Poverty-Oriented Banking:
Serving the Needs of Farmers, Herders,
and Traders in Northern Senegal

The Case of the Caisses Populaires de Louga

INTRODUCTION

The issuing of credit is now the most common spending and investing mechanism available to consumers and business people in wealthy nations. Once they are deemed credit-worthy by a commercial bank or credit card company, individuals and businesses become eligible to spend thousands of dollars they do not own for just about anything, including buying homes, travelling, and making business investments. In 1991 alone, as a result of this privilege, the amount of money owed to banks, mortgage companies, and credit card companies in the United States was $777.3 billion (Ritzer 1995:7). To a large extent, using credit for purchases has become an addictive practice for those who are given the opportunity of taking advantage of a Visa, Mastercard, or American Express, among other credit options. Commercial credit institutions are in the business of encouraging people to spend what they do not have, to pay back slowly, and at extremely high rates of interest. That is, to go into debt. Meanwhile, poor and disentitled people, in both poor and wealthy nations, are completely neglected by commercial financial institutions because they have nothing in the form of collateral, because they may be illiterate, because they do not have the opportunity to earn a credit rating, and because the type of loan they are likely to want is too small and requires to much administration for the return, from a large bank's point of view. Not only are poor people systematically denied credit, they also do not have access to savings facilities. Many community economic development projects, both in the "First World" and in the "Third World", are defying this pattern of discrimination and the stereotypes which perpetuate it. Why do some have the opportunity to lavishly accumulate large personal debts, while others do not even have access to small amounts of credit, because it is assumed they will default? Commercial banks are simply not set up to handle the financial situations of people without traditional markers of credit-worthiness. The bottom line for a bank is, does the client have something that can be repossessed in the event of bad debt? For the poor and marginalized, the answer is always no. However, a system of providing savings and credit facilities for disentitled people and communities, by creating community banks, has been attempted by several NGOs and not-for-profit organizations worldwide, demonstrating that there are alternatives. These projects are based on the belief that poor people are capable of managing money, effectively using credit, accumulating savings, and reimbursing loans. This study is about one of these attempts. The Caisses Populaires de Louga, in Senegal, is a five year old community banking project which was created to deal exclusively with the financial situations of poor farmers, herders, and petty traders. The project, like others of its kind was also mandated to target women, who, across the globe, are the poorest of the poor. Micro lending projects such as this one are filling in the large gap left by the narrowly defined objectives of commercial financial institutions of credit. The field study I conducted in Louga was designed to examine the impact of the project on the situations of individual clients and to evaluate the effectiveness of the bank's structure in serving its clients' needs. The particular financial needs of poor rural clients are many and distinct. Thus, non-traditional banks, in answering to these needs, cannot simply replicate commercial banking practice. This paper will present the outcomes of the study. In the pages which follow, I examine the practice of creating and managing micro-lending and savings facilities worldwide to give a framework for the research project. Following the overview, I will present the context and methodology of my research project; a background on the political economy of agriculture in Senegal; an overview of Wolof production and consumption patterns; a discussion of the regional characteristics of Louga; the theory behind the Louga project: and finally, an analysis of the findings.

OVERVIEW OF MICRO-LENDING

Since 1976, when Muhammed Yunus, a professor of economics in Jobra, Bangladesh, began developing a model of a poverty-oriented bank, the idea has taken off all over the world, crossing traditional "First World"/"Third World" boundaries. The revolutionary idea that poor people, if given a little financial support could innovate their own enterprises, generate profits, and successfully reimburse a financial institution with interest, has been proven countless times by grassroots savings and credit initiatives in the last 2 decades. Most of these initiatives are able to boast a 95-100% repayment rate, which is almost double the rate of traditional commercial banks. Further, where commercial banks are traditionally "anti-poor", "anti-illiterate", and "anti-women", organizers of village and community level banks often consciously target poor, illiterate, women (Danaher 1994:84). The genius behind Yunus' method, and that of those who have built on his model, is fairly simple. After all, it enhances and expands on systems of supplying credit which poor people have been organizing for themselves all along, based on the principles of collective financing. These include chit funds in India, tontines in Africa, and loaning circles in Europe and the United States (Shah and Johnson 1994; Baviskar and Attwood 1995: chpt. 5, 16; McArthur, McGregor, and Stewart 1993). All of these are ways of collecting a sum of money from participants and then administrating its distribution for individual members' enterprises or needs, or for group projects and events. Further, loan circles or lottery funds do not require substantial collateral in the Western conventional sense, but invent other ways of insuring member repayment, such as peer monitoring. Grassroots savings and credit initiatives, that have been NGO-sponsored, also implement this system in order to end the vicious cycle of no collateral = no loan = no generated capital = no collateral. NGO-sponsored initiatives most often add an educational component of literacy, money management, and bank administration so that records can be kept by members and more effective investments can be made. It is important to note, then, that while large banking institutions have always rejected the poor as clients, and NGOs have only recently taken up this project, poor people have always had other means of finding credit. The chit funds and loan circles mentioned above are the positive side of the spectrum. On the negative side, is the prevalence of usury. This often involves relatively wealthy merchants, exploiting the desperation of their poor neighbours by lending money at interest rates as high as 300% per annum (ibid:405). It is not just the wealthy involved in this practice though; in some settings, such as the case of India, nearly anyone who has money lends it to others. Poor people are often forced to turn to this option, as other methods require waiting one's turn to receive money, even though emergencies come up periodically. This form of credit forces people into terrible and perpetual debt and borrowers often live in fear of their moneylender, knowing that they cannot possibly afford the interest, and also worrying that the moneylender may demand to be reimbursed without notice. Alternative banking institutions take very seriously the particular conditions of work and obligations of the very poor and disentitled. Many working women living in poor nations engage in activities that are part time, require little start-up or working capital, have informal structures, and require little or no formal education (Krahen 1991:54). This type of activity, if presented on a loan application, would be immediately rejected by a traditional commercial bank because it reeks of instability. That is to say, it is in the informal sector, it is probably subordinated to highly labor-intensive domestic obligations and child care, and the cost of administering a tiny amount of capital could never pay for itself from the point of view of a large corporate structure. Poverty-oriented banking is a labor-intensive initiative. Several sensitive issues have to be addressed when implementing these services for poor people. Micro-lending and savings projects first have to be able to respond to the prevalent fear that disentitled people have of large institutions, such as banks, where they are made to feel that they have no rights. In urban areas, this may mean going door-to-door to inform people about the lending system, and actually carrying out the banking door-to-door (see for e.g. Montemayor 1993:29; Wahid 1994:11). The administrative cost of this added service can be up to 40% more than a regular bank transaction (Montemayor 1993:30). Further, if the borrowers are to actually become responsible for the management and administration of the bank, to lessen the dependency on experts and consultants, there is the large task not only of offering effective training programs, but also instilling confidence in the trainees to be able to take on the responsibility. These programs often take years before they become effective (de Silva and Denby 1992:81). The most common scheme for covering administrative costs for services is for the alternative institution to lend out their capital with interest charges slightly above the rates charged by commercial banks in the region (e.g. Catholic Relief Services project report 1994:3; Wahid 1993:268; McArthur, McGregor, and Stewart 1993:405). The excellent repayment rate so often talked about in relation to grassroots banks takes innovative thinking as well. With no significant collateral required, and little lending capital, an alternative banking system must have a special method of monitoring its clients to avoid the risk of bad loans. The Grameen model is now famous for its peer monitoring method, whereby loans are administered to groups of 5 borrowers who are responsible for distributing loans to each member in turn (Maloney and Ahmed 1988:81). In this system, the availability of a loan depends on the repayment of a previous one, making each borrower feel responsible to the group. In other cases, the very fact of the bank being situated in a small village, puts tremendous pressure on all borrowers to reimburse fully to avoid shame. That is, because the viability of a small community bank depends on each borrower repaying, if a member defaults, she or he knows that it will not be kept secret in a small village, and that other villagers, feeling let down, will think poorly of that person. Personal debt becomes public in this system. Furthermore, many of the banks have tried to take into consideration the specific conditions of work faced by petty traders and have implemented a repayment system of weekly or monthly instalments (Catholic Relief Services project report 1994:2; Wahid 1993:17-18). This method is meant to make the loan manageable for the borrower so that she or he can keep track of what is owed, at the same time as developing an excellent credit rating which could reward her or him with a higher subsequent loan (Howells 1993:27). As mentioned above, it is poor women who are the main target population of most grassroots savings and credit institutions. This has a lot to do with trends in development, but also with the track record of women in many different countries who have been entrusted with small loans. The UN conference on women in 1975, which was partly to celebrate the opening of the UN "Decade On Women", brought a lot of attention to women, at least in international development circles (ibid:25). Many Third World women were finally getting credit for the economic and productive activities they had always been involved in. This trend meant that projects that even gave lip service to women and development would be likely to receive funding from major institutions. Thus, people who had been devoted to the plight of women all along were more able to prove that women were definitely worth the investment. The result today is that it is common knowledge, at least in development circles, that women are more likely to pay back their loans on time and in full than men, and that they are also more apt to reinvest most of their surplus income in their children's welfare and the home than are men (e.g. de Silva and Denby 1992:ix). Besides the low risk factor which attracts lending bodies to women, it is also the case that women are the poorest of the poor internationally, making it especially important to continue to invest in them. It makes sense for micro-lending initiatives to be alternatives to banks as opposed to trying to tack these operating principles onto existing banks. An existing commercial bank would never take on all of the necessary steps for creating an inclusive loaning system. It would also never take the time to invest in literacy or numeracy classes for its clients. However, as these alternative banks build up an excellent track record, showing near perfect repayment rates, intelligent investing, and effective training, they are in a position to develop partnerships with commercial banks that will allow them to have access to a substantial line of credit which they can in turn distribute to their borrowers (ibid:73). In the case of a project in the Dominican Republic, one general manager of a commercial bank was so impressed with the project's achievements that he approached its managers, wanting to develop a partnership (Howells 1993:26). In other cases, the alternative bank, after a while, will start to send its clients directly to commercial banks, if their loan demands begin to exceed their capacity. This is the case with the Filipino project "Bridges to Progress" (Montemayor 1993:29). The aspect of grassroots banking which is most often emphasized is the distribution of small loans. This is because it is viewed as novel and exciting to entrust poor people with capital. The other aspect of course, and one which is essential to the survival of many micro-lending institutions, is deposits and saving. The very fact of having an institution with a facility for saving money is a great incentive for the borrowers to actually deposit their money. Many people are in need of a safe place to put their savings. It is difficult to avoid theft in a rural home without locks. Further, money can be destroyed if hidden in places where insects can get to it (Maloney and Ahmed 1988:146). Some people have dealt with this problem by lending their money to moneylenders, who in turn lend out the money with high interest (Baviskar and Attwood 1995:346). But often they do not have a mechanism for earning on their savings. Community and village banks offer a reasonable interest rate on deposits, slightly lower than that on loans. Moreover, the incentive to save is also community-oriented because it follows that the more money that is deposited, the more capital there is for loaning. Aside from outside funding, or partnerships with commercial bank, this is the most common way to generate funds. What we have so far been discussing are the effects and benefits of micro-lending for the individual small trader, farmer, or artisan. However, another persuasive argument for the proliferation of micro-lending initiatives is, from the perspective of macro-economics, its explicit promotion of entrepreneurial markets. Small business is seen as the most successful employment creator in most markets (Montemayor 1993:29). Thus, if development dollars are diverted from mega projects to support millions of small business people, the economy in question could be far better off, especially when compared to major development projects where money does not go further than the government and connected interests (Barry 1994:4). Here are some examples. Women's World Banking, which is a 14-year-old international NGO with affiliates in 40 countries, is currently loaning to over 500,000 poor women on 5 continents (Howells 1993:21). This organization mostly lends to women who have existing small businesses. Through their loan program, many of these women are able to expand into small firms with employees (ibid:26). The Grameen Bank and B.R.A.C. in Bangladesh currently loan to over 1 million borrowers each (Karmaluddin 1993:381). Further, the Grameen model has been replicated in 30 countries (ibid:382). Catholic Relief Services, which has been in the business of micro-lending only since 1988, has over 10 000 borrowers in 9 different countries (C.R.S. project report 1994). Further, the Filipino project "Bridges to Progress", which is also a micro-enterprise loan fund claims that their system can create one job for every $1200 US invested (Montemayor 1993:29). This cost is for the training and loan administration of one borrower (ibid). Each of these organizations is continually expanding to create mor e affiliates in order to reach as many poor people as possible. In these first couple of decades of micro-banking projects, the most important achievements have been to generally raise the conditions of life of their members (Parzen and Kieschnick 1992:213). For example, through the Grameen Bank, borrowers are able to take out housing loans which help them to build nicer and more sanitary homes (Wahid 1993:91). The issue of micro-lending is an interesting one, because it can be embraced by people across the political spectrum. It appeals to those on the left because of principles of inclusiveness in terms of gender and class. On the right, it is appealing because it promotes individual enterprise with little dependence on government. The attention that is paid to the informal sector and small-scale entrepreneurship has been taken up by both the right and the left. Hernando deSoto's work in Peru, which exposes the talent and innovation in the informal sector has been extremely influential for making the plight of "informals" a mainstream issue, as it promotes the idea that poor people can and do create "bootstrap" enterprises (deSoto 1989). Tellingly, his work was endorsed by ex-president George Bush. A recent book written about the Shorebank Corporation in Chicago, which mixes commercial banking with development banking, is entitled Community Capitalism (Taub 1988). It is not extremely revolutionary to promote capitalism within poorer communities, but the inclusiveness and development orientation definitely appeal to leftist principles. The fact that the loans given by grassroots initiatives are relatively small in scale essentially means that the achievements of these small traders, farmers, herders, and artisans are not likely to make much of an impact on the fundamental economic divisions between rich and poor, within nations and between nations. This makes these projects relatively non-threatening to governments and powerful institutions. Still, what they will be able to accomplish, and importantly so, is a rise above the poverty line for many borrowers. Moreover, people are given the opportunity to achieve a decent standard of living themselves, instead of depending on hand-outs. The psychological impact of this alone is probably extremely positive. Further, organizations like B.R.A.C. offer training sessions on human rights and laws surrounding divorce and land (personal communication with former B.R.A.C. chief officer). Although in economic terms the results of such initiatives, when they occur alongside multinational corporate expansion, will be fairly small, the very fact that people are becoming more aware of their rights, and even learning to read and write, will have positive political implications for the poor. It remains to be seen whether projects which are still young and dependent on funding can build up a comfortable working capital. It is clear that too much dependency on foreign or government aid is dangerous, given the whims of funding trends and government budgeting.

