Jeffrey Ashe
, Director Grassroots Finance Action (grassrootsfinanceaction.org), USA
12 July 2022
As I understand it, the group receives a micro equity grant and adds it to the savings mobilized by the group and repays the micro-equity contribution when the fund is divided at the end of the yearlong cycle. This deals with the issue that if the fund is divided at the end of the cycle the group needs to wait for a month or two to mobilize enough savings to make loans. Savings groups routinely take care of this issue by not distributing some or all of the group fund, so that the group can make loans immediately. As the loan pool continues to grow the group can make larger loans. For example, most of the fifty savings groups in Guatemala we are working are holding back distributing at least part of the loan fund. This is a common strategy among the million or so savings groups worldwide. How much does the group pay for the micro equity grant? If the group does not repay the micro equity investmen, what are the consequences for the group?
As I understand it, the group receives a micro equity grant and adds it to the savings mobilized by the group and repays the micro-equity contribution when the fund is divided at the end of the yearlong cycle. This deals with the issue that if the fund is divided at the end of the cycle the group needs to wait for a month or two to mobilize enough savings to make loans. Savings groups routinely take care of this issue by not distributing some or all of the group fund, so that the group can make loans immediately. As the loan pool continues to grow the group can make larger loans. For example, most of the fifty savings groups in Guatemala we are working are holding back distributing at least part of the loan fund. This is a common strategy among the million or so savings groups worldwide. How much does the group pay for the micro equity grant? If the group does not repay the micro equity investmen, what are the consequences for the group?