Midterm evaluation of Freedom from Hunger : credit with education for women cooperative agreement

Midterm evaluation covers the period 1993-7/96 and compares the program with the village banking program of World Relief Corporation (WRC). Four country projects, two in Honduras and two in Burkina Faso, are reviewed. Implementation has proceeded smoothly, and all four village banking projects have been successful, though progress toward sustainability has differed. High membership turnover in Honduras and substantial illiteracy of members in Burkina Faso have hindered loan growth, health message assimilation, and self-management. All four projects have introduced distinct innovations to the village banking program, with varied success. In three projects, graduation of banks has been abandoned. In only one (CREDO), do men still belong to village banks; this is problematic. Turnover of members and single female membership are much greater in Honduras than in Burkina Faso. Member savings policy is probably the most variable component of the projects, ranging from minimal and voluntary to substantial and obligatory, with ability to withdraw savings from cycle to cycle varying from total to nil. The CWE model is being successfully implemented, with minimal changes to FFH education materials. In the absence of comparative impact studies, it cannot yet be determined whether CWE significantly improves welfare impacts, particularly for infants; the same holds true for the relationship between women's increased income and health education. Relations between WRC and FFH and their partners are cordial and generally collegial. The most innovative, and in many ways most difficult, partnership is between FFH and Reseau des Caisses Populaires du Burkina Faso (RCPB), FFH's Burkinabe partner. While satisfied with CWE's education component, RCPB's desire to modify the banking model to fit the needs of its credit union movement has occasionally resulted in friction. On the other hand, FAMA, FFW's partner in Honduras, a former applied nutrition organization with interests in sustainable agriculture, will need to focus on bank portfolio growth in order to remain successful in village banking. Without significant progress toward self-sufficiency, its village bank program will remain dependent on rapidly shrinking donor contributions. Common to all programs is the need to increase loan size and the number of village banks served in the interest of operational and financial sustainability. In some cases, particularly FAMA, the number of members per bank should be raised. Increasing loan size to banks and bank members depends on reducing member turnover, discouraging the use of internal fund lending, and uncoupling loan size from amount of savings. Key to the cost-effective expansion of the village bank portfolio is moving from 4-month cycles with weekly reimbursement of interest and principal to 6-month cycles with biweekly or monthly repayment meetings. While the basic financial problems of village banking are now fairly well understood, the sociological and microeconomic dimensions of village banking are largely unknown. A precise appreciation of how women's businesses generate income, how this income is reinvested or consumed, and how consumption is directed to human needs is still lacking after nearly a decade of village banking. The need to gauge the enhanced impact of CWE compared with straight village banking has led FFH to develop several surveys, which it will implement late in 1996 in both Honduras and Burkina Faso in collaboration with WRC and all four partner organizations. The trend in village banking toward loans to individuals or small, solidarity groups appears to be inevitable. Both WRC and CREDO have launched such programs, and WRC appears ready to experiment with other modalities. Beyond these shifts, FAMA continues to permit internal fund lending in its more experienced banks, while RCPB is moving steadily toward longer loan terms with unchanged interest rates. While there are dangers to cost containment in such experimentation, experimentation with credit to women entrepreneurs is both warranted and inevitable. (Author abstract, modified)