CMSL

What is the Community Managed Savings and Lending (CMSL) Project?

Nelson Mandela University’s Department of Development Studies believes in engaging with communities through projects such as CMSL. Not only do students benefit from applying what they learn in the classroom, but communities benefit from students' contribution also.

Students from the Department of Development Studies will conduct research on the impact the project has on economically vulnerable households and the children under their care.

Project methodology

CMSL builds on a very old tradition practiced by low-income communities throughout Africa. In South Africa, it is referred to as ‘Stokvel’ or ‘Oorgooi’, in Zimbabwe it s called ‘Mukando”, in Kenya, it’s known as ‘merry-go-round’. These traditional systems enable households to pool their resources. For the poor, this is vital to their survival since amassing a useful lump sum of money to meet health, education or investment in an income earning activity is often a daunting challenge.

With the CMSL project, economically vulnerable households will join together in self-selected savings groups. The members agree on how much each will contribute toward a group fund every week. By combining their savings, groups create an internal loan fund.

Members borrow money from the internal fund at an agreed interest rate and the fund continues to grow through the regular savings contributions and revenue from interest rates charged on the internal loans.

To build the capacity of the CMSL groups, our project team will provide:

Training in the management of groups’ internal savings and lending fund as well as group dynamics
Training in the Selection, Planning and Management (SMP) of income earning activities
Intensive monitoring of group performance and on-the-spot trouble shooting
Research and documentation of project impact on member households and the children under their care.

Household Economic Resiliency and the well-being of children

Violence against women and children, crime and poverty make life particularly difficult for the inhabitants of the township communities in the Kouga Municipal area. In addition, the impact of HIV/AIDS weighs heavily on households’ ability to adequately care for and protect children. Not only do children lose one or both parents, the reduced resources in the household often means that they can no longer attend school or receive proper healthcare. The loss of productive adults also means that, as a matter of survival, children engage in income earning activities or take on other work for the family. Some become household heads trying to care for younger siblings.

The capacity of households to provide for children depends, in part, on their ability to maintain or stabilize livelihoods. Generating income and building up savings help households accumulate and protect their resources. These activities are long-standing coping mechanisms that poor families employ to respond to times of economic stress.

Our premise is that affording low income households access to timely and flexible savings and loans from their own resources will improve economic resiliency. We also believe that being able to care for one’s family builds confidence, restores dignity and self-esteem.

Goals, Objective and Expected Results

The goal of the CMSL project is to enhance the economic resiliency of 1,575 low-income households in the Kouga municipal area through membership in 225 groups over three years.

This will be achieved through the following objectives:

Offer training and follow up technical support to the CMSL group members.
Provide training on business management skills to CMSL group members.
Build strategic alliances with other community organizations that focus on the social, emotional and spiritual support
Host field days and site visits in order to share lessons learned about the impact and implementation of CMSL with other organizations in the Kouga Municipal area.

As a result of CMSL, vulnerable households will be able to better withstand crises, and better care for their children. Households will diversify their income sources, protect and accumulate assets. They will also send more of their children to school and improve their ability to provide for their basic health needs.