On my last day in Huancayo, I saw two examples of village banking that showed why this approach works for PRISMA in Peru. “Village banking strengthens social networks,” PRISMA Director Diego Fernandez told me. It is the best way to educate and motivate clients, he says, because they can learn from and support each other.
In the morning a group of 15 clients, 11 women and 4 men (spouses) gathered at the PRISMA office. This was a “mature” group which had been through multiple loan cycles together, some as many as 14. The topic for the meeting was money management: why it is important to keep business funds and family money separate. The session ended with a written, ten-question test, labored over by the clients. Example: I have to know enough mathematics to be able to understand my bills and to determine exactly the profits from my business—true or false.
In mid-afternoon I visited quite a different village bank meeting—this one held outdoors in the middle of a potato field. It was potato harvest time and the dozen clients who made up the village bank chose to gather in a corner of the field with their loan officer rather than leaving the field. Some clients had been in this group for seven years. One older mother was joined in the group by a daughter and a daughter-in-law, each with one a swaddled baby. All said they used their PRISMA loans for growing their crops, and for some animals including cows, sheep, pigs, bulls and guinea pigs. With their harvest income, they buy seeds and fertilizer for their next crop. “We always win at harvest time,” said one. The group confirmed that they had never experienced losses with their harvested crops. When the meeting ended, they all drifted back into the field to continue the harvest.
Pat Kelly is Senior Communications Officer at the Grameen Foundation Social Performance Management Center (SPMC). She is based in Washington, DC.