FINAL REPORT Assessing the Role, Effectiveness and Sustainability of Village Revolving Fund (VRF) Groups in Myanmar Study on Village Revolving Fund (VRF) RFP No: MYA/14/MMOH/RFP/0004 August 2015 - Myanmar Collaborative Study on VRF By Development Facilitators (Pvt) Limited & Livelihood & Food Security Trust Fund Final Report Assessing the role, effectiveness and sustainability of Village Revolving Fund (VRF) groups in Myanmar Study on Village Revolving Fund, Myanmar (VRF) RFP No: MYA/14/MMOH/RFP/0004 August 2015 – Myanmar Collaborative Study on VRF By Development Facilitators (Pvt) Limited & Livelihood & Food Security Trust Fund i Study on Village Revolving Fund, Myanmar, 2015 ACKNOWLEDGEMENT Development Facilitators (DF) wishes to extend the sincere thanks to management and the staff of LIFT, Mr Myint Kyaw, Business Development and Microfinance Officer in particular for giving this opportunity to contribute to the development sector in Myanmar. We sincerely appreciate their support extended to carry out this study successfully. DF also wishes to extend the gratitude for the management and staff of DPDO, AAM, ADRA, Mercy Corps, and MCS for providing all the information necessary to carry out the study, providing access to the field operations and for all the support extended in various ways to carry out the study successfully. The volunteer workers at village level, SHG and VDC leaders, members, non members made a significant contribution for this study and DF extend sincere thanks to them for their valuable contributions in knowledge and various forms of logistical support to carry out the study in a very successful manner. The government staff and village leaders and the Buddhist monks who contributed to the study in the capacity of KIIs are sincerely appreciated. Finally, the research team led by lead researcher and the international and local consultants and the staff who carried out the study at field level under numerous difficulties are highly appreciated. Key Research Team International Consultants Dulan De Silva, Lead Researcher Anura Atapattu, Research Tool Designer Udaya Wewelwala, Consultant Subodhanie Dissanayake, Consultant Local Consultants Kyaw Kyaw Thwin, Lead Local Consultant Myat Su Tun, Consultant ii Study on Village Revolving Fund, Myanmar, 2015 Table of Content ACKNOWLEDGEMENT ............................................................................................................................. ii Table of Content ..................................................................................................................................... iii List of Table ............................................................................................................................................. vi List of Figures ......................................................................................................................................... vii List of Graphs ......................................................................................................................................... vii List of Abbreviations ............................................................................................................................. viii EXECUTIVE SUMMARY ........................................................................................................................... 1 1 BACKGROUND TO THE STUDY ....................................................................................................... 5 1.1 Context .......................................................................................................................... 5 1.2 Introduction ................................................................................................................... 6 1.3 Village Revolving Fund Model ....................................................................................... 6 1.4 Objectives of the Study and Key Research Questions .................................................. 7 1.5 Methodology ................................................................................................................. 7 1.5.1 Field Research ................................................................................................................ 7 1.5.2 Household Questionnaire Survey................................................................................... 8 1.5.3 Qualitative Tools (FGDs, KIIs, FCAs and Case Studies) .................................................. 8 1.5.4 Data Quality Assurance ................................................................................................. 9 2 LITERATURE REVIEW .................................................................................................................... 10 2.1 Village Revolving Funds ............................................................................................... 10 2.2 SHGs & Different SHG Models .................................................................................... 10 2.3 Other VRF Models ....................................................................................................... 11 2.4 Indian Experience on Scale and Impact of SHGs ......................................................... 12 2.5 Non-Financial Work by Community Based Financial Institutions (Group Businesses and Contracts) .................................................................................................................... 12 2.6 Challenges in VRF ........................................................................................................ 12 2.7 Strengths of VRF Compared to Formal MFIs .............................................................. 13 2.8 Lessons and Recommendations from Previous Studies done in Myanmar. .............. 13 2.9 Lessons and Recommendations from Previous Studies done Internationally ........... 14 3 DIFFERENT APPROACHES OF PARTNERS TO THE VRF MODEL AND BENEFICIARY DEMOGRAPHICS ................................................................................................................................... 15 3.1 Integrated Rural Development or Specific Sector Development Approach............... 15 3.2 Implementing Partner (IP), Sub Implementing Partner (SIP) and Joined Partner (JP) 15 3.3 Establishment of Village Volunteer Network Titled as ‘Fellows’ ................................ 15 3.4 Targeting Poor and Vulnerable ................................................................................... 16 3.5 Different Types of Grassroots Level Organizations Managing VFR ............................ 17 3.5.1 Self Help Group (SHGs) ................................................................................................ 18 3.5.2 Village Development Committee (VDC) ...................................................................... 18 3.6 Demographics of Beneficiaries .................................................................................... 18 4 FINANCIAL SERVICES OF VRF (SHGs AND VDCs) .......................................................................... 19 4.1 Micro Credit Facilities .................................................................................................. 19 4.1.1 Cash VRF ...................................................................................................................... 20 4.1.1.1 Partners Implementing Cash VRF and Dedicated Funds ............................................. 20 iii Study on Village Revolving Fund, Myanmar, 2015 4.1.1.2 Adequacy of Loan Sizes................................................................................................ 21 4.1.1.2.1 Agriculture Loans ......................................................................................................... 21 4.1.1.2.2 Livestock Loans ............................................................................................................ 22 4.1.1.2.3 Small Enterprise Loans................................................................................................. 23 4.1.1.3 Non Income Generation Loans (Health, Education and Emergency) .......................... 23 4.1.1.4 Loan Terms .................................................................................................................. 23 4.1.1.5 Interest Rates ............................................................................................................... 24 4.1.2 In Kind VRF ................................................................................................................... 25 4.1.2.1 Partners Implementing Non Cash VRFs (In kind VRF) ................................................. 25 4.1.2.2 Animal Banks ............................................................................................................... 25 4.1.2.2.1 Pig Bank ....................................................................................................................... 26 4.1.2.2.2 Goat Bank .................................................................................................................... 26 4.1.2.2.3 Cattle Bank................................................................................................................... 27 4.1.2.3 Rice Bank...................................................................................................................... 28 4.1.2.4 Seed Bank .................................................................................................................... 29 4.1.2.5 Issues in In kind Banks ................................................................................................