THE RESEARCH PROJECT: CONTEXT AND METHODOLOGY

My research project was based in the region of Louga which is in the north of Senegal. I was in Senegal doing a six month internship through the University of Minnesota's International Studies program. The University of Minnesota has contacts in the West African NGO, ENDA-Tiers Monde. Every year, ENDA coordinates a handful of North American volunteer interns from the Minnesota program, giving them the opportunity to learn how to do field research on development projects or development issues of concern in Senegal. My stated area of interest was micro-lending and savings and credit operations, particularly for rural women. My research site was a 4 year old project called the Caisses Populaires de Louga. It is a banking system, initially funded by a Senegalese savings and credit NGO (CONACAP), and later by the African Development Foundation (which is US-backed, though coordinated by host country nationals). The official mandate of the project had been to target women and the rural poor. The project was simultaneously put into place in ten northern, medium and small-sized villages chosen by CONACAP. My interest upon reading the literature surrounding the project's implementation was to try and gauge what impact, if any, the advent of the banks had had on individual clients during the previous four years. I designed my questionnaire under the guidance of the director of ENDA - Systeme et Prospective, and a chief officer of Catholic Relief Services, Senegal (an organization which carries out micro savings and credit operations worldwide). We decided that I would visit all of the ten villages and interview an equal number of people in each, to facilitate comparison between the villages. In the first two villages I was to interview people as a pre-test to evaluate the questionnaire and come up with a final draft to be carried out in the remaining 8 villages. I decided with my advisors that it would be feasible to interview 10 bank clients in each of the villages - 5 men and 5 women, chosen randomly. Therefore, the final sample would be 80 people. The total number of clients from all ten banks was 779 (227 men, 552 women). I chose to question men and women equally because I found that male clients, although fewer in number were actually receiving a higher percentage of the total credit. I would also have focus group discussions with the elected management of each bank, and with each women's group. As an ENDA intern, it was required that I study the Wolof language (the dominant, non-official language of Senegal) for 3 months prior to my internship. In each of the villages I was to visit, Wolof was indeed the dominant language. However, at the time of interviewing I did not feel confident enough to administer the questionnaires myself in Wolof. I therefore hired a 24 year old male interpreter from Dakar, who was familiar with the region of Louga and, importantly, the particular Wolof dialect of the region. I did not hire a male for any specific reason, other than the fact that I felt that he was competent. Furthermore, the more I learned about the project, the more I discovered that men were key players in every aspect. The villages were all spread out over the northern region. The smallest village had a population of 289 (Niandoul), while the largest had a population of 11 246 (Dahra). Most of the villages had populations of between 300 and 500 people. Excepting Dahra, which is more a town than a village, the main economic activities throughout are livestock raising, agriculture, petty commerce, and peanut oil production. In Dahra, there is more artisan work and petty commerce than agriculture and livestock raising. In every village, the majority of people live in millet straw huts in compounds of about two or three huts. In a few cases, one or two wealthier families in a village may have a compound of stone buildings. The pre-test exercise was extremely informative as it was my first experience administering a survey, at the same time as being my first experience in a rural, West African setting. In each village I was being hosted by the village chief, and/or the bank president or manager. I was to stay in each village for only 6 or 7 days. In terms of interviewing, I discovered what I had already suspected - the questionnaire alone was not interesting enough. I preferred to ask the questions on the questionnaire, but have the sessions be semi-structured in the sense that I would allow people to elaborate on the issues that were important to them, and not dwell too long on what seemed to be uninteresting to them. A lot of people would happily begin the interview by giving me a preamble on their impressions of the bank and the impact it had on the village before I had asked my first question. I still managed to get a standard set of data from everyone, but there were informal issues that people touched on that were different for everyone. We found that the average interview was about 2 hours long, sometimes as long as 3 hours. Before each interview, we would gather all the banking information on the client in question, so that we could ask specific questions about the use of loans, helping the client recall the sums of money and the number of times she or he had borrowed. In the end, a whole section of the questionnaire did not turn out to be fruitful, because people were simply not in a position to answer with any accuracy. This was my questioning concerning people's incomes and expenses. I was asking people to provide me with information on their average incomes both before and after the bank. There turned out to be two problems with this. The first was that people do not keep accurate records of this information, and the second is that people's incomes and worth in a rural, semi-subsistence context is not measurable in the Western sense. For instance, I was asking a question concerning income generated from livestock. While some people are earning the equivalent of several hundred dollars a year in this activity, the fact that another herder earns nothing can mean that the latter is wealthier because he or she is not compelled to sell anything. Further, I simply did not exhaust the sources of income that people have available to them in my questioning, such as remittances from children abroad or elsewhere within Senegal. Thus, it is very difficult to put a value on income, because there are no accurate ways to assess what someone is worth in money terms if their goods and possessions are not actually on the market. Therefore, although the questionnaire was set up to determine how people's incomes were affected by the bank, what it actually answered was how the bank is used and perceived by its clients. Initially I wanted to interview each of the women's groups because the project literature claimed that the bank was an expansion of the women's groups' activities (Benn and Jones 1992:2). As it turned out, the women's groups had, in all but one case, turned most of the management over to men because they felt ill-equipped to deal with the accounting and the general running of the banks. The focus group discussions were still very informative because they provided me with a history of the activities of the women's groups leading up to the inauguration of the bank. This tended to show how the women's group status was manipulated by the villages in order to attract foreign funds. Overall, the response to my presence as a researcher was positive. My project goals were well understood by the people being interviewed and the management staff, based on the responses. One of the weaknesses of my study though, was the short amount of time I actually spent in each of the villages. This circumstance left me almost entirely dependent on the interviews for the information I was seeking. For instance, during my research period there were no scheduled village-level bank meetings such as the annual general assemblies. Observation of these would have helped me further observe the dynamics between the management and the clientele at large. In order to compensate for this, the questionnaires were designed to provoke discussion around the client's participation and sense of involvement with the bank. Clearly my analysis of the banking system would have been improved had I been able to spend more time in each setting. However, the fact that I had the opportunity to talk to people in 10 different villages, with identical banking systems, made up for the fact that the visits were brief. That is, the more villages I saw, the more I began to get a global idea of the system. Had I only visited one village, I would not have had as clear an idea of which aspects of the bank resulted from the bank structure, and which were due to characteristics of the village. One example of this, elaborated on in the Findings section, had to do with the role of women's groups in each of the banks. Another weakness of the study is that I did not interview a control group of non-clients of the bank, to compare with the client data. On the other hand, the random sample of clients had me interviewing very new clients who had never borrowed from the bank. Although this did not account for a significant portion of the sample, it did provide me with some insight into why people do not join, or what type of people might not join. My results could have been improved had I designed the study to include non-clients. In sum, the questionnaires mainly focused on the principal activities of the clients and how the bank impacted on these; the types of investments made, according to the size of loans awarded; the level of involvement of clients in the bank; the differences between the impact of the bank on women and on men; and the impact of the bank on the client's need for outside sources of credit. The objective was to fully understand the role of the bank for the clients it served, and its success in meeting their needs.

