Bankomunales, financial inclusion, and local development to overcome poverty
Access to financial services is key to overcome poverty and, in this regard, bankomunales are an effective instrument to stabilize the income of low income populations, which have the capacity to invest but do not have an appropriate mechanism to do so, and to strengthen the social capital of the community
Together with the Fundación de Financiamiento Rural (Fundefir) (Rural Financing Foundation), the CAF (IIS) Social Innovation Initiative promotes "la otra microfinanza" (the other microfinance), a self sustainable and self managed financial inclusion model which, in a first stage, will implement the creation of Bankomunales in El Alto (Bolivia), jointly with Enda, and in the border between the Dominican Republic and Haiti, with the Unión de Centros de Madres Mujeres Fronterizas. (Union of Border Mothers Centers).
Bankomunales have shown to be an effective mechanism to capture savings, stabilize income, and organize people. In these organizations, the members of the community group voluntarily, based on a micro investment mechanism where they capture funds from their own pockets, group voluntarily to save and/or lend each other money in the form of loans, and finance their needs under norms and rules that they themselves establish, maintaining the group's capital in permanent circulation.
Beyond an economic transaction, the model has shown that it does not only provide financial education, but also strengthens trust and social capital between its members, triggering other organization processes within the communities that favor the development of mechanisms to provide efficient responses to needs or urgencies among large segments of the population.
It is regarding this aspect that IIS CAF proposed to deepen the Bankomunales model at a regional level, and expand it to Argentina and Colombia, in addition to Bolivia and the Dominican Republic, in order to increase its social impact and transform it into a local development platform through development community agents, neighboring leaders emerged from these organizations with the capacity to progressively promote the implementation of new programs, products, and services which impact on the life conditions of their communities, and who may eventually connect to the formal banking system, regulators, and authorities.
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