in total

Semi‐formal

Two credit union networks (UCACEC, CMCA)

Various local caissesd’epargne et du credit

Informal

Figure 1. The financial sector in the CAR

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and remote communities.30 A typical RoSCA consists of between 10 and 40 members. Each member contributes a set amount to the rotating pool of funds at regular meetings, often weekly or bi‐weekly. One member receives the pool of funds at each meeting, on a rotating basis. The order for receipt of the pool can be determined in various ways – based on seniority, based on need, with priority given to the governing board, by lottery, through a bidding process – but is most often determined at the beginning of each rotation. Contributions are most often cash, but can also be in‐kind or labor commitments.

Many tontines also operate as ASCAs. In addition to the rotating fund to which the members contribute regularly, members of ASCAs often save an additional, smaller amount to contribute to a central group fund that accumulates. This fund may be used for emergencies or communal needs, or may serve as a credit fund that grows as borrowing members repay their loans with interest. In many ASCAs, the accumulated fund is disbursed after a set period of time, with group members receiving an amount proportional to their contribution over the course of the cycle.

The members of these types of savings groups use their funds for expenses that require a significant lump sum. These are most often investments in lucrative income generation activities, but can also be household needs, education costs, or life cycle events such as weddings, funerals, and other ceremonies. Additionally, funds are used to support group members in the event of emergencies or to provide credit. Savings‐led microfinance Recognizing the resilience and indigenous nature of these types of groups, non‐governmental organizations (NGOs) have intervened to support and promote this form of “savings‐led” microfinance. Among the more prominent initiatives are Oxfam’s Saving for Change (SfC) program, CARE International’s Village Savings & Loan (VS&L) model, Catholic Relief Services’ (CRS) Saving and Internal Lending Communities (SILCs), and Pact’s WORTH model. These initiatives aim to reach poor communities that microfinance institutions have not – either because of their isolation or lack of sufficient means – and demonstrate that this population is willing to engage in this type of saving practice when presented with a well‐designed methodology.31 NGOs are also attracted to the savings‐led model as it is thought to promote social cohesion and empower women, and offers a platform for the delivery of other social services, such as health education and specific skills training. These initiatives aim to establish ASCA‐like structures in locations where these practices are not pervasive. The NGOs generally act as facilitators, assisting women to organize themselves into groups and providing training either directly or via local animators. The premise of these

30 Adams and Canavesi, 1989 31 USAID, Building the Assets of the Poorest: Savings‐Led Financial Services Report, June 2006

Accumulating Fund

7

1 3

6

5

2

48 2.000 FCFA

250

250 250

250

250 250

250

250

Accumulating FundAccumulating Fund

7

1 3

6

5

2

48 2.000 FCFA

250

250 250

250

250 250

250

250

Figure 2. Diagram of a typical RoSCA/ASCA

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programs is that once groups learn to manage their own saving and lending activities, they can sustain the activities with no continued intervention. Unlike other microfinance initiatives, savings‐led microfinance programs of this type do not provide external credit to support businesses; rather, they provide a system through which beneficiaries can generate their own loan capital. All of the models introduce their own collection of best practices related to transparent governance and accounting, which take many forms but generally include an elected governing council, written statutes, a bookkeeping system (be it written or oral), and procedures to protect the funds accumulated. These programs also promote internal lending to grow the balance of group funds, and unlike with loans taken from an MFI, interest paid directly benefits the group. In short, these NGOs look to replicate indigenous mechanisms of financial intermediation and to strengthen them with simple tools and procedures that improve governance and enable groups to accumulate and protect larger sums. Oxfam’s SfC program highlights the potential for self‐replication as a key strength of its model. Oxfam animators work directly with newly formed groups to introduce the SfC model and then train dynamic members of these groups as volunteer replicating agents to spread the methodology to other interested groups. The program aims to reach every member of its target villages, to ensure that the poorest are reached. SfC also emphasizes the simplicity of its written recordkeeping system, and has developed alternative oral or representative systems to accommodate illiterate members, in which memorization or representative items, such as beans or stones, are used to account for contributions made to the group fund. Oxfam has leveraged the groups to deliver other training modules such as malaria education and improved agricultural techniques in certain locations. SfC launched in Mali in April 2005 and is active in Cambodia, Senegal, and Burkina Faso, with an additional pilot in El Salvador. The program has reached over 100,000 individuals, who have saved over $1 million USD collectively.32 CARE’s VS&L model targets women beneficiaries. The primary innovation of the Village Savings and Loan Associations (VSLAs) is that members can contribute savings in the form of shares.33 This innovation allows members to save different amounts based on their individual capacity. Members keep

32 http://www.oxfamamerica.org/whatwedo/issues_we_work_on/saving_for_change 33 The shareholder model is only used among literate communities. A more basic model with fixed savings applies for illiterate groups.

Pictographic manual

Africa

Asia

Latin America

40,000145,000N/A700,000Number of beneficiaries

Appreciative/reflective approach

Share‐based saving

Replicating agents builtinto model

Literacy training

Alternative record‐keeping system

Complementary trainings

Business development services (BDS)

Time‐bound disbursement cycles

Pact WORTH

Oxfam SfC

CRS SILC

CAREVS&L

Pictographic manual

Africa

Asia

Latin America

40,000145,000N/A700,000Number of beneficiaries

Appreciative/reflective approach

Share‐based saving

Replicating agents builtinto model

Literacy training

Alternative record‐keeping system

Complementary trainings

Business development services (BDS)

Time‐bound disbursement cycles

Pact WORTH

Oxfam SfC

CRS SILC

CAREVS&L

Table 3. Comparison of various NGO models

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track of their contributions in individual passbooks, and at the end of each cycle the group distributes the accumulated balance proportionally according to the number of shares purchased. VSLAs are characteristically time‐bound, requiring that groups disburse the funds on a regular basis in order to ensure transparency and to enable members to benefit from their accumulated wealth. The original manifestation of this model was the Mata Masu Dubara (“Women on the Move”) program, which was initiated in Niger in 1974. CARE has since established more than 10,000 associations comprising more than 700,000 participants in Africa, Latin America, and Central and South Asia, with more than 400,000 participants in Africa alone.34 CRS’ SILCs employ a self‐managed approach whereby members identify best practices based on their experience, through “peer learning.”35 The CRS model is unique in that it often links the SILCs to agro‐enterprise development, food security, and basic education initiatives. Agro‐enterprise development connects small‐scale rural producers to market opportunities, primarily through the creation of farmer groups, partnerships with local technical assistance providers, and sourcing opportunities further up the relevant value chain. SILC or farmer groups come together as larger producer groups, pooling SILC funds to collectively purchase agricultural inputs and market their produce. CRS employs the SILC model in a number of its programs across Africa. Pact’s WORTH model incorporates literacy and small business development into its group saving model. Like VS&L, this model specifically targets women, and in fact was originally called the Women’s Empowerment Program. WORTH’s pictographic literacy curriculum leads the groups through their various stages of formation, moving from saving, to internal lending, to business development. In some cases, topics related to health or human rights have also been incorporated into the curriculum. The WORTH model employs the technique of Appreciative Planning and Action to help group members focus on success rather than on obstacles and to identify the resources they already possess to effect change in their lives. Like SfC, Pact’s program has witnessed autonomous replication of the model by groups that learn the techniques from WORTH women, but does not formally identify replicating agents. The WORTH model was first implemented in Nepal between 1998 and 2001, where it reached over 125,000 women, and is now present in several countries in Africa, including Ethiopia, Kenya, Tanzania, and Zambia, where it has reached approximately 40,000 women. WORTH has also been active in Cambodia since 2005.36 Relevance of savings‐led microfinance in the CAR This study and the subsequent project design are informed by the successes and challenges of past interventions in other contexts, and aims to identify and incorporate elements applicable to the CAR. The target for the majority of savings‐led microfinance initiatives are remote, rural areas, with low population density, limited economic opportunities, modest levels of monetary transactions and an absence of formal financial services. These preliminary conditions and population characteristics correspond to those of the CAR, particularly in the northwest and central regions targeted in this study.

