Economic insecurity is a major barrier to growth and sustainable development in Malawi, and as with many developing countries, accessing finance remains a challenge for the country’s rural poor. Without access to financial services, the ability of individuals and families to increase their income and develop their economic capacity is limited.
This is particularly true of women, who typically have little control over family income – as many as one third of married women are not involved in spending decisions, even when it concerns their own income. Among the poorest quintile, this figure is as much as 46%.
'We are empowered'
Yet evidence has shown that increasing a woman’s income and economic opportunities is key to her own empowerment and, ultimately, improving the education, health, food security and overall quality of life of her children.
Plan has therefore been working with several communities, supporting village savings and loans schemes which help generate income and spur the establishment of entrepreneurial enterprises. These schemes provide poor and marginalised members of society with access to basic financial services that are safe, reliable and profitable – services they would otherwise not be able to benefit from.
Speaking to the women involved in two of these schemes, in Kasungu and Lilongwe districts, it is immediately apparently what impact they have had on the women, their families and the wider communities. When asked whether the group changed their lives in any way, the women reply with a resounding “Yes”. The beaming, proud smiles of independent women as they explain the impact the scheme has had tells its own story.
Their answers come thick and fast. “We’re empowered”, “We can provide for our families”, “Our husbands come to us for help”, they shout. “Before, we couldn’t buy food or pay the school fees for our children,” one member explains. “Now we can provide these things as we have our own money. We are self-reliant; we don’t need to go to our husbands for help with small things.”
Transparency is paramount
The operating model for village savings and loans schemes is simple, meaning illiterate women can also take part. “Even though I don’t have a good education, I can still be part of the group," says one member.
The activities of the group run on an annual cycle, with weekly meetings where members determine their own contribution. Groups decide the minimum and maximum weekly contributions required from members, as well as the interest rates on payable on loans, and at the end of the year the accumulated savings are distributed to members according to the amount they have contributed. The basic principle is the more you save, the more you earn.
In addition, members contribute to a social fund, which provides members with a basic form of insurance. This group asset – which is not distributed back to members at the end of the cycle – serves as a community safety net and covers a number of purposes, from emergency medical assistance to festivals or funeral expenses. “The social fund means we have access to assistance at the right time, in the right place because the money is within the community,” explains one group member.
While the set-up is simple, the groups are meticulous in their running. A constitution governs the group’s rules and procedures, and the chairperson, secretary and treasurer each hold one of the three keys to the deposit box, which is opened in front of the entire group. Transparency is paramount, and background character checks are carried out to ascertain the suitableness of any potential member. The system may be informal, but the professional approach taken by the members reflects the pride and importance they attach to the scheme.
Wider societal benefits
It is widely documented that women are more likely to reinvest their income in their families and communities. As such, microfinance schemes do far more than benefit a single individual. With the help of a trained community based facilitator who assesses market opportunities, the women determine how best to invest their savings and loans so they don’t squander the money.
“We do small income generating activities: selling vegetables, brewing sweet wine, buying and selling crops, roasting fish and baking donuts and scones,” the women explain. Investing loans in productive activities such as these allows poor households to meet their basic daily needs, including food, shelter and education, and provides the first line of defence against unexpected shocks.
Economic security, however, is not just about access to money. Access to, and control over, material assets such as land are critical to building an economically sound future and standard of living, and through this type of microfinance scheme, women have been able to acquire these assets. “I have invested my savings to buy a maize field,” says a member of the group in Kasungu. “Now I can feed my family. It makes me proud.” Her neighbour, meanwhile, has bought a soya field.
One lady in Lilongwe group went from brick maker to business woman. “At first I invested my money and moulded bricks, then I built a barber shop. Now I’ve expanded and my shop has three rooms.
“Now money is not a problem,” she adds. “We are economically empowered.”
Fighting gender stereotypes
This has had a powerful effect on the wider community and has also helped shift harmful gender stereotypes within their own households. “At first, our husbands weren’t very supportive. But now they’ve seen the benefits they are encouraging us to continue saving. They are very happy because we can share responsibility in the family,” she explains.
Thanks to the group, the women walk with their heads held high, regardless of their background. “When the community sees us, they see we have moved forward. They see that we can look after ourselves and our families, that we can afford nice clothes.”
With Plan’s support, these strong, dynamic women have transformed their lives and are going from strength to strength in their business ventures. And they have their sights set on even greater success, by establishing a business for the whole group. “We want to do something that benefits the entire community, not just us,” they declare proudly.
By Louise Hagendijk, Communications and Media Officer