Microfinance: Joining a Savings Group on 50 Cents a Day

Ben is back! Benjamin Hess is a CRS international development fellow living in Guatemala and working with savings-led microfinance programs. He writes a weekly (schedule permitting) blog post about microfinancing in Guatemala. In this post, a parish priest asks an intriguing question: How can people who make so little hope to save money?

Last year will be remembered for the global financial crisis, which affected us all to some extent. To get the new year started off on a positive note, I wanted to share this financial success story from El Salvador that demonstrates the remarkable potential of savings-led microfinance to transform individuals and communities.

In October 2008, CRS, Caritas Santiago de Maria, and CARE initiated a savings-led microfinance pilot project in two extremely poor municipalities of El Salvador. CRS staff member Mabel Guevara recounted the following story about the formation of savings groups. Using a report from Mabel and additional comments from LACRO Deputy Regional Director Gaye Burpee, I’ve paraphrased the story below:

“The first meeting was held in the Parish. Besides the priest, twenty representatives from the communities—six women and fourteen men—were in attendance. When the priest presented our initiative, he remarked: ‘How are those women supposed to save if some of them live on $0.50 a day?’

When the facilitator asked how many people saved money, nobody responded. When they were asked how many used cell phones, they all raised their hands and then began to laugh because they realized they had savings to pay for the service.

“At the end of the meeting, when the people were asked how many of them were interested in joining savings groups, only six people raised their hands—the six women. We organized a second meeting and this time fifty-four women showed up.

“Although the project goal was to form eight groups, thirteen groups (with 247 women) have been formed to date in the two municipalities. The groups meet every 15 days. The minimum savings amount is $0.10 per meeting, but most members hope to save at least $0.25. The women wanted to begin saving right away, but we convinced them that they needed to learn first so the groups would be strong and successful. All of the groups will start saving this month.

“The women involved in the project have expressed their appreciation for teaching them to save and for helping them build their self-confidence and develop leadership skills. And the priest who had serious doubts about the project now says that this is the best thing to happen in his community.”

– Ben Hess

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