A CVECA is a ''self-reliant village savings and credit bank'' (from the French Caisse Villageoise d'Epargne et de Crédit Autogérée). CVECAs are designed to operate in rural areas with clients who are primarily subsistence farmers, with minimal non-farm income. While most banks have less than 250 members, they achieve service flexibility and
economies of scale
In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
through networking together into regional federations. "Each bank is managed by 2 part-time local staff and a board composed of members, all of whom have minimal education."
CVECAs are member-based
microfinance
Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services.
Microfinance includes microcredit, the provision of small loans to poor clients; saving ...
intermediaries inspired by external technical support. Structurally they lie between
informal
Formal, formality, informal or informality imply the complying with, or not complying with, some set of requirements ( forms, in Ancient Greek). They may refer to:
Dress code and events
* Formal wear, attire for formal events
* Semi-formal att ...
financial market actors like moneylenders, collectors, and
ROSCA
A rotating savings and credit association (ROSCA) is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending. Members all chip in regula ...
s on the one hand, and formal actors like microfinance institutions and
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
s on the other. Other organizations in this transitional zone in financial market development include
self-help groups {{short description, None
This is a list of self-help organizations.
Twelve-step programs
Recovery programs using Alcoholics Anonymous' twelve steps and twelve traditions either in their original form or by changing only the alcohol-specific ref ...
,
ASCAs, rural credit co-operatives,
village banks and financial service associations.
Significance
These small financial intermediaries "grew out of an interest in improving the traditional cooperative model in West Africa" by adapting it to thinly populated regions where there are very low levels of functional literacy and
monetization
Monetization ( also spelled monetisation in the UK) is, broadly speaking, the process of converting something into money. The term has a broad range of uses. In banking, the term refers to the process of converting or establishing something into ...
. Many of the world's poorest people live in such regions. The CVECAs represent an effort to show that poor people can manage and operate their own banks. Should this prove to be the case, it will open the doors to greatly expanded access to
microfinance
Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services.
Microfinance includes microcredit, the provision of small loans to poor clients; saving ...
for poor rural populations.
Progress
Beginning in the
Dogon
Dogon may refer to:
*Dogon people, an ethnic group living in the central plateau region of Mali, in West Africa
*Dogon languages
The Dogon languages are a small closely related language family that is spoken by the Dogon people of Mali and may ...
region of
Mali
Mali, officially the Republic of Mali, is a landlocked country in West Africa. It is the List of African countries by area, eighth-largest country in Africa, with an area of over . The country is bordered to the north by Algeria, to the east b ...
in the late 1980s, CVECAs have begun to spread around Africa, reaching 220,000 members with average loans of $130 by the end of 2003.
[Helms, ''Ibid''.] The networks in Mali are now sufficiently developed to access refinancing through the Banque Nationale de Developpement Agricole, the rural central bank.
See also
*
Credit union
A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
*
Microfinance
Microfinance consists of financial services targeting individuals and small businesses (SMEs) who lack access to conventional banking and related services.
Microfinance includes microcredit, the provision of small loans to poor clients; saving ...
*
ROSCA
A rotating savings and credit association (ROSCA) is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending. Members all chip in regula ...
*
Self-help group
References
{{reflist
External links
Comparative Analysis of Savings Mobilization Strategies
Development in Africa
Microfinance