Rural women who live below the poverty line have limited access to formal financial institutions and often do not know about options for making sound financial decisions. Neither can the 15 million people on social grants access credit that is appropriate for their income bracket and be protected from unscrupulous lenders and exorbitant interest rates.
Micro-financing is one answer. Although not a new concept, community-based saving and loan groups have helped one organization based in KwaZulu-Natal, Sinamandla, give more than 15,000 rural women the opportunity to pool their collective resources and address their own poverty-related issues.
Sinamandla helps form Self-Help Groups which consist of between 15 and 20 women. They save a minimum of R2 per week, accruing capital women can borrow to meet their needs from burials to selling and growing vegetables. Loans are repayable at an interest rate of 10% within the time-frame agreed among the members which is usually a month. Over time, the amount saved increases and the loan amount grows as the interest rises which is added to the group savings.
SHGs are managed by Sinamandla partner non-profit organizations (NPOs) that work in areas of health and social welfare. One staff member of these partners is employed to support the formation, training and monitoring of SHGs. Through working with partner organizations, Sinamandla enables NPOs to build financial self-reliance into their development interventions. In 2011, 12 NPO partner organizations in KwaZulu-Natal, the Eastern Cape, Mpumalanga, Limpopo and the Free State supported 383 SHGs with 5,653 members who assist more than 30,000 family members. SHGs saved R1 503 156 and borrowed R3 415 514 from 27 238 loans. Since inception in 2007, 11,000 SHGs have been created and 85% are still functioning.
SHGs form part of a three-tiered model which develops community-driven conglomerates as powerful development forces in poor areas. A minimum of eight SHGs that comply with set criteria can form Cluster Level Associations (CLAs) to take up issues beyond the scope of individual SHGs. Sinamandla currently has 38 CLAs in operation. If CLAs and SHGs continue strengthening, up to nine CLAs can form a Federation which is an important step in taking over the administrative tasks conducted by partner organizations.
Very few such conglomerates exist albeit one collective in Pietermaritzburg aiming for Federation status. Zimele has been managing SHGs for almost six years and is comprised of nine clusters and 1,200 women. They run a number of home-based care activities, food gardens and crèches around the rural areas of Swayimana and Bergville.
The financial benefits of this micro-financing approach in fact underscore the strong social fabric created through functioning SHGs. Sinamandla creates community amongst its groups around the country through running an annual ‘Self-help Awards’ for exceptional partner organizations, CLAs, individual SHG members, and community facilitators. Sinamandla Annual Reports are littered with these success stories.
SHGs are autonomous, self-regulating and help amplify social grants and encourage less dependency on this form of government support. Social grants afford basic survival such as helping maintain basic shelter, and provide money for children to attend school. SHGs on the other hand provide an opportunity for greater quality of life. Women can renovate homes, buy school uniforms and stationary, pay for transport to clinics and start other income-generating activities.
Who would have thought only R2 a week could do all this?
Image: A Self-Help Group (SHG) pooling their collective monies.
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