34 Grant and Allen 2002; VSL Associates, 2007; CARE VS&L presentation (internal document) 35 Vanmeenen, 2006 36 http://www.pactworld.org/cs/where_we_are

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Rationale A multi‐disciplinary mission to the northwest in May 2007 asserted that in order to “rebuild livelihoods,” recovery and development activities must accompany emergency efforts in a systematic and strategic way. The report further noted that “unless and until an adequate response is provided to address the causes of the prevailing crisis, there is no doubt that the humanitarian situation in the CAR will continue to deteriorate.”37 Early recovery programming in the CAR must respond to the socio‐economic needs of the population while taking into account the overarching political and security situation in order to contribute to sustainable peace and development. The strengthening of local safety nets such as tontines can help to ensure their sustainability, support income generating activities, and contribute to overall socio‐economic recovery. The flexibility of these informal financial mechanisms makes them a better financial service provider than formal institutions for the rural poor following conflict.38 Good practice guidelines for microfinance in war‐affected contexts also advise donors to work with RoSCAs due to their indigenous nature and because they may provide a relatively easier conduit for support than formal institutions in such contexts.39 The qualities of tontines that explain their long history in Africa are the same qualities that explain their importance for vulnerable post‐conflict populations: simplicity, accessibility, socio‐economic empowerment of individuals and groups, social organization and capital, accountability, and information sharing. In post‐conflict settings like those of the CAR, tontines can help to rebuild previously existing linkages, as these traditional safety nets are often “the only civil society institution to survive” conflict and societal breakdown.40 Social cohesion has been strained by political schisms, internal displacement, and economic stagnation. This multifaceted instability has worn on traditional informal networks and community solidarity, which will need to be supported and rebuilt. 41 Women in particular need innovative financial products and services to support and strengthen their income generating activities, the revenues of which are used to address and meet basic household needs. As in many African countries, women constitute a large proportion of market vendors, and their significant commercial role can help drive local markets and create economic opportunities. Increasing the market influence of women has the potential to contribute to the regeneration of local economies recovering from conflict‐related disruptions in the northwest and northeast. Given the prevalence of the indigenous tontine model, especially among women, UNDP CAR engaged a team of graduate students from Columbia University SIPA to explore the feasibility

37 ICVA, 10‐17 May 2007 38 The flexibility of community‐based financial organizations with no banks or branches (in non‐conflict settings) is discussed in Murray and Rosenberg, 2006 39 Concern Worldwide, 2004 40 Hadon and Seibel, 2007 41 Werlin and Hastings, 2006

III. STUDY OVERVIEW

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and potential of supporting these local safety nets in the CAR. Strengthening the tontine model in the CAR would provide greater access to physical and knowledge capital for economic activity, driven and managed by local communities. This model is particularly important in remote, early recovery areas of the country where existing MFIs have not yet established an operational presence.42 In those areas where MFIs may expand their reach in the future, the strengthened tontines can serve as a seasoned client base familiar with savings and credit repayment discipline. Objectives The objectives of this study, as established by UNDP CAR in collaboration with the research team were as follows:

• Document the form and scale of existing tontines and women's income generation activities in five target cities in the CAR

• Identify strategic inputs for the strengthening of tontines

• Develop a program design for strengthening existing tontines and expanding the reach of the tontine model in selected target regions

• Develop a plan of action for the implementation of a pilot initiative to test the program design in selected target regions

Methodology The feasibility study and project design were carried out by a team of six graduate students from Columbia University’s School of International and Public Affairs (SIPA) in partnership with UNDP CAR. The team collaborated with UNDP CAR staff in the field, most directly with the National Microfinance Expert, Mr. Dominique Malo, and the former Microfinance Technical Advisor, Mr. Davide Stefanini. The team also received ongoing technical advice from faculty advisor Mr. Jeffrey Ashe, Manager of Community Finance at Oxfam America and Adjunct Associate Professor at SIPA.

Literature review In order to gain an understanding of the contextual background in the CAR and to develop relevant expertise on the latest microfinance knowledge, the team reviewed a wide range of existing documents on the following topics:

1. Country context • Political and socio‐economic background • Humanitarian situation • Current situation/latest developments

2. Relevant programs/initiatives in country • National poverty reduction strategies

42 Owing to various reasons including the persistent insecurity, reduced economies of scale, small market size, weak economic potential, and low population density

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• Microfinance initiatives to date • Existing microfinance actors • Approximate reach of existing programs/initiatives

3. Microfinance approaches/best practices • Savings‐led approaches worldwide • Post‐conflict/early recovery particularities

Field research The project team executed two 2‐week field missions in the CAR, in January and March 2008. These field missions provided critical primary data sources. The team conducted interviews with 114 different tontines in five target cities and in one best practices comparison city, covering in total 3375 individuals involved in tontine activities (83% female; 17% male members).43

The five target cities selected for the study were Bossangoa (Ouham prefecture), Kaga Bandoro (Nana‐Grébizi prefecture), Ndélé (Bamingui‐Bangoran prefecture), Paoua and Bozoum (Ouham‐Pendé prefecture), and the best practices case study was conducted in Mbaiki (Lobaye prefecture). The team also conducted stakeholder interviews in Bangui, the capital city. The target cities were selected based on the following criteria:

• Early recovery setting • Presence of economic

activity • Sufficient security for

consistent saving activities to occur and for the team to conduct relevant research

• Capture large percentage of the population

• Strategic relevance for UNDP and presence of or potential for UNDP base

Stakeholder interviews Additionally, the team interviewed representatives from two local NGOs. One of these NGOs, Centre de Documentation, d’Information et de Formation pour le Développement (CEDIFOD), runs a microfinance project in Mbaiki, which served as our best practices case study. The other NGO, ONG Echelle, has contributed to study and train the rural population their agricultural micro‐projects. We also spoke with UCACEC, one of the two savings and credit union networks in the CAR about their specific target groups, reach and operational shortcomings. Moreover, we spoke with other potential partners or stakeholders (e.g. Caritas/IPHD, UNICEF, International

43 Based on overall number of tontines interviewed, while some tontines displayed incomplete member statistics

Figure 3. Map of locations investigated

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Rescue Committee, Première Urgence, COOPI) in Bangui and in the different target cities to better understand:

• Scale and pervasiveness of tontine activities • Perceived impact of tontines on their members • Perceived strengths and weaknesses of the model • Specific obstacles hindering the success of income generating activities • Profile and financial services needs of their own program beneficiaries • Specific regional factors influencing income generation

opportunities and women’s economic status • Organizational mission and its applicability to a savings‐led microfinance program • Organizational capacity, history, and reputation

Limitations of research

1. Sampling bias ‐ Since the groups who responded to our invitation to discuss their

tontine activities made a deliberate choice to participate in our study, results might be contingent on a certain degree of self‐selection bias.

2. Regional reach ‐ Given the tense security situation in some of the regions in the CAR as

well as logistical difficulties (poor road conditions, limited air connectivity, etc.) and tight timeframes of around two weeks per mission on the ground, the regional reach of our study was limited and could not cover all potentially relevant post‐conflict areas of the CAR.

Additionally, the security situation meant that our research was confined to city centers, and did not reach the more isolated rural locations that savings‐led microfinance often aims to reach.

3. Quality of translation ‐ The depth and accuracy of the information obtained in our field

research heavily depended on the quality of translation support we received in the different locations. This varied greatly from location to location as well as within locations, which was largely out of the team's range of influence since translators were organized by the local NGOs / stakeholders.

