The Answer

On Friday, Jim and I went to visit a St. Benedict's graduate ('81) who lives in nearby Jeffry's Bay.  Jeffry's Bay is known primarily for its surfing - especially the "super-tube"effect the waves make there.  It's a small beautiful resort town that is, again, surrounded by very poor "townships" of primarily Xhosa people.

Jill

The alumna's name is Jill Thompson, and she has had quite the history since she left St. Joseph, Minnesota. She has been a Peace Corp volunteer in two different African countries before becoming Associate Country Director for both Mali and Botswana.  (Jim and she could trade Peace Corps stories!)  For the last five years, she's lived in Jeffry's Bay, starting up a micro-savings non-profit.

Quite often these days we read about the promise of micro-loans - small loans to set someone up in small-scale business ventures.  They are the rage in economic development.  So, what are micro-savings plans?  They are actually a cousin, but they flip the equation.  Instead of leading with debt (even small debt), this program encourages people to save first.  Once group savings have accrued, the savers make loans to one another.  No outside money is needed; no money is repaid to anyone outside the group.

Her program, called Mpendulo Savings, helps people in the townships form savings and lending groups.  Saving in the township is hard, as 50% of the residents are already in debt to money lenders called skoppers, or credit card companies.  If they do have some money to save, their small deposits in traditional savings accounts get quickly eaten up with bank fees.  Jill's group helps them work towards the elimination of their debt and/or the building of assets.

Savings "kit"

Each savings circle must agree to meet for a year.  They set their own ground-rules: how often they will meet, where, and the required savings target from each member/ each month.  Jill's staff (3 trainers) supports the groups by providing advice, some financial literacy training, and - most importantly - a unique savings "kit."  Since trust of one another is crucial (so you can trust that no one is tempted to run off with all the group's funds),  the kit comes with a unique "strongbox."   This simple metal box is locked on three sides; each side requires a unique key to open it.  To safeguard the money, three different people in the circle hold the keys, and a fourth person keeps the metal box.  All four must be present for any money to be withdrawn.

Show me the money!

Once savings have started accruing, they make loans to one another at a rate of 10%.  Jill's group now supports over 130 savings/lending circles.  We had the opportunity to visit one on Friday.  Held in a person's home, each member brought their savings target:  250 Rand.  The money is counted publicly and placed in the lockbox.

Counting the money

Savings group member

Before we left, I asked, "What does Mpendulo mean?"  Jill smiled self-consciously and said that the members came up with the name.  "In Xhosa, Mpendulo means 'the answer'."  While Mpendulo may not be the only answer to getting people out of poverty, it is proving to be one answer that works.  I liked the fact that it builds on the concept of "we have assets" rather than "please help us."