POLITICS, PRODUCERS, AND ACCESS TO CREDIT IN SENEGAL

The Caisses Populaires de Louga, along with other Senegalese micro-lending projects are certainly novel in that they cater to the financial needs of the rural poor, providing year-round cash credit and savings facilities. However, Senegal has had nation-wide agricultural credit programs from the Colonial period through the post-Colonial one. The two types of credit must be distinguished in order to fully appreciate the importance of the non-governmental versions. This section examines the bureaucratic, national credit programs which were set up in the countryside to promote groundnut production for export. In the national programs, the bottom line was that as long as the government in question, Colonial or Independent, could benefit from the issuing of credit, a formalized system was in place. On the other hand, the entrepreneurship of petty traders whose livelihoods threatened the near-monopoly of the Colonial regime or the Independent government in the trading and marketing of groundnuts, cotton, and other products, was systematically blocked. Thus, during the colonial era, the commercial banks that were established in the AOF, the Maisons de Commerce, and the Colonial Administration secured their monopoly by ensuring that independent traders could not get access to credit (Boone 1992:45). Yet, the same regime enforced a system of mandatory membership in rural "cooperative societies" whereby small groundnut producers were issued credit at the inter-village level (Schumacher 1975:151). This cooperative system allowed the Colonial government to ensure that groundnut production was a priority and to extract the producers' harvest in exchange for inputs and seed, securing an export marketing monopoly. It also allowed them to maintain control in the countryside. As is a common story among post-Colonial states, the change in power to an independent Senegalese state involved little deviation from the economic and political apparatus set up by the French. Thus, although the socialist democratic mission was a new innovation developed within the Senghor administration, the regional "cooperatives" set up to carry out this plan looked a lot like their Colonial predecessors (ibid). The new cooperatives, managed by l'Office National de Cooperation et d'Assistance pour le Developpement (ONCAD) were created supposedly to free the peasant farmer from the exploitation of middlemen, a characteristic of Colonial trade. This was achieved by expanding the number of cooperatives so that producers were in direct contact with the marketing boards (Boone 1992:106). Another deviation was the decision to discontinue forced membership, in favour of simply encouraging it (Schumacher 1975:151). However, the ONCAD program was still based on the assumption that the private market in the countryside was non-competitive. That is, that the only way to have a viable economy was for the state to centralize and monopolize the marketing of groundnuts (Ross 1982:65). Access to credit would be facilitated as long as the producer was working according to the monopolistic rules of the state. In practice, both the Colonial cooperative system and the Independent one can correctly be called disasters. The systems were set up to provide groundnut seed, agricultural inputs, and extension services on credit at the beginning of the rainy season. The producer was supposed to reimburse, with interest, at the harvest season with a portion of the output crop. Both systems found themselves in trouble because of high operating costs, corruption, poor management and non-repayment (Schumacher 1975:186). While the Colonial government could compensate for bad debt with guaranteed unpaid African labor (Hart 1982:84), the Independent state found itself accumulating a huge and unrecoverable debt load. In late 1980, the entire credit system was cancelled. By 1982, the total amount of bad debt accumulated by the program was approximately $300 million US (Gersowitz and Waterbury 1987:165). With these and other financial problems, the Diouf government turned to the IMF as a last resort. The Structural Adjustment program predictably called for a halt to extensive government spending on agriculture, in order to privatize the sector (Danaher 1994:86). In part, the accumulation of bad debt was a result of a vicious cycle whereby the government would forgive the debt of farmers who had not reimbursed, which, in turn, sent a message to farmers in subsequent years that they would not be penalized for non-repayment. The incentive for farmers to respect the cooperative system was minimal. The system of cooperative credit was introduced in the Independent period partly as a measure to shield the small producer from bad years by regulating the price they would receive for their output. That is, instead of pricing according to the international market, during a boom year the farmer would receive a lesser price, so that his or her income would be secure in a slump year. In theory then, at the time of harvest, the government would pay the farmer for his or her output at the fixed price, and would then deduct the cost of the items on credit from that price. In practice, the prices were so low that, if the farmer did sell to the cooperative, he or she would most likely be losing. On the other hand, the government would be able to turn around and sell the output at high market prices (Hart 1982:93). It was only because of the regular forgiving of debt on the part of the government that farmers could actually raise their financial standing through the credit system (Gersowitz and Waterbury 1987:172). Some farmers would receive credit but sell their output on the black market, where they could get closer to market rates, and then claim bankruptcy to the government (de Silva and Denby 1992:72). The formal cooperative system was simply not suited to the conditions of peasant farming. Because the government saw rural producers as incapable of determining their own farming needs, the cooperatives were set up to dictate to farmers the types of inputs they could receive on credit. Thus, many farmers would find themselves with equipment that was not appropriate, or would not be properly instructed as to how to use it (Ibid:163). In this system, farmers were not entrusted with cash credit, nor were they provided with opportunities to save. Farmers were simply encouraged to borrow and spend, leaving them in a dependent relationship with the state (ibid). Further, the system was often known to be too late in delivering inputs to the cooperatives, so that producers could not take full advantage of the rainy season (de Silva and Denby 1992:66). As mentioned above, the system did not end up serving the needs of the government any better than it served those of the producers, given that through cooperative credit an unrecoverable national debt accumulated. Hart, writing about West Africa in general, argues that the cooperatives, while advertised as promoting increased agricultural production, must have been serving other needs for governments to persist with them in the face of repeated failures (Hart 1982:94). He concludes that the governments could maintain power in the countryside through this system, one of the main reasons why they continued the program for so long (ibid). Casswell seconds this, demonstrating that once the program "...threatened the political stability it had originally helped to create..." it was canned (as quoted in Boone 1992:204). Thus, corruption was rife within the cooperatives and it quickly became uncontrollable. Hart argues that post-Colonial West African states had few alternatives but to rely on heavily controlling agriculture to generate revenue and to have a viable system of rule. Further, there was external pressure to make large investments in state formation to be competitive in the global scene (Hart 1982:86). Above all, preoccupation with shoring up the state by any available economic means has dominated development policy in the last two decades. The needs of commercial agriculture, in particular, have been subordinated to those of state formation (ibid:84). The Senegalese state was practically forced in this direction because the French Colonial system actively prevented industrialization in Senegal so that France would not have to compete in its processing of primary commodities (Boone 1992:41). Thus, Senegal was not in any financial or physical position to diversify to other industrial activities. Further, while France had originally protected the Senegalese economy by subsidizing groundnut prices, by the mid 1960s, this financial cushion was taken away, making this already feeble source of income even less viable. The heavy corruption on the part of the government power holders which diverted much needed funds away from small producers, also directly undermined the very source of state revenue. Today, farmers have absolutely minimal support from the government, which has been promoting a policy of decentralization and food self-sufficiency since the start of the Structural Adjustment program. The policy amounts to major cutbacks in public sector spending. The credit program had been an attempt to centralize the agricultural system by distributing seeds and inputs to all farmers as a way of maximizing output. Instead of attempting to improve the program, the IMF and the government have preferred to drastically decrease spending in agriculture altogether, decentralizing the sector. Since 1985, the government has discontinued the supplying of credit. Thus, farmers have to buy seed and fertilizer in cash (de Silva and Denby 1992:69). The obvious result is that most producers have to rely fully on moneylending at high interest rates. Although Structural Adjustment also calls for decreases in government salaries, it is much easier for the government to neglect the small producers in the countryside than their powerful constituents in the cities and the countryside. The state still has a near monopoly on the marketing of groundnuts, aside from some petty traders who smuggle products across the border for better prices. What the government has done is to close down many of the cooperatives, while leaving some open to receive and buy output. Thus, some of the farmers I interviewed were still using the government cooperative to some extent, but this was only a minority. I will now turn the discussion to Wolof production and consumption to provide an ethnographic background for the research study.