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Overview of findings Tontines in the CAR represent a longstanding collective support mechanism, particularly for conflict‐affected communities. Following violent conflict in 2003 and widespread, sporadic violence carried out by rebels and road bandits over the next five years (the most recent major incident occurred in January 2007), these mechanisms now serve as socio‐economic safety nets for affected communities. Tontines in the CAR (known as kelemba in Sango, one of the local languages) are innovative versions of the widespread tontine structure common to many African countries as described above. Many operate as both RoSCAs and ASCAs, and serve a variety of social and economic purposes. Membership is based, as in most traditional RoSCAs, on geographic proximity and often on a common economic activity that is carried out individually or communally. Trust and solidarity

between members, as well as their capacity to contribute to group funds, greatly impact the success of the tontine. Women who cannot contribute the requisite monetary or in‐kind amount are usually asked to catch up by the next meeting, without paying interest or fines. This latitude comes from a common

understanding of the challenging early recovery context. However, almost all groups cited the necessity of examining potential members’ “moral” history, at least informally, before allowing someone to become a member. Operational / structural characteristics The structural basis for tontines in the CAR is the rotating fund of pooled member contributions. This rotating fund is usually allocated to one to two members per cycle. In nearly every case the entire rotating fund is allocated immediately upon pooling at regular meetings. Some tontines encompass multiple RoSCAs within their group, whereby women form sub‐groups with different levels of contribution (and therefore multiple rotating funds), based on their capacity to contribute. In over three‐quarters of the tontines sampled, the group decides collectively upon the recipient of the rotating fund. Members wishing to receive the pool must present their case before the group. In one notable case, the tontine uses a bidding mechanism to determine allocation of the rotating fund.44 In addition, just under 95% of the tontines maintain a supplemental accumulating fund (a “solidarity fund”) based on parallel regular contributions, which often serves simultaneously as an insurance fund for personal emergencies (family illnesses or deaths) and a credit fund for members. Accumulating fund contributions are often monetary, representing a fraction (usually 10‐20%) of the rotating fund contribution. In about half of the tontines in our target areas, the recipient of the rotating fund is expected to withhold a portion thereof for the accumulating fund. In this way the accumulating fund grows.

44 See Mamboko a muesirinali case study on p. 23.

IV. FINDINGS

“There are no conflicts in our tontine because we all know each other.”

– Female tontine member Paoua, Jan 2008

“There are no conflicts in our tontine because we all know each other.”


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When a personal emergency occurs, tontines usually grant a portion of the accumulating fund to the affected member, normally without interest. Many tontines, particularly when their accumulating funds are low, also make small impromptu cash contributions. In the event of a funeral, this ad hoc contribution can also be in coffee or sugar for the ceremony. Requirements for these ad hoc contributions are less strict than those for regular contributions since they arrive at unpredictable intervals, so if certain members cannot contribute cash (usually 100‐250 FCFA), they might contribute a small amount of soap, salt or other household goods. Some groups also maintain an in‐kind insurance fund of plates, cups or other items needed for funerals. The mechanism for such a fund varies: some groups use their accumulating fund savings to invest in such items for the group, while others require each member to contribute an item and the resulting pool is then lent out as necessary. ` In the majority of tontines, the accumulating fund is also used to provide members with microcredit with or without interest. Interest rates range from 10‐50% tontines often specify two weeks to one month for loan repayment. Many tontines also include an in‐kind rotating fund, which may include small amounts of soap, salt or other household products. In‐kind contributions may be fixed by weight or monetary equivalence. Members can use the products for household consumption or for resale for income generation. Some tontines include parallel labor tontines whereby members work in each other’s fields on a rotating basis. In some cases members who cannot work someone else’s field in a given rotation pay someone else to do so, or pay a small fee to the group’s accumulating fund instead. Many groups also work on a communal field (usually on rented land) to produce crops that the group sells to increase its accumulating fund. Without exception, each tontine has created a governing structure including president, vice‐president, treasurer, and secretary. Larger groups may include additional roles, such as vice‐secretary or advisor. In most cases members are elected to these roles through a group vote and hold office for a fixed period of time, ranging from 1 to 4 years. Some groups do stipulate that officeholders possess at least basic literacy skills. Many tontines maintain open membership policies, allowing anyone to join, subject to a popular vote (which may be informal) and in about half the cases, a fee ranging from 25 to 5,000

45 For many groups a vote is held, but not at each meeting; rather voting determines a set list at the start of a cycle.

Table 4. Operational and structural characteristics of tontines in the CAR

Characteristic Measure Average group size 31 members

Presence of rotating fund

100% frequency

Presence of accumulating fund

95% frequency

Frequency of contributions to rotating fund

66% Weekly 14% Bi‐Weekly 12% Monthly 8% Other

Method of rotating fund allocation

77% Group vote45 13% Decision of president 10% Predetermined list

Group composition by gender

54% Mixed 40% Women only 6% Men only

Membership fee 53% Yes 47% No

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FCFA. Others, however, are more restrictive, offering membership only to those belonging to a church or mosque. Most tontines are part of registered associations based on economic activity. Some tontines represent specific social groups who are often vulnerable, such as HIV‐positive individuals, youth and widows. Purpose: Why join a tontine? What explains the prevalence of tontines? Why are they so widespread, and why is the participation rate, particularly among women, so high? Members most commonly cite the general safety net function: a combination of communal social support and access to lump sums.46 The periodic lump sums of cash from the rotating fund are far greater than what most individuals would be able to generate or access on their own.47 These lump sums enable recipients to stimulate their existing income generating activity or expand the range of activities in which they engage, an extremely important feature given the near total lack of alternative sources of credit. These activities may be undertaken individually or collectively. Among market traders, one of the most frequently observed uses of this lump sum (the rotating fund) is the purchase of agricultural commodities at a low unit price for resale at a higher margin. Farmers, on the other hand, often use their lump sums to purchase tools or additional seed to increase their productivity or output, or to pay for transport of their products to Bangui where they can obtain higher prices for them. Many members also report that they use their lump sums to pay for educational or health expenses. This link between economic and social needs again exemplifies the safety net mechanism inherent in tontines; members would otherwise be forced to fend for themselves when emergencies arise. Some tontines, but by no means a majority, have created also created a separate fund (the accumulating, or “solidarity” fund) specifically for emergencies. Members also appreciate the opportunity to safely “deposit” savings. This makes sense given the dearth of access to formal financial services, especially in the remote post‐conflict areas where we conducted our study. While not a substitute for banks, tontines enable members to store a portion of their saving outside of their residence, providing a modicum of security and helping to ease pressure from other family members to spend or lend their savings against their wishes.

46 Participation in any form of saving association presupposes an ability to generate some surplus income with which to save. The most vulnerable segment of the population, because they lack the means to participate in tontines, cannot access even the modest benefits that membership provides. 47 The accumulating fund also constitutes a lump sum, but it is usually not granted or lent in full, and not on a regular basis; and it is used for consumption more often than productive purposes, as described further below.

• Way of saving outside of the home• Periodic access to lump sum far larger than

ordinarily available• Expand/enhance income generating activity• Provides insurance in case of emergency• Social cohesion/opportunity for discussion

Primary reasons for joining a tontine

• Way of saving outside of the home• Periodic access to lump sum far larger than

ordinarily available• Expand/enhance income generating activity• Provides insurance in case of emergency• Social cohesion/opportunity for discussion

Primary reasons for joining a tontine

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Finally, there is a social motivation for joining. Members can count on one another during personal emergencies or for help in their agricultural production. The latter is particularly important given that many people in our target areas have seen their farming disrupted by conflict, and in some cases have just recently returned to their fields after seeking refuge in the bush. Group meetings also provide a valuable forum for discussion of personal, economic and social issues, and help foster a sense of social cohesion. Scope of saving The average weekly48 contribution per member to the rotational credit mechanism in the five target zones is 859 FCFA, though this amount ranges from as low as 23 FCFA to as high as 10,000 FCFA. The most common contribution, as indicated by both the median and modal average, is 500 FCFA. In 89% of the associations surveyed this amount is fixed. In almost all cases members are tolerant towards the occasional missed contribution, but late payments must be recovered in the subsequent round.

