There is a good deal of focus on militant and other violence in Mali and Burkina Faso. This is understandable. Armed attacks not only kill and harm people and destroy property. The destruction, insecurity and instability impede economic development. In the long run, development is the only lasting solution to normalised political violence and all the suffering it causes.
Rural villages in Mali and Burkina Faso are making progress in improving output and incomes. The key is access to capital.
Foreign investors are not setting up shop in these villages. Rather, communities must rely on themselves to build capital to invest in agricultural innovations and small businesses. This may sound impossible, given the poverty in these communities. But through savings and credit groups, it’s happening.
A savings and credit group is an initially small group of individuals and families. Each participant contributes a small amount each month. When enough capital is amassed, participants take out loans at low or no interest. These loans are invested in greenhouses, fishponds to raise tilapia and catfish, better seeds and livestock and other improvements to raise output and profit.
If there is a difficulty repaying a loan, a savings and credit group will work with a borrower on terms that work. Unlike moneylenders or even banks, neighbours do not seize property or otherwise impose conditions that can make borrowers worse off than before they took out a loan.
In addition to making loans, savings and credit groups teach basic accounting and other financial knowledge. And since many members are often illiterate, they can teach reading and writing so members can understand financial education. These groups are often the hub of a more comprehensive social and economic development effort.
Changing lives of small-scale farmers
One such effort in Burkina Faso and Mali, run by international development organisation World Neighbors, has helped communities establish 71 savings and credit groups with about 1,600 members. These groups have an accumulated savings of just under $27,000 and have made 365 loans to members.
The savings and credit projects have enabled many small success stories in Burkina Faso.
Thiombiano Ardjima is mother of two children who took out at an eight-month, $288 loan at 5% interest to start a sheep raising business. She bought five sheep. Through World Neighbors training on proper nutrition, basic veterinary care and more, Thiombiano raised healthy and heavy sheep for Eid al-Adha. After selling them for $989 and paying back the loan and interest, Thiombiano had income of $686. She used most of that to buy seven sheep. Thiombiano intends to continue to expand her herd and, with it, her income and profit.
Dabini Albertine is a mother of three children. Dabini has taken three loans from her savings and credit group over six months, for a total of $259. The interest rate on the loans is 5%. She invested the loans to start a dolo (local beer) business. After paying back her loan with interest, her initial net sales were $528. Dabini is using a portion of the profit from those sales to further expand output and grow her business.
Tompoudi Awa is a mother of two children. After joining a savings and credit group in her village and contributing for some time, she took out a six-month $240 loan at 5% interest. With it Tompoudi invested in a loom, thread, caustic soda and dye. She uses her equipment to produce and sell traditional loincloths. Tompoudi sold $912 worth of clothes. After paying back her loan with interest, this left her with income of $660.
Relatively small amounts of capital can make big changes in peoples’ lives. Savings and credit groups are a proven way to build and invest it to meet communities’ needs.
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