How village savings groups change people’s lives

Laurie Lee
Uwimana Rose in the hairdressing salon she set up with a loan from the village savings and loan association

This was my first visit to see the work CARE is doing in developing countries, and my first visit to Rwanda, writes CARE chief executive Laurie Lee.

It is a country I had wanted to visit for a long time. It’s a country of stark contrasts: lush, clean, and tidy, with good roads, and relatively few shacks or slums – but with a large number of people who are still very poor.

Extraordinary progress, but still extreme poverty

CARE has worked in Rwanda since 1984. In 1994, Rwanda suffered a horrendous genocide. One million people were murdered in three months, often by their neighbours, in a country of only 8 million people.

Rwanda has made extraordinary progress since then, both in terms of reconciliation and in terms of reducing poverty. In the latest progress report on the Millennium Development Goals, Rwanda is one of the top performers in six out of the eight goals. It is making fast progress on education, health, and gender equality – but from a very low starting point. The number of people living below the extreme poverty line of $1.25 a day has fallen from 72% in 2006 to 63% in 2011, but it is still one of the highest proportions in the world.

Working a way out of poverty

One of CARE’s major programmes in Rwanda is to reduce poverty by helping people to increase their income through micro-businesses, kick-started by Village Savings and Loan Associations. These days, we are building on this progress, giving people, mainly women, extra training in entrepreneurship so that some of them can turn their micro-businesses into bigger businesses which begin to employ other people too.

This work, supported by Hand In Hand International and the Cherie Blair Foundation for Women, will train over 100,000 women and men in Rwanda in entrepreneurship skills, with the aim of creating sustainable jobs which will last long after the project ends.

I found out the real difference this makes when we attended the weekly meeting of the Abadahigwa Village Savings and Loan Association (VSLA) in Gishari, Rwamagana District, in Eastern Rwanda.

Venuste (in blue shirt), President of the VSLA, during the group's weekly meeting

Venuste (in blue shirt), President of the VSLA, during the group's weekly meeting

The President of the association, Venuste, told us that the group of 30, mainly women, had been saving for three years. They had begun by saving as little as 10p a week. Their first goal had been for everyone to be able to buy a mattress to sleep on instead of the ground. Their second goal was for every family be able to afford health insurance, which is £3 per person. Their third goal was for everyone to be able to buy a goat or chicken. They are now saving at least 50p a week and their current goal is for every family to be able to buy a cow. That’s £100! A cow can provide milk for children, manure for their land, and in good years another cow!

Setting up a nursery

Olive, 48, has two children and is widowed. She is also disabled. She used to be a teacher in Kenya, but when she moved to this village in Rwanda, she told us she was lonely and poor. She joined the VSLA, and with the additional entrepreneurship training provided by CARE’s local partners, she was able to identify a business opportunity.

There was a primary school in the village but no nursery. This made it difficult for women in the village, including those in the VSLA, to work. They would have to take their children into the fields with them, or worry about leaving them at home.

The association supported Olive’s application to the government to open a nursery which was approved. She borrowed £80 to buy school materials. Members of the association sent their children to her nursery and encouraged others in the village to do the same. Soon, Olive had 10 kids in the nursery paying £2 per month each, though she didn’t charge orphans anything.

She was soon able to repay the loan, take another loan and then start expanding the school, to 20, now 35 children. She is now employing a school cook and two cleaners, and has repaid four loans. As well as creating an income for Olive and three employees, her nursery has helped other women in the village to be able to work and earn a living. Most movingly of all though, Olive said she no longer felt lonely and was part of the community.

A business opportunity

Uwimana Rose has been a VSLA member since 2010, and has taken her business training a long way. She told us that she was very poor when she joined the association. She gradually made progress, like others, buying a mattress and health insurance. She had never been to school, but then she began receiving our entrepreneurship training. That taught her about accounts and budgets, and to think about where was a gap in the market. She looked around her village and saw many shops. But… no hairdressing salon.

She borrowed £200 from the association. This allowed her to rent the shop, do it up like a salon, get electricity (using rechargeable car batteries), and employ a barber. The tariff list on her wall said it cost between 10p and 30p for a haircut, depending on the style. On a good day, she turns over about £4. Like other shops, she also sells mobile phone airtime and people can take cash out of their mobile money accounts in her shop. After eight months in business, in an average month, she makes… just £20 profit.

The difference it makes

For one of the best entrepreneurs in the group, that doesn’t sound much does it? But we saw what a huge difference it made to her. She was clearly doing much better than many people in the village. Even though £20 a month is only just over the national poverty line, it was clearly a massive improvement for Rose.

45% of people in Rwanda do still live below the national poverty line. CARE is focused on helping those people who are the poorest of the poor, who are hard to reach and might miss out on other assistance. For them, and especially for their children, a few more £s a month can make ALL the difference.

Laurie Lee's picture

Laurie Lee is Chief Executive of CARE International UK – Read his blog posts on our Insights policy and practice website