Average weekly accumulating fund contributions are 123 FCFA and also exhibit considerable range, from as low as 17.5 FCFA to as high as 500 FCFA. Both the median and modal weekly contribution to the accumulating fund stand at 100 FCFA. These figures, however, must be treated with caution. Many groups allow members to regularly miss making accumulating fund contributions and, particularly with groups located in Ndélé and Kaga Bandoro, exempt certain members

from ever having to make a contribution. Thus, the actual amount of money being saved through this channel is less than might be assumed at first glance. However, many tontine leaders and members with whom we spoke may have underestimated the amount they have saved in the accumulating fund, for both cultural and security reasons. Less than a dozen tontines maintaining an accumulating fund require no regular contributions, relying instead on ad‐hoc donations when necessary to assist a member in the event of a personal emergency. The vast majority (82%) of tontines extend loans to members through the accumulating fund. Of these, about 8% also lend to nonmembers. The maximum loan size is typically closely associated to the size of the weekly contribution to the accumulating fund, ranging from 1,000 to 30,000 FCFA. The interest rate on internal loans can reach 100%, although most groups do not charge any interest. Despite the seeming prevalence of internal microcredit funds, few members we interviewed actually claimed to have pursued a loan themselves and many expressed a reluctance to do so in the future. This stands out as one aspect of tontine operations that merits further exploration.

48 Contribution numbers have been standardized to a weekly level for the purposes of comparison.

Table 5. Financial characteristics of tontines in the CAR

Characteristic Measure Average weekly contribution

859 FCFA (mean) 500 FCFA (median) 500 FCFA (mode) Range: 23 – 10,000 FCFA

Average weekly accumulating fund contribution

123 FCFA (mean) 100 FCFA (median) 100 FCFA (mode) Range: 17.5 – 500 FCFA

Availability of loans to members

82% frequency Range: 1,000 FCFA – 30,000 FCFA

Availability of loans to nonmembers

8% frequency

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Regional variations Thus far we have described the characteristics of the tontines of our selected area of focus in aggregate. Doing so, however, obscures the tremendous variation that exists even within post‐conflict zones. A brief discussion of three such areas, Paoua, Ndélé and Kaga Bandoro, illustrates this point.

At one extreme there is Paoua, a town due north from the capital of Bossangoa prefecture and approximately a day’s drive from Bangui. Exhibiting an economic dynamism more closely associated with non‐conflict areas of the country, the average tontine member contributes 1181 FCFA per week to the rotating fund and an additional 138 FCFA to the accumulating fund. The median contribution to the rotating fund is 500 FCFA.

At the other extreme is Ndélé, capital of Bamingui‐Bangoran prefecture and the second to last major settlement in the northeast before the border with the Sudanese state of South Darfur. Physically isolated from the rest of the country and lacking all but the most rudimentary transportation links to the urban centers further south, the economy functions as a virtually self‐contained island. Producers must rely almost exclusively on local demand as they are unable to export agricultural produce in any significant volume, especially during the rainy season when roads and bridges become impassable. Consequently, tontine members contribute approximately 252 FCFA per week to the rotating fund, more than 4.6 times less than the average for Paoua. The median contribution is even considerably lower at 138 FCFA. Average contributions to the accumulating fund are also much lower than those for Paoua, at 109.4 FCFA per week, though only by half. Yet even this low figure is somewhat misleading as many individual members are excused from making any contribution at all.

198 252

705

10691181

Bozoum Ndele KagaBandoro

Bossangoa Paoua

Average Weekly Contribution to Rotating Credit Mechanism

Figure 4. Regional variation in weekly contributions

One of the strengths of the informal solidarity networks is the fertile ground they provide for innovation. A striking example of this is provided by the Mamboko a muesirinali association in Kaga Bandoro. Composed of 30 women, each member contributes 250 FCFA on a weekly basis to the credit pool which is then distributed to a single individual. What sets this group apart, however, is the process by which the recipient of the pool is chosen.

Every member that has not within the current 30‐week cycle received the pool is eligible to make a bid for the funds. The member offering the highest bid is then awarded the pool for that week. The amount of the bid, typically ranging from 500 to 1,000 FCFA, is subtracted from the pool and deposited into a solidarity fund. As money accumulates in the solidarity fund, it is made available to any member in the form of a repayable loan.

In addition to the solidarity fund, the group also maintains twoadditional accounts. One, financed by an obligatory 750 FCFA membership fee, is used by the group to make volume purchases ofagricultural products such as sesame and peanuts which are then resold for profit. The second is an emergency fund financed by an additional weekly contribution of 100 FCFA. This pool of money is disbursed to a member confronted with a sudden unforeseen expense illness.

This is the kind of innovation that, through the fostering of interaction between groups, could be replicated in tontines throughout the CAR.

CASE STUDY: An example of local innovation

One of the strengths of the informal solidarity networks is the fertile ground they provide for innovation. A striking example of this is provided by the Mamboko a muesirinali association in Kaga Bandoro. Composed of 30 women, each member contributes 250 FCFA on a weekly basis to the credit pool which is then distributed to a single individual. What sets this group apart, however, is the process by which the recipient of the pool is chosen.

Every member that has not within the current 30‐week cycle received the pool is eligible to make a bid for the funds. The member offering the highest bid is then awarded the pool for that week. The amount of the bid, typically ranging from 500 to 1,000 FCFA, is subtracted from the pool and deposited into a solidarity fund. As money accumulates in the solidarity fund, it is made available to any member in the form of a repayable loan.

In addition to the solidarity fund, the group also maintains twoadditional accounts. One, financed by an obligatory 750 FCFA membership fee, is used by the group to make volume purchases ofagricultural products such as sesame and peanuts which are then resold for profit. The second is an emergency fund financed by an additional weekly contribution of 100 FCFA. This pool of money is disbursed to a member confronted with a sudden unforeseen expense illness.

This is the kind of innovation that, through the fostering of interaction between groups, could be replicated in tontines throughout the CAR.

CASE STUDY: An example of local innovation

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Situated between these two cases, physically as well as economically, is Kaga Bandoro. The once vibrant capital of Nana‐Grebizi prefecture, Kaga Bandoro has experienced declining economic fortunes due to its proximity to the frontlines of the ongoing conflict. Yet, because of the existence of a reasonably good road connecting it with the city of Sibut and onwards to Bangui, it has avoided the near isolation of Ndele. This is reflected in the average tontine member’s weekly rotating fund contribution of 705 FCFA, slightly less than three times the amount observed in Ndélé and slightly less than a third of that for Paoua. With respect to the accumulating fund, the average weekly contribution in Kaga Bandoro is 117 FCFA per member, though as with Ndélé this figure may be somewhat overstated as many members are exempt from this contribution. Opportunities for intervention The endurance of these traditional saving and credit mechanisms across the CAR demonstrates an impressive resilience to political and economic instability. Most tontines have never

benefited from any external assistance. The pervasiveness of tontines in post‐conflict areas speaks to both the need for basic, local financial services and the reliance on local safety nets. Many tontines have evolved important social functions. For example, they frequently serve as vehicles for knowledge‐sharing (e.g. in the fields of nutrition, HIV prevention,

hygiene and maternal and child healthcare) among members while also providing an important forum, particularly for women, for discussion. Many tontines have also developed particular social functions based on the particular needs of the membership. At the same time, however, it is important to acknowledge the reality of the limited economic opportunities in these regions. As the case of Ndélé illustrates, when a rural area becomes effectively disconnected from the rest of the country there is a dramatic reduction in the ability of the population to generate income. Until security and infrastructure improvements are realized, enabling local producers to connect to outside markets, the range of available economic activities remains restricted to subsistence agriculture. In such an environment, the ability to leverage personal savings and assets into income generating potential is severely constricted. This situation minimizes the impact and influence of tontines: they are safety nets rather than engines of growth. Furthermore, poor infrastructure and insecurity also challenge the expansion of the tontine model, particularly via self‐replication of these autonomous groups.

“[Economic] activities are restarting little by little.”


“Gara kwi – the market is dead.”– Female tontine member Kaga Bandoro, Jan 2008

“[Economic] activities are restarting little by little.”


