Our Tools - Community Microfinance Groups (CMGs)

Community Microfinance Groups (CMG) is a participatory, sustainable and community development models (can either be Village Community Banks - VICOBA or Village Savings and Loan Associations - VSLA) replicated from MMD (Mata Masu Dubara).

CMG Group is formed by 25-30 members who are essentially in smaller groups of fives called collateral groups (these acts like pressure groups in loans payments and guarantee systems). Once it is formed, members elect the group management committee leaders among themselves; and there after the whole group undergoes training on business management, entrepreneurship and group management.

The group meets once a week for training and banking. The banking operation starts by pre determining a group share value, of which can be USD 0.5, 1 USD, and 2 USD etc, depending on the economic status of the group members. Each member has to buy between 1-3 shares per week plus other pre-determined health, education and group operations funds contributions.

Thereafter, group is required to open a bank account with a commercial bank normally for security reasons and easy access of banking facility.

Fund mobilization and training continue for about 16 weeks, there after the loans are issued on rotation bases following the pressure groups on monthly bases. The fund mobilization continues every week; in this way every member gets a loan after submitting a business plan as trained. VICOBA has proved to be much more than a rural microfinance model. The experience from various projects is that it has caused unexpected ripple effects such as promotion of agribusiness, good governance, environmental management, health, education etc.