Transforming lives through a culture of savings

Ethiopia’s Kacha Bira District has a great potential for business, nevertheless, the residents’ financial capacity is very fragile. The existing institutions that provide loans are finger counted and demand collateral which is far from possible for this poor community. Desperate to access loans from a legal entity, most visit local loan lenders that don’t require collateral but demand high interest rates.

Tarekech Irkalo, 35, married with 7 children lives in Wondire Village. She used to take loans from local lenders. Recalling her loan experience she says, “The interest of the local money lenders was 150% per 100 Birr (5.26USD). Over 90% of the profit that I used to make was going to the pocket of the money lender. But I had no choice than continue doing the business to ensure my children get at least a meal a day.”

In response to the community’s challenges, World Vision introduced the concept of Saving Groups to the Kacha Bira community. At first, there was a huge challenge to convince the community to accept the idea. But through time, World Vision was able to prove the concept of saving. Today, the community has established 155 active Saving Groups with a total of 2,946 members.

Ediget Bekuteba Saving Group is one of those Groups. Established in May 2013, it has 22 women saving members. The minimum share price is 1 and the maximum is 5 share prices. One share price costs 3 Birr (0.33 USD cents) and paid once per week. B/esides share price, the Saving Group has social fund. Each member of the group has to contribute one Birr (0.11USD cents) per week which will be used to support members when they face emergency.

So far, the Edi-get Bekuteba Saving Group has saved more than 14,000 Birr (736.84 USD). All members of the Group have started a business. Tarekech is one of the members. “At first, I was not thinking that the little saving that I contribute every week can bring a difference in my life. It was like a daydream for me when World Vision staff was introducing us to the concept,” she recalls. Five weeks after she started saving, she was allowed to take loan with 10% interest. With this loan, she fattened a sheep and started corn flour trading. “This time, around 90% of the profit is mine. I can feed and fulfill all my children basic needs adequately,” she happily recalls. As her income grows, she is now able to purchase 5 share prices per week.

Amarech Maru, 37, married and with 7 children, is a member of the Kuteba Leidget Saving Group. The Group consists of 15 members (14 women and one male) and it has saved 10, 000 Birr (526.31 USD). “When World Vision staff was sharing the idea of saving, it was a foolish idea for me to think of saving 3 Birr per week and expecting the saving to make a difference in our life. Anyway I just began saving 6 Birr per week for the sake of not disappointing the World Vision staff,” she regrettably recalls.

Two months after she started saving, she took a loan and started a business. Describing her benefit, Amarech said, “When I was with local money lender, providing a meal a day for my children was a problem, but today, I am able to feed them thrice a day. I can also take them to a health center when they get sick.”  She is now saving five share prices per week.