Community-driven development decision tools for rural - IFAD

Table 2Degrees of CDD in rural financial services projectsProject design Conventional microcredit projects Full CDD rural financialfeaturesservices projectsVery low CDDModerate CDDOrigin and control of the Financial institution or specialized NGO Cbanks = associations of savings groupsfinancial service provider external to the communities established by the communities and& of funds handledcontrolled by the membershipProductsLoans Only production More liberal but still Members are free toloans purposeful lending borrow for any purposeCollateral Mortgage on - Mortgage on - Savings group’s guaranteeproducts financed products financed - Accumulated collective savings- Group guarantee of the groupInterest rates Negotiated by government and the Proposed by the loan committeeservice provider; depends on the rateof Cbanks; approved by membership.charged by the government loanMust cover all Cbank’s costsLoan-making decision Local managers of the external service Loan Committee of the Cbanks,provideri.e. elected members of savings groupsSavings mobilization Savings collected If allowed by the Central Bank,members’ savings collectedOther products Depends on the interest of the external Depends on the demand ofservice provider or on externalcommunity membersdonors’ initiativesSources of funds for Government (donors) Government (donors) Government (and donors) fundinglending to community funding loaned by funding transferred by - transferred by way of loansmembers the Central Bank way of loans - possibly with an element of grantto the serviceplus savingsprovider mobilized locally If allowed by the Central Bank:- membership savings- non-members’ depositsOther government (donors) grant supportCommunity animation Often done by the Use social workers Use social workers with experience inservices (CAS) extension service of specialized in clients’ establishing savings and loanministry of agriculture; group formation; associations; accountable to PCUaccountable to project accountable to PCU, and directly to the Cbanks networksand ministryministries, localgovernmentMarket and microfinance Specialists may not Specialists are Financial experts with experience infeasibility studies be required if only provided directly by savings and loans associationscrop finance envisaged the service provider cooperate with the social workersCost of the staff of the Initially funded by government Either benevolent staff used by theservice providerCbanks or paid by the membershipTraining of members Not relevant Not relevant A major project cost if adequatelyof the savings groupsplanned and implementedand of the MCs ofthe CbanksPerformance monitoring Performance monitoring is part of M&E system Monitoring performance and training ofand on-the-job training designed to supervise the service provider managers of the Cbanks includescombinations of accounting assistanceand auditAudit of the service providersIndependent auditors51