Sunday, November 11, 2012

Village Savings and Loan Organizations

I have heard of programs that help people learn to save money, but our visits Thursday afternoon and Saturday morning helped me understand much more and to see the value of the program.  Even though this is not one of my areas of responsibility, I want to write about it because it has impressed me immensely. 

A Village Savings and Loan organization is a group of about 15 – 25 (or some times more) friends and neighbors who get together to help each other financially.  They establish strict rules before they start so that there is no confusion or doubt along the way.  Then, they meet weekly for nine months.  There are three main goals:  savings, solidarity, and credit.  The program was started to help women, in particular, but both men and women may participate. 

Each week participants first count all the money they have gathered so far in their cashbox.  The box has three different locks and three different people hold the keys so all must be present to open the box.  (Between meetings it is kept in the treasurer’s house, but s/he doesn’t have a key.) As you might imagine, security about the money is a major concern.  People want to know that what they have given is there and will come back to them.  (We asked is there is a problem with the box being stolen out of the treasurer’s house, but it has only happened once among all the organizations that have been formed.  The fact that this is a neighborhood groups means they can keep their eyes out, too.  In another group, the treasurer’s house burned down and the money was lost.  Not a bid record at all!) 

The president runs the meeting.  A secretary keeps track of records and two others are the counters/verifiers.  At each step one counts publicly – in front of the whole group – and then the other recounts before the money is added or returned to the box.  These officers are elected from the group by secret ballot (after members meet minimal qualifications and express interest).  Each person is given a number and all phases of the meeting are done in order of these numbers.  The people, of course, know each other, but this fosters some anonymity so that there is no emphasis on who saves how much, only on the fact that they are saving.

Members next give 100 cfa.  This is the solidarity part.  During the cycle, if a member has a problem (illness, death in the family, etc.) s/he asks the group for money.  Amounts are determined ahead of time so that there is no question.  It is a group decision to give the money – so that all know that the need is real.  Any unused money at the end of the cycle goes for a meal/celebration at the end of the cycle.

The next step is for participants to give the money they are saving.  Each group determines the amount people are encouraged to save.  In the meeting we attended, a person got a fish stamp in his/her notebook for each 500 cfa and was encouraged to save 2,500 cfa each week.  Members, though, save what they can.  If they give at least 1,500 cfa (three stamps), the group claps to encourage them.  I asked why a fish stamp is used.  People in this area consider fish something of great value.  Fish are available from local rivers, but they are expensive to buy and eat.  So, they stamp their books with something of value as they save money to get something else they value.  As each saver brings his/her money, both counters count the money and put it in the box.  The saver then watches the secretary stamp his/her notebook – transparency and double checking abound!

In some meetings (but not the one we saw) have an additional step.  Members may borrow money.  They must pay 10% interest each month and then repay the loan in three months. 

At the end of the nine-month cycle, all of the money is counted again.  The coordinator (from the church or someone from the neighborhood who has been trained) announces how much interest will be given.  Then he reads out how much each person has saved plus the additional amount and the counters count out that amount.  It is put on the notebook on a table until all notebooks have their money.  Invited guests – government officials or international visitors are then asked to give the money to its owner.  They cycle then ends although many groups start the next cycle the following week.

Both groups we visited gave us a gift.  The first gave us a live chicken!  The second gave us shirts.  The woman who made them (and the matching dresses the women wore) had used her money last time to get a sewing machine and to take classes. 

Money is used for a variety of purposes, but here are some examples:  university tuition, product to be sold in a shop or the market, bricks and other materials for the house, household goods, or a motorcycle.  It is a pleasure to see the joy people show as they see how their lives are enriched.  Many groups become like extended families – even though they may be of different ethnic groups or religions. They encourage and support each other while improving their lives and improving the town, area, and country.

The Central African Lutheran Church now assists 225 Village Savings and Loan organizations.  As some have now completed three cycles, participants are saving more and understanding the value of the program.  Friends and neighbors are also very interested and more are becoming involved.  Maybe this is a grassroots approach to training people in ways that will (eventually) minimize corruption throughout the country!  At the very least, it is empowering people and enabling them to better their lives. 

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