July 23, 2016 12:08 pm
So much have changed since 2011 when we first initiated the village Savings and Loans association in Kakuuto. At that time loans and savings issues were for people conducting ‘big’ businesses, salary earners and the term loan was not a word associated with small scale farmers especially the women.
Financing enterprises or getting credit or saving in early days was about the commercial banks, visiting bank loans officers, handing over collateral security documents like land tittles, taking photos, verification from the local authorities and banks taking assets in case of loan payment failure. Don’t get me wrong, borrowing and credit was happening at personal level, money lenders were common and other innovations were happening. But later some magical idea was brought: the village saving and loans associations were promoted- changing life of the village people as we know it, savings mobilization and even loan repayments, forever.
RECO has promoted and supported village Savings and Loans associations. The village savings and loans association have proper leadership with the chairperson as the head, record keeper, and 2 money counters.
Savings and Loan disbursement; saving is done weekly were for example the katovu village Savings and Loans group members saved between shs 500-5000 demanding on the person’s financial abilities. Each group in a cluster manages its savings. Money saved acts as loanable funds where the persons pays agreed interest monthly and the money is paid in a period of three months. Members also save an emergence fund of 200 shillings every week and this is given to members with problems and but no interest is paid to the emergence fund and the money is returned in an agreed period of time. At the end of the year, both interest and principle is shared and a new cycle begins.
There is success including the following:
- Accessibility of loanable funds to members; members have easy access to loanable funds which they can take with little interest and no collateral security which is the case with commercial banks. Members who have acquired these loans have used them to start up self-help projects.
- Improved household incomes; members have improved their household incomes due to income generating activities and improved savings leading to increased investments that have led to poverty reduction among the members and the community.
However there are challenges including: inadequate tool kits and other facilities like safes, stamps, stationery, calculators etc.; inadequate loanable funds; monitoring and supervision is still a challenge; and Conflict of interest among members.
There are future plans for business training of members and buying rental chairs and tents. And as the world has become more and more driven by technology, there is hope to carry the idea of village Savings and Loans associations over into the designs of systems, websites, and applications.