WOLOF PRODUCTION AND CONSUMPTION

The Wolof are the dominant ethnic group in Senegal based on population. While French is the official language, as inherited from Colonialism, the Wolof language is increasingly being spoken by people of all ethnicities and is gaining the status of a national language. There were other ethnic groups, primarily the Peul (Fulani), in the villages I visited, however, the Wolof cultural patterns were most pervasive. I am going to focus this discussion on issues surrounding Wolof production and consumption as these most relate to the larger project of access to credit. A discussion of the production and consumption patterns of the Wolof must start by acknowledging the influences upon their present formation. Islam is no doubt the greatest single influence on the Wolof tradition. Approximately 95% of the contemporary Senegalese population is Muslim, and the Wolof have been in contact with Muslims since at least the 11th century (Cruise O'Brien 1971:19). Before the spread of Islam, Wolof society was principally a matrilineal one. One of the most important factors in determining one's relative status was through matrilineal descent. Patrilineal descent was also an important indicator of one's rank, but it was definitely secondary (ibid:17). As Wolof society has become increasingly Muslim, the importance of matrilineages has almost disappeared. In Senegal today, some Wolof will still refer to descent through the female line as a cultural artifact, but on the ground, it is inheritance through the male line that reigns. Property passes through males, and the compound and household is both patriarchal and patrilocal. The Islamic influence has been syncretized in many ways with traditional Wolof culture and belief systems, yet the emphasis on males as carrying greater status and power than women was a significant shift. The French influence upon Wolof culture was of a different style. Colonialism's impact on Wolof society was felt more quickly and intensely. It was primarily an economic impact, yet its cultural consequences were many. The French did very little in terms of directly interfering with Islam, yet they completely uprooted the traditional subsistence economy, replacing it with cash cropping. In fact, the French used the power of Muslim leaders in the countryside to their advantage in order to ensure the expansion of groundnut cultivation for the export market. Had the French not had this religious endorsement, their ability to wield influence throughout the country would have been greatly weakened. Having Muslim leaders on their side, by offering significant rewards, allowed the French to shift Wolof society from a clan and extended family system where solidarity was valued, towards a more individualistic and competitive system in which production was geared away from familial needs to the needs of the Colonial regime (ibid:288). Today, there are Catholics in Senegal, but only a small minority (about 5%), indicating that Catholic missionaries did not play a very significant role in the Colonial regime. On the other hand, the very development and expansion of the cultivating of peanuts for the export market is still changing the Wolof family patterns. For instance, while writers have long written about compounds as the unit of consumption and production in the Wolof culture, it is now becoming clear that there has been a distinct shift to a more nuclear style compound (Diop 1985:147; Gersowitz and Waterbury 1987:48). That is, the individual households that make up the compound are becoming more autonomous economic units, moving away from the traditional compound with a patriarch. This is a consequence of the emphasis placed on cash cropping. Originally, the compound consisted of a large collective field, called the "grand champ", primarily for millet production, that could feed all the dependents. The compound as an economic unit began to lose importance as soon as cash cropping in the collective field became so extensive that the millet produced could no longer feed a whole compound. The married sons or brothers of the patriarch, who were the heads of the other 2 to 5 households in the compound, began to behave more like nuclear units providing millet for their own household (Diop 1985:163). Where there still exist compounds with true collective fields, dependents of the patriarch work the field in the morning and return to their individual fields in the afternoon. Women are given a small parcel of their husband's land at marriage. Before marriage they work their father's or mother's fields as well as performing domestic duties. After marriage they cultivate what they can on their own fields, usually millet and groundnuts and other consumption crops in small quantities. If they are fortunate enough to have an adequate supply of water, they may do out-of-season farming of vegetables for cash. According to Diop, traditionally, women only worked on the collective field. The demise of the collective field represents a shift away from community solidarity (ibid). The money economy seems to encourage individualization of the household. Today, if women do work another field besides their own, it is the household head's and not the compound head's. Women rarely inherit anything but the field. The cash that they derive from it is generally for their own purposes. It is usually a small source of independent cash (ibid). For a lot of women, this cash pays for the households, especially for their own children. Polygamy is an important aspect of Wolof society. Traditionally, a Wolof man could have as many wives as he could afford to support. There was usually a hierarchy among the wives which could depend upon favouritism or upon status in the Wolof caste system. Under Islam, polygamy is limited to 4 wives and equality in the treatment of each wife is strongly emphasized (Diop 1985:183). Today, it would be a wealthy man who could afford to have multiple wives and support all the children. However, it is common for rural men with reasonable incomes to have two wives. In reality, there is competition and hierarchy among wives, despite Islamic tenets for the equal treatment of wives. On the other hand, and remembering that each situation is different, economically speaking, with an extremely intensive workload for women, a co-wife's work contribution can be a relief. The goal here is not to evaluate the polygamous system, but to point out the presence of this element in Wolof society. Ideally, each wife would have her own hut, probably housing her own children, within the compound. The compound head still sanctions marriages and devolves land to a marrying son. In the time of the cooperative program, although women could get some credit, the compound head was usually the household member who interacted with the state, biasing the access to credit and equipment in his favour (Gersowitz and Waterbury 1987:49). The loss of the compound head's power as chief provider has meant that household heads are now much more important. In terms of consumption then, while a whole compound would have eaten the same meal, meals are now eaten within households, encouraged by the fact that households are more and more responsible for their own subsistence production. The Senegalese government responded to the UN "Decade on Women" by celebrating women's work as an important part of the economy, at least on paper, and promoting the formation and development of women's groups. Still, because of the pattern of women not inheriting and generally having access to only a tiny potential for independent cash, women's paid and unpaid work is less valuable to her and to the household than is men's work.

