Pests and weeds are two of the most common problems that farmers face. This is why the training with SAT focuses on these challenges by elaborating sustainable solutions with the farmers on how to handle them. Nevertheless, it’s not only ecological issues that small-scale farmers have to cope with; it’s also financial problems which eventually can lead to health-related issues for example. This is why SAT, in its holistic approach, also provides training in this regard, namely with the “Saving & Lending” system. Daudi Gwabara is the facilitator at SAT that has already introduced over 20 farmer groups to this system. Let’s have a closer look at how it works and what effects it can have on the livelihood of small-scale farmers.
Every Tuesday, the members of Mwongozo farmer group meet up at the demonstration garden they have set up with SAT. They sit down in a half-circle to ensure that everyone can witness what is happening. There’s a book keeper, a key holder and a cashier which have been elected in a democratic process. The technical set-up is as follows: The heart of the “Saving & Lending” System is on the one hand a large metal box, where the money is kept and locked, and on the other hand the willingness of all group members to make it work. The system itself consists of two different parts: The “Social Fund” and the “Loan Fund”. Every week, all 24 members pay TZS 500,- into the Social Fund. Individuals not being able to attend a weekly meeting, make up for the missed contribution the next week. This money is saved for eventualities like a group member falling sick and needing medical assistance and other emergencies. Solidarity within the group is the fundament for this fund and helps to ensure the functioning and social cohesion of the group.
The second fund focuses on the individual level and provides the group members with more freedom of decision. Every week, they can buy between one and five shares which cost TZS 500,- each. They do so by visibly handing the money to the cashier while saying “I buy one (or more) share”. Transparency is a fundamental principle in the “Saving & Lending” System and is kept up. Every purchase is kept note of in the personal booklets of the members as well as in the common book. If group members decide to take up a loan in order to purchase tools or starting their own business, they can do so under the following conditions: A loan has to be paid back within three months and with an interest of ten percent. This may sound high but as the money stays within the group, it directly benefits the community. In October 2016, the Mwongozo group in Kimbwala has completed its first year within the “Saving & Lending” System. Therefore the accumulated interest in the fund is distributed proportionally to the amount of shares that every member purchased. Owning 5% of the total amount of shares leads to getting 5% of the interest. This enables the group members once again to make new investments in order to improve their business, health and their children’s education.
“Saving & Lending” is a principle that is based on solidarity within the community as well as entrepreneurship. The goal is to provide access to loans to farmers that don’t have bank accounts, and therefore lack access to bank loans, and dispose of limited financial resources. Numbers from the Y group show the success of this system: In less than a year, the group has accumulated over TZS 624’000 in the Social Fund and over TZS 3’119’000 in the Share Fund. A total of 20 farmers from the Mwongozo group have already taken up a loan from their “Saving & Lending” account. By doing so, they have invested in new tools for their individual fields, have bought different items for reselling or have started their own soap making business. Increased productivity on their fields and an increased household income are only some of the many benefits that the small-scale farmers get out of this system. It also gives them independency – and what better feeling than improving your livelihood through your own efforts, supported only by the community that you are working with and have trust in!