Taulo, the power of Savings Groups in Malawi

When an official from World Vision went to a remote Mpapathu Village to encourage them to set up a savings group, Patrick Taulo, 30, was one of the few people in the village who dismissed the idea as a far fetched one.

“It was like a joke. How could they talk about saving money in the village here when our main source of income is farming, in like once a year? I have always believed that for one to save, he or she should have been employed” he wondered.

To his surprise, the World Vision staff insisted and asked the local village chief to allow his subjects set up a Savings group and that they had to fully own the idea. Eventually, he and other villagers agreed to try it out.

“We then established Chisomo Savings Group in September, 2011 and World Vision taught us a lot on how it works on separate meetings. I bought five shares at 20 cents each and kept on borrowing and saving for about one year,” he says.

When we were sharing proceeds in 2012, he was surprised to note that he had earned US$30 and in 2013, he realized US$54 from the savings.

“I used US$38 to buy 11 iron sheets and other materials for building my house. Then, I also borrowed some money and invested in tomato production where I realized US$60 which I topped up with a loan from the group to buy a male calf at US$82,” he says.

In 2014, Patrick sold the bull at US$321, which he used to build a big house with five rooms. He has also used proceeds from his business to pay US$54 for a dairy cow from a fellow community member and the cow is expected to calve before the end of 2015.

Patrick, who is the chair for Chisomo Savings Group now and a carpenter by trade, which also boomed as a result of joining the savings group, explains that before he joined the group, his carpentry and joinery business always faced challenges of low capitalization, which affected productivity and subsequently profits. He never had profits before.

He says he uses the money borrowed from the Savings Group to boost his capital and production, which enables him to meet demand for orders.

“Previously, it was difficult for me to meet demand for orders because I could not raise enough money to buy materials for production. Instead, I used to ask the customer to give me part payment which I would use to buy raw materials like planks and nails. Now, I am able to buy enough materials well in advance so that when an order is placed, I am able to commence production immediately.

“Buying materials in advance is good because you save time and money in that you buy in bulk and therefore get some discounts and you spend less on transport hire because you buy only once in a while,” says Patrick.

The coming of the Savings Group saved him and other villagers from preying loan sharks who charge 100 percent compound interest rate per month, for any amount borrowed. This makes it difficult for villagers who do not have reliable means of earning income or do small-scale businesses to repay the loans. With the Savings Group, the service charge is only 25 percent.

Patrick added that with the proceeds from his carpentry and joinery, as supported by the borrowings and profits from the Savings Group, he has bought goats and dairycow, bought fertilizer for food production and has also bought a total of three bicycles he is using now.

The improvements he has experienced have already started having a positive impact on his family.

“Now, I am able to feed my family whatever and whenever I want,” says Patrick as he lifted his two-year-old son, Cosmas, who was still chewing the last mouthful of Nsima (a local dish)  and peas as he had just finished having lunch with his sisters, Blessings, and Grace.

He is now planning to raise his capital to reach US$200, so that he can be making more money from his carpentry and joinery business.

“At the moment, other community members have also emulated our example because they have seen that it is profitable to save and borrow within savings groups. For us, we give thanks to our supporters at World Vision because as you can see, I and my family are living happily now.