LOUGA: BACKGROUND ON THE TARGETED REGION

The Caisses Populaires de Louga was developed as a pilot program targeting 10 northern villages in the departments of Linguere, Kebemer, and Louga, in the region of Louga. It is important to note the particular characteristics of the region and the targeted villages, before moving to a discussion of the project. Geographically, the country of Senegal is Sahelian desert or grasslands in the north, gradually becoming a Savannah landscape in the south. The groundnut basin, where the most profitable cultivation takes place, stretches across the center of the country. Thus, although groundnut production is extremely important in terms of northern incomes, the region of Louga does not possess the most advantageous soil conditions. Further, the desert climate makes agriculture very difficult, the first rains beginning later than in the more southern regions, and being much more erratic. On the other hand, some of the more urban villages have developed in Louga as a result of the region's own groundnut basin (Monograph de la Region de Louga, 1987:2). Still, the basin is much less fertile than the central region. All of the villages are also inland, away from the workings of the fishing industry which is a lesser, but significant portion of the country's export market. The third major industry in Senegal is the mining of phosphates. While there is mining activity in the region, none of the villages in my research engaged in it. The production-oriented economic activities of all the villages are farming, and livestock raising. The Wolof place much more emphasis on agriculture, while livestock raising is much more important among the Peul (Fulani) minority. Aside from the cultivation of groundnuts, the other principal crops are millet and cowpeas. Other activities include petty trade by both men and women, including livestock and manufactured goods; and small-scale, labor-intensive processing of peanut oil by women. In terms of the regional population, the most recent census was published in 1988; the following statistics are all from that year. The population for the region of Louga accounted for 7% of Senegal's total population. The population in the region, similar to many poorer nations, is a young one. People less than 19 years accounted for 56% of the regional population, and people over 60 accounted for only 6%. The female population is larger than the male population. There were 87-90 men for every 100 women in the region. Like the whole of Senegal, the most dominant ethnic group in terms of numbers is Wolof. The Wolof ethnic group accounted for approximately 70% of the population (Recensement General de la Population de 1988, 1992). In terms of literacy, 72% of the population was illiterate. If divided by sex, 72% of men are illiterate, while 91% of women are (ibid:30). 84.9% of the population had never attended school at all. Of those who had, only 2.4% had reached secondary school. Predictably, where 90% of women had never attended school, 79% of men had never attended (ibid:35). The state education system has only recently been more widely implemented in the region. Some villages though, are more neglected than others because of their isolation. Literacy and learning takes three principal forms in the region. In the more traditional Koranic schools, Arabic, the Koran, and math are the three main subjects. In the French system, Western subjects of history, math, French literature etc. are instructed. Finally, and this is more prevalent for women than for men, non-governmental agencies, including the sponsors of the banking project, teach Wolof literacy and specific lessons to do with a particular village-level development project. Because the above figures are for 1988, it is most likely the case that slightly more women, and slightly more of the population in general are now literate. Seasonal migration to urban areas is prevalent especially for young men between 15 and 35 years in the region. The norm is for migrants to spend approximately 6 months away from their home village, coming home in the rainy season to help work the fields (ibid:43). Due to shortages in millet yields, to supplement a family income, it is usually essential for members of a compound to find work in urban settings during the dry season. The region is plagued by a particularly precarious economy. There is little capital flow, especially in the rural parts of the region, as the economy is not diverse and is agriculturally based. Despite the fact that the government cooperative program was unsuccessful and unsuitable for many reasons, the decentralization policy is not a better solution for the villagers. The policy amounts to reinforcing an already established urban bias, neglecting to invest in the rural regions not only in agricultural inputs, but also in infrastructure, to which the above figures in education attest. A majority of the 10 villages are significantly isolated from the main highway, and from other towns, mostly because the surrounding roads are not in very good condition. This physical isolation is further exacerbated by government neglect. The need for villagers to have something in between total state control and total neglect is strong. A tiny portion of the regional population has been served for the past 4 years by the community style banks in Louga. There are also variations on the community banking model in other pockets of the country. Perhaps this model can be gradually implemented in more of the region and in other parts of the country as a partial solution to general poverty. Had the government, with the millions of dollars that were mostly wasted in the cooperative system, been able to create this type of project, where reimbursement is almost perfect, and where interest rates gradually increase the working capital, state financing of rural activities might not have been such a bad idea. Of course, this was not a possibility given all the powerful forces keeping money out of the hands of the most needy, but the amount of money that was completely wasted is staggering given rural poverty.

THE THEORY BEHIND THE LOUGA PROJECT

The creation of the Caisses Populaires de Louga in 1989 was part of the international movement towards poverty-oriented banking. Further, it was one of a number of initiatives created in Senegal, over the past two decades, to target capital-poor villages and develop systems of micro savings and credit to stimulate the rural economy. It was started by a non-governmental organization called Le Conseil National pour la Promotion et le Developpement des Caisses Populaires (CONACAP). In stark contrast to the state credit program, members of each of the 10 Caisses Populaires were to be awarded small loans in cash during both the dry and rainy seasons to be used in activities, or for circumstances, of their choice. Moreover, the banking system was to provide a facility for accumulating savings with interest. Given that each of the 10 banks would be working with their own separate capital, and within one small village, management would require dealing with no more than a few hundred members at most. The initiative was an outcome of the UN focus on women and development. A very significant collaborative project of the UN and the Senegalese government, also started in 1989, was the distribution of millet grinders to many villages to help relieve the work burden on rural women, and to acknowledge and support their role as producers. The UN and the government were attempting to promote village women's groups which were engaging in savings activities (tontines). Thus, a village was deemed eligible for a grinder if it had an active women's group. In practice, this required women's groups to raise a certain sum of money to partially pay for the grinders. The grinders were not only to reduce greatly the amount of work women had to do to prepare millet for the daily meal, but also to generate capital for the village by charging nominal user fees. As an offshoot of the grinder project, CONACAP decided to create a village banking pilot project in the Louga region to build on certain women's groups' demonstrated ability to save and manage money. The technical assistants within the NGO did a tour of the region and selected the 10 villages that were to become the Caisses Populaires de Louga (Benn and Jones 1992). The project was therefore created as an investment in the women's groups. Like Yunus' Grameen model, the Louga project was designed to build on and enhance the systems of savings and credit the women already had in place. One of the features of the Senegalese tontines is that the collection of contributions from all the women involved was never for profitable activities, but for ceremonies, weddings, and religious organizing. It is up to the women to organize these events, but the cost of food and clothing etc. is generally too much for one women's household to undertake. Therefore, each woman in the tontine regularly contributes to the collective fund, benefiting when it is her turn. Turn taking is either in the form of a lottery or dependent on which member is presently organizing a baptism or some other event. The Caisses Populaires de Louga were created to bring outside capital into the targeted villages and begin to orient the women's activities towards investing in more profitable activities, and to provide the opportunity for many women to take small loans simultaneously. CONACAP's plan was to create a banking system that would ultimately be run by its members. Thus, along with the capital that was granted to each of the 10 villages, an identical system of management though committees was also put in place, and training sessions in bank-related activities were to be implemented. In 1991, after the project had been in place for two years, and CONACAP workers were satisfied with the success, the African Development Foundation, a creation of the US congress, but run by host country nationals, was solicited for further funding. CONACAP had provided initial funding with the equivalent of $20,000 US. In 1992, the African Development Foundation decided to award the bank an additional $148,845 US. A large portion of the additional funding was for the construction of a bank building with a safe in each village, further technical assistance, and literacy training. In terms of the relationship between the 10 different banks, an advisory council was formed to meet 4 times a year with the hired Technical Assistant. This advisory council is made up of 20 committee members (2 from each bank). The idea was that this advisory committee would eventually replace the technical assistant and became the overseer of the system. The technical training was to consist of a Feasibility seminar of 6 days, a seminar on Productive Credit to last an additional 6 days, and a Bookkeeping and Accounting Training session would eventually be given for each treasurer. These sessions were all designed for the management committee members, with the idea that the trained members would arrange and implement further training for all the other bank members. For literacy and numeracy training, the Foundation International de Developpement, a French agency, was identified by the African Development Foundation to provide instruction. Each village would have 4 months of training to be conducted in the bank buildings. The actual mechanics of the savings and credit system required that all members would pay a tiny fee, the equivalent of $1.00 US to receive a membership card. They would then be required to deposit an additional fee for 3 months prior to receiving a loan. The minimum deposit was the equivalent of $2.00 US. Technically, a member would be eligible for a loan three times the size of her or his deposit. In addition to the cash collateral, members would also be required to state a possession that could be repossessed if she or he failed to reimburse. The loans would be distributed in 3 or 6 month cycles, based on the borrower's preference. This was set up so that during the rainy season, agricultural investments could have a 6 month term, while dry season petty trade activities could be of a shorter term. Interest on loans would be 1% per month, while interest on deposits would be 0.5% per month. However, a member was not supposed to withdraw the minimum deposit, which acted as collateral. The Louga project had three main objectives. It was meant to bring capital into the region under the control of the villagers. Women were to be the primary targets of the program as a way of supporting women as agents of development. And training would be provided to enhance the members' ability to effectively manage the bank, and to make worthwhile investments. Before moving beyond the theory to discuss how the system works in practice for the clients, it is important to note that there are a number of features in the basic design of the system that made it more akin to a traditional bank than to the Grameen model. The borrower is required to produce case collateral prior to borrowing. Further, he or she must have some possession that can be used as further collateral. Finally, the borrowers's loan size depends on her or his relative wealth. Theoretically, a rich merchant can deposit the equivalent of $50.00 US and receive a loan of $150.00 US, while a member who can only afford the $2.00 US deposit is only eligible for $6.00 US. Moreover, a villager who can only afford to pay his or her membership fee, is eligible for nothing. This has serious implications for a system that wishes to target women and the poor. Although rural Senegalese women are not uniformly poor, women have far fewer resources, both in terms of time and money, for generating an income. From the start, the system discriminates. One of the benefits of creating a micro-lending system is that the scale of the project allows for peer pressure to play an important role in ensuring reimbursement. Clearly, the project designers did not have enough faith in the villagers to give this system a try. Another major problem is the issue of education. Looking at the statistics in the last section, women are much less likely than men to be educated and literate. Thus, a system that is to be member-run and target women, would necessarily require much more training in literacy and numeracy than a 4 month course could offer, and much more than 6 days sessions in technical training. Even if the education were not targeting women, the training design is clearly not extensive enough to expect the banking managers to become self-sufficient.

