Women who live in very poor, very rural areas face a complex set of obstacles in their fight against poverty. They are much less likely to be literate and much less likely to operate a home-based business that earns more than $1/day. They are no less creditworthy, but their credit needs tend to be small and irregular, so banks cannot afford to provide them with loans. Even microfinance institutions cannot serve them, because it costs so much to transport staff to their villages. Further setting them back, many women who endure chronic poverty and hunger are reluctant to participate in microcredit programs. Many lack self-confidence, are unsure whether their home-based businesses can generate enough profit to repay a loan, or simply prefer to save rather than borrow. These women want very much to save money, if only a few pennies at a time, but they rarely have a safe place to keep their savings, much less earn a return on their money.
To overcome these barriers and help these women meet their self-help goals, Freedom from Hunger is co-developing Saving for Change with Oxfam America and Stromme Foundation of Norway, starting in Mali and now spreading to other West African countries and beyond to Latin America. Saving for Change enables groups of women to deposit savings-often starting with weekly deposits of only 20 cents-and build lump sums for predictable needs. When savings accumulate, the women in the group act as their own bankers, approving small loans to each other from their pooled savings. The interest they charge themselves for the loans goes back into the pool of savings, yielding a healthy return on the deposited savings of each member of the group.
The services of a microfinance institution are not needed because the loan capital comes from the women themselves, the recordkeeping is simple (it is actually done without writing in West Africa), and the women themselves monitor all the transactions. Freedom from Hunger trains and supports local service organizations (NGOs) to train women to start their own groups and manage their own financial needs on an ongoing basis. Over time, the funds grow and allow the members to meet larger and larger financial needs such as healthcare, education, small business start-up and expansion, agriculture and even purchase of food during the hungry season before the next harvest.
Microfinance is Just the Beginning
Freedom from Hunger has known for decades that when women come together regularly, many things are possible. The regular meetings women attend to deposit savings and take loans are a platform for learning, encouragement and building self-confidence. The dynamic of solidarity guarantees steady participation, repayment of loans and even the collective courage to try new things.
The groups also engage in Freedom from Hunger learning sessions on various topics, such as how to grow savings and how to fight and manage malaria. This education is dialog-based and does not require that women know how to read or write to participate. It fosters a sense of sisterhood among the women so that learning is shared and behavior change is mutually supported by the group members.
An additional benefit of the Saving for Change model in West Africa is that women members of groups, enthusiastic about the changes they are seeing in their own lives, are helping other women to form new Saving for Change groups in the same or nearby villages. Using picture-based curriculum developed by Freedom from Hunger to train group members to expand the program, Saving for Change groups are now being started by women from existing, successful groups. They are launching a true grassroots movement for change.