“Gara kwi – the market is dead.”– Female tontine member Kaga Bandoro, Jan 2008

StrengthsHigh level of self‐motivated innovationQuite pervasive, even without external supportGroups serving complementary purposes that promote social cohesion

WeaknessesFunds don’t grow with interestNo formal governance structuresLast in rotation enjoy less benefitLimited income from both agriculture and other activities

OpportunitiesIntroduce / increase internal lending activities to grow group wealthImprove security for group’s capitalFacilitate knowledge‐sharing between groups to spread best practicesLeverage channel for other activities

ThreatsGeneral insecurity / post‐conflict settingLack of security options to protect capitalLack of markets and transport infrastructure

StrengthsHigh level of self‐motivated innovationQuite pervasive, even without external supportGroups serving complementary purposes that promote social cohesion

WeaknessesFunds don’t grow with interestNo formal governance structuresLast in rotation enjoy less benefitLimited income from both agriculture and other activities

OpportunitiesIntroduce / increase internal lending activities to grow group wealthImprove security for group’s capitalFacilitate knowledge‐sharing between groups to spread best practicesLeverage channel for other activities

ThreatsGeneral insecurity / post‐conflict settingLack of security options to protect capitalLack of markets and transport infrastructure

Figure 5. SWOT analysis

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Despite these challenges, the prevalence and proven robustness of these associations, combined with the demonstrated motivation of the participants, represents a reservoir of strength that can serve as a valuable foundation for future

development endeavors while providing immediate opportunities for livelihood‐enhancing initiatives. Encouraging greater communication between associations, for example, represents such an opportunity. By taking advantage of their existing role as information disseminators, this would provide an efficient way of encouraging the rapid spread of innovative practices while requiring a minimum of external intervention. The potential to reap relatively quick benefits from such an initiative is quite large given the very basic structure of most of the associations and failure of many to engage in simple practices that could grow the size of their capital more rapidly.

“We go to our fields in fear of seeing people we don’t know [who could be armed bandits].”


“We go to our fields in fear of seeing people we don’t know [who could be armed bandits].”


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In addition, each member contributes 100 FCFA per week to a solidarity fund that members can draw from in an emergency and 500 FCFA per month to a “cooking pot” fund. Once the cooking pot fund has accrued to a certain value, a supply of cooking pots are purchased and resold at a profit. Profits from the sale of the cooking pots are subsequently divided into three; a small dividend, typically in the range of 1,000 FCFA, is paid to each member, another portion is used to purchase capital equipment to facilitate the planting and harvesting of coco leaves, with the remainder placed in a liquid account which is used for groups day‐to‐day expenses. At the end of a complete cycle any leftover funds in the liquid account are transferred to the cooking pot fund for use in the next round.

Loans of up to 15,000 FCFA are made available to members, financed from the cooking pot fund. The rate of interest is set at 5 percent. In the case of a family emergency, a member can receive a 5,000 FCFA contribution which they pay back once it has been resolved. If it is one of the members herself who is sick or injured, that member receives up to 30,000 FCFA without any obligation to reimburse the group.

A complex structure such as that employed by the Groupement Wallicoco serves as a reminder of the capacity for Central Africans to develop their own creative solutions to the problems confronting them. It also helps mitigate the belief that microfinance structures must be kept as simple and basic as possible in order to succeed in an environment such as the Central African Republic. It represents what is possible.

Mbaïki, capital of the southern prefecture of Lobaye, is an area of the Central African Republic that has enjoyed relative stability compared to much of the rest of the country. This stability has in turn provided a fertile breeding ground for all manner of microfinance innovations. An illustrative case in point is the Groupement Wallicoco, an association of manioc leaf growers made up of 60 enterprising women that has evolved over 10 years into an organization noteworthy for its complexity and flexibility.

The association is comprised of three primary groups made up of 20 members, each of whom ordinarily makes a 2,500 FCFA contribution to their group’s rotational credit mechanism. Members who cannot afford the normal contribution in a given cycle temporarily join a sub‐group where they only need to make a 500 FCFA contribution until they are able to rejoin the main group once again.

CASE STUDY: A preview of what is possible

In addition, each member contributes 100 FCFA per week to a solidarity fund that members can draw from in an emergency and 500 FCFA per month to a “cooking pot” fund. Once the cooking pot fund has accrued to a certain value, a supply of cooking pots are purchased and resold at a profit. Profits from the sale of the cooking pots are subsequently divided into three; a small dividend, typically in the range of 1,000 FCFA, is paid to each member, another portion is used to purchase capital equipment to facilitate the planting and harvesting of coco leaves, with the remainder placed in a liquid account which is used for groups day‐to‐day expenses. At the end of a complete cycle any leftover funds in the liquid account are transferred to the cooking pot fund for use in the next round.

Loans of up to 15,000 FCFA are made available to members, financed from the cooking pot fund. The rate of interest is set at 5 percent. In the case of a family emergency, a member can receive a 5,000 FCFA contribution which they pay back once it has been resolved. If it is one of the members herself who is sick or injured, that member receives up to 30,000 FCFA without any obligation to reimburse the group.

A complex structure such as that employed by the Groupement Wallicoco serves as a reminder of the capacity for Central Africans to develop their own creative solutions to the problems confronting them. It also helps mitigate the belief that microfinance structures must be kept as simple and basic as possible in order to succeed in an environment such as the Central African Republic. It represents what is possible.

Mbaïki, capital of the southern prefecture of Lobaye, is an area of the Central African Republic that has enjoyed relative stability compared to much of the rest of the country. This stability has in turn provided a fertile breeding ground for all manner of microfinance innovations. An illustrative case in point is the Groupement Wallicoco, an association of manioc leaf growers made up of 60 enterprising women that has evolved over 10 years into an organization noteworthy for its complexity and flexibility.

The association is comprised of three primary groups made up of 20 members, each of whom ordinarily makes a 2,500 FCFA contribution to their group’s rotational credit mechanism. Members who cannot afford the normal contribution in a given cycle temporarily join a sub‐group where they only need to make a 500 FCFA contribution until they are able to rejoin the main group once again.

CASE STUDY: A preview of what is possible

Members of Groupement Wallicoco gather in Mbaïki

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The ultimate purpose of this feasibility study was to inform a nine‐month project to support and strengthen tontines in the CAR. The design of this proposed project is outlined below and is based on the team’s findings in the field and our understanding of the ways that NGOs have intervened in other contexts to promote savings‐led microfinance. Critical theme and overarching strategy As confirmed by this feasibility study, the tontine model in the CAR is both pervasive and robust. Tontines have shown great resiliency to persistent conflict and the consequent displacement and economic insecurity of their members. Additionally, they have demonstrated a strong ability to innovate and adapt the RoSCA model to their specific needs and context. Many of the NGO interventions present in other countries to support savings‐led microfinance have aimed to establish saving groups where they do not already exist, and to introduce best practices in governance and financial management to encourage the growth of the groups’ funds. Given the prevalence of tontines in the CAR and their tendency to innovate, the proposed project will aim to strengthen existing tontines and build cohesion among them, rather than attempting to introduce an external model. The inaccessibility and continued insecurity of some remote post‐conflict areas means that reaching a critical mass of target beneficiaries is only possible in cities. Expanding outreach to villages between major cities is therefore premature for these reasons, although the pilot project encourages increased recognition of the tontine financial model. The project takes the cultivation of local innovation as its central theme, and incorporates multiple opportunities for knowledge‐sharing among groups to spread these practices. While the project will aim to develop and disseminate a uniform set of best practices that target groups should adopt, the form that these practices will take will grow from the examples set by local groups. Goal and objectives Tontines represent a local structure that has the potential to contribute to economic recovery and to the generation of income as the country moves out of early recovery and into a more stable developmental phase. The goal of the proposed project reflects this potential.

Goal: To contribute to the restoration of economic safety nets and income generating activities in post‐conflict Central African Republic.

In reaching this goal, the project will aim to realize three specific objectives, which reflect the needs articulated by the subjects of our study, as well as the critical theme of local innovation and knowledge‐sharing articulated above.

Objective 1: To increase the funds accumulated by tontines through improved governance and structural innovation.

V. PROPOSED PROJECT DESIGN

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Almost every tontine representative with whom we spoke expressed a desire for larger contributions and funds, i.e., the need for larger amounts of capital for economic activities. The proximity and informality that render tontines so flexible and widespread can also hinder their potential growth, as members hesitate to demand larger contributions, interest on intra‐group loans, or interest on late payments from their struggling friends and neighbors. This social cohesion is telling, and in most cases members do not contribute larger sums or more interest because they simply cannot do so. Tontines must increase their collective funds if members are to see any impact on their economic investments, and therefore on their daily lives.

