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“Saving for Change”: Enabling Women to Better Their Lives through Community Savings

By Nancy McDermott

July 6, 2007

Oxfam America, a well-known non-profit organization working to combat global poverty and social injustice, has recently implemented an innovative savings-and-lending program, known as “Saving for Change” [1].  The initiative addresses the prevalent concern that, in the words of a 2007 report by Acción International, “most microfinance institutions will continue to reach the poor and very poor, that is, those below the poverty line in their countries, but NOT those in the lower half below the poverty line.  In other words, even with subsidies and increased technology, it will still be challenging to reach the poorest most rural remote clients.  The “Saving for Change” program, derived from more traditional savings-and-lending practices already prevalent in many African communities, provides even very rural and extremely poor women with a safe, transparent and accessible opportunity for saving their money [2].

Through the “Saving for Change” program, Oxfam enables women to organize themselves into simple credit unions.  The groups are comprised of approximately twenty voluntary participants who meet regularly, as determined by the women.  At the meetings, each woman contributes a sum of money (previously established by the members) to a communal pool.  When a woman needs a loan, she proposes her idea to the group and they collectively discuss and decide the amount of the loan that will be approved [3].  All women who have received loans must then repay the money, along with a jointly agreed upon amount of interest, to the communal pool.  Thus, the interest paid continually increases the amount of money available to the women, rather than covering operating costs, as is necessary with bank provided loans.  Over time, the interest allows a group’s funds grow, and each member gains access to more money at a given time than she could feasibly save on her own.  The fact that all money originates from the women themselves, as opposed to outside loans or savings-matching programs, also increases ownership of the money.  Richard Rotberg, development specialist with CGAP (Consultant Group to Assist the Poor), found that this practice actually improves success of the program [4].

To implement the program, Oxfam first trains members of existing local organizations in target areas; in turn, these individuals train women in their local community to organize into a “Saving for Change” group.  Groups receive one year of training (comprised of twelve weekly sessions followed by monitoring visits) and a safe to protect their future savings.  After the local staff has trained one group in a village, the leaders of this group take on the responsibility of guiding of other local women to organize.  Hence, the groups become both self-replicating and self-sustaining [5]. All records within the groups are kept orally and in the presence of all members, enhancing transparency and allowing for the participation of illiterate women [6].

Research supports Oxfam’s approach to rural finance, emphasizing the value of savings-based programs, the importance of long-term relationships between lender and loan recipient in increasing repayment rate, as well as the necessity of placing decision-making in the hands of locals.  A plan that is flexible to the needs of villagers [7], long-term in scope and voluntary is also recommended to enhance sustainability [8].  The “Savings for Change” model complies with these basic principles and, based on analysis of its first year-and-a-half of operation through the organization TONUS in Mali, Oxfam has observed this success.  According to their evaluation, both the number of participants and the loan-repayment rate through “Saving for Change” were higher than a traditional microfinance program; overall, the groups had achieved a 99.75% [9] return rate and were able to have 85% of the money out on loan throughout the year, increasing financial access and yearly returns through interest.  In Mali, this access to capital translated into such improvements as an increase in school attendance for members’ children (10% increase among girls and 8% for boys) [10]. According to TONUS, self reports by women indicate that the “Saving for Change” groups also positively affect the status and self assurance of local women. The education, independence and support women find within their groups help them to “build confidence in their ability to do things” says Dalla Sissoko, one of the founders of TONUS [11].

  

The IIJD supports Oxfam’s “Saving for Change” initiative and commends its success in empowering African women to better their own lives.  Such efforts promote the engagement of women as partners in development and work to counteract the concerning reality that African women are largely overlooked as an extremely valuable resource for sustainable growth.  The “Saving for Change” program successfully implements one of the main policy recommendations of the IIJD to “strengthen women’s rights and their ability to mobilize resources for development” [12].  Furthermore, the self-sustaining nature of the program, as well as the direct and voluntary involvement of local women, clearly furthers IIJD’s as well as Oxfam’s shared goals of sustainable and grass-roots development.