Cause the money’s all been spent…
The words of Arcade Fire’s song Lenin, “cause the money’s all been spent” took on a new meaning as I sat writing this blog. Savings has been on my mind a lot over the past two months of my fellowship — most prominently, in the context of the field and the role that microfinance plays in both teaching and facilitating savings for the poor.
This topic brings a lot of difficult questions: With such extremely small amounts of money available, how does one manage to put anything aside? And yet, without this, what happens when you child falls ill with malaria? How does one get together a sum large enough to pay their school fees? How do you put a roof over your head when your hut has been washed away in a flood? If the money stays in your pocket, the little costs of the day-to-day could quickly add up until “the money’s all been spent”…
Back in July, in my field mission with Entrepreneurs du Monde (EdM) to the region of Dano to set up shopkeepers with their cookstoves (click here for that blog post), our final stop was in front of the market in the small village of Oronkua, where under the large Baobab trees, vendors displayed pagnes (African wax cloth with traditional prints), fruits, spices and peanuts on the ground, women collected water from the outdoor pump nearby, children rolled tires with sticks and men gathered drinking homemade beer on wooden stools in the shade.
As we unloaded the cookstoves into the shop, a young girl, who told me she was a student nearby, explained to me she was very interested in getting a stove to use with her classmates at school during lunch but that the 3500 CFA (7 USD) price tag was beyond her budget. I asked if there was any way she could put aside a small amount per month – at the end of several months, perhaps she could save enough for a stove?
She found this to be quite an interesting concept. An older man and his wife then approached us, with the concern over the price. On her own accord, the young girl began explaining to him that while the amount can see like a lot to have all at once, he could put aside a little each month to eventually pay for the stove. “Oh, it’s like that!” he exclaimed, “then that’s ok.” That’s when it hit me – the concept of saving up for something can be novel.
The contrast of the realities of life struck me as I considered my own introduction to savings, as a child walking with my grandfather to the bank on Main Street, Antigonish, back when they would print your deposit and balance into a little savings book. Here in Burkina Faso, the savings book, called a “Carnet d’Epargne” is still alive and well, and in hand-written form, as I saw during my Borrower Verification visits last week with Kiva Partner Micro Start, based in Burkina Faso with branches in and around Ouagadougou (for more on the awesomeness that is Micro Start, read this Kiva post on their story and this blog post from previous Kiva Fellow Allison Moomey (KF16).
When meeting borrowers for the verifications, I learned that lenders, who are for the majority groups of women, take part in obligatory savings, typically 10% of the total loan amount, which they receive at the end of their loan cycle. Facilitated by the payment procedure already in place for the loan repayment, this service shows women that the creation of savings can be possible, even on their extremely modest budgets.
EdM Burkina Faso will soon begin working with local women’s associations to offer microfinance loans for the purchase of the energy efficient cookstoves. The women will take group loans, referred to as “solidarity lending” and very common in microcredit, as group members can support each other and ensure each other pays. This methodology will also help the women to pay the little by little, as they would if they were saving up, but with the advantage of receiving the stove upfront.
These types of groups not only provide a base for women for financial education, but also with workshops and trainings on broader health and social issues. As I saw with the lending groups at Micro Start, the women create their own support structure, at once emancipating, confidence building and engaging. Keep an eye out for the group loans to facilitate the purchase of clean cookstoves for poor women in Burkina Faso, coming soon!