Oxfam America’s saving-led microfinance model was conceptualized as an alternative financial service for the rural poor who are underserved by formal financial institutions. On the one hand, it is more advantageous than traditional saving methods of keeping money at home, in terms of security and interest income. On the other hand, the saving-led model involves a lower risk for the poor, compared with credit institutions, by allowing them to save before/while borrowing. A pool of group saving is a source of low interest loans to group members without collateral. A simple mechanism for saving and loans enables a group to run the services themselves, and makes the saving led model more cost effective than credit institutions managed by professional staff.

An external evaluation and internal monitoring have consistently indicated, however, that the program mainly serves the middle poor, but does not reach the poorest of the poor. Why so? While Oxfam America had a clear picture of the financial market and its own niche, it lacked sufficient understanding of 'demand'. A participatory inquiry was undertaken by Oxfam America staff in collaboration with their local partners in November 2012 to deepen understanding of the rural poverty that the program aims to address. The inquiry explored the following questions from the perspective of rural communities:

Methodology involved an extensive review of the poverty data and literature, key informant interviews with village leaders, focus group discussions in men and women’s groups with the poorest of the poor (selected by the aforementioned village leaders on the basis of context-specific criteria), and focus group discussions with field staff from Oxfam America’s partners. Findings were analyzed by Oxfam staff and later discussed with the partners, in view of developing a new strategy to guide Oxfam and the partners’ work.

The findings painted multifaceted characteristics of the poorest families against the background of widening intra-community gaps in wealth and power, rural-urban migration, and loosening relations within a family and a community. Participatory household financial analysis involving the poorest men and women revealed a seasonal pattern of their precarious livelihoods according to a farming cycle and household gender relations in financial management. An understanding of who are the poorest and what factors keep them in poverty, as well as what change they envision for themselves and their families, led Oxfam and the partners to substantially revise the original assumptions about how change would happen through saving groups.

Yuko Yoneda was, until December 2013, the Regional Monitoring, Evaluation & Learning Coordinator, Oxfam America. From February she will be the Program Development & Quality Director, Save the Children Liberia.

Image: Household financial management (Yuko Yoneda).