Meet the Kamende group, a small saving group in Kibingo village, in the Kibondo district of Kigoma, one of the poorest regions in Tanzania. Around thirty people, 13 men and 17 women, formed this group back in 2017, the oldest member was sixty years old at the time, the youngest twenty-five. Like most villagers, they were subsistence farmers, only able to provide one meal a day for their families. Through so-called Rotating Saving and Credit Associations (ROSCAs) they tried to put aside some money. Never enough however, to get loans. Loans needed to make investments that could spur real growth.

In 2018 however, things started to change. Under the United Nations Kigoma Joint Programme (KJP), UNCDF works with implementing partners such as the Danish Refugee Council (DRC) to promote access to financial services as well as digital and financial literacy among smallholder farmers by strengthening saving groups in refugees and host communities with a focus on youth and women.

As part of the KJP interventions by UNCDF, the Kamende group received training on best practices for saving group operations and management, in line with the Village Saving and Loans Association (VSLA) model. Participation and proper management of saving groups, especially in combination with the usage of mobile financial services, can have a clear and direct impact on economic growth, and inclusive social development. And in this case, they did.

“This training helped us to form a saving group and conduct proper record keeping, we thus access loans at affordable interest rates and we are now able to start small businesses. We can now save our money easily.” Says Ramadhani, a member of the Kamende saving group.

According to members of Kamende saving group, these interventions are making a significant impact in the Kigoma region. More stable operations help groups to save more money, allowing individuals to improve their living standards. Kamende group began issuing loans to its members in 2019, and members are encouraged to take loans to pay for necessary expenses, such as the cost of repairing the house, children's school fees or family medical expenses. Now, most of the group members’ families enjoy two or three meals a day.

The secret to success: a collective effort
The trainings also inspire people to unite their efforts and work together beyond their collective weekly deposits. When saving groups have accumulated a certain balance, they are encouraged to use this money and invest.

Kamende group decided to use 200,000 TZS (USD 87) to hire five acres of land and farm this together. At the end of the season, they harvested a total of 240 kg of beans and 23 kg of sunflowers, earning 500,000 TZS (USD 216). After this succes, group members, instead of sharing the dividend, invested in buying four acres land in 2020.

When people started to manage their capital together with a longer-term perspective, rather than only saving for individual goals, their investment brought them greater returns. Group members harvested 800 kg of beans and 96 kg sunflower from these lands last year.

“Now, we are not only a saving group, but also a producer group. Since 2019, we had more and more deposits and shared land. In the future, we also plan to develop poultry farming together. We already bought 16 chickens, and we plan to buy another by the end of this savings cycle. We are more united, more stable and stronger than before” Added Ramadhani.

Members of the Kamende saving group were trained by UNCDF and its partners on how to manage their capital together and invest in today and tomorrow (Photo by Tian Zhang, UNCDF Tanzania)

Adequate savings in the group also allows group members to help each other in times of need. Contributions are made to a social fund that provide small grants to members during emergency situations. The Kamende group used their social fund to help ten primary school students to buy school supplies such as pens, uniforms, and books. And this did not go unnoticed; the local government rewarded the group with an additional 40 acres of land.

Kamende group has entered a virtuous circle. By putting knowledge received during the trainings into practice, and by working together rather than focusing on individual needs, they can take care of not only their families, but the entire village. And slowly gradually, step by step, break the poverty trap.