Pulling Their Own Purse Strings
While Oxfam invests tremendous energy in skill building, advocacy, and other endeavors to help lift people out of poverty, often what is most needed is income, which our innovative savings-led microfinance program – geared largely towards women – seeks to address.
by Kelley Damore
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| Mutualité et Développement has launched an innovative savings-led microfinance program in Senegal. By the end of this year, it hopes to help 2,500 rural women—growing to reach 100,000 women by 2008. By: Jeff Ashe/Oxfam |
West Africa has 10 of the 20 poorest countries in the world. In Senegal alone, more than five million people (approximately half the population) live below the poverty line. In a country where the average per capita income is $1,500, Oxfam is working to grow local economies by building women's businesses—and fostering equality for women in the process.
Casamance, in southern Senegal, is one of the newest targets for Oxfam's savings-led microfinance efforts. The Casamance region has been particularly neglected in development efforts due to a long-standing civil war. In partnership with Mutualité et Développement, Oxfam's savings-led microfinance program aims to provide opportunities for 2,500 rural women by the end of this year. This number is slated to increase to 20,000 in Casamance and 100,000 in Senegal by 2008.
A New Approach to an Old Concept
In fact, the concept of microfinance is not new: Oxfam and other nongovernmental organizations have offered such programs for decades. Traditionally, these programs have assumed poor people need loans to build their businesses.
In The Gambia, for example, one Oxfam partner, the Association of Farmers, Educators, and Traders (AFET), works through kafos, or indigenous self-help groups, and trains women in skills such as food processing and preservation, tie-dye, and soap making. AFET has already disbursed start-up capital to 30 women's groups to embark on these income-generating activities.
In contrast, Oxfam's new savings-led model is based not on loans, but on teaching groups to save more and to lend out their savings to build businesses.
How the Savings-Led Approach Works
The savings-led approach being used by Mutualité et Développement in Senegal is based on a traditional structure called the tontin. Tontins are traditional local savings and lending groups that have existed in West Africa for hundreds of years.
With this new approach, women gather in groups of 20. Each woman contributes money monthly to a group savings account. During the first month, one woman takes the pooled money and invests it in her own business. She then repays the loan from the group with interest. As the group's savings increase month by month, loans are made to several members at a time.
The savings-led approach offers a number of advantages. Because members develop and manage their own accounts and lend their savings to other members, this approach sidesteps the problematic issue of creating a financial institution that makes loans. Instead, it is built on existing community groups and modernized traditional savings structures. Additionally, because members loan their own money to each other and the interest income is returned as dividends, they start to view themselves as shareholders in a business. This encourages members to save and stay involved in the groups.
Whether using the traditional loanbased or savings-led approach, microfinance programs do more than encourage women to save money. Members help each other in times of emergency and give each other advice. By supporting each other, women gain decision-making authority in their households. They also increase their community activism.
The end result is a win-win for the community. Men appreciate the fact that women can generate income, and women are discovering a greater role and stronger voice in West African society.
Today, Oxfam operates community finance programs in 22 countries with 65 partners. In addition to the Casamance project, Oxfam is currently piloting savings-led microfinance projects in Zimbabwe, Mali, and Cambodia and plans to support 50 partners by 2010 through our Banking on the Poor Initiative.
Saving Yabello: How a Microfinance Program United a Village
By Sudha Kotha
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| When drought forced other families to pull their children from school because they could not afford the fees, the savings plan helped Goddanna Dida send both her children to school. By: Paul Valentin/Oxfam |
In the late 1990's, the Ethiopian village of Yabello lost 100 percent of its crops and 90 percent of its livestock to drought. Local ponds dried up, forcing women to walk up to 10 hours for water. Within two years, families had lost most of their assets and were struggling to survive.
Oxfam partner, Action for Development (AFD), was on the scene, supplying 120 camels to transport water and rehabilitate the fields. To jumpstart the local economy, AFD paid cash to those who worked to restore ponds. And to help people save their earnings, AFD supported nine groups of 35 women each to participate in a credit savings program.
Not only did the credit savings program help to further generate income, but it also profoundly affected gender relations in Yabello. "Before this, separate meetings were held for men and women," says villager Goddanna Dida. "With the introduction of the savings program, women became more equal. Now, many hold leadership positions in the community. Men and women attend meetings together."
Women are not the only ones who value the shift in gender relations in Yabello. "Before AFD's interventions, all responsibility to generate income was on me," says one husband, Kadhu Gharfi. "Now [my wife and I] share this burden." Even the introduction of camels has altered gender relations. Men who use the camels to transport goods to market are now helping fetch water—traditionally, a woman's duty. This allows women to contribute in other ways.
"Today, the village has a strong vision," Kadhu says. "We have an elementary school with 200 girls in school. Someday, we hope to have them as doctors." When asked if he felt that Oxfam and AFD had imposed their own ideas of gender equality on the village, Kadhu responded, "If it were against our culture, we would not have followed you."