Community savings and credit: the mother of Thailand’s community-driven development
Thailand has a long and rich history of community-managed finance systems that enable poor communities, in both rural and urban areas, to save together and access credit from their pooled savings. Self-managed credit unions, savings cooperatives, village banks, Buddhist savings groups and village funds have long enabled rural communities to pool resources and finance their own development initiatives, using both their own resources and additional government capital. In urban areas, poor communities have also used savings and finance systems they control themselves to link vulnerable households and collectively address a variety of needs.
Since 1992, CODI has energetically promoted community savings and credit as a key strategy for building a community-driven development process, in which poor people work out their own solutions to the serious problems they face. Besides helping set up new savings groups, already-existing community savings systems around the country were invited to join the savings process. The emphasis was on spreading this new opportunity by making it easy for people to start savings groups and to get access to loans from the CODI fund. Scale was seen as being important for several reasons. The scale of urban and rural poverty called for solutions at a matching scale. Plus, large scale savings activities generate more possibilities, more connections and more dynamism, as groups begin linking and learning from each other.
In 2003, the savings process got a big boost when CODI’s Baan Mankong national housing program was launched. The program required communities to organize savings groups and collectively save at least ten percent of the amount they borrowed from the CODI fund for their housing projects. The savings groups were also crucial financial management systems in these informal communities, which enabled them to collectively and transparently manage large, complex housing projects and project budgets – and later loan repayments. Most of these groups are linked to CODI, through the community networks that bring together communities together within certain constituencies or around common issues.
Community savings in urban Thailand:
According to A Study on Community Finance in Five Asian Countries (ACHR, June SANYO DIGITAL CAMERA 2017), there were 1,903 savings groups in 345 cities in Thailand, with about 850,000 members and total savings of some 3.2 billion baht (US$ 102 million).