Savings groups –15 to 25 people, usually women, who combine their own modest weekly savings into a group fund—are an essential means to bring financial services to the poorest communities in Africa, Asia, and Latin America, says Sophie Romana, Oxfam’s deputy director in the Community Finance department. “Savings groups promote financial inclusion; they help poor, remote communities with no access to banks to save, borrow, and invest.” Savings groups leverage their own funds, rather than relying on credit from banks and other microfinance institutions, which usually do not serve the poorest of the poor.
There are now more than six million members of saving groups in 60 countries. Oxfam America’s Saving for Change program, started in 2007, helped establish more than 27,000 groups now serving 576,000 members.
The conference will focus on promoting savings groups, and participants will discuss ways to integrate savings groups into more formal financial systems, to help small businesses access larger loans as they grow, and how mobile technology can play a role in this process.
Participants will also discuss another important aspect of savings groups: They are, as Romana puts it, “highly efficient platforms” for business training, public health promotion, and other activities designed to increase well-being and reduce poverty. “Savings group members retain what they learn and always demand more,” Romana says. “We want big organizations to ally with those working with savings groups, so they can train group members in things like family planning, and other subjects that will help women in particular, since most saving group members are women and we can see when countries invest in women, their economies do better.”
Oxfam America, Freedom from Hunger, Catholic Relief Services, and the International Rescue Committee are sharing the results of their randomized controlled trials at the conference. Kathleen Odell, an assistant professor of economics at Dominican University will lead the session on research. “The results will show that savings groups are having a positive impact on members and their families,” Romana says.
Other notable speakers and conference advisory committee members include:
“Before we would use 100 francs to buy tea,” Diallo said after a group meeting at her home, while she was selling a small bag of cooking spices to a young boy waiting patiently in her doorway. “We would sit around and laugh and tease each other. We didn’t know that if we put our 100 francs together, we could do something really important.”
Saving for Change group members pool their savings, and borrow money to invest in small businesses. Selling foodstuff as Diallo does is quite common, as is selling phone cards, and buying and selling cloth and clothing. Members pay back their loans with 10 percent interest, and the money grows in the group fund for 12 months, when all the assets are disbursed to members equally, and a 12-month cycle starts again. Last fall at the end of the last cycle, each member got nearly $50.
Mariama Ly, a 38-year-old mother of four wearing a bright red head scarf that forms a perfect circle around her face, says she did really well this past year. “I bought new furniture for my house, a bicycle for my son, and I invested the rest in my business,” she says brightly.
Her enthusiasm is easy to understand when you hear her story: Unable to find any steady work in their village, called Bandafassi, Ly’s husband had to move to Dakar where he is a fisherman. It is a good 800 kilometers (just under 500 miles) away, so he only comes home for the annual Tabaski holiday, which marks the end of the Ramadan fasting period. He stays for a couple of weeks, handing over the money he has earned to support the family.
But the money rarely lasted a year, forcing Ly to buy much of the food and clothing for her family on credit. When her husband came home, Ly says “He dealt with all my debts, he had to go around the village paying it all back.” It was the source of stress in their relationship.
After she joined the Saving for Change group in her village, staff from an organization called La Lumière used a grant from Oxfam to teach her and the other members how to establish a saving fund, make loans to members, start their individual businesses, pay back the loans, and re-invest her profits.
Ly began selling dried fish, pepper, vinegar, and other spices around her neighborhood. She says she can now cover all her household expenses. And her relationship with her husband has completely changed. “He’s treating me really well,” she says proudly outside her small home, the only one in her neighborhood with new thatch on the roof. “We talk a lot, we talk things over together. Before he just did what he wanted, but now we discuss it first.
“He’s really happy that I take this responsibility. I get a lot of respect from him now, and it makes me really happy.” Best of all, she says, “when he comes back to the house, there is just peace and love between us.”
Her group president Diallo says harnessing the modest savings and energy of the group members has created similar changes for all of them. “Before we had no way to help ourselves, but now with just 100 francs a week we solve a lot of problems, and help our husbands and our children.” Now, instead of sitting around drinking tea and teasing each other, she says “We tease the men. We are handling all the expenses now, not them.”
]]>But now that she has insurance, she can afford to take him to a clinic to get checked out.
According to Devudamma, many mothers here face the same dilemma when their child comes down with fever. Fevers could mean malaria or dengue, both of which are potentially fatal.
"Because they don't know what it is, the tendency is to rush to the hospital," said Devudamma, "But they charge a lot."
"That's where insurance is very handy," she said.
Many fishing families in the Pudimedaka village are deep in debt, borrowing money to rebuild boats, to cover daily costs when the catch is small or injury or illness keep them from working, or, like Devudamma, to pay for medical care.
When fish are plentiful, families have to pay back their loans, usually with a high percentage of their catch.
But health insurance, as part of a broader economic plan, is opening up new possibilities here.
Three years ago, the District Fishermen's Youth Welfare Association (DFYWA) a local NGO, and Oxfam partner, helped families in this village determine that medical expenses were a huge drain on their resources, costing some up to a quarter of their yearly income.
DFYWA also convinced Oriental Insurance, a government of India company, to create policies designed, and priced, for very poor fishing families.
Now, for what they make in a day, families like Devudamma's, can purchase an annual policy, protecting themselves from the costs of sickness, accidents ? even the death of a breadwinner.
With money saved on medical care, families here are buying ice-boxes, fishing nets and fish drying and processing equipment. These investments can help them earn a little more on their catch than they did before.
Health insurance is a great first step, but ultimately, the people of Pudimedaka need a more comprehensive insurance package to keep them out of the pockets of money-lenders, who fulfill a "mafia-like" role, according to J. Saravanan, fisheries expert from the Development Human Action (DHAN) Academy in Madurai.
Beyond medical costs, fishing families would benefit from insurance that covers assets including their boats, houses and even their day's catch.
Initially, Oriental did not know how to insure the traditional Indian catamarans that the poorest fishermen use, since they had no way of knowing whether the boats were seaworthy.
But DFYWA convinced the Department of Fisheries to rate and certify even these homemade boats. As a result, boat insurance should be available soon, according to Oriental representative Srihari Naidu.
Home insurance has also proved tricky for Oriental, since thatched roofs break easily in storms, even though they are also cheap and easy to repair.
And Naidu was confounded by the idea of insuring a fisherman's catch, despite the fact that other insurers have found a way to insure a farmer's crops.
Fish are a common resource, used by many, said Naidu. "We can't possibly know how many fish are in the sea."
Insuring assets, and not just health, would do more to keep vulnerable families out of debt, and allow them to build their savings, add value to their work, earn more money and reduce their vulnerability.
Mahalakshmi Kara, a grandmother in the village, has relied on a health insurance policy for at least a year and has started saving a small percentage of her earnings.
"We never thought that we could save, but we're doing it," she said.
"I don't know how it will be helpful," said Kara, "but if [saving] can lift us even an inch out of poverty, I'll be very happy."
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