Community loans: protecting forests, improving lives

An innovative community loan scheme run by Money for Madagascar has empowered Malagasy people to generate income in new ways, developing and enacting environmentally-friendly farming and other activities.

The Critical Ecosystem Partnership Fund (CEPF) created a pool of cash for Malagasy people, including women, vulnerable minority groups and young people, to set up and operate projects which protect the unique and vital Malagasy rainforest, while increasing incomes and becoming more resilient to climate change.

Malagasy people are among the world’s least well-off, with 79.7 per cent surviving on just US$2.15 (£1.73) – the global poverty baseline – or less, per day.

They are also, by an accident of birth, charged with protecting their country’s rainforest, a region of unique and extreme importance to the survival not just of its own fascinating, beautiful and useful plants and animals, but also to the fight against the most catastrophic outcomes of climate change.

Our CEPF project supports Malagasy people to run their own forestry activities, including agroforestry, improving agricultural production and sustainability, the restoration of degraded habitats including soil damaged and lost because of climate change-driven unusual weather events, and training young leaders to deliver forestry-related support services.

It created 19 VOIs Communautés Locales de Base/Grassroots Local Communities (COBAs), each of which has roughly 350 members, and which were divided into 91 VSLAs Village Savings and Loans Associations or Community Savings Groups (GECs).

These structures were created not only to ensure all members hear and make decisions on loans for proposed activities, but also to provide support and financial advice to all members as they develop and enact their projects, helping them structure and consider extra elements which may assist their success.

Simon Esamberaiso, a resident of Ranomay, set up two GECs, each of which have 30 members.

He explained: ‘Before, the inhabitants of my village had done the ‘Voa mamy’ (‘sweet fruit’ – an alternative savings and loans group) but the approach was not similar to that of the GEC. The latter is more disciplined and more formal.

‘In fact, the members of ‘Voa mamy’ decided to join the GEC because they found that it was more serious, secure and transparent. I received training on market gardening which I passed on to the GEC members. As a result, everyone now has a plot of market gardening to help raise extra money.

‘I am proud to have been trained, because everyone has benefited from my training. Even my social status has changed now within my village as I am really respected in the community as a development leader.’

The CEPF approach has helped more than 2,536 Malagasy people, 57 per cent of them women, make extra money and improve farming yields, even as they protect their local rainforest and safeguard agricultural soil. It also helps to generate cash for tackling forest degradation, enabling participants to restore key ecosystems including threatened tree species, and regularly patrol rainforest areas.

It has also empowered 75 young leaders (59 per cent of them women) aged 19–30, by providing their first post-school training, to become local development agents. They now drive household well-being and ecosystem conservation in their communities, and are also the latest generation of trainers for new members and leaders.

CEPF has also empowered women and young people by empowering and engaging them to drive actions to strengthen their socio-economic and climate resilience.

Razananirina Pierrette, a member of the Ambiky GEC, explained: ‘I was able to buy a solar panel with the loan I made in the GEC to get  away from the use of oil, to improve the health and well-being of my family.

‘I thank the project very much for introducing me to this project, particularly the GEC, because I will be able to improve the life of my family thanks to the savings I have been able to make.’