trueBy Stella Mugena
Living in poverty is ugly and those trapped in it need to explore their potentials out of it. Uganda has made enormous progress in reducing poverty levels country wide from 56% in 1992 to 24% in 2009; several national studies report the reduction to be more significant in urban areas compared to rural areas.
Rural poverty revolves in a vicious circle and with households characterized by large sizes of households, low educational levels, and low asset holdings, among others. Prof. Nuwagaba’s inspiring article on Friday November 14, 2014 in the New Vision, Pg 14 points out ways of getting rid of poverty. He identified saving as a culture or way of life as one an option.
As a strategy, communities need to be empowered to form Village Savings and Loans Associations (VSLAs) which gives individuals an opportunity to save regularly in groups to provide sustainable and profitable microfinance services especially in remote areas with no access to formal financial services. VSLAs are self-managed groups that do not receive external capital but provide members with an opportunity to save, acquire small loans proportionate to repayment capacities of borrowers.
It is often easier to accumulate wealth collectively than individually to start up a project on which to base personal growth. This helps in addressing individual emergency needs.
VSLAs enable members to build on collective savings and assets which they wouldn’t have possessed as individuals. In most Associations, women are reported to compose approximately 70% of the membership. This raises self–respect of individual members and helps to build social capital with in communities considering that poverty has a feminine face.
If well managed, VSLAs enable households to accumulate savings for future spending on obtaining quality social services like health care and education which improves human development for national growth and development.
Examples can be drawn from members who have benefited from VSLAs. For instance, Esangu David a resident of Alito parish in Obalanga Sub County, Amuria district in March 2014 borrowed sh300,000 from an Association where he is a member to inject in his millet business.
After a period of 3 months he generated 650,000/=. By July, he was able to repay the capital borrowed and bought a heifer cow. From this, he obtains more income through selling milk and improving the nutrition of his household members as part of it is consumed.
Although Government through the Microfinance Department in the Ministry of Finance is implementing the Savings and Credit Cooperatives (SACCOS), a thorough study of the VSLA model needs to be conducted to establish how community members who fail to qualify for SACCOS can be encouraged to save their little income.
This can be piloted in a few districts recorded with high poverty levels particularly Northern and Eastern Uganda. Adequate capacity building of communities can be conducted highlighting what to expect from the initiative; an evaluation later carried out for possible adoption and roll out to other remote areas.
This approach, if explored in addition to other poverty eradication initiatives is most likely to capture a bigger population affected by poverty than expected which will enable them improve their livelihoods and eventually participate in accelerating economic growth and development in the nation.
The writer works with Uganda Debt Network.