A South Africa financial services cooperative ("village bank") was one of 44 projects to share in $5 million awarded during a World Bank competition for innovative community development proposals. The U.S. Department of Agriculture's rural Business-Cooperative Service has been involved in a project under the auspices of the U.S./South African Bi-National Commission to assist in the development of these so-called village banks.
The proposal, "Leveraging Local Savings for Local Development," received $60,000 in the competition. It was selected from a group of 339 finalists from 60 countries. The finalists were chosen from nearly 2,000 entries. Finalists set up booths in the atrium of the World Bank's headquarters in Washington, DC, and were asked to explain their projects to a panel of judges.
Wezi Ximaya, chief executive officer of the Financial Services Association, a trade and financial services association in South Africa, represented the project in the competition. According the Ms. Ximaya, the "local savings for local development" proposal focuses on the role of a newly organized financial services cooperative in an overall community development effort. The funds will be used to conduct pilot community development projects in rural South African villages that already have their own financial services cooperatives.
The project was born out of rural South Africa's deep-rooted mistrust of banks, and the unwillingness of commercial banks to serve rural areas. Rural communities, however, need funds for development projects and the lack of financial services can thwart that effort. in addition, Ms. Ximaya indicated that community banking structures have tended to be institutionally weak and not integrated with local development priorities.
The solution was to redefine village banking to better leverage local savings for local development priorities. working together, organizers, community leaders and residents created a sound, local institutional structure, a "village bank." It also serves as a link to the formal financial sector.
The village bank is operated by and for the community. It inter grates the community's development planning and decision-making processes, and provides local deposit and withdrawal services for individuals. The bank also makes loans to the community's traditional authority for development projects and to community members for entrepreneurial and targeted investment activities.
The World Bank competition was modeled after a similar competition in 1998 that awarded $3 million in start-up funds to World Bank staff. This year's competition was extended to organizations outside the bank.
"It's remarkable to see so many people from within and outside the bank join in one very simple objective, which is to see how we can do development better and address the issues of poverty," said World Bank President James Wolfersohn. "In the next 25 years, another 2 billion people will share the world. Most of them will live in poverty if we don't take action now," he said. "We need ever more effective, innovative solutions to meet this challenge. The development marketplace can help bring our collective experience, knowledge and passion to bear in search for solutions."
Proposals offered ways to promote good government, combat corruption, develop legal and judicial systems, strengthen financial and regulatory systems, and insulate the poor from crisis. Ideas ranged from creating a center to train Moldova's disabled children in crafts and specialized enterprises to providing cultural sensitivity training for judges in indigenous areas affected by war in Guatemala. Representing the development community and private sector, jurors judges the proposals on originality, partnerships created, cost effectiveness, potential for ownership for those who benefit the most and, above all, expected impact on poverty.
Susan Theiler, an agribusiness specialist on assignment to the bank from the U.S. Department of Agriculture, visited the event. "The visual impact of these displays is really amazing," she said.
For those who weren't selected for awards, there is still a chance for funding. "We're keeping all proposals on the Web and encouraging donors, foundations and multilaterals to look at them to see if they can fund them," said Mari Kuraaishi, one of the event's key organizers.
Wolfensohn said he was working with the United Nations Development Program to try to link unfunded proposals with potential donors through Net Aid, the recently launched Website that acts as a clearinghouse for donors and organizations.
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