Learning to Save on Two Dollars a Day

Lew meeting with a local government official and project coordinator

Can people who live in one of Africa’s poorest countries save money? How does one manage to save money when your annual family income is a couple dollars a day? And how do community organizations, even congregations, function and survive in a time of civil war, chaos and lawlessness? What is the purpose of saving? There are responses to those questions but first a look at microfinance, what it is and why it’s important.

Microfinance is a term referring to financial training and activities for individuals and small-scale entrepreneurs lacking access to formal banking services. The microfinance movement, in large part, can be attributed to the Grameen Bank, the work of Professor Muhammad Yunus at University of Chittagong, Bangladesh. Dr. Yunus, an economist, launched a research project to study how to design a credit delivery system to provide banking services to the rural poor. The success of the Grameen Bank kicked off a worldwide movement in microfinance as development organizations, churches and banking systems started to see poor people, especially women, not as bad credit risks but as responsible customers.

The Evangelical Lutheran Church in the Central African Republic (EEL-CAR), in partnership with Lutheran Partners in Global Ministry (LPGM), a Minneapolis based organization, supports a microfinance project known as the Village Savings and Loan project. Currently the project has around 500 savings groups serving nearly 12,000 members. The project is managed by the social service outreach arm of the church with a staff of eight: a coordinator, administrative assistant and six trainers, The training staff work out of several satellite offices located in the northwestern part of the country.

How does the Village Savings and Loan project work?

The first task for trainers is to work with village leaders to bring together a group of people who know and trust each other. Groups usually have 15 to 25 members and in the majority of cases women outnumber men. Next, members of the group need to agree on the basic operating plans. Such as when will they have their weekly meeting, how much money will they plan to save each week. A president, treasurer and secretary are elected. Weekly savings are kept in a locked box under the control of the group, the metal box has three locks and three members each have one key!

At each weekly meeting members contribute as they are able with records kept in individual notebooks. Most weekly contributions range from a few cents to less than a dollar in local currency. When enough money has been saved, loans are made to members which must be repaid with interest. Loans are taken for a variety of reasons: family emergencies, house repairs, micro-business loans, etc.

Saving cycles run for nine months and at the end of each cycle members are repaid money they saved and proportionately receive interest earnings that result from loans made to members during the cycle. At the end of each cycle the groups have a distribution celebration when savings are returned and interest earnings divided. One can compare this model with a very small credit union, owned by members and operated for the benefit of members, working together for individual and community goals.

Why are savings groups important? One good answer to that question is the comment by one member made at a weekly meeting,

Finding some money is not always difficult, learning how to save is the challenge.

There are few banks in the Central African Republic outside the capital city of Bangui. Most citizens have no experience working with a formal banking institution, so how does one safely keep money? Micro savings groups provide a basic mechanism to save money in a relatively safe manner as all group members work together to hide the treasury box from thieves. This is not easy but groups have been amazingly successful.

Savings groups collaborate to achieve personal and community goals. By working together, village groups set an example for the broader community to resolve conflicts and differences, encourage reconciliation and peace-building. Savings groups are a local platform for peace, a crucial need in the Central African Republic today.

Village Savings and Loan group membership is representative of community diversity. Membership is not restricted to a particular faith community, gender or ethnic group. Savings groups are examples of inter-faith cooperation, community engagement and advocacy. Women and men of all faith traditions work together for individual and common goals.

Lew Hille has been working with the Evangelical Lutheran Church in the Central African Republic and Lutheran Partners in Global Ministry  as a consultant to the Village Savings and Loan project since 2015. The project is now in year two of a three-year expansion plan to create new savings groups and to rebuild village groups that were forced to disband due to violence. The project focuses on the northwest provinces of the country. CAR borders Cameroon where Lew and Marian served as ELCA missionaries for a eleven years. His first visit to CAR was in 1966 so involvement with this microfinance project is a bit of a homecoming. Lew is pictured meeting with local government official, Jean Symphorien NGAMA- PIAULT (R) and Floribert Ngaré, project coordinator (L).

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