GROUP SAVINGS PROJECT
Lack of financial literacy and a widespread failure to save has kept many Ugandans in abject poverty and deprivation that spans generations. Statistics from the Ministry of Finance, Planning and Economic Development (MoFPED) reveal that the average savings rate among Ugandans stands at 6.2%, far below the minimum level required for families to lift themselves out of poverty.
The low savings rate is largely attributable to a limited knowledge of available financial services, general financial illiteracy, and the lack of physical proximity to financial institutions. Despite this, many people in rural and peri-urban areas desire to borrow in case of emergencies, and to start or expand small businesses. At CCUg, we believe that fostering a habit of savings among women and youth is critically important as a means of enabling them to achieve a measure of financial stability, educate their children and break the cycle of generational poverty.
The CCUg Group Savings Project (GSP) seeks to address the short-term financial needs of women and youth in the communities we serve. Resembling a Village Savings and Loan Association, this program operates in small groups of 10 to 12 women who live within the same community. Each group member is asked to bring personal savings to weekly meetings. The savings are pooled at each meeting, and members are eligible to take loans from the pool to use for emergencies or to initiate, expand or invest in income-generating activities. Monthly interest on all loans is charged at a rate of at 5% - 10% based on the agreed-upon loan terms established by each group.
CCUg injects funds into the savings pool of each group as needed to meet the credit requirements of its members; however, these injections are made in our capacity as program sponsor. We do not borrow GSP funds or otherwise participate in the activity of any group as a member.
Before formally contributing their first round of savings, GSP members are required to attend 2 workshops presented by CCUg staff. These workshops teach basic record-keeping skills, introduce entrepreneurial concepts such as capital, inventory, investment and profit, and establish the importance of regular savings to meet future needs.
Since its inception in April 2013, the GSP has been immensely popular within the communities we serve, boasting a 99.9% repayment rate on borrowed funds. As of Q1 2017, 13 savings groups involving more than 150 women are operating in Nakalanga Village, Magamaga Trading Centre and Wabulungu in Mayuge district, and in Wanyange, Jinja district.