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Title:Does Membership Homogeneity Matter for Group-Based Financial Services? Evidence from Gambia
Authors:Nagarajan, Geetha
Meyer, Richard L.
Graham, Douglas H.
Periodical:African Development Review
Geographic term:Gambia
credit cooperatives
Economics and Trade
Abstract:Recently, NGOs have become active in using existing indigenous rotating savings and credit associations (called 'osusu' in the Gambia) to channel their financial services to villagers. However, whereas traditional 'osusus' are observed to be generally homogeneous in their membership composition, NGOs are attempting to include heterogeneous members in order to diversify the loan portfolios of their groups and reduce default risks. But a mismatch between the design of NGO 'osusus' and member interests could lead to unsustainable groups. This article examines if membership homogeneity affects the design features and repayment performance of 88 indigenous 'osusus' in the Gambia. The results show that homogeneity in gender is less likely to affect membership size, fund size and fund allocation methods than homogeneity in income generating capacity reflected in members' age and employment type. Increased homogeneity in member age and occupation is associated with smaller fund size and random methods of fund allocation. The results also suggest that group performance as measured by delinquency and default rates is more directly affected by group design characteristics than by membership composition. Poor repayment performance was observed in 'osusus' with larger funds and membership size, and which used nonrandom methods of pot allocation. Bibliogr., notes, ref., sum. in English and French.