Women and youth find hope through community savings-and-loans programs

Buna Bullo (pictured with family) often worried about the weather. She depended on rain. Without rain, there would be no crops, and without crops, there would be no way to support her family.

The 36-year-old mother-of-four and her husband are substance farmers in the monsoon-dependent area of Langano, Ethiopia. And, making enough money to cover household expenses isn’t easy. It’s even harder now that Ethiopia faces its worst drought in 40 years.

Having a livelihood dependent on agriculture has become much more worrisome. But, there has been a reprieve and glimmers of hope for families like Buna’s.

Savings-and-loans groups supported by Children Believe are giving vulnerable, low-income families a chance to create sustainable income-generating opportunities, supporting more children’s access to education and helping break the cycle of poverty.

Why are informal savings-and-loans groups needed in Sub-Saharan Africa?

“Poverty reduction has suffered its worst setback in decades,” reads The World Bank Poverty and Shared Prosperity 2020 report. “The impacts of COVID-19 are expected to set back progress toward ending extreme poverty by at least three years.”

The same report reveals that about 40 percent of the population in Sub-Saharan Africa lived on less than US$1.90 a day in 2018. Almost 70 percent live on less than $3.20 a day.

Meanwhile, young people and women from rural areas are overrepresented in low-income communities, especially the uneducated. These groups are underserved and the pandemic has only deepened inequalities.

What’s more, low-income households often don’t qualify for financial services from banks, which are not usually available in rural areas. So, these vulnerable people often go to exploitative moneylenders — a reality deeply rooted in discrimination and a disadvantaged position in accessing resources and opportunities.

For Buna, this inequity translated into crop losses, making it hard to afford growing her livelihood. The hard worker was at risk of turning to informal moneylenders who may charge steep interest rates.

Savings-and-loans groups offer a much-needed alternative. The Hadha Langano Savings-and-Credit Cooperative in Buna’s community is an example of one that’s providing help. For members like Buna, it provides inclusive financial services, filling the gap in bank support for underserved communities.

With access to loans, credit and assistance with saving, members can invest in sustainable income-generating activities, diversifying or expanding their existing micro-businesses. The funds also help pay for living expenses, such as food, education and healthcare.

How we’re helping vulnerable families in Africa help themselves

We believe education is essential to break intergenerational poverty and improve the lives of children, their families and communities. So, we’ve joined with local partners during the past 30 years to implement child-focused development programs in Ethiopia, Ghana and Burkina Faso. And, one strategy to boost education is to boost financial services for vulnerable families.

In our rural program areas in Ethiopia, Ghana and Burkina Faso, we have helped primarily women and young people organize Savings and Credit Cooperatives (SACCOs), Village Savings and Loans Associations (VSLAs) and Youth Savings and Loans Associations (YSLAs). The three groups vary in their structural arrangement, but all operate for the same purpose — to promote access to inclusive financial services.

Typically, the savings-and-loans groups begin informally; they’re established when individuals from a community save money together, following agreed upon rules.

Pooled savings provide financing to members who determine policies, such as the amount to be saved monthly by each member, the interest to charge on borrowing and the dividend sharing formula.

The groups build social ties, creating trust. They’re formed voluntarily and are self-governed local institutions led by elected leaders.

Children Believe and our partners have facilitated the formation of the groups and strengthened operations. This includes creating awareness about their value, identifying individuals and households who would most benefit and connecting them.

The groups are strengthened through start-up capital, training, experience-sharing and operational guidance.

The goal is to empower members to find creative solutions for their small credit needs and lead positive change. 

Savings-and-loans groups are making a big impact

Our teams in Ghana, Burkina Faso and Ethiopia have effectively reached numerous communities through our SACCOS, VSLAs and YSLAs, improving financial stability and access to food and education.  

Our SACCOs in Ethiopia, including the one Buna joined, celebrated many achievements, which we share in our Power of collectives report. Below are highlights…

• In 2021, SACCO membership in our program areas grew by more than 79 percent.
• Members have grown their initial investment of nearly C$10,000 to about C$270,000 as of the August 2021 publishing date of the Power of collectives
• About 77 percent of cooperative members who had access to loans were women. They thrived at managing and creating income-generating activities to support their children’s education.
• SACCOs directly contributed to creating access to education for more than 3,000 girls and boys, whose parents are members of a cooperative.
• Cooperatives sparked collaboration among members, community consultations, training and discussions about economic and social issues. And, the more families benefited, the less children were vulnerable to gender-based violence, child marriage, abuse and exploitation.
• Successful cooperatives led to the establishment of new cooperatives.

Buna’s SACCO membership connected her with financial services and loans, improving her family’s agricultural production. With the funds she received, she bought drought-resistant crop seed and fertilizer. She also diversified her activities to include raising goats and pursuits outside of farming.

The boost in income has improved her family’s living conditions, making it possible for all Buna’s children to go to school. The busy mom has even returned to school herself to complete a diploma in accounting. She also continues to support her local cooperative.

“I would like to thank Children Believe and (their partner) Bole Bible Baptist Church Child Care and Community Development for their help…. It would have been difficult to attain this triumph without the support of the cooperative,” she told us.

Learn more about the success of our savings-and-credit cooperatives by reading our Ethiopia case study, The power of collectives.

About Children Believe

Children Believe works globally to empower children to dream fearlessly, stand up for what they believe in — and be heard. For 60+ years, we’ve brought together brave young dreamers, caring supporters and partners, and unabashed idealists. Together, we’re driven by a common belief: creating access to education — inside and outside of classrooms — is the most powerful tool children can use to change their world.

About Childfund Alliance

A member of ChildFund Alliance, Children Believe is part of a global network of child-focused development organizations working to create opportunities for children and youth, their families and communities. ChildFund helps nearly 23-million children and their families in 70 countries overcome poverty and underlying conditions that prevent children from achieving their full potential. We work to end violence against children; provide expertise in emergencies and disasters to ease the harmful impact on children and their communities; and engage children and youth to create lasting change and elevate their voices in decisions that affect their lives.