Objective 2: To increase awareness of and engagement in the tontine model and to promote local innovation by facilitating knowledge sharing among tontines.

The tontine model is a viable financial structure embedded in local culture. Tontines represent both a safety net in the present early recovery context and a potential stepping‐stone to the semi‐formal and formal segments of financial sector. The various tontines that we studied exhibited a variety of innovations, and expressed interest in learning about the operational strategies of tontines in other areas. Knowledge‐sharing among tontines can promote the exchange of best practices as well as synergies between groups.

Objective 3: To increase physical and knowledge capital to improve the profitability of income generating activities.

Tontine members in our target cities cited inputs and equipment as potential catalysts for the growth of their economic activities and increased income generation. This applies to agriculture, basic processing and transformation of agricultural products, and transport of products to market. Individual tontines lack sufficient funds for such substantial investments. Tontines can capitalize upon economies of scale by aggregating their demand through collective procurement of necessary material inputs. Members have also requested technical activity‐specific training, advice on better management of their tontine funds, and parallel information sessions on subjects related to health or education. Tontines provide a group structure with the relevant financial and economic bent to incorporate complementary initiatives driven by members’ demand. Approach As described in Section III (Study Overview), the team interviewed a number of local NGOs to assess their potential to act as implementing partners for a project to support tontines. The most relevant of these were CEDIFOD and ONG Echelle. While both are engaged in projects related to microfinance or income generation activities in their target communities, their activities are restricted to the areas of Bangui and the Lobaye, and neither currently has the operational capacity to deliver against this study's recommendations in other regions. There are generally very few international or local NGOs active in the CAR, and none of those present work directly with tontines as a vehicle for economic recovery. The proposed project thus aims to complement the capacities and respond to the needs of tontines through the incubation of a local NGO that can continue to support these groups beyond the life of this initial project. This NGO will execute project activities under the supervision of a project

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manager (PM) / technical advisor to be identified by UNDP. Additionally, a local NGO dedicated to working with tontines provides a platform for institutional linkages between these groups and other potential partners including, eventually, more formal financial service providers. The project ultimately seeks to fortify a culture of savings within the CAR that will facilitate the absorption of the poor in post‐conflict areas into the inclusive formal financial sector being supported by the UNDP Microfinance Project. Thus, we propose that the local NGO to be established act as the administrator of a “federation” of tontines. By building relationships and promoting knowledge‐sharing between its tontine members, this federation will promote local innovation and encourage the adoption of best practices for growth. We envision that the federation will brand a tontine “movement” that will compel women in the CAR to take part in or augment their group saving activities. In the long‐term, supporting local savings and credit mechanisms will help create financial literacy amongst the poor and better prepare them to be eventual clients of savings and credit institutions, MFIs or banks as these institutions expand their outreach beyond the vicinity of Bangui. At the same time, the recognition of tontines, and their potential for scaled‐up funds and access to other financial products and services, can send a signal to financial institutions that a potential client pool exists even in remote, early recovery areas. Target locations Given the nine‐month timeframe and the amount of funding available, the project can be implemented in a maximum of two target locations, selected from among the five sites investigated as part of the feasibility study. Operating in two locations will enable cross‐regional knowledge‐sharing and learning, though logistical costs of traveling between two remote locations may be prohibitive and should be considered. Additionally, management of two NGO officers by one PM may not be ideal, given the objective of building the foundations of a sustainable local institution. All five of the locations investigated fit our initial selection criteria (see Study Overview section above), but we recommend Paoua and Kaga Bandoro for both strategic and practical reasons. These two locations hold strategic relevance for the UN as they have been identified as possible target locations for other interventions including humanitarian coordination. A UN base has already been established in Paoua, and UNHCR has a representative in Kaga Bandoro. Paoua is the most densely populated region of the CAR, and between Paoua and Kaga Bandoro, the project will reach a large swath of the population. In terms of practicality, both of these

Local NGO presence in two locations

96 Tontine Federation member groups

UNDP Project Manager

12 animators work within their own groups and three others

Local NGO presence in two locations

96 Tontine Federation member groups


12 animators work within their own groups and three others

Figure 6. Diagram of approach

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locations demonstrate a higher level of stability and market activity than the others, and are easily accessible overland or via air from Bangui. In selecting Paoua as a target location, we are aware that along with its population density comes an elevated presence of NGOs. While this provides opportunities for partnership and collaboration, the UNDP will need to verify any additional programs that may have begun to work with tontines in this vicinity since January when the research for this study was conducted.49 Activities, implementation plan, and budget The proposed project is designed to last 9 months from July 2008 to March 2009. Given the outlined approach, the initial two months will be spent recruiting NGO officers, immersing the team in local tontine activities, and preparing for a collaborative workshop, in which dynamic tontines will define the specific innovations to be introduced more widely. September through February will consist of direct interaction with target groups to facilitate their adoption of the best practices, through training and ongoing support. The project will culminate in March with a national conference to acknowledge and document the accomplishments and experiences of the federation members. The estimated budget for the activities described, including staff, administrative, and transport costs totals $121,000. See Annex 1 for a detailed workplan and budget.

Immersion To build a foundation for the successful implementation of project activities, the PM and NGO officers must gain an in‐depth understanding of the scope, reach, strengths and weaknesses of tontines in the selected project locations. This will be acquired over the course of one month while conducting other logistical start‐up activities, by the PM and NGO officers attending regular meetings of tontines in the target areas, visiting the markets, and speaking with tontine members and leaders. This immersion will serve to acquaint the team with the project’s potential client base and to illuminate local needs that may not have been captured by the feasibility study, as well as to vet the idea of a tontine “federation” comprising a cross‐section of tontines in the target locations.

49 We believe that the DRC has initiated a project in Paoua to support agricultural groups and their related tontines, the details of which have not been investigated.

