The MasterCard Foundation, an independent, private foundation based in Toronto, Canada has announced two new programs to expand savings initiatives in the countries of Tajikistan and Rwanda. According to a press release on PR Newswire, a total investment of USD 9 million will be made towards these programs aimed at strengthening and creating innovations within the Village Savings and Loan Association (VSLA) model. The program in Tajikistan will be in association with the non-profit, Aga Khan Foundation Canada (AKFC) whereas CARE Canada (an operational member of the private, international humanitarian organization CARE International) will be involved with the MasterCard Foundation for the Rwandan initiative. The electronic news and information portal, PR Newswire is headquartered in New York, USA and is a subsidiary of the London based global business media company United Business Media Plc.
The VSLA model is a savings-based approach to microfinance where mostly self-selected groups of very poor people pool their money into funds, from which members can borrow, with out external credit. Each group sets its own rules about membership, savings and loans. This model was originally developed by CARE International in Niger in 1991. MicroCapital had previously reported on CARE International’s focus on the VSLA model in Uganda, the detailed story can be found here.
As per the release, over the next five years, AKFC will adapt and introduce the VSLA model to the mountainous regions of Tajikistan. This program would help villagers identify and develop viable businesses and help connect them to markets. The total cost of this initiative is estimated at USD 5 million, of which USD 4 million will be borne by The MasterCard Foundation and the remaining USD 1 million by AKFC. As per initial estimates, this initiative would reach more than 350,000 people in Tajikistan. Commenting on this initiative, the CEO of AKFC, Khalil Z. Shariff said this initiative is part of the foundation’s ‘long-term, holistic effort’ in Tajikistan. He also stated that the foundation’s plan to introduce VSLAs across ten other developing countries would be announced soon.
Tajikistan, the land-locked country in Central Asia with a population of 7 million, has about 53 percent of its population below the poverty line (less than USD 2.15 dollars as per the World Bank Standard). According to the United Nations, this is a considerable reduction from the 81 percent poverty rate in 1999. In terms of meeting the first of its Millennium Development Goals (i.e. reduce, by half, the proportion of population living on less than one dollar a day), the United Nations states that so far Tajikistan is ‘on track’ to achieve the same.
In Rwanda, over the next three years, CARE Canada will introduce several new VSLAs in a move to enable an estimated 540,000 people build sustainable livelihoods by providing them access to financial resources. As per the release, the USD 4 million cost of the initiative will be shared evenly by The MasterCard Foundation and the Canadian International Development Agency, a Canada based development assistance agency. As part of this initiative, CARE would help banks and microfinance institutions (MFIs) in Rwanda to customize their products and services to cater to VSLA groups which are ready for larger loans and need more diverse products. According to the President and CEO of CARE Canada, Kevin McCort, this initiative was aligned to Rwanda’s efforts to reduce extreme poverty by 17 percent by the year 2012.
A United Nations research states that nearly 60 percent of Rwanda’s population lives in poverty with 42 percent living in absolute poverty. The 2008 Human Development survey of the United Nations ranks Rwanda among the 15 poorest countries, measured on the basis of standard of living, life expectancy and literacy. As per United Nations, Rwanda is so far ‘on track’ to achieve the first of its Millennium Development Goals (i.e. reduce, by half, the proportion of population living on less than one dollar a day).
The release states that both the programs would collaborate with other savings-led initiatives in Rwanda and Tajikistan funded by international donors to ‘compare learning about sustainable ways to provide financial services to the remote poor’.
The MasterCard Foundation is an independent, private foundation founded in 2006 in Toronto, Canada. It was established through the involvement of MasterCard Worldwide customer financial institutions at the time of the company’s initial public offering in 2006. The MasterCard Foundation has two areas of focus: 1) Microfinance and 2) Children and Youth Education. For the fiscal year ending December 31, 2007, the foundation had USD 2.4 billion in total assets. MicroCaptial has previously reported on several initiatives of the foundation. Please click here for the list of stories featured on MicroCapital.
CARE International is a global NGO with poverty reduction programs aimed developing women’s economic capabilities. Founded in 1945 and originally established as a means to send supplies to post-war Europe, it has evolved into a large-scale humanitarian organization. It works in 71 countries around the world and in 2007 reported assets of USD 351.5 million. CARE Canada is part of the CARE International network focusing on issues such as climate change, poverty and economic development, gender inequality and HIV AIDS.
The Aga Khan Foundation Canada is a nonprofit international agency that supports social development programs in Asia and Africa. As a member of the worldwide Aga Khan Development Network (AKDN), the foundation works to address poverty and to promote solutions that help improve the quality of life for poor communities. It was established in 1980. As of June 2006, AKDN’s combined microfinance portfolio amounts to USD 52 million in loans outstanding with 97,000 clients in 12 countries. For a complete profile of AKDN, please refer to MicroCapital’s “Who’s Who in Microfinance” feature on this organization.
By Bharathi Ram, Research Assistant
Additional Resources:
PR NewsWire: MasterCard Foundation expands Savings Services to the Poor
MicroCapital.org:
June 14, 2007: WHO’S WHO: Aga Khan Development Network (AKDN)
United Nations Millennium Development Goals: Tajikistan, Rwanda
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