My daughter, Annie, bought her first used car recently. She’s out on her own, and this is her first big purchase.
And it’s all because of her piggy bank.
Full disclosure: Her bank is actually a white porcelain bear. It now looks a little forelorn, resting on a high shelf, in what used to be her bedroom. Of course, years back, she grew out of putting a few coins into the bear’s back. She graduated to her DinoSaver account through our bank. Every three months she received a plastic dinosaur for saving money in her account. It was amazing how the money—and the dinosaurs—added up. By college, she had a “real” bank account.
I’d like to credit good parenting for her success in this area. But truthfully, it has more to do with what those in economic development call a “tradition of saving.” I know what you’re thinking. Your tradition could be stronger. So could mine. But at least we’ve been taught the value of saving. And where it leads. We not only save money for larger purchases, we save so that we can borrow money when we want to buy a house or start a business. We have financial institutions that are more than willing to help us save and borrow.But this is not how it works in all parts of the world. Last fall, I met an amazing group of women in the Kapululwe community development area in southern Zambia. Through the Empowerment, Respect, and Equality (ERE) program, World Vision helped them form a savings group in their rural village, one of 198 ERE savings groups in Zambia. More than 2,900 people, mostly women, participate in these groups.
The Chipo Savings Group started in 2010 with 10 women. Since then, they’ve come together weekly to put money into their joint savings account and to take turns borrowing money. They also contribute to a benevolent fund to help members and others in the community during a crisis.
When a member borrows money, the interest on the loan stays in the group and is added to the pool of money divided at the end of a six-month cycle. At the end of a cycle, each person’s savings, plus her share of the interest and fines, is returned. The money is kept in a locked box. Three keys, kept by three individuals, are needed to open it. During the first cycle, the women saved $400. When I visited, the group was in its fourth cycle, and savings stood at $764.
As a visitor, I found out the hard way how fines are collected. My group arrived in the village of Chipo later than expected and the savings group chairwoman, with good humor, informed us that we needed to pay a fine for our tardiness, which we did. They take seriously the processes and procedures that they’ve put into place and the role that the chairwoman plays in leading the group.
I sat with the women on a blanket under a sprawling tree, protected from the hot Zambian sun. As I looked around at the faces, I knew this was a place of business, for sure, but it was also a place of friendship. A place of connection.
One by one, the women stood up, testifying to how the savings group had changed their lives.“I got a loan for $250 to open a grocery shop. I’m ready for you!”
“It’s been a blessing for women like me who are widowed. I paid for my child to attend grade seven but didn’t have the money to pass her to grade eight.” With an $80 loan, she built 5,000 brick blocks herself and sold them for $600 so that her child could continue in school.
One woman’s husband was hesitant for her to join the group. When she explained that she wanted to save money to build a new house, with a block roof, rather than grass. He said yes. So, every day she is up before 6 a.m., herding their cows to a different grazing area. Then she comes back to the village and bakes scones to sell to earn extra money. She’s already started building their new house.
All of the women in the savings group grow crops or raise animals to provide food for their families, and they are also fledgling entrepreneurs. They bake scones. They own shops. They raise chickens. All to benefit their families and provide services to fellow community members. Working this hard also helps them continue saving so they can send their children to school and expand their small businesses and their farms.
So, why don’t they just go to a bank? First, there are no banks nearby. And banks aren’t excited about working with rural farmers who are disbursed over wide geographic areas and have only their crops for collateral. Small loans also carry higher than average administrative costs. Besides, it’s intimidating to go to a bank when you don’t understand banking language or how a structured banking system works.
When the women in the Chipo Savings Group are ready to take out larger loans (at about the $300 level or more) World Vision will help them take the next step, connecting them with VisionFund Zambia, our microfinance affiliate that works with small farmers.
When that time comes, they’ll be ready. They’ve developed their leadership skills, their confidence, and they’ve had financial training through their savings group. In World Vision’s experience, about half of savings group members graduate to using microfinance services.
Since I work on the economic development team at World Vision, I understood a little about how savings groups work even before I traveled to Zambia on my first trip to Africa. But what I saw for myself is the living, breathing power of community. Most of the women in the Chipo Savings Group did save money on their own before the group started. But it was never enough to finance their children’s education or their business. The power of the group combining their money into one pool is what is helping them move forward.
The best way to develop a tradition is to pass it on to the next generation. In that way, the Chipo Savings Group now has a tradition of saving, even though there are no dinosaurs involved. “My first-born child is married now,” said one woman, proudly, “and she is in a different savings group.”
This story originally appeared at World Vision’s For Every Child blog.