Jambo! still in Arusha, the exciting Arusha Savings Group Summit over yesterday...learned so much! To clarify, this entire group of reps from 43 countries, all over Africa, India, Egypt, Pakistan, Afghanistan, Vietnam, Cambodia...from Plan, World Vision, Catholic Resource Centre, Feed the Hungry, Kids International - all the big world-wide organizations coming together to talk about how they are organizing small VSLs...Village savings and loans groups, in their countries..where poor people form groups of up to 25 people, elect their own leaders and each person putting as little as $.25 cents into the pot each week or every two weeks. The total amount accumulates, and members can borrow at an agreed upon interest rate. This money is used to enhance or begin small businesses. Profits from it are used to better lifestyles of their families, support education of their kids.
It is an incredible model.
I spent alot of time with Jones, a great woman working in Zimbabwe, setting up these small savings groups especially with teenagers from age 13 on.... sometimes even with younger kids, from age 6 on! All wanting to learn how to save, many of whom have witnessed the successful results of their parent's in savings groups. The kids would borrow money from their parents to begin their investment. Then take out a tiny loan, buy sweets with it, and sell to other kids, raise a small profit with each sale...end up buying their own shoes, uniforms for school, and even helping their parent's with basic needs of their families. It is incredible.
This VSL group model is different from micro finance.
With micro finance, someone from the outside lends money to a small group of 5-6 people...with an agreement that this money will be paid back, sometimes at great interest, at a certain date, each member responsible for each other. When someone can't pay back, the others must jump in to cover.
Micro finance has been a great model for years, but has been abused as well.
I heard, at a conference last year on alternative investing in Toronto, a woman from NYC actually stand up on the stage promoting micro finance as a viable option for your money, say "a lot of money can be made from the poor! They always pay back, much more dependable than most people from the west!" Shockingly, huge interest rates of up to 40-50% were sometimes demanded. Often borrowers were illiterate, not understanding what they were 'signing', or in many cases, this was the only game in town for them to borrow. Yes the poor were paying back, terrified of what might happen to them if they didn't. Harassed by creditors, I have been told that they actually sold family land to pay off debts, even hire their children out for prositution, marry them off - anything to get the lender off their backs!
With VSL, outside money is not required which makes this model sustainable to the people in the group. Large interest rates are not incurred. The group decides and agrees upon the interest rate themselves. VSL is a model that was started by a Norwegian woman back in the 80s and has spread world wide...the people at the conference this week, some pioneers this movement, but all hugely enthusiastic about increasing the numbers from millions to billions in the years to come.
Last year I sunk seed money (from my uncle, therefore from the outside), interest free, into four savings groups of 80 people, mostly women, all living with HIV Aids. These groups had been in operation for a few years, struggling along, not making a lot of profit, with more challenges than most - their money going toward good food to support their medication, travel to doctors, as well as toward basic needs for their families. So on Charles' advice we sunk this seed money into their pot, with a contract for one year. I am delighted that at this writing three of the four groups have paid it back in full. The last group promising by next week, the date of the loan last year.
Charles tells me it has been a success, with most of the people enhancing small businesses, like selling bananas and fruit at the market and along the main street, buying a little bit of land, renting a tractor to till it...and harvesting 150 times what they were able to make initially. Out of the profits expensive school fees have been paid for kids to attend secondary school, houses have been fixed, new businesses started.
I can't wait to hear all the stories next week during their paying back ceremony...great!
Jones from Zimbabwe tells me things are getting a little better since the opposition party is working hand in hand with the Mugabi govt..food in the supermarkets...a little fuel at the pumps...life a little easier..I'm told our western press embellishes stories, making them sound a lot worse than they are, according to the people living there. When i worked in Zim back in 2006 the US govt advised Americans not to visit. I was the only white I saw for a month, walking down the street, jammed into local buses. It was not what we were told. I never felt unsafe. The people were warm and welcoming. There was horrible sickness with an estimated 30% suffering the ravages of HIV AIDS, amongst terrible poverty, but in the midst of this I felt such resilience, banning together helping each other, community, joy, singing, dancing as well. WE can only imagine this at home in times of collective disaster. The ice storm; Sept. 11. the death of Kennedy, even Jack Layton.
People coming together, forgetting themselves. Working as a whole. It feels good.
Our truck broke down yesterday; Charles was unable to pick me up, so last night was spent buried into a book at the Naz hotel in Arusha...delicious after the mind bending intensity of the conference.
Today: the internet across the street from the Naz....a luxury...power on...rain falling softly outside, atop the crashing of traffic racing up and down, vendors selling shoes, fruits and vegetable, belts, cell phones alongside the road...and later, if Charles comes, off to the SOS orphanage just outside of town to check it out... starting to research other orphanages to determine the best way to go with a new Majengo facility to be built by 2013.
How many kids? Big dormitories or small houses with a mama and baba? How many staff, kitchens, toilets, government help?> restrictions? playgrounds, vegetable gardens, chickens and goats, pre school? primary...? I'm looking for an English teacher to hire full time in the interim...translators at the conference promise to send someone my way, someone qualified who comes from the Mto Wa Mbu village area...with family near the orphanage. All good...
Till then, I'm off to Mto Wa Mbu without easy internet access...
will get back to blog, when i can..have a great day! xxLynn