Improving practices

Increasing recognition

Aggregating demand

Jul

Best PracticesWorkshop

Develop toolkit

Initial trainings

National conference

Awareness raising campaign

Pilot group‐based provision of inputs

Knowledge‐sharing meetings

Ongoing support

Sector‐specific trainings

Start‐up

M & E

Immersion

Baseline survey

Closing survey

Aug Sep Oct Nov Dec Jan Feb Mar

Satisfaction survey

Bi‐weekly progress reports

Improving practices

Increasing recognition

Aggregating demand

Jul

Best PracticesWorkshop

Develop toolkit

Initial trainings

National conference

Awareness raising campaign

Pilot group‐based provision of inputs

Knowledge‐sharing meetings

Ongoing support

Sector‐specific trainings

Start‐up

M & E

Immersion

Baseline survey

Closing survey

Aug Sep Oct Nov Dec Jan Feb Mar

Satisfaction survey

Bi‐weekly progress reports

Figure 7. Project timeline

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Best practices workshop In order to distill and document the local best practices and innovations observed during the feasibility study, in which there was a large degree of local variation, we propose a best practices workshop be held in each target location. Project staff will invite approximately 20‐30 women to each workshop: 1‐2 dynamic representatives each from about 10‐15 strong tontines (40‐60 total from 20‐30 tontines across both locations). These representatives will be identified from among participants in the SIPA feasibility study, through initial immersion activities (see above), as well as via a modest marketing campaign to pique the groups’ interest. The workshop program will include a review of the various tontines’ governance and recordkeeping mechanisms, a discussion of what limits certain individuals from joining tontines, an appreciative inquiry into how the members envision an ideal tontine would look, and a vetting of the “tontine federation” concept to understand strengths, weaknesses, opportunities, and threats related to the initiative. Best practices toolkit After the workshop, project staff will distill the most relevant structural and operational practices to produce a written and/or pictographic best practices toolkit. We have outlined above some of the innovations that international NGOs have introduced to informal financial mechanisms via other savings‐led programs, and some of these modifications may be relevant or complementary to the resulting best practices toolkit, in which case they may be included as well. The toolkit will subsequently be delivered among target tontines (see below). Awareness raising and tontine federation The PM and NGO officers will build on the momentum of the best practices workshop to organize tontines to establish a tontine federation: a network through which tontines can collaborate and share knowledge.50 The PM and NGO Officers will conduct an awareness raising campaign in the target locations to “brand” the federation and recruit members. Ideally, project staff will recruit 48 tontines in each location. The main criterion for membership in the federation (note that federation member groups constitute the project’s target population), aside from their residency in one of the target locations, is the regularity and frequency of their meetings, which must occur weekly or bi‐weekly to ensure that they can make sufficient progress over the course of the project (see Ongoing support below). Project staff will act as coordinators of the tontine federation, but the federation members (with their facilitation) will establish their own vision, goals, and by‐laws and governance procedures, in accordance with best practices observed from similar initiatives in other contexts. Member groups will be expected to adhere to any by‐laws established, and to assert their commitment to the knowledge‐sharing and collaborative vision of the federation. The 48 tontines in each location will ultimately be chapters of a national federation. The NGO Officers will supervise the federation, at least in the short‐term over the life of this pilot project. Introductory training The NGO Officers will deliver the finalized best practices toolkit to federation members through an introductory training. In each target location, the NGO Officer will hold four separate, identical training sessions in small groups for representatives of 12 tontines each (i.e. 24 individual representatives in total – 2 from each of 12 tontines). Each NGO Officer will therefore

50 The federation will not hold any funds or serve any direct financial purpose other than organizing tontines as an aggregate.

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introduce the toolkit to the 48 tontines in their location (96 total for both locations, for a total of approximately 3000 beneficiaries), who can use all or part of the toolkit to adapt their practices according to their specific needs. Animator training From each small training session, the project team will identify 3 dynamic individuals to serve as animators, for a total of 12 animators in each location. Animators will work within their own tontines as well as with 3 others, which will constitute a “cluster” of four. The animators will monitor tontine progress in best practice adoption, facilitate knowledge‐sharing meetings, and liaise between tontine federation members and the project staff. A one‐day training will be provided by NGO officers to introduce animators to their role, set expectations, and to provide them with the skills necessary to effectively motivate and monitor their target groups. Ongoing support The Animators will provide ongoing support on a bi‐weekly basis to the tontines in their cluster to reinforce best practices. In the initial meetings with their cluster tontines, the Animators will re‐introduce the toolkit as necessary, set goals and identify needs by tontine. They will also distribute lockboxes and/or other supporting materials (upgraded notebooks, registers, etc.) that may have come out of the best practices workshop. The Animators will attend the regular meetings of the individual tontines in their cluster (which may be weekly or bi‐weekly) to provide ongoing support and monitor progress. Tontine clusters will gather with their Animators for monthly knowledge‐sharing meetings where they can share recent adapted practices, successes and failures, and new ideas. Management and/or sector‐specific trainings From the moment when federation members are identified, Animators and project staff should explore their collective needs for trainings. The PM and NGO Officers will compile a “menu” of priority relevant trainings agreed upon by federation members. NGO Officers will then identify relevant potential service providers (local individuals or other NGOs) and arrange trainings in conjunction with tontine clusters’ monthly knowledge‐sharing meetings. Pilot collective purchasing program During the immersion phase, project staff should explore the feasibility of a collective purchasing program. During identification of federation members, NGO Officers will identify groups interested in such a program. The PM and NGO Officers will initiate a pilot to provide in‐kind loans (e.g. seeds and tools) and/or micro‐leasing of income generating inputs/equipment to federation members, or to organize a large‐scale purchase of inputs. If the NGO is registered by this point in the project, it can serve as the lender or leaser of these inputs/equipments. This project activity in particular will become more specific after the PM and NGO Officers have vetted the micro‐leasing/‐lending idea with both target tontines and other NGOs who may be providing similar services. National conference The project will culminate in a national conference. This event will establish national recognition of the tontine federation and allow federation members to identify future goals and a long‐term vision for both current and potential members of the tontine federation. The conference will be held in one of the two project locations, or if logistics render this impossible, in both. In the

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latter case, other potential federation members from surrounding villages and/or towns could attend. See Annex 2 for complete logical framework linking objectives to activities, and outlining anticipated results and relevant indicators. Roles and responsibilities The project team will comprise a Project Manager, 2 NGO Officers, and 24 local Animators.

Project Manager – Full‐time UNV staff Role: Oversee the project in its entirety, including monitoring and evaluation. Guide project strategy to encourage project innovation and relevance. Responsibilities:

• Supervise all project activities and ensure monitoring and evaluation • Recruit NGO Officers and oversee recruitment of Animators • Supervise and collaborate with NGO Officers and Animators • Provide technical assistance to NGO Officers • Manage budget and progress reports • Identify opportunities for project continuation • Initiate and maintain a database of contacts, ideas and relevant documentation towards

the project’s longer‐term vision of upward linkage • Ensure compliance with all UNDP rules and regulations

NGO Officers – Full‐time national staff Role: Liaise between PM, local Animators and target tontines to facilitate knowledge‐sharing and access to inputs. Responsibilities:

• Support the PM in project set‐up, implementation, monitoring and evaluation • Provide administrative support / coordinate tontine federation • Identify and recruit federation members • Identify and recruit local Animators • Work directly with target tontines to introduce toolkit

NGO OfficerNGO Officer NGO OfficerNGO OfficerNGO OfficerNGO Officer

12 Animators12 Animators



Figure 8. Organizational chart

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• Supervise, monitor and evaluate Animators’ activities • Identify sources for input and training needs as identified by Animators • Coordinate opportunities for collaboration between groups as identified by Animators • Coordinate National Conference

Animators – Part‐time local volunteers Role: Support tontines in their adoption of best practices and innovations and monitor their progress. Responsibilities:

• Work with target groups to set goals • Attend regular meetings of target tontines • Lead monthly knowledge‐sharing meetings with tontine clusters • Complete bi‐weekly reports on tontine progress • Provide feedback to NGO officers on group successes and challenges • Identify individual group needs (training and/or inputs) • Identify opportunities for collaboration between groups

Monitoring & Evaluation Progress reports Animators should complete bi‐weekly reports to document their target groups’ progress. These should take the form of a low‐effort, one‐page template, and should capture information on the balance of loan funds, key milestones (such as the election of a board or the writing of statutes), and a checklist of other best practices and whether or not they are being incorporated into the groups’ activities. Observation by NGO officers NGO officers should monitor the animators engagement with the target tontines by attending at least one of each animators’ meetings each month during the ongoing support period between November and February. These observations should be documented in progress reports, again taking the form of a low‐effort, one‐page template. These visits will allow NGO officers to identify areas for improvement and any necessary follow‐up trainings to increase the animators’ effectiveness. Additionally, they will enable the NGO officers to verify the progress being reported by the animators. Baseline and closing survey At the project’s outset, a baseline survey will be taken of each target group in order to establish their starting state. This survey will be completed by the animators during their initial meetings with each tontine in their cluster and should collect information required by the indicators outlined in the project’s logical framework (see Annex 2). This includes, but is not limited to:

• Governance structure • Operational structure

o Number of members o Frequency of meetings and contributions

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• Presence of written statutes, procedures, etc • Accounts

o Amount of contribution(s) o Balance of accumulated fund(s) o Loan history

At the end of February, a closing survey should be conducted to collect data on the target groups’ end state. This survey should gather the same information as the baseline survey in order to allow comparison of key indicators. Mid‐term and final reports Based on the work of the NGO officers and PM, progress reports completed by animators, and regular visits made by NGO officers to observe animators’ work, the NGO officers should compile a mid‐term report. This report should highlight both successes and challenges, and should identify actionable improvements to the project’s activities. This will serve as both an update to the UNDP and as a guide for the PM to ensure the project achieves its objectives. In the last two weeks of the project period, the PM, with the support of the NGO officers, should compile a final report documenting all aspects of the project, including activities, outputs, indicators, successes, challenges, lessons learned, and recommendations for the continuation of the project. Critical success factors The proposed project represents a departure from the UNDP’s traditional role of strengthening existing institutions. The rationale for this departure, as articulated in previous sections of the report, is that there is a dearth of local institutions operating in the CAR and none that have previously engaged tontines as their target group. Given the unique nature of the project, there are several factors that will be critical to its success that the UNDP must monitor closely during implementation. Flexibility This project represents uncharted territory for UNDP in the CAR, and for interventions supporting informal saving and credit models. The project design is intended to be flexible, in order to respond to local needs and strengths. This flexibility means that the Project Manager and NGO officers will need to be creative and proactive. There will be much ambiguity, and for the project to move forward, the team will need to adapt quickly to discoveries in the field. Additionally, targeting two locations in a short time presents a management challenge that will require staff to be autonomous and self‐motivated. Monitoring and providing effective incentives The project relies on a network of 24 animators, recruited from existing tontines and with potentially little experience in community mobilization. The project design assumes that these animators will be engaged as volunteers, thus it will be critical that they see value in their role. This will be achieved by creating a strong, recognized brand for the tontine federation so that animators feel they are a part of something significant, and ensuring that they are given individual recognition for their contributions at regular intervals.

