The Next Big Thing?

This could be really boring for 90% of people but if you’re interested in development or you donate money to any of the big hitter non-profits, micro-savings could be where a fair amount of money is headed. In the past 30 years, micro-finance has sky-rocketed bringing small loans and big opportunities for millions that were either unable to get credit or enslaved to loan sharks with unreachable interest rates. Everyone is getting involved in micro-finance, including governments. Some micro-finance is good, some bad and some ugly, depending on the country. Rwanda has its own micro-finance bank called Umarango Sako. Apparently they have given out a lot of loans and are pushing a majority of the population to join the formal economy and participate in business and get a bank account. According to other NGO folk, Rwanda is doing a decent job handling micro-finance but others aren’t handling it so well.

So to join the Umarango Sako micro-finance community you need 10,000 francs. That’s the equivalent of around $20. I know a Jackson seems like chump change but in a country where close to 60% of the population lives on less than $0.50 a day, 20 dollars seems impossible for most. This is where micro-savings comes in, to help the poorest of the poor. Similar to micro-finance, micro-savings joins a group of 12-15 very vulnerable folks, predominately women, and together, they create a savings club. Each week, each member brings what they can and buys shares of entire savings collected. The price of a share is determined by the group. This can range from 500-1500 francs ($1-$3). In joining the club they are also asked to donate a little bit to a social fund to help pay for an orphans school fees or widow’s funeral or a cause agreed upon by the group. After three months of growth the group chooses one person to give a loan to. They (the hard core people at Care and other non-profits who wrote the painstakingly detailed manual) have learned that most people in the group end up helping each other out to start a small business or pay for something much needed to improve their family life.

Most micro-savings projects are still in pilot stages but from what people are telling me, results have been overwhelmingly positive.

It now just depends on how it spreads. Each non-profit has to tailor similar micro-savings projects for each country. 3 years ago, Niger was the first test country for micro-savings and since then projects have been popping up all over Niger. Rwanda is in its second year where non-profits are wrapping up their pilot stages and starting to operate full scale.

I highly doubt that if you’re reading my blog that you believe that all poor people are lazy and they should help themselves but if you are, check it, people helping themselves. Besides education, people are lifting themselves out of poverty without any outside financial help.

Poor folks aren’t powerless or voiceless, many just aren’t given an opportunity to rise up. I don’t know about you but I love a good empowerment story and I think micro-savings is going to be full of them. So share the story of micro-savings and if you got a couple bucks, maybe give a few to a non-profit engaging in micro-savings.