Emmaculate, 28, sells charcoal and for 10 years has eked out a small income, selling half a bag of charcoal each week. Then, two years ago, Emmaculate joined the “Unique Smart” Group Savings & Loan supported by Alice Visionary Foundation Project and WomenStrong International in the slum of Manyatta.
The group trained her in how to start saving and take sensible loans. Within a short time, she borrowed to buy an entire bag of charcoal, doubling her weekly income almost immediately. “My charcoal business did well so we did not go hungry. People must cook, and they need charcoal to do it. My life changed,” she said.
Savings groups such as those run by Alice Visionary have been recognized as among some of the most promising ideas in development aid. Such groups now serve millions of people in nearly 60 countries who do not have access to traditional credit or other financial services. Savings groups require nothing but the participation of the members themselves and some training to get started.
In Kumasi, groups of around 20 self-selected women meet weekly to save with amounts based on each woman’s ability. The groups provide a secure place to save and the opportunity to borrow small amounts on flexible and mutually agreed-upon terms. Interest charged on the loans becomes part of the pool of savings, as do fines charged to encourage professional behaviour, such as punctuality. Savings and loans for each member are recorded in passbooks or a central ledger. At the end of each “cycle” lasting 9 to 12 months, savings are shared out by members, providing useful lump sums once a year.
In her share-out at the end of her first year, Emmaculate’s return on savings fetched $200 (KES 20,000), allowing her to further expand her business, buying and selling five sacks of charcoal each month, a 900% increase in turnover within the year.
Last year, Emmaculate’s portion of the savings share-out was $440 (KES 44,000), which she invested in the purchase of 20 iron sheets that will soon be used to build a house for her family at their ancestral home. And she’s got even bigger plans.
Looking toward the share-out in December 2016, she has set a goal of saving at least $1,000 (KES 100,000) to pay a year’s school fees for her older son. To understand the extent of Emmaculate’s achievement, it is useful to know something about school costs in Kenya.
Most secondary schools (high schools) in Kenya are boarding schools, housing students for nine months each year and providing all meals, books, uniforms and activities. Although the costs of high school vary, the average cost for a single year is about $700 per student, well beyond the means of most poor families, especially a young mom in a Kenyan slum raising two sons.
“My life has changed so much,” Emmaculate said, looking back over the past two years. “I can now plan for my sons’ futures and pay their school fees.”
When she first joined her savings group, Emmaculate had no home and crammed her family and all belongings into a small space provided by a cousin. “Now, I am staying in a four-room house with enough space to keep my charcoal and our things,” she said.
Beldina Opiyo-Omolo, Founder and Director of Alice Visionary Foundation Project, said the savings groups provide women with more than money, they offer dignity and a supportive social network.
“The change you see in the individual women is phenomenal,” she said. “You can see it in the way they talk, dress, how they carry themselves. They have a sense of accomplishment they never had before, a sense that they’ve achieved something they never thought was possible. When you have money, you have a voice, and that is what this is all about.”
Emmaculate agrees “Before, I could not confidently join other women in savings and loans, because I did not have any source of income to help me repay my loans. I depended on my husband,” she said. Her financial independence is the key to overcoming extreme poverty and building toward a better future.
“My plan now is to diversify, so that I’m not dealing in only one product. I learned this from Alice Visionary that has trained us on so many things, like business skills and how to select and manage various businesses,” Emmaculate said, showing the entrepreneurial smarts that is helping her change the future and provide a role model of success for other women in her community.