FINDINGS

At the outset, I want to clarify, that although I have pointed out that the banking project fell short of some of its stated objectives, and of the objectives of poverty-oriented banking in general, this was not how the vast majority of the clients nor the managers I interviewed felt about it. My own observations of the bank were framed by expectations I had based on what I had read about other such projects all over the world including the Grameen Bank, Accion projects, and Women's World Banking projects, which I felt had more aggressively targeted women and the poorest of the poor. Thus, in this section, I will present criticisms of the project, but emphasizing what was an overwhelmingly positive response, on the part of the people I interviewed, to the project. Universal praise of the bank, on the part of the clients, clearly did not depend on the size of loans received. Because the loaning system demands a minimum deposit, and because loan sizes are determined with respect to the deposit, everyone has different access to funds. In fact, one of the more important findings of the questionnaire was that simply making money, was not considered to be the main benefit of the bank, even though there was a near-universal affirmative response when clients were asked if their investments were profitable. Clients never cited the ability to generate profits as a benefit of the project. Instead, answers had more to do with the great pride villagers felt in running their own financial institution which was within walking distance; the confidentiality that had been facilitated by the banks around issues of access to credit; the solidarity some villagers felt had been created over the course of the literacy training; the possibility of getting through personal crises more readily, such as health problems, with the advent of the bank; the greater possibility of helping a relative out financially; the incentive to save; and the sense that the bank would be extremely beneficial for generations to come; among other responses. All of the answers pointed to the fact that people felt a definite sense of security and pride in having the bank there. As mentioned in the methodology section, part of my questionnaire was to get a sense of whether the banking system had had a noticeable impact on people's incomes. This was because, prior to conducting the research, I gave primary importance to the potential of the bank to make people wealthier. Community banks are generally set up to create mechanisms for economic development, so my aim was to look at the individual level and determine what changes had come about in people's economic activities. Changes in income turned out to be a difficult thing to gauge in practice because people do not keep exact records of their income from year to year. Therefore, I cannot use the figures I recorded in the interviews because, except for a couple of wealthier clients who calculate their budgets, they are more like estimations. What was made quite clear in the interviews, though, was that over the four years since the bank had been created, actual fluctuations in people's overall incomes had little to do with the bank, but more to do with the precarious nature of the agricultural economy; some years are simply better than others. It turned out that lack of rain, or livestock disease, things that people cannot control, were among the main causes of fluctuations. Compared to these fluctuations, the typical loan sizes at this point are small for the vast majority of clients, making the potential for generating profits low (Please see Appendix III for the mean and median loans for the sampled clients). Loans valued at less than the equivalent of $20.00 US accounted for around 44% of the entire sample and the median loan size for the entire sample was $25.00 US. Although not represented in the Appendix, for every client's first loan, which represented 65 cases out of a possible 80 (the highest representation of the eleven loan cycles), the median loan size was 6000 CFA, or $12.00 US. This amount would feed the average Wolof household for about 3 days. Had I not gone into detail about people's incomes, breaking down each part, and simply asked if they were better off now than before, most clients would have said yes. I believe that this has a lot to do with a sense of security that the bank gives people. That is to say that a practical consequence of the bank, apart from supporting local enterprise, is that it serves as a type of insurance for people. Presumably, larger loans will eventually be facilitated by increased funds generated by interest payments, and actual incomes may rise. However, at this time, the greatest gains have been sociological ones surrounding the issue of personal finances. It became clear that one of the major functions of the bank, at this stage in its history, is to replace existing or previously existing mechanisms for people to get by or regulate their business. Still, in most cases, the bank was a much more efficient or effective mechanism than any other for the villagers' needs. For example, though the government agricultural cooperative was still functioning for some of the farmers in some of the villages, most people had been abandoned by this service or the service no longer effectively served their needs. One client explained that, under the government policy, he used to receive an annual loan of 100 kg of peanut grain, and his wife received 50 kg, yet this supply had been completely discontinued leaving the household in the lurch. Today it is the bank loans which allow him and his wife to finance the needed grain, but without the hassle of the delays of grain distribution that went along with the government cooperative. Except for wealthier clients, who said that they had never felt a need for sources of credit before the bank (3.8% of sampled clients), and those who had avoided moneylending of any sort, fearing debt (10%), people cited various informal mechanisms to obtain credit prior to the bank. These were tontines (10% of sampled women), where turn-taking in fund receiving was generally for baptisms and other ceremonies; women borrowing or being given "gifts" from their husbands (15% of sampled women); people borrowing from merchants (this includes receiving merchandise on credit) (28.8%) and from relatives, friends, or neighbours (25.1%); and people selling livestock or some of their subsistence crops, including millet, in time of need (20%). Although the types of loaning mentioned did not always involve interest payments, many did. Sixty percent of 45 sampled clients who had borrowed from one source or another, prior to the bank, said that the contract always included an interest charge. In one village, the going rate was 100-200% per season. One client informed me that his money lender would show up at his door unexpectedly, and demand that he pay, tripling the interest rate if the repayment was late. The bank, on the other hand, offered a well-understood contract of 3 to 6 month terms, with exactly 2% interest per month. Even when replacing less intimidating and unjust situations than money lending, the bank is still preferred. As one woman, who had previously gone to her husband for money, mentioned, "When I borrow from the bank, I feel independent from my husband. It is no longer his business when I need money". Interestingly, of the interviewed clients who had used other sources of credit (82.6% of the sampled clients), 34.8% said that they no longer used other sources of credit now that the bank has been established, while an almost equal portion (36.4%) were still using these sources, and 28.8% of this population said they were using these sources far less. Although, a lot of people are still using these mechanisms, the sentiment is clearly that as the bank continues to grow, the other sources, which are much less preferred, will eventually disappear. A significant portion of clients have gone in this direction. One man described the bank as "putting the moneylenders out of business". Bank clients are treated to a confidential system of borrowing that does not involve shame, but pride. As mentioned above, people cited the ability to deal with a crisis or unexpected expenses more readily as being a clear benefit of the bank. One of the interesting findings that came out of the research with respect to investments was that out of the sampled clients who had actually taken out loans (85% of the sample), 53% had used some of their loans for covering expenses, as opposed to making concrete business investments. The popularity of this type of loan use was greater than that of agricultural investments. Of clients who farmed (93.8% of the sample), 38.7% had used some of their loans to invest in this activity. It is important to note that there were multiple responses for loan use, such that people who invest in agriculture may also have responded affirmatively to using their loans for expenses. Covering expenses varied from people who used the money for baptisms to people who needed a box of sugar. These types of uses are not in the official rhetoric of the bank, nor in that of poverty-oriented banking in general. In the bank register, someone may have listed buying a sheep for resale as their stated objective, but in practice, they might have used the money to help cover household expenses. One elderly client stated, "The bank is beneficial to old people. I have spent my life travelling from village to village trying to make some money to cover my expenses, now I can get help within the village". Poverty-oriented banking rhetoric focuses on economic development as a goal, in terms of expanding or enhancing an enterprise. While some clients certainly are able to make worthwhile, profitable investments (as noted later), well above breaking even, many people use the bank to cover costs that they would have to cover one way or another anyway. The bank then, for a significant number of people, is a form of insurance, meaning that you do not necessarily have to go hungry (as long as you can afford the equivalent of $3.00 US for the membership card and the minimum deposit) in a time of need. You have 6 months to pay the money back, at what clients unanimously felt was a reasonable interest rate. Indeed, although clients are eligible to borrow in each cycle, the majority borrow in a seemingly sporadic fashion, sometimes skipping a year. Although there had been 11 loaning cycles in all the banks, the median number of times people borrowed was 3.5 times, suggesting that need is the motivating factor as opposed to involvement in an on-going business operation. This form of insurance is not only beneficial to those clients in most need, but also to other villagers. As one man said, "We no longer have to feel obligated to give money to a friend in trouble, now it's the bank's job". This man further expressed that he had no guarantee that a friend in need could pay him back, but that because the bank is a shared institution there would be more pressure on people to reimburse to avoid public humiliation. It could be argued that this is problematic, given that a more individualistic attitude seems to result from the advent of the bank, where more village solidarity existed before. On the other hand, it can be seen as a drain on the community if people are constantly having to rescue others out of crisis situations. With the bank, theoretically, the whole community can grow, assisted by outside credit. The types of investments made with the loans varied because loan sizes varied. Clients of relative wealth, who could obtain large loans due to their ability to deposit a significant amount of money, were able to do much more than cover expenses or take care of emergencies. In a unique case, a male client in the village of Mbacke Lo was able to invest in a second peanut field outside of the village and pay for seasonal labourers. Further, this client used the bank to deposit a significant sum of money in his son's name to earn interest for future investments. In general though, most wealthy clients would make what is considered the most common-sensical investment, and that is to invest in cattle and sheep for resale. This is certainly one of the more profitable activities to be involved in because the return is quite high. Tellingly, a number of poorer male clients expressed that if they could obtain larger loans, they would be in the business of livestock trade. This demonstrated that while the bank was serving many clients in terms of providing an insurance mechanism, there was no doubt that people knew how to effectively invest larger sized loans. In two cases, relatively wealthy clients had not yet borrowed because they were waiting until the bank could afford larger loans so that they could make significant investments. One of these clients told me, "I am not a conformist, when the right moment comes for me to invest, it will be when I am guaranteed to make profits ". This client was slowly building up his deposits in order to take out a large loan. In some cases, there seemed to be some connection between a person being connected to or part of management and the larger size of loan they received relative to others. This was true for men and for women. In these cases, the deposit was less than a third of the awarded loans. This was not something that was scandalous, because there was wide respect for people who worked within the banks, which helped to justify the uneven distribution of loans. For the most part, however, people of relative wealth received the largest loans. Of course, the client's perception of the loan size also changes with relative wealth. When I was