Village savings

by MMC
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Nuriati Jumanne Mpinda does not have access to a bank or traditional financial support services.

“I didn’t have the ability to save money,” Nuriati says. “All the money I received was immediately used to buy basic necessities. »

Nuriati is responsible for a household of seven people. Rural farmers like her often lack access to financial services, making it difficult to break the cycle of poverty.

Limited access to financial services perpetuates poverty

For farmers like Nuriati, limited or no access to financial services and support poses a significant barrier to poverty reduction and long-term success. Many farming families in his small rural village in Tanzania live in poverty.

“Few of the smallholder farmers where Trees for the Future works have bank accounts where they can save their money. Additionally, it can be difficult for rural farmers living in poverty to access credit from formal financial institutions,” says Gabe Buttram, TREES training director. “When they need it, it is more common for them to obtain a loan from informal lenders in their community, but these often have high interest rates which can be extremely difficult to repay. »

Improving income through the forest garden approach

Buttram and his teammates at Trees for the Future (TREES) work closely with tens of thousands of farmers living in poverty in sub-Saharan Africa. Local TREES staff train farmers in a regenerative agroforestry technique called the Forest Garden Approach. Farmers enroll in the four-year program to receive training, seeds and resources. During the program, they plant thousands of trees on their property and dozens of food crops and resources. Farmers can transform their land, improve their health and increase their income through their forest gardens.

Nuriati joined the TREES Forest Garden Training Program in Singida, Tanzania in 2020. She has planted thousands of trees and now grows dozens of food and resource crops on her land to provide food and income for his family.

Training of village savings and credit associations

In 2020, TREES introduced an additional training element to the training program to ensure that farmers are able to grow their wealth and invest in their own success: Village Savings and Loan Association training (VSLA).

VSLAs have a proven track record of breaking the cycle of extreme poverty and strengthening a culture of savings and investment in the community. VSLAs are generally made up of 15 to 30 people. They work together to save money, lending each other their savings at low interest rates, and sharing the profits. VSLAs are designed to be simple to manage, fully transparent, secure and independently led by the groups themselves.

“Various NGOs have had great success introducing VSLAs to rural communities. These groups have helped families build savings that they can use to invest in their livelihoods or as a safety net in times of need. This helps families manage their cash flow and build capital, and through the collective nature of the associations, they build trust and solidarity within their communities,” explains Buttram.

2,100 Tanzanian farmers learn to save for the future

Nuriati is one of more than 2,100 Tanzanian farmers currently enrolled in the VSLA training program.

“The VSLA training was an eye-opener for me,” she says. “I didn’t know you could save all that money.”

Local staff teach participants how to establish, govern and manage their own VSLAs. VSLAs are based on collective ownership, transparency, good governance, inclusiveness and a time-limited savings and loan cycle. Each group learns to manage their VSLA independently throughout the training program in order to be ready to operate independently at the end of the project.

The groups meet regularly, usually weekly. Savings are collected, counted and recorded in the presence of all members at each meeting, then stored in a secure savings bank. As savings increase, the group is able to provide loans to individual farmers in the group if they wish. Once approved, the borrower has a fixed period of time to repay the loan. When the loan is repaid with interest, the group’s savings grow. At the end of a savings cycle, everyone gets their money back based on what they saved, as well as their share of the interest earned from lending their money to group members.

$32,000 saved in less than a year

In this latest savings cycle, 112 VSLA groups saved a total of 80 million Tanzanian shillings (32,000 USD) in nine months!

Group members use their increased savings to invest in themselves. They start businesses, make home repairs, cover medical bills and pay college tuition.

“The VSLA training has improved my record keeping skills, I can now save, plan and budget my money,” says participant Rukia Mwanja. “I used my savings to increase my livestock, I was also able to pay my children’s school fees and I managed to start a tailoring business. »

“I used my savings to send my wife to the hospital, she was seriously ill,” says Lucas John.

Lucas John benefited from a loan that his group granted him. He borrowed 150,000 Tanzanian shillings (US$60) to start his grocery and fish business.

“Saving and borrowing is something that makes me more financially resilient. I can solve some of my family problems more easily than before,” he says.

Long-term growth in wealth and opportunity

Equipped with a better understanding of savings and access to a secure and reliable lending mechanism, VS participants look to the future with optimism and self-confidence.

“My future plan is to increase my savings so that I can buy more land, buy more livestock and build a beautiful house,” says Shabani Ramadhani Mghuna.

“VSLA training has helped us get more value for our money. Before using my money, I must first think about saving,” explains Nuriati. “My plan is to become a successful entrepreneur. »

TREES first piloted its WITH training program in Senegal in 2020 and in Tanzania in 2021. Today, all TREES project participants in Tanzania have the opportunity to enroll in the training. The TREES team is currently deploying VSLAs across all projects in Senegal as well as Uganda.

Help the TREES team reach more farmers with land-based and life-changing training. Donate today.

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