In my last post, I mentioned that the women’s association I’m working with, Si Teriw, was running a successful credit program, in which the women of the association had access to nearly USD $240 of credit collectively. Although that sounds really great, you might be wondering, how exactly is this thing executed, and where does the money go?
I, too, asked these questions when we first discussed the possibility of setting up a credit structure. I had heard a lot about microfinance before becoming a Peace Corps volunteer, and I was familiar with the stellar work that was being done in this field by organizations like Kiva, Grameen Bank and OxFam’s Savings for Change. What I wasn’t quite sure of was how this small women’s association was going to run such a program and what the women would choose to do with the money. Luckily, they had a lot of practice and were familiar with the concept of microfinance.
Many, if not all, of the women in Si Teriw are members of a small savings group, or tontine. These small groups of women get together weekly or monthly to put a specified amount of money into a piggy bank of sorts. After a specified amount of time, or at each meeting, one of the women will get to take the money. For example, I’ve been to meetings where members of a tontine each contribute 200 CFA, or about 40 cents, to the piggy bank weekly. Once everyone has contributed, there is about 4,000 CFA, or USD $8, in the bank. The women then all take a piece of paper from a small bottle, and one of them has a star on it. The woman who pulls the star or “picks her name out of the hat,” as we would say, gets to take the money that week. This concept develops a sense of trust among the women. You always put money in, and by the luck of the draw, you always have the potential to hit the jackpot. This sense of trust carries over into the work of Si Teriw.
In addition to their familiarity with small tontines, they are also familiar with the two formal micro-credit providers in my village. Although many women claim that they have had bad experiences with these banks, they understand how they are supposed to work – you take out credit, there is an interest rate and a loan term and after the time has elapsed you pay back the money you took out, plus interest. They applied this same principle to the Si Teriw credit program and sprinkled in a bit of their experience from tontines.
The women of Si Teriw established loan terms on their own. As I see it, they made this money through the sales of shea butter and soap. So, although they are the beneficiaries, they are also the lenders and have the opportunity to set fair terms for themselves and their fellow association members.
They decided that the loan would be given for six months. On each 5,000 CFA of credit they would charge an interest rate of 20 percent, or 1,000 CFA – a little bit less than the typical rates of the local microfinance banks. That meant that each village was given 20,000 CFA and would be expected to return the money, plus 4,000 CFA of interest in January 2012. These seemed to be fair terms to me and one woman from each village left the meeting with 20,000 CFA in hand.
What I was particularly interested in was what they were planning to do with the loan. So, I asked to attend the meetings in each of their villages to see how they selected the loan recipient(s) and what they intended to do with the loan. Each village – there are six total – conducted the process a bit differently.
Two groups of woman gave all of the money to one member. They intend to use the money to expand a shoe-selling business and a condiments stand, respectively. Another village, decided to spilt the money between two women, both of which intend to buy peanuts, shell them by hand, package them and resell them in small bags at market. Yet another village decided to split the money between five members of their association, recollect the money plus interest in just two months and start another cycle of five women. All of the women in that group plan to use the money to buy materials for their fried food stands. These, plus the other two village groups, all selected the recipients based on consensus. They asked each other who needed the money and for what reason, and then determined as a group if they would grant the loan. In each place this process was quick and civil – they trust each other and have each other’s best interest in mind.
My hope is that the credit program continues to succeed, as it is currently the best way to reward the women for their work in shea butter production and soapmaking. In the future, I hope that the women are able to make enough profit to pay the women for their work and pay out dividends to all of the villages. They understand that businesses grow and improve slowly (as they say here dooni, dooni “little by little”) and that the success of their business and the credit program rest on their motivation, dedication and continued cooperation. I have high hopes for Si Teriw and look forward to reporting future successes here!