Saving for Change
Women who live in very poor, very rural areas face a complex set of obstacles. They are much less likely to be literate or operate a home-based business that earns more than $1 per day. Their credit needs tend to be small and irregular, so banks cannot afford to provide them with loans. Even microfinance institutions (MFIs), committed to serving the poor, cannot serve them because it is too costly to transport staff to very remote villages. These women want to save money, but they rarely have a safe place to keep their savings, much less earn a return.
To respond to this need, Freedom from Hunger co-developed Saving for Change with Oxfam America and the Strømme Foundation of Norway to enable 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 each other for the loans goes back into the pool of savings, yielding a return on the deposited savings for each member of the group.
The services of an MFI are not needed because the loan capital comes from the women themselves. The recordkeeping is simple, and the participants monitor all the transactions. Freedom from Hunger works with local NGO partners to train women to start their new groups and manage their own financial needs on an ongoing basis. Over time, the funds grow and allow the members to meet larger financial needs such as healthcare, education, small business start-up and expansion, agriculture and the purchase of food during the hungry season.
Microfinance is Just the Beginning
Freedom from Hunger has known for decades that when women come together regularly, many things are possible. The regular group meetings the women attend provide a platform for learning, encouragement and building self-confidence. Group solidarity ensures steady participation and guarantees the repayment of loans.
The groups also participate in Freedom from Hunger learning sessions on various topics, such as how to increase savings and prevent and manage malaria. The education sessions are dialogue-based and do not require that women know how to read or write to participate. This fosters a sense of sisterhood among the women so that learning is shared and supported by the group members.
An additional benefit of the Saving for Change model is that some women, enthusiastic about the changes they are seeing in their own lives, are helping others to form new groups in the same or nearby villages. The participants themselves are launching a true grassroots movement.