asking a client from the village of Dahra, whose average loan size was the equivalent of $200.00 US for a six month term, about how he used his loans, his response was, "[$200.00] is hardly enough to take seriously, I simply add it to my own expenses". A case from the village of Kantar further illustrates the discrepancy between a poor client and a wealthier one. Of the sampled clients in that village, the smallest loan size, received by a woman, was for the equivalent of $1.00 US, while the largest loan was awarded to a male merchant for the equivalent of $451.00 US. Both of these were for a 6 month term. The point of the second example has less to do with gender than relative wealth. In the same sample, two men received the equivalent of $1.50 US each, in one of the loaning cycles. Still, overall, men are wealthier than women as a general rule, so that women are more likely to get the tiny loans. Even when women receive medium-sized loans, enough to purchase a goat or a sheep, a handful of men admitted to using their wives' loans for their own use. As one man put it, "I gave my wife a chance to invest her loan in the beginning, and she did well, but I don't want to ever have to bail her out, so I use the money for my affairs". Even when a woman's husband does not demand her loan, convention sometimes dictates that she will not be in complete control of it. Many women said that they invested their loans in sheep for resale, yet when I asked who did the selecting, the purchasing, and selling, it was always their husbands. The profits of a sale would not go into the woman's pocket, but directly into the household expenses. This analysis is not meant as a criticism of Wolof gender relations; the women themselves did not generally complain about this situation. However, it is important to point out that the notion of the individual client does not always fit this context. Although the bank register lists individual clients, in a few cases, interviewing a husband and wife together might have been more appropriate. On the other hand, for activities such as peanut oil processing and petty trade women do operate independently. Something I discovered in the course of interviewing, was that in three of the villages (Ndimbe, Barale, and Mbacke Lo), women were getting supplemental small loans on a turn-taking basis from their women's group (tontine). The loan sizes were comparable to what the bank offers, but they are a lot less frequent. Generally these operate either by having each woman contribute a sum, or they are financed by a portion of the profits of the millet grinder, or a community field. This was an interesting situation, given that the bank had been set up to invest in the activities women were involved in and provide them with larger loans. The assumption was that the bank would replace the tontines. One economist at ENDA had called the banks "the evolution of the tontine system". What seems to have happened though, is that men took over most of the control of the bank because of its status for the village, and their superior rate of education. The tontines in these three cases remained active, and in other cases, although there is not a regular tontine, women will still come together to form an ad hoc tontine in a time of need. Clearly, the bank cannot serve all the needs of a client, but in this case, there has been no real adjustment from the situation prior to the bank; the system has not "evolved" at all. As a male manager of one bank said, "At one time, the bank was a 'women's' project, but men began to realize the potential and began depositing money in return for loans. Men's deposits are so much bigger than women's, that the bank has had a lot more success". The idea that having rich clients amounts to success in a poverty-oriented bank was echoed by the technical assistant who suggested I focus my research on the village of Ndimbe, because it has had the most success. Ndimbe is the only village in which male clients outnumber female clients (70% and 30% respectively in 1993, and the gap is growing). It is certainly true that men's involvement in the bank allows for the potential of greater deposits, given that overall they are richer than women. As it turned out, the significantly high deposits were almost all from men. These deposits were as much as the equivalent of $300.00 US, while the median deposit was for the equivalent of $10.00 US (12.5% of this sample had deposited nothing). However, giving men much larger loans due to their relative wealth means that the initial objective of targeting women's activities to help them expand is less possible. There is only so much money available and depositing money is a difficult thing for poorer people to do. As one woman said, "I can't deposit my money, I need to work with it. If it sits in the bank, I can't use it". Based on the bank's rules, a richer villager has the potential to monopolize more of the funding, and his or her large deposit does not necessarily allow a greater number of poor people to benefit. The most significant exception, in terms of women, was the case of Dahra. When I arrived in the village and was brought to the home of the president of the bank, I found myself in a room with only women who introduced themselves as the bank management. In all other cases, I was first brought to a man who was seen as the person in charge. I couldn't help but react and tell the women that I was surprised that they were all women and that all the other cases were different. One woman responded saying, " all the other women's groups let the men take over. We, on the other hand, have maintained control of the bank". This was the only case in which the women's group members had bank titles that were meaningful with respect to their actual duties. Further, and perhaps not coincidentally, this was the only village in which women could read and write in French. This is quite significant given that, of the entire sample, only 5% of clients were literate in French. Unfortunately though, there was another side to the story. The village of Dahra is more like a small town with a population of 11 246 (the other villages numbered between 300-500 people). Yet, Dahra's banking records show that they loaned to the fewest number of people, per cycle, out of all the banks. Where the small villages were lending to more and more of their population each year, up to 400 loans per year in some cases, in Dahra the largest number of loans they had granted over the course of a year was 62. As it turned out, this probably had a lot to do with the fact that Dahra was large and that not many people knew about the bank, whereas in the other villages, the bank's existence could not be kept a secret. When I asked the women what they had done for recruitment, suggesting that a village like this had the potential for many depositors which would allow the fund to grow, they told me that they had only told friends and family. This was also the only village where some clients told be that they sometimes did not borrow because they were not made aware of the loaning dates. It seems that some women took advantage of the opportunity to monopolize a large amount of funding. One of the interviewed male clients, very much frustrated with the situation said, "I have yet to see any benefits of this bank. The managers are intent upon loaning mostly to their friends". Still, this was the one case where the objective of investing in the women's groups was achieved. There were male clients, but the small number of total clients meant that there was little competition for the funds. The members of the women's group with whom I spoke were individually quite successful, for example doing artisan work, running general stores, and running a private midwifery clinic. The other exception to the rule was the village of Niandoul. This was the one village where every woman was literate in Wolof. Of the entire sample, 38.8% of clients were literate in Wolof. Niandoul was the smallest of all the villages, and the women had made sure that once a set of women was trained in reading, writing, and numeracy that others were subsequently trained by them. In most villages, once the hired instructors left, the training program came to a standstill. In the case of Niandoul, the women's group had largely maintained control of the bank, but the manager - the most important position - was held by a man. While this is quite normal in this setting, and one would not expect otherwise, members of the women's group told me that now that they are becoming more educated they would like to take more control of the management of the bank. Education seems to be the key for people's feeling confident to run the bank. In the case of Dahra, the women were quite educated because the village had more access than others to schools, yet the women did not seem to be concerned with serving as many people as possible. Still, simply making sure that more women are members in the initial stages was not enough for most of the women in all the banks to feel like it was their project. Many women told me that they do not feel comfortable taking on all the duties, because they are clearly not equipped to do it. For instance, two women in two different banks had been assigned the title of treasurer. In both cases neither one could actually discuss the financial situation of the bank because, as they said, they had not learned about accounting. To them, it only made sense that men should take the responsibility. There were a total of 12 clients in the sample who were members who had never borrowed. Although this is a minority, it is worth discussing some of the reasons why some people had not taken advantage of the seemingly perfect opportunity to make use of available credit. As it turned out, 4 of the non-borrowers in the sample expressed that they had a fear of debt, and were thus wary of taking the risk. This was an interesting response given that 3 of these clients had borrowed from moneylenders in the past, and from time to time in the present as well. Perhaps, running up a debt with moneylenders, although humiliating, is not as problematic for these people as letting the whole village down by losing the bank money. One of the women who had never borrowed expressed to me that she was very anxious to borrow, but that her husband forbade her. He was not borrowing either, she said, because he did not want to worry about debt. This woman further said that when she needs money for something, her husband gives her some. Another reason that came up in 3 cases was that it has now become clear that the bank is a positive element in the village, improving life for its clients, but that in the beginning these clients were generally distrustful of outside projects. As one woman told me, "Politicians come to each village before elections making promises that they never keep. You stop believing promises after awhile. But I will start to borrow because I can see that the bank is making others happy". Even though, at the time of my study, there were only 12 non-borrowers, the bank registers indicated that many people had waited a few cycles before taking out their first loan. One of the more problematic reasons for not borrowing, cited by 3 men, was their inability to afford the initial deposit required by the banking system. In one of these cases, the client was awarded tiny amounts of money anyway to help him get by. In the other two cases though, the clients were still dependent on moneylenders within the village for sources of credit. A continued dependence on moneylenders with high interest rates, probably means that these clients would not be able to afford the deposit any time soon. Clearly, the bank is falling short of its mandate to target the poorest of the poor. It can be argued that the bank maintains its excellent repayment rates because it only awards loans to those people who can afford this deposit. However, I would argue, given the proud sentiment concerning the bank expressed by those who had not been awarded loans, that pride alone would motivate borrowers to pay back their loans. Further, given that debt is common with moneylenders in large part because interest rates are so high, and because repayment dates are often unreasonable, these people would probably be more able to cope with the fairer rules of the bank. The fact that the banking system is a source of village-wide pride is not in any way surprising. There is nothing else of the kind in the regional vicinity. Indeed, the banks are a source of envy for neighbouring villages. People need only look around at other villages, just as hard hit by decentralization and a difficult climate, and realize that they are so much better off. Even if someone cannot themselves afford to get a loan, there is still more liquid capital floating around than ever before, making it more possible for people to help one another if they wish to. Further, many people feel more educated by the bank, even if they are not literate. That is, the fact of having such an important institution seems to be enough, for now, to give people incentive to be more responsible about their money. One woman remarked, "My husband used to waste all his money before the bank, and now he has saved a lot". This woman saw this as a principal benefit of the bank, indicating that she was benefitting from this as well as her husband. This demonstrates that benefits of the bank percolate through the villages beyond the individual clients. The pride that people feel, especially those who have never before been treated as responsible borrowers has been very positive and has given people social as well as financial incentive to work.

