Episcopal Relief & Development’s Savings with Education program shows how community-led microfinancing can build savings and support education, agriculture, and empowerment.
By Kirk Petersen
Maritza Gonzales Martínez is a housewife with five children in Ojo de Agua, which is in the western interior of Honduras. “I never thought I could save, so I never tried until I joined my community savings group,” she said.
Now she meets regularly with a group called Fe y Esperanza (Faith and Hope), “and I have had the benefit of applying and receiving loans, of saving regularly, and of earning profit from the interest” collected on the group’s loans.
“Most of my savings goes to pay for school fees and supplies,” she said. “I thank God that two of my children are going to college and I have savings to help them.”
Fe y Esperanza is part of Savings with Education (SwE), a microfinance program established by Episcopal Relief & Development, in partnership with the Diocese of Honduras and the diocese’s Anglican Agency of Development, known as Aanglidesh.
Microfinance is not a new concept, but the typical model has involved financial institutions or nonprofit groups making small loans to support entrepreneurs in impoverished areas. The loans often are accompanied by education on how to run a small business.
In recent years, some microfinance organizations have added a personal savings component to their operations, and in 2011, Episcopal Relief & Development set out on that path. It introduced SwE, through which local groups would make loans from pools of money that had been saved by members.
“A group of 15 to 25 women come together every week to save an amount of money that they have determined is feasible for them, and once that pool of funds is large enough, then they can loan to each other,” Kellie McDaniel, senior program officer of Episcopal Relief & Development, told TLC. “And interest that they generate on those loans is distributed equally among the savings group members at the end of the year.”
The weekly savings goals range from 25 cents to $5. While those amounts would be considered insignificant in developed economies, more than 700 million people around the world live below the World Bank’s poverty line of $1.90 per day. Loan amounts range from about $20 to $100 or more, money that buys seeds for agriculture, pays laborers in busy times, and pays to transport wares or purchase them for resale.
Episcopal Relief & Development worked with its existing church partners to launch SwE in 2011 in Brazil, Mexico, Honduras, Guatemala, and Colombia. “Some of the partners were skeptical at first. And by some, I mean almost all,” McDaniel said with a laugh. But the program took hold quickly, and in 2012, 63 local groups had launched. Now that the program has existed for a few years, “a large part of the story is how passionate the partners implementing this program are about it,” she said.
The program expanded into Africa in 2014, and SwE now has more than 1,300 savings groups, with 31,000 members, in 17 countries. The groups collectively have saved more than $5.5 million since 2012, and the pace of growth has accelerated. In 2017, the program added 10,000 new members and 400 new groups, saving $2.2 million in 2017 alone.
Kasseche is a community in Uíge Province, a landlocked area of northern Angola. It is now the home of a boisterous bunch of savers called the Courage Group. Most members are women, but there are four men. They started in 2015 with a personal target for each member of saving 250 kwanza per week — about $1.18. Like all SwE programs, they established their own rules, which include fines of 50 kwanza for missing a meeting or missing a savings target.
The group soon began making loans. One member borrowed money to buy land to clear and plant manioc, which produces a tuber that is a major food source throughout the developing world. Another bought dry and canned goods to resell, while two took loans for healthcare.
Courage was still going strong in 2017, having increased its weekly savings target from 250 to 500 kwanza. By the end of the program year members had accumulated 338,000 kwanza in savings and earnings — about $1,590. Each year the group decides how much of the earnings to distribute to the members.
The economic benefits of the program are obvious, but there are more subtle benefits as well. “One of the things we are trying to do is increase decision-making ability and empower women,” McDaniel said. The program can “help shift the perception of the role a woman can have in the community.”
“Our vision is to reach the most vulnerable people in the community, and oftentimes those are women,” she said.