WUNRN
SAVINGS GROUPS CAN BE KEY FOR
WOMEN'S ECONOMIC SUSTAINABILITY
While not a magic bullet, a
sturdy metal savings box with three keys can have a surprisingly profound
impact. For Trickle Up, integrating all program participants into Savings and
Credit Groups has been a highly effective way to address several key needs of
the very poor:
- Provides a safe place to save.
- Develops strong saving habits.
- Provides access to credit for emergencies and
productive investments.
- Provides a social network.
- Builds the social capital of its participants.
In recent years there has
been an increasing recognition that, like any other population, the very poor
need financial services. These needs are not being met by most microfinance
institutions. The poor need access to very small amounts of credit to help
smooth incomes, meet predictable expenses, and cope with shocks and
emergencies, although this is rarely available at reasonable rates. For
example, quick access to a small amount of credit or accumulated savings to pay
for a health emergency can enable a farmer to defer selling or pre-selling
their harvest, instead of having to sell at a time when prices are higher. With
more stability in their cash flow, people can make better choices about their
health, education and nutrition, while also investing in income generating
activities.
How do Savings Groups work?
They are voluntary, community-based and self-managed groups of 15 to 25
individuals who meet regularly to contribute to their own savings. Savings are
maintained as a loan fund from which members can borrow in small amounts. The
group decides the terms by which members may borrow, and often set a maximum
ratio of loan size to a member’s savings. Almost all savings groups charge a
service charge (interest rate), determined by the members. Groups elect
officers democratically, and rotate every few years. Records are kept in
individual pass books or by a paid accountant, and participants earn between 10
and 40% a year on their savings. In some regions the savings groups open a bank
account, although in others the cost and distance make this undesirable.
Savings Groups provide
important financial services, but also have a powerful social impact.
Participants take great pleasure in being part of a group, and receive the
social and financial support they need to move forward in their lives. Seeing
their own success and that of their peers, they are inspired to earn more, save
more, and fulfill their dreams of providing food for their families, sending
their children to school, repairing their homes, and taking control of their
lives and their futures. It is a long-term, sustainable solution which plays a
central role in the efforts of the very poor to improve and stabilize their
livelihoods.
Trickle
Up Savings Groups Quick Facts:
(based on 2012 data)
- 99% of participants reported having savings at the end
of the program, an increase from 21% at the start of the program.
- In
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