Meet Angelique. She’s a compilation of women I’ve met in rural Rwanda – all facing dire circumstances and looking to Food for the Hungry (FH) for help.
Angelique has four children. She and her husband Thomas are subsistence farmers and harvest their crop of maize and beans once a year. What they don’t eat, they sell. The proceeds must last for the next 12 months.
The “hungry season” is from March to May – when this year’s crop is not yet ready for harvest and proceeds from last year’s crop are dwindling.
Angelique and Thomas were delighted when they harvested twice what they normally do. Being among 2.5 billion people worldwide who, according to The World Bank, don’t have a bank account, Angelique had nowhere safe to keep the money.
As is often the case in a hard-pressed village like theirs, Angelique ended up giving away some of the money in the form of loans that wouldn’t be repaid, and some of it was stolen.
Several months later, their eldest child required an expensive medical treatment, and the couple borrowed money from a local loan shark who charged 100 percent interest. They were forced to sell some of their meager possessions to repay the loan.
Angelique started wondering if someone had put a curse on her and her family. Maybe she was somehow being punished for bringing in a good harvest.
What a tragedy! And the saddest part of the story is that millions of people living in extreme poverty face many of the same kinds of economic dynamics as Angelique. Unfortunately, these people often don’t have either access to financial services or training on how to manage their finances, so they end up letting their finances manage them.
That’s where FH comes in.
FH helps people save money and manage their finances. FH is seeing incredible success with Village Savings and Loan Associations (VSLAs) in the communities where we work. These function like small, informal credit unions. Members deposit their savings and can take out small, short-term loans. The members provide discipline and accountability to help all 7 to 30 members save and thrive.Each group has a President, Secretary, Treasurer and two money counters. Money is stored in cashboxes with two or three locks. Multiple group members take possession of one key to maintain accountability and transparency. Groups meet every week or every other week.Members can take out loans, normally at an interest rate of 10 percent. These loans provide fair and accessible credit for micro-businesses or for major life events, such as weddings, medical expenses or a funeral. They also maintain a social fund to make no-interest loans to members who experience an emergency.The group retains the interest as loans are repaid. The rate of loan repayment is extremely high.Trust and positive relationships are at the heart of savings group success”
Since trust is a foundational ingredient, each Savings Group selects its members carefully.
At the end of a year, groups clear out their books and each person receives the amount they saved plus a portion of interest the group made on the loans. Then they start over again.
Relationship is at the heart of VSLA success
VSLAs provide discipline and accountability. They help members save. The social support that these groups provide is just as important as any practical means for saving.
These groups include training on biblical principles about money and household management. They teach members to think differently of their finances and lives.
As a Christian organization FH recognizes that we can never overlook the relational dynamic when we are addressing poverty.
Christian economic development is about more than money. It’s about restored relationships. We must address a person’s relationship with God, others and creation. This involves a change in worldview—that is, seeing the world, finances and our relationships in the way God intended, rather than in a distorted manner.
As this platform is built and a new view of financial management is taken on, positive financial results multiply, both within the community and to surrounding communities. The famous founder of Methodism, John Wesley once exhorted his followers, “Earn as much as you can, save as much as you can, give as much as you can”. This principle still holds today—for the poor in the developing world as well as for those with much greater means in the Global North.