E-mail: info@mcsethiopia.org   P.O.Box  43  Meki-Ethiopia

Saving and Internal lending community (SILC)

Access to financial institutions is usually limited or nonexistent for the poorest of the poor. For rural populations, the distance to the closest commercial bank, credit union or microfinance institution (MFI) is often too far and transport costs are too expensive for making use of banking services. Moreover, the minimum savings required to open a bank account are usually high while the bank charges to open account or apply for a loan are often prohibitive for the poor households. In contrast, savings and internal lending communities – SILC – are filling that gap as the amounts boundled are affordable, easier to manage and within reach of the poor.

The program helped SILC group members to acquire skills in savings, credit, and record keeping. SILC groups are becoming increasingly popular because of the following reasons:

Savings can help those in poverty start a business, send children to school, or invest in future goals. But first and most fundamentally, savings provide a safety net. Without this sum of money to fall back on, an illness, emergency, or temporary drop in income can quickly become a crisis. MCS offers a variety of savings services, from church-based Savings and Credit Associations—groups of men and women who pool their resources to purchase assets, make loans to one another, and support each other.

Because of easy accessibility of savings and credit services, some SILC members have used their savings and credit to build permanent houses and purchase land, household furniture, livestock and domestic items such as china plates, mattresses and quality sauce pans. Based on this, the program has not only enabled the SILC group members to strengthen their financial asset base but have also helped group members to diversify their income generating activities and build up physical capital.

Accessibility to credit and savings, in a transparent and immediate manner. Members do not have to wait for others to pay their loans so as to obtain another loan.