Village Banking
Village Banking was first envisioned in 1984, when FINCA Co-Founder John Hatch came up with a radical idea while working with farmers in Bolivia who had no means to access credit:
What if a group of farmers collectively took out a loan to invest in their businesses and grow their income, sharing responsibility to guarantee repayment?
While flying over the Andes Mountains to La Paz, Bolivia, and famously using an airplane napkin, John sketched out a novel approach for providing capital to people excluded from traditional finance — especially women — helping them build their own pathways out of poverty. The concept was revolutionary.
A New and Transformative Model
The initial Village Banking model gave revolving loans, starting at $50 USD, to groups of 30 to 50 women to finance their small businesses, from selling produce to raising livestock to making clothing. The groups created a reliable structure for borrowing and repayment, grounded in mutual accountability and community. Group members selected how to use the funds, allowing them to grow their businesses and generate a small savings pool, while building a payment history to qualify for larger loans.
The model took hold because it worked. The loans helped people grow their businesses, support their families, and build more secure livelihoods. And institutions were able to open the door to credit for millions of previously unserved customers.
Within the first five years, FINCA had opened 400 Village Banks in nine countries, serving more than 35,000 people. The model also proved that these new customers were good borrowers, with repayment rates of 96% over the same period.
![Sidecar Creatives / [CLIENT]](https://finca.org/wp-content/uploads/FNC001UG260212C2234-1024x683.jpg)
Village Banking 40 Years in the Making
Today, FINCA continues to offer group lending in the Democratic Republic of Congo, Malawi, Uganda, Tanzania, and Zambia, with an average group loan size in Malawi of $200 USD. While staying true to the original concept, FINCA is also innovating the model to better meet customers’ needs. For example, in Uganda and Malawi, FINCA is piloting a new product called Group Choice, which gives group members who have demonstrated strong repayment the option to take out an individual loan.
More than four decades later, FINCA remains true to its original idea and belief that people have the ability and entrepreneurial skills needed to lift themselves out of poverty. And that what they truly need is access to responsible and tailored financial services that help them improve their livelihoods, build resilience, and provide an education for themselves and their children.
![Sidecar Creatives / [CLIENT]](https://finca.org/wp-content/uploads/FNC001UG260212C2529-scaled.jpg)