A source of income, funded by savings

By Tjarda Muller
Rocio Rosales Teletor: Now Im happy because I took a loan to buy paraffin. Im able to make my candles again, and Im selling again.

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Women are on the front line in the fight against poverty. While world leaders are at the UN talking about the Millennium Development Goals (MDG), Rocío Rosales Teletor, 58, is running her candle-making shop in Baja Verapaz, Guatemala.

With prices going up, she has had a hard time keeping her business running. “When I started, I didn’t have to invest much… But everything is so expensive now and I didn’t know where to get the money. The interest rates at a bank are so high. I couldn’t afford it," she says.

“And then we started this [savings] group. Now I’m happy because I took a loan to buy paraffin. I’m able to make my candles again, and I’m selling again.”

Global struggle against poverty

Ten years ago, leaders of 189 countries met at the UN and promised to halve the proportion of people living in extreme poverty by 2015. They agreed to a roadmap setting out eight time-bound and measurable goals for 2015 -- the Millennium Development Goals (MDGs). One of these goals is to promote gender equality and empower women. One measure of progress towards this goal is to look at the number of women working and earning money.

With paying jobs scarce in many poor countries, earning wages is particularly challenging for women. While many would like to start their own businesses, they lack capital and it is hard to find money to borrow. Without credit, they are unable to take advantage of economic opportunities and stay close to home and take care of their children.

Oxfam’s ‘Saving for Change’ program helps women organize themselves and pool their savings to form a small fund. From this fund, the members can take out loans, which they normally use to start small-scale businesses, deal with emergencies, or improve their quality of life. The program serves poor women in rural and semi-urban areas who do not have access to conventional micro-credit institutions. Savings can be as little as $1 a week and loans as small as $25, or less.

Sandra, like Rocío, also lives in Guatemala and recently joined a Saving for Change group. “Before, I had to go elsewhere to get a loan, and that was so difficult. But now we have our savings and can get our loans. And it’s our own money,” she says. Sandra took a 50 quetzales ($6) loan to buy wool for making Guatemalan cloth. She hasn’t sold it yet, but when she does she expects to make 200 quetzales ($25).

These amounts sound small, but they make a substantial difference in the women’s lives. Take Elena Miranda, who now owns a bakery in Chalatenango, El Salvador. “I took a loan to buy a machine to make bread and pastries… at only one percent interest. Within two months I could pay half of it back… With this business, I cover all the daily household expenses,” she explains.

Saving for Change is based on the group members’ own savings. They borrow no external capital. It teaches women how to manage their fund, and within a year the groups are able to continue their activities on their own. By the end of 2010, Saving for Change aims to reach 10,000 people in El Salvador and Guatemala. That is 10,000 empowered women who are one step closer to lifting their families out of poverty.