Savings Groups Transform Families
Have you ever thought that the comprehensive banking and financing systems we can access at our fingertips is a privilege that empowers us to achieve a lot more with our limited resource?
About 1.7 billion people have no access to banking services, and almost 1.4 billion people are considered to be exploited in their workplace, in the forms of underpayment, dangerous and indecent working conditions, and a lack of formal work arrangements, etc. This makes it difficult for parents and caregivers to generate income and save for their children’s basic needs such as education, nutrition, clothing and health. As a result, children living in poverty are the most exposed to different forms of threat, including early marriages, neglect and child labour.
International non-governmental organisations have identified savings groups as one of the best economic empowerment methodologies capable of lifting the most vulnerable children and their families out of extreme poverty and building resilience to shocks and stresses.
Convenient and flexible, savings groups are mutually owned, managed and operated by its members using a simple, transparent method. Groups accumulate and convert small amounts of cash into savings, which can be lent to members as credit. A service or loan application fee can be charged as a way for the group to earn additional income and increase the return on savings, but this is optional.
In the Democratic Republic of the Congo (DR Congo), 35-year-old La Vie is able to make use of a savings group to improve the lives of her family.
La Vie used to save her money in a traditional system where several members would come together and contribute a set amount. However, it was not a well-organised system, and there was always a problem when it was her turn to receive the money.
“When I joined World Vision’s Saving Group, I saw how things were different from what was happening in the other system. I started to save money. I also benefited from trainings on financial management which were provided during weekly savings group meetings. This knowledge allowed me to position myself well.” Previously not owning a plot of land, she was able to use the money she saved to buy one and pay for her husband and children’s education. In addition to that, the family has opened a restaurant and is building a new sheet metal house.
“The saving group has completely changed me and my family. I gained more skills and identified additional opportunities as well. Since I joined the savings group, my children are healthy and they go to school. I do not worry about their education and health anymore because I can use our savings group to borrow money to pay for what they need,” says La Vie.
In Nepal, following the 2015 earthquakes, World Vision supported the establishment of savings groups to help vulnerable families build sustainable livelihoods.
Shova, chairperson of one of the savings groups, says, “This savings group is just a small beginning for us. We are planning to scale it up in the near future, so that more amount can be collected to start small scale businesses. This will ultimately support economic empowerment of poor farmers like us.”
The savings groups also serve as a means of emergency assistance for its members.
When 14-year-old Sunita fell sick with typhoid, her mother Meena was worried because she could not afford the treatment. "I am from a poor family so I was worried about the medical expense," she says. Thankfully, she received a loan with a minimal interest rate from her savings group to pay for Sunita's treatment. “Now, Sunita is healthy again. She is studying in grade nine and wants to become a teacher in the future,” says Meena with a broad smile. “One day, she will make me proud.”
Saving groups transform their members’ mindset, and transform communities. They multiply limited resources into unlimited opportunities for many families.