Waiting for rain and for returns

Written in 2010, “Waiting for Rain, Reaching for Mangoes,” a paper on savings groups in rural Swaziland is filled with surprises.  While the sample size of four groups cannot represent practices across that country, it does present practices worthy of our own reflection.

To undertake the study author Julie Zollmann returned to her Peace Corps country to visit four chiefdoms. There, she uncovered group activities that many veterans may find puzzling. Incidentally, while she went to great lengths to find groups that operated outside the supervision of NGOs, all groups were in fact influenced by NGOs.

Among her findings (Short VersionDetailed Version).

Wide range of group size. The smallest group studied includes just 10 members and the largest 86. Interestingly, the author notes, large groups function well because members know one another less intimately. Thus, important decisions loan decisions are made independently of social ties and adhere closely to group rules, a feature attractive to membership.

Usual interest calculations. Groups use two methods of computing income for the purposes of annual share-outs. The first method, “savings-based,” is one familiar to most promoters. Following a savings-based method, groups apportion income according to how much each member has saved. The second method, “loan-based”, is less familiar. Following a loan-based method, groups apportion income according to how much each member has borrowed. At the end of the year, then, members receive exactly the amount of their savings plus their loan interest payments (adjusting for costs and losses in the form of uncollected loans). No borrowing, no income.

Those groups using the second system watch their funds circulate constantly. Members want to borrow, are heavily motivated to borrow, as that is the only way they will earn distributions, beyond their regular deposits, at the end of the year.

Indebtedness. “In nearly every group [including sub-groups] at least one in ten members would end the year owing the group money.” Finding it difficult to fulfill savings minimums and loan repayments, members turn first to neighbors and then to moneylenders, paying as much as 30-50% per month. Zollmann highlights: “One notorious moneylender has been known to harass people on the bus, insisting delinquent borrowers immediately remove and publicly hand over clothing items on the spot if they do not have the money on hand.”

Lump sums, a case for crying and smiling. The author describes how those interviewed estimate that “10-25% of their members are “crying” at the end of the year, in many cases because they received negative returns on savings. So why do members press onward continuing to save, no matter how difficult, and suffer indebtedness, only to harvest negative returns at the end of a cycle? In Zollmann’s focus groups the ability to invest in large status symbols was key. She quotes: “If you have saved a lot of money, you think of building a house to show you have money.”

It seems that however poor people may be, proving they not poor is elemental to their humanity.

The lessons for me in this study are many. Perhaps what struck me most was that though these groups were influenced by NGOs, they operate according to their own devices. In doing so, they are free to set unique rules that may not make sense to us as outsiders but made sense to them. Despite risks and losses, members believe these groups offer benefits. Visible, tangible signs of savings – water tanks, houses, and home improvements – were considered crucial to development. “‘If you see physical evidence, your attitude can be changed. People can see this from what you are building, but also they can see if your children are going back to school.’




Dear Kim, 

Thank you for posting this. I am in Northern Uganda now and have bumped into groups that are also distributing interest back to members in proportion to how much each has borrowed (rewarding those who borrow the most) rather than how much each has saved. I am not here to look specifically at savings groups, so I haven’t seen enough of them to know whether this is confined to groups formed by a specific organization or is most common among mature or self-replicating groups, but it does turn out that it isn’t a phenomenon unique to Swaziland. 


Tue, February 1, 2011 | Julie Zollmann

Hi Julie and Kim,

Marcia Odell and I saw the same thing in Kenya: distribution proportional to borrowing, not savings. "Why do you do it that way?" we asked? "Well, it's only fair. They're the ones who paid the interest!"

We also saw many groups that shared all earnings equally regardless of prior financial transactions. In fact, groups that follow the classic model of distribution proportional to savings were the minority.

Since then, I've seen a group in Niger that shared everything - including the collected deposits - equally. I took the time to go through each passbook to see how much members had saved, and there was not a great difference between the largest and smallest saver. The group considered it a great innovation that they were proud to tell me about. I find this kind of egalitarian simplicity very congenial, like if I go out to lunch with a friend, we will split the bill equally, even if one of us had a steak and a glass of wine, and the other had tofu and water.


Tue, February 1, 2011 | Paul Rippey

Definitely not confined to Swazi or Kenya. We see the same thing here in South Africa! Though most groups seem to be sticking to the savings-based method of distributing income so far. One of the groups that chose the lending-based method made the calculations easier by noting down each member's interest payments in a separate book. This particular group has not had any problems with loan repayments so they haven't had to deal with how to cover a default.

Time is not always money

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