Savings Groups and Smallholder Agriculture: learning...

Savings Groups and Smallholder Agriculture: learning from the ground in South Africa

Anton Krone

14th August 2013

Content

Savings Groups in South Africa: SaveAct Savings & Credit Groups (SCGs)

Use of Financial Services: Changes over time

Trends and features of South African Savings Groups

Enabling institutions that support agro-enterprise

Financial Services & Sustainable Livelihoods for the Poor – Yakha Impilo engcono ngokulondoloza imali!

SaveAct Savings & Credit Groups (SCGs)

South African NGO founded in 2005 in KwaZulu-Natal

The savings model was piloted to allow for adaptations based on local conditions

Currently spread across several rural and peri-urban areas in KZN, EC and FS

It now reaches about 25 000 members in 1 100 savings & groups (SCGs).


There are roughly 1,100 SCGs and 24,100 individuals in the Eastern Cape and KwaZulu-Natal who make use of the SaveAct model to save and lend

4Source: SaveAct Annual Report & MIS data, 2012

324

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

8/16/13

SaveAct members Total money shared out in 2012

…70% of capital used for loans…

consumption & investment

…more than 90% of SCG

members are women.

Avg group size: 22. Very high

uptake & link with social

grants

SaveAct Stats

8/16/13

$7.5 million

1. Saving/ Lending

2. Saving/ Lending

3. Saving/ Lending

4. Saving/ Lending

5. Saving/ Lending

6. Saving/ Lending

7.Saving/ Lending

8. Saving/Lending

9. Saving/ Lending

10. Saving

11. Saving

12. Payout

Towards more sustainable livelihoods through financial services for the poor

The model follows a 12-month rolling cycle which allows members achieve more sustainable livelihoods through these SCGs

5Source: SaveAct, 2013 & Genesis Analytics, 2013

Start (Month 1)End (Month 12)

The 12-month operating cycle

Savings as the glue

that stimulates

social capital

Platform for efficient

and effective support

strategies

Economic literacy

Improved coping

strategies

Consumption

smoothing

Improved capacity to take risks

Stimulates formation

of enterprises

Incubated in SCGs

Fed by savings

and credit, share outs,

and training

Improved capacity for

self-reliance

Savings and credit

Financial education

& life skills

training

Enterprise develop-

ment

Grow Investment: escaping debt through savings

Bergville (n=129) Matatiele (n=67)05

101520253035

Average Number of Shares Bought in 2011, by Duration of SCG Membership

1 year (or less) 2 years

3 years 4 years

“[I] was encouraged by what I have done in 2010, therefore I bought more shares in 2011.” (59 year old female, Matatiele)

Source: Delany and Storchi for FinMark Trust, 2012

Bank Mashonisa Stokvel SCG0

1

2

3

4

5

Trend in financial services use (Bergville)

2007 2011

Bank Stokvel Post Office Home0

1

2

3

4

5

Trend in financial services use (Matatiele)

2007 2011

Returns from saving in Savings Groups


Money is borrowed and repaid with interest

99% repayment rate30-40% annual return

Savings Groups Enabling Investment

Non-investment; 29%

Household; 33%

Enterprise; 13%

Agriculture; 15%

Education; 9%

Use of loans (Bergville)

Non-investment; 32%

Household; 36%

Enterprise; 5%

Agriculture; 6%

Education; 21%

Use of loans (Matatiele)

Source: Delany and Storchi for FinMark Trust, 2012

1. Savings Groups

2. Clustering the economically active

across SCGs for commodity ranking

3. Commodity Interest Groups (CIGs) formed

4. Isiqalo (enterprise) training

5. CIGs mentored & Participatory Value

Chain Analysis (PVC) conducted

6. Business plans developed (factoring in share-outs/ loan capital

& collective opportunity, eg bulk

buying)

7. Business plans implemented

8. Business plans tracked with

mentorship across the value chain

Flow of agro-enterprise support activities to SCG members


Commodity Interest

Group

SCG

SCG

SCG

SCG

SCG

SCG

Leveraging SCGs towards Agricultural Development Informed by Ranking and

Participatory Value Chain Analysis

Single commodity focus Collective learning and action,

such as bulk-buying Training and mentorship can

be tailored and enabled Enables agro-processing Aggregation of production to

achieve scale and penetrate new markets


Build agency and social capital

Collective activity:

Bulk buying of fertiliser

Bulk buying of seeds (commodity interest groups)

Informal collective activitieso Growing vegetables collectively

o Buying food and household assets

o Helping each other with building houses (Bergville) or burial services (Matatiele)


“I gained that if we all come together as the [SCGs do], we can go a long way. ” (43 year old female, Bergville)

Enterprise Development Example: Commodity Interest Groups & Potatoes


A Path Towards More Sustainable Livelihoods


Thank you


[email protected]

2. Upward spiral: virtuous circle of savings and enterprise activities


• Grants• Remittances• Enterprise• Salary/wages

“Members would borrow money to improve their businesses and they know that they can borrow money from the group if anything in their business is lacking…it is a two-way process because [when] I have sold things, I take the profit and save it to the saving scheme”. (Community-based promoter, Bergville)

Virtuous circle of savings and enterprise development

Savings Groups and Smallholder Agriculture: learning...

Documents

Transcript of Savings Groups and Smallholder Agriculture: learning...