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Frequent monitoring of their activities will also be necessary to ensure against shirking. Routine visits by NGO officers to observe their progress will be a formal monitoring activity, but given the expected proximity of the target groups to city centers, NGO officers should also be in frequent contact with members of the target tontines to ensure they are gaining value from the animators’ presence and from membership in the tontine federation. Ensuring local buy‐in Because development studies show that hand‐outs are often counter‐productive and undermine sustainability, it will be important for the project to consider what the correct incentives are for tontine participation and what tontines should be asked to contribute in return. What do the tontines gain from their membership in the federation? What value are the animators providing? What are we asking of the tontines in terms of time, funds, effort? What can we ask them to invest in order to ensure their commitment? This type of cost‐benefit analysis should be embedded in the program of the best practices workshop to understand what tontines want and what that is worth to them. Efficiency Given the very short timeline of the project, efficiency will be key. This applies to the functioning of the project team, as well as to support provided by the UNDP centrally. Procurement, approval for expenditures, and logistics planning will need to be executed in an accelerated manner so as not to obstruct the project’s ambitious objectives. We have embedded much up‐front time in the work plan to ensure that relationships are built and that foundations for success are established. This is often overlooked due to donor constraints, but is critical to having a real impact on tontines in the CAR. Collaboration The logistics of managing a nascent institutional structure in two remote locations is a significant concern. Success will require that the Project Manager have the freedom and budget to travel frequently between the two locations in order to have face‐to‐face interaction with both NGO officers. Additionally, there will be a need for the NGO officers to spend time in each other’s locations in order to collaborate and create a sense of cohesion among the team. This introduces large travel expenses given the logistical challenges of traveling between two location in the CAR, particularly during the rainy season. Long‐term thinking If the ultimate motivation for supporting tontines is to provide them access to the formal financial sector, the project should constantly consider ways in which it might facilitate this transition. This can include dialogue with existing or potential MFIs, the identification of potential partnerships, and lobbying for the opening of a local savings and credit institution. Caveats As discussed previously, considerations related to infrastructure, security, and adequate market activity have informed the choice of target locations and activities encompassed by this pilot project. Should the UNDP aim to expand the scope or reach of a subsequent initiative, it will need to reevaluate these factors.

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If UNDP and its partners aim to build a truly inclusive financial sector in the CAR, strengthening of tontines must be complemented by support to savings and credit institutions and initiatives that operate in the middle of the financial “pyramid” (see diagram below). Given the current context, the UNDP Microfinance Project should prioritize continued and scaled‐up support to existing and nascent local savings and credit institutions. There are currently no banks operating in northern cities, much less in the more remote rural post‐conflict areas. The International Finance Corporation (IFC) is conducting a feasibility study for a “green field” MFI in the CAR, but even this potential initiative would most likely be based in the southern Lobaye prefecture, which was never directly affected by conflict. 51 Even the two major credit union networks do not operate in the most remote post‐conflict areas. UCACEC savings and credit unions extend as far as Bouar. Existing savings and credit unions have, however, demonstrated their ability to reach the poor and attract new clients from post‐conflict areas. The majority of economic activities in the CAR (both agriculture and microenterprises) are of a survivalist nature, particularly in post‐conflict areas, and potential clients need safety‐nets and inputs for existing activities. If and when regional security and infrastructure improves, the populations of post‐conflict areas can begin to diversify their activities and link to new markets and sources, which may require more advanced financial service provision. The tontine federation that the project will help create can serve as an organized, dynamic and financially literate client base for new or existing savings and credit institutions.

There is no substitute in the long run for supporting the business and enabling environment to contribute to enterprise development and economic growth, nor for supporting agriculture, access to knowledge and access to physical capital to support livelihoods recovery more broadly. Towards the specific goal of increasing access to financial products and services for the poor, however, UNDP CAR can add the most value by supporting local savings and credit institutions and the growth of local MFIs. UNDP has a comparative advantage as the Microfinance Project is the only donor entity that has supported and observed the

growth of a local credit union network from its inception. It can bring this experience to bear to encourage both the expansion and strengthening of existing institutions, as well as the creation of new MFIs. Furthermore, UNDP's partnership with UNCDF means that UNDP can facilitate a smooth start to the regulatory process for these MFIs, bridging the gap between local outreach and institution‐building.

51 Personal communication with John Barry of Projekt Consult, 26 March 2008.

VI. LONG‐TERM RECOMMENDATIONS

Tontine Federation



Banks

Figure 9. Inclusive financial sector

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Adams, Dale W. and Marie L. Canavesi, “Rotating Savings and Credit Associations in Bolivia,” Savings and Development, Vol. 13, no. 3 African Development Fund, “Economic Reform Support Program (ERSP) 2007‐2008 Central African Republic Appraisal Report,” Governance and Economic and Financial Reform Department, OSGE, February 2007 Ashe, Jeffrey (Presentation), “The Savings Led Revolution: Leveraging the Financial Capacity of the Poor,” Oxfam America, 2007 Ashe, Jeffrey, “A Symposium on Savings led Microfinance and the Rural Poor,” Institute for Sustainable Development, Heller School, Brandeis University, Journal of Microfinance, volume 4, no. 2, Fall 2002 Ashe, Jeffrey and Lisa Parrott, “Impact evaluation: Pact’s Women’s Empowerment Program in Nepal – A Savings and Literacy Led Alternative to Financial Institution Building,” October 2001 Bénard‐Dendé, Karim, “Innovations en Microfinance: Les produits Kelemba de l’UCACEC (Microcrédits et collecte journalière de l’épargne des plus pauvres en République Centraficaine),” 2006 CIA – The World Factbook “Central African Republic,” 1 November 2007 Concern Worldwide and The Springfield Centre for Business in Development, "Towards Good Practice Principles for Microfinance in War‐affected Contexts," Performance Standards for MFIs in War‐affected Environments ‐ A Compilation of Guidelines, 2004 Consultative Group to Assist the Poor (CGAP), “Sustainability of Self‐Help Groups in India: Two Analyses,” prepared by Jennifer Isern (CGAP), L.B. Prakash (Akshara), Anuradha Pillai (CGAP), Syed Hashemi (CGAP), Robert Peck Christen (Boulder Institute of Microfinance), Gautum Ivatury (CGAP), Richard Rosenberg (CGAP), Occasional Paper, no. 12, August 2007 Danish Refugee Council “Protection Report: Paoua Commune/Ouham Pende” January‐March 2008 Economist Intelligence Unit, “Country Report: Central African Republic,” September 2007 Grant, W.J. and H.C. Allen, “CARE’s Mata Masu Dubara (MMD) program in Niger: Successful Financial Intermediation in the Rural Sahel,” October 2002 Hadon, M. and H. Seibel, “Microfinance in post‐disaster and post‐conflict situations: turning victims into stakeholders,” 2007 Human Rights Watch, “State of Anarchy: Rebellion and Abuses against Civilians,” vol. 19, no. 14(A), September 2007

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