CONCLUSION

The design of my study of the Caisses Populaires de Louga was based on the assumption that, in evaluating a community bank, the most important factor is: how well does the bank suit the clients' needs. In the opening section on micro-lending worldwide, I touched on some of the key issues that community banks try to deal with in order to adequately serve their constituents. These included: responding to the fear that many poor and disentitled people have of institutions; attempting to bring clients above the so-called poverty line; providing adequate financial training to clients and managers with the understanding that the people to be served by the bank are inexperienced; and having the capacity to grow in order to serve as many clients as possible. To conclude, I will discuss how the Caisses Populaires de Louga has fared in dealing with these issues. The Caisses Populaires de Louga was quite successful in providing a financial institution that is non-threatening to its constituents. There was only one client, in the village of Dahra who had negative comments concerning the running of the bank, as he felt that it was more like a club than a public service. Every other interviewed client demonstrated, through his or her responses, that the bank was a source of pride because it is run by fellow villagers, and because it is located within walking distance of their homes. That is, the clients feel that the banks are truly theirs. The construction of the actual bank buildings in 1994 was a breakthrough for many of the villagers; it represented the fact that this was an official institution, both to villagers and to visitors. Prior to construction of the buildings, each bank was organized out of the home of a member of the management. Further, the African Development Foundation and CONACAP supplied the villages with banking books, calculators, pens, and teaching materials. Over the course of interviewing, several clients referred to the ownership of these materials as a source of pride, as they represented that the clients were becoming more and more literate, and thus, more sophisticated. Moreover, part of the budget from the African Development Foundation includes a trip to Togo, for some members of the management to visit other similar banking systems, designed by the same technical assistants. This will be a particularly exciting opportunity for some of the clients to act as the ambassadors of their banks. Although there is still some dependence on the ADF Technical Assistant, in that he is the banks' only contact with the French speaking world, helping them to find funding, the managing clients have been given a sense of confidence and ownership, being entrusted with the management of a sizeable budget. This sense of confidence is ultimately felt by the clientele at large. In terms of bringing clients above the poverty line, the last section outlined that for most clients, no significant increase in their incomes has occurred as a result of the bank. When clients were asked about the most important difficulties they faced despite the arrival of the bank, responses fell into 5 general categories. 33.8% responded that they would need larger loans to be able to expand their businesses beyond what it already was when the bank arrived; 25% responded that they had trouble just taking care of their daily household needs; 27.5% felt that they had no difficulties to speak of; 10% responded that they wanted larger loans to be able to diversify their activities away from farming; and 3.8% felt t that the dry climate was the most important difficulty they faced. For the most part, the bank has not been able to provide significant relief from the difficult life many of the clients face as farmers, herders, and petty traders. For the 27.5% who felt they faced no difficulties, these were generally wealthier clients, who felt better off than most, or who were provided for by other members of their households. In general though, larger loans will be required for most people to feel significant changes in their standard of living. Unfortunately, the banking system perpetuates the divisions between rich and poor, where wealthier clients always have access to more money. Although the lending capital will grow with interest charges, and perhaps with the help of further funders (the Desjardins Foundation had shown an interest in the project), there is a danger that the relatively wealthy clients will be the ones to benefit, being able to monopolize more and more of the funding. When I asked the different management focus groups about whether there was a maximum loan size, they responded that it depended on the capital funds, because even if a client could deposit a certain amount of money, there may not be enough to go around if he or she is given the standard loan proportionate to his or her deposit. Hopefully a mechanism will be created to prevent monopolization of funds by a minority. One wealthy client told me, "I could afford to take out a very large loan, but I don't think it is right to deprive others". In order for the banks to maintain a poverty-oriented approach, it will be necessary for more people to adopt this perspective. Catholic Relief Services in Senegal, employs a model in its banking projects whereby every client receives an equal sized loan of the equivalent of $40.00 US. This maximum can increase very slowly as the client develops a credit rating. The logic of this system is that wealthy clients will not even be attracted to the bank, given the limited funds available. The project thus manages to target the most needy. It would be difficult for the Caisses Populaires de Louga to completely rearrange their system, but perhaps a maximum loan, and a larger minimum loan could be defined so that wealthier clients cannot take out such large loans, and so that poorer clients have more opportunity to expand their activities. The training program for the Caisses Populaires de Louga generally only reached the level of management, although the original objectives were to gradually educate as much of the clientele as possible. Of course, education in literacy and numeracy is a long term process, and the bank is only 5 years old at this point. Still, many of the villagers who had gone through the training felt that more extensive education was necessary before they would feel comfortable instructing others. When I expressed this view to one of the technical advisors of the African Development Foundation, his response was that once you give people a little bit of education, they will naturally desire more, but that it was not possible to fund a more extensive program. If this was the case, perhaps it would have been more worthwhile for all the banks to modify the budget, such that the money designated for the trip to Togo (quite an expensive undertaking) could be used for a more extensive education program which would certainly benefit a greater number of people. Many clients mentioned that they hoped in the future, the bank would grow to the point of being able to serve many more people. Some even mentioned that the bank should eventually expand to serve the needs of surrounding villages as well. There are no immediate plans, on the part of the African Development Foundation, to think about expansion. There is hope that the technical assistant will be able to find further funding, while his contract is still valid. A difference between this project and others of its kind is that the African Development Foundation has only committed to about 6 years of involvement, with the hope that the project will become self-sufficient. In other projects such as with Catholic Relief Services, and Women's World Banking, there is a longer term relationship because the sponsoring NGO's mandate is to work on several projects of this type, gradually expanding to serve more and more people. Women's World Banking acts as a permanent guarantor of loans for their projects which have partnerships with commercial banks. Although CONACAP is also mandated to do this, political problems with the African Development Foundation caused CONACAP to withdraw from the project when ADF became involved. For the project to expand to serve a greater number of people, commitment of longer than 6 years would be required before the villagers are left to their own devices. Community level projects that generate greater funding, such as investing in training and an irrigation system for dry season farming could be developed to generate the greater funds required which many villagers felt were needed. Developing a partnership with a commercial bank, to guarantee a line of credit would also be a way to expand. However, without adequate training, villagers will not be in a position to successfully launch either of these projects. One of the villages, Ndiaw Ndiaw, attempted independently to launch a community level livestock raising project to generate more funds for the bank. However, proper investments were not made in order to make sure that the sheep were properly fed or treated for sickness. None of the villagers had had experience with such a large herd. The entire herd eventually died, leaving the village at a loss. Poverty-oriented banks should not simply replicate the objectives of commercial banks. For this reason, a connection should be made between training in financial issues and training in productive activities. Had the village of Ndiaw Ndiaw been assisted in their livestock raising attempt by experts in the field, they may have generated a significant surplus that could have been mixed with their lending capital. The Louga banking project is a step in the right direction considering the negative impacts of the decentralization policy on the rural population. It fulfils very important needs, according to the interviewed clients' own reports, which neither commercial banks, nor the government are able to do. Like other micro-lending projects of its kind, the Louga banks are a worthwhile investment which achieve much with very limited resources. In order to take full advantage of their potential to enfranchise the intended clientele, longer term outside support would be advisable.

APPENDIX I

List of the 8 sampled village banks by department, populations in 1992, and number of male and female clients in 1995

NOTE: the two villages that are not in the sample are Ndimbe Ngayene and Barale; both are in the Department of Louga. Village Dep't Population Male Clients Female Total Clients Belel Diop Louga 366 46 95 141 Ndiary Diop Linguere 324 23 43 66 Dahra Linguere 11246 15 67 82 Niandoul Linguere 289 8 28 36 Ndiaw Ndiaw Kebemer 315 25 75 100 Kantar Kebemer 450 36 92 128 Tinguitty Kebemer * 25 89 114 Mbacke Lo Kebemer 454 47 64 111 *Information on populations is from Benn and Jones, 1992. The population for Tinguitty was not provided in the document.

APPENDIX II [not included here]

APPENDIX III Mean and Median Loan Sizes For All Sampled Clients' Loans Prior to March, 1995.Values in CFA. Assume 500 CFA=$1.00 US. VALUE FREQUENCY PERCENT CUM. PERCENT 0-9999 136 43.59% 43.59% 10000-19999 68 21.79% 65.38% 20000-29999 50 16.03% 81.41% 30000-39999 18 5.77% 87.18% 40000-49999 9 2.88% 90.06% 50000-59999 5 1.60% 91.67% 60000-69999 7 2.24% 93.91% 70000-79999 2 0.64% 94.55% 80000-89999 2 0.64% 95.19% 90000-99999 0 0.00% 95.19% 100000+ 15 4.81% 100.00% Totals 312 100.00% 100.00% MEAN =21 654 CFA MEDIAN = 12 750 CFA

APPENDIX IV [not included here]

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