One of the innovations of the SWAPNO project is to inculcate the saving habit among the beneficiaries through the introduction of the model of Rotating Savings and Credit Association (ROSCA). This might be attributed towards SWAPNO’s efforts to address the “self-control” problems of the very poor. In collaboration with the local government, SWAPNO organizers select 36 members for each union who are further sub-divided into 3 groups, each consisting of 12 members. This team of 12 members constitute the ROSCA group. Each member must pay 300 BDT and the draw winner gets 3000-3600 BDT. So, each beneficiary receives 3000-3600 BDT of small amounts 3-4 times in the project duration, which help them to invest in small income generating activities.
The advantage of ROSCA is that it offers a “commitment device”: the pressure to put money aside regularly help them to save, which might have been difficult for many of them given the lack of self-control in the face of many competing spending demands. Although ROSCA do not offer interest on deposit, it has triple benefits as the ROSCA experience in SWAPNO project suggest. First, it allows to save considerable amount while still in the project and thus enable the SWAPNO members to initiate income-generating activities at an early stage of the cycle. Second, it has cemented the social bonding among the SWAPNO members, which proved to be a useful platform in times of shocks. As a result, many of the SWAPNO groups have continued even after the termination of the cycle. Third, it encourages more saving habit at the individual level— including an awareness of the virtues of financial savings whether in formal banks or quasi-formal MFIs at the local level–even after graduating from the project. All this are likely to be beneficial for the long-term economic mobility of the SWAPNO members.
Even after the completion of project cycle, these groups are continuing their savings activities successfully. Out of five capitals – Human, Natural, Financial, Physical and Social (Foreign, Commonwealth and Development Office (FCDO), former DFID), required for livelihood asset development, ROSCAs have contributed significantly to Human, Financial and Social capital development, and had crosscutting effects on Physical and Natural capitals.
